Famous Footwear 2004 Annual Report Download - page 53

Table of Contents
Notes to Consolidated Financial Statements (continued)
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
Pension Benefits Other Postretirement Benefits
Weighted Average Assumptions Used to Determine Net Cost 2003 2002 2001 2003 2002 2001
Discount rate 6.25% 6.75% 7.00% 6.25% 6.75% 7.00%
Rate of compensation increase 4.25% 4.50% 4.50% N/A N/A N/A
Expected return on plan assets 9.00% 9.00% 9.50% N/A N/A N/A
Health care cost trend on covered charges N/A N/A N/A 8.00% 8.00% 6.50%
The prior service cost is amortized on a straight-line basis over the average future service of active plan participants benefiting under the plan
at the time of each plan amendment. The net actuarial loss (gain) subject to amortization is amortized on a straight-line basis over the
average future service of active plan participants as of the measurement date. The net transition asset is amortized over the estimated service
life.
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.
Assumed health care cost trend rates have a negligible effect on the cost reported for health care plans.
Expected Cash Flows
Information about expected cash flows for all pension and postretirement benefit plans follows:
Pension Benefits Other
Postretirement
($ thousands) Funded Plans SERP Total Benefits
Employer Contributions
2004 expected contributions to plan
trusts $ — $ — $ — $ —
2004 expected contributions to plan
participants — 200 200 600
Expected Benefit Payments
2004 $6,932 $200 $7,132 $600
2005 6,989 200 7,189 500
2006 6,811 100 6,911 500
2007 7,013 100 7,113 500
2008 7,214 2,500 9,714 400
2009 - 2013 40,024 12,000 52,024 1,900
Defined Contribution Plans
The Company’s domestic defined contribution 401(k) plan covers salaried and certain hourly employees. Company contributions represent a
partial matching of employee contributions generally up to a maximum of 3.5% of the employee’s salary. The Company’s expense for this
plan was $3.0 million, $2.4 million and $2.5 million in 2003, 2002 and 2001, respectively.
The Company’s Canadian defined contribution plan covers certain salaried and hourly employees. The Company makes contributions for all
eligible employees, ranging from 3% to 8% of the employee’s salary. In addition, eligible employees may voluntarily contribute to the plan.
The Company’s expense for this plan was $0.2 million, $0.1 million and $0.1 million in 2003, 2002 and 2001, respectively.
5. INCOME TAXES
The components of earnings (loss) before income taxes consisted of domestic earnings (loss) before income taxes of $44.7 million,
$31.3 million and $(42.9) million in 2003, 2002 and 2001, respectively, and foreign earnings before income taxes of $20.0 million,