Famous Footwear 2012 Annual Report Download - page 36

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34 2012 BROWN SHOE COMPANY, INC. FORM 10-K
Selling and administrative expenses decreased $6.4 million, or 5.4%, to $112.1 million during 2011 compared to
$118.5 million in 2010, primarily resulting from the lower store count and lower expected payouts under both our
cash and stock-based plans, partially oset by an increase in the Canadian dollar exchange rate. As a percent of
net sales, selling and administrative expenses decreased to 43.9% in 2011 compared to 45.1% in 2010.
Restructuring and Other Special Charges, Net
We incurred restructuring and other special charges, net, of $3.7 million during 2012 compared to $0.6 million
last year, as a result of closing our Via Spiga, F.X. LaSalle and Brown Shoe Closet stores as part of our portfolio
realignment. No restructuring and other special charges were incurred in 2010.
Operating Loss
Our operating loss increased $1.3 million, or 16.0%, to $8.9 million for 2012 compared to $7.6 million for last year,
primarily due to a decrease in net sales and an increase in restructuring and other special charges, net, partially oset
by a decrease in selling and administrative expenses, as described above.
Our operating loss increased $1.6 million, or 27.8%, to $7.6 million for 2011 compared to $6.0 million in 2010, primarily
due to a decrease in net sales, a decline in gross profit rate and an increase in restructuring and other special charges,
net, partially oset by lower selling and administrative expenses, as described above.
OTHER
The Other segment includes unallocated corporate administrative and other costs and recoveries. The segment reported
costs of $41.2 million, $36.1 million and $44.0 million in 2012, 2011 and 2010, respectively.
There were several factors impacting the $5.1 million increase in costs from 2011 to 2012, as follows:
• Incentive compensation – Our selling and administrative expenses were higher by $6.9 million during 2012,
compared to last year, due to higher anticipated payments under our cash and stock-based incentive plans.
• Director compensation – Our expenses related to director compensation increased $3.2 million during 2012,
compared to last year, primarily reflecting the impact of the Company’s higher share price on certain of the
variable share-based compensation plans.
• Technology professional services and consulting fees – Our selling and administrative expenses were lower by
$2.0 million during 2012, compared to last year.
• Organizational changes – We incurred costs of $2.3 million in 2012, related to corporate organizational changes,
with no corresponding costs in 2011.
• Portfolio realignment costs – We incurred costs of $0.9 million during 2012, related to our portfolio realignment
initiatives, as compared to $3.3 million in 2011.
• Acquisition and integration costs – We incurred costs of $4.0 million during 2011, related to the acquisition and
integration of ASG, with no corresponding costs in 2012.
• ERP stabilization – We incurred professional fees of $1.9 million during 2011 to assist with the stabilization of our
ERP platform.
• Insurance settlement and contingent liabilities – During 2011, we resolved certain contingent liabilities related to
legal matters and reversed $1.8 million of the associated accrued liabilities to income. In addition, we reached a
settlement agreement with one of our insurers, whereby we recovered $0.8 million of prior expenses paid for
environmental remediation costs. The legal contingencies and insurance settlement were recognized as income.
There were several factors impacting the $7.9 million decrease in costs from 2010 to 2011, as follows:
• Incentive plans – Our selling and administrative expenses were lower by $7.5 million in 2011, compared to 2010,
due to lower anticipated payments under both our cash and stock-based incentive plans.
• Acquisition and integration costs – We incurred costs of $4.0 million during 2011, related to the acquisition and
integration of ASG in February 2011, as compared to $1.1 million in 2010.
• Portfolio realignment – We incurred $3.3 million in costs related to our portfolio realignment in 2011 with no
corresponding costs in 2010.
• ERP stabilization – We incurred professional fees of $1.9 million during 2011 to assist with the stabilization of our
ERP platform.
• Insurance settlement and contingent liabilities – During 2011, we resolved certain contingent liabilities related to
legal matters and reversed $1.8 million of the associated accrued liabilities to income. In addition, we reached a
settlement agreement with one of our insurers, whereby we recovered $0.8 million of prior expenses paid for
environmental remediation costs. The legal contingencies and insurance settlement were recognized as income.
• Information technology initiatives – We incurred charges of $6.1 million during 2010 related to the integration of
our ERP system with no corresponding charges in 2011.