DSW 2013 Annual Report Download - page 57

Table of Contents
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affected within the statement of operations or disclosed in the notes to the consolidated financial statements. See Note 15 for disclosures related to this
guidance.
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Merger with Retail Ventures, Inc. ("the Merger")- On May 26, 2011, Retail Ventures, Inc. (“Retail Ventures” or “RVI”) merged with and into DSW MS
LLC (“Merger Sub”), with Merger Sub surviving the Merger and continuing as a wholly owned subsidiary of DSW. Upon the closing of the Merger, each
outstanding RVI common share was converted into 0.435 DSW Class A Common Shares, unless the holder of each outstanding RVI common share properly
and timely elected to receive a like amount of DSW Class B Common Shares. In connection with the Merger, RVI shareholders received 21.2 million DSW
Class A Common Shares and 23.0 million DSW Class B Common Shares. Prior to the Merger, RVI held 54.8 million DSW Class B Common Shares, which
were retired in the third quarter of fiscal 2011. RVI common shares, without par value, which traded under the symbol “RVI,” ceased trading on, and were
delisted from, the New York Stock Exchange on May 26, 2011.
The Merger was accounted for as a reverse merger with RVI as the accounting acquirer and DSW (the surviving legal entity) as the accounting acquiree. As
this was a transaction between entities under common control under ASC 805, Business Combinations, the Merger was accounted for as an equity
transaction in accordance with ASC 810, Consolidation as the acquisition of a noncontrolling interest, and purchase accounting was not applied. As a result,
there was no adjustment to RVI's historical cost carrying amounts of assets and liabilities reflected in the accompanying balance sheet. For financial reporting
purposes, the Merger was accounted for as if the following transactions took place:
•RVI acquired all of the outstanding noncontrolling interests in DSW in exchange for 34.2 million newly issued Class A Common Shares, thus
eliminating the noncontrolling interests. Legally, these DSW Class A Common Shares are the shares that were publicly held prior to the Merger;
•RVI declared and implemented a reverse stock split at an exchange ratio of 0.435 applicable to all outstanding Common Shares;
•RVI established a new class of unregistered common shares, Class B Common Shares, with special voting rights. DSW Class A Common
Shares are entitled to one vote for each share. DSW Class B Common Shares are entitled to eight votes for each share; and
•RVI offered to all common shareholders as of the date immediately prior to the closing of the Merger, the opportunity to tender Class A Common
Shares in exchange for newly issued Class B Common Shares, resulting in the issuance of 23.0 million Class B Common Shares and the
retirement of the same number of Class A Common Shares.
Pre-merger financial information presented in the DSW consolidated financial statements represents consolidated RVI financial information. References to
Retail Ventures or RVI refer to the pre-merger entity. The pre-merger financial information was retrospectively recast in fiscal 2011 for the following matters:
•Share and per share information- DSW recast all RVI historical share and per share information, including earnings per share, to reflect the
exchange ratio of 0.435 for periods prior to the Merger.
•Segment presentation- DSW maintained its historical segment presentation, which is consistent with how the chief operating decision maker,
as defined in ASC 280, Segment Reporting, reviews the business. DSW sells products through three channels: DSW stores, dsw.com and the
Affiliated Business Group. The reportable segments are the DSW segment, which includes the DSW stores and dsw.com sales channels, and
the Affiliated Business Group segment. In order to reconcile to the consolidated financial statements, DSW includes Other, which consists of
assets, liabilities and expenses that are not attributable to the two reportable segments. The pre-merger or prior period consolidated financial
statements and notes were recast to reflect the two reportable segments and Other.
•Cost of sales- DSW conformed RVI's accounting policies and recast RVI's pre-merger or prior period financial statements and notes for
distribution and fulfillment expenses and store occupancy costs historically reported by RVI within operating expenses to be consistent with
DSW's historical classification of these costs within cost of sales.
F- 14
Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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