DSW 2015 Annual Report Download - page 56

Table of Contents
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balance sheet or the accompanying notes to the financial statements, and 8) clarifies that an entity should evaluate the need for a valuation allowance on a
deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The ASU will be effective for fiscal years
beginning after December 15, 2017, including interim periods within those fiscal years. An entity should apply the amendments by means of a cumulative-
effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily
determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The
Company is currently evaluating the impact of the standard on its financial statements and disclosures.
In February 2016, the FASB released ASU 2016-02, which will increase transparency and comparability among organizations by recognizing lease assets and
liabilities on the balance sheet. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2018, including
interim reporting periods. Early application will be permitted for all entities upon issuance of the final standard. In addition, the FASB has decided to require
a lessee to apply a modified retrospective transition approach for capital and operating leases existing at, or entered into after, the beginning of the earliest
comparative period presented in the financial statements (the date of initial application). The modified retrospective approach would not require any
transition accounting for leases that expired before the date of initial application. The FASB decided to not permit a full retrospective transition approach.
The Company is currently evaluating the impact of the standard on its financial statements and disclosures.

 As of January 30, 2016, the Schottenstein Affiliates, entities owned by or controlled by Jay L. Schottenstein, the executive chairman
of the DSW Inc. Board of Directors, and members of his family, beneficially owned approximately 19% of outstanding DSW Inc. Common Shares,
representing approximately 51% of the combined voting power of outstanding DSW Inc. Common Shares. As of January 30, 2016, the Schottenstein
Affiliates beneficially owned 7.6 million Class A Common Shares and 7.7 million Class B Common Shares.
The Company leases its fulfillment center and certain store locations owned by Schottenstein Affiliates and purchases services and products from
Schottenstein Affiliates. Accounts receivable from and payables to affiliates principally result from commercial transactions or affiliate transactions and
normally settle in the form of cash in 30 to 60 days. Related party balances are disclosed on the consolidated balance sheets.
- In fiscal 2012, DSW Inc. acquired 810 AC LLC, an Ohio limited liability company,
from certain Schottenstein affiliates, which owned property that was previously leased by DSW Inc. for its corporate office headquarters, its distribution
center and a trailer parking lot. DSW Inc. leases certain portions of the properties. DSW Inc. paid to sellers $72 million in cash, subject to credits and
adjustments, for 810 AC LLC. As this was a transaction between entities under common control, as provided by ASC Topic 805, Business Combinations,
there was no adjustment to the historical cost carrying amounts of assets transferred to DSW Inc. The difference between the historical cost carrying amounts
and the consideration of $72 million transferred was an equity transaction. DSW Inc. also reduced the cost basis of the assets by the balance of tenant
allowances and deferred rent recorded related to the properties.
- Purchases and services from related parties were $1.1 million, $0.9 million and $0.9 million in fiscal 2015, 2014 and 2013, respectively. In fiscal
2013, reimbursements of $1.8 million were paid to a Schottenstein Affiliate in connection with DSW Inc.'s test sale of luxury merchandise, which were then
primarily paid to unrelated vendors.
 DSW Shoe Warehouse, Inc., a wholly-owned subsidiary of DSW Inc., licenses use of its trade name and trademark,
DSW Designer Shoe Warehouse, to its equity investee, Town Shoes, for a sales-based royalty. The license is exclusive and non-transferable for use in Canada.
Town Shoes pays DSW Inc. a percentage of net sales from its Canadian DSW stores on a monthly basis. The Canadian DSW stores operate in a manner similar
to DSW stores in the United States and are required to maintain the standards and specifications that DSW uses to operate its own stores. DSW Inc. classifies
the royalty fee as net sales.
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Source: DSW Inc., 10-K, March 24, 2016 Powered by Morningstar® Document Research℠
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