DSW 2012 Annual Report Download - page 55

F- 15
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. Deferred
rent is included in other non-current liabilities.
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
are included in other 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, estimated or actual sublease payments and any other relevant factors. On a quarterly basis, DSW reassesses the
reserve based on current market conditions. See Note 15 for a discussion of exit and disposal obligations.
Accumulated Other Comprehensive Loss- Accumulated other comprehensive 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.
Sale of Subsidiary Stock- Prior to the Merger, sales of stock by a subsidiary were accounted for by RVI as capital transactions.
Recent Accounting Pronouncements
Fair Value- In May 2011, the Financial Accounting Standards Board ("FASB") issued an update to existing guidance related to
fair value measurements on how to measure fair value and what disclosures to provide about fair value measurements. For fair
value measurements categorized as level 3, a reporting entity should disclose quantitative information of the unobservable
inputs and assumptions, a description of the valuation processes and narrative description of the sensitivity of the fair value to
changes in unobservable inputs. This update was effective for interim and annual periods beginning after December 15, 2011.
The adoption of this update in the first quarter of fiscal 2012 did not materially affect the Company's consolidated financial
statements.
Comprehensive Income- In June 2011, the FASB issued an update to existing guidance related to the presentation of
comprehensive income. The main provisions of this update provide that an entity that reports other comprehensive income has
the option to present comprehensive income in either one continuous or two consecutive financial statements. The first option
is a single statement that must present the components of net income and total net income, the components of other
comprehensive income and total other comprehensive income and a total for comprehensive income. The second option is a
two statement approach, in which an entity must present the components of net income and total net income in the first
statement and that statement must be immediately followed by a financial statement that presents the components of other
comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The option in generally
accepted accounting principles that permits the presentation of other comprehensive income in the statement of changes in
equity has been eliminated. This update was effective for interim and annual periods beginning after December 15, 2011. In
November 2011, the FASB issued a proposed update to indefinitely defer the requirement to present reclassification
adjustments in the statement of operations. The Company elected to present a single statement of operations and comprehensive
income for quarterly reporting and separate statements for annual reports beginning in the first quarter of fiscal 2012.
In February 2013, the FASB issued an update to existing guidance related to the reporting of amounts reclassified out of
accumulated other comprehensive income that requires presentation of the effects on the line items of net income of significant
amounts reclassified out of accumulated other comprehensive income, but only if the item reclassified is required under
generally accepted accounting principles to be reclassified to net income in its entirety in the same reporting period. This
update is effective for fiscal years beginning after December 15, 2012. The Company currently does not expect the adoption of
this update to affect its consolidated financial statements, but this update will likely result in additional disclosure.
Goodwill- In September 2011, the FASB issued an update to existing guidance related to goodwill impairment testing. The
amendments will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step
quantitative goodwill impairment test. An entity no longer will be required to calculate the fair value of a reporting unit unless
the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying
Table of Contents DSW INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS