DSW 2009 Annual Report Download - page 39

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(1) Many of our operating leases require us to pay contingent rent based on sales, common area maintenance costs
and real estate taxes. Contingent rent, costs and taxes vary year by year and are based almost entirely on actual
amounts incurred. As such, they are not included in the lease obligations presented above. Other non-current
liabilities of $101.2 million are primarily comprised of deferred rent liabilities, construction and tenant
allowances, and uncertain tax positions. Deferred rent, which is included in non-current liabilities, is excluded
from this table as our payment obligations are included in the operating lease obligations. Construction and
tenant allowances, which are included in non-current liabilities, are not contractual obligations as the balance
represents cash allowances from landlords, which are deferred and amortized on a straight-line basis over the
original terms of the lease.
(2) Construction commitments include capital items to be purchased for projects that were under construction, or
for which a lease had been signed, as of January 30, 2010.
(3) Many of our purchase obligations are cancelable by us without payment or penalty, and we have excluded such
obligations, along with all associate employment and intercompany obligations.
(4) The amount of obligations related to uncertain tax positions as of January 30, 2010 were $10.9 million,
including approximately $1.9 million of accrued interest and penalties. Uncertain tax positions are positions
taken or expected to be taken on an income tax return that may result in additional payments to tax authorities.
We may not be required to settle these obligations. Uncertain tax positions are included in the “More than
5 Years” column as we are not able to reasonably estimate the timing of the potential future payments.
We had outstanding letters of credit that totaled approximately $17.4 million as of January 30, 2010. If certain
conditions are met under these arrangements, we would be required to satisfy the obligations in cash. Due to the
nature of these arrangements and based on historical experience and future expectations, we do not expect to make
any significant payment outside of terms set forth in these arrangements.
As of January 30, 2010, we have entered into various construction commitments, including capital items to be
purchased for projects that were under construction, or for which a lease has been signed. Our obligations under
these commitments aggregated to approximately $0.7 million as of January 30, 2010. In addition, as of January 30,
2010, we have signed six lease agreements for new store locations opening in fiscal 2010 and fiscal 2011 with total
annual rent of approximately $1.9 million. In connection with the new lease agreements, we expect to receive a total
of approximately $2.5 million of construction and tenant allowances, which reimburses us for expenditures at these
locations.
Recent Accounting Pronouncements
Recent Accounting Pronouncements and their impact on DSW are disclosed in Note 1 to the Consolidated
Financial Statements included in this Annual Report on Form 10-K.
In November 2008, the SEC released a proposed roadmap regarding the potential mandatory adoption of
International Financial Reporting Standards (“IFRS”). Under the proposed roadmap, the Company, as an accel-
erated filer, may be required to prepare financial statements in accordance with IFRS as early as 2015. In 2011, the
SEC will decide on the mandatory adoption of IFRS. The Company is currently assessing the implications should it
be required to adopt IFRS in the future.
Off-Balance Sheet Arrangements
As of January 30, 2010, we have not entered into any “off-balance sheet” arrangements, as that term is
described by the SEC.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our cash and equivalents have maturities of 90 days or fewer. We also have investments in tax exempt, tax
advantaged and taxable bonds, tax exempt term notes, variable rate demand notes and certificates of deposit. We
have $15.0 million invested in certificates of deposit and participate in the Certificate of Deposit Account Registry
Service»(“CDARS”), which provides FDIC insurance on deposits of up to $50.0 million. Certificates of deposit
35