DSW 2014 Annual Report Download - page 31

Table of Contents
of five years that will expire on August 2, 2018. The facility for the issuance of letters of credit is secured by a cash collateral account containing cash in an
amount equal to 103% of the face amount of any letter of credit extension (105% for extensions denominated in foreign currency) and is used for general
corporate purposes. The Letter of Credit Agreement requires compliance with conditions precedent that must be satisfied prior to issuing any letter of credit
or extension. In addition, the Letter of Credit Agreement contains restrictive covenants relating to our management and the operation of our business. These
covenants, among other things, limit or restrict our ability to grant liens on our assets, limit our ability to incur additional indebtedness, limit our ability to
enter into transactions with affiliates and limit our ability to merge or consolidate with another entity. An event of default may cause the applicable interest
rate and fees to increase by 2.0% per annum. As of January 31, 2015, we had $9.3 million in outstanding letters of credit and $11.5 million in restricted cash
on deposit as collateral under the Letter of Credit Agreement.
Discontinued Operations
For fiscal 2014, cash flows from discontinued operations related to the final distribution from the Filene's Basement debtor's estates. For fiscal 2013, cash
flows used in discontinued operations related to our payment of the Bergen, New Jersey lease guarantee settlement.
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Filene’s Basement Disposition.Following the Merger with Retail Ventures in fiscal 2011, 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 (see Item 3.
Legal Proceedings).
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We have the following minimum commitments under contractual obligations. A “purchase obligation”, as defined by the SEC, is an agreement to purchase
goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be
purchased, fixed, minimum or variable price provisions; and the approximate timing of the transaction. Other long-term liabilities are defined as long-term
liabilities that are reflected on our balance sheet in accordance with generally accepted accounting principles, or GAAP. Based on this definition, the table
below includes only those contracts which include fixed or minimum obligations. It does not include normal purchases, which are made in the ordinary
course of business.
The following table provides aggregated information about contractual obligations and other non-current liabilities as of January 31, 2015:
Payments due by Period
Total
Less Than
1 Year
1 - 3
Years
3 -5
Years
More Than
5 Years
Contractual obligations:
(in thousands)
Operating lease obligations (1)
$ 1,128,983
$ 183,635
$ 323,624
$ 243,025
$ 378,699
Construction commitments (2)
6,874
6,874
—
—
—
Purchase obligations (3)
2,634
1,642
708
284
—
Total
$ 1,138,491
$ 192,151
$ 324,332
$ 243,309
$ 378,699
(1) Many of our operating leases require us to pay contingent rent based on sales, common area maintenance costs and real estate taxes. Contingent rent,
costs and taxes vary year by year and are based almost entirely on actual amounts incurred. As such, they are not included in the lease obligations
presented above. Other non-current liabilities of $143.3 million are primarily comprised of deferred rent liabilities and construction and tenant
allowances. Deferred rent, which is included in non-current liabilities, is excluded from this table as our payment obligations are included in the
operating lease obligations. Construction and tenant allowances, which are included in non-current liabilities, are not contractual obligations as the
balance represents cash allowances from landlords, which are deferred and amortized on a straight-line basis over the noncancelable terms of the lease. In
addition, as of January 31, 2015, we have signed 34 lease agreements for new store locations opening in fiscal 2015 and 2016, with total annual rent of
approximately $9.6 million. In connection with the new lease agreements, we expect to receive a total of approximately $13.6 million of construction
and tenant allowance reimbursements for expenditures at these locations.
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Source: DSW Inc., 10-K, March 26, 2015 Powered by Morningstar® Document Research℠
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