DSW 2008 Annual Report Download - page 53

d
id not recognize any impairment on investments during fiscal 2007 or 200
6
. Please see Note 7 for additiona
l
di
scuss
i
on o
f
t
h
e Company’s
i
nvestments.
A
ccounts Recei
v
a
bl
e— Accounts rece
i
va
bl
e are c
l
ass
ifi
e
d
as current assets
b
ecause t
h
e average co
l
-
l
ect
i
on per
i
o
di
s
g
enera
lly l
ess t
h
an one
y
ear. T
h
e carr
yi
n
g
amount approx
i
mates
f
a
i
rva
l
ue
b
ecause o
f
t
he
relatively short average maturity of the instruments and no significant change in interest rates
.
Concentration of Cre
d
it Ris
k
—F
i
nanc
i
a
li
nstruments, w
hi
c
h
pr
i
nc
i
pa
lly
su
bj
ect t
h
e Compan
y
to concen
-
t
ration of credit risk, consist of cash, equivalents and short term investments. The Company invests excess cash
wh
en ava
il
a
bl
et
h
roug
hfi
nanc
i
a
li
nst
i
tut
i
ons
i
n overn
i
g
h
t
i
nvestments. At t
i
mes, suc
h
amounts may
b
e
i
n excess o
f
F
DIC insurance limits
.
Concentration of Ven
d
or Ris
k
—
During fiscal years 2008, 2007 and 200
6
, merchandise supplied to th
e
Compan
y
b
y
three ke
y
vendors accounted for approximatel
y
20%, 21%, and 22% of net footwear sales.
A
ll
owance for Dou
b
tfu
l
Accounts
.
We mon
i
tor our ex
p
osure
f
or cre
di
t
l
osses an
d
recor
d
re
l
ate
d
a
ll
owances
for doubtful accounts. Allowances are estimated based u
p
on s
p
ecific accounts receivable balances, where a risk of
default has been identified. As of January 31, 2009 and February 2, 2008, our allowances for doubtful accounts wer
e
$
0.8 million and
$
0.4 million, respectivel
y
. The increase in our allowance is primaril
y
related to the collectabilit
y
of
a receivable from Value Cit
y
Department Stores (“Value Cit
y
”).
I
nventorie
s
— Merc
h
an
di
se
i
nventor
i
es are state
d
at rea
li
za
bl
eva
l
ue,
d
eterm
i
ne
d
us
i
n
g
t
h
e
fi
rst-
i
n,
fi
rst-ou
t
b
asis, or market, usin
g
the retail inventor
y
method. The retail method is widel
y
used in the retail industr
y
due to its
p
ract
i
ca
li
ty. Un
d
er t
h
e reta
il i
nventory met
h
o
d
,t
h
eva
l
uat
i
on o
fi
nventor
i
es at cost an
d
t
h
e resu
l
t
i
ng gross pro
fi
ts are
c
a
l
cu
l
ate
db
y app
l
y
i
ng a ca
l
cu
l
ate
d
cost to reta
il
rat
i
otot
h
e reta
il
va
l
ue o
fi
nventor
i
es. T
h
e cost o
f
t
h
e
i
nventor
y
r
eflected on the balance sheet is decreased b
y
char
g
es to cost of sales at the time the retail value of the inventor
y
is
l
owere
d
t
h
roug
h
t
h
e use o
f
mar
kd
owns, w
hi
c
h
are re
d
uct
i
ons
i
npr
i
ces
d
ue to customers’ percept
i
on o
f
va
l
ue
.
Hence, earn
i
n
g
s are ne
g
at
i
ve
ly i
mpacte
d
as t
h
e merc
h
an
di
se
i
s mar
k
e
dd
own pr
i
or to sa
l
e
.
I
n
h
erent
i
nt
h
eca
l
cu
l
at
i
on o
fi
nventor
i
es are certa
i
ns
i
gn
ifi
cant management
j
u
d
gments an
d
est
i
mates,
i
nc
l
u
di
n
g
sett
i
n
g
t
h
eor
igi
na
l
merc
h
an
di
se reta
il
va
l
ue or mar
k
-on, mar
k
ups o
fi
n
i
t
i
a
l
pr
i
ces esta
bli
s
h
e
d
, mar
k
-
downs, and estimates of losses between physical inventory counts, or shrinkage, which combined with th
e
averaging process within the retail method, can significantly impact the ending inventory valuation at cost and
th
e resu
l
t
i
n
gg
ross pro
fi
t
.
P
roperty an
d
Equipment
—
Property an
d
equ
i
pment are state
d
at cost
l
ess accumu
l
ate
dd
eprec
i
at
i
on
d
eter
-
m
ined b
y
the strai
g
ht-line method over the expected useful lives of the assets. The strai
g
ht-line method is used t
o
amortize such ca
p
italized costs over the lesser of the ex
p
ected useful life of the asset or the life of the lease. Th
e
e
st
i
mate
d
use
f
u
lli
ves o
ff
urn
i
ture,
fi
xtures an
d
equ
i
pment are 3 to 10 years
.
A
sset Impairment and Lon
g
-Lived Asset
s
— The Company periodically evaluates the carrying amount of it
s
long-lived assets, primarily property and equipment, and finite life intangible assets when events and circumstances
warrant suc
h
arev
i
ew to ascerta
i
n
if
an
y
assets
h
ave
b
een
i
mpa
i
re
d
.T
h
e carr
yi
n
g
amount o
f
a
l
on
g
-
li
ve
d
asset
i
s
c
onsidered impaired when the carr
y
in
g
value of the asset exceeds the expected future cash flows from the asset. Th
e
Compan
y
reviews are conducted down at the lowest identifiable level, which include a store. The impairment loss
recogn
i
ze
di
st
h
e excess o
f
t
h
e carry
i
ng va
l
ue o
f
t
h
e asset over
i
ts
f
a
i
rva
l
ue,
b
ase
d
on
di
scounte
d
cas
hfl
ow ana
l
ys
i
s
u
sin
g
a discount rate determined b
y
mana
g
ement. Should an impairment loss be realized, it will
g
enerall
y
b
e
i
ncluded in cost of sales. The Company expensed
$
3.3 million,
$
2.1 million and
$
0.8 million in fiscal 2008, 200
7
and 200
6
, respectively, of identified store assets where the recorded value could not be supported by projected
future cash flows. The impairment char
g
es were recorded within the DSW reportable se
g
ment.
Se
l
f-insurance Reserves
—
T
h
eCompan
y
recor
d
sest
i
mates
f
or certa
i
n
h
ea
l
t
h
an
d
we
lf
are, wor
k
ers compen-
s
at
i
on an
d
casua
l
t
yi
nsurance costs t
h
at are se
lf i
nsure
d
pro
g
rams. Se
lf
-
i
nsurance reserves
i
nc
l
u
d
e actuar
i
a
l
est
i
mates
of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. The
F-
7
DS
W INC
.
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)