DSW 2008 Annual Report Download - page 20

a
l
most a
ll
t
h
e merc
h
an
di
se we purc
h
ase
dd
ur
i
ng
fi
sca
l
2008 was manu
f
acture
d
outs
id
et
h
eUn
i
te
d
States. For t
hi
s
r
eason, we face risks inherent in purchasin
g
from forei
g
n suppliers, such as:
• economic and political instabilit
y
in countries where these suppliers are located;
• international hostilities or acts of war or terrorism affectin
g
the United States or forei
g
n countries fro
m
w
hi
c
h
our merc
h
an
di
se
i
s source
d;
•
i
ncreases
i
ns
hi
pp
i
n
g
costs;
• transportat
i
on
d
e
l
a
y
san
di
nterrupt
i
ons,
i
nc
l
u
di
n
gi
ncrease
di
nspect
i
ons o
fi
mport s
hi
pments
by d
omest
i
c
a
uthorities
;
• wor
k
stoppages;
•a
d
verse
fl
uctuat
i
ons
i
n currency exc
h
ange rates
;
• U.S.
l
aws a
ff
ect
i
ng t
h
e
i
mportat
i
on o
f
goo
d
s,
i
nc
l
u
di
ng
d
ut
i
es, tar
iff
san
d
quotas an
d
ot
h
er non-tar
iff
b
arr
i
ers
;
•ex
p
ro
p
riation or nationalization;
• changes in local government administration and governmental policies
;
•c
h
anges
i
n
i
mport
d
ut
i
es or quotas
;
• comp
li
ance w
i
t
h
tra
d
ean
df
ore
i
gn tax
l
aws; an
d
•
l
oca
lb
us
i
ness pract
i
ces,
i
nc
l
u
di
ng comp
li
ance w
i
t
hl
oca
ll
aws an
d
w
i
t
hd
omest
i
can
di
nternat
i
ona
ll
a
b
o
r
s
tan
d
ar
d
s
.
We requ
i
re our ven
d
ors to operate
i
n comp
li
ance w
i
t
h
app
li
ca
bl
e
l
aws an
d
re
g
u
l
at
i
ons an
d
our
i
nterna
l
r
e
q
uirements. However, we do not control our vendors or their labor and business
p
ractices. The violation of labor or
ot
h
er
l
aws
by
one o
f
our ven
d
ors cou
ld h
ave an a
d
verse e
ff
ect on our
b
us
i
ness.
R
estrictions in our secure
d
revo
l
ving cre
d
it
f
aci
l
it
y
cou
ld l
imit our o
p
erationa
lfl
exi
b
i
l
it
y.
We have entered into a
$
150 million secured revolving credit facility with a term expiring July 2010. Under
t
his facilit
y
, we and our subsidiaries are named as co-borrowers. This facilit
y
is sub
j
ect to a borrowin
g
bas
e
r
estr
i
ct
i
on an
d
prov
id
es
f
or
b
orrow
i
ngs at var
i
a
bl
e
i
nterest rates
b
ase
d
on t
h
e Lon
d
on Inter
b
an
k
O
ff
ere
d
Rate, or
LIBOR, t
h
epr
i
me rate an
d
t
h
eFe
d
era
l
Fun
d
se
ff
ect
i
ve rate, p
l
us a marg
i
n. Our o
bli
gat
i
ons un
d
er our secure
d
r
evolvin
g
credit facilit
y
are secured b
y
a lien on substantiall
y
all our personal propert
y
and a pled
g
e of our shares o
f
D
SW S
h
oe Ware
h
ouse, Inc. In a
ddi
t
i
on, t
h
e secure
d
revo
l
v
i
ng cre
di
t
f
ac
ili
ty conta
i
ns usua
l
an
d
customar
y
r
estr
i
ct
i
ve covenants re
l
at
i
ng to our management an
d
t
h
e operat
i
on o
f
our
b
us
i
ness. T
h
ese covenants, among ot
h
e
r
thi
n
g
s, restr
i
ct our a
bili
t
y
to
g
rant
li
ens on our assets,
i
ncur a
ddi
t
i
ona
li
n
d
e
b
te
d
ness, open or c
l
ose stores, pa
y
cas
h
dividends and redeem our stock, enter into transactions with affiliates and merge or consolidate with another entity
.
In addition, if at any time we utilize over 90% of our borrowing capacity under this facility, we must comply with a
fi
xe
d
c
h
ar
g
e covera
g
e rat
i
o test set
f
ort
hi
nt
h
e
f
ac
ili
t
yd
ocuments. T
h
ese covenants cou
ld
restr
i
ct our operat
i
ona
l
flexibilit
y
, and an
y
failure to compl
y
with these covenants or our pa
y
ment obli
g
ations would limit our abilit
y
t
o
b
orrow un
d
er t
h
e secure
d
revo
l
v
i
ng cre
di
t
f
ac
ili
ty an
d
,
i
n certa
i
nc
i
rcumstances, may a
ll
ow t
h
e
l
en
d
ers t
h
ereun
d
er t
o
r
equ
i
re repa
y
ment.
We may be unable to secure additional credit upon the termination of our existing credit facility in July
2010 or the terms of additional credit could be materially different than the terms we have today
.
Our current credit facilit
y
expires in Jul
y
2010. While we do not currentl
y
have borrowin
g
s under our credi
t
facility, we had approximately
$
17.7 million of letters of credit outstanding at January 31, 2009. Based upon th
e
c
urrent cre
di
t mar
k
ets, we ma
yb
e una
bl
e to secure a
ddi
t
i
ona
l
cre
di
t, or
if
we are a
bl
e to secure a
ddi
t
i
ona
l
cre
di
t, t
h
e
t
erms of such additional credit ma
y
be materiall
y
different from our current terms. Such revised terms or the price o
f
c
re
di
t cou
ld h
ave a mater
i
a
l
a
d
verse e
ff
ect on our
b
us
i
ness,
fi
nanc
i
a
l
con
di
t
i
on or resu
l
ts o
f
operat
i
ons. Furt
h
er,
in
16