Famous Footwear 2013 Annual Report Download - page 78

76 2013 BROWN SHOE COMPANY, INC. FORM 10-K
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 $15.7 million as of February 1, 2014. The Company expects to spend approximately
$0.2 million in each of the next five years and $14.7 million in the aggregate thereafter related to the on-site remediation.
The cumulative expenditures for both on-site and o-site remediation through February 1, 2014 were $26.0 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 1, 2014, is $9.5 million, of which $8.5 million is recorded within other
liabilities and $1.0 million is recorded within other accrued expenses. Of the total $9.5 million reserve, $4.8 million is for
on-site remediation and $4.7 million is for o-site remediation.
Other
The Company has completed its remediation eorts at its closed New York tannery and two associated landfills. In 1995,
state environmental authorities reclassified the status of these sites as being properly closed and requiring only continued
maintenance and monitoring through 2024. The Company has an accrued liability of $1.5 million at February 1, 2014,
related to these sites, which has been discounted at 6.4%. On an undiscounted basis, this liability would be $2.0 million.
The Company expects to spend approximately $0.2 million in each of the next five years and $1.0 million in the aggregate
thereafter related to these sites. In addition, various federal and state authorities have identified the Company as a
potentially responsible party for remediation at certain other sites. However, the Company does not currently believe that
its liability for such sites, if any, would be material.
Based on information currently available, the Company has an accrued liability of $11.0 million as of February 1, 2014, to
complete the cleanup, maintenance and monitoring at all sites. Of the $11.0 million liability, $9.8 million is recorded in other
liabilities and $1.2 million is recorded in other accrued expenses. The Company continues to evaluate its estimated costs in
conjunction with its environmental consultants and records its best estimate of such liabilities. However, future actions and
the associated costs are subject to oversight and approval of various governmental authorities. Accordingly, the ultimate
costs may vary, and it is possible costs may exceed the recorded amounts.
Litigation
The Company is involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of
management, the outcome of such ordinary course of business proceedings and litigation currently pending is not expected
to have a material adverse eect on the Company’s results of operations or financial position. Legal costs associated with
litigation are generally expensed as incurred.