DSW 2013 Annual Report Download - page 66

Table of Contents
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(b) Short-term and long-term investments include available-for-sale and held-to maturity investments, which are valued using a market-based approach
using level 2 inputs such as prices of similar assets in active markets. Held-to-maturity investments are held at amortized cost and are reviewed for
impairment using level 2 inputs.
Non-Financial Assets and Liabilities- DSW periodically evaluates the carrying amount of its long-lived assets, primarily property and equipment, and finite
lived intangible assets when events and circumstances warrant such a review to ascertain if any assets have been impaired. The carrying amount of a long-
lived asset or asset group is considered impaired when the carrying value of the asset or asset group exceeds the expected future cash flows from the asset or
asset group. The reviews are conducted at the lowest identifiable level, which includes a store. The impairment loss recognized is the excess of the carrying
value of the asset or asset group over its fair value, based on a discounted cash flow analysis using a discount rate determined by management. Should an
impairment loss be realized, it will generally be included in cost of sales.
In fiscal 2013, DSW recognized an impairment loss of $0.8 million on assets used in a DSW store. DSW determined that the carrying value exceeded the
expected future cash flows and recorded a partial impairment after determining fair value based on the discounted future cash flow analysis using a discount
rate determined by management. The remaining carrying value of the assets used in the store, net of the tenant allowance, subsequent to the impairment is $0.8
million as of February 1, 2014.
In fiscal 2011, DSW recognized an impairment loss of $1.6 million on assets used in a leased office building assumed in the Merger. Based on the projected
future cash flows under the lease, DSW determined that the carrying value exceeded the expected future cash flows from the asset group and recorded a full
impairment after determining fair value. The impairment of the related lease is discussed in Note 16.
The following table presents the activity related to the fair value of assets held and used that realized an impairment loss for the periods presented:
Total Losses
As of February 1, 2014
Fiscal years ended
Level 1
Level 2
Level 3
Fair Value as of the
Impairment Date
February 1, 2014
February 2,
2013
January 28,
2012
(in thousands)
(in thousands)
Assets held and used —
—
$ 835
$ 835
$ 809
—
$1,626
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DSW $50 Million Secured Credit Facility- On August 2, 2013, DSW entered into a secured revolving credit agreement (the "Credit Facility"). The Credit
Facility, together with the Letter of Credit Agreement (defined below), amended and restated DSW's prior credit facility, dated June 30, 2010. The Credit
Facility reduced the amount of revolving credit commitments from $100 million to $50 million, allowed DSW to transfer its outstanding letters of credit and
has a term of five years that will expire on July 31, 2018. The Credit Facility may be increased by up to $100 million upon DSW's request and the increase
would be subject to lender availability, DSW's financial condition and compliance with covenants. The Credit Facility is secured by a lien on substantially all
of DSW's personal property assets and its subsidiaries with certain exclusions and may be used to provide funds for general corporate purposes, to provide
for DSW's ongoing working capital requirements and to make permitted acquisitions. Revolving credit loans bear interest under the Credit Facility at the
Company's option under: (a) a base rate option at a rate per annum equal to the highest of (i) the Federal Funds Open Rate (as defined in the Credit Facility),
plus 0.5%, (ii) the Lender's prime rate, and (iii) the Daily LIBOR Rate (as defined in the Credit Facility) plus 1.0%, plus in each instance an applicable
margin, which is between 1.00 and 1.25, based upon DSW's revolving credit availability; or (b) a LIBOR option at a rate equal to the LIBOR Rate (as defined
in the Credit Facility), plus an applicable margin based upon the Company's revolving credit availability. In addition, the Credit Facility contains restrictive
covenants relating to DSW's management and the operation of DSW's business. These covenants, among other things, limit or restrict DSW's ability to grant
liens on its assets, limit its ability to incur additional indebtedness, limit its ability to enter into transactions with affiliates and limit its ability to merge or
consolidate with another entity. The Credit Facility also requires that DSW meet the minimum cash and short-term investments requirement of $125 million,
as defined in the Credit Facility. An additional covenant limits payments for capital expenditures to $200 million in any fiscal year. DSW paid $86.4 million
for capital expenditures in fiscal 2013.
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Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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