DSW 2014 Annual Report Download - page 62

Table of Contents
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In fiscal 2014 and fiscal 2013, the Company recognized impairment losses on leasehold improvements used in DSW stores. The Company determined that
the carrying value exceeded the expected future cash flows and recorded an impairment after determining fair value based on the discounted future cash flow
analysis using a discount rate determined by management based on historical performance and expectations of future performance. The following table
presents the activity related to the fair value of assets held and used that realized an impairment loss for the periods presented:
Total Losses
As of January 31, 2015
Fiscal
Level 1
Level 2
Level 3
Fair Value as of the Impairment
Date
2014
2013
(in thousands)
(in thousands)
Assets held and used —
—
—
—
$ 5,095
$ 809
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$50 Million Secured Credit Facility- On August 2, 2013, the Company entered into a secured revolving credit agreement (the "Credit Facility"). The Credit
Facility, together with the Letter of Credit Agreement (defined below), amended and restated the prior credit facility, dated June 30, 2010. The Credit Facility
reduced the amount of revolving credit commitments from $100 million to $50 million, allowed DSW to transfer its outstanding letters of credit and has a
term of five years that will expire on July 31, 2018. The Credit Facility may be increased by up to $100 million upon the Company's request and the increase
would be subject to lender availability, DSW Inc.'s financial condition and compliance with covenants. The Credit Facility is secured by a lien on
substantially all of DSW Inc.'s personal property assets and its subsidiaries with certain exclusions and may be used to provide funds for general corporate
purposes, to provide for ongoing working capital requirements and to make permitted acquisitions. Revolving credit loans bear interest under the Credit
Facility at the Company's option under: (a) a base rate option at a rate per annum equal to the highest of (i) the Federal Funds Open Rate (as defined in the
Credit Facility), plus 0.5%, (ii) the Lender's prime rate, and (iii) the Daily LIBOR Rate (as defined in the Credit Facility) plus 1.0%, plus in each instance an
applicable margin, which is between 1.00 and 1.25, based upon revolving credit availability; or (b) a LIBOR option at a rate equal to the LIBOR Rate (as
defined in the Credit Facility), plus an applicable margin based upon the Company's revolving credit availability. In addition, the Credit Facility contains
restrictive covenants relating to management and the operation of DSW Inc.'s business. These covenants, among other things, limit or restrict DSW Inc.'s
ability to grant liens on its assets, limit its ability to incur additional indebtedness, limit its ability to enter into transactions with affiliates and limit its ability
to merge or consolidate with another entity. The Credit Facility also requires that DSW Inc. meet the minimum cash and short-term investments requirement
of $125 million, as defined in the Credit Facility. An additional covenant limits payments for capital expenditures to $200 million in any fiscal year. The
Company paid $98.1 million for capital expenditures in fiscal 2014.
As of January 31, 2015 and February 1, 2014, the Company had no outstanding borrowings under the Credit Facility and had availability under the facility
of $50.0 million and $49.4 million, respectively. As of February 1, 2014, the Company had outstanding letters of credit of $0.6 million under the Credit
Facility.
Total interest expense related to the Credit Facility for fiscal 2013 and 2012 included fees, such as commitment and line of credit fees of $0.3 million and
$0.6 million, respectively. Interest expense related to the Credit Facility for fiscal 2014 was less than $0.1 million.
$50 Million Letter of Credit Agreement- Also on August 2, 2013, the Company entered into a letter of credit agreement (the “Letter of Credit Agreement”).
The Letter of Credit Agreement provides for the issuance of letters of credit up to $50 million, with a term of five years that will expire on August 2, 2018.
The facility for the issuance of letters of credit is secured by a cash collateral account containing cash in an amount equal to 103% of the face amount of any
letter of credit extension (105% for extensions denominated in foreign currency) and is used for general corporate purposes. The Letter of Credit Agreement
requires compliance with conditions precedent that must be satisfied prior to issuing any letter of credit or extension. In addition, the Letter of Credit
Agreement contains restrictive covenants relating to the Company's management and the operation of the Company's business. These covenants, among
other things, limit or restrict the Company's ability to grant liens on its assets, limit its ability to incur additional indebtedness, limit its ability to enter into
transactions with affiliates and limit its ability to merge or consolidate with another entity. An event of default may cause the applicable interest rate and fees
to increase by 2% per annum.
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Source: DSW Inc., 10-K, March 26, 2015 Powered by Morningstar® Document Research℠
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