Famous Footwear 2014 Annual Report Download - page 69

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68 2014 BROWN SHOE COMPANY, INC. FORM 10-K
common stock that the participant could purchase or receive with the amount of the deferred compensation, based
upon the fair value (as determined based on the average of the high and low prices) of the Company’s common stock
on the last trading day of the fiscal quarter when the cash compensation was earned. Dividend equivalents are paid on
PSUs at the same rate as dividends on the Company’s common stock and are re-invested in additional PSUs at the next
fiscal quarter-end. The PSUs are payable in cash based on the number of PSUs credited to the participating director’s
account, valued on the basis of the fair value at fiscal quarter-end on or following termination of the director’s service.
The fair value of the liabilities is based on an unadjusted quoted market price for the Company’s common stock in an
active market with sucient volume and frequency (Level 1). Additional information related to the Company’s deferred
compensation plan for non-employee directors is disclosed in Note 5 to the consolidated financial statements.
Restricted Stock Units for Non-Employee Directors
Under the Company’s incentive compensation plans, cash-equivalent restricted stock units of the Company may be
granted at no cost to directors. Plan participants are entitled to cash dividends for their respective units. The fair
value of a restricted stock unit is the quoted market price for the Company’s common stock on the date of grant
(Level 1). Additional information related to restricted stock units for non-employee directors is disclosed in Note 15 to
the consolidated financial statements.
Performance Share Units
Under the Company’s incentive compensation plans, common stock or cash may be awarded at the end of the performance
period at no cost to certain ocers and key employees if certain financial goals are met. Under the plan, employees are
granted performance share awards at a target number of shares or units, which vest generally over a three-year service
period. At the end of the three-year period, the employee will be given an amount of shares between 0% and 200% of
the targeted award, depending on the achievement of specified financial goals for the three-year period. The fair value of
the performance share awards is the quoted market price for the Company’s common stock on the date of grant (Level 1).
Additional information related to performance share units is disclosed in Note 15 to the consolidated financial statements.
Derivative Financial Instruments
The Company uses derivative financial instruments, primarily foreign exchange contracts, to reduce its exposure to
market risks from changes in foreign exchange rates. These foreign exchange contracts are measured at fair value
using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2).
Additional information related to the Company’s derivative financial instruments is disclosed in Note 1 and Note 12 to
the consolidated financial statements.
Secured Convertible Note
The Company received a secured convertible note as partial consideration for the disposition of Shoes.com, as further
described in Note 2 to the consolidated financial statements. The convertible note is measured at fair value using
unobservable inputs (Level 3).
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis
at January 31, 2015 and February 1, 2014. The Company did not have any transfers between Level 1 and Level 2 during
2014 or 2013.
Fair Value Measurements
($ thousands) Total Level 1 Level 2 Level 3
Asset (Liability)
As of January 31, 2015:
Cash equivalents – money market funds . . . . . . . . . . . . . . . . . . $ 35,533 $ 35,533 $ – $ –
Non-qualified deferred compensation plan assets . . . . . . . . . . . . 2,904 2,904 – –
Non-qualified deferred compensation plan liabilities . . . . . . . . . . (2,904) (2,904) – –
Deferred compensation plan liabilities for non-employee directors . . (2,066) (2,066) – –
Restricted stock units for non-employee directors . . . . . . . . . . . . (8,857) (8,857) – –
Performance share units . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,147) (5,147) – –
Derivative financial instruments, net . . . . . . . . . . . . . . . . . . . . 79 – 79 –
Secured convertible note. . . . . . . . . . . . . . . . . . . . . . . . . . . 6,957 – – 6,957
As of February 1, 2014:
Cash equivalents – money market funds . . . . . . . . . . . . . . . . . . $ 41,236 $ 41,236 $ – $ –
Non-qualified deferred compensation plan assets . . . . . . . . . . . . . 2,191 2,191 – –
Non-qualified deferred compensation plan liabilities . . . . . . . . . . . (2,191) (2,191) – –
Deferred compensation plan liabilities for non-employee directors . . . (1,668) (1,668) – –
Restricted stock units for non-employee directors . . . . . . . . . . . . . (7,769) (7,769) – –
Performance share units . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,300) (2,300) – –
Derivative financial instruments, net . . . . . . . . . . . . . . . . . . . . . 834 – 834 –