DSW 2015 Annual Report Download - page 17

Table of Contents


In May 2014, DSW Inc. acquired an equity interest in Town Shoes. We are exposed to risk of the success of the Town Shoes business. We are also exposed to
risk of adverse reactions to the transaction or changes to business relationships; competitive responses; inability to maintain key personnel and changes in
general economic conditions in Canada. If Town Shoes fails to perform to our expectations, it could have a material adverse effect on our results of operations
or financial condition.

As a result of our equity investment in Town Shoes, we are exposed to foreign currency rate risk. We currently do not utilize hedging instruments to mitigate
foreign currency exchange risks. During the first quarter of 2015, we held $100 million CAD in Canadian bank accounts. During the second quarter of 2015,
we invested the $100 million CAD in available-for-sale securities in Canada. As the CAD was fully invested during the second quarter of 2015, any
gains/losses due to remeasurement are recorded in other comprehensive income. If the funds are transferred to cash, we will be exposed to foreign currency
rate risk due to remeasurement in our statement of operations.
 
None.
 
We own our corporate office headquarters and distribution center. As of January 30, 2016, all 468 DSW stores and our fulfillment center are leased or
subleased, and we leased or subleased 17 DSW stores and our dsw.com fulfillment center from Schottenstein Affiliates. The remaining DSW stores are leased
from unrelated entities. Most of the DSW store leases provide for a minimum annual rent plus a percentage of gross sales over specified breakpoints and are
for a fixed term with options for two to five extension periods, each of which is for a period of four or five years, exercisable at our option. The lease for our
fulfillment center expires in September 2017 and has 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.
 
We are involved in various legal proceedings that are incidental to the conduct of our business. We estimate the range of liability related to pending
litigation where the amount of the range of loss can be estimated. We record our best estimate of a loss when the loss is considered probable. When a liability
is probable and there is a range of estimated loss, we record the most likely estimated liability related to the claim. Although it is not possible to predict with
certainty the eventual outcome of any litigation, in the opinion of management, the amount of any potential liability with respect to these proceedings will
not be material to our results of operations or financial condition.
 
Not Applicable.
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Source: DSW Inc., 10-K, March 24, 2016 Powered by Morningstar® Document Research℠
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