Famous Footwear 2004 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2004 Famous Footwear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

Table of Contents
Notes to Consolidated Financial Statements (continued)
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
included in other accrued expenses and $8.1 million is included in other liabilities in the consolidated balance sheet. The ultimate costs may
vary, and it is possible costs may exceed the recorded amounts; however, the Company is not able to determine a range of possible
additional costs, if any.
While the Company currently does not operate manufacturing facilities, prior operations included numerous manufacturing and other
facilities for which the Company may have responsibility under various environmental laws for the remediation of conditions that may be
identified in the future.
Litigation
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. Plaintiffs alleged claims for trespass, nuisance, strict liability, unjust enrichment, negligence and exemplary
damages arising from the alleged release of solvents contaminating the groundwater and indoor air in the areas adjacent to and near the site.
In December 2003, the jury hearing the claims returned a verdict finding the Company’s subsidiary negligent and awarded the class
plaintiffs $1.0 million in damages. The Company has recorded this award along with estimated pretrial interest on the award and estimated
costs related to sanctions imposed by the court related to a pretrial discovery dispute between the parties. The total pretax charge recorded for
these matters in the fourth quarter of fiscal 2003 was $3.1 million ($2.0 million after tax). Several of these matters are still pending before the
court, and the ultimate outcome and cost to the Company may vary.
As described above in “Environmental Remediation,” the Company has filed suit against its insurance carriers and is seeking recovery of
certain defense costs, indemnity for the costs incurred for remediation related to the Redfield site and for the damages awarded in the class
action, and other related damages.
The Company also is 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 materially adverse effect on the
Company’s results of operations or financial position. All legal costs associated with litigation are expensed as incurred.
Other
The Company is a guarantor of an Industrial Development Bond financing of $3.5 million for a manufacturing and warehouse facility in
Bedford County, Pennsylvania. These facilities and the business that operated them were sold to another party in 1985, which assumed this
obligation. This financing is scheduled to be paid annually beginning in 2004 through 2009.
The Company is contingently liable for lease commitments of approximately $12 million in the aggregate, which primarily relate to the Cloth
World and Meis specialty retailing chains, which were sold in prior years.
In order for the Company to incur any liability related to these guarantees and lease commitments, the current owners would have to default.
At this time, the Company does not believe this is reasonably likely to occur.
15. COMMON STOCK
The Company’s common stock has a par value of $3.75 per share, and 100,000,000 shares are authorized. At January 31, 2004 and
February 1, 2003, there were 18,076,589 shares and 17,682,682 shares outstanding, net of 3,929,308 and 4,323,215 shares held in
treasury, respectively. The stock is listed and traded on the New York and Chicago Stock Exchanges (symbol BWS).
The Company has a Shareholder Rights Plan under which each outstanding share of the Company’s common stock carries one Common
Stock Purchase Right. The rights may only become exercisable under certain circumstances involving acquisition of the Company’s
common stock by a person or group of persons without the prior written consent of the Company. Depending on the circumstances, if the
rights become exercisable, the holder may be entitled to purchase shares of the Company’s common stock or shares of common stock of the
acquiring person at discounted prices. The rights will expire on March 18, 2006 unless they are earlier exercised, redeemed or exchanged.
52