DSW 2010 Annual Report Download - page 24

Possible future sales of Class A Common Shares by Retail Ventures, SSC and its affiliates and
Millennium could adversely affect prevailing market prices for the Class A Common Shares.
Retail Ventures may sell any and all of the Common Shares held by it subject to applicable securities laws and
the restrictions set forth below. In addition, SSC and its affiliates and Millennium have the right to acquire from
Retail Ventures Class A Common Shares of DSW. Sales or distribution by Retail Ventures, SSC and its affiliates and
Millennium of a substantial number of Class A Common Shares in the public market or to their respective
shareholders, or the perception that such SSC and its affiliates and Millennium sales or distributions could occur,
could adversely affect prevailing market prices for the Class A Common Shares.
Retail Ventures has not advised us that it currently intends to dispose of the Common Shares owned by it,
excluding the sale of 320,000 Class B Common Shares to DSW in fiscal 2009, and except to the extent necessary to
satisfy its obligations, including obligations under the PIES and obligations under warrants it has granted to SSC
and its affiliates and Millennium. In addition, Retail Ventures is subject to contractual obligations with its
warrantholders to retain enough DSW Common Shares to be able to satisfy its obligations to deliver such shares to
its warrantholders if the warrantholders elect to exercise their warrants in full for DSW Class A Common Shares.
Retail Ventures is also subject to contractual obligations with the holders of the PIES to retain enough DSW
Common Shares to be able to satisfy its obligations to deliver shares to the holders of the PIES. In addition, in the
event that the PIES were to be accelerated, a payment which is required to be paid to the PIES holders by RVI can be
satisfied by, in lieu of paying cash, using additional Class A Common Shares upon compliance with the terms of the
instruments governing the PIES. Shares delivered upon the settlement of the PIES will generally be freely tradable
by the former PIES holders as a result of having been registered in connection with the initial issuance of the PIES.
If Retail Ventures were to require funds to service or refinance its indebtedness or to fund its operations in the
future and could not obtain capital from alternative sources, it could seek to sell some or all of the Common Shares
of DSW that it holds in order to obtain such funds. On January 15, 2010, we entered into a share purchase agreement
with RVI pursuant to which RVI sold to us 320,000 Class B Common Shares, without par value, of DSW, for an
aggregate amount of $8.0 million.
Similarly, SSC and its affiliates and Millennium are not subject to any contractual obligation to retain Class A
Common Shares they may acquire from Retail Ventures. As a result, there can be no assurance concerning the
period of time during which Retail Ventures, SSC and its affiliates and Millennium will maintain their respective
beneficial ownership of Common Shares in the future. Retail Ventures and SSC and its affiliates (and any party to
whom either of them transfers at least 15% of their interest in registrable DSW Common Shares) will have
registration rights with respect to their respective Common Shares, which would facilitate any future distribution,
and SSC and its affiliates and Millennium will be entitled to participate in the registrations initiated by the other
entities.
RVI has a long-term lease and DSW has agreed to pay a portion of the expense related to the lease.
RVI is party to a lease for an office facility in Columbus, Ohio (the “Premises”) as of September 2003. In April
2005, RVI sublet the Premises to a third-party at a rent that was lower than the rent charged to RVI under the lease.
RVI remains liable under the lease through the lease expiration date in 2024. DSW agreed to pay $0.5 million
annually to RVI to partially reimburse its loss under the lease. After the merger, DSW will assume RVI’s
responsibilities under the lease. In the event the third-party subtenant defaults under the sublease or vacates the
premises, the amount of this increased expense could be material and may have a negative impact on our results of
operations and financial position.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
All DSW stores, our distribution and fulfillment centers, a trailer parking lot and our office facility are leased
or subleased. As of January 29, 2011, we leased or subleased 21 DSW stores, our corporate office, our primary
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