DSW 2012 Annual Report Download

Download and view the complete annual report

Please find the complete 2012 DSW annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended February 2, 2013 OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission file number 1-32545
DSW INC.
(Exact name of registrant as specified in its charter)
Ohio 31-0746639
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
810 DSW Drive, Columbus, Ohio 43219
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (614) 237-7100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
Class A Common Shares, without par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 229.405) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
(Do not check if smaller
reporting company)
Smaller reporting
company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of voting stock held by non-affiliates of the registrant computed by reference to the price at which such voting stock was
last sold, as of July 28, 2012, was $2,024,984,780.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 36,282,493 Class A
Common Shares and 8,730,087 Class B Common Shares were outstanding at March 20, 2013.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Proxy Statement relating to fiscal 2012 for the Annual Meeting of Shareholders to be held on June 5, 2013 are incorporated by reference into Part III.

Table of contents

  • Page 1
    ... Year Ended February 2, 2013 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-32545 DSW INC. (Exact name of registrant as specified in its charter) Ohio (State or other jurisdiction of incorporation or organization) 810 DSW Drive...

  • Page 2
    ...about Market Risk 8. Financial Statements and Supplementary Data 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 9A. Controls and Procedures 9B. Other Information PART III 10. Directors, Executive Officers and Corporate Governance 11. Executive Compensation 12...

  • Page 3
    ...OF CONTENTS TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Shareholders' Equity Consolidated Statements of Cash Flows Notes to...

  • Page 4
    ... sales and quarterly financial performance; risks related to our information systems and data; failure to retain our key executives or attract qualified new personnel; our competitiveness with respect to style, price, brand availability and customer service; our reliance on our "DSW Rewards" program...

  • Page 5
    ...the state of Ohio on January 20, 1969 and opened our first DSW store in Dublin, Ohio in 1991. In 1998, a predecessor of RVI purchased DSW and affiliated shoe businesses from Schottenstein Stores Corporation and Nacht Management, Inc. In July 2005, we completed an initial public offering of our Class...

  • Page 6
    ... for a sale event. In order to provide additional value to our customers, we maintain a loyalty program, "DSW Rewards", which rewards customers for shopping, both in stores and online. "DSW Rewards" members earn reward certificates that offer discounts on future purchases. Reward certificates expire...

  • Page 7
    ... store and dsw.com sales in fiscal 2011. Growth Strategy Our growth strategy is to continue to strengthen our position as a leading branded designer footwear and accessories retailer by pursuing the following primary strategies for growth in sales and profitability: expanding our business, driving...

  • Page 8
    ... our inventory in the fulfillment center or the customer's home store. Our primary distribution center is located in an approximately 700,000 square foot facility in Columbus, Ohio that we leased prior to our purchase of the facility in fiscal 2012. The design of the distribution center facilitates...

  • Page 9
    ...trademarks, service marks and domain names in the United States and internationally, including DSW®, DSW Shoe Warehouse® and DSW Designer Shoe Warehouse®. We believe our trademarks and service marks, especially those related to the DSW concept, have significant value and are important to building...

  • Page 10
    ...ability to successfully open and operate new DSW stores on a profitable basis as part of our real estate strategy. During fiscal 2012, 2011 and 2010, we opened 39, 17 and 9 new DSW stores, respectively. We plan to open 25 to 30 stores in fiscal 2013 and plan to open 15 to 20 stores each year for the...

  • Page 11
    ... in particular, the retail sales environment; changes in our merchandising strategy; timing and concentration of new DSW store openings and related new store and other start-up costs; levels of new store expenses associated with new DSW stores; changes in our merchandise mix; changes in and regional...

  • Page 12
    ...DSW Rewards" program to drive traffic, sales and loyalty. "DSW Rewards" is a customer loyalty program that we rely on to drive customer traffic, sales and loyalty. "DSW Rewards" members earn reward certificates that offer discounts on future purchases. In fiscal 2012, shoppers in the loyalty program...

  • Page 13
    ...successfully execute our plans may have a material adverse effect on our business, results of operations or financial condition. We are testing a new luxury business to sell shoes and related accessories through our website. For a limited time, we are selling luxury apparel that we purchased as part...

  • Page 14
    ...economic slowdown, we could experience lower net sales than expected on a quarterly or annual basis and be forced to delay or slow our expansion plans. Reduced net sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or leverage expenses. These...

  • Page 15
    ... change in control that may be favored by other DSW shareholders. The Schottenstein Affiliates may compete directly against us. The Schottenstein Affiliates engage in a variety of businesses, including, but not limited to, business and inventory liquidations, apparel companies and real estate...

  • Page 16
    ...ITEM 2. PROPERTIES. UNRESOLVED STAFF COMMENTS. We own our corporate office headquarters and distribution center as of the fourth quarter of fiscal 2012. On October 31, 2012, we entered into an agreement of purchase and sale (the "Purchase Agreement") with 4300 East Fifth Avenue LLC, an Ohio limited...

  • Page 17
    ... two renewal options with terms of five years each. Our primary distribution facility, our corporate office headquarters and our dsw.com fulfillment center are located in Columbus, Ohio. ITEM 3. LEGAL PROCEEDINGS. Guarantee of Union Square lease- RVI guaranteed Filene's Basement's obligations for...

  • Page 18
    ..., associates, corporations, or other entities identified in security position listings maintained by depositories. The following table provides the quarterly market prices of our Class A Common Shares as reported on the NYSE and cash dividends per share for 2012 and 2011: Market Price High Low...

  • Page 19
    ..., 2012 December 30, 2012 to February 2, 2013 Total number of shares withheld (in thousands) 3 7 - 10 Average price paid per share $ $ 62.29 65.26 Total number of Approximate shares purchased dollar value of as part of publicly shares that may yet announced be purchased under programs the programs...

  • Page 20
    ... in Item 7 of this Annual Report on Form 10-K. Fiscal years ended(1) 2/2/2013 1/28/2012 1/29/2011 1/30/2010 1/31/2009 (dollars in thousands, except per share and net sales per average gross square foot) Statement of Operations Data(2): Net sales(3) Gross profit(4) Change in fair value of derivative...

  • Page 21
    ... Fiscal 2012 capital expenditures excluded the $72 million purchase of DSW's corporate office headquarters and distribution center as this was considered a permitted acquisition under our credit facility. For financial reporting purposes, as a common control transaction, the net book value of assets...

  • Page 22
    ...merchandise margin rate due to increased average store sales and the 53rd week while distribution and fulfillment expenses were essentially flat. We have continued making investments in our business that are critical to long-term growth. In fiscal 2012, we purchased our corporate office headquarters...

  • Page 23
    ... non-comparable and closed store sales Net sales of the 53rd week Net sales for the fiscal year ended February 2, 2013 The following table summarizes our net sales by reportable segment and in total: DSW segment Affiliated Business Group segment Total DSW Inc. Fiscal years ended February 2, 2013...

  • Page 24
    ... and accessories by 9%. Our non-comparable sales growth is attributable to both stores opened in fiscal 2011 as well as our net increase of 38 DSW stores in fiscal 2012. The decrease in total net sales for our Affiliated Business Group segment was the result of the bankruptcy of Filene's Basement in...

  • Page 25
    ... home office overhead expenses by 70 basis points primarily due to reduced incentive compensation, which was partially offset by a deleverage of 60 basis points related to new store and store expenses. Change in Fair Value of Derivatives. During fiscal 2012 and 2011, the Company recorded a non-cash...

  • Page 26
    ... 31.0% in fiscal 2010. By reportable segment and in total, gross profit as a percentage of net sales was: Fiscal years ended January 28, 2012 January 29, 2011 33.4% 31.9% 19.4% 21.4% 32.3% 31.0% DSW segment Affiliated Business Group segment Total DSW Inc. For the DSW segment, the reconciliation of...

  • Page 27
    ... competitors as retailers differ on their definition of cost of sales. Management uses this non-GAAP measure to assist in the evaluation of the performance of our segments and to make operating decisions. Within Management's Discussion and Analysis, DSW discloses merchandise margin, store occupancy...

  • Page 28
    ...corporate office headquarters and distribution center during fiscal 2012, we incurred $99.8 million in capital expenditures, of which $69.3 million related to stores and $30.5 million related to information technology, the reconfiguration of the Columbus distribution center, the expansion of the dsw...

  • Page 29
    ... Activities For fiscal 2012, net cash used in financing activities of $137.1 million was related to our dividend payments, purchase of our corporate office headquarters and distribution center, warrant exercises and an increase in stock option exercises. For fiscal 2011, net cash used in financing...

  • Page 30
    ..., for an aggregate cash purchase price of $3.5 million, and we paid accrued dividends of $0.7 million related to our special dividend issued on September 30, 2011. On March 14, 2012, we issued 411,963 of our Class B Common Shares, without par value, to the Schottenstein Affiliates in connection with...

  • Page 31
    .... Following the Merger, a subsidiary of DSW, Merger Sub, assumed RVI's obligations under lease guarantees for three Filene's Basement retail store locations for leases assumed by Syms in its purchase of Filene's Basement in fiscal 2009. In fiscal 2011, Syms and Filene's Basement filed for bankruptcy...

  • Page 32
    ... include commitments related to our non-qualified deferred compensation plan. The timing of deferred compensation payouts is unknown as we have not made any payments under our plan. The current balance in the plan is $1.6 million. We had outstanding letters of credit that totaled approximately $14...

  • Page 33
    ...customer receipt of merchandise, are net of returns through period end, exclude sales tax and are not recognized until collectibility is reasonably assured. Cost of Sales and Merchandise Inventories. Merchandise inventories are stated at lower of cost or market, determined using the retail inventory...

  • Page 34
    ... group exceeds the expected future cash flows from the asset. Customer Loyalty Program. We maintain 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...

  • Page 35
    ...-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this Annual Report, that such disclosure controls and procedures were effective. 32

  • Page 36
    ... 2, 2013. Deloitte & Touche LLP, our independent registered public accounting firm, has issued an attestation report covering our internal control over financial reporting, as stated in its report which begins on page F-1 of this Annual Report. Changes in Internal Control over Financial Reporting No...

  • Page 37
    ... by this Item. ITEM 11. EXECUTIVE COMPENSATION. In accordance with General Instruction G(3), the information contained under the captions "COMPENSATION OF MANAGEMENT," "OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE INFORMATION", "REPORT OF THE COMPENSATION COMMITTEE...

  • Page 38
    Table of Contents ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. In accordance with General Instruction G(3), the information contained under the caption "AUDIT AND OTHER SERVICE FEES" in the Proxy Statement is incorporated herein by reference. 35

  • Page 39
    .... 15(a)(1) Financial Statements The documents listed below are filed as part of this Form 10-K: Page in Form 10-K Report of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the years ended February 2, 2013, January 28, 2012 and January 29, 2011 Consolidated...

  • Page 40
    ... by the undersigned, thereunto duly authorized. DSW INC. March 28, 2013 By: /s/ Douglas J. Probst Douglas J. Probst, Executive Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the...

  • Page 41
    ... REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of DSW Inc. Columbus, Ohio We have audited the accompanying consolidated balance sheets of DSW Inc. and its subsidiaries (the "Company") as of February 2, 2013 and January 28, 2012, and the related...

  • Page 42
    ... Non-operating income Income from continuing operations before income taxes Income tax (provision) benefit Income from continuing operations Income from discontinued operations, net of tax - Value City Department Stores Income (loss) from discontinued operations, net of tax - Filene's Basement Total...

  • Page 43
    ... INCOME YEARS ENDED FEBRUARY 2, 2013, JANUARY 28, 2012 AND JANUARY 29, 2011 (in thousands) February 2, 2013 Net income Less: net income attributable to the noncontrolling interests Net income, net of noncontrolling interests Other comprehensive (loss) income, net of tax: Change in minimum...

  • Page 44
    ... 28, 2012 (in thousands) February 2, 2013 ASSETS Cash and equivalents Short-term investments Accounts receivable, net Accounts receivable from related parties Inventories Prepaid expenses and other current assets Deferred income taxes Total current assets Property and equipment, net Long-term...

  • Page 45
    ... 2013, JANUARY 28, 2012 AND JANUARY 29, 2011 (in thousands) Number of Shares Class A Common Shares Balance, January 30, 2010 Income from continuing operations, net of tax Income from discontinued operations, net of tax Change in minimum pension liability, net of income tax benefit of $410 Non-cash...

  • Page 46
    ... of RVI options and SARs Stock-based compensation expense related to cash settled RVI options and SARs RVI stock based compensation expense, before related tax effects 21,873 - - - - - 3 $ 330,022 59) $ - - Accumul ated other Noncomprehe controlling nsive loss Interests (5,842) $ - - Total (78...

  • Page 47
    ...settlement of taxes Excess tax benefits related to stock exercises Equity impact of Corporate Headquarters and Distribution Center Acquisition, net of taxes of $17,877 Exchange of Class B Common Shares for Class A Common Shares Dividends paid ($2.87 per share) Balance, February 2, 2013 - 3,193 - 36...

  • Page 48
    ... assets Impairment of lease Excess tax benefits related to stock exercises Amortization of investment discounts and premiums Change in working capital, other assets and liabilities: Accounts receivable, net Inventories Prepaid expenses and other current assets Accounts payable Accrued expenses Other...

  • Page 49
    ... vesting and option exercises Cash settlement of RVI options and SARs Debt issuance costs Cash paid for fractional shares Proceeds from the exercise of warrants Dividends paid Basis difference related to acquisition of common control entity Excess tax benefits related to stock exercises Net cash and...

  • Page 50
    ...the leased business division segment). DSW offers a wide assortment of brand name dress, casual and athletic footwear and accessories for women and men. As of February 2, 2013, DSW operated a total of 364 stores located in 41 states, the District of Columbia and Puerto Rico. During fiscal 2012, 2011...

  • Page 51
    ... related to buying, information technology, depreciation expense for corporate cost centers, marketing, legal, finance, outside professional services, customer service center expenses, payroll and benefits for associates and payroll taxes. Stock-Based Compensation- DSW recognizes compensation...

  • Page 52
    ...February 2, 2013 or January 28, 2012. DSW does not hold or issue derivative financial instruments for trading purposes. DSW, and prior to the Merger, RVI, estimated the fair values of derivatives based on the Black-Scholes pricing model using current market information. The embedded exchange feature...

  • Page 53
    ... supplied to the Company by three key vendors accounted for approximately 18%, 19% and 20% of net sales, respectively. Fair Value- Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants...

  • Page 54
    ..., 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...

  • Page 55
    ... non-current liabilities. Exit and Disposal Obligations- DSW records a reserve when a store or office facility is abandoned due to closure or relocation. Using its credit-adjusted risk-free rate to present value the liability, DSW estimates future lease obligations based on remaining lease payments...

  • Page 56
    ... in the third quarter of fiscal 2011. RVI common shares, without par value, which traded under the symbol "RVI," ceased trading on, and were delisted from, the New York Stock Exchange on May 26, 2011. The Merger was accounted for as a reverse merger with RVI as the accounting acquirer and DSW (the...

  • Page 57
    ... Department Stores ("Value City") 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 25, 2010, Value City Holdings, Inc. and related entities filed a complaint against RVI, Retail Ventures...

  • Page 58
    .... Corporate Office Headquarters and Distribution Center Acquisition- On October 31, 2012, DSW entered into an agreement of purchase and sale (the "Purchase Agreement") with 4300 East Fifth Avenue LLC, an Ohio limited liability company, 4300 Venture 34910 LLC, a Delaware limited liability company...

  • Page 59
    ...to outstanding RVI stock options and stock appreciation rights ("SARs") (prior to the Merger), outstanding DSW stock options and restricted stock units ("RSUs") (after the Merger) and warrants (through exercise date) calculated using the treasury stock method. As PIES were exchangeable for DSW Class...

  • Page 60
    ... periods presented: Fiscal years ended February 2, January 28, January 29, 2013 2012 2011 (in thousands) 44,423 35,220 21,438 752 555 - 128 110 - - 65 138 - 45,303 1,188 37,138 - 21,576 Weighted average shares outstanding Assumed exercise of dilutive DSW stock options Assumed exercise of dilutive...

  • Page 61
    ... 26, 2012 and September 30, 2011, DSW adjusted its outstanding stock options under the anti-dilution provision by decreasing the grant price and increasing the number of shares to make the optionee whole as required under the DSW plan. As of February 2, 2013, the total compensation cost related to...

  • Page 62
    ... total fair value of options that vested during fiscal 2012, 2011 and 2010 was $4.8 million, $4.9 million and $4.2 million, respectively. Restricted Stock Units ("RSUs")- DSW expensed $1.5 million, $1.2 million and $0.3 million, respectively, in fiscal 2012, 2011 and 2010 related to restricted stock...

  • Page 63
    .... Each non-employee director is granted stock units based on the fair market value of DSW Class A Common Shares on the date of the annual meeting. In addition, each director eligible to receive compensation for board service may elect to have the cash portion of such directors' compensation paid in...

  • Page 64
    ... DSW Common Shares factoring in the exchange ratio of 0.435 pursuant to the Merger) or the issuance of restricted stock to management, key employees of RVI and affiliates, consultants (as defined in the RVI Plan), and directors of RVI. Stock Options- Excluding any expense related to the Merger, RVI...

  • Page 65
    ... options. Generally, DSW is required to pay base rent, real estate taxes, maintenance, insurance and contingent rentals based on sales in excess of specified levels. Under supply agreements, DSW pays contingent rents based on sales for the shoe departments it operates through its Affiliated Business...

  • Page 66
    ...direct borrowings greater than $25 million, the Credit Facility also requires that DSW maintain a fixed charge coverage ratio of not less than 1.1 to 1.0. DSW paid $102.0 million for capital expenditures in fiscal 2012, excluding the purchase of the corporate office headquarters, distribution center...

  • Page 67
    ... quarter purchase of DSW's corporate office headquarters, distribution center and trailer parking lot discussed in Note 4 was considered a permitted acquisition under the Credit Facility rather than a capital expenditure, and thus there was no violation of the Credit Facility covenant that limits...

  • Page 68
    ... model with the following assumptions as of the period presented: Assumptions: Risk-free interest rate Expected volatility of common stock Expected term Expected dividend yield January 28, 2012 0.1% 43.5% 0.4 years 1.3% For DSW's derivative liability, the fair value and balance sheet location...

  • Page 69
    ... annual basis or when a triggering event occurred using a discounted cash flow valuation model using level 3 inputs such as the financial condition of the entity. (d) The underlying assumptions for fair value measurement of the warrant liability is detailed in Note 12. Prior to exercise, the Company...

  • Page 70
    ... Total Losses Fiscal years ended February 2, 2013 January 28, January 29, 2012 2011 (in thousands) - - $ 1,626 Level 1 Assets held and used 14. BENEFIT PLANS - January 28, 2012 Fair Value as of Level Level the Impairment 2 3 Date (in thousands) - - - Filene's Basement Defined Benefit Pension Plan...

  • Page 71
    ...The Company's funding policy is to contribute an amount annually that satisfies the minimum funding requirements of ERISA and that is tax deductible under the Internal Revenue Code of 1986, as amended. If the plan is not terminated, the following benefit payments are expected to be paid in the years...

  • Page 72
    ...funds Fair market value at end of year Other Benefit Plans DSW 401(k) Plan- The Company sponsors a 401(k) Plan. Eligible employees may contribute up to fifty 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...

  • Page 73
    ...2013 and January 28, 2012, the amount of guarantees of Value City commitments was $0.1 million and $0.2 million, respectively. Filene's Basement- Following the Merger, a subsidiary of DSW, Merger Sub, assumed RVI's obligations under lease guarantees for three Filene's Basement retail store locations...

  • Page 74
    ...the DSW stores and dsw.com sales channels, and the Affiliated Business Group segment. DSW has identified such segments based on internal management reporting and responsibilities and measures segment profit as gross profit, which is defined as net sales less cost of sales. All operations are located...

  • Page 75
    ... for the fiscal year ended January 28, 2012 Net sales Gross profit Capital expenditures Total assets For the fiscal year ended January 29, 2011 Net sales Gross profit Capital expenditures 17. INCOME TAXES Affiliated Business Group Other (in thousands) $ 132,516 27,866 426 97,358 - - - 414 DSW Inc...

  • Page 76
    ...Fiscal years ended January 28, 2012 January 29, 2011 (in thousands) $ 49,794 $ 39,128 9,199 11,269 4,292 5,113 17,207 - (140,072) - - 1,511 (58,069) $ 2,409 2,054 59,973 February 2, 2013 Income tax expense at federal statutory rate State and local taxes-net Warrants PIES Merger related items Change...

  • Page 77
    ... the deferred tax liability of $87.4 million related to RVI's basis in DSW. RVI's tax basis of its investment in DSW was below its book basis in the shares and RVI had recorded a deferred tax liability for the gain on eventual sales of the DSW stock. When the merger closed, the parent/subsidiary...

  • Page 78
    ... and state income tax examinations for years prior to 2009. DSW is currently under audit for fiscal 2010. DSW estimates the range of possible changes that may result from any current and future tax examinations to be insignificant at this time. 18. QUARTERLY FINANCIAL DATA (UNAUDITED) In the Company...

  • Page 79
    ... STATEMENTS Net sales Cost of sales Operating expenses Change in fair value of derivative instruments Operating profit Interest (expense) income, net Income from continuing operations before income taxes Income tax (provision) benefit (Loss) income from continuing operations Total income (loss...

  • Page 80
    ... Plan of Merger, dated February 8, 2011, among DSW Inc., DSW MS LLC, and Retail Ventures, Inc. Incorporated by reference to Exhibit 2.1 to DSW's Form 8-K/A (file no. 1-32545) filed February 25, 2011. Agreement of Purchase and Sale, dated October 31, 2012, among DSW Inc., 4300 East Fifth Avenue LLC...

  • Page 81
    ...Cash Incentive Compensation Plan. Incorporated by reference to Appendix B to Form DEF 14A (file no. 1-32545) filed April 8, 2009. Lease, dated August 30, 2002, by and between Jubilee Limited Partnership, an affiliate of Schottenstein Stores Corporation, and Shonac Corporation, re: Troy, MI DSW store...

  • Page 82
    ... Shoe Warehouse, Inc., as assignee, re: Columbus, OH (Polaris) DSW store. Incorporated by reference to Exhibit 10.53.1 to Retail Ventures' Form 10-K/A (file no. 1-10767) filed May 12, 2005. Lease, dated August 30, 2002, by and between JLP-Cary, LLC, an affiliate of Schottenstein Stores Corporation...

  • Page 83
    ... Jubilee Limited Partnership, an affiliate of Schottenstein Stores Corporation, and Value City Department Stores, Inc., as modified by First Lease Modification, dated November 1, 1994, re: Merrillville, IN DSW store. Incorporated by reference to Exhibit 10.44 to Retail Ventures' Form 10-K (file no...

  • Page 84
    ... (file no. 1-10767) filed April 25, 2008. Consulting Agreement, dated January 10, 2013, between DSW Inc. and SB Capital Group, LLC. List of Subsidiaries. Consent of Independent Registered Public Accounting Firm. Powers of Attorney. Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer...

  • Page 85
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 28, 2013 By: /s/ Michael R. MacDonald Michael R. MacDonald, President and Chief Executive Officer...

  • Page 86
    ...information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 28, 2013 By: /s/ Douglas J. Probst Douglas J. Probst, Executive Vice President and Chief Financial Officer...

  • Page 87
    ... 1350 CERTIFICATION* In connection with the Annual Report of DSW Inc. (the "Company") on Form 10-K for the fiscal year ended February 2, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael R. MacDonald, President and Chief Executive Officer of...

  • Page 88
    ...CERTIFICATION * In connection with the Annual Report of DSW Inc. (the "Company") on Form 10-K for the fiscal year ended February 2, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Douglas J. Probst, Executive Vice President, and Chief Financial Officer...