DSW 2009 Annual Report Download - page 63

Warehouse, Inc. In addition, the secured revolving credit facility contains usual and customary restrictive covenants
relating to the management and the operation of the business. These covenants, among other things, restrict the
Company’s ability to grant liens on its assets, incur additional indebtedness, open or close stores, pay cash dividends
and redeem its stock, enter into transactions with affiliates and merge or consolidate with another entity. In addition,
if at any time the Company utilizes over 90% of its borrowing capacity under the facility, the Company must comply
with a fixed charge coverage ratio test set forth in the facility documents. The Company intends to refinance the
credit facility on a long-term basis. As of January 30, 2010 and January 31, 2009, the Company had no outstanding
borrowings and had availability under the facility of $132.6 million and $132.3 million, respectively. The Company
had outstanding letters of credit of $17.4 million and $17.7 million, respectively, as of January 30, 2010 and
January 31, 2009.
In January 2010, DSW amended its credit facility to be able to repurchase Class B Common Shares from RVI.
This amendment allows DSW to repurchase up to $10 million in both the fourth quarter of fiscal 2009 and the first
quarter of fiscal 2010 provided that DSW is not in default and that its cash and investments balance remains greater
than $200 million. On January 15, 2010, DSW entered into a share purchase agreement with RVI pursuant to which
RVI sold DSW 320,000 Class B Common Shares for an aggregate amount of $8.0 million.
Total interest expense was $1.4 million, $0.8 million and $1.2 million for fiscal 2009, 2008 and 2007,
respectively, and included fees, such as commitment and line of credit fees, of $0.5 million, $0.5 million and
$0.4 million, respectively.
8. EARNINGS PER SHARE
Basic earnings per share are based on net income and a simple weighted average of Class A and Class B
Common Shares and director stock units outstanding. Diluted earnings per share are calculated using the treasury
stock method and reflect the potential dilution of Class A Common Shares related to outstanding stock options and
restricted stock units. The numerator for the diluted earnings per share calculation is net income. The denominator
is the weighted average diluted shares outstanding.
January 30,
2010
January 31,
2009
February 2,
2008
Fiscal Years Ended
(In thousands)
Weighted average shares outstanding ................. 44,093 43,998 43,953
Assumed exercise of dilutive stock options............. 134 170
Restricted stock units ............................ 290 220 150
Number of shares for computation of dilutive earnings per
share ....................................... 44,517 44,218 44,273
Options to purchase 0.5 million, 2.1 million and 0.8 million common shares were outstanding as of January 30,
2010, January 31, 2009 and February 2, 2008, respectively, but were not included in the computation of diluted
earnings per share because the options’ exercise prices were greater than the average market price of the common
shares for the period and, therefore, the effect would be anti-dilutive.
9. OTHER BENEFIT PLANS
The Company participates in a 401(k) Plan. Eligible employees may contribute up to thirty percent of their
compensation to the 401(k) Plan, on a pre-tax basis, subject to Internal Revenue Service limitations. As of the first
day of the month following an employee’s completion of one year of service as defined under the terms of the 401(k)
Plan, the Company matches employee deferrals, 100% on the first 3% of eligible compensation deferred and 50%
on the next 2% of eligible compensation deferred. Additionally, the Company may contribute a discretionary profit
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DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)