Famous Footwear 2012 Annual Report Download - page 67

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2012 BROWN SHOE COMPANY, INC. FORM 10-K 65
The Company’s retail and wholesale reportable segments are operating units that market to dierent customers and
are each managed separately. An operating segment’s performance is evaluated and resources are allocated based on
operating earnings (loss). Operating earnings (loss) represent gross profit, less selling and administrative expenses,
restructuring and other special charges, net and impairment of intangible assets. The accounting policies of the reportable
segments are the same as those described in Note 1. Intersegment sales are generally recorded at a profit to the selling
segment. All intersegment earnings related to inventory on hand at the purchasing segment are eliminated against the
earnings of the selling segment.
Famous Wholesale Specialty
($ thousands) Footwear Operations Retail Other Total
Fiscal 2012
External sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,514,349 $ 845,176 $ 238,540 $ − $ 2,598,065
Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . 2,311 229,206 − − 231,517
Depreciation and amortization . . . . . . . . . . . . . . . . . . 22,819 13,688 2,991 17,846 57,344
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . 94,096 17,581 (8,850) (41,220) 61,607
Operating segment assets . . . . . . . . . . . . . . . . . . . . . 472,180 506,523 59,475 133,081 1,171,259
Purchases of property and equipment . . . . . . . . . . . . . . 34,931 8,969 6,716 5,185 55,801
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . − 3 − 7,925 7,928
Fiscal 2011
External sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,456,314 $ 870,873 $ 255,637 $ − $ 2,582,824
Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . 2,156 211,631 − − 213,787
Depreciation and amortization . . . . . . . . . . . . . . . . . . 26,116 15,521 3,517 16,295 61,449
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . 62,515 16,739 (7,627) (36,077) 35,550
Operating segment assets . . . . . . . . . . . . . . . . . . . . . 435,344 595,355 56,151 140,626 1,227,476
Purchases of property and equipment . . . . . . . . . . . . . . 16,272 5,991 3,901 1,693 27,857
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . 273 15 − 10,419 10,707
Fiscal 2010
External sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,486,538 $ 754,389 $ 263,164 $ − $ 2,504,091
Intersegment sales . . . . . . . . . . . . . . . . . . . . . . . . . 1,939 192,157 − − 194,096
Depreciation and amortization . . . . . . . . . . . . . . . . . . 26,017 9,410 3,852 13,238 52,517
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . 90,419 32,227 (5,970) (44,012) 72,664
Operating segment assets . . . . . . . . . . . . . . . . . . . . . 473,098 401,700 56,941 216,304 1,148,043
Purchases of property and equipment . . . . . . . . . . . . . . 22,066 2,619 2,730 3,366 30,781
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . 253 − − 23,793 24,046
Following is a reconciliation of operating earnings to earnings before income taxes from continuing operations:
($ thousands) 2012 2011 2010
Operating earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,607 $ 35,550 $ 72,664
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,382) (26,141) (19,647)
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . − (1,003) −
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322 644 203
Earnings before income taxes from continuing operations. . . . . . . . . . . . . . . . . . . . . . . $ 38,547 $ 9,050 $ 53,220
In 2012, the impact of restructuring and other special charges, net, included in operating earnings was as follows:
• Wholesale – $8.6 million of charges related to the Company’s portfolio realignment and $0.7 million related to
integration costs of ASG.
• Famous Footwear – $7.8 million of charges related to the Company’s portfolio realignment initiatives.
• Specialty Retail – $3.7 million of charges related to the Company’s portfolio realignment initiatives.
• Other – $2.3 million of charges related to the organizational change at the Company’s corporate headquarters
and $0.9 million of charges related to the Company’s portfolio realignment initiatives.
In 2011, the impact of restructuring and other special charges, net, included in operating earnings was as follows:
• Wholesale – $10.5 million of charges related to the Company’s portfolio realignment and $2.5 million related to
integration costs of ASG.
• Other – $4.0 million of charges related to the Company’s acquisition and integration costs of ASG and $3.3 million
of charges related to portfolio realignment initiatives.
• Famous Footwear – $2.8 million of charges related to the Company’s portfolio realignment initiatives.
• Specialty Retail – $0.6 million of charges related to the Company’s portfolio realignment initiatives.
In 2010, the impact of restructuring and other special charges, net, included in operating earnings was as follows:
• Other – $6.1 million of charges related to the Company’s information technology initiatives and $1.1 million of
charges related to the acquisition of ASG.
• Wholesale Operations – $0.7 million of charges related to the Company’s information technology initiatives.
For geographic purposes, the domestic operations include the wholesale distribution of licensed, branded and private-
label footwear to a variety of retail customers, including the Company’s Famous Footwear and Specialty Retail stores
and e-commerce business.