DSW 2008 Annual Report Download - page 57

fi
nanc
i
a
l
assets an
dli
a
bili
t
i
es t
h
at are recogn
i
ze
d
or
di
sc
l
ose
di
nt
h
e
fi
nanc
i
a
l
statements on a nonrecurr
i
ng
b
as
i
sto
fiscal years beginning after November 15, 2008. FAS 157, which defines fair value, establishes a framework for
m
easurin
g
fair value under GAAP and expands disclosures about fair value measurements. We have not applied the
p
rovisions of FAS 157 to our non-financial assets and non-financial liabilities measured on a nonrecurring basis in
accordance with FSP No. 157-2. FSP No. 157-2 is effective for the Company beginning February 1, 2009. Th
e
Compan
y
does not expect the adoption of FAS 1
5
7 for non-financial assets and liabilities measured on a
n
onrecurring basis to have a material impact on its financial position and results of operations
.
I
n October 2008, the FASB issued FSP FAS 1
5
7-3
,
Determining the Fair Value o
f
a Financial Asset in a Market
T
hat is Not Acti
v
e(“FSP FAS 1
5
7-3”). FSP FAS 1
5
7-3 clarifies the application of FAS 1
5
7 when the market for
a
fi
nanc
i
a
l
asset
i
s not act
i
ve, spec
ifi
ca
lly
re
g
ar
di
n
g
cons
id
erat
i
on o
f
mana
g
ement’s
i
nterna
l
assumpt
i
ons
in
m
easur
i
n
gf
a
i
rva
l
ue w
h
en o
b
serva
bl
e
d
ata are not present,
h
ow o
b
serva
bl
e mar
k
et
i
n
f
ormat
i
on
f
rom an
i
nact
i
ve
m
arket should be taken into account, and the use of broker quotes or pricing services in assessing the relevance of
o
b
serva
bl
ean
d
uno
b
serva
bl
e
d
ata. T
hi
s FSP was e
ff
ect
i
ve
i
mme
di
ate
ly
.T
h
e Compan
y
cons
id
ere
d
t
h
e
g
u
id
anc
e
p
rovided b
y
FSP FAS 157-3 in its determination of estimated fair values of its investment portfolio as of Januar
y
31
,
2009. Refer to Note 6 for additional information re
g
ardin
g
the fair value measurement of its investment portfolio.
I
n Novem
b
er 2008, t
h
e Secur
i
t
i
es an
d
Exc
h
an
g
e Comm
i
ss
i
on (“SEC”) re
l
ease
d
a propose
d
roa
d
map re
g
ar
di
n
g
t
he potential mandatory adoption of International Financial Reporting Standards (“IFRS”). Under the propose
d
r
oa
d
map, t
h
e Compan
y
, as an acce
l
erate
d fil
er, ma
yb
e requ
i
re
d
to prepare
fi
nanc
i
a
l
statements
i
n accor
d
ance w
i
t
h
IFRS as earl
y
as 2015. In 2011, the SEC will decide on the mandator
y
adoption of IFRS. The Compan
y
is currentl
y
assessin
g
the implications should it be required to adopt IFRS in the future.
2. OWNERSHIP
At Januar
y
31, 2009, Retail Ventures owned approximatel
y
62.9% of DSW’s outstandin
g
Common Shares
,
r
epresent
i
ng approx
i
mate
l
y 93.1% o
f
t
h
e com
bi
ne
d
vot
i
ng power o
f
DSW’s outstan
di
ng Common S
h
ares
.
Premium Income Exc
h
an
g
ea
bl
e Securities (PIES)
I
n fiscal 2006, RVI issued 2,87
5
,000 units of its 6.62
5
% Mandatorily Exchangeable Notes due September 1
5,
2011, or PIES (Premium Income Exchan
g
eable Securities) in the a
gg
re
g
ate principal amount of
$
143,750,000
.
Except to the extent RVI exercises its cash settlement option, the PIES are mandatoril
y
exchan
g
eable, on th
e
m
aturit
y
date, into Class A Common Shares of DSW, no par value per share, which are issuable upon exchan
g
eof
D
SW C
l
ass B Common S
h
ares, no par va
l
ue per s
h
are,
b
ene
fi
c
i
a
ll
y owne
db
y RVI. On t
h
e matur
i
ty
d
ate, eac
h
holder of the PIES will receive a number of DSW Class A Common Shares
p
er $50
p
rinci
p
al amount of PIES e
q
ua
l
t
o the “exchan
g
e ratio” described in the offerin
g
prospectus, or if RVI elects, the cash equivalent thereof or a
c
om
bi
nat
i
on o
f
cas
h
an
d
DSW C
l
ass A Common S
h
ares. T
h
e sett
l
ement o
f
t
h
e PIES w
ill
not c
h
ange t
h
e num
b
er o
f
D
SW Common Shares outstandin
g
. In the third quarter of fiscal 2008, Retail Ventures repurchased 200,000 units o
f
P
IES, which are still considered outstandin
g
and can be resold b
y
Retail Ventures.
3
. RELATED PARTY TRAN
S
A
C
TI
O
N
S
S
chottenstein Stores Corporation (“SSC”) — The Compan
y
leases certain store, office space and distributio
n
c
enter locations owned b
y
entities affiliated with SSC, as described in Note
5.
Accounts receivable from and pa
y
able to affiliates principall
y
result from commercial transactions with
e
ntities owned or affiliated with SSC or intercompan
y
transactions with SSC. Settlement of related part
y
receivable
s
and payables are in the form of cash. These transactions settle normally in 30 to
6
0 days. Accounts receivable an
d
p
a
y
able to SSC or its affiliates at Januar
y
31, 2009 and Februar
y
2, 2008, respectivel
y
, were primaril
y
related to
a
r
elated part
y
receivable from an SSC affiliate of $0.3 million and $0.9 million, respectivel
y
, for tenant allowances
and related party payables of
$
0.7 million and
$
0.9 million, respectively, related to rent and real estate taxes.
F
-
11
DS
W INC
.
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)