DSW 2010 Annual Report Download - page 57

for interim and annual reporting periods beginning after January 29, 2011. The adoption of the effective portions of
this new standard did not have a material impact to the Company’s consolidated financial statements and the
Company does not expect a material impact to its consolidated financial statements related to the level 3 fair value
disclosures.
2. RELATED PARTY TRANSACTIONS
RVI — Under the terms of the Amended and Restated Shared Services Agreement, DSW provides shared
finance, information technology and human resources services to RVI. In fiscal 2010 and 2009, DSW charged RVI
$1.1 million and $0.7 million, respectively, for these services. In fiscal 2008, DSW charged RVI and its now former
subsidiary $6.4 million. In both fiscal 2010 and 2009, RVI charged DSW for a reimbursement of $0.5 million
related to the expenses of an office facility leased by RVI, which is the only remaining charge from RVI to DSW. In
fiscal 2008, RVI charged DSW $4.7 million for shared services, management fees and expenses related to an office
facility. These cost allocations were determined on a basis that the Company and RVI consider to be reasonable
reflections of the use of services provided or the benefit received by the Company. These shared service expenses
and income were included in operating expenses. Accounts payable to RVI of less than $0.1 million and $1.0 million
as of January 29, 2011 and January 30, 2010, respectively, were primarily related to shared services and other
intercompany transactions. During fiscal 2010, accounts payable were reduced by $0.5 million due to RVI’s
reimbursement of certain DSW leasehold improvement expenditures.
In fiscal 2010, DSW had an adjustment to its non-cash capital contribution from RVI of a reduction of
$0.9 million. In fiscal 2009 and 2008, RVI contributed tax benefits to DSW resulting in non-cash capital
contributions of $4.7 million and $0.8 million, respectively.
On January 15, 2010, the Company entered into a share purchase agreement with RVI, pursuant to which RVI
sold to DSW 320,000 Class B Common Shares, without par value, of DSW, for an aggregate amount of $8.0 million.
Schottenstein Stores Corporation (“SSC”) — SSC and its affiliates are the majority shareholders of RVI. The
Company leases certain store, office space and distribution center locations owned by entities affiliated with SSC.
Accounts receivable from and payable to affiliates principally result from commercial transactions with entities
owned by or affiliated with SSC or intercompany transactions with SSC and normally settle in the form of cash in 30
to 60 days. These related party balances as of both January 29, 2011 and January 30, 2010, were related party
receivables of $0.1 million and as of January 29, 2011 and January 30, 2010 were related party payables of
$1.0 million and $0.5 million.
In fiscal 2009, DSW made an equity investment of $1.2 million, and the majority interest is held by an affiliate
of SSC. DSW received a return of capital of $0.2 million in fiscal 2010. There was no income statement impact in
fiscal 2010 or 2009 related to this investment.
Other — Purchases from related parties were $0.4 million, $0.2 million and $0.1 million in fiscal 2010, 2009
and 2008, respectively.
3. STOCK-BASED COMPENSATION
The Company has a 2005 Equity Incentive Plan (“the Plan”) that provides for the issuance of equity awards to
purchase up to 7.6 million common shares. The Plan covers stock options, restricted stock units and director stock
units. Eligible recipients include key employees of the Company and affiliates, as well as directors of the Company.
Options generally vest 20% per year on a cumulative basis. Options granted under the Plan generally remain
exercisable for a period of ten years from the date of grant. Prior to fiscal 2005, the Company did not have a stock
option plan or any equity units outstanding. As of January 29, 2011, 4.0 million shares are available for additional
grants under the Plan.
F-11
DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)