R
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended January 31, 2009
|
|
OR
|
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from ____________ to
______________
|
New
York
|
43-0197190
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
8300
Maryland Avenue
|
63105
|
St.
Louis, Missouri
|
(Zip
Code)
|
(Address
of principal executive offices)
|
Title
of each class
|
Name
of each exchange on which registered
|
Common
Stock — par value $0.01 per share
|
New
York Stock Exchange
|
Chicago
Stock Exchange
|
Large accelerated filer R | Accelerated filer £ | Non-accelerated filer £ | Smaller reporting company £ |
Do not check if a smaller reporting company) | |||
INDEX
|
PART
I
|
Page
|
|
3
|
||
12
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||
17
|
||
17
|
||
18
|
||
18
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||
PART
II
|
||
19
|
||
21
|
||
22
|
||
44
|
||
44
|
||
44
|
||
45
|
||
46
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||
47
|
||
48
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||
49
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||
50
|
||
51
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||
89
|
||
90
|
||
90
|
||
90
|
||
90
|
||
90
|
||
PART
III
|
||
91
|
||
91
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||
91
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||
92
|
||
92
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||
PART
IV
|
||
93
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||
PART
I
|
BUSINESS
|
RETAIL
OPERATIONS
|
2008
|
2007
|
2006
|
||
Famous
Footwear
|
||||
Family
footwear stores that feature a wide selection of brand-name, value-priced
footwear; located in shopping centers, outlet malls and regional malls in
the United States and Guam; primarily includes stores operated under the
Famous Footwear and Factory Brand Shoes names
|
1,138
|
1,074
|
999
|
|
Specialty
Retail
|
||||
Stores
selling women's footwear, primarily Naturalizer, located mostly in
regional malls, shopping centers, outlet malls and premier street
locations in the United States, Canada and China (through our
majority-owned subsidiary, B&H Footwear Limited); includes stores
operated under the Naturalizer, Brown Shoe Closet, F.X. LaSalle, Franco
Sarto and Via Spiga names
|
306
|
284
|
290
|
|
Total
|
1,444
|
1,358
|
1,289
|
2008
|
2007
|
2006
|
|
Strip
centers
|
759
|
694
|
610
|
Outlet
malls
|
197
|
193
|
197
|
Regional
malls
|
182
|
187
|
192
|
Total
|
1,138
|
1,074
|
999
|
WHOLESALE
OPERATIONS
|
Women’s
|
Men’s
and Athletic
|
Children’s
|
AirStep
|
Basswood
|
Barbie
(9)
|
Basswood
|
Big
Country
|
Backyardigans
(10)
|
Carlos
by Carlos Santana
(2)
|
Dr.
Scholl’s
(4)
|
Buster
Brown
|
Connie
|
Francois
Xavier Collection
|
Cars
(11)
|
Dr.
Scholl’s
(4)
|
F.X.
LaSalle
|
Disney
Standard Characters
(11)
|
EA
by Etienne Aigner
(5)
|
FX
|
Dr.
Scholl’s
(4)
|
Etienne
Aigner
(5)
|
Regal
|
Fergalicious
by Fergie
(1)
|
Eurosole
|
Studio
Via Spiga
|
Firstkiss
(7)
|
Eurostep
|
TX
Traction
|
Fisher
Price
(9)
|
Fanfares
|
Zodiac
American Original
|
Go
Diego Go
(8)
|
Firstkiss
(7)
|
Handy
Manny
(11)
|
|
Fergie
(1)
|
Polly
Pocket
(9)
|
|
Fergalicious
by Fergie
(1)
|
Power
Rangers
(11)
|
|
Franco
Sarto
(6)
|
That’s
So Raven
(11)
|
|
Francois
Xavier Collection
|
Toe
Zone
(12)
|
|
F.X.
LaSalle
|
Wall-E
(11)
|
|
FX
|
Winnie
The Pooh
(11)
|
|
Gretta
(3)
|
Zodiac
American Original
|
|
HOTKISS
(7)
|
||
Libby
Edelman
|
||
LifeStride
|
||
LS
Studio
|
||
Maserati
|
||
Natural
Soul
|
||
Naturalizer
|
||
Naturalizer
Sport
|
||
Natural
Sport
|
||
Nickels
|
||
Nickels
Soft
|
||
Opale
|
||
Original
Dr. Scholl’s
(4)
|
||
Paloma
|
||
Reba
McEntire
(13)
|
||
Sam
Edelman
|
||
Samuel
|
||
SE
Boutique
|
||
Signature
Naturalizer
|
||
Studio
Paulo
|
||
TX
Traction
|
||
Vera
Wang
(14)
|
||
Via
Spiga
|
||
V
Via Spiga
|
||
VS
|
||
VS
by Via Spiga
|
||
Zodiac
|
||
Zodiac
American Original
|
||
Zodiac
USA
|
(1)
Krystal Ball Entertainment, Inc.
|
(8)
MTV Networks
|
|
(2)
Cadestanza LLC
|
(9)
Mattel, Inc.
|
|
(3)
Gretta Enterprises, Inc.
|
(10)
Nelvana, Inc.
|
|
(4)
Schering-Plough Healthcare Products, Inc.
|
(11)
Disney Enterprises, Inc. (license expired on March 31,
2009)
|
|
(5)
Etienne Aigner, Inc.
|
(12)
Sole Concepts, Inc.
|
|
(6)
Fashion Shoe Licensing LLC
|
(13)
RebaWear LLC
|
|
(7)
Hot Kiss, Inc.
|
(14)
Vera Wang Licensing LLC
|
Country
|
Millions
of Pairs
|
China
|
61.9
|
Brazil
|
1.3
|
All
other
|
0.2
|
Total
|
63.4
|
AVAILABLE
INFORMATION
|
EXECUTIVE
OFFICERS OF THE REGISTRANT
|
Name
|
Age
|
Current
Position
|
Ronald
A. Fromm
|
58
|
Chairman
of the Board of Directors and Chief Executive Officer
|
Diane
M. Sullivan
|
53
|
President
and Chief Operating Officer
|
Joseph
W. Wood
|
61
|
President,
Brown Shoe Retail
|
Gary
M. Rich
|
58
|
President,
Brown Wholesale (Partnership Alliance)
|
Richard
M. Ausick
|
55
|
President,
Brown Wholesale (Authority Alliance)
|
Douglas
W. Koch
|
57
|
Senior
Vice President and Chief Talent Officer
|
Mark
E. Hood
|
56
|
Senior
Vice President and Chief Financial Officer
|
Joseph
Caro
|
46
|
Senior
Vice President and Chief Information Officer
|
Michael
I. Oberlander
|
40
|
Senior
Vice President, General Counsel and Corporate
Secretary
|
RISK
FACTORS
|
UNRESOLVED
STAFF COMMENTS
|
PROPERTIES
|
LEGAL
PROCEEDINGS
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
PART
II
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
2008
|
2007
|
|||||||||||||||||
Low
|
High
|
Dividends
Paid
|
Low
|
High
|
Dividends
Paid
|
|||||||||||||
1
st
Quarter
|
$11.89
|
$17.65
|
$0.07
|
$26.46
|
$37.68
|
$0.07
|
||||||||||||
2
nd
Quarter
|
12.06
|
17.60
|
0.07
|
19.92
|
33.00
|
0.07
|
||||||||||||
3
rd
Quarter
|
6.99
|
18.44
|
0.07
|
18.09
|
23.19
|
0.07
|
||||||||||||
4
th
Quarter
|
4.34
|
10.94
|
0.07
|
11.91
|
18.29
|
0.07
|
Fiscal
Period
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
per
Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly Announced Program
|
Maximum
Number of Shares that May Yet Be Purchased Under the Program
(1)
|
|||||||
November
2, 2008 – November 29, 2008
|
11,316
|
(2)
|
$
|
6.37
|
(2)
|
–
|
2,500,000
|
||||
November
30, 2008 – January 3, 2009
|
–
|
–
|
–
|
2,500,000
|
|||||||
January
4, 2009 – January 31, 2009
|
–
|
–
|
–
|
2,500,000
|
|||||||
Total
|
11,316
|
(2)
|
$
|
6.37
|
(2)
|
–
|
2,500,000
|
|
(1)
|
In
January 2008, the Board of Directors approved a stock repurchase program
authorizing the repurchase of up to 2.5 million shares of our outstanding
common stock. We can utilize the repurchase program to repurchase shares
on the open market or in private transactions from time to time, depending
on market conditions. The repurchase program does not have an expiration
date. No shares were repurchased under the 2008 Program; therefore, there
were 2.5 million shares authorized to be purchased under the 2008 program
as of January 31, 2009.
|
|
(2)
|
Includes
10,000 shares purchased by an affiliated purchaser in an open market
transaction. Also includes 1,316 shares that were tendered by employees
related to certain share-based awards. These shares were tendered in
satisfaction of the exercise price of stock options and/or to satisfy
minimum tax withholding amounts for non-qualified stock options,
restricted stock and stock performance awards. Accordingly, these share
purchases are not considered a part of our publicly announced stock
repurchase programs.
|
1/31/2004
|
1/29/2005
|
1/28/2006
|
2/3/2007
|
2/2/2008
|
1/31/2009
|
|||||||
Brown
Shoe Company, Inc.
|
$
|
100
|
$
|
80
|
$
|
122
|
$
|
226
|
$
|
110
|
$
|
31
|
S&P
©
600 SmallCap Stock Index
|
100
|
114
|
138
|
153
|
144
|
89
|
||||||
Peer
Group
|
100
|
125
|
165
|
213
|
136
|
83
|
SELECTED
FINANCIAL DATA
|
($
thousands, except per share amounts)
|
2008
(52
Weeks)
|
2007
(52
Weeks)
|
2006
(53
Weeks
)
|
2005
(52
Weeks)
|
2004
(52
Weeks)
|
||||||||||
Operations:
|
|||||||||||||||
Net
sales
|
$
|
2,276,362
|
$
|
2,359,909
|
$
|
2,470,930
|
$
|
2,292,057
|
$
|
1,941,804
|
|||||
Cost
of goods sold
|
1,394,126
|
1,416,510
|
1,500,037
|
1,393,753
|
1,157,437
|
||||||||||
Gross
profit
|
882,236
|
943,399
|
970,893
|
898,304
|
784,367
|
||||||||||
Selling
and administrative expenses
|
851,893
|
827,350
|
854,053
|
794,078
|
710,130
|
||||||||||
Impairment
of goodwill and intangible assets
|
149,150
|
–
|
–
|
–
|
–
|
||||||||||
Restructuring
and other special charges, net
|
54,278
|
19,000
|
8,145
|
14,654
|
9,708
|
||||||||||
Equity
in net loss of nonconsolidated affiliate
|
216
|
439
|
–
|
–
|
–
|
||||||||||
Operating
(loss) earnings
|
(173,301
|
)
|
96,610
|
108,695
|
89,572
|
64,529
|
|||||||||
Interest
expense
|
(17,105
|
)
|
(16,232
|
)
|
(17,892
|
)
|
(19,641
|
)
|
(9,109
|
)
|
|||||
Interest
income
|
1,800
|
3,434
|
2,610
|
1,348
|
929
|
||||||||||
(Loss)
earnings before income taxes and minority interests
|
(188,606
|
)
|
83,812
|
93,413
|
71,279
|
56,349
|
|||||||||
Income
tax benefit (provision)
|
53,793
|
(23,483
|
)
|
(27,719
|
)
|
(30,147
|
)
|
(12,982
|
)
|
||||||
Minority
interests in net loss (earnings) of consolidated
subsidiaries
|
1,575
|
98
|
14
|
(132
|
)
|
(62
|
)
|
||||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
60,427
|
$
|
65,708
|
$
|
41,000
|
$
|
43,305
|
||||
Operations:
|
|||||||||||||||
Return
on net sales
|
(5.9)%
|
2.6%
|
2.7%
|
1.8%
|
2.2%
|
||||||||||
Return
on beginning shareholders’ equity
|
(23.9)%
|
11.5%
|
15.1%
|
10.5%
|
12.4%
|
||||||||||
Return
on average invested capital
(1)
|
(18.3)%
|
8.4%
|
9.9%
|
6.3%
|
8.6%
|
||||||||||
Dividends
paid
|
$
|
11,855
|
$
|
12,312
|
$
|
9,147
|
$
|
7,353
|
$
|
7,266
|
|||||
Purchases
of property and equipment
(2)
|
$
|
60,417
|
$
|
41,355
|
$
|
60,725
|
$
|
36,800
|
$
|
46,227
|
|||||
Depreciation
and amortization
(3)
|
$
|
56,510
|
$
|
52,148
|
$
|
50,943
|
$
|
49,266
|
$
|
40,106
|
|||||
Per
Common Share:
|
|||||||||||||||
Basic
(loss) earnings
|
$
|
(3.21
|
)
|
$
|
1.40
|
$
|
1.56
|
$
|
1.00
|
$
|
1.07
|
||||
Diluted
(loss) earnings
|
(3.21
|
)
|
1.37
|
1.51
|
0.96
|
1.02
|
|||||||||
Dividends
paid
|
0.28
|
0.28
|
0.21
|
0.18
|
0.18
|
||||||||||
Ending
shareholders’ equity
|
9.31
|
13.35
|
12.10
|
10.45
|
9.53
|
||||||||||
Financial
Position:
|
|||||||||||||||
Receivables,
net
|
$
|
84,252
|
$
|
116,873
|
$
|
132,224
|
$
|
158,103
|
$
|
97,503
|
|||||
Inventories,
net
|
466,002
|
435,682
|
420,520
|
414,295
|
421,450
|
||||||||||
Working
capital
|
279,297
|
333,142
|
303,844
|
267,351
|
281,324
|
||||||||||
Property
and equipment, net
|
157,451
|
141,964
|
138,164
|
116,555
|
114,394
|
||||||||||
Total
assets
|
1,026,031
|
1,099,841
|
1,099,057
|
1,027,293
|
846,134
|
||||||||||
Average
net assets
(4)
|
496,979
|
496,996
|
428,118
|
415,738
|
428,844
|
||||||||||
Borrowings
under revolving credit agreement
|
112,500
|
15,000
|
1,000
|
50,000
|
92,000
|
||||||||||
Long-term
debt
|
150,000
|
150,000
|
150,000
|
150,000
|
50,000
|
||||||||||
Shareholders’
equity
|
394,104
|
558,577
|
523,645
|
434,210
|
391,303
|
||||||||||
Average
common shares outstanding – basic
|
41,525
|
43,223
|
42,225
|
40,890
|
40,310
|
||||||||||
Average
common shares outstanding – diluted
|
41,525
|
44,141
|
43,639
|
42,524
|
42,319
|
(1)
|
Return
on average invested capital is calculated by dividing net earnings for the
period by the average of each month-end invested capital balance during
the year. Invested capital is defined as total shareholders’ equity plus
long-term debt and borrowings under the revolving credit
agreement.
|
||
(2)
|
Purchases
of property and equipment exclude costs of acquiring Bennett Footwear
Group of $22.7 million in 2006 and $206.0 million in 2005.
|
||
(3)
|
Depreciation
and amortization includes depreciation of property and equipment and
amortization of capitalized software, intangibles and debt issuance costs.
The amortization of debt issuance costs is reflected within interest
expense in our consolidated statement of earnings and totaled $1.6 million
in 2008, $1.5 million in 2007, $1.5 million in 2006, $1.1 million in 2005
and $0.9 million in 2004.
|
||
(4)
|
Average
net assets are calculated as the average of each month-end net asset
balance during the year. Net assets are calculated as the sum of working
capital, property and equipment, net and capitalized software,
net.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
OVERVIEW
|
·
|
Consolidated
net sales declined 3.5%, to $2.276 billion in 2008, as compared to $2.360
billion last year. Net sales of our Wholesale Operations and Specialty
Retail segments decreased by $79.7 million and $10.7 million,
respectively, which was partially offset by an increase in net sales of
our Famous Footwear segment of $6.8
million.
|
·
|
Our
consolidated operating loss was $173.3 million in 2008, compared to
operating earnings of $96.6 million last
year.
|
·
|
Our
consolidated net loss was $133.2 million, or $3.21 per diluted share, in
2008, compared to net earnings of $60.4 million, or $1.37 per diluted
share last year.
|
·
|
Impairment
of goodwill and intangible assets – We incurred charges of $149.2 million
($119.2 million on an after-tax basis, or $2.87 per diluted share) during
2008, as a result of the deterioration of general economic conditions,
recent industry trends and the resulting decline in our share price and
market capitalization, with no corresponding impairment charges last year.
See the
Recent
Developments
section that follows and Note 1 and Note 10 to the
consolidated financial statements for additional information related to
impairment of goodwill and intangible
assets.
|
·
|
Expense
and capital containment initiatives – We incurred charges of $30.9 million
($19.1 million on an after-tax basis, or $0.46 per diluted share) during
2008, related to our expense and capital containment initiatives, with no
corresponding charges last year. These costs include employee-related
costs for severance, including health care benefits and enhanced pension
benefits, as well as facility and other costs. See the
Recent Developments
section that follows and Note 5 to the consolidated financial statements
for additional information related to these
charges.
|
·
|
Headquarters
consolidation – We incurred charges of $29.8 million ($18.2 million on an
after-tax basis, or $0.44 per diluted share) during 2008, related to the
relocation and transition of our Famous Footwear division headquarters,
with no corresponding charges last year. These costs include
employee-related costs for relocation, severance, recruiting and
retention, as well as facility and other costs. See the
Recent Developments
section that follows and Note 5 to the consolidated financial statements
for additional information related to these
charges.
|
·
|
Information
technology initiatives – We incurred charges of $3.7 million ($2.4 million
on an after-tax basis, or $0.06 per diluted share) during 2008, related to
our integrated enterprise resource planning (“ERP”) information technology
system that will replace select existing internally developed and certain
other third-party applications, with no corresponding charges last year.
See the
Recent
Developments
section that follows and Note 5 to the consolidated
financial statements for additional information related to these
charges.
|
·
|
Environmental
insurance recoveries and charges – We recorded income related to insurance
recoveries, net of associated fees and costs, of $10.2 million ($6.2
million on an after-tax basis, or $0.15 per diluted share) as a reduction
of restructuring and other special charges, net during 2008, with no
corresponding recoveries last year. See Note 5 and Note 17 to the
consolidated financial statements for additional information related to
these recoveries.
|
·
|
Share-based
incentive plans – As a result of our lower operating results, our
share-based compensation expense was lower by $5.8 million in 2008, as
compared to last year. The lower expense primarily reflects lower expected
payout percentages on our stock performance
plans.
|
·
|
Earnings
Enhancement Plan – Last year, we incurred charges related to our Earnings
Enhancement Plan initiatives of $19.0 million ($12.4 million on an
after-tax basis, or $0.28 per diluted share), with no corresponding
charges during 2008. The plan was designed to increase earnings through
cost reductions, efficiency initiatives and the reallocation of resources.
See Note 5 to the consolidated financial statements for additional
information related to the program and these
charges.
|
·
|
Our
Famous Footwear segment’s net sales increased 0.5%, to $1.320 billion in
2008, compared to $1.313 billion last year. A higher store count led to
the increase in overall net sales, but declines in customer traffic led to
a same-store sales decline of 4.7%. Operating earnings decreased 68.0% to
$27.0 million in 2008, as compared to $84.1 million last year, driven by
higher retail facilities charges resulting from our higher store count as
well as higher selling costs. We also recorded $3.8 million in charges
related to our expense and capital containment initiatives in 2008 and
$3.5 million in charges related to the impairment of goodwill, with no
corresponding charges in 2007. In addition, we experienced a lower gross
profit rate as a result of our increased promotional activity. As a
percent of net sales, operating earnings decreased to 2.0% in 2008, as
compared to 6.4% last year.
|
·
|
Our
Wholesale Operations segment’s net sales decreased 10.2%, to $703.8
million in 2008, as compared to $783.5 million last year. The challenging
retail environment softened demand for many of our brands. A lower mix of
department store sales, a higher mix of sales of lower-margin licensed
brands as compared to our owned brands and increased markdown and
allowance provisions led to a lower gross profit rate. We incurred an
operating loss of $108.1 million in 2008, as compared to operating
earnings of $67.5 million last year, as a result of $129.1 million of
charges incurred related to the impairment of goodwill and intangible
assets and $14.4 million of charges recorded in connection with our
expense and capital containment initiatives in 2008, with no corresponding
charges in 2007. These increases were partially offset by the
nonrecurrence of $4.2 million in charges related to our Earnings
Enhancement Plan in 2007. We also experienced a decline in net sales and
our gross profit rate.
|
·
|
Our
Specialty Retail segment’s net sales decreased 4.1%, to $252.5 million in
2008, compared to $263.2 million last year. We experienced a same-store
sales decline of 3.4% in our retail stores, lower net sales at Shoes.com
and a decline in the Canadian dollar exchange rate. Our operating loss
increased to $30.5 million in 2008, compared to $8.2 million last year due
to primarily to $16.6 million in charges related to the impairment of
goodwill, with no corresponding charges in 2007. In addition, we
experienced a decline in net sales and gross profit rate, partially offset
by lower expenses due primarily to the nonrecurrence of charges associated
with the relocation of our Shoes.com administrative office from Los
Angeles, California to St. Louis, Missouri last year and lower marketing
and selling costs. In addition, we recorded $0.6 million of charges
related to our expense and capital containment initiatives in 2008, with
no corresponding charges in 2007.
|
CONSOLIDATED
RESULTS
|
||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||
($
millions)
|
%
of
Net
Sales
|
%
of
Net
Sales
|
%
of
Net
Sales
|
|||||||||||||
Net
sales
|
$
|
2,276.4
|
100.0%
|
$
|
2,359.9
|
100.0%
|
$
|
2,470.9
|
100.0%
|
|||||||
Cost
of goods sold
|
1,394.2
|
61.2%
|
1,416.5
|
60.0%
|
1,500.0
|
60.7%
|
||||||||||
Gross
profit
|
882.2
|
38.8%
|
943.4
|
40.0%
|
970.9
|
39.3%
|
||||||||||
Selling
and administrative expenses
|
851.8
|
37.4%
|
827.4
|
35.1%
|
854.1
|
34.6%
|
||||||||||
Impairment
of goodwill and intangible assets
|
149.2
|
6.6%
|
–
|
–
|
–
|
–
|
||||||||||
Restructuring
and other special charges, net
|
54.3
|
2.4%
|
19.0
|
0.8%
|
8.1
|
0.3%
|
||||||||||
Equity
in net loss of nonconsolidated affiliate
|
0.2
|
0.0%
|
0.4
|
0.0%
|
–
|
–
|
||||||||||
Operating
(loss) earnings
|
(173.3
|
)
|
(7.6)%
|
96.6
|
4.1%
|
108.7
|
4.4%
|
|||||||||
Interest
expense
|
(17.1
|
)
|
(0.8)%
|
(16.2
|
)
|
(0.6)%
|
(17.9
|
)
|
(0.7)%
|
|||||||
Interest
income
|
1.8
|
0.1%
|
3.4
|
0.1%
|
2.6
|
0.1%
|
||||||||||
(Loss)
earnings before income taxes and minority
interests
|
(188.6
|
)
|
(8.3)%
|
83.8
|
3.6%
|
93.4
|
3.8%
|
|||||||||
Income
tax benefit (provision)
|
53.8
|
2.3%
|
(23.5
|
)
|
(1.0)%
|
(27.7
|
)
|
(1.1)%
|
||||||||
Minority
interests in net loss of consolidated
subsidiaries
|
1.6
|
0.1%
|
0.1
|
0.0%
|
–
|
–
|
||||||||||
Net
(loss) earnings
|
$
|
(133.2
|
)
|
(5.9)%
|
$
|
60.4
|
2.6%
|
$
|
65.7
|
2.7%
|
·
|
Cash-based
employee incentive plan – We recognized total expense of $1.2 million for
cash-based employee incentive plan costs in 2007 compared to $26.6 million
in 2006, resulting in a decrease in expenses of $25.4
million.
|
·
|
Earnings
Enhancement Plan savings – We experienced a decrease in costs of
approximately $16 million as a result of lower costs resulting from the
benefits of our Earnings Enhancement Plan (approximately $21 million
during 2007 versus approximately $5 million during
2006).
|
·
|
Executive
early retirement agreement – During 2006, we incurred charges related to
an executive early retirement agreement of $3.7 million, with no
corresponding charges during 2007.
|
·
|
Expense
and capital containment initiatives – We incurred charges of $30.9 million
during 2008, related to our expense and capital containment initiatives,
with no corresponding charges last year. These costs include
employee-related costs for severance, including health care benefits and
enhanced pension benefits, as well as facility and other costs. See
further discussion of these initiatives under
Recent
Developments
.
|
·
|
Headquarters
consolidation – We incurred charges of $29.8 million during 2008, related
to the relocation and transition of our Famous Footwear division
headquarters, with no corresponding charges last year. These costs include
employee-related costs for relocation, severance, recruiting and
retention, as well as facility and other
costs.
|
·
|
Earnings
Enhancement Plan – Last year, we incurred charges related to our Earnings
Enhancement Plan initiatives of $19.0 million, with no corresponding
charges during 2008. The plan was designed to increase earnings through
cost reductions, efficiency initiatives and the reallocation of
resources.
|
·
|
Environmental
insurance recoveries and charges – We recorded income related to insurance
recoveries, net of associated fees and costs, of $10.2 million, as a
reduction of restructuring and other special charges, net during 2008,
with no corresponding recoveries last
year.
|
·
|
Information
technology initiatives – We incurred charges of $3.7 million during 2008,
related to our integrated ERP information technology system that will
replace select existing internally developed and certain other third-party
applications, with no corresponding charges last
year.
|
·
|
Earnings
Enhancement Plan – We incurred additional charges of $13.0 million related
to our Earnings Enhancement Plan in 2007 compared to 2006 ($19.0 million
during 2007, compared to $6.0 million during
2006).
|
·
|
Exit
of the Bass business – During 2006, we incurred charges related to the
exit of our Bass business of $3.8 million, with no corresponding charges
during 2007.
|
·
|
Environmental
insurance recoveries and charges – We recorded income related to insurance
recoveries, net of costs to complete the Redfield on-site remediation of
$1.6 million, as a reduction of restructuring and other special charges,
net during 2006, with no corresponding recoveries in
2007.
|
2008
|
2007
|
2006
|
||||||||||||
($
millions)
|
Net
Sales
|
(Loss)
Earnings
Before
I
ncome
Taxes
and
Minority
Interests
|
Net
Sales
|
Earnings
Before
Income
Taxes
and
Minority
Interests
|
Net
Sales
|
Earnings
Before
Income
Taxes
and
Minority
Interests
|
||||||||
Domestic
|
$1,916.5
|
($217.2
|
)
|
$1,967.7
|
$38.7
|
$1,996.7
|
$51.3
|
|||||||
Foreign
|
359.9
|
28.6
|
392.2
|
45.1
|
474.2
|
42.1
|
||||||||
$2,276.4
|
($188.6
|
)
|
$2,359.9
|
$83.8
|
$2,470.9
|
$93.4
|
FAMOUS
FOOTWEAR
|
|||||||||||||
2008
|
2007
|
2006
|
|||||||||||
($
millions, except sales per square foot)
|
%
of
Net
Sales
|
%
of
Net
Sales
|
%
of
Net
Sales
|
||||||||||
Operating
Results
|
|||||||||||||
Net
sales
|
$
|
1,320.0
|
100.0%
|
$
|
1,313.2
|
100.0%
|
$
|
1,282.2
|
100.0%
|
||||
Cost
of goods sold
|
748.4
|
56.7%
|
727.8
|
55.4%
|
704.3
|
54.9%
|
|||||||
Gross
profit
|
571.6
|
43.3%
|
585.4
|
44.6%
|
577.9
|
45.1%
|
|||||||
Selling
and administrative expenses
|
537.3
|
40.7%
|
501.3
|
38.2%
|
488.1
|
38.1%
|
|||||||
Impairment
of goodwill and intangible assets
|
3.5
|
0.3%
|
–
|
–
|
–
|
–
|
|||||||
Restructuring
and other special charges, net
|
3.8
|
0.3%
|
–
|
–
|
–
|
–
|
|||||||
Operating
earnings
|
$
|
27.0
|
2.0%
|
$
|
84.1
|
6.4%
|
$
|
89.8
|
7.0%
|
||||
Key
Metrics
|
|||||||||||||
Same-store
sales % change (on a 52-week basis)
|
(4.7)%
|
(0.6)%
|
3.4%
|
||||||||||
Same-store
sales $ change (on a 52-week basis)
|
$
|
(60.3
|
)
|
$
|
(7.5
|
)
|
$
|
38.6
|
|||||
Sales
impact of 53
rd
week
|
$
|
–
|
$
|
(18.7
|
)
|
$
|
18.7
|
||||||
Sales
change from new and closed stores, net
|
$
|
67.1
|
$
|
57.2
|
$
|
37.7
|
|||||||
Sales
per square foot, excluding e-commerce
(on
a 52-week basis)
|
$
|
168
|
$
|
180
|
$
|
185
|
|||||||
Square
footage (thousand sq. ft.)
|
7,894
|
7,459
|
6,940
|
||||||||||
Stores
opened
|
89
|
110
|
92
|
||||||||||
Stores
closed
|
25
|
35
|
46
|
||||||||||
Ending
stores
|
1,138
|
1,074
|
999
|
WHOLESALE
OPERATIONS
|
2008
|
2007
|
2006
|
|||||||||||||
($
millions)
|
%
of
Net
Sales
|
%
of
Net
Sales
|
%
of
Net
Sales
|
||||||||||||
Operating
Results
|
|||||||||||||||
Net
sales
|
$
|
703.8
|
100.0%
|
$
|
783.5
|
100.0%
|
$
|
930.8
|
100.0%
|
||||||
Cost
of goods sold
|
497.9
|
70.7%
|
543.3
|
69.3%
|
657.0
|
70.6%
|
|||||||||
Gross
profit
|
205.9
|
29.3%
|
240.2
|
30.7%
|
273.8
|
29.4%
|
|||||||||
Selling
and administrative expenses
|
170.3
|
24.2%
|
168.1
|
21.5%
|
195.4
|
21.0%
|
|||||||||
Impairment
of goodwill and intangible assets
|
129.1
|
18.4%
|
–
|
–
|
–
|
–
|
|||||||||
Restructuring
and other special charges, net
|
14.4
|
2.1%
|
4.2
|
0.5%
|
7.4
|
0.8%
|
|||||||||
Equity
in net loss of nonconsolidated affiliate
|
0.2
|
0.0%
|
0.4
|
0.1%
|
–
|
–
|
|||||||||
Operating
(loss) earnings
|
$
|
(108.1
|
)
|
(15.4)%
|
$
|
67.5
|
8.6%
|
$
|
71.0
|
7.6%
|
|||||
Key
Metrics
|
|||||||||||||||
Unfilled
order position at year-end
|
$
|
200.2
|
$
|
238.1
|
$
|
214.4
|
SPECIALTY
RETAIL
|
||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||
($
millions, except sales per square foot)
|
%
of
Net
Sales
|
%
of
Net
Sales
|
%
of
Net
Sales
|
|||||||||||||||
Operating
Results
|
||||||||||||||||||
Net
sales
|
$
|
252.5
|
100.0%
|
$
|
263.2
|
100.0%
|
$
|
257.9
|
100.0%
|
|||||||||
Cost
of goods sold
|
147.8
|
58.5%
|
145.4
|
55.3%
|
138.7
|
53.8%
|
||||||||||||
Gross
profit
|
104.7
|
41.5%
|
117.8
|
44.7%
|
119.2
|
46.2%
|
||||||||||||
Selling
and administrative expenses
|
118.0
|
46.8%
|
122.2
|
46.4%
|
122.2
|
47.4%
|
||||||||||||
Impairment
of goodwill and intangible assets
|
16.6
|
6.6%
|
–
|
–
|
–
|
–
|
||||||||||||
Restructuring
and other special charges, net
|
0.6
|
0.2%
|
3.8
|
1.4%
|
0.8
|
0.3%
|
||||||||||||
Operating
loss
|
$
|
(30.5
|
)
|
(12.1)%
|
$
|
(8.2
|
)
|
(3.1)%
|
$
|
(3.8
|
)
|
(1.5)%
|
||||||
Key
Metrics
|
||||||||||||||||||
Same-store
sales % change
(on
a 52-week basis)
|
(3.4)%
|
(0.9)%
|
2.1%
|
|||||||||||||||
Same-store
sales $ change
(on
a 52-week basis)
|
$
|
(6.0
|
)
|
$
|
(1.7
|
)
|
$
|
3.2
|
||||||||||
Sales
impact of 53
rd
week
|
$
|
–
|
$
|
(3.8
|
)
|
$
|
3.8
|
|||||||||||
Sales
change from new and closed stores, net
|
$
|
3.1
|
$
|
(12.0
|
)
|
$
|
(20.3
|
)
|
||||||||||
Impact
of changes in Canadian
exchange
rate on sales
|
$
|
(3.4
|
)
|
$
|
6.2
|
$
|
4.1
|
|||||||||||
Sales
change of e-commerce subsidiary
(on
a 52-week basis)
|
$
|
(4.4
|
)
|
$
|
16.6
|
$
|
27.1
|
|||||||||||
Sales
per square foot, excluding e-commerce
(on
a 52-week basis)
|
$
|
348
|
$
|
358
|
$
|
351
|
||||||||||||
Square
footage (thousand sq. ft.)
|
487
|
468
|
488
|
|||||||||||||||
Stores
opened
|
31
|
14
|
4
|
|||||||||||||||
Stores
closed
|
9
|
20
|
28
|
|||||||||||||||
Ending
stores
|
306
|
284
|
290
|
OTHER
|
·
|
Headquarters
consolidation – We incurred charges of $29.8 million during 2008, related
to the relocation and transition of our Famous Footwear division
headquarters, with no corresponding charges last
year.
|
·
|
Expense
and capital containment initiatives – We incurred charges of $12.1 million
during 2008, related to our expense and capital containment initiatives,
with no corresponding charges last year. See further discussion of these
initiatives under
Recent
Developments
.
|
·
|
Earnings
Enhancement Plan – Last year, we incurred charges related to our Earnings
Enhancement Plan initiatives of $11.0 million, with no corresponding
charges during 2008.
|
·
|
Environmental
insurance recoveries and charges – We recorded income related to insurance
recoveries, net of associated fees and costs, of $10.2 million, as a
reduction of restructuring and other special charges, net during 2008,
with no corresponding recoveries last
year.
|
·
|
Information
technology initiatives – We incurred charges of $3.7 million during 2008,
related to our integrated ERP information technology system that will
replace select existing internally developed and certain other third-party
applications, with no corresponding charges last
year.
|
·
|
Share-based
incentive plans – As a result of our lower operating results, our
share-based compensation expense was lower by $2.8 million in 2008, as
compared to last year. The lower expense primarily reflects lower expected
payout percentages on our stock performance
plans.
|
·
|
Lower
expenses related to lower legal fees and an increase in capitalized
salaries in connection with our capitalized
software.
|
·
|
Earnings
Enhancement Plan – We incurred higher costs related to our Earnings
Enhancement Plan of $9.4 million ($11.0 million during 2007 versus $1.6
million during 2006).
|
·
|
Cash-based
employee incentive plan – Annual incentive costs were $4.9 million lower
than last year ($1.2 million during 2007 versus $6.1 million during
2006).
|
·
|
Executive
retirement agreement – During 2006, we incurred a charge of $3.7 million
related to an executive early retirement agreement, with no corresponding
charge in 2007.
|
·
|
Environmental
insurance recoveries and charges – During 2006, we recognized income of
$1.6 million related to an insurance recovery for our Redfield site, net
of environmental charges.
|
·
|
Credit
card settlement – In 2007, we recognized $1.2 million of income related to
a settlement with credit card companies as a reduction of selling and
administrative expenses.
|
·
|
Lower
expenses related to share-based director and employee compensation
(related to a lower stock price) and lower legal
fees.
|
RESTRUCTURING
AND OTHER SPECIAL CHARGES, NET
|
IMPACT
OF INFLATION AND CHANGING PRICES
|
LIQUIDITY
AND CAPITAL RESOURCES
|
($
millions)
|
January
31, 2009
|
February
2, 2008
|
Increase/
(Decrease)
|
||||||
Borrowings
under revolving credit agreement
|
$
|
112.5
|
$
|
15.0
|
$
|
97.5
|
|||
Senior
notes
|
150.0
|
150.0
|
–
|
||||||
Total
debt
|
$
|
262.5
|
$
|
165.0
|
$
|
97.5
|
($
millions)
|
January
31, 2009
|
February
2, 2008
|
Increase/
(Decrease)
|
||||||
Working
capital
|
$
|
279.3
|
$
|
333.1
|
$
|
(53.8
|
)
|
||
Current
ratio
|
1.69:1
|
2.10:1
|
|||||||
2008
|
2007
|
Increase/
(Decrease)
|
|||||||
Net
cash provided by operating activities
|
$
|
34.3
|
$
|
86.3
|
$
|
(52.0
|
)
|
||
Net
cash used for investing activities
|
(81.1
|
)
|
(58.7
|
)
|
(22.4
|
)
|
|||
Net
cash provided by (used for) financing activities
|
79.0
|
(23.8
|
)
|
102.8
|
|||||
Effect
of exchange rate changes on cash
|
(5.1
|
)
|
2.3
|
(7.4
|
)
|
||||
Increase
in cash and cash equivalents
|
$
|
27.1
|
$
|
6.1
|
$
|
21.0
|
·
|
Lower
net earnings, including the impact of costs associated with our
headquarters consolidation,
|
·
|
A
larger increase in our inventory balance due to operating 86 more retail
stores, slower sales and the timing and amount of purchases,
and
|
·
|
A
larger decrease in trade accounts payable due to the timing and amount of
our purchases and payments to
vendors,
|
·
|
An
increase in 2008 in accrued expenses primarily due to additional severance
costs accrued in 2008 related to our voluntary severance program and our
relocation of the Famous Footwear division headquarters from Madison,
Wisconsin to St. Louis, Missouri, compared to a decline last year as a
result of lower cash-based employee incentive plan liabilities,
and
|
·
|
A
larger decrease in our receivables balance due to the timing of receipts
and a decline in sales.
|
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
|
·
|
Expected
long-term rate of return – The expected long-term rate of return on plan
assets is based on historical and projected rates of return for current
and planned asset classes in the plan’s investment portfolio. Assumed
projected rates of return for each asset class were selected after
analyzing experience and future expectations of the returns. The overall
expected rate of return for the portfolio was developed based on the
target allocation for each asset class. The weighted-average expected rate
of return on plan assets used to determine our pension expense for 2008
was 8.75%. A decrease of 50 basis points in the weighted-average expected
rate of return on plan assets would impact pension expense by
approximately $1.1 million. The actual return on plan assets in a given
year may differ from the expected long-term rate of return and the
resulting gain or loss is deferred and recognized into the plans’ expense
over time.
|
·
|
Discount
rate – Discount rates used to measure the present value of our benefit
obligations for our pension and other postretirement benefit plans are
based on a yield curve constructed from a subset of high quality bonds for
which the timing and amount of cash outflows approximate the estimated
payouts of the plans. The weighted-average discount rate selected to
measure the present value of our benefit obligations under our pension and
other postretirement benefit plans were both 6.50%. A decrease of 50 basis
points in the weighted-average discount rate would have impacted the
projected benefit obligation of the pension and other postretirement
benefit plans by approximately $12.9 million and $0.1 million,
respectively.
|
OFF-BALANCE
SHEET ARRANGEMENTS
|
CONTRACTUAL
OBLIGATIONS
|
Payments
Due by Period
|
|||||||||||
($
millions)
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
Than
5
Years
|
||||||
Borrowings
under revolving credit agreement
(1)
|
$
|
112.5
|
$
|
112.5
|
$
|
–
|
$
|
–
|
$
|
–
|
|
Long-term
debt
(2)
|
150.0
|
–
|
–
|
150.0
|
–
|
||||||
Interest
on long-term debt
(2)
|
42.7
|
13.1
|
26.2
|
3.4
|
–
|
||||||
Operating
lease commitments
(6)
(Note 12)
|
831.9
|
164.7
|
266.9
|
171.4
|
228.9
|
||||||
Minimum
license commitments
|
41.3
|
11.5
|
9.1
|
6.3
|
14.4
|
||||||
Purchase
obligations
(3)
|
407.2
|
396.7
|
9.8
|
0.7
|
–
|
||||||
Obligations
related to restructuring initiatives (Note 5)
|
21.5
|
19.5
|
2.0
|
–
|
–
|
||||||
Other
(4)
|
23.6
|
3.7
|
2.4
|
10.8
|
6.7
|
||||||
Total
(5)
|
$
|
1,630.7
|
$
|
721.7
|
$
|
316.4
|
$
|
342.6
|
$
|
250.0
|
|
(1)
|
Interest
on borrowings is at variable rates based on the LIBOR rate or the prime
rate, as defined in the Credit Agreement. The interest rate and fees
for letters of credit varies based upon the level of
excess
availability
under the Credit Agreement. There is an unused
line fee payable on the excess availability under the facility and a
letter of credit fee payable on the outstanding exposure under
letters of credit. Interest obligations, which are variable in
nature, are not included in the table above. See Note 11 to the
consolidated financial statements.
|
||||||||||
(2)
|
Interest
obligations in future periods have been reflected based on our $150.0
million in Senior Notes and a fixed interest rate (8.75%) as of fiscal
year ended January 31, 2009. See Note 11 to the consolidated financial
statements.
|
||||||||||
(3)
|
Purchase
obligations include agreements to purchase goods or services that specify
all significant terms, including quantity and price
provisions.
|
||||||||||
(4)
|
Other
includes obligations for our supplemental executive retirement plan and
other postretirement benefits (Note 6).
|
||||||||||
(5)
|
Excludes
liabilities of $1.3 million, established pursuant to the provisions of FIN
48 due to their uncertain nature in timing of payments.
|
||||||||||
(6)
|
A
majority of our retail operating leases contain provisions which allow us
to modify amounts payable under the lease or terminate the lease in
certain circumstances, such as experiencing actual sales volume below a
defined threshold and/or co-tenancy provisions associated with the
facility. The contractual obligations presented in the table above reflect
the total lease obligation, irrespective of the Company’s ability to
reduce or terminate rental payments in the future, as
noted.
|
SAFE
HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995 AND FORWARD-LOOKING STATEMENTS
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
FOREIGN
CURRENCY EXCHANGE RATES
|
INTEREST
RATES
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
($
thousands, except number of shares and per share amounts)
|
January
31,
2009
|
February
2,
2008
|
||||
ASSETS
|
||||||
Current
assets
|
||||||
Cash
and cash equivalents
|
$
|
86,900
|
$
|
59,801
|
||
Receivables,
net of allowances of $12,878 in 2008 and $13,844 in 2007
|
84,252
|
116,873
|
||||
Inventories,
net of adjustment to last-in, first-out cost of $9,437 in 2008 and $9,552
in 2007
|
466,002
|
435,682
|
||||
Deferred
income taxes
|
19,888
|
–
|
||||
Prepaid expenses and other current assets
|
24,401
|
24,701
|
||||
Total
current assets
|
681,443
|
637,057
|
||||
Prepaid
pension costs
|
44,016
|
70,584
|
||||
Deferred
income taxes
|
17,681
|
–
|
||||
Investment
in nonconsolidated affiliate
|
–
|
6,641
|
||||
Property
and equipment, net
|
157,451
|
141,964
|
||||
Goodwill
and intangible assets, net
|
84,000
|
217,382
|
||||
Other
assets
|
41,440
|
26,213
|
||||
Total
assets
|
$
|
1,026,031
|
$
|
1,099,841
|
||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||
Current
liabilities
|
||||||
Borrowings
under revolving credit agreement
|
$
|
112,500
|
$
|
15,000
|
||
Trade
accounts payable
|
152,339
|
172,947
|
||||
Employee
compensation and benefits
|
59,064
|
39,204
|
||||
Deferred
income taxes
|
–
|
3,010
|
||||
Other
accrued expenses
|
78,243
|
72,859
|
||||
Income
taxes
|
–
|
895
|
||||
Total
current liabilities
|
402,146
|
303,915
|
||||
Other
liabilities
|
||||||
Long-term
debt
|
150,000
|
150,000
|
||||
Deferred
rent
|
41,714
|
41,415
|
||||
Deferred
income taxes
|
–
|
11,534
|
||||
Other
liabilities
|
29,957
|
32,313
|
||||
Total
other liabilities
|
221,671
|
235,262
|
||||
Minority
interests
|
8,110
|
2,087
|
||||
Shareholders’
equity
|
||||||
Preferred
stock, $1.00 par value, 1,000,000 shares authorized; no shares
outstanding
|
–
|
–
|
||||
Common
stock, $0.01 par value, 100,000,000 shares authorized; 42,323,224 and
41,832,656 shares outstanding, net of 3,763,571 and 4,254,139 treasury
shares in 2008 and 2007, respectively
|
423
|
418
|
||||
Additional
paid-in capital
|
147,702
|
145,690
|
||||
Accumulated
other comprehensive (loss) income
|
(5,781
|
)
|
15,598
|
|||
Retained
earnings
|
251,760
|
396,871
|
||||
Total
shareholders’ equity
|
394,104
|
558,577
|
||||
Total
liabilities and shareholders’ equity
|
$
|
1,026,031
|
$
|
1,099,841
|
($
thousands, except per share amounts)
|
2008
|
2007
|
2006
|
||||||
Net
sales
|
$
|
2,276,362
|
$
|
2,359,909
|
$
|
2,470,930
|
|||
Cost
of goods sold
|
1,394,126
|
1,416,510
|
1,500,037
|
||||||
Gross
profit
|
882,236
|
943,399
|
970,893
|
||||||
Selling
and administrative expenses
|
851,893
|
827,350
|
854,053
|
||||||
Impairment
of goodwill and intangible assets
|
149,150
|
–
|
–
|
||||||
Restructuring
and other special charges, net
|
54,278
|
19,000
|
8,145
|
||||||
Equity
in net loss of nonconsolidated affiliate
|
216
|
439
|
–
|
||||||
Operating
(loss) earnings
|
(173,301
|
)
|
96,610
|
108,695
|
|||||
Interest
expense
|
(17,105
|
)
|
(16,232
|
)
|
(17,892
|
)
|
|||
Interest
income
|
1,800
|
3,434
|
2,610
|
||||||
(Loss)
earnings before income taxes and minority interests
|
(188,606
|
)
|
83,812
|
93,413
|
|||||
Income
tax benefit (provision)
|
53,793
|
(23,483
|
)
|
(27,719
|
)
|
||||
Minority
interests in net loss of consolidated subsidiaries
|
1,575
|
98
|
14
|
||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
60,427
|
$
|
65,708
|
||
Basic
(loss) earnings per common share
|
$
|
(3.21
|
)
|
$
|
1.40
|
$
|
1.56
|
||
Diluted
(loss) earnings per common share
|
$
|
(3.21
|
)
|
$
|
1.37
|
$
|
1.51
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Operating
Activities
|
|||||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
60,427
|
$
|
65,708
|
||
Adjustments
to reconcile net (loss) earnings to net cash provided by
operating
activities:
|
|||||||||
Depreciation
|
39,937
|
36,130
|
35,147
|
||||||
Amortization
of capitalized software
|
7,812
|
7,694
|
7,439
|
||||||
Amortization
of intangibles
|
7,124
|
6,844
|
6,848
|
||||||
Amortization
of debt issuance costs
|
1,637
|
1,480
|
1,509
|
||||||
Share-based
compensation expense
|
2,601
|
8,391
|
9,721
|
||||||
Loss
on disposal of facilities and equipment
|
1,065
|
1,101
|
1,908
|
||||||
Impairment
charges for facilities and equipment
|
2,657
|
2,065
|
1,922
|
||||||
Impairment
of goodwill and intangible assets
|
149,150
|
–
|
–
|
||||||
Deferred
rent
|
249
|
3,390
|
1,806
|
||||||
Deferred
income taxes
|
(51,248
|
)
|
(4,072
|
)
|
(906
|
)
|
|||
Provision
for doubtful accounts
|
548
|
18
|
737
|
||||||
Minority
interests
|
(1,575
|
)
|
(98
|
)
|
(14
|
)
|
|||
Foreign
currency transaction losses (gains)
|
131
|
(194
|
)
|
79
|
|||||
Undistributed
loss of nonconsolidated affiliate
|
216
|
439
|
–
|
||||||
Changes
in operating assets and liabilities:
|
|||||||||
Receivables
|
35,644
|
16,065
|
25,310
|
||||||
Inventories
|
(29,196
|
)
|
(12,506
|
)
|
(6,667
|
)
|
|||
Prepaid
expenses and other current assets
|
106
|
7,145
|
(19,379
|
)
|
|||||
Trade
accounts payable
|
(27,213
|
)
|
(13,323
|
)
|
12,759
|
||||
Accrued
expenses
|
25,386
|
(35,445
|
)
|
15,043
|
|||||
Income
taxes
|
(834
|
)
|
(533
|
)
|
(2,398
|
)
|
|||
Other,
net
|
3,377
|
1,242
|
(4,103
|
)
|
|||||
Net
cash provided by operating activities
|
34,336
|
86,260
|
152,469
|
||||||
Investing
Activities
|
|||||||||
Purchases
of property and equipment
|
(60,417
|
)
|
(41,355
|
)
|
(60,725
|
)
|
|||
Capitalized
software
|
(16,327
|
)
|
(5,770
|
)
|
(10,080
|
)
|
|||
Cash
recognized on initial consolidation
|
3,337
|
2,205
|
–
|
||||||
Investment
in nonconsolidated affiliate
|
–
|
(7,080
|
)
|
–
|
|||||
Investments
in consolidated companies
|
(7,683
|
)
|
(3,916
|
)
|
–
|
||||
Acquisition
cost
|
–
|
(2,750
|
)
|
(22,700
|
)
|
||||
Net
cash used for investing activities
|
(81,090
|
)
|
(58,666
|
)
|
(93,505
|
)
|
|||
Financing
Activities
|
|||||||||
Proceeds
from borrowings under revolving credit agreement
|
655,500
|
151,000
|
79,000
|
||||||
Payments
on borrowings under revolving credit agreement
|
(558,000
|
)
|
(137,000
|
)
|
(128,000
|
)
|
|||
Debt
issuance costs
|
(7,500
|
)
|
–
|
–
|
|||||
Acquisition
of treasury stock
|
–
|
(41,090
|
)
|
–
|
|||||
Proceeds
from stock options exercised
|
313
|
9,209
|
10,560
|
||||||
Tax
benefit related to share-based plans
|
498
|
6,421
|
7,947
|
||||||
Dividends
paid
|
(11,855
|
)
|
(12,312
|
)
|
(9,147
|
)
|
|||
Net
cash provided by (used for) financing activities
|
78,956
|
(23,772
|
)
|
(39,640
|
)
|
||||
Effect
of exchange rate changes on cash
|
(5,103
|
)
|
2,318
|
49
|
|||||
Increase
in cash and cash equivalents
|
27,099
|
6,140
|
19,373
|
||||||
Cash
and cash equivalents at beginning of year
|
59,801
|
53,661
|
34,288
|
||||||
Cash
and cash equivalents at end of year
|
$
|
86,900
|
$
|
59,801
|
$
|
53,661
|
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
Total
|
||||||||||||||||||||||
( $ thousands, except number of shares and per |
Common
Stock
|
Paid-In
|
Comprehensive
|
Retained
|
Shareholders’
|
|||||||||||||||||||
share
amounts)
|
Shares
|
Dollars
|
Capital
|
Income
(Loss)
|
Earnings
|
Equity
|
||||||||||||||||||
BALANCE
JANUARY 28, 2006
|
41,566,423 | $ | 416 | $ | 138,027 | $ | 2,822 | $ | 292,945 | $ | 434,210 | |||||||||||||
Net
earnings
|
65,708 | 65,708 | ||||||||||||||||||||||
Foreign
currency translation adjustment
|
(1,504 | ) | (1,504 |
)
|
||||||||||||||||||||
Unrealized
gains on derivative instruments,
net
of tax provision of $457
|
1,435 | 1,435 | ||||||||||||||||||||||
Pension
and other postretirement benefits
adjustments,
net of tax benefit of $8
|
(12 | ) | (12 |
)
|
||||||||||||||||||||
Comprehensive
income
|
65,627 | |||||||||||||||||||||||
Adjustment for
initial application of SFAS No. 158, net of deferred tax liability of
$5,893 (Note 6)
|
9,140 | 9,140 | ||||||||||||||||||||||
Dividends
($0.213 per share)
|
(9,147 | ) | (9,147 |
)
|
||||||||||||||||||||
Stock
issued under employee benefit
and
restricted stock plans
|
1,702,286 | 17 | 6,130 | 6,147 | ||||||||||||||||||||
Tax
benefit related to share-based plans
|
7,947 | 7,947 | ||||||||||||||||||||||
Share-based
compensation expense
|
9,721 | 9,721 | ||||||||||||||||||||||
BALANCE
FEBRUARY 3, 2007
|
43,268,709 | $ | 433 | $ | 161,825 | $ | 11,881 | $ | 349,506 | $ | 523,645 | |||||||||||||
Net
earnings
|
60,427 | 60,427 | ||||||||||||||||||||||
Foreign
currency translation adjustment
|
8,777 | 8,777 | ||||||||||||||||||||||
Unrealized
losses on derivative instruments,
net
of tax benefit of $440
|
(876 | ) | (876 | ) | ||||||||||||||||||||
Pension
and other postretirement benefits
adjustments,
net of tax benefit of $2,482
|
(4,184 | ) | (4,184 | ) | ||||||||||||||||||||
Comprehensive
income
|
64,144 | |||||||||||||||||||||||
Cumulative
effect of adoption of FIN 48 (Note 7)
|
(750 | ) | (750 | ) | ||||||||||||||||||||
Dividends
($0.28 per share)
|
(12,312 | ) | (12,312 | ) | ||||||||||||||||||||
Stock
issued under employee benefit
and
restricted stock plans
|
973,922 | 9 | 10,119 | 10,128 | ||||||||||||||||||||
Acquisition
of treasury stock
|
(2,409,975 | ) | (24 | ) | (41,066 | ) | (41,090 | ) | ||||||||||||||||
Tax
benefit related to share-based plans
|
6,421 | 6,421 | ||||||||||||||||||||||
Share-based
compensation expense
|
8,391 | 8,391 | ||||||||||||||||||||||
BALANCE
FEBRUARY 2, 2008
|
41,832,656 | $ | 418 | $ | 145,690 | $ | 15,598 | $ | 396,871 | $ | 558,577 | |||||||||||||
Net
loss
|
(133,238 | ) | (133,238 | ) | ||||||||||||||||||||
Foreign
currency translation adjustment
|
(10,544 | ) | (10,544 | ) | ||||||||||||||||||||
Unrealized
gains on derivative instruments,
net
of tax provision of $189
|
398 | 398 | ||||||||||||||||||||||
Pension
and other postretirement benefits
adjustments,
net of tax benefit of $7,150
|
(11,233 | ) | (11,233 | ) | ||||||||||||||||||||
Comprehensive
income
|
(154,617 | ) | ||||||||||||||||||||||
Dividends
($0.28 per share)
|
(11,855 | ) | (11,855 | ) | ||||||||||||||||||||
Adjustment
for adoption of SFAS No. 158, net of
deferred
tax liability of $14 (Note 6)
|
(18 | ) | (18 | ) | ||||||||||||||||||||
Stock issued under
employee benefit and restricted stock plans
|
490,568 | 5 | (1,087 | ) | (1,082 | ) | ||||||||||||||||||
Tax
benefit related to share-based plans
|
498 | 498 | ||||||||||||||||||||||
Share-based
compensation expense
|
2,601 | 2,601 | ||||||||||||||||||||||
BALANCE
JANUARY 31, 2009
|
42,323,224 | $ | 423 | $ | 147,702 | $ | (5,781 | ) | $ | 251,760 | $ | 394,104 |
1.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
·
|
Level
1 – Quoted prices in active markets that are unadjusted and accessible at
the measurement date for identical, unrestricted assets or
liabilities;
|
·
|
Level
2 – Quoted prices for identical assets and liabilities in markets that are
not active, quoted prices for similar assets and liabilities in active
markets or financial instruments for which significant inputs are
observable, either directly or
indirectly;
|
·
|
Level
3 – Prices or valuations that require inputs that are both significant to
the fair value measurement and
unobservable.
|
2.
|
BUSINESS
COMBINATIONS AND INVESTMENTS
|
3.
|
EARNINGS
PER SHARE
|
(in
thousands, except per share amounts)
|
2008
|
2007
|
2006
|
||||||
NUMERATOR
|
|||||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
60,427
|
$
|
65,708
|
||
DENOMINATOR
|
|||||||||
Denominator
for basic (loss) earnings per common share
|
41,525
|
43,223
|
42,225
|
||||||
Dilutive
effect of unvested restricted stock and stock options
|
–
|
918
|
1,414
|
||||||
Denominator
for diluted (loss) earnings per common share
|
41,525
|
44,141
|
43,639
|
||||||
Basic
(loss) earnings per common share
|
$
|
(3.21
|
)
|
$
|
1.40
|
$
|
1.56
|
||
Diluted
(loss) earnings per common share
|
$
|
(3.21
|
)
|
$
|
1.37
|
$
|
1.51
|
4.
|
COMPREHENSIVE
INCOME
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
60,427
|
$
|
65,708
|
||
Other
comprehensive (loss) income, net of tax:
|
|||||||||
Foreign
currency translation adjustment
|
(10,544
|
)
|
8,777
|
(1,504
|
)
|
||||
Pension
and other postretirement benefits adjustments
|
(11,233
|
)
|
(4,184
|
)
|
(12
|
)
|
|||
Unrealized
gains (losses) on derivative instruments
|
409
|
(518
|
)
|
647
|
|||||
Net
(loss) gain from derivatives reclassified into earnings
|
(11
|
)
|
(358
|
)
|
788
|
||||
(21,379
|
)
|
3,717
|
(81
|
)
|
|||||
Comprehensive
(loss) income
|
$
|
(154,617
|
)
|
$
|
64,144
|
$
|
65,627
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Foreign
currency translation gains
|
$
|
720
|
$
|
11,264
|
$
|
2,487
|
|||
Unrealized
gains (losses) on derivative instruments
|
268
|
(130
|
)
|
746
|
|||||
Pension
and other postretirement benefits
|
(6,769
|
)
|
4,464
|
8,648
|
|||||
Accumulated
other comprehensive (loss) income
|
$
|
(5,781
|
)
|
$
|
15,598
|
$
|
11,881
|
5.
|
RESTRUCTURING
AND OTHER SPECIAL CHARGES, NET
|
($
millions)
|
Employee
Severance
|
Facility
|
Other
|
Total
|
|||||||||||
Original
charges and reserve balance
|
$
|
24.7
|
$
|
6.0
|
$
|
0.2
|
$
|
30.9
|
|||||||
Amounts
settled in 2008
|
(5.3
|
)
|
(2.7
|
)
|
–
|
(8.0
|
)
|
||||||||
Reserve
balance at January 31, 2009
|
$
|
19.4
|
$
|
3.3
|
$
|
0.2
|
$
|
22.9
|
($
millions)
|
Employee
Severance
|
Employee
Relocation
|
Employee
Recruiting
|
Facility
|
Other
|
Total
|
||||||||||||
Original
charges and reserve balance
|
$
|
6.6
|
$
|
8.3
|
$
|
4.6
|
$
|
9.2
|
$
|
1.1
|
$
|
29.8
|
||||||
Amounts
settled in 2008
|
(4.7
|
)
|
(6.2
|
)
|
(4.3
|
)
|
(3.6
|
)
|
(1.0
|
)
|
(19.8
|
)
|
||||||
Reserve
balance at January 31, 2009
|
$
|
1.9
|
$
|
2.1
|
$
|
0.3
|
$
|
5.6
|
$
|
0.1
|
$
|
10.0
|
($
millions)
|
Employee
Severance
|
Facility
& Lease
Exits
|
Inventory
Markdowns
|
Asset
Write-Offs
|
Consulting
Services
|
Other
|
Total
|
||||||||||||||
Original
charges
and
reserve balance
|
$
|
3.5
|
$
|
(0.1
|
)
|
$
|
0.3
|
$
|
1.2
|
$
|
1.3
|
$
|
0.1
|
$
|
6.3
|
||||||
Amounts
settled in 2006
|
(1.1
|
)
|
(0.2
|
)
|
(0.3
|
)
|
(1.2
|
)
|
(1.1
|
)
|
(0.1
|
)
|
(4.0
|
)
|
|||||||
Reserve
balance at February 3, 2007
|
$
|
2.4
|
$
|
(0.3
|
)
|
$
|
–
|
$
|
–
|
$
|
0.2
|
$
|
–
|
$
|
2.3
|
||||||
Additional
charges in 2007
|
8.2
|
2.6
|
–
|
0.3
|
6.3
|
1.6
|
19.0
|
||||||||||||||
Amounts
settled in 2007
|
(8.7
|
)
|
(1.9
|
)
|
–
|
(0.3
|
)
|
(5.8
|
)
|
(0.9
|
)
|
(17.6
|
)
|
||||||||
Reserve
balance at February 2, 2008
|
$
|
1.9
|
$
|
0.4
|
$
|
–
|
$
|
–
|
$
|
0.7
|
$
|
0.7
|
$
|
3.7
|
|||||||
Amounts
settled in 2008
|
(1.4
|
)
|
(0.4
|
)
|
–
|
–
|
(0.7
|
)
|
(0.7
|
)
|
(3.2
|
)
|
|||||||||
Reserve
balance at
January
31, 2009
|
$
|
0.5
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
0.5
|
($
millions)
|
Famous
Footwear
|
Wholesale
Operations
|
Specialty
Retail
|
Other
|
Total
|
||||||||||||||||
Charges
in 2006
|
$
|
–
|
$
|
3.6
|
$
|
1.1
|
$
|
1.6
|
$
|
6.3
|
|||||||||||
Charges
in 2007
|
–
|
4.2
|
3.8
|
11.0
|
19.0
|
||||||||||||||||
Cumulative
charges to date
|
$
|
–
|
$
|
7.8
|
$
|
4.9
|
$
|
12.6
|
$
|
25.3
|
6.
|
RETIREMENT
AND OTHER BENEFIT PLANS
|
Pension
Benefits
|
Other
Postretirement
Benefits
|
|||||||||||
($
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||
Benefit
obligation at beginning of year
|
$
|
185,171
|
$
|
176,713
|
$
|
4,295
|
$
|
4,294
|
||||
Effect
of eliminating the early measurement date
|
723
|
–
|
21
|
–
|
||||||||
Service
cost
|
7,970
|
8,083
|
–
|
–
|
||||||||
Interest
cost
|
10,935
|
10,637
|
257
|
257
|
||||||||
Plan
participants’ contribution
|
9
|
13
|
53
|
42
|
||||||||
Plan
amendments
|
(1,549
|
)
|
1,186
|
–
|
–
|
|||||||
Actuarial
(gain) loss
|
(14,178
|
)
|
3,187
|
(914
|
)
|
12
|
||||||
Benefits
paid
|
(10,364
|
)
|
(15,557
|
)
|
(170
|
)
|
(310
|
)
|
||||
Special
termination benefits
|
5,407
|
–
|
–
|
–
|
||||||||
Settlement
gain
|
(1,223
|
)
|
–
|
–
|
–
|
|||||||
Curtailment
loss
|
–
|
(247
|
)
|
–
|
–
|
|||||||
Foreign
exchange rate changes
|
(1,034
|
)
|
1,156
|
–
|
–
|
|||||||
Benefit
obligation at end of year
|
$
|
181,867
|
$
|
185,171
|
$
|
3,542
|
$
|
4,295
|
Pension
Benefits
|
Other
Postretirement
Benefits
|
||||||||||||||||
Weighted-Average
Assumptions
Used
to Determine Benefit Obligations, End of Year
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Discount
rate
|
6.50%
|
6.00%
|
6.50%
|
6.00%
|
|||||||||||||
Rate
of compensation increase
|
4.25%
|
4.25%
|
N/A
|
N/A
|
Pension
Benefits
|
Other
Postretirement
Benefits
|
|||||||||||
($
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||
Fair
value of plan assets at beginning of year
|
$
|
240,969
|
$
|
236,374
|
$
|
–
|
$
|
–
|
||||
Effect
of eliminating the early measurement date
|
716
|
–
|
–
|
–
|
||||||||
Actual
return on plan assets
|
(17,160
|
)
|
13,383
|
–
|
–
|
|||||||
Employer
contributions
|
1,917
|
5,472
|
117
|
268
|
||||||||
Plan
participants’ contributions
|
9
|
12
|
53
|
42
|
||||||||
Benefits
paid
|
(10,364
|
)
|
(15,557
|
)
|
(170
|
)
|
(310
|
)
|
||||
Settlements
|
(1,223
|
)
|
–
|
–
|
–
|
|||||||
Foreign
exchange rate changes
|
(1,159
|
)
|
1,285
|
–
|
–
|
|||||||
Fair
value of plan assets at end of year
|
$
|
213,705
|
$
|
240,969
|
$
|
–
|
$
|
–
|
Target
Allocation
for 2009
|
Percentage
of Plan
Assets
at Year-End
|
|||||
2008
|
2007
|
|||||
Asset
Category
|
||||||
Domestic
equities
|
60%
|
35%
|
57%
|
|||
Debt
securities
|
30%
|
51%
|
32%
|
|||
Foreign
equities
|
10%
|
14%
|
11%
|
|||
Total
|
100%
|
100%
|
100%
|
Pension
Benefits
|
Other
Postretirement
Benefits
|
|||||||||||
($
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||
Prepaid
pension costs (noncurrent asset)
|
$
|
44,016
|
$
|
70,584
|
$
|
-
|
$
|
-
|
||||
Accrued
benefit liabilities (current liability)
|
(2,507
|
)
|
(1,592
|
)
|
(1,170
|
)
|
(460
|
)
|
||||
Accrued
benefit liabilities (noncurrent liability)
|
(9,671
|
)
|
(13,194
|
)
|
(2,372
|
)
|
(3,835
|
)
|
||||
Net
amount recognized at end of year
|
$
|
31,838
|
$
|
55,798
|
$
|
(3,542
|
)
|
$
|
(4,295
|
)
|
Projected
Benefit
Obligation
Exceeds
the
Fair Value
of
Plan Assets
|
Accumulated
Benefit
Obligation
Exceeds
the
Fair Value
of
Plan Assets
|
|||||||||||
($
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||
End
of Year
|
||||||||||||
Projected
benefit obligation
|
$
|
12,077
|
$
|
14,786
|
$
|
12,077
|
$
|
14,786
|
||||
Accumulated
benefit obligation
|
11,642
|
11,818
|
11,642
|
11,818
|
||||||||
Fair
value of plan assets
|
-
|
-
|
-
|
-
|
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||
($
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||
Components
of accumulated other comprehensive (income) loss, net of
tax:
|
||||||||||||
Net
actuarial loss (gain)
|
$
|
7,637
|
$
|
(4,880
|
)
|
$
|
(686
|
)
|
$
|
(128
|
)
|
|
Net
prior service cost
|
(68
|
)
|
862
|
-
|
-
|
|||||||
Net
transition asset
|
(114
|
)
|
(318
|
)
|
-
|
-
|
||||||
$
|
7,455
|
$
|
(4,336
|
)
|
$
|
(686
|
)
|
$
|
(128
|
)
|
||
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||
($
thousands)
|
2009
|
2009
|
||||||||||
Expected
amortization, net of tax:
|
||||||||||||
Amortization
of net actuarial losses (gains)
|
$
|
67
|
$
|
(52
|
)
|
|||||||
Amortization
of net prior service cost
|
(12
|
)
|
-
|
|||||||||
Amortization
of net transition asset
|
77
|
-
|
||||||||||
$
|
132
|
$
|
(52
|
)
|
Pension
Benefits
|
Other
Postretirement Benefits
|
||||||||||||||||||
($
thousands)
|
2008
|
2007
|
2006
|
2008
|
2007
|
2006
|
|||||||||||||
Service
cost
|
$
|
7,970
|
$
|
8,083
|
$
|
7,864
|
$
|
–
|
$
|
–
|
$
|
–
|
|||||||
Interest
cost
|
10,935
|
10,637
|
10,162
|
257
|
257
|
251
|
|||||||||||||
Expected
return on assets
|
(18,762
|
)
|
(17,919
|
)
|
(17,167
|
)
|
–
|
–
|
–
|
||||||||||
Amortization
of:
|
|||||||||||||||||||
Actuarial
loss (gain)
|
246
|
413
|
542
|
(9
|
)
|
(10
|
)
|
(10
|
)
|
||||||||||
Prior
service cost
|
(23
|
)
|
364
|
348
|
–
|
–
|
–
|
||||||||||||
Net
transition asset
|
(161
|
)
|
(191
|
)
|
(176
|
)
|
–
|
–
|
–
|
||||||||||
Special
termination benefits
|
5,407
|
–
|
1,470
|
–
|
–
|
–
|
|||||||||||||
Settlement
cost
|
449
|
1,200
|
82
|
–
|
–
|
–
|
|||||||||||||
Total
net periodic benefit cost
|
$
|
6,061
|
$
|
2,587
|
$
|
3,125
|
$
|
248
|
$
|
247
|
$
|
241
|
Pension
Benefits
|
Other
Postretirement Benefits
|
|||||||||||
Weighted-Average
Assumptions Used to Determine Net Cost
|
2008
|
2007
|
2006
|
2008
|
2007
|
2006
|
||||||
Discount
rate
|
6.00%
|
6.00%
|
6.00%
|
6.00%
|
6.00%
|
6.00%
|
||||||
Rate
of compensation increase
|
4.25%
|
4.00%
|
4.00%
|
N/A
|
N/A
|
N/A
|
||||||
Expected
return on plan assets
|
8.75%
|
9.00%
|
9.00%
|
N/A
|
N/A
|
N/A
|
||||||
Health
care cost trend on covered charges
|
N/A
|
N/A
|
N/A
|
8.00%
|
8.00%
|
8.00%
|
Pension
Benefits
|
|||||||||||||
($
thousands)
|
Funded
Plans
|
SERP
|
Total
|
Other
Postretirement
Benefits
|
|||||||||
Employer
Contributions
|
|||||||||||||
2009
expected contributions to plan trusts
|
$
|
13
|
$
|
–
|
$
|
13
|
$
|
–
|
|||||
2009
expected contributions to plan participants
|
–
|
2,507
|
2,507
|
1,170
|
|||||||||
2009
refund of assets (e.g. surplus) to employer
|
138
|
–
|
138
|
–
|
|||||||||
Expected
Benefit Payments
|
|||||||||||||
2009
|
$
|
6,641
|
$
|
2,507
|
$
|
9,148
|
$
|
1,170
|
|||||
2010
|
8,953
|
247
|
9,200
|
364
|
|||||||||
2011
|
8,742
|
1,452
|
10,194
|
350
|
|||||||||
2012
|
9,160
|
1,176
|
10,336
|
334
|
|||||||||
2013
|
9,546
|
8,995
|
18,541
|
318
|
|||||||||
2014
– 2018
|
53,957
|
5,371
|
59,328
|
1,306
|
7.
|
INCOME
TAXES
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Federal
|
|||||||||
Current
|
$
|
(1,174
|
)
|
$
|
18,169
|
$
|
25,787
|
||
Deferred
|
(43,336
|
)
|
(642
|
)
|
(4,822
|
)
|
|||
(44,510
|
)
|
17,527
|
20,965
|
||||||
State
|
|||||||||
Current
|
(1,308
|
)
|
4,108
|
4,407
|
|||||
Deferred
|
(7,912
|
)
|
(273
|
)
|
(1,447
|
)
|
|||
(9,220
|
)
|
3,835
|
2,960
|
||||||
Foreign
|
(63
|
)
|
2,121
|
3,794
|
|||||
Total
income tax (benefit) provision
|
$
|
(53,793
|
)
|
$
|
23,483
|
$
|
27,719
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Income
taxes at statutory rate
|
$
|
(66,012
|
)
|
$
|
29,334
|
$
|
32,695
|
||
State
income taxes, net of federal tax benefit
|
(4,411
|
)
|
2,669
|
1,924
|
|||||
State
income tax credits, net of federal tax expense
|
(1,582
|
)
|
–
|
–
|
|||||
Tax
impact of nondeductible stock option expense
|
708
|
1,169
|
1,149
|
||||||
Tax
impact of nondeductible goodwill impairment
|
24,883
|
–
|
–
|
||||||
Foreign
earnings taxed at lower rates
|
(10,195
|
)
|
(11,130
|
)
|
(9,004
|
)
|
|||
Other
|
2,816
|
1,441
|
955
|
||||||
Total
income tax (benefit) provision
|
$
|
(53,793
|
)
|
$
|
23,483
|
$
|
27,719
|
($
thousands)
|
January
31, 2009
|
February
2, 2008
|
||||
Deferred
Tax Assets
|
||||||
Employee
benefits, compensation and insurance
|
$
|
19,341
|
$
|
15,132
|
||
Accrued
expenses
|
7,760
|
8,313
|
||||
Depreciation
|
6,469
|
6,975
|
||||
Postretirement
and postemployment benefit plans
|
2,009
|
2,401
|
||||
Deferred
rent
|
10,903
|
10,088
|
||||
Accounts
receivable reserves
|
2,700
|
2,838
|
||||
Net
operating loss (“NOL”) carryforward / carryback
|
29,503
|
4,653
|
||||
Inventory
capitalization and inventory reserves
|
2,922
|
2,526
|
||||
Other
|
3,002
|
3,855
|
||||
Total
deferred tax assets, before valuation allowance
|
84,609
|
56,781
|
||||
Valuation
allowance
|
(6,723
|
)
|
(3,236
|
)
|
||
Total
deferred tax assets, net of valuation allowance
|
77,886
|
53,545
|
||||
Deferred
Tax Liabilities
|
||||||
Retirement
plans
|
(13,265
|
)
|
(21,522
|
)
|
||
LIFO
inventory valuation
|
(28,163
|
)
|
(23,761
|
)
|
||
Goodwill
and intangible assets
|
1,925
|
(22,000
|
)
|
|||
Other
|
(814
|
)
|
(806
|
)
|
||
Total
deferred tax liabilities
|
(40,317
|
)
|
(68,089
|
)
|
||
Net
deferred tax asset (liability)
|
$
|
37,569
|
$
|
(14,544
|
)
|
($
thousands)
|
|||
Balance
at February 4, 2007
|
$
|
961
|
|
Additions
for tax positions of prior years
|
22
|
||
Reductions
for tax positions of prior years due to a lapse in the statute of
limitations
|
(60
|
)
|
|
Balance
at February 2, 2008
|
923
|
||
Additions
for tax positions of prior years
|
619
|
||
Reductions
for tax positions of prior years due to a lapse in the statute of
limitations
|
(149
|
)
|
|
Balance
at January 31, 2009
|
$
|
1,393
|
8.
|
BUSINESS
SEGMENT INFORMATION
|
($
thousands)
|
Famous
Footwear
|
Wholesale
Operations
|
Specialty
Retail
|
Other
|
Total
|
||||||||||
Fiscal
2008
|
|||||||||||||||
External
sales
|
$
|
1,319,978
|
$
|
703,841
|
$
|
252,543
|
$
|
-
|
$
|
2,276,362
|
|||||
Intersegment
sales
|
2,252
|
167,164
|
-
|
-
|
169,416
|
||||||||||
Equity
in net loss of nonconsolidated
affiliate
(1)
|
-
|
216
|
-
|
-
|
216
|
||||||||||
Depreciation
and amortization
|
30,806
|
10,365
|
4,913
|
10,426
|
56,510
|
||||||||||
Operating
earnings (loss)
|
26,955
|
(108,065
|
)
|
(30,530
|
)
|
(61,661
|
)
|
(173,301
|
)
|
||||||
Operating
segment assets
|
448,472
|
340,318
|
71,115
|
166,126
|
1,026,031
|
||||||||||
Purchases
of property and equipment
|
48,512
|
1,328
|
5,714
|
4,863
|
60,417
|
||||||||||
Fiscal
2007
|
|||||||||||||||
External
sales
|
$
|
1,313,165
|
$
|
783,533
|
$
|
263,211
|
$
|
-
|
$
|
2,359,909
|
|||||
Intersegment
sales
|
2,558
|
155,707
|
-
|
-
|
158,265
|
||||||||||
Equity
in net loss of nonconsolidated
affiliate
(1)
|
-
|
439
|
-
|
-
|
439
|
||||||||||
Depreciation
and amortization
|
31,289
|
9,219
|
4,681
|
6,959
|
52,148
|
||||||||||
Operating
earnings (loss)
|
84,138
|
67,544
|
(8,180
|
)
|
(46,892
|
)
|
96,610
|
||||||||
Operating
segment assets
|
412,248
|
455,129
|
83,920
|
148,544
|
1,099,841
|
||||||||||
Investment
in nonconsolidated
affiliate
(1)
|
-
|
6,641
|
-
|
-
|
6,641
|
||||||||||
Purchases
of property and equipment
|
31,204
|
3,344
|
5,967
|
840
|
41,355
|
||||||||||
Fiscal
2006
|
|||||||||||||||
External
sales
|
$
|
1,282,211
|
$
|
930,790
|
$
|
257,929
|
$
|
-
|
$
|
2,470,930
|
|||||
Intersegment
sales
|
4,003
|
175,442
|
-
|
-
|
179,445
|
||||||||||
Depreciation
and amortization
|
29,911
|
9,277
|
5,056
|
6,699
|
50,943
|
||||||||||
Operating
earnings (loss)
|
89,834
|
70,962
|
(3,808
|
)
|
(48,293
|
)
|
108,695
|
||||||||
Operating
segment assets
|
411,432
|
465,887
|
78,242
|
143,496
|
1,099,057
|
||||||||||
Purchases
of property and equipment
|
37,260
|
4,983
|
4,966
|
13,516
|
60,725
|
||||||||||
(1)
Related to the
operating results of Edelman Shoe, Inc., which was accounted for under the
equity method until the fourth quarter of 2008. See Note 2 to the
consolidated financial statements for additional information related to
Edelman Shoe,
Inc.
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Operating
earnings
|
$
|
(173,301
|
)
|
$
|
96,610
|
$
|
108,695
|
||
Interest
expense
|
(17,105
|
)
|
(16,232
|
)
|
(17,892
|
)
|
|||
Interest
income
|
1,800
|
3,434
|
2,610
|
||||||
(Loss)
earnings before income taxes and minority interests
|
$
|
(188,606
|
)
|
$
|
83,812
|
$
|
93,413
|
·
|
Wholesale
Operations – $129.1 million of charges related to the Company’s impairment
of goodwill and intangible assets and $14.4 million of charges related to
the Company’s expense and capital containment
initiatives.
|
·
|
Other
– $29.8 million of charges related to the Company’s headquarters
consolidation, $12.1 million of charges related to the Company’s expense
and capital containment initiatives and $3.7 million of charges related to
the Company’s information technology initiatives, partially offset by
$10.2 million of income related to the environmental insurance recoveries,
net of associated fees and costs.
|
·
|
Specialty
Retail – $16.6 million of charges related to the Company’s impairment of
goodwill and $0.6 million of charges related to the Company’s expense and
capital containment initiatives.
|
·
|
Famous
Footwear – $3.8 million of charges related to the Company’s expense and
capital containment initiatives and $3.5 million of charges related to the
Company’s impairment of goodwill.
|
·
|
Other
– $11.0 million of charges related to the Company’s Earnings Enhancement
Plan.
|
·
|
Wholesale
Operations – $4.2 million of charges related to the Company’s Earnings
Enhancement Plan.
|
·
|
Specialty
Retail – $3.8 million of charges related to the Company’s Earnings
Enhancement Plan.
|
·
|
Wholesale
Operations – $3.6 million of charges related to the Company’s Earnings
Enhancement Plan and $3.8 million related to Bass exit
costs.
|
·
|
Other
– $1.6 million of charges related to the Company’s Earnings Enhancement
Plan and $1.6 million of income related to insurance recoveries, net of
associated fees and costs.
|
·
|
Specialty
Retail – $1.1 million of charges related to the Company’s Earnings
Enhancement Plan.
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Net
Sales
|
|||||||||
United
States
|
$
|
1,916,522
|
$
|
1,967,717
|
$
|
1,996,666
|
|||
Far
East
|
283,122
|
313,194
|
384,671
|
||||||
Canada
|
76,718
|
78,983
|
89,881
|
||||||
Latin
America, Europe and other
|
-
|
54
|
-
|
||||||
Inter-area
sales
|
-
|
(39
|
)
|
(288
|
)
|
||||
$
|
2,276,362
|
$
|
2,359,909
|
$
|
2,470,930
|
||||
Long-Lived
Assets
|
|||||||||
United
States
|
$
|
333,134
|
$
|
430,334
|
$
|
431,905
|
|||
Far
East
|
4,331
|
14,753
|
13,609
|
||||||
Canada
|
6,878
|
17,475
|
14,906
|
||||||
Latin
America, Europe and other
|
245
|
222
|
277
|
||||||
$
|
344,588
|
$
|
462,784
|
$
|
460,697
|
9.
|
PROPERTY
AND EQUIPMENT
|
($
thousands)
|
January
31, 2009
|
February
2, 2008
|
||||
Land
and buildings
|
$
|
43,116
|
$
|
42,598
|
||
Leasehold
improvements
|
174,965
|
175,536
|
||||
Technology
equipment
|
39,837
|
39,963
|
||||
Machinery
and equipment
|
22,198
|
22,549
|
||||
Furniture
and fixtures
|
106,040
|
100,777
|
||||
Construction
in progress
|
30,479
|
6,921
|
||||
416,635
|
388,344
|
|||||
Allowances
for depreciation
|
(259,184
|
)
|
(246,380
|
)
|
||
$
|
157,451
|
$
|
141,964
|
Buildings
|
15-30
years
|
Leasehold
improvements
|
5-20
years
|
Technology
equipment
|
3-10
years
|
Machinery
and equipment
|
8-20
years
|
Furniture
and fixtures
|
3-10
years
|
10.
|
GOODWILL
AND INTANGIBLE ASSETS
|
($
thousands)
|
January
31, 2009
|
February
2, 2008
|
||||
Famous
Footwear
|
$
|
2,800
|
$
|
6,279
|
||
Wholesale
Operations
|
81,000
|
196,541
|
||||
Specialty
Retail
|
200
|
14,562
|
||||
$
|
84,000
|
$
|
217,382
|
11.
|
LONG-TERM
AND SHORT-TERM FINANCING
ARRANGEMENTS
|
12.
|
LEASES
|
($
thousands)
|
2008
|
2007
|
2006
|
||||||
Minimum
rents
|
$
|
153,273
|
$
|
139,146
|
$
|
132,643
|
|||
Contingent
rents
|
446
|
798
|
844
|
||||||
$
|
153,719
|
$
|
139,944
|
$
|
133,487
|
13.
|
FINANCIAL
INSTRUMENTS AND RISK MANAGEMENT
|
January
31, 2009
|
February
2, 2008
|
|||||||||||
($
thousands)
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||
Borrowings
under revolving credit agreement
|
$
|
112,500
|
112,500
|
$
|
15,000
|
$
|
15,000
|
|||||
Senior
Notes
|
150,000
|
116,250
|
150,000
|
153,375
|
(U.S.
$ thousands)
|
January
31, 2009
|
February
2, 2008
|
||||
Deliverable
Financial Instruments
|
||||||
United
States dollars (purchased by our Canadian division
with
Canadian dollars)
|
$
|
12,700
|
$
|
12,200
|
||
Euro
|
4,200
|
2,600
|
||||
Non-deliverable
Financial Instruments
|
||||||
Chinese
yuan
|
10,900
|
7,500
|
||||
Japanese
yen
|
1,700
|
1,100
|
||||
New
Taiwanese dollars
|
1,300
|
800
|
||||
Other
currencies
|
500
|
300
|
||||
$
|
31,300
|
$
|
24,500
|
14.
|
COMMON
STOCK REPURCHASES
|
15.
|
SHARE-BASED
PLANS
|
2008
|
2007
|
2006
|
|||||||
Dividend
yield
|
2.2%
|
0.9%
|
1.0%
|
||||||
Expected
volatility
|
39.7%
|
39.9%
|
42.4%
|
||||||
Risk-free
interest rate
|
3.0%
|
4.4%
|
4.7%
|
||||||
Expected
term (in years)
|
7
|
7
|
7
|
Outstanding
|
Exercisable
|
|||||||||||||
Exercise
Price Range
|
Number
of
Options
|
Weighted-
Average
Remaining
Life
(Years)
|
Weighted-
Average
Exercise
Price
|
Number
of
Options
|
Weighted-
Average
Exercise
Price
|
|||||||||
$4.68
– $9.99
|
425,900
|
2
|
$
|
7.40
|
410,900
|
$
|
7.48
|
|||||||
$10.00
– $14.99
|
643,964
|
6
|
13.94
|
492,919
|
13.65
|
|||||||||
$15.00
– $19.99
|
563,803
|
6
|
16.85
|
468,647
|
17.11
|
|||||||||
$20.00
– $24.99
|
230,468
|
7
|
21.63
|
109,709
|
21.68
|
|||||||||
$25.00
– $29.99
|
-
|
-
|
-
|
-
|
-
|
|||||||||
$30.00
– $35.25
|
155,619
|
8
|
35.02
|
42,926
|
34.84
|
|||||||||
2,019,754
|
5
|
$
|
15.88
|
1,525,101
|
$
|
14.23
|
Number
of Options
|
Weighted-Average
Exercise
Price
|
|||||
Outstanding
at February 2, 2008
|
2,083,388
|
$
|
16.22
|
|||
Granted
|
103,500
|
14.52
|
||||
Exercised
|
(31,924
|
)
|
12.83
|
|||
Forfeited
|
(57,915
|
)
|
24.15
|
|||
Canceled
or expired
|
(77,295
|
)
|
18.37
|
|||
Outstanding
at January 31, 2009
|
2,019,754
|
$
|
15.88
|
|||
Exercisable
at January 31, 2009
|
1,525,101
|
$
|
14.23
|
Number
of
Nonvested
Options
|
Weighted-Average
Grant
Date
Fair
Value
|
|||||
Nonvested
at February 2, 2008
|
856,067
|
$
|
9.52
|
|||
Granted
|
103,500
|
5.30
|
||||
Vested
|
(406,999
|
)
|
8.51
|
|||
Forfeited
|
(57,915
|
)
|
10.96
|
|||
Nonvested
at January 31, 2009
|
494,653
|
$
|
9.31
|
Number
of
Nonvested
Restricted
Shares
|
Weighted-Average
Grant
Date
Fair
Value
|
||||||||
Nonvested
at February 2, 2008
|
496,183
|
$
|
20.97
|
||||||
Granted
|
362,500
|
15.07
|
|||||||
Vested
|
(36,841
|
)
|
10.34
|
||||||
Forfeited
|
(50,689
|
)
|
20.04
|
||||||
Nonvested
at January 31, 2009
|
771,153
|
$
|
18.76
|
Number
of
Nonvested
Stock Performance Awards at Target Level
|
Number
of
Nonvested
Stock Performance Awards
at
Maximum Level
|
Weighted-Average
Grant
Date
Fair
Value
|
|||||||
Nonvested
at February 2, 2008
|
363,833
|
727,666
|
$
|
27.12
|
|||||
Granted
|
148,500
|
297,000
|
15.43
|
||||||
Vested
|
-
|
-
|
-
|
||||||
Expired
|
(198,750
|
)
|
(397,500
|
)
|
21.04
|
||||
Forfeited
|
(32,333
|
)
|
(64,666
|
)
|
29.74
|
||||
Nonvested
at January 31, 2009
|
281,250
|
562,500
|
$
|
24.94
|
16.
|
RELATED
PARTY TRANSACTIONS
|
17.
|
COMMITMENTS
AND CONTINGENCIES
|
18.
|
FINANCIAL
INFORMATION FOR THE COMPANY AND ITS
SUBSIDIARIES
|
CONDENSED
CONSOLIDATING BALANCE SHEET
AS
OF JANUARY 31, 2009
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Assets
|
|||||||||||||||
Current
assets
|
|||||||||||||||
Cash
and cash equivalents
|
$
|
–
|
$
|
22,834
|
$
|
64,066
|
$
|
–
|
$
|
86,900
|
|||||
Receivables
|
43,705
|
4,417
|
36,130
|
–
|
84,252
|
||||||||||
Inventories
|
91,669
|
362,299
|
12,034
|
–
|
466,002
|
||||||||||
Deferred
income taxes
|
22,556
|
(2,867
|
)
|
199
|
–
|
19,888
|
|||||||||
Prepaid
expenses and other current assets
|
7,254
|
15,782
|
1,365
|
–
|
24,401
|
||||||||||
Total
current assets
|
165,184
|
402,465
|
113,794
|
–
|
681,443
|
||||||||||
Other
assets
|
78,531
|
9,951
|
14,655
|
–
|
103,137
|
||||||||||
Intangible
assets, net
|
64,480
|
3,000
|
16,520
|
–
|
84,000
|
||||||||||
Property
and equipment, net
|
31,102
|
122,310
|
4,039
|
–
|
157,451
|
||||||||||
Investment
in subsidiaries
|
647,979
|
68,062
|
–
|
(716,041
|
)
|
–
|
|||||||||
Total
assets
|
$
|
987,276
|
$
|
605,788
|
$
|
149,008
|
$
|
(716,041
|
)
|
$
|
1,026,031
|
||||
Liabilities
and Shareholders’ Equity
|
|||||||||||||||
Current
liabilities
|
|||||||||||||||
Borrowings
under revolving credit agreement
|
$
|
112,500
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
112,500
|
|||||
Trade
accounts payable
|
30,948
|
88,109
|
33,282
|
–
|
152,339
|
||||||||||
Accrued
expenses
|
76,629
|
55,144
|
5,534
|
–
|
137,307
|
||||||||||
Total
current liabilities
|
220,077
|
143,253
|
38,816
|
–
|
402,146
|
||||||||||
Other
liabilities
|
|||||||||||||||
Long-term
debt
|
150,000
|
–
|
–
|
–
|
150,000
|
||||||||||
Other
liabilities
|
23,263
|
41,854
|
6,554
|
–
|
71,671
|
||||||||||
Intercompany
payable (receivable)
|
199,832
|
(227,298
|
)
|
27,466
|
–
|
–
|
|||||||||
Total
other liabilities
|
373,095
|
(185,444
|
)
|
34,020
|
–
|
221,671
|
|||||||||
Minority
interests
|
–
|
–
|
8,110
|
–
|
8,110
|
||||||||||
Shareholders’
equity
|
394,104
|
647,979
|
68,062
|
(716,041
|
)
|
394,104
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
987,276
|
$
|
605,788
|
$
|
149,008
|
$
|
(716,041
|
)
|
$
|
1,026,031
|
CONDENSED
CONSOLIDATING STATEMENT OF EARNINGS
FOR
THE FISCAL YEAR ENDED JANUARY 31,
2009
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
sales
|
$
|
569,026
|
$
|
1,594,761
|
$
|
285,138
|
$
|
(172,563
|
)
|
$
|
2,276,362
|
||||
Cost
of goods sold
|
431,128
|
896,663
|
238,898
|
(172,563
|
)
|
1,394,126
|
|||||||||
Gross
profit
|
137,898
|
698,098
|
46,240
|
–
|
882,236
|
||||||||||
Selling
and administrative expenses
|
156,863
|
676,710
|
18,320
|
–
|
851,893
|
||||||||||
Impairment
of goodwill and intangible assets
|
115,006
|
30,309
|
3,835
|
–
|
149,150
|
||||||||||
Restructuring
and other special charges, net
|
49,890
|
4,388
|
–
|
–
|
54,278
|
||||||||||
Equity
in net loss of nonconsolidated affiliate
|
–
|
–
|
216
|
–
|
216
|
||||||||||
Equity
in (earnings) loss of subsidiaries
|
(5,385)
|
(26,307
|
)
|
–
|
31,692
|
–
|
|||||||||
Operating
(loss) earnings
|
(178,476
|
)
|
12,998
|
23,869
|
(31,692
|
)
|
(173,301
|
)
|
|||||||
Interest
expense
|
(17,007
|
)
|
–
|
(98
|
)
|
–
|
(17,105
|
)
|
|||||||
Interest
income
|
80
|
669
|
1,051
|
–
|
1,800
|
||||||||||
Intercompany
interest income (expense)
|
5,753
|
(6,677
|
)
|
924
|
–
|
–
|
|||||||||
(Loss)
earnings before income taxes and minority
interests
|
(189,650
|
)
|
6,990
|
25,746
|
(31,692
|
)
|
(188,606
|
)
|
|||||||
Income
tax benefit (provision)
|
56,412
|
(1,605
|
)
|
(1,014
|
)
|
–
|
53,793
|
||||||||
Minority
interests in net loss of consolidated subsidiaries
|
–
|
–
|
1,575
|
–
|
1,575
|
||||||||||
Net
(loss) earnings
|
$
|
(133,238
|
)
|
$
|
5,385
|
$
|
26,307
|
$
|
(31,692
|
)
|
$
|
(133,238
|
)
|
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR
THE FISCAL YEAR ENDED JANUARY 31,
2009
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
cash (used for) provided by operating activities
|
$
|
(22,725
|
)
|
$
|
41,416
|
$
|
15,645
|
$
|
–
|
$
|
34,336
|
||||
Investing
activities
|
|||||||||||||||
Purchases
of property and equipment
|
(5,095
|
)
|
(54,229
|
)
|
(1,093
|
)
|
–
|
(60,417
|
)
|
||||||
Capitalized
software
|
(13,073
|
)
|
(3,172
|
)
|
(82
|
)
|
–
|
(16,327
|
)
|
||||||
Cash
recognized on initial consolidation
|
–
|
–
|
3,337
|
–
|
3,337
|
||||||||||
Investments
in consolidated companies
|
–
|
–
|
(7,683
|
)
|
–
|
(7,683
|
)
|
||||||||
Net
cash used for investing activities
|
(18,168
|
)
|
(57,401
|
)
|
(5,521
|
)
|
–
|
(81,090
|
)
|
||||||
Financing
activities
|
|||||||||||||||
Proceeds
from borrowings under revolving credit
agreement
|
655,500
|
–
|
–
|
–
|
655,500
|
||||||||||
Payments
on borrowings under revolving credit
agreement
|
(558,000
|
)
|
–
|
–
|
–
|
(558,000
|
)
|
||||||||
Debt
issuance costs
|
(7,500
|
)
|
–
|
–
|
–
|
(7,500
|
)
|
||||||||
Proceeds
from stock options exercised
|
313
|
–
|
–
|
–
|
313
|
||||||||||
Tax
benefit related to share-based plans
|
498
|
–
|
–
|
–
|
498
|
||||||||||
Dividends
(paid) received
|
(11,855
|
)
|
7,105
|
(7,105
|
)
|
–
|
(11,855
|
)
|
|||||||
Intercompany
financing
|
(38,063
|
)
|
12,800
|
25,263
|
–
|
–
|
|||||||||
Net
cash provided by financing activities
|
40,893
|
19,905
|
18,158
|
–
|
78,956
|
||||||||||
Effect
of exchange rate changes on cash
|
–
|
(5,103
|
)
|
–
|
–
|
(5,103
|
)
|
||||||||
(Decrease)
increase in cash and cash equivalents
|
–
|
(1,183
|
)
|
28,282
|
–
|
27,099
|
|||||||||
Cash
and cash equivalents at beginning of year
|
–
|
24,017
|
35,784
|
–
|
59,801
|
||||||||||
Cash
and cash equivalents at end of year
|
$
|
–
|
$
|
22,834
|
$
|
64,066
|
$
|
–
|
$
|
86,900
|
CONDENSED
CONSOLIDATING BALANCE SHEET
AS
OF FEBRUARY 2, 2008
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Assets
|
|||||||||||||||
Current
assets
|
|||||||||||||||
Cash
and cash equivalents
|
$
|
–
|
$
|
24,017
|
$
|
35,784
|
$
|
–
|
$
|
59,801
|
|||||
Receivables
|
59,186
|
5,835
|
51,852
|
–
|
116,873
|
||||||||||
Inventories
|
80,009
|
353,951
|
1,722
|
–
|
435,682
|
||||||||||
Prepaid
expenses and other current assets
|
18,578
|
5,803
|
320
|
–
|
24,701
|
||||||||||
Total
current assets
|
157,773
|
389,606
|
89,678
|
–
|
637,057
|
||||||||||
Other
assets
|
87,118
|
(1,302
|
)
|
10,981
|
–
|
96,797
|
|||||||||
Investment
in nonconsolidated affiliate
|
–
|
–
|
6,641
|
–
|
6,641
|
||||||||||
Goodwill
and intangible assets, net
|
186,330
|
31,052
|
–
|
–
|
217,382
|
||||||||||
Property
and equipment, net
|
29,887
|
108,055
|
4,022
|
–
|
141,964
|
||||||||||
Investment
in subsidiaries
|
656,032
|
68,286
|
7,498
|
(731,816
|
)
|
–
|
|||||||||
Total
assets
|
$
|
1,117,140
|
$
|
595,697
|
$
|
118,820
|
$
|
(731,816
|
)
|
$
|
1,099,841
|
||||
Liabilities
and Shareholders’ Equity
|
|||||||||||||||
Current
liabilities
|
|||||||||||||||
Borrowings
under revolving credit agreement
|
$
|
15,000
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
15,000
|
|||||
Trade
accounts payable
|
33,883
|
94,702
|
44,362
|
–
|
172,947
|
||||||||||
Accrued
expenses
|
62,264
|
58,666
|
(5,857
|
)
|
–
|
115,073
|
|||||||||
Income
taxes
|
850
|
523
|
(478
|
)
|
–
|
895
|
|||||||||
Total
current liabilities
|
111,997
|
153,891
|
38,027
|
–
|
303,915
|
||||||||||
Other
liabilities
|
|||||||||||||||
Long-term
debt
|
150,000
|
–
|
–
|
–
|
150,000
|
||||||||||
Other
liabilities
|
58,674
|
26,180
|
408
|
–
|
85,262
|
||||||||||
Intercompany
payable (receivable)
|
237,892
|
(240,096
|
)
|
2,204
|
–
|
–
|
|||||||||
Total
other liabilities
|
446,566
|
(213,916
|
)
|
2,612
|
–
|
235,262
|
|||||||||
Minority
interests
|
–
|
–
|
2,087
|
–
|
2,087
|
||||||||||
Shareholders’
equity
|
558,577
|
655,722
|
76,094
|
(731,816
|
)
|
558,577
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
1,117,140
|
$
|
595,697
|
$
|
118,820
|
$
|
(731,816
|
)
|
$
|
1,099,841
|
CONDENSED
CONSOLIDATING STATEMENT OF EARNINGS
FOR
THE FISCAL YEAR ENDED FEBRUARY 2,
2008
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
sales
|
$
|
608,825
|
$
|
1,548,957
|
$
|
368,405
|
$
|
(166,278
|
)
|
$
|
2,359,909
|
||||
Cost
of goods sold
|
446,461
|
839,183
|
297,144
|
(166,278
|
)
|
1,416,510
|
|||||||||
Gross
profit
|
162,364
|
709,774
|
71,261
|
–
|
943,399
|
||||||||||
Selling
and administrative expenses
|
171,204
|
617,767
|
38,379
|
–
|
827,350
|
||||||||||
Restructuring
and other special charges, net
|
15,156
|
3,844
|
–
|
–
|
19,000
|
||||||||||
Equity
in net loss of nonconsolidated affiliate
|
–
|
–
|
439
|
–
|
439
|
||||||||||
Equity
in (earnings) loss of subsidiaries
|
(84,497
|
)
|
(38,513
|
)
|
–
|
123,010
|
–
|
||||||||
Operating
earnings (loss)
|
60,501
|
126,676
|
32,443
|
(123,010
|
)
|
96,610
|
|||||||||
Interest
expense
|
(16,231
|
)
|
(1
|
)
|
–
|
–
|
(16,232
|
)
|
|||||||
Interest
income
|
961
|
941
|
1,532
|
–
|
3,434
|
||||||||||
Intercompany
interest income (expense)
|
5,252
|
(7,010
|
)
|
1,758
|
–
|
–
|
|||||||||
Earnings
(loss) before income taxes and minority
interests
|
50,483
|
120,606
|
35,733
|
(123,010
|
)
|
83,812
|
|||||||||
Income
tax benefit (provision)
|
9,944
|
(32,110
|
)
|
(1,317
|
)
|
–
|
(23,483
|
)
|
|||||||
Minority
interests in net (earnings) loss of consolidated
subsidiaries
|
–
|
(338
|
)
|
436
|
–
|
98
|
|||||||||
Net
earnings (loss)
|
$
|
60,427
|
$
|
88,158
|
$
|
34,852
|
$
|
(123,010
|
)
|
$
|
60,427
|
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR
THE FISCAL YEAR ENDED FEBRUARY 2,
2008
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
cash (used for) provided by operating activities
|
$
|
(20,699
|
)
|
$
|
81,524
|
$
|
26,971
|
$
|
(1,536
|
)
|
$
|
86,260
|
|||
Investing
activities
|
|||||||||||||||
Purchases
of property and equipment
|
(2,542
|
)
|
(37,344
|
)
|
(1,469
|
)
|
–
|
(41,355
|
)
|
||||||
Capitalized
software
|
(4,592
|
)
|
(1,178
|
)
|
–
|
–
|
(5,770
|
)
|
|||||||
Investment
in nonconsolidated affiliate
|
–
|
–
|
(7,080
|
)
|
–
|
(7,080
|
)
|
||||||||
Investment
in consolidated company
|
–
|
–
|
(3,916
|
)
|
–
|
(3,916
|
)
|
||||||||
Cash
recognized on initial consolidation
|
–
|
–
|
2,205
|
–
|
2,205
|
||||||||||
Acquisition
cost
|
–
|
(2,750
|
)
|
–
|
–
|
(2,750
|
)
|
||||||||
Net
cash used for investing activities
|
(7,134
|
)
|
(41,272
|
)
|
(10,260
|
)
|
–
|
(58,666
|
)
|
||||||
Financing
activities
|
|||||||||||||||
Proceeds
from borrowings under revolving credit
agreement
|
151,000
|
–
|
–
|
–
|
151,000
|
||||||||||
Payments
on borrowings under revolving credit
agreement
|
(137,000
|
)
|
–
|
–
|
–
|
(137,000
|
)
|
||||||||
Acquisition
of treasury stock
|
(41,090
|
)
|
–
|
–
|
–
|
(41,090
|
)
|
||||||||
Proceeds
from stock options exercised
|
9,209
|
–
|
–
|
–
|
9,209
|
||||||||||
Tax
benefit related to share-based plans
|
6,421
|
–
|
–
|
–
|
6,421
|
||||||||||
Dividends
(paid) received
|
(12,312
|
)
|
30,007
|
(30,007
|
)
|
–
|
(12,312
|
)
|
|||||||
Intercompany
financing
|
51,605
|
(63,670
|
)
|
10,529
|
1,536
|
–
|
|||||||||
Net
cash provided by (used for) financing activities
|
27,833
|
(33,663
|
)
|
(19,478
|
)
|
1,536
|
(23,772
|
)
|
|||||||
Effect
of exchange rate changes on cash
|
–
|
2,318
|
–
|
–
|
2,318
|
||||||||||
Increase
(decrease) in cash and cash equivalents
|
–
|
8,907
|
(2,767
|
)
|
–
|
6,140
|
|||||||||
Cash
and cash equivalents at beginning of year
|
–
|
15,110
|
38,551
|
–
|
53,661
|
||||||||||
Cash
and cash equivalents at end of year
|
$
|
–
|
$
|
24,017
|
$
|
35,784
|
$
|
–
|
$
|
59,801
|
CONDENSED
CONSOLIDATING STATEMENT OF EARNINGS
FOR
THE FISCAL YEAR ENDED FEBRUARY 3,
2007
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
sales
|
$
|
687,902
|
$
|
1,523,907
|
$
|
447,630
|
$
|
(188,509
|
)
|
$
|
2,470,930
|
||||
Cost
of goods sold
|
507,431
|
816,224
|
364,891
|
(188,509
|
)
|
1,500,037
|
|||||||||
Gross
profit
|
180,471
|
707,683
|
82,739
|
–
|
970,893
|
||||||||||
Selling
and administrative expenses
|
192,802
|
615,165
|
46,086
|
–
|
854,053
|
||||||||||
Restructuring
and other special charges, net
|
7,360
|
785
|
–
|
–
|
8,145
|
||||||||||
Equity
in (earnings) loss of subsidiaries
|
(86,663
|
)
|
(34,167
|
)
|
–
|
120,830
|
–
|
||||||||
Operating
earnings (loss)
|
66,972
|
125,900
|
36,653
|
(120,830
|
)
|
108,695
|
|||||||||
Interest
expense
|
(17,842
|
)
|
(9
|
)
|
(41)
|
–
|
(17,892
|
)
|
|||||||
Interest
income
|
918
|
567
|
1,125
|
–
|
2,610
|
||||||||||
Intercompany
interest income (expense)
|
5,047
|
(6,731
|
)
|
1,684
|
–
|
–
|
|||||||||
Earnings
(loss) before income taxes and minority
interests
|
55,095
|
119,727
|
39,421
|
(120,830
|
)
|
93,413
|
|||||||||
Income
tax benefit (provision)
|
10,613
|
(33,785
|
)
|
(4,547
|
)
|
–
|
(27,719
|
)
|
|||||||
Minority
interests in net loss of consolidated
subsidiaries
|
–
|
–
|
14
|
–
|
14
|
||||||||||
Net
earnings (loss)
|
$
|
65,708
|
$
|
85,942
|
$
|
34,888
|
$
|
(120,830
|
)
|
$
|
65,708
|
CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR
THE FISCAL YEAR ENDED FEBRUARY 3,
2007
|
($
thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net
cash provided by operating activities
|
$
|
40,231
|
$
|
83,411
|
$
|
28,618
|
$
|
209
|
$
|
152,469
|
|||||
Investing
activities
|
|||||||||||||||
Acquisition
cost
|
(22,700
|
)
|
–
|
–
|
–
|
(22,700
|
)
|
||||||||
Purchases
of property and equipment
|
(18,212
|
)
|
(42,063
|
)
|
(450
|
)
|
–
|
(60,725
|
)
|
||||||
Capitalized
software
|
(5,935
|
)
|
(3,959
|
)
|
(186
|
)
|
–
|
(10,080
|
)
|
||||||
Net
cash used for investing activities
|
(46,847
|
)
|
(46,022
|
)
|
(636
|
)
|
–
|
(93,505
|
)
|
||||||
Financing
activities
|
|||||||||||||||
Proceeds
from borrowings under revolving credit agreement
|
79,000
|
–
|
–
|
–
|
79,000
|
||||||||||
Payments
on borrowings under revolving credit agreement
|
(128,000
|
)
|
–
|
–
|
–
|
(128,000
|
)
|
||||||||
Proceeds
from stock options exercised
|
10,560
|
–
|
–
|
–
|
10,560
|
||||||||||
Tax
benefit related to share-based plans
|
7,947
|
–
|
–
|
–
|
7,947
|
||||||||||
Dividends
paid
|
(9,147
|
)
|
–
|
–
|
–
|
(9,147
|
)
|
||||||||
Intercompany
financing
|
32,919
|
(36,543
|
)
|
3,833
|
(209
|
)
|
–
|
||||||||
Net
cash (used for) provided by financing activities
|
(6,721
|
)
|
(36,543
|
)
|
3,833
|
(209
|
)
|
(39,640
|
)
|
||||||
Effect
of exchange rate changes on cash
|
–
|
128
|
(79
|
)
|
–
|
49
|
|||||||||
(Decrease)
increase in cash and cash equivalents
|
(13,337
|
)
|
974
|
31,736
|
–
|
19,373
|
|||||||||
Cash
and cash equivalents at beginning of year
|
13,337
|
14,566
|
6,385
|
–
|
34,288
|
||||||||||
Cash
and cash equivalents at end of year
|
$
|
–
|
$
|
15,540
|
$
|
38,121
|
$
|
–
|
$
|
53,661
|
19.
|
QUARTERLY
FINANCIAL DATA (Unaudited)
|
Quarters
|
|||||||||
($
thousands, except per share amounts)
|
First
Quarter
(13
weeks)
|
Second
Quarter
(13
weeks)
|
Third
Quarter
(13
weeks)
|
Fourth
Quarter
(13
weeks)
|
|||||
2008
|
|||||||||
Net
sales
|
$554,491
|
$569,219
|
$631,657
|
$520,995
|
|||||
Gross
profit
|
216,462
|
223,497
|
248,491
|
193,786
|
|||||
Net
earnings (loss)
|
7,195
|
2,217
|
10,398
|
(153,048
|
)
|
||||
Per
share of common stock:
|
|||||||||
Earnings
(loss) - basic
|
0.17
|
0.05
|
0.25
|
(3.68
|
)
|
||||
Earnings
(loss) - diluted
|
0.17
|
0.05
|
0.25
|
(3.68
|
)
|
||||
Dividends
paid
|
0.07
|
0.07
|
0.07
|
0.07
|
|||||
Market
value:
|
|||||||||
High
|
17.65
|
17.60
|
18.44
|
10.94
|
|||||
Low
|
11.89
|
12.06
|
6.99
|
4.34
|
Quarters
|
|||||||
($
thousands, except per share amounts)
|
First
Quarter
(13
weeks)
|
Second
Quarter
(13
weeks)
|
Third
Quarter
(13
weeks)
|
Fourth
Quarter
(13
weeks)
|
|||
2007
|
|||||||
Net
sales
|
$566,348
|
$576,571
|
$645,546
|
$571,444
|
|||
Gross
profit
|
229,803
|
230,994
|
259,841
|
222,761
|
|||
Net
earnings
|
9,636
|
9,830
|
27,009
|
13,952
|
|||
Per
share of common stock:
|
|||||||
Earnings
- basic
|
0.22
|
0.23
|
0.62
|
0.33
|
|||
Earnings
- diluted
|
0.22
|
0.22
|
0.61
|
0.33
|
|||
Dividends
paid
|
0.07
|
0.07
|
0.07
|
0.07
|
|||
Market
value:
|
|||||||
High
|
37.68
|
33.00
|
23.19
|
18.29
|
|||
Low
|
26.46
|
19.92
|
18.09
|
11.91
|
·
|
$149.2
million ($119.2 million on an after-tax basis) related to our impairment
of goodwill and intangible assets,
|
·
|
$30.9
million ($19.1 million on an after-tax basis) related to our expense and
capital containment initiatives,
|
·
|
$2.8
million ($1.7 million on an after-tax basis) related to the relocation and
transition of our Famous Footwear division headquarters
and
|
·
|
$2.3
million ($1.5 million on an after-tax basis) related our information
technology initiatives.
|
(A)
|
Accounts
written off, net of recoveries, discounts and allowances
taken.
|
(B)
|
Adjustment
upon disposal of related
inventories.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
CONTROLS
AND PROCEDURES
|
OTHER
INFORMATION
|
PART
III
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
EXECUTIVE
COMPENSATION
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|||||
Equity
compensation plans approved by security holders
|
2,582,254
|
(1)
|
$15.88
|
(1)
|
2,551,385
|
(2)
|
||
Equity
compensation plans not approved by security holders
|
–
|
–
|
30,000
|
(3)
|
||||
Total
|
2,582,254
|
$15.88
|
2,581,385
|
|||||
(1)
|
Column
(a) includes the following:
(i)
2,019,754
outstanding stock options (includes vested and nonvested
options)
(ii)
562,500
rights to receive common shares subject to nonvested performance share
awards at the maximum award level. The target amount of shares to be
awarded under these performance share awards is 281,250, and depending on
the achievement of certain objectives at the end of 2009 and 2010, these
awards may be payable anywhere from zero to a maximum 562,500 shares.
Although these awards are reflected at the maximum 200% award level in the
table above (562,500 shares), our current expectation is that no shares
will be issued upon satisfaction of these awards.
Performance
share rights described in (ii) above were disregarded for purposes of
computing the weighted-average exercise price in column (b). This table
excludes restricted stock units granted to independent directors and
independent directors’ deferred compensation units, which are payable only
in cash.
|
|||||||
(2)
|
Represents
our remaining share awards available for grant based upon the plan
provisions, which reflects our practice to reserve shares for outstanding
awards. Per our current practice, the number of securities available for
grant has been reduced for stock option grants and performance share
awards payable in stock. Performance share awards are reserved based on
the maximum payout level.
|
|||||||
(3)
|
Represents
our remaining shares available for grant for our director share plan,
whereby non-employee directors can elect to receive their annual retainer
and meeting fees in whole shares of our stock in lieu of
cash.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
PART
IV
|
ITEM 15 | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | |||
(a)
|
(1)
and (2) The list of financial statements and Financial Statement Schedules
required by this item is included in the Index on page 2 under
Financial Statements and
Supplementary Data
. All other schedules specified under Regulation
S-X have been omitted because they are not applicable, because they are
not required or because the information required is included in the
financial statements or notes thereto.
|
|||
(3)
Exhibits
|
||||
Certain
instruments defining the rights of holders of long-term debt securities of
the Company are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K,
and the Company hereby undertakes to furnish to the SEC, upon request,
copies of any such instruments.
|
Exhibit
No.
|
Description
|
|
3.1
|
Restated
Certificate of Incorporation of the Company incorporated herein by
reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended May 5, 2007 and filed June 5,
2007.
|
|
3.2
|
Bylaws
of the Company as amended through October 2 2008, incorporated herein by
reference to Exhibit 3.1 to the Company’s Form 8-K dated October 8, 2008
and filed October 8, 2008.
|
|
4.1a
|
Indenture
for the 8.75% Senior Notes due 2012 dated April 22, 2005 among Brown Shoe
Company, Inc., the subsidiary guarantors set forth therein, and SunTrust
Bank, as trustee, including the form of Global Note attached thereto,
incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K dated
April 26, 2005.
|
|
4.1b
|
Supplemental
Indenture for 8.75% Senior Notes, dated October 24, 2007, incorporated
herein by reference to Exhibit 4.1b to the Company’s For m 10-K dated
February 2, 2008 and filed March 28, 2008.
|
|
10.1
|
Second
Amended and Restated Credit Agreement, dated as of January 21, 2009, among
Brown Shoe Company, Inc., as lead borrower for itself and on behalf of
certain of its subsidiaries, and Bank of America, N.A., as lead issuing
bank, administrative agent and collateral agent, Wells Fargo Retail
Finance, LLC, as syndication agent, Bank of America, N.A. and JPMorgan
Chase Bank, N.A., as co-documentation agents, and the other
financial institutions party thereto, as lenders, incorporate herein by
reference to Exhibit 10.1 to the Company’s Form 8-K dated January 22, 2009
and filed January 22, 2009.
|
|
†
|
10.2*
|
|
10.3*
|
Summary
of compensatory arrangements for the named executive officers of Brown
Shoe Company, Inc., incorporated herein by reference to Item 5.02 and
Exhibit 10.1 to the Company’s Form 8-K dated March 4, 2009 and filed March
10, 2009.
|
|
10.4a*
|
Incentive
and Stock Compensation Plan of 1999, incorporated herein by reference to
Exhibit 2 to the Company's definitive proxy statement dated April 26, 1999
and filed April 26, 1999.
|
|
10.4b*
|
Amendment
to Incentive and Stock Compensation Plan of 1999, dated May 27, 1999,
incorporated herein by reference to Exhibit 10(e)(i) to the Company's Form
10-K for the year ended January 29, 2000 and filed April 19,
2000.
|
|
10.4c*
|
First
Amendment to the Incentive and Stock Compensation Plan of 1999, dated
January 7, 2000, incorporated herein by reference to Exhibit 10(e)(ii) to
the Company's Form 10-K for the year ended January 29, 2000 and filed
April 19, 2000.
|
|
10.5a*
|
Brown
Shoe Company, Inc. Incentive and Stock Compensation Plan of 2002, as
Amended and Restated as of May 22, 2008, incorporated by reference to
Exhibit A to the Company’s definitive proxy statement dated April 11, 2008
and filed April 11, 2008.
|
|
†
|
10.5b(1)*
|
|
10.5b(2)*
|
Form
of Incentive Stock Option Award Agreement (for grants prior to May 2008)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated by reference to Exhibit 10.4 to the Company’s
Quarterly Report on Form 10-Q for the quarter ended July 31, 2004 and
filed September 8, 2004.
|
|
†
|
10.5c(1)*
|
|
10.5c(2)*
|
Form
of Non-Qualified Stock Option Award Agreement for awards issued prior to
May 2008 under the Brown Shoe Company, Inc. Incentive and Stock
Compensation Plan of 2002, incorporated by reference to Exhibit 10.3 to
the Company’s Quarterly Report on Form 10-Q for the quarter ended July 31,
2004 and filed September 8, 2004.
|
|
†
|
10.5d(1)*
|
|
10.5d(2)*
|
Form
of Restricted Stock Agreement (for employee grants in 2006 and 2007) under
the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan of
2002, incorporated by reference to Exhibit 10.6 to the Company’s Form 8-K
dated March 8, 2006 and filed March 8, 2006.
|
|
10.5d(3)*
|
Form
of Restricted Stock Agreement (for employee grants in 2002 through 2005)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated herein by reference to Exhibit 10.5 to the Company’s
Form 10-Q for quarter ended July 31, 2004 and filed September 8,
2004.
|
|
†
|
10.5e*
|
10.5f(1)*
|
Form
of Performance Award Agreement (for grants commencing March 2009) under
the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan of
2002, incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K
dated March 23, 2009 and filed March 27, 2009.
|
|
10.5f(2)*
|
Form
of Performance Unit Award Agreement (for 2008-2010 performance period)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated by reference to Exhibit 10.1e to the Company’s Form
10-Q for the quarter ended August 2, 2008 and filed September 10,
2008.
|
|
10.5f(3)*
|
Amendment
to Performance Unit Award Agreement (for 2008-2010 performance period)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated by reference to Exhibit 10.4 to the Company’s Form
8-K dated March 4, 2009 and filed March 10, 2009.
|
|
10.5g(1)*
|
Form
of Performance Share Award Agreement (for 2007-2009 performance period)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated by reference to Exhibit 10.5f to the Company’s Form
10-K dated January 28, 2006 and filed April 10, 2006.
|
|
10.5g(2)*
|
Amendment
to Performance Share Award Agreement (for 2007-2009 performance period)
under the Brown Shoe Company, Inc. Incentive and Stock Compensation Plan
of 2002, incorporated by reference to Exhibit 10.6 to the Company’s Form
8-K dated March 4, 2009 and filed March 10, 2009.
|
|
10.6a*
|
Form
of Non-Employee Director Restricted Stock Unit Agreement between the
Company and each of its Non-Employee Directors (for grants in
2008), incorporated by reference to Exhibit 10.2 to the Company’s
Form 10-Q for the quarter ended August 2, 2008 and filed September 10,
2008.
|
|
10.6b*
|
Form
of Non-Employee Director Restricted Stock Unit Agreement between the
Company and each of its Non-Employee Directors (for grants prior to 2008),
incorporated by reference to Exhibit 10(u) to the Company’s Form 10-K
dated January 29, 2005 and filed April 1, 2005.
|
|
10.7*
|
Brown
Shoe Company, Inc. Deferred Compensation Plan for Non-Employee Directors,
as amended and restated as of January 1, 2009, incorporated herein by
reference to Exhibit 10.2a to the Company’s Form 10-Q for the quarter
ended November 1, 2008 and filed December 9, 2008.
|
|
10.8*
|
Brown
Shoe Company, Inc. Supplemental Executive Retirement Plan (SERP),
conformed and restated as of December 2, 2008, incorporated herein by
reference to Exhibit 10.3 to the Company’s Form 10-Q for the quarter ended
November 1, 2008 and filed December 9, 2008.
|
|
10.9*
|
Brown
Shoe Company, Inc. Deferred Compensation Plan, incorporated by reference
to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed
December 11, 2007.
|
|
10.10*
|
Brown
Shoe Company, Inc. Non-Employee Director Share Plan (2009), incorporated
by reference to Exhibit 10.1 to the Company's Form 10-Q for the Quarter
ended November 1, 2008 and filed December 9, 2008.
|
|
10.11*
|
Severance
Agreement, effective April 1, 2006, between the Company and Ronald A.
Fromm, incorporated herein by reference to Exhibit 10.1 to the Company’s
Form 8-K dated April 6, 2006.
|
|
10.12*
|
Severance
Agreement, effective April 1, 2006, between the Company and Joseph W.
Wood, incorporated herein by reference to Exhibit 10.2 to the Company's
Form 8-K dated April 6, 2006.
|
|
10.14*
|
Severance
Agreement, effective April 1, 2006, between the Company and Richard M.
Ausick, incorporated herein by reference to Exhibit 10.12 to the Company’s
Form 10-K dated February 2, 2008 and filed March 28,
2008.
|
|
10.15*
|
Severance
Agreement, effective April 1, 2006, between the Company and Diane M.
Sullivan, incorporated herein by reference to Exhibit 10.5 to the
Company's Form 8-K dated April 6, 2006.
|
|
10.16*
|
Severance
Agreement, effective October 30, 2006, between the Company and Mark E.
Hood, incorporated herein by reference to Exhibit 10.6 to the Company’s
Form 8-K dated October 30, 2006.
|
|
†
|
21
|
|
†
|
23
|
|
†
|
24
|
|
†
|
31.1
|
|
†
|
31.2
|
|
†
|
32.1
|
(b)
|
Exhibits:
|
See
Item 15(a)(3) above. On request, copies of any exhibit will be furnished
to shareholders upon payment of the Company’s reasonable expenses incurred
in furnishing such exhibits.
|
|
(c)
|
Financial
Statement Schedules:
|
See
Item 8 above.
|
BROWN
SHOE COMPANY, INC.
|
|
By:
|
/s/
Mark E. Hood
|
Mark
E. Hood
|
|
Senior
Vice President and Chief Financial
Officer
|
Signatures
|
Date
|
Title
|
||
/s/
Ronald A. Fromm
|
March
31, 2009
|
Chairman
of the Board of Directors and Chief Executive Officer on behalf of the
Company and as Principal Executive Officer
|
||
Ronald
A. Fromm
|
||||
/s/
Mark E. Hood
|
March
31, 2009
|
Senior
Vice President and Chief Financial Officer on behalf of the Company and as
Principal Financial Officer and Principal Accounting
Officer
|
||
Mark
E. Hood
|
||||
/s/
Diane M. Sullivan
|
March
31, 2009
|
Director,
President and Chief Operating Officer
|
||
Diane
M. Sullivan
|
||||
/s/
Mario L. Baeza
|
March
26, 2009
|
Director
|
||
Mario
L. Baeza
|
||||
/s/
Joseph L. Bower
|
March
19, 2009
|
Director
|
||
Joseph
L. Bower
|
||||
/s/
Julie C. Esrey
|
March
23, 2009
|
Director
|
||
Julie
C. Esrey
|
||||
/s/
Carla C. Hendra
|
March
27, 2009
|
Director
|
||
Carla
C. Hendra
|
||||
/s/
Ward M. Klein
|
March
24, 2009
|
Director
|
||
Ward
M. Klein
|
||||
/s/
Steven W. Korn
|
March
22, 2009
|
Director
|
||
Steven
W. Korn
|
||||
/s/
Patricia G. McGinnis
|
March
24, 2009
|
Director
|
||
Patricia
G. McGinnis
|
||||
/s/
W. Patrick McGinnis
|
March
23, 2009
|
Director
|
||
W.
Patrick McGinnis
|
||||
/s/
Michael F. Neidorff
|
March
20, 2009
|
Director
|
||
Michael
F. Neidorff
|
||||
/s/
Hal J. Upbin
|
March
23, 2009
|
Director
|
||
Hal
J. Upbin
|
||||
/s/
Harold B. Wright
|
March
19, 2009
|
Director
|
||
Harold
B. Wright
|
•
|
$30,000
as an annual retainer,
|
•
|
Chairs
of the Compensation, Executive and Governance and Nominating Committees
each received an additional $7,500 annual
retainer,
|
•
|
Chair
of the Audit Committee received an additional $12,500 annual
retainer,
|
•
|
$1,500
fee for each board meeting attended, or each day of such meeting if such
meeting was over multiple days, and $1,000 for each committee meeting
attended, regardless of whether serving as a member of the
committee,
|
•
|
Reimbursement
of customary expenses (such as travel expenses, meals and lodging) for
attending board, committee and shareholder meetings,
and
|
•
|
Option
to participate in the deferred compensation plan, with cash fees and
retainer to be invested in phantoms stock units (PSUs) that mirror our
stock and are ultimately paid in
cash.
|
•
|
Option
to participate in the Non-Employee Share Plan, with shares of the
company’s common stock to be issued in lieu a cash for directors’ fees and
annual retainer.
|
|
_______________________
|
|
________________________
|
BROWN SHOE COMPANY, INC. | |||||
|
By:
|
||||
Sarah Stephenson, Vice President - Total Rewards | |||||
Accepted: | |||||
Optionee
|
|||||
Date: |
1.
|
Conditions and
Limitations on Right To Exercise
Option.
|
|
(a)
|
Time for Exercise
. This
Stock Option may not be exercised as to any Option Shares until such
Option Shares are vested or after the Expiration
Date.
|
|
(b)
|
Exercise While on Leave of Absence
. This
option may not be exercised by the Optionee while on a leave of absence
until he has returned to active employment with the Company, unless such
exercise is expressly approved in writing by the Compensation
Committee.
|
|
(c)
|
Exercise if No Longer an Employee
.
|
|
(1)
|
Termination
. Except
as set forth in subsection (c)(2), this Stock Option must be exercised by
the Optionee only while he is an employee of the Company or one of its
subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code”)), or within sixty (60) days after
termination as an employee, but not later than the Expiration
Date.
|
|
(2)
|
Death
. If
the Optionee dies while employed by the Company or one of its subsidiaries
or dies within sixty (60) days after termination of such employment, this
Stock Option may be exercised to the extent the Optionee was entitled to
exercise it at the date of his death, by a legatee or legatees of the
Optionee under his last will, or by his personal representatives or
distributees at any time within one (1) year after his death, but not
later than the Expiration Date.
|
2.
|
Method of Exercise of Option and Payment of Option Price
.
|
|
(a)
|
Exercise
. This
Stock Option may be exercised (in whole or in part) at any time or from
time to time after the option is vested and exercisable as provided in
this Option Agreement and before the termination of said right, by
delivering to the Vice President-Total Rewards of the Company or by
sending by registered mail or Express Mail, postage prepaid or by
recognized courier service to the Company to the attention of the Vice
President-Total Rewards (i) using such form as the Company may require, a
written request designating the number of Option Shares to be purchased,
signed by the Optionee or the purchaser acting under Section 1(c)(2)
hereof, (ii) payment to the Company of the full purchase price of the
shares of Common Stock with respect to which the Stock Option is
exercised, and (iii) payment of applicable tax amounts, if required as
provided in Section 4. A stock option exercise form will be
provided upon request made to the Vice President-Total
Rewards.
|
|
(b)
|
Payment
. The
purchase price upon the exercise of this Stock Option may be paid as
follows: (i) in cash, or (ii) by the tender (either actual or by
attestation) to the Company of shares of the Common Stock owned by the
Optionee, which shares are registered in the Optionee’s name and have a
fair market value equal to the cash exercise price of the option being
exercised; provided that n
o shares of Common
Stock may be tendered in exercise of this Stock Option if such shares were
acquired by Optionee through the exercise of an Incentive Stock Option,
unless (x) such shares have been held by Optionee for at least one
year, and (y) at least two years have elapsed since such Incentive
Stock Option was granted;
or (iii) in the discretion of the
Compensation Committee, by any combination of the payment methods
specified in clauses (i) and (ii) hereof, or (iv) cashless exercise as
permitted under Federal Reserve Board’s Regulation T, subject to
applicable securities law restrictions. In addition, the
Compensation Committee may determine, in its sole discretion
, to allow all or a
portion of the purchase price upon exercise of this Stock Option to be
paid by having the Company withhold from the Option Shares otherwise
issuable upon exercise of the Stock Option that number of Option Shares
having a fair market value equal to the amount of the Option Price
applicable to the exercise, provided that such “net exercise” might result
in different tax treatment to the Optionee.
Any determination of
fair market value pursuant to this subsection 2(b) or Section 4 shall be
made in such appropriate manner as may be determined by the Compensation
Committee or as may be required in order to comply with, or to conform to
the requirements of, any applicable law or
regulation.
|
3.
|
Issuance and Delivery of Shares . |
4.
|
Withholding Tax . |
5.
|
Miscellaneous . |
|
(a)
|
Rights in Shares Prior to Issuance
. Prior
to issuance of the Option Shares pursuant to the exercise of rights
granted hereunder, whether by book entry or by physical certificate,
neither the Optionee nor his legatees, personal representatives, or
distributees, shall be deemed to be a holder of any Option
Shares.
|
|
(b)
|
Adjustment Upon Changes in Capitalization
. In
the event that there is a change in the Common Stock of the Company by
reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, reorganizations, combinations or exchanges of shares, then
the number and class of shares available for options and the number of
shares subject to any outstanding options and the price thereof, shall be
appropriately adjusted by the Compensation
Committee.
|
|
(c)
|
Non-Assignability
. This
Stock Option shall not be transferable by the Optionee otherwise than by
will or by the laws of descent and distribution and may be exercised,
during his lifetime, only by the
Optionee.
|
|
(d)
|
Right to Continued Employment
. Nothing
in this Option Agreement shall confer on any individual any right to
continue in the employ of the Company or a subsidiary or interfere with
the right of the Company or a subsidiary to terminate his employment at
any time.
|
|
(e)
|
Interpretation
. The
option granted herein shall in all respects be subject to and governed by
the provisions of the Plan in effect from time to time, provided that no
amendment or modification to the Plan made subsequent to the grant date of
this Stock Option sha
ll adversely affect
in any material way this Stock Option without the written consent of the
Optionee
. This Agreement shall in all respects be so
interpreted and construed as to be consistent with this
intention. By way of an example, the Change of Control
provisions set forth in the Plan shall apply to this
option.
If there is any
inconsistency between the terms of this Stock Option Agreement and the
terms of the Plan, the Plan’s terms shall completely supersede and replace
the conflicting terms of this Stock Option
Agreement.
|
|
(f)
|
Amendment.
The
Stock Option may be amended by the Compensation Committee at any time (i)
if the Compensation Committee determines, in its sole discretion, that
amendment is necessary or advisable on account of any addition to, or
change in, the Internal Revenue Code of 1986, as amended, or in the
regulations issued thereunder, or any federal or state securities law or
other law or regulation, which changes occurs after the Date of Grant and
by its terms applies to this Stock Option; or (ii) other than
in the circumstances described in Clause (i) above, with the consent of
the Optionee.
|
|
(g)
|
Construction
. The
validity, construction, interpretation and effect of this instrument shall
be governed by and determined in accordance with the laws of the state of
Missouri without respect to any conflict of laws doctrine which might
otherwise apply.
|
(h)
|
Incentive Stock
Option.
This Option is intended by the parties to be,
and shall be treated as, an incentive stock option (as such term is
defined under Section 422 of the Internal Revenue Code of 1986, as
amended).
|
|
_____________________________
|
|
_____________________________
|
|
7.
Exercise Following
Termination
: see Section 1(c) of attached General Terms
and Conditions, but no later than Expiration
Date
|
BROWN SHOE COMPANY, INC. | |||||
|
By:
|
||||
Sarah Stephenson, Vice President - Total Rewards | |||||
Accepted: | |||||
Optionee | |||||
Date: |
(a)
|
Time for
Exercise
. This Stock Option may not be exercised as to
any Option Shares until such Option Shares are vested or after the
Expiration Date.
|
|
(b)
|
Exercise While on Leave of Absence
. This
option may not be exercised by the Optionee while on a leave of absence
until he has returned to active employment with the Company, unless such
exercise is expressly approved in writing by the Compensation
Committee.
|
|
(c)
|
Exercise if No Longer an Employee
.
|
|
(1)
|
Termination
. Except
as set forth in subsection (c)(2), this Stock Option must be exercised by
the Optionee only while he is an employee of the Company or one of its
subsidiaries (as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code”)), or within sixty (60) days after
termination as an employee, but not later than the Expiration
Date.
|
|
(2)
|
Death
. If
the Optionee dies while employed by the Company or one of its subsidiaries
or dies within sixty (60) days after termination of such employment, this
Stock Option may be exercised to the extent the Optionee was entitled to
exercise it at the date of his death, by a legatee or legatees of the
Optionee under his last will, or by his personal representatives or
distributees at any time within one (1) year after his death, but not
later than the Expiration Date.
|
|
(a)
|
Exercise
. This
Stock Option may be exercised (in whole or in part) at any time or from
time to time after the option is vested and exercisable as provided in
this Option Agreement and before the termination of said right, by
delivering to the Vice President-Total Rewards of the Company or by
sending by registered mail or Express Mail, postage prepaid or by
recognized courier service to the Company to the attention of the Vice
President-Total Rewards: (i) using such form as the Company may require, a
written request designating the number of Option Shares to be purchased,
signed by the Optionee or the purchaser acting under Section 1(c)(2)
hereof, (ii) payment to the Company of the full purchase price of the
shares of Common Stock with respect to which the Stock Option is
exercised, and (iii) payment of applicable tax amounts, if required as
provided in Section 4. A stock option exercise form will be
provided upon request to the Vice President-Total
Rewards.
|
|
(b)
|
Payment
. The
purchase price upon the exercise of this Stock Option may be paid as
follows: (i) in cash, or (ii)
by having the
Company withhold from the Option Shares otherwise issuable upon exercise
of the Stock Option that number of Option Shares having a fair market
value equal to the amount of the Option Price applicable to the exercise;
or
(iii) by the tender (either actual or by attestation) to the
Company of shares of the Common Stock owned by the Optionee
;
which
shares are registered in the Optionee’s name and have a fair market value
equal to the cash exercise price of the option being exercised (provided
that if
shares
of Common Stock to be tendered in exercise of this Stock Option were
acquired by Optionee through the exercise of an Incentive Stock Option,
such tender might result in a disqualifying disposition unless
(x) such shares have been held by Optionee for at least one year, and
(y) at least two years have elapsed since such Incentive Stock Option
was granted);
or (iv) in the discretion of the Compensation
Committee, by any combination of the payment methods specified in clauses
(i), (ii) and (iii) hereof, or (v) cashless exercise as permitted under
Federal Reserve Board’s Regulation T, subject to applicable securities law
restrictions. Any determination of fair market value pursuant
to this subsection 2(b) or Section 4 shall be made in such appropriate
manner as may be determined by the Compensation Committee or as may be
required in order to comply with, or to conform to the requirements of,
any applicable law or regulation.
|
|
(a)
|
Rights in Shares Prior to Issuance
. Prior
to issuance of the Option Shares pursuant to the exercise of rights
granted hereunder, whether by book entry or by physical certificate,
neither the Optionee nor his legatees, personal representatives, or
distributees, shall be deemed to be a holder of any Option
Shares.
|
|
(b)
|
Adjustment Upon Changes in Capitalization
. In
the event that there is a change in the Common Stock of the Company by
reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, reorganizations, combinations or exchanges of shares, then
the number and class of shares available for options and the number of
shares subject to any outstanding options and the price thereof, shall be
appropriately adjusted by the Compensation
Committee.
|
|
(c)
|
Non-Assignability
. This
Stock Option shall not be transferable by the Optionee otherwise than by
will or by the laws of descent and distribution and may be exercised,
during his lifetime, only by the
Optionee.
|
|
(d)
|
Right to Continued Employment
. Nothing
in this Option Agreement shall confer on any individual any right to
continue in the employ of the Company or a subsidiary or interfere with
the right of the Company or a subsidiary to terminate his employment at
any time.
|
|
(e)
|
Interpretation
. The
option granted herein shall in all respects be subject to and governed by
the provisions of the Plan in effect from time to time, provided that no
amendment or modification to the Plan made subsequent to the grant date of
this Stock Option sha
ll adversely affect
in any material way this Stock Option without the written consent of the
Optionee
. This Agreement shall in all respects be so
interpreted and construed as to be consistent with this
intention. By way of an example, the Change of Control
provisions set forth in the Plan shall apply to this
option.
If there is any
inconsistency between the terms of this Stock Option Agreement and the
terms of the Plan, the Plan’s terms shall completely supersede and replace
the conflicting terms of this Stock Option
Agreement.
|
|
(f)
|
Amendment.
The
Stock Option may be amended by the Compensation Committee at any time (i)
if the Compensation Committee determines, in its sole discretion, that
amendment is necessary or advisable on account of any addition to, or
change in, the Internal Revenue Code of 1986, as amended, or in the
regulations issued thereunder, or any federal or state securities law or
other law or regulation, which changes occurs after the Date of Grant and
by its terms applies to this Stock Option; or (ii) other than
in the circumstances described in Clause (i) above, with the consent of
the Optionee.
|
|
(g)
|
Construction
. The
validity, construction, interpretation and effect of this instrument shall
be governed by and determined in accordance with the laws of the state of
Missouri without respect to any conflict of laws doctrine which might
otherwise apply.
|
|
(h) |
|
Non-Qualified Stock
Option.
This Option is not intended by the parties to
be, and shall not be treated as, an incentive stock option (as such term
is defined under Section 422 of the Internal Revenue Code of 1986, as
amended).
|
|
(a)
|
This
Award Agreement shall not confer upon the Participant any right to
continuation of employment by the Company, nor shall this Award Agreement
interfere in any way with the Company’s right to terminate his or her
employment at any time.
|
|
(b)
|
The
Board may terminate, amend, or modify the Plan; provided, however, that no
such termination, amendment, or modification of the Plan may in any way
adversely affect the Participant’s rights under this Award Agreement
without the Participant’s written
consent.
|
|
(c)
|
This
Award Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be
required.
|
(d)
|
To
the extent not preempted by Federal law, this Award Agreement shall be
construed in accordance with and governed by the substantive laws of the
State of Missouri without regard to conflicts of laws principles, which
might otherwise apply. Any litigation arising out of, in
connection with, or concerning any aspect of the Plan or this Award
Agreement shall be conducted exclusively in the State or Federal courts in
Missouri.
|
BROWN SHOE COMPANY, INC. | |||||
|
By:
|
||||
Sarah Stephenson, Vice President - Total Rewards | |||||
Title | |||||
Accepted: | |||||
Participant
|
|||||
Date: |
|
Participant
: _____________________,
who is a non-employee member of the Company’s Board of
Directors
|
|
Award Grant Date:
___________________
|
|
Number of Restricted
Shares: ____
Shares of Brown Shoe Company,
Inc. Common Stock, subject to certain
restrictions
|
|
Vesting
Schedule (Lapse of Restrictions):
___% of the Restricted
Shares shall vest on the date of the Company’s 20__ Annual Meeting of
Shareholders
|
|
(a)
|
The
Board may terminate, amend, or modify the Plan; provided, however, that no
such termination, amendment, or modification of the Plan may in any way
adversely affect the Participant’s rights under this Award Agreement
without the Participant’s written
consent.
|
|
(b)
|
This
Award Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be
required.
|
(c)
|
To
the extent not preempted by Federal law, this Award Agreement shall be
construed in accordance with and governed by the substantive laws of the
State of Missouri without regard to conflicts of laws principles, which
might otherwise apply. Any litigation arising out of, in
connection with, or concerning any aspect of the Plan or this Award
Agreement shall be conducted exclusively in the State or Federal courts in
Missouri.
|
BROWN SHOE COMPANY, INC. | |||||
|
By:
|
||||
Sarah Stephenson, Vice President - Total Rewards | |||||
Date: | |||||
Accepted: | |||||
Participant
|
|||||
Date: |
Name
|
State
or Country
of
Incorporation
|
|
B&H
Footwear Company Limited (51% owned)
|
Hong
Kong
|
|
Bennett
Footwear Group, LLC
|
Delaware
|
|
Brown
California, Inc.
|
California
|
|
Brown
Cayman Ltd.
|
Cayman
Islands
|
|
Brown
Group Dublin Limited
|
Ireland
|
|
Brown
Group Retail, Inc.
|
Pennsylvania
|
|
Brown
Missouri, Inc.
|
Missouri
|
|
Brown
Retail Development Company
|
Louisiana
|
|
Brown
Shoe Asia Investment Limited
|
Hong
Kong
|
|
Brown
Shoe Company of Canada Ltd.
|
Canada
|
|
Brown
Shoe International Corp.
|
Delaware
|
|
Brown
Shoe International Sales and Licensing S.r.l.
|
Italy
|
|
Brown
Shoe International Sales and Licensing Limited
|
Hong
Kong
|
|
Brown
Shoe International (Macau) Company Limited
|
Macau
|
|
Brown
Shoe Investment Company, Inc.
|
Delaware
|
|
Brown
Shoe Service Company Limited
|
Hong
Kong
|
|
Brown
Shoe Services Corporation
|
Ohio
|
|
Brown
Texas, Inc.
|
Texas
|
|
Buster
Brown & Co.
|
Missouri
|
|
DongGuan
B&H Footwear Company Limited (51% owned)
|
China
|
|
DongGuan
Brown Shoe Company Limited
|
China
|
|
DongGuan
Leeway Footwear Company Limited
|
China
|
|
Edelman
Shoe, Inc (50% owned)
|
Delaware
|
|
Great
Prosper Profits Corporation
|
British
Virgin Islands
|
|
Laysan
Company Limited
|
Hong
Kong
|
|
Leeway
International Company Limited
|
Hong
Kong
|
|
Maryland
Square, Inc.
|
Missouri
|
|
Maserati
Footwear, Inc.
|
New
York
|
|
Pagoda
International Corporation do Brazil, LTDA
|
Brazil
|
|
Pagoda
International Footwear Limited
|
Hong
Kong
|
|
Pagoda
International Footwear (Macau Commercial
Offshore)
Ltd.
|
Macau
|
|
Pagoda
Leather Limited
|
Hong
Kong
|
|
Pagoda
Trading North America, Inc.
|
Missouri
|
|
Putian
Brown Shoe Company Limited
|
China
|
|
Shoes.com,
Inc.
|
Delaware
|
|
Sidney
Rich Associates, Inc.
|
Missouri
|
|
Whitenox
Limited
|
Hong
Kong
|
|
Form
Number
|
Registration
Statement Number
|
Description
|
Form
S-8
|
33-58751
|
Stock
Option and Restricted Stock Plan of 1994, as amended
|
Form
S-8
|
333-60671
|
Stock
Option and Restricted Stock Plan of 1994 and 1998
|
Form
S-8
|
333-83717
|
Incentive
and Stock Compensation Plan of 1999
|
Form
S-8
|
333-65900
|
Brown
Shoe Company, Inc. 401(k) Savings Plan
|
Form
S-8
|
333-89014
|
Brown
Shoe Company, Inc. Incentive
and
Stock Compensation Plan of 2002
|
Form
S-8
|
333-134496
|
Brown
Shoe Company, Inc. Incentive and
Stock
Compensation Plan of 2002, as amended
|
Form
S-8
|
333-147989
|
Brown
Shoe Company, Inc. Deferred
Compensation
Plan
|
Form
S-8
|
333-151122
|
Brown
Shoe Company, Inc. Incentive and Stock Compensation Plan of 2002, as
amended
|
CERTIFICATIONS
|
|
1.
|
I
have reviewed this annual report on Form 10-K of Brown Shoe Company,
Inc.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
/s/
Ronald A. Fromm
|
Ronald
A. Fromm
|
Chairman
of the Board of Directors
and
Chief Executive Officer
|
Brown
Shoe Company, Inc.
|
March
31, 2009
|
CERTIFICATIONS
|
|
1.
|
I
have reviewed this annual report on Form 10-K of Brown Shoe Company,
Inc.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
/
s/ Mark E.
Hood
|
Mark
E. Hood
|
Senior
Vice President and Chief Financial Officer
|
Brown
Shoe Company, Inc.
|
March
31, 2009
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant.
|
/s/
Ronald A. Fromm
|
Ronald
A. Fromm
|
Chairman
of the Board of Directors
and
Chief Executive Officer
|
Brown
Shoe Company, Inc.
|
March
31, 2009
|
/s/
Mark E. Hood
|
Mark
E. Hood
|
Senior
Vice President and Chief Financial Officer
|
Brown
Shoe Company, Inc.
|
March
31, 2009
|