DSW 2011 Annual Report Download - page 58

Table of Contents DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
the investment using the cost method of accounting.
Self-insurance Reserves-
The Company records estimates for certain health and welfare, workers compensation and casualty insurance costs that
are self-insured programs. Self-
insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement
value, and claims incurred but not yet reported. The liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet
date. Estimates for health and welfare, workers’
compensation and general liability are calculated utilizing claims development estimates based on
historical experience and other factors. The Company has purchased stop loss insurance to limit its exposure on a per person basis for health and
welfare and on a per claim basis for workers compensation and general liability, as well as on an aggregate annual basis. The self-
insurance
reserves were $0.2 million and $2.1 million as of January 28, 2012 and January 29, 2011 , respectively. The reduction in the self-
insurance
reserves was due to favorable claims and payment experience related to the health and welfare insurance trust.
Customer Loyalty Program-
DSW maintains a customer loyalty program for the DSW stores and dsw.com sales channels in which program
members earn reward certificates that result in discounts on future purchases. Upon reaching the target-
earned threshold, the members receive
reward certificates for these discounts which expire six months after being issued. DSW accrues the anticipated redemptions of the discount
earned at the time of the initial purchase. To estimate these costs, DSW makes assumptions related to customer purchase levels and redemption
rates based on historical experience. The accrued liability included in other accrued expenses as of January 28, 2012 and January 29, 2011
was
$14.6 million and $12.4 million, respectively.
Deferred Rent- Many of the Company’
s operating leases contain predetermined fixed increases of the minimum rentals during the initial lease
terms. For these leases, the Company recognizes the related rental expense on a straight-
line basis over the noncancelable terms of the lease. The
Company records the difference between the amounts charged to expense and the rent paid as deferred rent and begins amortizing such deferred
rent upon the delivery of the lease location by the lessor. The deferred rent included in other non-current liabilities was $35.7 million
and $34.4
million as of January 28, 2012 and January 29, 2011 , respectively.
Construction and Tenant Allowances- DSW receives cash allowances from landlords, which are deferred and amortized on a straight-
line basis
over the noncancelable terms of the lease as a reduction of rent expense. Construction and tenant allowances included in other non-
current
liabilities were $62.5 million and $60.4 million as of January 28, 2012 and January 29, 2011 , respectively.
Comprehensive Income (Loss)-
Accumulated other comprehensive income (loss) is defined as the change in equity of a business enterprise during
a period from transactions and other events and circumstances from non-
owner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The Company presents accumulated other comprehensive loss and
comprehensive income (loss) in its consolidated statements of shareholders’ equity.
The accumulated other comprehensive loss was $8.5 million and $5.8 million as of January 28, 2012 and January 29, 2011
, respectively, and
includes the minimum pension liability and in fiscal 2011 and 2009, the unrealized losses on held-to-maturity and available-for-
sale securities. For
fiscal 2011, total comprehensive income was $192.8 million . For fiscal 2010 , total comprehensive income was $59.5 million . For fiscal 2009
,
total comprehensive loss was $6.2 million .
Sales and Revenue Recognition-
Revenues from merchandise sales are recognized upon customer receipt of merchandise, are net of returns
through period end, exclude sales tax and are not recognized until collectibility is reasonably assured. For sales through the dsw.com sales
channel, DSW estimates a time lag for shipments to record revenue when the customer receives the goods and also includes revenue from
shipping and handling in net sales while the related costs are included in cost of sales.
Revenue from gift cards is deferred and recognized upon redemption of the gift card. The Company’
s policy is to recognize income from breakage
of gift cards when the likelihood of redemption of the gift card is remote. The Company recognized $1.3 million
, $1.1 million and $1.1 million as
other operating income from gift card breakage during fiscal 2011 , 2010 and 2009 , respectively.
As of January 28, 2012 , the Company supplies footwear, under supply arrangements, to three
retailers. Sales for these leased businesses are net of
returns through period end and exclude sales tax, as reported by the lessor, and are included in net sales. Leased business division segment sales
represented 7.5% , 7.8% and 9.2% of total net sales for fiscal 2011 , 2010 and 2009 ,
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