Famous Footwear 2013 Annual Report Download - page 69

Download and view the complete annual report

Please find page 69 of the 2013 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 96

  • 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

2013 BROWN SHOE COMPANY, INC. FORM 10-K 67
Rent expense for operating leases was:
($ thousands) 2013 2012 2011
Minimum rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $143,958 $ 145,788 $ 151,355
Contingent rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942 567 408
Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,170) (1,145) (1,121)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $143,730 $ 145,210 $ 150,642
Future minimum payments under noncancelable operating leases with an initial term of one year or more were as follows
at February 1, 2014:
($ thousands)
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 149,801
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,319
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,112
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,196
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,347
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,282
Total minimum operating lease payments . . . . . . . . . . . . . $ 631,057
12. RISK MANAGEMENT AND DERIVATIVES
General Risk Management
The Company maintains cash and cash equivalents and certain other financial instruments with various financial
institutions. The financial institutions are located throughout the world and the Company’s policy is designed to
limit exposure to any one institution or geographic region. The Company’s periodic evaluations of the relative credit
standing of these financial institutions are considered in the Company’s investment strategy.
The Company’s Wholesale Operations segment sells to national chains, department stores, mass merchandisers,
independent retailers, online retailers, and catalogs primarily in the United States, Canada and China. Receivables
arising from these sales are not collateralized; however, a portion is covered by documentary letters of credit.
Credit risk is aected by conditions or occurrences within the economy and the retail industry. The Company
maintains an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers
and historical trends.
Derivatives
In the normal course of business, the Company’s financial results are impacted by currency rate movements in foreign-
currency-denominated assets, liabilities, and cash flows as it makes a portion of its purchases and sales in local currencies.
The Company has established policies and business practices that are intended to mitigate a portion of the eect of
these exposures. The Company uses derivative financial instruments, primarily forward contracts, to manage its currency
exposures. These derivative financial instruments are viewed as risk management tools and are not used for trading or
speculative purposes. Derivatives entered into by the Company are designated as cash flow hedges of forecasted foreign
currency transactions.
Derivative financial instruments expose the Company to credit and market risk. The market risk associated with these
instruments resulting from currency exchange movements is expected to oset the market risk of the underlying
transactions being hedged. The Company does not believe there is a significant risk of loss in the event of non-performance
by the counterparties associated with these instruments because these transactions are executed with major international
financial institutions and have varying maturities through January 2015. Credit risk is managed through the continuous
monitoring of exposures to such counterparties.
The Company principally uses foreign currency forward contracts as cash flow hedges to oset a portion of the eects
of exchange rate fluctuations. The Company’s cash flow exposures include anticipated foreign currency transactions,
such as foreign currency denominated sales, costs, expenses, intercompany charges, as well as collections and payments.
The Company performs a quarterly assessment of the eectiveness of the hedge relationship and measures and
recognizes any hedge ineectiveness in the consolidated statement of earnings. Hedge ineectiveness is evaluated using
the hypothetical derivative method. The amount of hedge ineectiveness for 2013, 2012, and 2011 was not material.
The Company’s hedging strategy uses forward contracts as cash flow hedging instruments, which are recorded in the
Company’s consolidated balance sheets at fair value. The eective portion of gains and losses resulting from changes in
the fair value of these hedge instruments are deferred in accumulated other comprehensive income and reclassified to
earnings in the period that the hedged transaction is recognized in earnings.