DSW 2012 Annual Report Download - page 35

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Policy Judgments and Estimates Effect if Actual Results Differ from Assumptions
Pension. Plan assets, which consist
primarily of marketable equity and debt
instruments, are valued using market
quotations. Plan obligations and the
annual pension expense are determined
by independent actuaries and through the
use of a number of assumptions. Key
assumptions in measuring the plan
obligations include the discount rate and
the estimated future return on plan assets.
In determining the discount rate, we
utilize the yield on a forward curve based
on corporate debt securities currently
available with maturities corresponding
to the anticipated timing of the benefit
payments. Asset returns are based upon
the anticipated average rate of earnings
expected on the invested funds of the
plans.
On an annual basis, we evaluate the
assumed discount rate and expected
return on plan assets used to determine
pension benefit and other post-
retirement benefit expenses and
obligations. Given the anticipated
pension plan termination, the discount
rate for the plan will be based on
reference to year-end annuity rates being
charged by insurance companies. Our
expected return on plan assets is based
on historical experience.
If our discount rate were to increase or
decrease by 25 basis points, it would
result in a decrease or increase to the
unfunded pension liability of
approximately $0.7 million.
Off-Balance Sheet Arrangements
As of February 2, 2013, we have not entered into any “off-balance sheet” arrangements, as that term is described by the
SEC.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Cash and Equivalents and Investments- Our cash and equivalents have maturities of 90 days or fewer. At times, cash and
equivalents may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. We also have investments in
various short-term and long-term investments. Our available-for-sale investments generally renew every 7 days, but have longer
maturities, and we also have held-to-maturity investments that have terms greater than 365 days. These financial instruments
may be subject to interest rate risk through lost income should interest rates increase during their term to maturity and thus may
limit our ability to invest in higher income investments.
$100 Million Credit Facility- As of February 2, 2013, there was no long-term debt outstanding. Future borrowings, if any,
would bear interest at rates in accordance with our Credit Facility and would be subject to interest rate risk. Because we have no
outstanding debt, we do not believe that a hypothetical adverse change of 1% in interest rates would have a material effect on
our financial position.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Our financial statements and the Report of Independent Registered Public Accounting Firm thereon are filed pursuant to this
Item 8 and are included in this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-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.
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