Famous Footwear 2004 Annual Report Download - page 45

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Table of Contents
Notes to Consolidated Financial Statements (continued)
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of
SFAS No. 123, Accounting for Stock-Based Compensation, to stock options outstanding:
($ thousands, except per share amounts) 2003 2002 2001
Net earnings (loss), as reported $46,894 $45,172 $(3,962)
Add: Total share-based employee compensation expense included
in reported net earnings, net of related tax effect 3,102 1,346 663
Deduct: Total share-based employee compensation expense determined
under the fair value-based method for all awards, net of related tax effect (5,387) (3,323) (1,997)
Pro forma net earnings (loss) $44,609 $43,195 $(5,296)
Earnings (loss) per share:
Basic — as reported $2.65 $2.60 $(0.23)
Basic — pro forma 2.52 2.49 (0.31)
Diluted — as reported 2.52 2.52 (0.23)
Diluted — pro forma 2.40 2.41 (0.31)
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
($ thousands, except per share amounts) 2003 2002 2001
NUMERATOR
Net earnings (loss) $46,894 $45,172 $(3,962)
DENOMINATOR (thousand shares)
Denominator for basic earnings (loss) per common share 17,677 17,367 17,188
Dilutive effect of unvested restricted stock and stock options 939 572 351
Denominator for diluted earnings (loss) per common share 18,616 17,939 17,539
Basic earnings (loss) per common share $2.65 $2.60 $(0.23)
Diluted earnings (loss) per common share $2.52 $2.52 $(0.23)
Options to purchase 34,982, 311,325 and 947,952 shares of common stock in 2003, 2002 and 2001, respectively, were not included in the
denominator for diluted earnings (loss) per common share because their effect would be antidilutive.
3. RESTRUCTURING AND OTHER SPECIAL CHARGES
Closure of Canadian Manufacturing Facility
In the fourth quarter of fiscal year 2003, the Company announced the closing of its last Canadian footwear manufacturing factory located in
Perth, Ontario, and recorded a pretax charge of $4.5 million, the components of which are as follows:
• Severance and benefit costs for approximately 300 factory employees — $2.3 million
• Inventory markdowns to liquidate factory inventory — $1.6 million
• Cost to buy out leases prior to their normal expiration date — $0.6 million