DSW 2010 Annual Report Download - page 64

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 29,
2011
January 30,
2010
January 31,
2009
Fiscal Years Ended
(In thousands)
Weighted average shares outstanding ................. 44,016 44,093 43,998
Assumed exercise of dilutive stock options............. 622 134
Restricted stock units ............................ 280 290 220
Number of shares for computation of dilutive earnings per
share ....................................... 44,918 44,517 44,218
Options to purchase 0.9 million, 0.5 million and 2.1 million common shares were outstanding as of January 29,
2011, January 30, 2010 and January 31, 2009, 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
sharing amount to the Plan each year but has not for the past three fiscal years. The Company incurred costs
associated with the Plan of $1.9 million, $1.8 million and $1.9 million for fiscal 2010, 2009 and 2008, respectively.
10. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings that are incidental to the conduct of its business. The
Company estimates the range of liability related to pending litigation where the amount of the range of loss can be
estimated. The Company records its best estimate of a loss when the loss is considered probable. When a liability is
probable and there is a range of estimated loss, the Company records the most likely estimated liability related to the
claim. In the opinion of management, the amount of any potential liability with respect to current legal proceedings
will not be material to the Company’s results of operations or financial condition. As additional information
becomes available, the Company will assess the potential liability related to its pending litigation and revise the
estimates as needed. Revisions in its estimates and the amount of potential liability could materially impact the
Company’s future results of operations and financial condition.
On January 23, 2008, Retail Ventures disposed of an 81% ownership interest in its Value City Department
Stores business to VCHI Acquisition Co., a newly formed entity owned by VCDS Acquisition Holdings, LLC,
Emerald Capital Management LLC, and Crystal Value, LLC. On October 26, 2008, Value City filed for bankruptcy
and discontinued operations. On December 21, 2010, Value City and Retail Ventures entered into a Settlement and
Release Agreement, pursuant to which Retail Ventures and DSW collectively agreed to pay $3.6 million to Value
City, of which DSW paid $0.8 million, and Value City agreed to file a dismissal of its claims against Retail Ventures
and DSW in bankruptcy court and to fully release Retail Ventures and DSW from all claims and obligations. The
settlement is included in other accrued expenses as of January 29, 2011.
See Note 14 for litigation related to DSW’s proposed merger with RVI.
F-18
DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)