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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K/A
 
 
 (Amendment
No. 1)
 
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For The Fiscal Year Ended January 28, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
 Commission file number 1-10767
 RETAIL VENTURES, INC.
  Ohio
    
    20-0090238(State or other jurisdiction of incorporation or
organization
    
    (I.R.S. Employer Identification No.)3241 Westerville Road, Columbus, Ohio
    
    43224(Address of principal executive offices)
    
    (Zip Code)
   Title of each class:
    
    Name of each exchange on which registered:Common Shares, without par value
    
    New York Stock Exchange
  o þ
 o þ
 þ o
 o
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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Retail Ventures, Inc.
Form 10-K/A
Amendment No. 1




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TABLE OF CONTENTS
  
 Item No.
    
    
    
    PagePART I1.
    
    Business
    
    
    41.A
    
    Risk Factors
    
    
    201.B
    
    Unresolved Staff Comments
    
    
    302.
    
    Properties
    
    
    313.
    
    Legal Proceedings
    
    
    324.
    
    Submission of Matters to a Vote of Security Holders
    
    
    33PART II5.
    
    Market for the Registrants Common Equity, Related Shareholder Matters and
Issuer Purchases of Equity Securities
    
    
    346.
    
    Selected Financial Data
    
    
    357.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    367A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    548.
    
    Financial Statements and Supplementary Data
    
    
    559.
    
    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    559A.
    
    Controls and Procedures
    
    
    559B.
    
    Other Information
    
    
    56PART III10.
    
    Directors and Executive Officers of the Registrant
    
    
    5711.
    
    Executive Compensation
    
    
    5912.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Shareholders Matters
    
    
    5913.
    
    Certain Relationships and Related Transactions
    
    
    5914.
    
    Principal Accountant Fees and Services
    
    
    59PART IV15.
    
    Exhibits, Financial Statement Schedules
    
    
    60Signatures
    61
 2




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TABLE OF CONTENTS TO FINANCIAL STATEMENTS AND SCHEDULES
 Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations
    
    
    F-5Consolidated Statements of Shareholders Equity
    
    
    F-6Consolidated Statements of Cash Flows
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8SCHEDULESI Condensed Financial Information of Registrant
    
    
    S-1IIValuation and Qualifying Accounts
    
    
    S-2Index to Exhibits
    
    
    E-1EX-23EX-31.1EX-31.2EX-32.1EX-32.2
  3




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PART I
   
 Restatement
 
 
  
 
  
 Forward-Looking Information
   
 ITEM 1.
BUSINESS.
 History of Our Business
   4




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General
  Value City.
 DSW.
 5




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Filenes Basement.
 
  
 VALUE CITY
    Merchandising
   6




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Supplier Relationships and Purchasing
    Advertising and Promotion
    7




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Stores
 Store Location, Design and Operations.
     8




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Expansion.
 Distribution
    License Agreements
   Segment Seasonality
  9




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Service Marks, Trademarks and Tradenames
  DSW
   Merchandising
 Selection.
 Value.
  Convenience.
 10




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Supplier Relationships and Purchasing
  Advertising and Promotion
 Indulge in your
passion for shoes
 Reward Your Style
 Stores
 Store Location, Design and Operations.
 11




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Expansion.
   Distribution
  12




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Leased Departments and Supply Agreements
    Segment Seasonality
  Service Marks, Trademarks and Tradenames
 ® ® ®
 FILENES BASEMENT
  13




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Merchandising
 Best Selection of Designer and Famous Brand Merchandise.
 Value Pricing.
  Supplier Relationships and Purchasing
   Advertising and Promotion
  14




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Stores
 Store Location, Design and Operations.
 15




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Expansion.
  Distribution
   16




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License Agreements and Leased Departments
    Segment Seasonality
  Service Marks, Trademarks and Tradenames
 ,
 RVI Management Information and Control Systems
  Value City.
 17




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DSW.
  Reward Your Style Reward Your Style
 Filenes Basement.
 18




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Associates
   Competition
       19




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Available Information
  
 ITEM 1A. RISK FACTORS.
 Safe Harbor Under the Private Securities Litigation Reform Act of 1995
   If we are unable to retain current and attract new customers to our Value City business segment,
our results of operations, cash flow, financial condition and business could be materially
adversely affected.
  We may be unable to open all the DSW and Filenes Basement stores contemplated by our growth
strategy on a timely basis, and new stores we open may not be profitable or may have an adverse
impact on the profitability of existing stores, any of which could have a material adverse effect
on our business, financial condition, cash flow and results of operations.
  
    
    identify suitable markets and sites for new store locations;
    
    negotiate favorable lease terms;
 20




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
    
    build-out or refurbish sites on a timely and effective basis;
    
    obtain sufficient levels of inventory to meet the needs of new stores;
    
    obtain sufficient financing and capital resources or generate sufficient cash flows
from operations to fund growth;
    
    successfully open new DSW and Filenes Basement stores in regions of the United
States in which we currently have few or no stores;
    
    open new stores at costs not significantly greater than those anticipated;
    
    control the costs of other capital investments associated with store openings,
including, for example, those related to the expansion of distribution facilities;
    
    hire, train and retain qualified managers and store personnel; and
    
    successfully integrate new stores into our existing infrastructure, operations and
management and distribution systems or adapt such infrastructure, operations and
systems to accommodate our growth.
   We intend to open new DSW stores at an increased rate compared to historical years, and we intend
to open new Filenes Basement stores, which could strain our resources and have a material adverse
effect on our business and financial performance.
  21




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We rely on our good relationships with vendors to purchase brand name and designer merchandise at
favorable prices. If these relationships were to be impaired, we may not be able to obtain a
sufficient selection of merchandise at attractive prices, and we may not be able to respond
promptly to changing fashion trends, either of which could have a
material adverse effect on our
competitive position, our business and financial performance.
   We may be unable to anticipate and respond to fashion trends and consumer preferences in the
markets in which we operate, which could materially adversely affect our business, financial
condition, cash flow and results of operations.
  
    
    variations in local economic conditions, which could affect our customers discretionary spending;
    
    unanticipated fashion trends;
    
    our success in developing and maintaining vendor relationships that provide us
access to in-season merchandise at attractive prices;
    
    our success in distributing merchandise to our stores in an efficient manner; and
    
    changes in weather patterns, which in turn affect consumer preferences.
  Our operations are affected by seasonal variability.
  22




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Our comparable store sales and quarterly financial performance may fluctuate for a variety of
reasons in addition to seasonal factors, which could result in a decline in the price of our common
shares.
  
    
    changes in our merchandising strategy;
    
    timing and concentration of new store openings and related pre-opening and other start-up costs;
    
    levels of pre-opening expenses associated with new stores;
    
    changes in our merchandise mix;
    
    changes in and regional variations in demographic and population characteristics;
    
    timing of promotional events;
    
    actions by our competitors; and
    
    general United States economic conditions and, in particular, the retail sales environment.
  We have debt which could have consequences if we were unable to repay the balances or interest due.
  
    
    limit our flexibility in planning for, or reacting to, changes in our industry in which we operate;
    
    place us at a competitive disadvantage compared to our competitors that have less debt;
    
    limit our ability to seek and borrow additional funds; and
    
    expose us to risks inherent in interest rate fluctuations because some of our
borrowings are at variable rates of interest, which could result in higher interest
expense in the event of increases in interest rates.
 23




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VCDSs and DSWs secured revolving credit facilities could limit operational flexibility.
 $275 Million Secured Revolving Credit Facility  The VCDS Revolving Loan
  $150 Million Secured Revolving Credit Facility  The DSW Revolving Loan
  24




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Our stock price may fluctuate significantly, which could negatively affect the trading of our
common shares.
  
    
    developments related to DSW and fluctuations in the market
price of DSW shares;
    
    quarterly variations in actual or anticipated operating results;
    
    changes by securities analysts in estimates regarding Retail Ventures;
    
    conditions in the retail industry;
    
    the condition of the stock market; and
    
    general economic conditions.
 Our failure to retain our existing senior management team and to continue to attract qualified new
personnel could materially adversely affect our business.
  We may be unable to compete favorably in our highly competitive markets.
  SSC and/or its affiliates may compete directly against us.
  25




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A decline in general economic conditions, or the outbreak or escalation of war or terrorist acts,
could lead to reduced consumer demand for our merchandise.
   We rely on foreign sources for our merchandise, and our business is therefore subject to risks
associated with international trade.
  
    
    economic and political instability in countries where these suppliers are located;
    
    international hostilities or acts of war or terrorism affecting the United States
or foreign countries from which our merchandise is sourced;
    
    increases in shipping costs;
    
    transportation delays and interruptions, including as a result of increased
inspections of import shipments by domestic authorities;
    
    work stoppages;
    
    adverse fluctuations in currency exchange rates;
    
    laws of the United States affecting the importation of goods, including duties,
tariffs and quotas and other non-tariff barriers;
    
    expropriation or nationalization;
    
    changes in local government administration and governmental policies;
    
    changes in import duties or quotas;
 26




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
    
    compliance with trade and foreign tax laws; and
    
    local business practices, including compliance with local laws and with domestic
and international labor standards.
  DSW and Filenes Basement each rely on a single distribution center. The loss or disruption of
either of these centralized distribution centers could have a
material adverse effect on our business and
operations.
   We will require strong cash flows from our operations to support capital expansion, operations and
debt repayment.
  If we fail to execute our opportunistic buying and inventory management well, our business could be
materially adversely affected.
  27




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If we
do not attract and retain quality sales, distribution center and
other associates in sufficient
numbers as well as experienced buying and management personnel, our
performance could be materially adversely
affected.
  If we
are unable to operate information systems and implement new
technologies effectively, our
business could be materially disrupted or our sales or profitability could be reduced.
  We face security risks related to our electronic processing and transmission of confidential
customer information. On March 8, 2005, we announced the theft of credit card and other purchase
information relating to DSW customers. This security breach could
materially adversely affect our reputation
and business and subject us to liability.
     28




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Accounting for Contingencies
  We continue to be dependent on DSW to provide us with key services for our business.
   We are controlled indirectly by Schottenstein Stores Corporation, whose interests may differ from
our other shareholders.
  29




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Some of our directors and officers also serve as directors or officers of DSW, and may have
conflicts of interest because they may own DSW stock or options to purchase DSW stock, or they may
receive cash-based or equity-based awards based on the performance of DSW.
  
 ITEM 1B.UNRESOLVED STAFF COMMENTS.
  30




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ITEM 2. PROPERTIES.
  Value
    
    
    
    
    
    FilenesCity
    
    DSW
    
    Basement
    
    TotalAlabama
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Arizona
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5California
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    14Colorado
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Connecticut
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Delaware
    
    
    3
    
    
    
    1
    
    
    
    
    
    
    
    4Florida
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Georgia
    
    
    4
    
    
    
    7
    
    
    
    1
    
    
    
    12Illinois
    
    
    16
    
    
    
    10
    
    
    
    3
    
    
    
    29Indiana
    
    
    7
    
    
    
    6
    
    
    
    
    
    
    
    13Iowa
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Kansas
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Kentucky
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Maine
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Maryland
    
    
    8
    
    
    
    6
    
    
    
    2
    
    
    
    16Massachusetts
    
    
    
    
    
    
    8
    
    
    
    9
    
    
    
    17Michigan
    
    
    9
    
    
    
    11
    
    
    
    
    
    
    
    20Minnesota
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Missouri
    
    
    6
    
    
    
    4
    
    
    
    
    
    
    
    10Nebraska
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Nevada
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3New Hampshire
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1New Jersey
    
    
    6
    
    
    
    8
    
    
    
    1
    
    
    
    15New York
    
    
    
    
    
    
    17
    
    
    
    6
    
    
    
    23North Carolina
    
    
    1
    
    
    
    4
    
    
    
    
    
    
    
    5Ohio
    
    
    22
    
    
    
    11
    
    
    
    1
    
    
    
    34Oklahoma
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Pennsylvania
    
    
    18
    
    
    
    10
    
    
    
    1
    
    
    
    29Rhode Island
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Tennessee
    
    
    1
    
    
    
    3
    
    
    
    
    
    
    
    4Texas
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Virginia
    
    
    4
    
    
    
    9
    
    
    
    
    
    
    
    13Washington D.C.
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3West Virginia
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Wisconsin
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4113
    
    
    
    199
    
    
    
    27
    
    
    
    339
  31




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ITEM 3. LEGAL PROCEEDINGS.
       32




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Accounting for Contingencies
   
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  33




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PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
  High
    
    LowFiscal 2004:First Quarter
    
    $
    8.60
    
    
    $
    5.02Second Quarter
    
    
    9.70
    
    
    
    6.13Third Quarter
    
    
    8.04
    
    
    
    6.32Fourth Quarter
    
    
    7.67
    
    
    
    6.02Fiscal 2005:First Quarter
    
    $
    10.25
    
    
    $
    6.60Second Quarter
    
    
    14.34
    
    
    
    9.80Third Quarter
    
    
    14.12
    
    
    
    8.95Fourth Quarter
    
    
    14.03
    
    
    
    10.02Fiscal 2006:First Quarter
    
    $
    14.74
    
    
    $
    12.35(through March 31, 2006)
  34




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Total number
    
    Maximumof shares
    
    number ofpurchased as
    
    shares that mayTotal
    
    Average
    
    part of publicly
    
    yet benumber of
    
    price
    
    announced
    
    purchasedshares
    
    paid per
    
    plans or
    
    under plans orPeriod
    
    purchased
    
    share
    
    programs
    
    programsOctober 30, 2005 - November 26, 2005
    
    None
    
    
    
    
    
    NoneNovember 27, 2005 - December 31, 2005
    
    None
    
    
    
    
    
    NoneJanuary 1, 2006 - January 28, 2006
    
    None
    
    
    
    
    
    NoneTotal
    
    None
    
    
    
    
    
    None
 
 ITEM 6. SELECTED FINANCIAL DATA.
  35




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For the Fiscal Year EndedJanuary 28,
    
    
    January 29,
    
    
    January 31,
    
    
    February 1,
    
    
    February 2,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Restated(dollars in thousands, except per share amounts and net sales per selling square feet)Net sales
    
    $
    2,913,371
    
    
    $
    2,739,631
    
    
    $
    2,594,206
    
    
    $
    2,450,719
    
    
    $
    2,283,878Operating (loss) profit
    
    $
    (136,991
    )
    
    $
    6,685
    
    
    $
    31,658
    
    
    $
    36,706
    
    
    $
    (15,430
    )Loss before cumulative
effect of accounting change
    
    $
    (183,418
    )
    
    $
    (19,448
    )
    
    $
    (5,219
    )
    
    $
    (2,357
    )
    
    $
    (30,256
    )Cumulative effect of accounting change
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (2,080
    )
    
    $
    Net loss
    
    $
    (183,418
    )
    
    $
    (19,448
    )
    
    $
    (5,219
    )
    
    $
    (4,437
    )
    
    $
    (30,256
    )Basic loss per share before
cumulative effect of accounting change
    
    $
    (4.75
    )
    
    $
    (0.57
    )
    
    $
    (0.15
    )
    
    $
    (0.07
    )
    
    $
    (0.90
    )Cumulative effect of accounting change
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (0.06
    )
    
    $
    Basic loss per share
    
    $
    (4.75
    )
    
    $
    (0.57
    )
    
    $
    (0.15
    )
    
    $
    (0.13
    )
    
    $
    (0.90
    )Diluted loss per share
    
    $
    (4.75
    )
    
    $
    (0.57
    )
    
    $
    (0.15
    )
    
    $
    (0.13
    )
    
    $
    (0.90
    )Total assets
    
    $
    1,086,574
    
    
    $
    976,426
    
    
    $
    860,592
    
    
    $
    828,126
    
    
    $
    883,045Working capital
    
    $
    184,961
    
    
    $
    233,568
    
    
    $
    227,665
    
    
    $
    174,971
    
    
    $
    225,740Current ratio
    
    
    1.33
    
    
    
    1.65
    
    
    
    1.84
    
    
    
    1.57
    
    
    
    1.77Long-term obligations
    
    $
    165,995
    
    
    $
    343,375
    
    
    $
    326,940
    
    
    $
    264,664
    
    
    $
    337,199Number of:(1)Value City Stores
    
    
    113
    
    
    
    116
    
    
    
    116
    
    
    
    116
    
    
    
    117DSW Stores
    
    
    199
    
    
    
    172
    
    
    
    142
    
    
    
    126
    
    
    
    104Filenes Basement Stores
    
    
    27
    
    
    
    26
    
    
    
    21
    
    
    
    20
    
    
    
    20Net sales per selling sq. ft. (2)
    
    $
    219.08
    
    
    $
    221.00
    
    
    $
    225.00
    
    
    $
    224.00
    
    
    $
    233.00Comparable store sales change (3)
    
    
    0.5
    %
    
    
    -1.0
    %
    
    
    1.2
    %
    
    
    -3.5
    %
    
    
    -2.4
    %
 
 
 (1)
    
    Includes all stores operating at the end of the fiscal year.(2)
    
    Presented in whole dollars and excludes leased departments and stores not
operated during the entire fiscal period.(3)
    
    A store or leased department is considered to be comparable if it has been
opened 14 months at the beginning of the fiscal year. 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  
  
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OVERVIEW
   
  
  Key Financial Measures
   Fiscal Year; Seasonality
  37




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CRITICAL ACCOUNTING POLICIES
    
    
    Revenue recognition. Revenues from merchandise sales are recognized at the point of
sale and are net of returns and exclude sales tax. Revenue from gift cards is deferred and
is recognized upon redemption of the gift cards. Layaway sales are recognized when the
merchandise has been paid for in full. The layaway program was discontinued in fiscal
2004.
    
    Cost of sales and merchandise inventories. We use the retail method of accounting for
substantially all of our merchandise inventories. Merchandise inventories are stated at
the lower of cost, determined using the first-in, first-out basis, or market, using the
retail inventory method. The retail inventory method is widely used in the retail industry
due to its practicality. Under the retail inventory method, the valuation of inventories
at cost and the resulting gross margins are calculated by applying a calculated cost to
retail ratio to the retail value of inventories. The cost of the inventory reflected on
our consolidated balance sheet is decreased by charges to cost of sales at the time the
retail value of the inventory is lowered through the use of markdowns. Accordingly
earnings are negatively impacted as merchandise is marked down prior to sale. Reserves to
value inventory at the lower of cost or market were $43.1 million and $42.8 million at the
end of fiscal 2005 and 2004, respectively.Inherent in the calculation of inventories are certain significant management judgments and
estimates, including setting the original merchandise retail value or markon, markups of
initial prices established, reduction of pricing due to customers value perception or
perceived value known as markdowns, and estimates of losses between physical inventory
counts or shrinkage, which, combined with the averaging
 38




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process within the retail method, can significantly impact the ending inventory valuation
at cost, and the resulting gross margins.
    
    Asset impairment and long-lived assets. We must periodically evaluate the carrying
amount of our long-lived assets, primarily property and equipment, and finite life
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 is considered
impaired when the carrying amount of the asset exceeds the expected future cash flows from
the asset. Our reviews are conducted at the lowest identifiable level, which includes a
store. The impairment loss recognized is the excess of the carrying value, based on
discounted future cash flows, of the asset over its fair value. Should an impairment loss
be realized, it will be included in operating expenses. Assets acquired for stores that
have been previously impaired are not capitalized when acquired if the stores expected
future cash flow remains negative. During fiscal 2005, fiscal 2004 and fiscal 2003, we
recorded $0.5 million, $2.9 million (including the impairment of a capital lease of $1.2
million related to a store closing) and $0.3 million in charges, respectively, related to
long-lived assets at store operating units.During fiscal 2004 we recorded a non-cash charge of $11.7 million, $6.9 million net of
taxes, for the impairment of goodwill related to Filenes Basement. The balance of goodwill
subject to goodwill annual testing at the end of the current fiscal year was $25.9 million
on the DSW segment.We believe at this time that the carrying values and useful lives of long-lived assets
continue to be appropriate. To the extent these future projections or our strategies
change, the conclusion regarding impairment may differ from our current estimates.
    
    Self-insurance reserves. We record

estimates for certain health and welfare, workers
compensation and casualty insurance costs that are self-insured programs. Self insurance reserves
include actuarial estimates of both claims filed, carried at their expected ultimate settlement
value, and claims incurred but not yet reported. Our liability represents an estimate of the
ultimate cost of claims incurred as of the balance sheet date. Health and welfare estimates are
calculated monthly, based on a historical analysis for the average of the previous three months
claims cost and the number of associates employed. Workers compensation and casualty insurance
estimates are calculated semi-annually, with the assistance of an actuary, utilizing claims
development estimates based on historical experience and other factors. We have purchased stop loss
insurance to limit our exposure to any significant exposure on a per person basis for health and
welfare and on a per claim basis for workers compensation and casualty insurance. Although we do
not anticipate the amounts ultimately paid will differ significantly from our estimates,
self-insurance reserves could be affected if future claim experience differs significantly from the
historical trends and the actuarial assumptions. For example, for workers compensation and
liability claims estimates, a 1% increase or decrease to the assumptions for claims costs and loss
development factors would increase or decrease our self-insurance accrual by $0.4 million and $0.1
million, respectively. The self-insurance reserves were $17.6 million and $21.8 million at the end
of fiscal 2005 and 2004, respectively. The decrease in self-insurance reserves was principally
associated with the workers compensation reserve as a result of the completion of a bureau of
workers compensation audit.
    
    Pension. The obligations and related assets of defined benefit retirement plans are
presented in Note 8 of the Notes to Consolidated Financial Statements starting on page
F-26 of this Annual Report. Plan assets, which consist primarily of marketable equity and
debt instruments, are valued using market quotations. Plan obligations and the annual
pension expense are determined by independent actuaries and through the use of a number of
assumptions. Key assumptions in measuring the plan obligations include the discount rate,
the rate of salary increases and the estimated future return on plan assets. In
determining the discount rate, we utilize the yield on fixed-income investments currently
available with maturities corresponding to the anticipated timing of the benefit payments.
Salary increase assumptions are based upon historical experience and anticipated future
management actions. Asset returns are based upon the anticipated average rate of earnings
expected on the invested funds of the plans. At January 29, 2005, the weighted-average
actuarial assumptions applied to our plans were:
discount rate 5.75%, assumed salary increases 4.0% and long-term rate of return on plan assets
8.0%. At January 28, 2006, the weighted-average
actuarial assumptions applied to our plans were: discount rate 5.75%, assumed salary
increases 3.5% and long-term rate of return on plan assets 8.0%. To the extent actual
results vary from assumptions, earnings would be impacted.
    
    Customer loyalty program. DSW maintains a customer loyalty program for our DSW stores
in which customers receive a future discount on qualifying purchases. The Reward Your
Style program is designed to promote customer awareness and loyalty plus provide DSW with
the ability to communicate with our customers and enhance our understanding of their
spending trends. While the program develops customer loyalty, it also provides DSW with
valuable market intelligence and purchasing information regarding its
 39




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##### Table of Contents



most frequent
customers. Upon reaching the target level, customers may redeem these discounts on a
future purchase. Generally, these future discounts must be redeemed within six months. We
accrue the estimated costs of the anticipated redemptions of the discount earned at the
time of the initial purchase and charge such costs to selling, general and administrative
expense based on historical experience. The estimates of the costs associated with the
loyalty program require us to make assumptions related to customer purchase levels and
redemption rates. The accrued liability as of January 28, 2006 and January 29, 2005, was
$8.3 million and $4.5 million, respectively. To the extent assumptions of purchases and
redemption rates vary from actual results, earnings would be impacted.During the third quarter of 2004, Filenes Basement implemented a limited-time customer
rewards program that ended in December 2004. The rewards program provided qualifying
customers with Filenes Basement gift cards in various denominations based on their
cumulative spending during the program period. Filenes Basement had an accrued liability
related to the rewards program of $0.8 million at January 29, 2005. These rewards were
redeemed in the first quarter of fiscal 2005, and no liability remains at January 28, 2006.
    
    Change in fair value of Warrants. In accordance with SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended, the Company recognizes all
derivatives on the balance sheet at fair value. For derivatives that are not designated as
hedges under SFAS No. 133, changes in the fair values are recognized in earnings in the
period of change. During the
fiscal years 2005 and 2004, the company did not have any derivative financial
instruments that were held or issued and accounted for as hedges of anticipated transactions and
there were no outstanding swap agreements.

During fiscal 2005 the Company recorded a charge related to the change in the
fair value of the warrants of $144.2 million, including a $134.2 million charge relating to
the initial recording of the conversion warrants. The initial recording and change in fair
value of the warrants were non-cash in nature.
    
    Income taxes. We are required to determine the aggregate amount of income tax expense
to accrue and the amount which will be currently payable based upon tax statutes of each
jurisdiction we do business in. In making these estimates, we adjust income based on a
determination of generally accepted accounting principles for items that are treated
differently by the applicable taxing authorities. Deferred tax assets and liabilities, as
a result of these differences, are reflected on our balance sheet for temporary
differences that will reverse in subsequent years. A valuation allowance is established
against deferred tax assets when it is more likely than not that some or all of the
deferred tax assets will not be realized. If our management had made these determinations
on a different basis, our tax expense, assets and liabilities could be different. During
fiscal 2005, we established an additional valuation reserve of $14.4 million for state net
operating loss carry forwards and wrote off $4.0 million of deferred tax assets no longer
deductible as a result of changes in state income tax laws in Ohio. During fiscal 2004, we
established an additional valuation reserve for deferred income tax assets of $3.2 million
for carry forwards related to state net operating losses. During fiscal 2003, we
established a valuation reserve for deferred income tax assets of $1.5 million for
charitable contribution carry forwards.Following the completion of the DSW initial public
offering (IPO) in June 2005, DSW is no
longer included in Retail Ventures consolidated federal tax return.
 RESULTS OF OPERATIONS
  40




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##### Table of Contents



Fifty-two weeks endedJanuary 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004RestatedNet sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    (61.9
    )
    
    
    (60.7
    )
    
    
    (61.4
    )Gross profit
    
    
    38.1
    
    
    
    39.3
    
    
    
    38.6Selling, general and administrative expenses
    
    
    (38.1
    )
    
    
    (39.3
    )
    
    
    (37.6
    )Change in fair value of warrants
    
    
    (5.0
    )
    
    
    0.0
    
    
    
    0.0License fees and other income
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.2Operating
(loss) profit
    
    
    (4.7
    )
    
    
    0.2
    
    
    
    1.2Interest expense, net:Non-related
    
    
    (0.4
    )
    
    
    (0.5
    )
    
    
    (0.4
    )Related parties
    
    
    (0.5
    )
    
    
    (0.9
    )
    
    
    (1.0
    )Loss before income taxes and minority interest
    
    
    (5.6
    )
    
    
    (1.2
    )
    
    
    (0.2
    )Income taxes (expense) benefit
    
    
    (0.5
    )
    
    
    0.5
    
    
    
    0.0Loss before minority interest
    
    
    (6.1
    )
    
    
    (0.7
    )
    
    
    (0.2
    )Minority interest
    
    
    (0.2
    )
    
    
    0.0
    
    
    
    0.0Net loss
    
    
    (6.3
    )%
    
    
    (0.7
    )%
    
    
    (0.2
    )%
 
 41




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##### Table of Contents



Fiscal Year Ended January 28, 2006 (fiscal 2005) Compared To Fiscal Year Ended January 29, 2005
(fiscal 2004)
 Sales.
 2005
    
    
    2004Value City Department Stores
    
    
    (3.2
    )%
    
    
    (4.9
    )%DSW
    
    
    5.4
    %
    
    
    5.0
    %Filenes Basement
    
    
    3.5
    %
    
    
    4.7
    %Total
    
    
    0.5
    %
    
    
    (1.0
    )%
     42




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##### Table of Contents



Gross Profit.
  2005
    
    
    2004Value City
    
    
    35.6
    %
    
    
    38.0
    %DSW
    
    
    42.4
    %
    
    
    43.2
    %Filenes Basement
    
    
    34.3
    %
    
    
    33.7
    %Total
    
    
    38.1
    %
    
    
    39.3
    %
    
 Selling, General and Administrative Expenses.
 
 43




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##### Table of Contents



2005
    
    
    2004Value City Department Stores
    
    
    39.8
    %
    
    
    40.0
    %DSW
    
    
    36.3
    %
    
    
    37.2
    %Filenes Basement
    
    
    39.5
    %
    
    
    43.1
    %Total
    
    
    38.1
    %
    
    
    39.3
    %
    Change in Fair Value of Warrants.
 
  
 44




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##### Table of Contents



License fees and other income.
 
 Operating
(Loss) Profit.
 
 
  
 
 2005
    
    
    2004Value City
    
    
    (14.2
    )%
    
    
    (1.7
    )%DSW
    
    
    6.1
    %
    
    
    6.1
    %Filenes Basement
    
    
    (2.8
    )%
    
    
    (7.8
    )%Total
    
    
    (4.7
    )%
    
    
    0.2
    %
 
 Interest expense.
 
 Income
Taxes.
 
 Minority Interest.
 
 Net
Loss.
 
 45




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##### Table of Contents



Fiscal Year Ended January 29, 2005 (fiscal 2004) Compared To Fiscal Year Ended January 31, 2004
(fiscal 2003)
 Sales.
 2004
    
    
    2003Value City Department Stores
    
    
    (4.9
    )%
    
    
    (0.7
    )%DSW
    
    
    5.0
    %
    
    
    5.9
    %Filenes Basement
    
    
    4.7
    %
    
    
    1.8
    %Total
    
    
    (1.0
    )%
    
    
    1.2
    %
    Gross profit.
    46




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##### Table of Contents



2004
    
    
    2003Value City Department Stores
    
    
    38.0
    %
    
    
    38.5
    %DSW
    
    
    43.2
    %
    
    
    41.0
    %Filenes Basement
    
    
    33.7
    %
    
    
    32.8
    %Total
    
    
    39.3
    %
    
    
    38.6
    %
 Selling, General and Administrative Expenses.
  2004
    
    
    2003Value City Department Stores
    
    
    40.0
    %
    
    
    38.0
    %DSW
    
    
    37.2
    %
    
    
    37.4
    %Filenes Basement
    
    
    43.1
    %
    
    
    37.1
    %Total
    
    
    39.3
    %
    
    
    37.6
    %
 License fees and other income.
 Operating profit.
  2004
    
    
    2003Value City
    
    
    (1.7
    )%
    
    
    0.7
    %DSW
    
    
    6.1
    %
    
    
    3.7
    %Filenes Basement
    
    
    (7.8
    )%
    
    
    (2.7
    )%Total
    
    
    0.2
    %
    
    
    1.2
    %
 Interest expense.
 47




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##### Table of Contents



Income Taxes.
 Net Loss.
 Seasonality
  Fiscal Year
  Adoption of Accounting Standards
  Accounting for Stock-Based Compensation
 Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
 48




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##### Table of Contents



Inflation
  Liquidity and Capital Resources
  
  
     49




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##### Table of Contents



Revolving Credit Facilities
 $275 Million Secured Revolving Credit Facility  The VCDS Revolving Loan
  $150 Million Secured Revolving Credit Facility  The DSW Revolving Loan
  50




---



##### Table of Contents



Term Loans  Related Parties
    Amendment to Term Loans
  51




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##### Table of Contents



Senior Subordinated Convertible Loan  Related Parties
 $75 Million Senior Subordinated Convertible Loan
  $50 Million Second Amended and Restated Senior Loan Agreement  The Non-Convertible Loan
  Contractual Obligations
  52




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##### Table of Contents



Payments due by PeriodNoLess Than
    
    
    1 - 3
    
    
    3 - 5
    
    
    More Than
    
    
    ExpirationContractual
Obligations(5)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years
    
    
    DateLong-term debt
    
    $
    138,000
    
    
    $
    
    
    
    $
    
    
    
    $
    138,000
    
    
    $
    
    
    
    $
    Interest
payments on long-term
debt(1)
    
    
    19,122
    
    
    
    7,218
    
    
    
    10,112
    
    
    
    1,792
    
    
    
    
    
    
    
    Capital lease and operating lease
obligations(2)
    
    
    1,419,705
    
    
    
    168,135
    
    
    
    327,499
    
    
    
    286,878
    
    
    
    637,193
    
    
    
    Construction
commitments(3)
    
    
    720
    
    
    
    720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase
obligations(4)
    
    
    28,554
    
    
    
    16,297
    
    
    
    8,280
    
    
    
    3,977
    
    
    
    
    
    
    
    Total
    
    $
    1,606,101
    
    
    $
    192,370
    
    
    $
    345,891
    
    
    $
    430,647
    
    
    $
    637,193
    
    
    $
    
 
 
 1.
    
    Projected interest payments are for the Senior Loan Agreement
and the VCDS Revolving Loan and are based on the
outstanding principal amount at January 28, 2006 and interest rate per the agreement.2.
    
    Capital and operating leases require us, as part of the lease, to pay for common area
maintenance, real estate taxes and contingent rents. In fiscal 2005, the common area
maintenance and real estate taxes represented 35.4% of the required lease payment. These
costs vary year by year and are based almost entirely on actual costs incurred by the landlord and
as such are not included in the lease obligations presented above.3.
    
    Construction commitments include capital items to be purchased for projects that were
under construction, or for which a lease had been signed, as of January 28, 2006.4.
    
    Many of our purchase commitments are cancelable by us without payment or penalty, and we
have excluded such commitments, along with all associate employment and intercompany
commitments.5.
    
    Deferred taxes, minority interest and payments related to pension plans are not included
in this table.    53




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##### Table of Contents



Off-Balance Sheet Arrangements
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Secured Revolving Credit Facilities
   Warrants
  
  
 54




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
 
  
 
    
 Managements Report on Internal Control over Financial Reporting
     55




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION.
  56




---



##### Table of Contents



PART III
 
 ITEM
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 Executive Officers
  Heywood Wilansky
 James A. McGrady
 Julia A. Davis
 Jed L.
Norden
 Steven E. Miller
 Audit Committee
  57




---



##### Table of Contents



Code of Ethics and Corporate Governance Information
 www.retailventuresinc.com www.retailventuresinc.com
  Other
 ELECTION
OF DIRECTORS, OTHER DIRECTOR INFORMATION, COMMITTEES OF DIRECTORS AND CORPORATE GOVERNANCE
INFORMATION
    58




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##### Table of Contents



Item 11.
EXECUTIVE COMPENSATION.
 COMPENSATION OF MANAGEMENT OTHER DIRECTOR INFORMATION COMMITTEES OF DIRECTORS AND CORPORATE
GOVERNANCE INFORMATION  GENERAL
 
 Item 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS.
 SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, COMPENSATION OF MANAGEMENT  EQUITY
COMPENSATION PLAN TABLE
 
 Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
 
 Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 AUDIT AND
OTHER SERVICE FEES
 59




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 15(a)(1) Financial Statements
  Page inForm 10-KReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets at January 28, 2006 and January 29, 2005
    
    
    F-3Consolidated Statements of Operations for the years ended
January 28, 2006, January 29, 2005 and January 31, 2004
    
    
    F-5Consolidated Statements of Shareholders Equity for the years ended
January 28, 2006, January 29, 2005 and January 31, 2004
    
    
    F-6Consolidated Statements of Cash Flows for the years ended
January 28, 2006, January 29, 2005 and January 31, 2004
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-815(a)(2) Consolidated Financial Statement Schedules:The schedule listed below is filed as part of this Form 10-K:Schedule I. Condensed Financial Information of Registrant
    
    
    S-1Schedule II. Valuation and Qualifying Accounts
    
    
    S-2
  15(a)(3) and (b) Exhibits:
  15(c) Additional Financial Statement Schedules:
  60




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##### Table of Contents



SIGNATURES
  RETAIL VENTURES, INC.August 1, 2006
    
    By:
    
    /s/ James A. McGradyJames A. McGrady, Executive Vice President,
Chief Financial Officer, Treasurer and Secretary
  
 Signature
    
    Title
    
    Date*
    
    Chairman of the Board of Directors
    
    August 1, 2006Jay L. Schottenstein/s/ Heywood Wilansky

Heywood Wilansky
    

President, Chief Executive
Officer

and Director (Principal Executive Officer)
    
    August 1, 2006/s/ James A. McGrady

James A. McGrady
    

Executive
Vice President, Chief
Financial

Officer, Treasurer and Secretary

(Principal Financial and Accounting Officer)
    
    August 1, 2006*
    
    Director
    
    August 1, 2006Henry L. Aaron*
    
    Director
    
    August 1, 2006Ari Deshe*
    
    Director
    
    August 1, 2006Jon P. Diamond*
    
    Director
    
    August 1, 2006Elizabeth M. Eveillard*
    
    Director
    
    August 1, 2006Lawrence J. Ring
 
 61




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##### Table of Contents



Signature
    
    Title
    
    Date*
    
    Director
    
    August 1, 2006Harvey L. Sonnenberg*
    
    Director
    
    August 1, 2006James L. Weisman
 
 
 *By:
    
    /s/ James A. McGradyJames A. McGrady, (Attorney-in-fact)
 62




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




---



##### Table of Contents



/s/ Deloitte & Touche LLPColumbus, OhioApril 12, 2006(July 31, 2006 as to the effects of the warrant liability restatement described in Note 2) 
 F-2




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##### Table of Contents



RETAIL VENTURES, INC.
 
 CONSOLIDATED
BALANCE SHEETSJanuary 28, 2006 and January 29, 2005
 (in thousands, except share amounts)
 
 January 28,
    
    
    January 29,2006
    
    
    2005Restated*ASSETSCash and equivalents
    
    $
    138,731
    
    
    $
    29,258Accounts receivable, net
    
    
    19,259
    
    
    
    7,455Receivables from related parties
    
    
    437
    
    
    
    501Inventories
    
    
    491,867
    
    
    
    473,051Prepaid expenses and other assets
    
    
    26,814
    
    
    
    21,112Deferred income taxes
    
    
    66,581
    
    
    
    62,355Total current assets
    
    
    743,689
    
    
    
    593,732Property and equipment, at cost:Furniture, fixtures and equipment
    
    
    348,296
    
    
    
    321,513Leasehold improvements
    
    
    272,835
    
    
    
    268,423Land and building
    
    
    789
    
    
    
    801Capital leases
    
    
    32,300
    
    
    
    36,265654,220
    
    
    
    627,002Accumulated depreciation and amortization
    
    
    (385,094
    )
    
    
    (346,548
    )Property and equipment, net
    
    
    269,126
    
    
    
    280,454Goodwill
    
    
    25,899
    
    
    
    25,899Tradenames and other intangibles, net
    
    
    39,217
    
    
    
    43,460Deferred income taxes
    
    
    
    
    
    
    29,274Other assets
    
    
    8,643
    
    
    
    3,607Total assets
    
    $
    1,086,574
    
    
    $
    976,426
 
 
   
 F-3




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##### Table of Contents



RETAIL VENTURES, INC.  CONSOLIDATED BALANCE SHEETS (Continued)  January 28, 2006 and January 29, 2005  (in thousands, except share amounts)
 January 28,
    
    
    January 29,2006
    
    
    2005Restated*LIABILITIES AND SHAREHOLDERS EQUITYAccounts payable
    
    $
    221,444
    
    
    $
    202,578Accounts payable to related parties
    
    
    4,901
    
    
    
    5,428Accrued expenses:Compensation
    
    
    35,085
    
    
    
    38,526Taxes
    
    
    37,869
    
    
    
    48,666Other
    
    
    88,403
    
    
    
    64,355Warrant
liability ($168,680 - related party)
    
    
    170,403Current maturities of long-term obligations
    
    
    623
    
    
    
    611Total current liabilities
    
    
    558,728
    
    
    
    360,164Long-term obligations, net of current maturities:Non-related parties
    
    
    115,995
    
    
    
    169,134Related parties
    
    
    50,000
    
    
    
    174,241Other noncurrent liabilities
    
    
    87,080
    
    
    
    87,710Deferred income taxes
    
    
    45,829Minority interest
    
    
    112,396Commitments and contingenciesShareholders equity:Common shares, without par value;
160,000,000 authorized; issued, including treasury shares
39,864,577 and 34,110,707, respectively
    
    
    159,617
    
    
    
    143,477Warrants
    
    
    
    
    
    
    6,074(Accumulated
deficit) retained earnings
    
    
    (36,082
    )
    
    
    42,756Deferred compensation expense, net
    
    
    (1
    )
    
    
    (3
    )Treasury shares, at cost, 7,551 shares
    
    
    (59
    )
    
    
    (59
    )Accumulated other comprehensive loss
    
    
    (6,929
    )
    
    
    (7,068
    )Total shareholders equity
    
    
    116,546
    
    
    
    185,177Total liabilities and shareholders equity
    
    $
    1,086,574
    
    
    $
    976,426
 
  
  F-4




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##### Table of Contents



RETAIL VENTURES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended January 28, 2006, January 29, 2005 and January 31, 2004
(in thousands, except per share amounts)
 January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Restated*Net sales
    
    $
    2,913,371
    
    
    $
    2,739,631
    
    
    $
    2,594,206Cost of sales
    
    
    (1,804,139
    )
    
    
    (1,663,215
    )
    
    
    (1,593,214
    )Gross profit
    
    
    1,109,232
    
    
    
    1,076,416
    
    
    
    1,000,992Selling, general and administrative expenses
    
    
    (1,110,950
    )
    
    
    (1,076,445
    )
    
    
    (974,944
    )Change in fair value of warrants
    
    
    (144,209
    )License fees and other income
    
    
    8,936
    
    
    
    6,714
    
    
    
    5,610Operating (loss) profit
    
    
    (136,991
    )
    
    
    6,685
    
    
    
    31,658Non-related
parties interest expense
    
    
    (13,526
    )
    
    
    (13,465
    )
    
    
    (12,144
    )Related
parties interest expense
    
    
    (14,335
    )
    
    
    (25,741
    )
    
    
    (26,570
    )Total
interest expense
    
    
    (27,861
    )
    
    
    (39,206
    )
    
    
    (38,714
    )Interest
income
    
    
    1,660
    
    
    
    645
    
    
    
    119Interest
expense, net
    
    
    (26,201
    )
    
    
    (38,561
    )
    
    
    (38,595
    )Loss before income taxes and minority interest
    
    
    (163,192
    )
    
    
    (31,876
    )
    
    
    (6,937
    )Income taxes (expense) benefit
    
    
    (13,224
    )
    
    
    12,428
    
    
    
    1,718Loss before minority interest
    
    
    (176,416
    )
    
    
    (19,448
    )
    
    
    (5,219
    )Minority interest
    
    
    (7,002
    )Net loss
    
    $
    (183,418
    )
    
    $
    (19,448
    )
    
    $
    (5,219
    )Basic and diluted loss per share
    
    $
    (4.75
    )
    
    $
    (0.57
    )
    
    $
    (0.15
    )Shares used in basic and diluted per share calculations
    
    
    38,586
    
    
    
    33,956
    
    
    
    33,753
 
  
  F-5




---



##### Table of Contents



RETAIL VENTURES, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 Years Ended January 28, 2006, January 29, 2005 and January 31, 2004
(in thousands)
 
 Number of SharesRetained
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon
    
    
    
    
    
    
    
    
    
    
    Earnings
    
    
    Deferred
    
    
    
    
    
    
    OtherCommon
    
    
    Shares in
    
    
    Common
    
    
    
    
    
    
    (Accumulated
    
    
    Compensation
    
    
    Treasury
    
    
    Comprehen-Shares
    
    
    Treasury
    
    
    Shares
    
    
    Warrants
    
    
    Deficit)
    
    
    Expense
    
    
    Shares
    
    
    sive Loss
    
    
    TotalBalance, February 1, 2003
    
    
    33,913
    
    
    
    8
    
    
    $
    143,183
    
    
    $
    6,074
    
    
    $
    67,423
    
    
    $
    (981
    )
    
    $
    (59
    )
    
    $
    (5,820
    )
    
    $
    209,820Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,219
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,219
    )Net unrealized gain on derivative
financial instruments, net of
income tax provision of $413
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    620
    
    
    
    620Change in minimum pension liability,
net of income tax benefit of $541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (811
    )
    
    
    (811
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,410
    )Exercise of stock options
    
    
    20
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Net issuance/forfeitures of
restricted shares
    
    
    58
    
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred
compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    180Balance, January 31, 2004
    
    
    33,991
    
    
    
    8
    
    
    $
    143,077
    
    
    $
    6,074
    
    
    $
    62,204
    
    
    $
    (635
    )
    
    $
    (59
    )
    
    $
    (6,011
    )
    
    $
    204,650Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,448
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,448
    )Change in minimum pension liability,
net of income tax benefit of $753
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,057
    )
    
    
    (1,057
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,505
    )Exercise of stock options
    
    
    136
    
    
    
    
    
    
    
    504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504Net forfeitures of
restricted shares
    
    
    (16
    )
    
    
    
    
    
    
    (104
    )
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred
compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    
    
    
    
    528Balance, January 29, 2005
    
    
    34,111
    
    
    
    8
    
    
    $
    143,477
    
    
    $
    6,074
    
    
    $
    42,756
    
    
    $
    (3
    )
    
    $
    (59
    )
    
    $
    (7,068
    )
    
    $
    185,177Net loss (as restated)*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183,418
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183,418
    )Change in minimum pension liability,
net of income tax expense of $924
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    139Total
comprehensive loss (as restated)*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (183,279
    )Initial public offering of subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,187Capital transactions of subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393Exercise of stock options
    
    
    5,754
    
    
    
    
    
    
    
    26,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,286Tax benefit related to stock
options exercised
    
    
    
    
    
    
    
    
    
    
    9,974
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,974Amortization of deferred
compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2Warrant reclassification to liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,074
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,074
    )Warrant
adjustment to fair value (as restated)*
    
    
    
    
    
    
    
    
    
    
    (20,120
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,120
    )Balance,
January 28, 2006 (as restated)*
    
    
    39,865
    
    
    
    8
    
    
    $
    159,617
    
    
    $
    
    
    
    $
    (36,082
    )
    
    $
    (1
    )
    
    $
    (59
    )
    
    $
    (6,929
    )
    
    $
    116,546
 
 
  
  F-6




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##### Table of Contents



RETAIL VENTURES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended January 28, 2006, January 29, 2005 and January 31, 2004
(in thousands)
 
 January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Restated *Cash flows from operating activities:Net loss
    
    $
    (183,418
    )
    
    $
    (19,448
    )
    
    $
    (5,219
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Amortization of debt issuance costs and discount on debt
    
    
    4,422
    
    
    
    5,380
    
    
    
    6,055Amortization of deferred compensation
    
    
    2
    
    
    
    528
    
    
    
    180Depreciation and amortization
    
    
    58,889
    
    
    
    56,111
    
    
    
    53,432Change in
fair value of warrants ($144,058  related party)
    
    
    144,209Deferred income taxes and other noncurrent liabilities
    
    
    2,872
    
    
    
    (8,264
    )
    
    
    1,761Tax benefit related to stock options exercised
    
    
    9,974Loss on disposal of assets
    
    
    1,735
    
    
    
    120
    
    
    
    1,282Gain on lease termination
    
    
    (9,536
    )Minority interest in consolidated subsidiary
    
    
    7,353Impairment charges
    
    
    507
    
    
    
    14,596
    
    
    
    312Other
    
    
    393Change in working capital, assets and liabilities:Receivables
    
    
    (11,740
    )
    
    
    1,150
    
    
    
    2,493Inventories
    
    
    (18,816
    )
    
    
    (52,713
    )
    
    
    (30,513
    )Prepaid expenses and other assets
    
    
    (10,825
    )
    
    
    (12,013
    )
    
    
    11,546Accounts payable
    
    
    16,419
    
    
    
    58,488
    
    
    
    (15,259
    )Proceeds from lease incentives
    
    
    10,781
    
    
    
    13,099
    
    
    
    7,094Accrued expenses
    
    
    9,524
    
    
    
    33,042
    
    
    
    (22,885
    )Net cash provided by operating activities
    
    
    32,745
    
    
    
    90,076
    
    
    
    10,279Cash flows from investing activities:Capital expenditures
    
    
    (46,499
    )
    
    
    (85,443
    )
    
    
    (67,373
    )Proceeds from sale of assets
    
    
    165
    
    
    
    119
    
    
    
    43Tradename acquisitions
    
    
    
    
    
    
    (4,066
    )Other assets
    
    
    
    
    
    
    
    
    
    
    (25
    )Net cash used in investing activities
    
    
    (46,334
    )
    
    
    (89,390
    )
    
    
    (67,355
    )Cash flows from financing activities:Payments on convertible loan
    
    
    (25,000
    )Payments on term loan
    
    
    (100,000
    )Payments of capital lease obligations
    
    
    (611
    )
    
    
    (720
    )
    
    
    (817
    )Net (decrease) increase in revolving credit facility
    
    
    (52,000
    )
    
    
    15,000
    
    
    
    61,000Proceeds from exercise of stock options
    
    
    26,286
    
    
    
    504
    
    
    
    60Debt issuance costs
    
    
    (3,576
    )
    
    
    (438
    )Proceeds from sale of stock of subsidiary
    
    
    277,963Net cash provided by financing activities
    
    
    123,062
    
    
    
    14,346
    
    
    
    60,243Net increase in cash and equivalents
    
    
    109,473
    
    
    
    15,032
    
    
    
    3,167Cash and equivalents, beginning of year
    
    
    29,258
    
    
    
    14,226
    
    
    
    11,059Cash and equivalents, end of year
    
    $
    138,731
    
    
    $
    29,258
    
    
    $
    14,226
 
 
  
  F-7




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. BUSINESS OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Business Operations
     
  
 Principles of Consolidation
  Fiscal Year
  Use of Estimates
  F-8




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Cash and Equivalents
  Accounts Receivable, Net
  Inventories
   Pre-Opening Expenses
  F-9




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Property and Equipment
  Buildings
    
    31 yearsFurniture, fixtures and equipment
    

    3 to 10 years
 Asset Impairment and Long-Lived Assets
   Fiscal Year2005
    
    2004
    
    2003Value City
    
    
    
    
    
    $
    2,043
    
    
    $
    312DSW
    
    $
    234
    
    
    
    833Filenes Basement
    
    
    273$
    507
    
    
    $
    2,876
    
    
    $
    312
 
 Store Closings
 
 
  
 
 Balance at
    
    
    Related
    
    
    
    
    
    
    Balance at1/29/2005
    
    
    Changes
    
    
    Payments
    
    
    1/28/2006(in thousands)Employee severance and

termination benefits
    
    $
    599
    
    
    $
    277
    
    
    $
    (599
    )
    
    $
    277Lease costs
    
    
    674
    
    
    
    4,892
    
    
    
    (3,436
    )
    
    
    2,130Other
    
    
    39
    
    
    
    307
    
    
    
    (346
    )Total
    
    $
    1,312
    
    
    $
    5,476
    
    
    $
    (4,381
    )
    
    $
    2,407
 Balance at
    
    
    Related
    
    
    
    
    
    
    Balance at1/31/2004
    
    
    Changes
    
    
    Payments
    
    
    1/29/2005(in thousands)Employee severance and

termination benefits
    
    
    
    
    
    $
    599
    
    
    
    
    
    
    $
    599Lease costs
    
    
    $1,122
    
    
    
    1,288
    
    
    $
    (1,736
    )
    
    
    674Other
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    39Total
    
    $
    1,122
    
    
    $
    1,926
    
    
    $
    (1,736
    )
    
    $
    1,312
 
 Goodwill
   Tradenames and Other Intangible Assets
  F-10




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 FilenesValue City
    
    DSW
    
    Basement
    
    TotalAs of January 28, 2006Tradenames:Gross amount
    
    $
    5,211
    
    
    $
    12,750
    
    
    $
    9,900
    
    
    $
    27,861Accumulated amortization
    
    
    (1,134
    )
    
    
    (6,587
    )
    
    
    (3,905
    )
    
    
    (11,626
    )Useful life (in years)
    
    
    15
    
    
    
    15
    
    
    
    15Favorable lease values:Gross amount
    
    $
    14,417
    
    
    $
    140
    
    
    $
    23,057
    
    
    $
    37,614Accumulated amortization
    
    
    (5,715
    )
    
    
    (87
    )
    
    
    (8,830
    )
    
    
    (14,632
    )Useful life (in years)
    
    
    25
    
    
    
    14
    
    
    
    21As of January 29, 2005Tradenames:Gross amount
    
    $
    5,211
    
    
    $
    12,750
    
    
    $
    9,900
    
    
    $
    27,861Accumulated amortization
    
    
    (783
    )
    
    
    (5,738
    )
    
    
    (3,245
    )
    
    
    (9,766
    )Useful life (in years)
    
    
    15
    
    
    
    15
    
    
    
    15Favorable lease values:Gross amount
    
    $
    14,417
    
    
    $
    140
    
    
    $
    23,057
    
    
    $
    37,614Accumulated amortization
    
    
    (5,115
    )
    
    
    (73
    )
    
    
    (7,061
    )
    
    
    (12,249
    )Useful life (in years)
    
    
    25
    
    
    
    14
    
    
    
    21
  FilenesFiscal Year
    
    Value City
    
    DSW
    
    Basement
    
    Total2005
    
    $
    952
    
    
    $
    864
    
    
    $
    2,428
    
    
    $
    4,2442006
    
    
    952
    
    
    
    861
    
    
    
    2,428
    
    
    
    4,2412007
    
    
    952
    
    
    
    854
    
    
    
    2,428
    
    
    
    4,2342008
    
    
    948
    
    
    
    854
    
    
    
    2,428
    
    
    
    4,2302009
    
    
    938
    
    
    
    854
    
    
    
    1,625
    
    
    
    3,4172010
    
    
    929
    
    
    
    854
    
    
    
    1,625
    
    
    
    3,408
 Vendor Allowances
  F-11




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  
 Self-insurance Reserves
 
 
  
 Revenue Recognition
  
  
 Customer Loyalty Program
   Advertising Expense
  Derivative Financial Instruments
 Accounting for Derivative Instruments and Hedging Activities
 F-12




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   
  
  Minority Interest
  Earnings Per Share
  F-13




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004(in
thousands)Weighted average shares outstanding
    
    
    38,586
    
    
    
    33,956
    
    
    
    33,753Assumed exercise of dilutive SARS
    
    
    259
    
    
    
    123
    
    
    
    10Assumed exercise of dilutive stock options
    
    
    717
    
    
    
    1,736
    
    
    
    444Assumed exercise of dilutive term loan warrants
    
    
    3,138
    
    
    
    1,087Assumed exercise of dilutive senior convertible loan
    
    
    7,143
    
    
    
    16,667
    
    
    
    16,667Assumed exercise of dilutive conversion warrants
    
    
    9,077Number of shares for computation of dilutive earnings per share
    
    
    58,920
    
    
    
    53,569
    
    
    
    50,874
  January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004(in
thousands)Stock Options
    
    
    1,782
    
    
    
    7,714
    
    
    
    9,266SARS
    
    
    1,308
    
    
    
    1,998
    
    
    
    990Term loan warrants
    
    
    4,413
    
    
    
    2,955
    
    
    
    2,955Conversion warrants
    
    
    16,667Convertible debt
    
    
    
    
    
    
    16,667
    
    
    
    16,667Total of all potentially dilutive instruments
    
    
    24,170
    
    
    
    29,334
    
    
    
    29,878
 Stock-Based Compensation
 Accounting For Stock
Issued to Employees Accounting
For Stock-Based Compensation
 F-14




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 January
28,2006
    
    

January
29,2005
    
    

January
31,2004Net loss, as reported
    
    $
    (183,418
    )
    
    $
    (19,448
    )
    
    $
    (5,219
    )Add: Stock-based employee compensation
expense included in reported net loss, net of tax
    
    
    4,698
    
    
    
    391
    
    
    $
    333Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards
    
    
    (5,748
    )
    
    
    (2,773
    )
    
    
    (5,674
    )Pro forma net loss
    
    $
    (184,468
    )
    
    $
    (21,830
    )
    
    $
    (10,560
    )Loss per share:Basic and diluted as reported
    
    $
    (4.75
    )
    
    $
    (0.57
    )
    
    $
    (0.15
    )Basic and diluted pro forma
    
    $
    (4.78
    )
    
    $
    (0.64
    )
    
    $
    (0.31
    )
 
   Comprehensive Loss
  Recent Accounting Pronouncements
  Accounting for Stock-Based Compensation
 F-15




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Accounting for Conditional Asset Retirement Obligations Accounting for Asset Retirement Obligations
 
 2. RESTATEMENT
 
  
 
  
 
 Year Ended January 28, 2006As Originally
    
    
        
    
    
    AsReported
    
    
    Adjustments
    
    
    RestatedConsolidated Balance Sheets:Warrant liability (related party; $90,644,
$78,036, $168,680)
    
    $
    91,679
    
    
    $
    78,724
    
    
    $
    170,403Total current liabilities
    
    
    480,004
    
    
    
    78,724
    
    
    
    558,728Common shares
    
    
    168,409
    
    
    
    (8,792
    )
    
    
    159,617(Accumulated
deficit) retained earnings
    
    
    33,850
    
    
    
    (69,932
    )
    
    
    (36,082
    )Total shareholders equity
    
    
    195,270
    
    
    
    (78,724
    )
    
    
    116,546Consolidated Statements of Operations:Change in fair value of warrants
    
    
    (74,277
    )
    
    
    (69,932
    )
    
    
    (144,209
    )Operating loss
    
    
    (67,059
    )
    
    
    (69,932
    )
    
    
    (136,991
    )Loss before income taxes and minority interest
    
    
    (93,260
    )
    
    
    (69,932
    )
    
    
    (163,192
    )Loss before minority interest
    
    
    (106,484
    )
    
    
    (69,932
    )
    
    
    (176,416
    )Net loss
    
    
    (113,486
    )
    
    
    (69,932
    )
    
    
    (183,418
    )Basic and diluted loss per share
    
    
    (2.94
    )
    
    
    (1.81
    )
    
    
    (4.75
    )Consolidated Statements of Cash Flows:Net loss
    
    
    (113,486
    )
    
    
    (69,932
    )
    
    
    (183,418
    )Change in fair value of warrants (related party; $74,287, $69,771, $144,058)
    
    
    74,277
    
    
    
    69,932
    
    
    
    144,209
 
 
 3. RELATED PARTY TRANSACTIONS
 
  
  
    
  
 
 4. INITIAL PUBLIC OFFERING OF SUBSIDIARY
 
  F-16




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 .
 
 5. STOCK OPTION PLANS
 
 Retail Ventures, Inc.
      F-17




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   January 28, 2006
    
    
    January 29, 2005
    
    
    January 31, 2004Shares
    
    
    WAEP
    
    
    Shares
    
    
    WAEP
    
    
    Shares
    
    
    WAEPOutstanding beginning of year
    
    
    7,714
    
    
    $
    4.85
    
    
    
    9,266
    
    
    $
    4.94
    
    
    
    8,921
    
    
    $
    5.36Granted
    
    
    45
    
    
    
    10.49
    
    
    
    90
    
    
    
    6.95
    
    
    
    833
    
    
    
    2.44Exercised
    
    
    (5,754
    )
    
    
    
    
    
    
    (143
    )
    
    
    
    
    
    
    (20
    )
    
    
    3.04Canceled
    
    
    (223
    )
    
    
    5.43
    
    
    
    (1,499
    )
    
    
    5.25
    
    
    
    (468
    )
    
    
    8.47Outstanding end of year
    
    
    1,782
    
    
    $
    5.81
    
    
    
    7,714
    
    
    $
    4.85
    
    
    
    9,266
    
    
    $
    4.94Options exercisable end of year
    
    
    848
    
    
    $
    7.70
    
    
    
    6,055
    
    
    $
    5.12
    
    
    
    2,845
    
    
    $
    6.50Shares available for additional grants
    
    
    5,613
    
    
    
    
    
    
    
    5,498
    
    
    
    
    
    
    
    7,436
  Options Outstanding
    
    
    Options ExercisableWeightedAverageRemainingContractRange of Exercise Prices
    
    Shares
    
    
    Life
    
    
    WAEP
    
    
    Shares
    
    
    WAEP$1.63    $4.49
    
    
    484,600
    
    
    7 years
    
    
    $
    2.16
    
    
    
    146,100
    
    
    $
    2.20$4.50    $10.00
    
    
    1,050,200
    
    
    6 years
    
    
    $
    5.62
    
    
    
    489,900
    
    
    $
    6.54$10.01    $21.44
    
    
    247,400
    
    
    3 years
    
    
    $
    13.79
    
    
    
    212,400
    
    
    $
    14.16
 DSW Stock Compensation Plan
   F-18




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   January 28, 2006Shares
    
    
    WAEPOutstanding beginning of year
    
    
    
    
    
    
    Granted
    
    
    937
    
    
    $
    19.53Exercised
    
    
    (1
    )
    
    
    19.00Canceled
    
    
    (22
    )
    
    
    19.00Outstanding end of year
    
    
    914
    
    
    $
    19.54Options exercisable end of year
    
    
    30
    
    
    $
    19.00Shares available for additional grants
    
    
    3,536
  Options Outstanding
    
    
    Options ExercisableWeightedAverageRemainingContractRange of Exercise Prices
    
    Shares
    
    
    Life
    
    
    WAEP
    
    
    Shares
    
    
    WAEP$19.00    $20.00
    
    
    829,400
    
    
    9 years
    
    
    $
    19.00
    
    
    
    30,000
    
    
    $
    19.00$20.01    $25.00
    
    
    73,300
    
    
    10 years
    
    
    $
    24.52
    
    
    
    $25.01    $30.00
    
    
    11,500
    
    
    10 years
    
    
    $
    26.84
    
    
    
    
 
 6. LEASES
 
  F-19




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Minimum rentals
    
    $
    694
    
    
    $
    694
    
    
    $
    1,132Contingent rentals
    
    
    473
    
    
    
    641
    
    
    
    263Total
    
    
    1,167
    
    
    
    1,335
    
    
    
    1,395
 
  
  F-20




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Operating LeasesUnrelated
    
    
    Related
    
    
    CapitalFiscal Year
    
    Total
    
    
    Party
    
    
    Party
    
    
    Leases2006
    
    $
    164,764
    
    
    $
    143,383
    
    
    $
    21,381
    
    
    $
    3,3712007
    
    
    164,668
    
    
    
    143,616
    
    
    
    21,052
    
    
    
    3,4482008
    
    
    155,879
    
    
    
    136,248
    
    
    
    19,631
    
    
    
    3,5042009
    
    
    145,975
    
    
    
    127,068
    
    
    
    18,907
    
    
    
    3,5182010
    
    
    133,728
    
    
    
    116,144
    
    
    
    17,584
    
    
    
    3,657Future Years
    
    
    596,651
    
    
    
    501,146
    
    
    
    95,505
    
    
    
    40,542Total minimum lease payments
    
    $
    1,361,665
    
    
    $
    1,167,605
    
    
    $
    194,060
    
    
    
    58,040Less amount representing interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,422
    )Present value of minimum lease payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,618Less current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (623
    )Total long-term portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    27,995
  January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Minimum rentals:Unrelated parties
    
    $
    132,692
    
    
    $
    117,770
    
    
    $
    103,925Related parties
    
    
    21,156
    
    
    
    24,549
    
    
    
    21,837Contingent rentals:Unrelated parties
    
    
    20,776
    
    
    
    17,746
    
    
    
    15,735Related parties
    
    
    69
    
    
    
    111
    
    
    
    156Total
    
    $
    174,693
    
    
    $
    160,176
    
    
    $
    141,653
  F-21




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 7. LONG TERM OBLIGATIONS
 
  January 28,
    
    
    January 29,2006
    
    
    2005Credit facilities:Revolving credit facilities
    
    $
    88,000
    
    
    $
    140,000Term loans  related parties
    
    
    
    
    
    
    100,000Discount on term loan  related parties
    
    
    
    
    
    
    (759
    )Senior notes  related parties
    
    
    50,000
    
    
    
    Senior subordinated convertible loan  related parties
    
    
    
    
    
    
    75,000138,000
    
    
    
    314,241Capital lease obligations
    
    
    28,618
    
    
    
    29,724Other
    
    
    
    
    
    
    21166,618
    
    
    
    343,986Less current maturities
    
    
    (623
    )
    
    
    (611
    )$
    165,995
    
    
    $
    343,375Letters of credit outstanding:RVI revolving credit facilities
    
    $
    19,019
    
    
    $
    29,589DSW revolving credit facilities
    
    $
    13,577Availability under revolving credit facilities:RVI revolving credit facilities
    
    $
    63,521
    
    
    $
    145,001DSW revolving credit facilities
    
    $
    136,423Accrued interest to related parties
    
    $
    1,236
    
    
    $
    4,128
   F-22




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Revolving Credit Facilities
 $275 Million Secured Revolving Credit Facility  The VCDS Revolving Loan
  $150 Million Secured Revolving Credit Facility  The DSW Revolving Loan
  F-23




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Term Loans  Related Parties
  
  
  Amendment to Term Loans
  F-24




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Senior Subordinated Convertible Loan  Related Parties
 $75 Million Senior Subordinated Convertible Loan
  $50 Million Second Amended and Restated Senior Loan Agreement  The Non-Convertible Loan
  Other Debt Items
   F-25




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  Fiscal Year
    
    Amount2006
    
    $
    2007
    
    
    2008
    
    
    2009
    
    
    138,0002010
    
    
    Future Years
    
    
    Total
    
    $
    138,000
 
 8. PENSION BENEFIT PLANS
 
   January 28,
    
    
    January 29,2006
    
    
    2005Change in projected benefit obligation:Projected benefit obligation at beginning of year
    
    $
    26,588
    
    
    $
    24,393Service cost
    
    
    45
    
    
    
    43Interest cost
    
    
    1,464
    
    
    
    1,401Benefits paid
    
    
    (1,581
    )
    
    
    (1,120
    )Actuarial loss
    
    
    (200
    )
    
    
    1,871Projected benefit obligation at end of year
    
    $
    26,316
    
    
    $
    26,588
 January 28,
    
    
    January 29,2006
    
    
    2005Change in plan assets:Fair market value at beginning of year
    
    $
    19,902
    
    
    $
    18,369Actual return on plan assets
    
    
    2,036
    
    
    
    1,272Employer contributions
    
    
    2,500
    
    
    
    1,659Benefits paid
    
    
    (1,581
    )
    
    
    (1,120
    )Other
    
    
    (177
    )
    
    
    (278
    )Fair market value at end of year
    
    $
    22,680
    
    
    $
    19,902
 F-26




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 January 28,
    
    
    January 29,2006
    
    
    2005Reconciliation of funded status:Funded status
    
    $
    (3,635
    )
    
    $
    (6,686
    )Unrecognized actuarial loss
    
    
    10,923
    
    
    
    12,111Unrecognized transition obligation
    
    
    (185
    )
    
    
    (222
    )Accrued benefit cost
    
    $
    7,103
    
    
    $
    5,203
  January 28,
    
    
    January 29,2006
    
    
    2005Accrued benefit cost
    
    $
    (3,527
    )
    
    $
    (6,626
    )Accumulated other comprehensive income
    
    
    10,630
    
    
    
    11,829Net amount recognized
    
    $
    7,103
    
    
    $
    5,203
  January 28,
    
    
    January 29,2006
    
    
    2005(in thousands)Projected benefit obligation
    
    $
    26,316
    
    
    $
    26,588Accumulated benefit obligation
    
    
    26,208
    
    
    
    26,528Fair value of plan assets
    
    
    22,681
    
    
    
    19,902
  January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Service cost
    
    $
    45
    
    
    $
    43
    
    
    $
    35Interest cost
    
    
    1,464
    
    
    
    1,401
    
    
    
    1,292Expected return on plan assets
    
    
    (1,571
    )
    
    
    (1,436
    )
    
    
    (1,286
    )Amortization of transition (asset) obligation
    
    
    (38
    )
    
    
    (37
    )
    
    
    (75
    )Amortization of prior-service cost
    
    
    
    
    
    
    
    
    
    
    Amortization of net loss
    
    
    700
    
    
    
    580
    
    
    
    596Net periodic benefit cost
    
    $
    600
    
    
    $
    551
    
    
    $
    562
 F-27




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   January 28,
    
    
    January 29,2006
    
    
    2005Discount rate
    
    
    5.75
    %
    
    
    5.75
    %Rate of increase in compensation levels
    
    
    3.5
    %
    
    
    4.0
    %Expected long-term rate of return
    
    
    8.0
    %
    
    
    8.0
    %
   January 28,
    
    
    January 29,2006
    
    
    2005Equity securities
    
    
    50.7
    %
    
    
    49.1
    %Fixed securities
    
    
    44.9
    %
    
    
    44.7
    %Commercial mortgage
    
    
    3.3
    %
    
    
    5.5
    %Other
    
    
    1.1
    %
    
    
    0.7
    %100.0
    %
    
    
    100.0
    %
    Fiscal Year
    
    Amount2006
    
    $
    1,1022007
    
    
    1,0992008
    
    
    1,1012009
    
    
    1,1142010
    
    
    1,1162011 - 2015
    
    
    7,028
 F-28




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 9. OTHER BENEFIT PLANS
 
   
  
    F-29




---



##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   
 10. SHAREHOLDERS EQUITY and WARRANT LIABILITY
 
   Warrants
 
 Accounting for
Derivative Instruments and Hedging Activities
 
  
  
 F-30




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 11. COMMITMENTS AND CONTINGENCIES
 
      Accounting for Contingencies
   F-31




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  
 12. INCOME TAXES
 
  January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    1,644
    
    
    $
    9,967
    
    
    $
    198State and local
    
    
    4,451
    
    
    
    3,923
    
    
    
    Total current tax expense
    
    
    6,095
    
    
    
    13,890
    
    
    
    198Deferred:Federal
    
    
    (10,071
    )
    
    
    (29,245
    )
    
    
    (1,463
    )State and local
    
    
    17,200
    
    
    
    2,927
    
    
    
    (453
    )Total deferred tax expense
    
    
    7,129
    
    
    
    (26,318
    )
    
    
    (1,916
    )Income tax expense (benefit)
    
    $
    13,224
    
    
    $
    (12,428
    )
    
    $
    (1,718
    )
  
 January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Income tax (benefit) expense at federal statutory rate of 35%
    
    $
    (57,117
    )
    
    $
    (12,760
    )
    
    $
    (667
    )Warrant liability marked to market
    
    
    50,473
    
    
    
    
    
    
    
    Jobs credit
    
    
    (949
    )
    
    
    (800
    )
    
    
    (1,524
    )State and local taxes, net
    
    
    (1,713
    )
    
    
    (1,251
    )
    
    
    208Non-deductible interest
    
    
    222
    
    
    
    592
    
    
    
    662Valuation allowance
    
    
    14,367
    
    
    
    3,214
    
    
    
    1,467Write off of net operating loss
    
    
    4,018
    
    
    
    3,072
    
    
    
    Provision to return adjustments
    
    
    1,979Other
    
    
    1,944
    
    
    
    (4,495
    )
    
    
    (1,864
    )$
    13,224
    
    
    $
    (12,428
    )
    
    $
    (1,718
    )
 
  F-32




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 January 28,
    
    
    January 29,2006
    
    
    2005Deferred tax assets:Basis differences in inventory
    
    $
    9,537
    
    
    $
    12,867Basis differences in property and equipment
    
    
    10,316
    
    
    
    12,248Deferred compensation
    
    
    1,473Intangible assets
    
    
    6,196Store closing reserve
    
    
    913Net operating loss
    
    
    37,157
    
    
    
    21,770Federal tax credit
    
    
    4,583
    
    
    
    6,103Contribution carry forward
    
    
    391
    
    
    
    330Tenant allowance
    
    
    173
    
    
    
    1,315Capital leases
    
    
    3,387
    
    
    
    2,489Other comprehensive loss
    
    
    3,837
    
    
    
    4,760Workers compensation
    
    
    7,278
    
    
    
    8,353Deferred revenue
    
    
    
    
    
    
    5,007Accrued expenses
    
    
    10,791
    
    
    
    11,137Accrued rent
    
    
    12,059
    
    
    
    10,065Other
    
    
    1,896
    
    
    
    233Total deferred tax assets
    
    
    109,987
    
    
    
    96,677Less: Valuation allowance
    
    
    (13,406
    )
    
    
    (4,150
    )96,581
    
    
    
    92,527Deferred tax liabilities:Basis in subsidiary
    
    
    (69,644
    )Prepaid expenses
    
    
    (5,367
    )
    
    
    (5,823
    )Deferred Revenue  CAT Credit
    
    
    (818
    )Total deferred tax liabilities
    
    
    (75,829
    )
    
    
    (5,823
    )Total net
    
    $
    20,752
    
    
    $
    86,704
 
  January 28,
    
    
    January 29,2006
    
    
    2005Current deferred tax asset
    
    $
    66,581
    
    
    $
    62,355Non current deferred tax (liability) asset
    
    
    (45,829
    )
    
    
    24,349Net deferred tax asset
    
    $
    20,752
    
    
    $
    86,704
  F-33




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
   
 13. SEGMENT REPORTING
 
    Filenes
    
    IntersegmentValue City
    
    DSW
    
    Basement
    
    Eliminations
    
    
    TotalAs of
January 28, 2006 (as restated)*Net sales
    
    $
    1,379,975
    
    
    $
    1,144,061
    
    
    $
    389,335
    
    
    
    
    
    $
    2,913,371Operating (loss) profit
    
    
    (196,376
    )
    
    
    70,112
    
    
    
    (10,727
    )
    
    
    
    
    
    (136,991
    )Depreciation and amortization
    
    
    30,193
    
    
    
    19,443
    
    
    
    9,253
    
    
    
    
    
    
    58,889Interest expense
    
    
    21,811
    
    
    
    8,893
    
    
    
    5,290
    
    
(8,133
)
    
    
    27,861Interest
income
    
    
    6,813
    
    
    
    1,388
    
    
    
    1,592
    
    
    (8,133
    )
    
    
    1,660Benefit (provision) for income taxes
    
    
    8,659
    
    
    
    (25,426
    )
    
    
    3,543
    
    
    
    
    
    
    (13,224
    )Capital expenditures
    
    
    19,181
    
    
    
    25,537
    
    
    
    3,701
    
    
    
    
    
    
    48,419Total assets
    
    
    451,727
    
    
    
    501,459
    
    
    
    133,388
    
    
    
    
    
    
    1,086,574
 
  
 F-34




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 FilenesValue City
    
    
    DSW
    
    
    Basement
    
    
    TotalAs of January 29, 2005Net sales
    
    $
    1,434,618
    
    
    $
    961,089
    
    
    $
    343,924
    
    
    $
    2,739,631Operating (loss) profit
    
    
    (24,862
    )
    
    
    58,275
    
    
    
    (26,728
    )
    
    
    6,685Depreciation and amortization
    
    
    29,935
    
    
    
    18,692
    
    
    
    7,484
    
    
    
    56,111Interest expense
    
    
    32,550
    
    
    
    2,734
    
    
    
    3,922
    
    
    
    39,206Interest
income
    
    
    590
    
    
    
    
    
    
    
    55
    
    
    
    645Benefit (provision) for income taxes
    
    
    17,886
    
    
    
    (18,420
    )
    
    
    12,962
    
    
    
    12,428Capital expenditures
    
    
    27,679
    
    
    
    29,536
    
    
    
    26,640
    
    
    
    83,855Total assets
    
    
    462,838
    
    
    
    395,437
    
    
    
    118,151
    
    
    
    976,426As of January 31, 2004Net sales
    
    $
    1,508,675
    
    
    $
    791,348
    
    
    $
    294,183
    
    
    $
    2,594,206Operating profit (loss)
    
    
    10,630
    
    
    
    28,857
    
    
    
    (7,829
    )
    
    
    31,658Depreciation and amortization
    
    
    31,131
    
    
    
    15,892
    
    
    
    6,409
    
    
    
    53,432Interest expense
    
    
    25,657
    
    
    
    9,258
    
    
    
    3,799
    
    
    
    38,714Interest
income
    
    
    105
    
    
    
    5
    
    
    
    9
    
    
    
    119Benefit (provision) for income taxes
    
    
    8,124
    
    
    
    (10,652
    )
    
    
    4,246
    
    
    
    1,718Capital expenditures
    
    
    38,582
    
    
    
    21,017
    
    
    
    9,102
    
    
    
    68,701
 
  January 28,
    
    
    January 29,
    
    
    January 31,2006
    
    
    2005
    
    
    2004Apparel and ready to wear
    
    $
    1,077,088
    
    
    $
    1,083,195
    
    
    $
    1,112,789Hard goods and home furnishings
    
    
    509,592
    
    
    
    512,169
    
    
    
    493,511Shoes and other footwear
    
    
    1,326,691
    
    
    
    1,144,267
    
    
    
    987,906Total
    
    $
    2,913,371
    
    
    $
    2,739,631
    
    
    $
    2,594,206
 F-35




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
 14. QUARTERLY FINANCIAL DATA (UNAUDITED):
 
 
 Year Ended January 28, 2006
 
 
 Thirteen weeks endedApril 30,
    
    
    July 30,
    
    
    October 29,
    
    
    January 28,(in thousands except per share data)
    
    2005
    
    
    2005
    
    
    2005
    
    
    2006Restated *
    
    
    Restated *
    
    
    Restated *Net sales
    
    $
    680,045
    
    
    $
    666,734
    
    
    $
    746,101
    
    
    $
    820,491Cost of sales
    
    
    (411,653
    )
    
    
    (407,362
    )
    
    
    (462,397
    )
    
    
    (522,727
    )Gross profit
    
    
    268,392
    
    
    
    259,372
    
    
    
    283,704
    
    
    
    297,764Selling, general and administrative expenses
    
    
    (279,342
    )
    
    
    (265,547
    )
    
    
    (290,439
    )
    
    
    (275,622
    )Change in fair value of warrants
    
    
    
    
    
    
    (137,583
    )
    
    
    66,997
    
    
    
    (73,623
    )License fees and other income
    
    
    1,518
    
    
    
    3,993
    
    
    
    1,593
    
    
    
    1,832Operating (loss) profit
    
    
    (9,432
    )
    
    
    (139,765
    )
    
    
    61,855
    
    
    
    (49,649
    )Interest expense, net:Non-related
    
    
    (3,077
    )
    
    
    (5,372
    )
    
    
    (1,981
    )
    
    
    (1,436
    )Related parties
    
    
    (6,558
    )
    
    
    (5,062
    )
    
    
    (1,264
    )
    
    
    (1,451
    )(Loss) income before income taxes
    
    
    (19,067
    )
    
    
    (150,199
    )
    
    
    58,610
    
    
    
    (52,536
    )Income taxes benefit (expense)
    
    
    7,608
    
    
    
    (7,775
    )
    
    
    1,812
    
    
    
    (14,869
    )(Loss) income before minority interest
    
    
    (11,459
    )
    
    
    (157,974
    )
    
    
    60,422
    
    
    
    (67,405
    )Minority interest
    
    
    
    
    
    
    723
    
    
    
    (4,022
    )
    
    
    (3,703
    )Net (loss) income
    
    $
    (11,459
    )
    
    $
    (157,251
    )
    
    $
    56,400
    
    
    $
    (71,108
    )(Loss) earnings per share(1):Basic
    
    $
    (0.32
    )
    
    $
    (4.03
    )
    
    $
    1.43
    
    
    $
    (1.79
    )Diluted
    
    $
    (0.32
    )
    
    $
    (4.03
    )
    
    $
    0.92
    
    
    $
    (1.79
    )
 
 
  
 
 Year Ended January 28, 2006  As previously reported
 
 
 Thirteen weeks endedApril 30,
    
    
    July 30,
    
    
    October 29,
    
    
    January 28,(in thousands except per share data)
    
    2005
    
    
    2005
    
    
    2005
    
    
    2006Net sales
    
    $
    680,045
    
    
    $
    666,734
    
    
    $
    746,101
    
    
    $
    820,491Cost of sales
    
    
    (411,653
    )
    
    
    (407,362
    )
    
    
    (462,397
    )
    
    
    (522,727
    )Gross profit
    
    
    268,392
    
    
    
    259,372
    
    
    
    283,704
    
    
    
    297,764Selling, general and administrative expenses
    
    
    (279,342
    )
    
    
    (265,547
    )
    
    
    (290,439
    )
    
    
    (275,622
    )Change in fair value of warrants
    
    
    
    
    
    
    (95,848
    )
    
    
    64,778
    
    
    
    (43,207
    )License fees and other income
    
    
    1,518
    
    
    
    3,993
    
    
    
    1,593
    
    
    
    1,832Operating (loss) profit
    
    
    (9,432
    )
    
    
    (98,030
    )
    
    
    59,636
    
    
    
    (19,233
    )Interest expense, net:Non-related
    
    
    (3,077
    )
    
    
    (5,372
    )
    
    
    (1,981
    )
    
    
    (1,436
    )Related parties
    
    
    (6,558
    )
    
    
    (5,062
    )
    
    
    (1,264
    )
    
    
    (1,451
    )(Loss) income before income taxes
    
    
    (19,067
    )
    
    
    (108,464
    )
    
    
    56,391
    
    
    
    (22,120
    )Income taxes benefit (expense)
    
    
    7,608
    
    
    
    (7,775
    )
    
    
    1,812
    
    
    
    (14,869
    )(Loss) income before minority interest
    
    
    (11,459
    )
    
    
    (116,239
    )
    
    
    58,203
    
    
    
    (36,989
    )Minority interest
    
    
    
    
    
    
    723
    
    
    
    (4,022
    )
    
    
    (3,703
    )Net (loss) income
    
    $
    (11,459
    )
    
    $
    (115,516
    )
    
    $
    54,181
    
    
    $
    (40,692
    )(Loss) earnings per share(1):Basic
    
    $
    (0.32
    )
    
    $
    (2.96
    )
    
    $
    1.37
    
    
    $
    (1.03
    )Diluted
    
    $
    (0.32
    )
    
    $
    (2.96
    )
    
    $
    0.88
    
    
    $
    (1.03
    )
 
 
 Year
Ended January 29, 2005
 
 Thirteen weeks endedMay 1,
    
    
    July 31,
    
    
    October 30,
    
    
    January 29,(in thousands except per share data)
    
    2004
    
    
    2004
    
    
    2004
    
    
    2005Net sales
    
    $
    646,300
    
    
    $
    631,654
    
    
    $
    699,738
    
    
    $
    761,939Cost of sales
    
    
    (386,867
    )
    
    
    (372,088
    )
    
    
    (419,776
    )
    
    
    (484,484
    )Gross profit
    
    
    259,433
    
    
    
    259,566
    
    
    
    279,962
    
    
    
    277,455Selling, general and administrative expenses
    
    
    (254,606
    )
    
    
    (249,664
    )
    
    
    (273,962
    )
    
    
    (298,213
    )License fees and other income
    
    
    1,557
    
    
    
    1,566
    
    
    
    1,950
    
    
    
    1,641Operating profit (loss)
    
    
    6,384
    
    
    
    11,468
    
    
    
    7,950
    
    
    
    (19,117
    )Interest expense, net:Non-related
    
    
    (2,780
    )
    
    
    (3,078
    )
    
    
    (3,123
    )
    
    
    (3,839
    )Related parties
    
    
    (6,615
    )
    
    
    (6,836
    )
    
    
    (6,815
    )
    
    
    (5,475
    )(Loss) income before income taxes
    
    
    (3,011
    )
    
    
    1,554
    
    
    
    (1,988
    )
    
    
    (28,431
    )Benefit (provision) for Income taxes
    
    
    1,062
    
    
    
    (797
    )
    
    
    646
    
    
    
    11,517Net (loss) income
    
    $
    (1,949
    )
    
    $
    757
    
    
    $
    (1,342
    )
    
    $
    (16,914
    )Basic and diluted (loss) earnings per share(1)
    
    $
    (0.06
    )
    
    $
    0.02
    
    
    $
    (0.04
    )
    
    $
    (0.50
    )
 F-36




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (1)
    
    (Loss) earnings per share calculations for each quarter are based
on the applicable weighted average shares outstanding for each period and may not necessarily be
equal to the full year per share amount.
 
 15. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
 
 January 28,
    
    
    January 29,
    
    
    January 31,(in thousands)
    
    2006
    
    
    2005
    
    
    2004Cash paid during the period for:Interest:Non-related parties
    
    $
    9,041
    
    
    $
    8,647
    
    
    $
    21,694Related parties
    
    
    16,382
    
    
    
    20,217
    
    
    
    12,376Income taxes
    
    
    16,278
    
    
    
    12,540
    
    
    
    2,298Noncash investing and operating activities:Changes in accounts payable due to asset purchases
    
    
    1,920
    
    
    
    (1,588
    )
    
    
    1,328
 
 16. SUBSEQUENT EVENTS:
 
  F-37




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##### Table of Contents



RETAIL VENTURES, INC.
 
 SCHEDULE I  Condensed Financial Information of Registrant
 (dollars in thousands)
 Description
    

000sDividend paid to registrant from DSW Inc.:January 31, 2004
    
    NoneJanuary 29, 2005
    
    NoneJanuary 28, 2006
    
    $
    190,000
 S-1




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##### Table of Contents



RETAIL VENTURES, INC.
 
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 (dollars in thousands)
 Column A
    
    Column B
    
    
    Column C
    
    

Column D
    
    

Column EBalance at
    
    
    Charges to
    
    
    Charges to
    
    
    
    
    
    
    BalanceBeginning
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    
    at EndDescription
    
    of Period
    
    
    Expenses
    
    
    Accounts
    
    
    Deductions (1)
    
    
    of PeriodAllowance
deducted from asset to which it applies:Allowance for doubtful accountsJanuary 31, 2004
    
    $
    896
    
    
    $
    33
    
    
    $
    
    
    
    $
    103
    
    
    $
    826January 29, 2005
    
    
    826
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    766January 28, 2006
    
    
    766
    
    
    
    99
    
    
    
    
    
    
    
    419
    
    
    
    446Inventory ReserveJanuary 31, 2004
    
    
    32,475
    
    
    
    6,569
    
    
    
    
    
    
    
    4,859
    
    
    
    34,185January 29, 2005
    
    
    34,185
    
    
    
    14,142
    
    
    
    
    
    
    
    5,545
    
    
    
    42,782January 28, 2006
    
    
    42,782
    
    
    
    7,820
    
    
    
    
    
    
    
    7,542
    
    
    
    43,060Allowance for Sales ReturnsJanuary 31, 2004
    
    
    2,262
    
    
    
    963
    
    
    
    
    
    
    
    15
    
    
    
    3,210January 29, 2005
    
    
    3,210
    
    
    
    1,861
    
    
    
    
    
    
    
    1,495
    
    
    
    3,576January 28, 2006
    
    
    3,576
    
    
    
    2,868
    
    
    
    
    
    
    
    2,436
    
    
    
    4,008Store Closing ReserveJanuary 31, 2004
    
    
    524
    
    
    
    598
    
    
    
    
    
    
    
    
    
    
    
    1,122January 29, 2005
    
    
    1,122
    
    
    
    1,926
    
    
    
    
    
    
    
    1,736
    
    
    
    1,312January 28, 2006
    
    
    1,312
    
    
    
    5,476
    
    
    
    
    
    
    
    4,381
    
    
    
    2,407
 
 (1)
    
    The deductions from Column D are amounts written off against the reserve. S-2




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##### Table of Contents



INDEX TO EXHIBITS
Exhibits marked with an asterisk (*) are filed herewith.
 ExhibitNo.
    
    Description2.1
    
    Agreement and Plan of Merger among Value City Department Stores, Inc., Retail Ventures, Inc.
(the Company) and Value City Merger Sub, Inc., effective as of October 8, 2003.
Incorporated by reference to Exhibit 2 to Form 8-K (file no. 1-10767) filed on October 8,
2003.3.1
    
    Amended and Restated Articles of Incorporation of the Company. Incorporated by reference to
Exhibit 3(a) to Form 8-K (file No. 1-10767) filed on October 8, 2003.3.2
    
    Amended and Restated Code of Regulations of the Company. Incorporated by reference to Exhibit
3(b) to Form 8-K (file No. 1-10767) filed on October 8, 2003.4.1
    
    Amended Common Stock Purchase Warrant issued by Retail Ventures, Inc. to Cerberus Partners,
L.P. Incorporated by reference to Exhibit 4.1 to Form 8-K (file no. 1-10767) filed October 19,
2005.4.2
    
    Amended Common Stock Purchase Warrant issued by Retail Ventures, Inc. to Schottenstein Stores
Corporation. Incorporated by reference to Exhibit 4.2 to Form 8-K (file no. 1-10767) filed
October 19, 2005.4.3
    
    Form of Term Loan Warrant issued by Retail Ventures, Inc. to Millennium Partners, L.P.
Incorporated by reference to Exhibit 4.1 to Form 10-Q (file no. 1-10767) filed December 8,
2005.4.4
    
    Form of Conversion Warrant issued by Retail Ventures, Inc. issued to Cerberus Partners, L.P.
and Schottenstein Stores Corporation. Incorporated by reference to Exhibit 4.1 to Form 8-K
(file no. 1-10767) filed July 11, 2005.4.5
    
    Exchange Agreement, dated July 5, 2005, between Retail Ventures, Inc. and DSW Inc.
Incorporated by reference to Exhibit 10.4 to Form 8-K (file no. 1-10767) filed July 11, 2005.4.6
    
    Second Amended and Restated Registration Rights Agreement, dated July 5, 2005, among Retail
Ventures, Inc., Cerberus Partners, L.P., Schottenstein Stores Corporation and Back Bay Capital
Funding LLC. Incorporated by reference to Exhibit 4.2 to Form 8-K (file no. 1-10767) filed
July 11, 2005.4.7
    
    Specimen of Common Share
Certificate. Incorporated by reference to Exhibit 4.7 to Form 10-K
(file no. 1-10767) filed April 13, 2006.10.1
    
    Corporate Services Agreement, dated June 12, 2002, between the Company and SSC. Incorporated
by reference to Exhibit 10.6 to Form 10-Q (file no. 1-10767) filed June 18, 2002.10.1.1
    
    Amendment to Corporate Services Agreement, dated July 5, 2005, among Schottenstein Stores
Corporation, Retail Ventures, Inc. and Schottenstein Management Company, together with Side
Letter Agreement, dated July 5, 2005, among DSW Inc., Schottenstein Stores Corporation, Retail
Ventures, Inc. and Schottenstein Management Company. Incorporated by reference to Exhibit 10.5
to Form 8-K (file no. 1-10767) filed July 11, 2005.10.2
    
    License Agreement, dated June 5, 1991, between the Company and SSC re: Service Marks.
Incorporated by reference to Exhibit 10.2 to Amendment No. 1 to Form S-1 Registration
Statement (file no. 33-40214) filed June 6, 1991.10.3
    
    Master Separation Agreement, dated July 5, 2005, between Retail Ventures, Inc. and DSW Inc.
Incorporated by reference to Exhibit 10.1 to Form 8-K (file no. 1-10767) filed July 11, 2005.10.4
    
    Shared Services Agreement, dated as of January 30, 2005, between Retail Ventures, Inc. and
DSW Inc. Incorporated by reference to Exhibit 10.2 to Form 8-K (file no. 1-10767) filed July
11, 2005.10.5
    
    Tax Separation Agreement, dated July 5, 2005, among Retail Ventures, Inc. and its affiliates
and DSW Inc. and its affiliates. Incorporated by reference to Exhibit 10.3 to Form 8-K (file
no. 1-10767) filed July 11, 2005.10.6
    
    Supply Agreement, effective as of January 30, 2005, between DSW Inc. and Filenes Basement,
Inc. Incorporated by reference to Exhibit 10.6 to Form 8-K (file no. 1-10767) filed July 11,
2005.10.7#
    
    Form of Indemnification Agreement entered into on December 22, 2005 between Retail Ventures,
Inc. and each of its directors and executive officers. Incorporated by reference to Exhibit
10.1 to Form 8-K (file no. 1-10767) filed December 23, 2005
 E-1




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##### Table of Contents



ExhibitNo.
    
    Description10.8#
    
    Amended and Restated Retail Ventures, Inc. 1991 Stock Option Plan. Incorporated by reference
to Exhibit 4(a) to Amendment No. 1 to Form S-8 Registration Statement (file no. 333-45852)
filed October 16, 2003.10.9#
    
    Retail Ventures, Inc. Employee Stock Purchase Plan. Incorporated by reference to Exhibit
4(a) to Amendment No. 1 to Form S-8 Registration Statement (file no. 33-46221) filed October
16, 2003.10.10#
    
    Retail Ventures, Inc. Amended and Restated 2000 Stock Incentive Plan (the 2000 Stock
Incentive Plan). Incorporated by reference to Exhibit 4(a) to Amendment No. 1 to Form S-8
Registration Statement (file no. 333-100398) filed on October 16, 2003.10.11#
    
    Amended and Restated Retail Ventures, Inc. Non-Employee Director Stock Option Plan.
Incorporated by reference to Exhibit 4(a) to Form S-8 Registration Statement (file no.
333-45856) filed October 16, 2003.10.12
    
    Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee,
re: Baltimore, MD (Eastpoint) furniture store location. Incorporated by reference to Exhibit
10.15.1 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.10.13
    
    Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee,
re: Baltimore, MD (Westview) furniture store location. Incorporated by reference to Exhibit
10.15.2 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.10.14
    
    Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee,
re: Lansing, MI furniture store location. Incorporated by reference to Exhibit 10.15.3 to
Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.10.15
    
    Sublease, dated April 25, 1991, between the Company, as sublessor, and SSC, as sublessee,
re: Louisville, KY (Preston Highway) furniture store location. Incorporated by reference to
Exhibit 10.15.4 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29,
1991.10.16
    
    Form of Assignment and Assumption Agreement between the Company, as assignee, and SSC, as
assignor, re: separate assignments of leases for 31 stores. Incorporated by reference to
Exhibit 10.16 to Registration Statement on Form S-1 (file no. 33-40214) filed April 29, 1991.10.17
    
    Lease Agreement, dated July 1, 1988, between the Company, by assignment from SSC, dated
April 25, 1991, as sublessee, and SSC, as sublessor, re: Benwood, WV store location.
Incorporated by reference to Exhibit 10.19 to Form 10-K (file no.1-10767) filed October 24,
1991.10.18#
    
    Form of Restricted Stock Agreement between the Company and certain employees. Incorporated
by reference to Exhibit 10.27 to Amendment No. 1 to Form S-1 Registration Statement (file no.
33-47252) filed April 27, 1992.10.19
    
    Lease, dated September 1,
1992, between the Company, as lessee, and SSC, as lessor, re: South Bend/Mishawaka, IN store. Incorporated by reference to Exhibit 10.29 to Form 10-K (file
no.1-10767) filed October 22, 1992.
 E-2




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##### Table of Contents



ExhibitNo.
    
    Description10.20
    
    Lease, dated January 27, 1992, between the Company, as lessee, and J.A.L. Realty Company, an
affiliate of SSC, as lessor, re: 3080 Alum Creek Drive, Columbus, OH warehouse. Incorporated
by reference to Exhibit 10.30 to Form 10-K (file no.1-10767) filed October 22, 1992.10.20.1
    
    Exercise of the first five-year renewal option commencing February 1, 1997 under lease,
dated January 27, 1992, as amended, between the Company, as lessee, and J.A.L. Realty Company,
an affiliate of SSC, as lessor, re: 3080 Alum Creek Drive, Columbus, OH warehouse.
Incorporated by reference to Exhibit 10.30.1 to Form 10-Q (file no. 1-10767) filed March 19,
1996.10.21
    
    Lease, dated July 29, 1992, between the Company, as lessee, and J.A.L. Realty Company, an
affiliate of SSC, as lessor, re: 3232 Alum Creek Drive, Columbus, OH warehouse. Incorporated
by reference to Exhibit 10.31 to Form 10-K (file no.1-10767) filed October 22, 1992.10.22
    
    Ground lease, dated April 15, 1994, between the Company, as lessee, and J.A.L. Realty
Company, an affiliate of SSC, as lessor, re: 19 acres (Westerville Rd., Columbus, OH).
Incorporated by reference to Exhibit 10.35 to Form 10-K (file no. 1-10767) filed October 26,
1994.10.23
    
    Agreement of Lease, dated March 1, 1994, between the Company, as tenant, and Jubilee Limited
Partnership, an affiliate of SSC, as landlord, re: Hobart, IN store. Incorporated by reference
to Exhibit 10.37 to Form 10-Q (file no. 1-10767) filed December 12, 1994.10.24
    
    Agreement of Lease, dated January 13, 1995, between the Company, as tenant, and Westland
Partners, an affiliate of SSC, as landlord, re: Westland, MI store. Incorporated by reference
to Exhibit 10.39 to Form 10-Q, (file no. 1-10767) filed March 14, 1995.10.25
    
    Agreement of Lease, dated January 13, 1995, between the Company, as tenant, and Taylor
Partners, an affiliate of SSC, as landlord, re: Taylor, MI store. Incorporated by reference to
Exhibit 10.40 to Form 10-Q, (file no. 1-10767) filed March 14, 1995.10.26
    
    Lease, dated September 2, 1997, between the Company, as lessee, and SSC-Fort Wayne L.L.C.,
an affiliate of SSC, as lessor. Incorporated by reference to Exhibit 10.33.1 to Form 10-K
(file no. 1-10767) filed April 29, 2002.10.27
    
    Agreement of Lease, dated April 10, 1995, between the Company, as tenant, and Independence
Limited Liability Company, an affiliate of SSC, as landlord, re: Charlotte, NC store.
Incorporated by reference to Exhibit 10.45 to Form 10-Q (file no. 1-10767) filed December 12,
1995.10.28
    
    Sublease and Occupancy Agreement, dated December 15, 1995, between the Company, SSC and SSC,
dba Value City Furniture, re: Louisville, KY (Preston Highway) store. Incorporated by
reference to Exhibit 10.46 to Form 10-Q (file no. 1-10767) filed March 19, 1996.10.29
    
    Agreement of Lease, dated October 4, 1996, between the Company, as tenant, and Hickory Ridge
Pavilion, Ltd., an affiliate of SSC, as landlord, re: Memphis, TN store. Incorporated by
reference to Exhibit 10.50 to Form 10-K (file no. 1-10767) filed November 1, 1996.10.30
    
    Agreement of Lease, dated October 30, 1998, between the Company, as lessee, and Jubilee
Limited Partnership, an affiliate of SSC, as lessor, re: Calumet City, IL store. Incorporated
by reference to Exhibit 10.56 to Form 10-K (file no. 1-10767) filed April 30, 1999.
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ExhibitNo.
    
    Description10.31
    
    Agreement of Lease, dated September 29, 1998, between the Company, as tenant, and Valley
Fair Irvington, LLC, an affiliate of SSC, as landlord, re: Irvington, NJ. Incorporated by
reference to Exhibit 10.57 to Form 10-K (file no. 1-10767) filed April 30, 1999.10.32
    
    Industrial Space LeaseNet, dated March 22, 2000, between 4300 East Fifth Avenue, LLC, an
affiliate of SSC, as landlord, and Shonac Corporation, as tenant, re: Building 6, Columbus
International Aircenter, Columbus, OH. Incorporated by reference to Exhibit 10.60 to Form 10-K
(file no. 1-10767) filed April 28, 2000.10.33
    
    Lease, dated August 30, 2002, by and between Jubilee Limited Partnership, an affiliate of
SSC, and Shonac Corporation, re: Troy, MI DSW store. Incorporated by reference to Exhibit
10.44 to Form 10-K (file no. 1-10767) filed April 29, 2004.10.33.1
    
    Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Troy, MI DSW store. Incorporated by
reference to Exhibit 10.29.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12,
2005.10.34
    
    Lease, dated October 8, 2003, by and between Jubilee Limited Partnership, an affiliate of
SSC, and Shonac Corporation, re: Denton, TX DSW store. Incorporated by reference to Exhibit
10.46 to Form 10-K (file no. 1-10767) filed April 29, 2004.10.34.1
    
    Assignment and Assumption Agreement, dated December 18, 2003 between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Denton, TX DSW store. Incorporated by
reference to Exhibit 10.30.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12,
2005.10.35
    
    Lease, dated October 28, 2003, by and between JLP-RICHMOND LLC, an affiliate of SSC, and
Shonac Corporation, re: Richmond, VA DSW store. Incorporated by reference to Exhibit 10.47 to
Form 10-K (file no. 1-10767) filed April 29, 2004.10.35.1
    
    Assignment and Assumption Agreement, dated December 18, 2003, between Shonac Corporation,
as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Richmond, VA DSW store.
Incorporated by reference to Exhibit 10.31.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.36#
    
    Employment Agreement, dated June 21, 2000, between James A. McGrady and the Company.
Incorporated by reference to Exhibit 10.46 (also listed as Exhibit 10.61) to Form 10-K (file
no. 1-10767) filed May 4, 2001.10.37#
    
    Employment Agreement, dated as of April 29, 2004, between Julia A. Davis and the Company.
Incorporated by reference to Exhibit 10.51 to Form 10-K (file no. 1-10767) filed April 29,
2004.10.38
    
    Amended and Restated Loan and Security Agreement, dated July 5, 2005, by and among National
City Business Credit, Inc., as Administrative Agent for the ratable benefit of the Revolving
Credit Lenders, National City Business Credit, Inc., as Collateral Agents for the ratable
benefit of the Revolving Credit Lenders, the Revolving Credit Lenders and Value City
Department Stores LLC (in such capacity, the Lead Borrower), as agent for the Borrower and
collectively the Borrowers. Incorporated by reference to Exhibit 10.7 to Form 8-K (file
no. 1-10767) filed July 11, 2005.
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ExhibitNo.
    
    Description10.39
    
    Financing Agreement, dated as of June 11, 2002, by and among Value City Department Stores,
Inc., Shonac Corporation, DSW Shoe Warehouse, Inc., Gramex Retail Stores, Inc., VCM Ltd.,
Filenes Basement, Inc., GB Retailers, Inc., Value City Limited Partnership, and Value City of
Michigan, Inc., as Borrowers, the Lenders named therein, and Cerberus Partners, L.P., as Agent
for the Lenders. Incorporated by reference to Exhibit 10.2 to Form 10-Q (file no. 1-10767)
filed June 18, 2002.10.39.1
    
    First Amendment to the Financing Agreement, dated as of October 7, 2003, by and among Value
City Department Stores, Inc., Shonac Corporation, DSW Shoe Warehouse, Inc., Gramex Retail
Stores, Inc., Filenes Basement, Inc., GB Retailers, Inc., Value City Limited Partnership, and
Value City of Michigan, Inc., as Borrowers, J.S. Overland Delivery, Inc., Value City
Department Stores Services, Inc., Westerville Road GP, Inc. and Westerville Road LP, Inc., as
Initial Guarantors, Retail Ventures, Inc., Retail Ventures Jewelry, Inc., Retail Ventures
Services, Inc., and Retail Ventures Imports, Inc., as Additional Guarantors, the Lenders named
therein, and Cerberus Partners, L.P., as Agent for the Lenders. Incorporated by reference to
Exhibit 10(b) to Form 8-K (file No. 1-10767) filed October 8, 2003.10.39.2
    
    Second Amendment to Financing Agreement, dated as of July 29, 2004, by and among the
Borrowers named therein, the Guarantors named therein, the Lenders named therein, and Cerberus
Partners, L.P., as Agent for the Lenders. Incorporated by reference to Exhibit 10.2 to Form
10-Q (file no. 1-10767) filed September 8, 2004.10.39.3
    
    Third Amendment to Financing Agreement, dated as of December 29, 2004, by and among the
Borrowers named therein, the Guarantors named therein, the Lenders named therein, and Cerberus
Partners, L.P., as Agent for the Lenders. Incorporated by reference to Exhibit 10.2 to Form
8-K (file no. 1-10767) filed January 4, 2005.10.39.4
    
    Fourth Amendment to Financing Agreement, dated July 5, 2005, by and among the Borrowers
named therein, the Guarantors named therein, the Lenders named therein, and Cerberus Partners,
L.P., as Agent for the Lenders. Incorporated by reference to Exhibit 10.8 to Form 8-K (file
no. 1-10767) filed July 11, 2005.10.40
    
    Second Amended and Restated Senior Loan Agreement, dated July 5, 2005. by and among Value
City Department Stores LLC, as Borrower, Retail Ventures, Inc., Gramex Retail Stores, Inc.,
Filenes Basement, Inc., GB Retailers, Inc., Value City of Michigan, Inc., J.S. Overland
Delivery, Inc., Value City Department Stores Services, Inc., Retail Ventures Jewelry, Inc.,
Retail Ventures Services, Inc., and Retail Ventures Imports, Inc., as Guarantors, the Lenders
named therein, and Cerberus Partners, L.P., as Agent for itself and the other Lenders.
Incorporated by reference to Exhibit 10.9 to Form 8-K (file no. 1-10767) filed July 11, 2005.
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##### Table of Contents



ExhibitNo.
    
    Description10.41#
    
    Value City Department Stores, Inc. 2003 Incentive Compensation Plan. Incorporated by
reference to Exhibit 10.41 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.42#
    
    Employment Agreement, effective November 1, 2004, between Retail Ventures, Inc. and Heywood
Wilansky. Incorporated by reference to Exhibit 10.1 to Form 8-K/A (file no. 1-10767) filed
November 24, 2004.10.43#
    
    Employment Agreement, effective October 10, 2003, between Value City Department Stores, Inc.
and Steven E. Miller. Incorporated by reference to Exhibit 10.43 to Form 10-K (file no.
1-10767) filed April 14, 2005.10.44
    
    Agreement of Lease, dated March 1, 1994, between Jubilee Limited Partnership, an affiliate
of SSC, and Value City Department Stores, Inc., as modified by First Lease Modification, dated
November 1, 1994, re: Merrilville, IN Value City store. Incorporated by reference to Exhibit
10.44 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.45
    
    Lease Agreement, dated July 7, 1987, by and between Schottenstein Trustees, an affiliate of
SSC, and Schottenstein Stores Corp. dba Schottensteins Department Store, as modified by Lease
Extension and Modification Agreement, dated March 12, 1998, by and between Schottenstein
Trustees and Value City Department Stores, Inc. dba
Schottensteins East Department Store, re: 6055 E. Main Street, Columbus, OH Value City store. Incorporated by reference to Exhibit 10.45
to Form 10-K (file no. 1-10767) filed April 14, 2005.10.46
    
    Industrial Space Lease  Net, dated May 18, 2000, by and between 4300 East Fifth Avenue
LLC, an affiliate of SSC, and Value City Department Stores, Inc., re: 4320-30 East Fifth
Avenue, Columbus, OH warehouse. Incorporated by reference to Exhibit 10.47 to Form 10-K (file
no. 1-10767) filed April 14, 2005.10.47
    
    Sublease, dated May 2000, by and between SSC, as sublessor, and Shonac Corporation dba DSW
Shoe Warehouse, as sublessee, re: Pittsburgh, PA DSW store. Incorporated by reference to
Exhibit 10.48 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.47.1
    
    Assignment and Assumption Agreement, dated January 8, 2001, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: 451 Clariton Boulevard, Pittsburgh,
PA DSW store. Incorporated by reference to Exhibit 10.48.1 to Form 10-K/A Amendment No. 2
(file no. 1-10767) filed May 12, 2005.
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##### Table of Contents



ExhibitNo.
    
    Description10.48
    
    Lease, dated May 2000, by and between Jubilee-Richmond LLC, an affiliate of SSC, and DSW
Shoe Warehouse, Inc. (as assignee of Shonac Corporation), re: Glen Allen, VA DSW store.
Incorporated by reference to Exhibit 10.49 to Form 10-K (file no. 1-10767) filed April 14,
2005.10.49
    
    Lease, dated February 28, 2001, by and between Jubilee-Springdale, LLC, an affiliate of SSC,
and Shonac Corporation dba DSW Shoe Warehouse, re: Springdale, OH DSW store. Incorporated by
reference to Exhibit 10.50 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.49.1
    
    Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Springdale, OH DSW store.
Incorporated by reference to Exhibit 10.50.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.50
    
    Agreement of Lease, dated 1997, between Shoppes of Beavercreek Ltd., an affiliate of SSC,
and Shonac Corporation (assignee of SSC d/b/a Value City Furniture through Assignment of
Tenanyt Leasehold Interst and Amendment No. 1 to Agreement of Lease, dated February 28, 2001),
re: Beavercreek, OH DSW store. Incorporated by reference to Exhibit 10.51 to Form 10-K (file
no. 1-10767) filed April 14, 2005.10.50.1
    
    Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Beavercreek, OH DSW store.
Incorporated by reference to Exhibit 10.51.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.51
    
    Lease, dated February 28, 2001, by and between JLP-Chesapeake, LLC, an affiliate of SSC, and
Shonac Corporation, re: Chesapeake, VA DSW store. Incorporated by reference to Exhibit 10.52
to Form 10-K (file no. 1-10767) filed April 14, 2005.10.51.1
    
    Assignment and Assumption Agreement, dated May 11, 2001, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Chesapeake, VA DSW store.
Incorporated by reference to Exhibit 10.52.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.52
    
    Ground Lease Agreement, dated April 30, 2002, by and between Polaris Mall, LLC, a Delaware
limited liability company, and SSC-Polaris LLC, an affiliate of SSC, as modified by Sublease
agreement, dated April 30, 2002, by and between SSC-Polaris LLC, as sublessor, and DSW Shoe
Warehouse, Inc. as sublease (assignee of Shonac Corporation), re: Columbus, OH (Polaris) DSW
store. Incorporated by reference to Exhibit 10.53 to Form 10-K (file no. 1-10767) filed April
14, 2005.10.52.1
    
    Assignment and Assumption Agreement, dated August 6, 2002, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Columbus, OH (Polaris) DSW store.
Incorporated by reference to Exhibit 10.53.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.53
    
    Lease, dated August 30, 2002, by and between JLP-Cary LLC, an affiliate of SSC, and Shonac
Corporation, re: Cary, NC DSW store. Incorporated by reference to Exhibit 10.54 to Form 10-K
(file no. 1-10767) filed April 14, 2005.10.53.1
    
    Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as
assignor and DSW Shoe Warehouse, Inc., as assignee, re: Cary, NC DSW store. Incorporated by
reference to Exhibit 10.54.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12,
2005.
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ExhibitNo.
    
    Description10.54
    
    Lease, dated August 30, 2002, by and between JLP-Madison LLC, an affiliate of SSC, and
Shonac Corporation, re: Madison, TN DSW store. Incorporated by reference to Exhibit 10.55 to
Form 10-K (file no. 1-10767) filed April 14, 2005.10.54.1
    
    Assignment and Assumption Agreement, dated October 23, 2002, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Madison, TN DSW store. Incorporated
by reference to Exhibit 10.55.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May
12, 2005.10.55
    
    Lease, dated July 19, 2000, by and between Jubilee Limited Partnership, an affiliate of SSC,
and Value City Department Stores, Inc., as modified by Lease Modification Agreement, dated
November 2, 2000, re: 3704 W. Dublin-Granville Rd., Columbus, OH DSW/Filenes combo store.
Incorporated by reference to Exhibit 10.56 to Form 10-K (file no. 1-10767) filed April 14,
2005.10.56
    
    Master Store Lease, dated April 25, 1991, by and between SSC and Value City Department
Stores, Inc., as modified by First Amendment to Master Store Lease, dated February 3, 1992,
and Second Amendment to Master Store Lease, dated March 18, 2005, by and between SSC and Value
City Department Stores LLC and Value City of Michigan, Inc., re: 4 store locations
(Clarksville, IN, Springdale, OH, Louisville, KY (Dixie Highway), and Beckley, WV).
Incorporated by reference to Exhibit 10.57 to Form 10-K (file no. 1-10767) filed April 14,
2005.10.57
    
    Lease, dated September 24, 2004, by and between K&S Maple Hill Mall, L.P., an affiliate of
SSC, and Shonac Corporation, re: Kalamazoo, MI DSW store. Incorporated by reference to
Exhibit 10.58 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.57.1
    
    Assignment and Assumption Agreement, dated February 28, 2005, between Shonac Corporation,
as assignor, and DSW Shoe Warehouse, Inc., as assignee, re: Kalamazoo, MI DSW store.
Incorporated by reference to Exhibit 10.58.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.58
    
    Lease, dated November 2004, by and between KSK Scottsdale Mall, L.P., an affiliate of SSC,
and Shonac Corporation, re: South Bend, IN DSW store. Incorporated by reference to Exhibit
10.59 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.58.1
    
    Assignment and Assumption Agreement, dated March 18, 2005, between Shonac Corporation, as
assignor, and DSW Shoe Warehouse, Inc., as assignee, re: South Bend, IN DSW store.
Incorporated by reference to Exhibit 10.59.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767)
filed May 12, 2005.10.59
    
    Lease Agreement, dated March 18, 2005, by and between SSC and Value City of Michigan, Inc.,
re: Flint, MI DSW store. Incorporated by reference to Exhibit 10.60 to Form 10-K (file no.
1-10767) filed April 14, 2005.10.60
    
    Lease Agreement, dated September 2, 1997, by and between SSC-Barboursville, L.L.C., an
affiliate of SSC, and Value City Department Stores, Inc. Incorporated by reference to Exhibit
10.61 to Form 10-K (file no. 1-10767) filed April 14, 2005.10.61#
    
    Sample Nonqualified Stock Option Award Agreement issued by the Company pursuant to the 2000
Stock Incentive Plan. Incorporated by reference to Exhibit 10.62 to Form 10-K (file no.
1-10767) filed April 14, 2005.
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##### Table of Contents



ExhibitNo.
    
    Description10.62#
    
    Sample Price Protected Stock Option Award Agreement issued by the Company pursuant to the
2000 Stock Incentive Plan. Incorporated by reference to Exhibit 10.63 to Form 10-K (file no.
1-10767) filed April 14, 2005.10.63#
    
    Sample Equity Compensation Approval Notice and Agreement issued by the Company to certain
employees. Incorporated by reference to Exhibit 10.64 to Form 10-K (file no. 1-10767) filed
April 14, 2005.10.64
    
    Master Sublease, dated April 25, 1991, between the Company, as sublessee, and SSC, as
sublessor, re: two stores (Covington, KY and Greenwood, IN). Incorporated by reference to
Exhibit 10.11 to Registration Statement on Form S-1 (file no. 33-402144) filed April 29, 1991.10.65#
    
    Form of Indemnification Agreement between the Company and its directors and officers.
Incorporated by reference to Exhibit 10(b) to Registration Statement on Form S-8 (file no.
333-117341) filed July 13, 2004.10.66
    
    Lease Agreement, dated November 5, 1992, by and between Value City Department Stores, Inc.
(successor to SSC d/b/a Elyria Value City Shopping Center), as sublessor, and SSC d/b/a Value
City Furniture #17, as sublessee, as modified by Sublease Extension and Modification
Agreement, dated October 11, 2001, re: Elyria, OH store. Incorporated by reference to Exhibit
10.67.1 to Form 10-K/A Amendment No. 2 (file no. 1-10767) filed May 12, 2005.10.67
    
    Agreement of Lease, dated March 6, 1996, between Value City of Michigan, Inc. (assignee of
MRSLV Saginaw, L.L.C.), as sublessor, and SSC d/b/a Value City Furniture, as sublessee, re:
Saginaw Michigan store. Incorporated by reference to Exhibit 10.68.1 to Form 10-K/A Amendment
No. 2 (file no. 1-10767) filed May 12, 2005.10.68
    
    Agreement of Sublease, dated June 12, 2000, between Jubilee Limited Partnership, an
affiliate of SSC, and DSW Shoe Warehouse, Inc. (assignee of DSW Inc.), re: Baileys Crossroads,
VA DSW Store. Incorporated by reference to Exhibit 10.1 to Form 10-Q (file no. 1-10767) filed
June 9, 2005.10.69
    
    Underwriting Agreement, dated June 28, 2005, among Retail Ventures, Inc., DSW Inc. and the
Underwriters named therein. Incorporated by reference to Exhibit 10.1 to Form 8-K (file no.
1-10767) filed July 5, 2005.10.70
    
    License Agreement, dated August 30, 2002, by and between Value City Department Stores, Inc.
and Shonac Corporation, re: Merrillville, IN DSW store. Incorporated by reference to Exhibit
10.1 to Form 10-Q (file no. 1-10767) filed September 13, 2005.10.71#
    
    Standard Executive Employment Agreement, effective as of January 29, 2006, by and between
Jed L. Norden and the Company. Incorporated by reference to Exhibit 10.1 to Form 8-K (file
no. 1-10767) filed February 2, 2006.10.72
    
    Agreement of Lease, dated April 7, 2006, by and between JLP  Harvard Park, LLC, an
affiliate of SSC, as landlord, and DSW Inc., as tenant, re: Chagrin
Highlands, Warrensville, Ohio
DSW store. Incorporated by reference to Exhibit 10.72 to
Form 10-K (file
no. 1-10767) filed April 13, 2006.
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##### Table of Contents



ExhibitNo.
    
    Description10.73#
    
    Form of Indemnification Agreement between the Company and its directors and officers.
Incorporated by reference to Exhibit 10.7 to Amendment No. 1 to Form S-1 Registration
Statement (file no. 33-40214) filed June 6, 1991.10.74#
    
    Summary of Director Compensation.
Incorporated by reference to Exhibit 10.74 to Form 10-K (file
no. 1-10767) filed April 13, 2006.21
    
    List of Subsidiaries. Incorporated
by reference to Exhibit 21 to Form 10-K (file
no. 1-10767) filed April 13, 2006.23*
    
    Consent of Independent Registered Public Accounting Firm.24
    
    Power of Attorney. Incorporated by
reference to Exhibit 24 to Form 10-K (file
no. 1-10767) filed April 13, 2006.31.1*
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Executive Officer.31.2*
    
    Rule 13a-14(a)/15d-14(a) Certification  Principal Financial Officer.32.1*
    
    Section 1350 Certification  Principal Executive Officer.32.2*
    
    Section 1350 Certification  Principal Financial Officer.
 
 *
    
    Filed herewith.#
    
    Management contract or compensatory plan or arrangement. E-10