Famous Footwear 2012 Annual Report Download - page 78

76 2012 BROWN SHOE COMPANY, INC. FORM 10-K
The following table summarizes stock performance activity for the year ended February 2, 2013:
Number of Number of
Nonvested Stock Nonvested Stock Weighted-Average
Performance Awards Performance Awards Grant Date
at Target Level at Maximum Level Fair Value
Nonvested at January 28, 2012 . . . . . . . . . . . . . . . . . . . . . . . . 285,750 428,625 $ 14.56
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,325 208,650 9.46
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (140,000) (210,000) 13.99
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – –
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,750) (44,750) 13.34
Nonvested at February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . 222,325 382,525 $ 12.67
The weighted-average grant-date fair value of stock performance awards granted for 2012, 2011, and 2010 was $9.46,
$15.20, and $13.99, respectively. Stock performance awards of 140,000 and 323,500 vested in 2012 and 2011, respectively,
and no awards vested in 2010. As of February 2, 2013, the remaining unrecognized compensation cost related to nonvested
stock performance awards was $1.6 million.
16. RELATED PARTY TRANSACTIONS
C. banner International Holdings Limited
The Company entered into a joint venture agreement with a subsidiary of C. banner International Holdings Limited (“CBI”)
(formerly known as Hongguo International Holdings Limited) to market Naturalizer footwear in China in 2007. The Company
is a 51% owner of B&H Footwear, the joint venture, with CBI owning the other 49%. B&H Footwear began operations in 2007
and distributes the Naturalizer brand in department stores and free-standing stores in several of China’s largest cities. In
addition, B&H Footwear sells Naturalizer footwear to CBI on a wholesale basis. CBI then sells Naturalizer products through
retail stores in China. During 2012, 2011 and 2010, the Company, through its consolidated subsidiary, B&H Footwear, sold
$6.9 million, $5.9 million and $3.9 million, respectively, of Naturalizer footwear on a wholesale basis to CBI.
17. COMMITMENTS AND CONTINGENCIES
Environmental Remediation
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. The Company is
involved in environmental remediation and ongoing compliance activities at several sites and has been notified that it is or
may be a potentially responsible party at several other sites.
Redfield
The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned
facility in Colorado (the “Redfield site” or, when referring to remediation activities at or under the facility, the “on-site
remediation”) and residential neighborhoods adjacent to and near the property (the “o-site remediation”) that have been
aected by solvents previously used at the facility. The on-site remediation calls for the operation of a pump and treat
system (which prevents migration of contaminated groundwater o the property) as the final remedy for the site, subject
to monitoring and periodic review of the on-site conditions and other remedial technologies that may be developed in the
future. O-site groundwater concentrations have been reducing over time since installation of the pump and treat system
in 2000 and injection of clean water beginning in 2003. However, localized areas of contaminated bedrock just beyond
the property line continue to impact o-site groundwater. The modified workplan for addressing this condition includes
converting the o-site bioremediation system into a monitoring well network and employing dierent remediation methods
in these recalcitrant areas. In accordance with the workplan, a pilot test was conducted of certain groundwater remediation
methods and the results of that test were used to develop more detailed plans for remedial activities in the o-site areas,
which were approved by the authorities and are being implemented in a phased manner. The results of groundwater
monitoring are being used to evaluate the eectiveness of these activities. The Company submitted a proposed expanded
remedy workplan and is awaiting public comment and feedback from the oversight authorities. The liability for the on-site
remediation was discounted at 4.8%. On an undiscounted basis, the on-site remediation liability would be $15.9 million as of
February 2, 2013. The Company expects to spend approximately $0.2 million in each of the next five years and $14.9 million
in the aggregate thereafter related to the on-site remediation.
The cumulative expenditures for both on-site and o-site remediation through February 2, 2013 were $25.8 million.
The Company has recovered a portion of these expenditures from insurers and other third parties. The reserve for the
anticipated future remediation activities at February 2, 2013 is $7.8 million, of which $7.0 million is recorded within other
liabilities and $0.8 million is recorded within other accrued expenses. Of the total $7.8 million reserve, $4.8 million is for
on-site remediation and $3.0 million is for o-site remediation.