Famous Footwear 2012 Annual Report Download - page 34

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32 2012 BROWN SHOE COMPANY, INC. FORM 10-K
Selling and Administrative Expenses
Selling and administrative expenses decreased $13.7 million, or 6.0%, to $212.9 million during 2012 compared to
$226.6 million last year, due in part to our lower cost structure resulting from exiting certain brands under our portfolio
realignment initiatives, partially oset by an increase in anticipated payments under our cash and stock-based incentive
plans ($6.8 million) and incremental expenses associated with the 53rd week. As a percent of net sales, selling and
administrative expenses decreased to 25.2% in 2012 from 26.0% last year, reflecting the above named factors.
Selling and administrative expenses increased $37.5 million, or 19.8%, to $226.6 million during 2011 compared
to $189.1 million in 2010 due primarily to the acquisition of ASG, which contributed $41.2 million in operating
expenses, and an increase in marketing, merchandising and selling expenses. The increase was partially oset
by lower expected payouts under both our cash and stock-based plans ($8.9 million). As a percent of net sales,
selling and administrative expenses increased to 26.0% in 2011 from 25.0% in 2010, reflecting the higher selling and
administrative expenses from ASG and increased costs related to our ERP system.
Restructuring and Other Special Charges, Net
Restructuring and other special charges, net, decreased $3.7 million to $9.3 million with $13.0 million of corresponding
charges last year as a result of the following items (see Note 4 to the consolidated financial statements for additional
information related to these charges and recoveries):
• Portfolio realignment – We incurred charges of $8.6 million during 2012 related to our portfolio realignment initiatives
compared to $10.5 million in 2011.
• Acquisition and integration related costs – We incurred charges of $0.7 million during 2012 related to the integration
of ASG as compared to $2.5 million of costs during 2011 related to the acquisition and integration of ASG.
As a percent of net sales, restructuring and other special charges, net, decreased to 1.1% in 2012, from 1.5% last year,
reflecting the above named factors.
Restructuring and other special charges, net, increased $12.3 million to $13.0 million in 2011 with $0.7 million of
corresponding charges in 2010 as a result of the following items (see Note 4 to the consolidated financial statements
for additional information related to these charges and recoveries):
• Portfolio realignment – We incurred charges of $10.5 million during 2011 related to our portfolio realignment with
no corresponding charges in 2010.
• Acquisition and integration related costs – We incurred $2.5 million of costs during 2011 related to the acquisition
and integration of ASG, which we purchased on February 17, 2011.
• Information technology initiatives – We incurred no charges during 2011 related to our ERP system but incurred
$0.7 million in charges in 2010.
As a percent of net sales, restructuring and other special charges, net, increased to 1.5% in 2011, from 0.1% in 2010
reflecting the above named factors.
Impairment of Intangible Assets
During 2012, the Company terminated the Etienne Aigner license agreement due to a dispute with the licensor.
In conjunction with the termination, the Company recognized an impairment charge of $5.8 million to reduce the
remaining unamortized value of the licensed trademark intangible asset to zero.
Operating Earnings
Operating earnings increased $0.9 million, or 5.0%, to $17.6 million in 2012 compared to $16.7 million last year.
The increase was primarily driven by lower selling and administrative expenses and restructuring and other special
charges, net, partially oset by lower net sales and corresponding gross profit and an intangible asset impairment
charge. As a percent of net sales, operating earnings increased to 2.1% in 2012 compared to 1.9% last year.
Operating earnings decreased $15.5 million, or 48.1%, to $16.7 million in 2011 compared to $32.2 million in 2010.
The decrease was primarily driven by higher selling and administrative expenses and restructuring and other
special charges, net, partially oset by an increase in net sales. As a percent of net sales, operating earnings
decreased to 1.9% in 2011 compared to 4.3% in 2010.