DSW 2008 Annual Report Download - page 33

D
i
str
ib
ut
i
on costs
i
nc
l
u
d
et
h
e transportat
i
on o
f
merc
h
an
di
se to t
h
e
di
str
ib
ut
i
on centers an
df
rom t
he
d
istribution center to our stores. Store occupanc
y
costs include rent, utilities, repairs, maintenance
,
insurance, janitorial costs, costs associated with licenses for leased departments and occupancy-relate
d
taxes, w
hi
c
h
are pr
i
mar
il
y rea
l
estate taxes passe
d
to us
b
y our
l
an
dl
or
d
s.
•
I
nvestments.
O
ur investments in auction rate securities are recorded at fair value under SFAS No. 157
,
Fa
ir
Va
l
ue Measurement
s
us
i
ng an
i
ncome approac
h
va
l
uat
i
on mo
d
e
l
t
h
at uses
l
eve
l
3
i
nputs suc
h
as t
h
e
fi
nanc
i
a
l
c
ondition of the issuers of the underl
y
in
g
securities, expectations re
g
ardin
g
the next successful auction, risk
s
i
n the auction rate securities market and other various assumptions. Our other types of investments ar
e
va
l
ue
d
us
i
ng a mar
k
et
b
ase
d
approac
h
us
i
ng
l
eve
l
2
i
nputs suc
h
as pr
i
ces o
f
s
i
m
il
ar assets
i
n act
i
ve mar
k
ets.
We
b
e
li
eve t
h
at c
h
an
g
es
i
n our va
l
uat
i
on mo
d
e
l
wou
ld
not resu
l
t
i
n a mater
i
a
l
c
h
an
g
e to earn
i
n
g
s
.
We eva
l
uate our
i
nvestments
f
or
i
mpa
i
rment an
d
w
h
et
h
er
i
mpa
i
rment
i
sot
h
er-t
h
an-temporary. In
d
eter-
minin
g
whether impairment has occurred, we review information about the underl
y
in
g
investment that is
publicly available and assess our ability to hold the securities for the foreseeable future. Based on the nature
of
t
h
e
i
mpa
i
rment(s), we wou
ld
recor
d
temporary
i
mpa
i
rments as unrea
li
ze
dl
osses
i
not
h
er compre
h
ens
i
ve
i
ncome or ot
h
er-t
h
an-temporar
yi
mpa
i
rments
i
n earn
i
n
g
s. T
h
e
i
nvestment
i
swr
i
tten
d
own to
i
ts curren
t
market value at the time the im
p
airment is deemed to have occurred
.
•
Asset Impairment and Long-lived Assets. We must periodicall
y
evaluate the carr
y
in
g
amount of our lon
g-
li
ve
d
assets, pr
i
mar
il
y property an
d
equ
i
pment, an
dfi
n
i
te
lif
e
i
ntang
ibl
e assets w
h
en events an
d
c
i
rcum-
s
tances warrant suc
h
arev
i
ew to ascerta
i
n
if
any assets
h
ave
b
een
i
mpa
i
re
d
.T
h
e carry
i
ng amount o
f
a
l
ong-
li
ve
d
asset
i
s cons
id
ere
di
mpa
i
re
d
w
h
en t
h
e carr
yi
n
g
va
l
ue o
f
t
h
e asset excee
d
st
h
e expecte
df
uture cas
h
flows from the asset. Our reviews are conducted at the lowest identifiable level
,
which includes a store. The
i
mpairment loss recognized is the excess of the carrying amount of the asset over its fair value, based o
n
pro
j
ecte
ddi
scounte
d
cas
hfl
ows us
i
n
g
a
di
scount rate
d
eterm
i
ne
dby
mana
g
ement. An
yi
mpa
i
rment
l
oss
realized is included in cost of sales. We believe as of Januar
y
31, 2009 that the lon
g
-lived assets’ carr
y
in
g
amounts and useful lives are appropriate. We do not believe that there will be material changes in th
e
e
st
i
mates or assumpt
i
ons we use to ca
l
cu
l
ate asset
i
mpa
i
rments. To t
h
e extent t
h
ese
f
uture pro
j
ect
i
ons or our
s
trate
g
ies chan
g
e, the conclusion re
g
ardin
g
impairment ma
y
differ from our current estimates.
•
S
e
l
f-insurance Reserves
.
We recor
d
est
i
mates
f
or certa
i
n
h
ea
l
t
h
an
d
we
lf
are, wor
k
ers’ compensat
i
on an
d
c
asualt
y
insurance costs that are self-insured pro
g
rams. Self-insurance reserves include actuarial estimate
s
of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet
reporte
d
. Our
li
a
bili
t
y
represents an est
i
mate o
f
t
h
eu
l
t
i
mate cost o
f
c
l
a
i
ms
i
ncurre
d
as o
f
t
h
e
b
a
l
ance s
h
ee
t
d
ate. Health and welfare estimates are calculated utilizin
g
claims development estimates based on historica
l
e
xperience and other factors. Workers’ compensation and
g
eneral liabilit
y
insurance estimates are calculate
d
u
t
ili
z
i
ng c
l
a
i
ms
d
eve
l
opment est
i
mates
b
ase
d
on
hi
stor
i
ca
l
exper
i
ence an
d
ot
h
er
f
actors. We
h
ave purc
h
ase
d
s
top loss insurance to limit our exposure to an
y
si
g
nificant exposure on a per person basis for health an
d
welfare and on a per claim basis for workers’ compensation and casualt
y
insurance. Althou
g
h we do not
ant
i
c
i
pate t
h
e amounts u
l
t
i
mate
l
ypa
id
w
ill diff
er s
i
gn
ifi
cant
l
y
f
rom our est
i
mates, se
lf
-
i
nsurance reserves
c
ould be affected if future claim experience differs si
g
nificantl
y
from the historical trends and the actuarial
assumptions. For example, for workers’ compensation and liabilit
y
future claims estimates, a 1% increase o
r
d
ecrease to t
h
e assumpt
i
ons
f
or c
l
a
i
ms costs an
dl
oss
d
eve
l
opment
f
actors wou
ld i
ncrease or
d
ecrease our
s
elf-insurance accrual b
y
approximatel
y
$0.1 million
.
•
Customer Lo
y
a
l
t
y
Pro
g
ram
.
We ma
i
nta
i
n a customer
l
oya
l
ty program
f
or t
h
e DSW stores an
dd
sw.com
i
n
which pro
g
ram members earn reward certificates that result in discounts on future purchases. Upon reachin
g
the tar
g
et-earned threshold, the members receive reward certificates for these discounts which must b
e
re
d
eeme
d
w
i
t
hi
ns
i
x mont
h
s. We accrue t
h
e ant
i
c
i
pate
d
re
d
empt
i
ons o
f
t
h
e
di
scount earne
d
at t
h
et
i
me o
f
t
he
i
n
i
t
i
a
lp
urc
h
ase. To est
i
mate t
h
ese costs, we are re
q
u
i
re
d
to ma
k
e assum
p
t
i
ons re
l
ate
d
to customer
p
urc
h
as
e
levels and redem
p
tion rates based on historical ex
p
erience.
•
Income Taxe
s.
We are requ
i
re
d
to
d
eterm
i
ne t
h
ea
gg
re
g
ate amount o
fi
ncome tax expense to accrue an
d
t
he
amount w
hi
c
h
w
ill b
e current
ly
pa
y
a
bl
e
b
ase
d
upon tax statutes o
f
eac
hj
ur
i
s
di
ct
i
on we
d
o
b
us
i
ness
i
n. I
n
m
aking these estimates, we adjust income based on a determination of generally accepted accountin
g
29