Famous Footwear 2004 Annual Report Download - page 60

Table of Contents
Notes to Consolidated Financial Statements (continued)
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
In fiscal 2001, the impact of special charges on operating earnings was as follows:
• Famous Footwear — $16.5 million primarily related to inventory markdowns
• Wholesale Operations — $0.5 million related to severance
• Naturalizer Retail — $16.8 million to close underperforming domestic Naturalizer stores
• Other — $6.4 million related to severance associated with the Company’s shared-services project and the transition to new
management at Famous Footwear
For geographic purposes, the domestic operations include the wholesale distribution of branded, licensed and private-label footwear to a
variety of retail customers, and nationwide operation of our retail chains, including Famous Footwear and Naturalizer.
The Company’s foreign operations primarily consist of wholesale distribution operations in the Far East and wholesale and retail operations
in Canada. The Far East operations include “first-cost” transactions, where footwear is sold at foreign ports to customers who then import the
footwear into the United States and other countries.
A summary of the Company’s net sales and long-lived assets by geographic area were as follows:
($ thousands) 2003 2002 2001
Net Sales
United States $1,500,936 $1,494,506 $1,429,617
Far East 258,724 277,314 252,729
Canada 77,154 71,151 76,195
Latin America, Europe and other 54 247 69
Inter-area sales (4,760) (1,775) (2,762)
$1,832,108 $1,841,443 $1,755,848
Long-Lived Assets
United States $160,825 $161,963 $150,487
Far East 12,820 11,077 11,040
Canada 15,638 13,333 12,297
Latin America, Europe and other 362 334 164
$189,645 $186,707 $173,988
Long-lived assets consisted primarily of property and equipment, prepaid pension costs, goodwill, trademarks and other assets.
7. GOODWILL AND OTHER INTANGIBLE ASSETS
Effective at the beginning of fiscal 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. This statement
requires that goodwill and intangible assets with indefinite lives are not amortized but instead are tested for impairment at least annually.
Accordingly, all goodwill and indefinite-lived intangible asset amortization ceased at the beginning of fiscal 2002. During the fourth quarter of
fiscal 2002, the Company performed the required impairment tests based on a discounted cash flow approach, which resulted in an
impairment charge of $0.7 million related to an intangible asset of the Company’s e-commerce business, which is part of the Company’s
Other business segment. This impairment charge was reflected as a component of selling and administrative expenses. The Company did
not record any impairment charges during fiscal 2003 related to goodwill or intangible assets. On an ongoing basis, the Company will
perform impairment tests during the fourth quarter of each fiscal year, unless events indicate an interim test is required.
In fiscal 2003 and 2002, there was no amortization cost of goodwill and indefinite-lived intangible assets. In fiscal 2001, such amortization
costs were $1.2 million, or $0.07 per share, on an after-tax basis. As of January 31, 2004, goodwill of $20.0 million (net of $11.3 million
accumulated amortization) and intangible assets of $0.4 million (net of $1.0 million accumulated amortization) were attributable to the
Company’s operating segments as follows: