DSW 2013 Annual Report Download - page 34

Table of Contents
Union Square, NY- RVI guaranteed Filene’s Basement’s obligations for the Union Square location when RVI owned Filene’s Basement, and the
landlord at the Union Square location has brought a lawsuit against Merger Sub in the Supreme Court of the State of New York seeking payment
under the guarantee. DSW believes that the liability under the guarantee may be limited based on the ultimate disposition of the lease and/or the
guarantee may not be enforceable. In April 2012, the landlord advised DSW that it had signed a lease with a tenant and asserted that DSW is
responsible for shortfalls and rent while the space is unoccupied. In April 2013, the Court denied the landlord's motion for summary judgment. The
landlord appealed the court's denial of summary judgment. Oral arguments for the appeal were held in February 2014. The expected range of loss is
from no loss to $7.0 million.

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 February 1, 2014:
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)
$1,075,664
$170,434
$313,965
$228,991
$ 362,274
Construction commitments (2)
6,682
6,682
—
—
—
Purchase obligations (3)
4,719
3,495
1,224
—
—
Total
$1,087,065
$180,611
$315,189
$228,991
$ 362,274
(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 $138.3 million are primarily comprised of deferred rent liabilities, construction and tenant allowances and uncertain
tax positions. 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.
The amount related to uncertain tax positions as of February 1, 2014 was $2.0 million, including approximately $0.2 million of accrued interest and
penalties. Uncertain tax positions are positions taken or expected to be taken on an income tax return that may result in additional payments to tax
authorities. We may not be required to settle these obligations and have excluded these obligations from the table as we are not able to reasonably estimate
the timing of the potential future payments, if any.
(2) Construction commitments include capital items to be purchased for projects that were under construction, or for which a lease had been signed, as of
February 1, 2014.
(3) We are able to cancel many of our purchase obligations without payment or penalty, and we have excluded such obligations. One purchase obligation of
approximately $0.1 million is a service contract with a related party that expires in July 2014.
We had outstanding letters of credit that totaled approximately $0.6 million as of February 1, 2014. If certain conditions are met under these arrangements, we
would be required to satisfy the obligations in cash. Due to the nature of these arrangements and based on historical experience and future expectations, we do
not expect to make any significant payment outside of terms set forth in these arrangements.
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Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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