DSW 2008 Annual Report Download - page 59

Cap
i
ta
l
Management LLC an
d
Crysta
l
Va
l
ue, LLC. As a part o
f
t
hi
s transact
i
on, RVI agree
d
to prov
id
e certa
in
t
ransition services to Value City. On October 2
6
, 2008, Value City filed for bankruptcy protection and announced
t
hat it would close its remainin
g
stores. DSW ne
g
otiated an a
g
reement with Value Cit
y
to continue to provide
s
erv
i
ces post
b
an
k
ruptcy
fili
ng,
i
nc
l
u
di
ng r
i
s
k
management,
fi
nanc
i
a
l
serv
i
ces,
b
ene
fi
ts a
d
m
i
n
i
strat
i
on, payro
ll
an
d
i
nformation technology services, in exchange for a weekly payment. DSW received
$
3.3 million in fiscal 2008
r
elated to services provided post bankruptc
y
filin
g.
As of Januar
y
31, 2009, Value Cit
y
owes DSW approximatel
y
$6.7 million for services rendered b
y
us prior t
o
t
he filin
g
of bankruptc
y
. Of these unpaid amounts, DSW reserved approximatel
y
$0.6 million and did not reco
g
nize
a rece
i
va
bl
ere
l
ate
d
to t
h
e rema
i
n
i
ng serv
i
ces prov
id
e
d
. DSW su
b
m
i
tte
d
a proo
f
o
f
c
l
a
i
m
i
nt
h
e
b
an
k
ruptc
y
p
rocee
di
n
g
see
ki
n
g
pa
y
ment
i
n
f
u
ll f
or a
ll
amounts owe
d
,
h
owever, t
h
ere
i
s no assurance t
h
at DSW can co
ll
ect a
ll
o
r
an
y
of the amounts owed
.
Other — Purchases from affiliates were $0.1 million in fiscal 2008. There were no
p
urchases from affiliates i
n
fiscal 2
00
7or2
006.
4.
S
TOCK BA
S
ED COMPEN
S
ATIO
N
The Company has a 2005 Equity Incentive Plan that provides for the issuance of equity awards to purchase u
p
to 4.
6
million common shares, includin
g
stock options, restricted stock units to mana
g
ement and director stock
units, ke
y
emplo
y
ees of the Compan
y
and affiliates, consultants as defined, and directors of the Compan
y
. Options
generally vest 20% per year on a cumulative basis. Options granted under the 200
5
Equity Incentive Plan generall
y
r
emain exercisable for a period of ten
y
ears from the date of
g
rant. Prior to fiscal 2005, the Compan
y
did not have
a
s
tock option plan or an
y
equit
y
units outstandin
g
.
On Januar
y
29, 200
6
, DSW adopted the fair value reco
g
nition provisions of FAS 123R relatin
g
to its stock
-
based compensation plans. Prior to January 29, 2006, DSW had accounted for stock-based compensation in
accordance with Accounting Principles Board Opinion No. 2
5,
Accounting
f
or Stock Issued to Employees
,
and
related interpretations (“APB 25”). In accordance with APB 25, compensation expense for emplo
y
ee stock option
s
was
g
enerall
y
not reco
g
nized for options
g
ranted that had an exercise price equal to the market value of the
u
nderlying common shares on the date of grant
.
Under the modified prospective method of FAS 123R, compensation expense was reco
g
nized durin
g
the
y
ear
s
e
n
d
e
d
January 31, 2009, Fe
b
ruary 2, 2008 an
d
Fe
b
ruary 3, 2007,
f
or a
ll
unveste
d
stoc
k
opt
i
ons grante
db
e
f
or
e
Januar
y
29, 200
6
, based on the
g
rant date fair value estimated in accordance with the ori
g
inal provisions of FAS 123
,
and for all stock based pa
y
ments
g
ranted after Januar
y
29, 2006, based on the
g
rant date fair value estimated in
accor
d
ance w
i
t
h
t
h
e prov
i
s
i
ons o
f
FAS 123R. DSW’s
fi
nanc
i
a
l
resu
l
ts, resu
l
ts o
f
operat
i
ons, or cas
hfl
ows
f
or t
h
e
pr
i
or per
i
o
d
s
h
ave not
b
een restate
d
as a resu
l
to
f
t
hi
sa
d
opt
i
on. T
h
e cas
hfl
ows resu
l
t
i
ng
f
rom t
h
e tax
b
ene
fi
t
s
resultin
g
from tax deductions in excess of compensation expense reco
g
nized for those options (excess tax benefits)
are c
l
ass
ifi
e
d
as
fi
nanc
i
ng cas
hfl
ows.
C
onsistent with the valuation method used for the disclosure onl
y
provisions of FAS No. 123, Accounting
f
o
r
Sh
are-Base
d
Pa
y
ment
(
“FAS 123”), DSW uses t
h
eB
l
ac
k
-Sc
h
o
l
es opt
i
on-pr
i
c
i
ng mo
d
e
l
to va
l
ue stoc
k
-
b
ase
d
c
om
p
ensat
i
on ex
p
ense. T
hi
smo
d
e
l
assumes t
h
at t
h
e est
i
mate
df
a
i
rva
l
ue o
f
o
p
t
i
ons
i
s amort
i
ze
d
over t
h
eo
p
t
i
ons
’
v
estin
g
periods and the compensation costs are included in operatin
g
expenses in the consolidated statements o
f
i
ncome. DSW recognizes compensation expense for stock option awards granted subsequent to the adoption o
f
FAS 123R an
d
t
i
me-
b
ase
d
restr
i
cte
d
stoc
k
awar
d
s on a stra
igh
t-
li
ne
b
as
i
s over t
h
e requ
i
s
i
te serv
i
ce per
i
o
d
o
f
t
h
e
a
war
d
.Pr
i
or to t
h
ea
d
opt
i
on o
f
FAS 123R, compensat
i
on expense
f
or stoc
k
opt
i
on awar
d
s
g
rante
d
was recor
d
e
d
u
sing an accelerated method.
F
-
13
DS
W INC.
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)