DSW 2011 Annual Report Download - page 18

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Table of Contents
Our primary distribution facility, our corporate office and our dsw.com fulfillment center are located in Columbus, Ohio. The lease for our
distribution center and our executive office space expires in December 2021 and has three renewal options with terms of five years each. The lease for
our dsw.com fulfillment center expires in September 2017 and has two renewal options with terms of five years each.
Most of the DSW store leases provide for a minimum annual rent plus a percentage of gross sales over specified breakpoints and are for a fixed
term with options for three to five extension periods, each of which is for a period of four or five years, exercisable at our option. As of
January 28,
2012 , we leased or subleased 22
DSW stores, our corporate office, our primary distribution center, a trailer parking lot and our dsw.com fulfillment
center from entities affiliated with SSC. The remaining DSW stores are leased from unrelated entities.
Litigation relating to the merger of DSW and RVI -
In the first quarter of fiscal 2011, shareholders of RVI filed two putative shareholder class
action lawsuits in an Ohio state court captioned as follows: Steamfitters local #449 Retirement Security Fund v. Schottenstein, et. al (“Steamfitters”
),
and Farkas v. Retail Ventures, Inc. (“Farkas”).
The Steamfitters action was brought against RVI and its directors and chief executive officer and DSW.
The Farkas action was brought against RVI and its directors, and DSW and Merger Sub. The Steamfitters action alleged, among other things, that RVI
and its directors breached their fiduciary duties by approving the merger agreement and that RVI’
s chief executive officer and DSW aided and abetted
in these alleged breaches of fiduciary duty. The Farkas action alleged, among other things, that the RVI board of directors breached its fiduciary duties
by approving the merger agreement and failing to disclose certain alleged material information, and that RVI and DSW aided and abetted these alleged
breaches of fiduciary duty. Both complaints sought, among other things, to enjoin the shareholder vote on the Merger, as well as money damages. On
May 9, 2011, the court granted plaintiffs’
motion to consolidate the actions. In order to avoid the costs associated with the litigation, the parties agreed
to a disclosure-
based settlement of the lawsuits set forth in an executed memorandum of understanding that was filed with the court. The memorandum
of understanding provided for, among other things, additional public disclosure with respect to the Merger, which was included in the joint proxy
statement/prospectus sent to the shareholders of RVI and DSW. The court approved the settlement, and this matter is resolved.
Guarantee of Union Square lease- RVI guaranteed Filene’s Basement’s obligations for the Union Square location when RVI owned Filene’
s
Basement, and the landlord at the Union Square location has brought a lawsuit against Merger Sub in the Supreme Court of the State of New York
seeking to recoup payments under the guarantee. We believe that the guarantee may not be enforceable and/or that the amount of liability under the
guarantee may be limited. Currently, the ultimate disposition of this lease is unknown. Among other things, the landlord could find a tenant and assert
that DSW is responsible for any shortfalls or rent while the space is unoccupied, DSW could assume additional space at this location (where DSW
already has a store) or DSW could successfully assert that the guarantee is not enforceable resulting in limited or no liability to DSW. We will continue
to monitor our potential liability regarding this lease obligation.
Other legal proceedings -
Other than the proceedings noted above, we are involved in various legal proceedings that are incidental to the conduct
of our business. We estimate the range of liability related to pending litigation where the amount of the range of loss can be estimated. We record our
best estimate of a loss when the loss is considered probable. When a liability is probable and there is a range of estimated loss, we record the most
likely estimated liability related to the claim. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion
of management, the amount of any potential
13
Alabama
4
Kentucky
3
North Carolina
6
Arizona
7
Louisiana
2
Ohio
15
Arkansas
1
Maine
1
Oklahoma
2
California
33
Maryland
12
Oregon
4
Colorado
10
Massachusetts
12
Pennsylvania
17
Connecticut
5
Michigan
15
Rhode Island
1
Delaware
1
Minnesota
8
Tennessee
5
Florida
22
Mississippi
1
Texas
30
Georgia
14
Missouri
5
Utah
2
Idaho
1
Nebraska
2
Virginia
13
Illinois
15
Nevada
3
Washington
7
Indiana
7
New Hampshire
2
Wisconsin
4
Iowa
1
New Jersey
12
Kansas
2
New York
19
Total
326
ITEM 3.
LEGAL PROCEEDINGS.