Famous Footwear 2004 Annual Report Download - page 15

Table of Contents
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
ITEM 2 PROPERTIES
We own our principal executive, sales and administrative offices in Clayton (St. Louis), Missouri. The Famous Footwear division operates
from a leased office building in Madison, Wisconsin. The Canadian wholesale division operates from an owned office building in Perth,
Ontario, and the retail division from leased office space in Laval, Quebec. A leased sales office and showroom is maintained in New York,
New York.
Most of the footwear sold through our domestic wholesale divisions is processed through two Company-owned distribution centers in
Sikeston, Missouri, and Fredericktown, Missouri, which have 720,000 and 465,000 square feet, including mezzanine levels, respectively.
As a result of the acquisition of the Bass license and inventory and anticipated growth in our landed business, we expect we will need to
expand our wholesale warehousing capacity in 2004. In fiscal 2003, we operated one manufacturing facility and a 150,000-square-foot
distribution facility in Perth, Ontario. In March 2004, we closed the manufacturing facility located in Perth, Ontario. We own these Canadian
facilities in addition to another Canadian manufacturing facility which was closed during 2002.
Our retail footwear operations are conducted throughout the United States, Canada, Puerto Rico and Guam and involve the operation of
1,271 shoe stores, including 170 in Canada. All store locations are leased, with approximately one-half having renewal options. Famous
Footwear operates a leased 750,000-square-foot distribution center, including a mezzanine level, in Sun Prairie, Wisconsin, and a leased
800,000-square-foot distribution center, including mezzanine levels, in Lebanon, Tennessee. Our Canadian retailing division operates a
leased 21,000-square-foot distribution center, which is adjacent to the division’s office in Laval, Quebec.
Our Brown Shoe Sourcing division leases office space in Hong Kong, China, Taiwan, Italy, Indonesia and Mexico. We have entered into a
lease for a new office and sample-making facility in China, which will be occupied and begin operations in mid-2004.
We also own a building in Denver, Colorado, which is leased to a third party, and land in New York. See Item 3, “Legal Proceedings,” for
further discussion of these properties.
ITEM 3 LEGAL PROCEEDINGS
We are involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of
such ordinary course of business proceedings and litigation currently pending will not have a material adverse effect on our results of
operations or financial position.
We are involved in environmental remediation and ongoing compliance activities at several sites. We are remediating, under the oversight of
Colorado authorities, contamination at and beneath our owned facility in Colorado (also known as the “Redfield” site) and groundwater and
indoor air in residential neighborhoods adjacent to and near the property, which have been affected by solvents previously used at the site and
surrounding facilities. During fiscal 2003, 2002 and 2001, we incurred charges of $0.8 million, $4.1 million and $1.4 million, respectively,
related to this remediation.
In March 2000, a class action lawsuit was filed in Colorado State Court (District Court for the City and County of Denver) related to the
Redfield site described above against one of our subsidiaries, a prior operator at the site and two individuals (the Antolovich class action).
Plaintiffs, certain current and former residents living in an area adjacent to the Redfield site, alleged claims for trespass, nuisance, strict
liability, unjust enrichment, negligence and exemplary damages arising from the alleged release of solvents that are contaminating the
groundwater and indoor air in certain areas adjacent to the site. In December 2003, a jury returned a verdict finding us negligent and
awarding the class plaintiffs $1.0 million in damages. We have recorded this award along with the estimated cost of associated pretrial
interest and the estimated costs of sanctions imposed on us by the court resulting from pretrial discovery disputes between the parties. We
recorded a total pretax charge of $3.1 million for these matters in the fourth quarter of fiscal 2003 and carried an accrued liability for such
amount at January 31, 2004. Several of these matters are still pending before the court, and the ultimate outcome and cost to us may vary.
We have also filed suit in Federal District Court in Denver against a number of former owner/operators of the Redfield site as well as
surrounding businesses seeking recovery of amounts spent responding to the contamination at and around the Redfield site. We have
reached settlement agreements with several of these defendants in this
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