Famous Footwear 2002 Annual Report Download

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


(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


(Exact name of registrant as specified in its charter)

(State or other jurisdiction
of incorporation or organization)

(IRS Employer Identification Number)

St. Louis, Missouri
(Address of principal executive offices)

(Zip Code)

(Registrant's telephone number, including area code)

Title of each class Name of each exchange on which registered
Common Stock - par value $3.75 a share with
Common Stock Purchase Rights
New York Stock Exchange
Chicago Stock Exchange
 None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
As of April 6, 2002, 17,547,003 common shares were outstanding, and the aggregate market value of the common shares held by non-affiliates of
the registrant was approximately $341 million.

Portions of the annual shareholders report for the year ended February 2, 2002, are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual meeting of shareholders to be held May 23, 2002, are incorporated by reference into Part III.

Table of contents

  • Page 1
    ... BROWN SHOE COMPTNY, INC. (Exact name of registrant as specified in its charter) New York (State or other jurisdiction of incorporation or organization) 43-0197190 (IRS Employer Identification Number) 8300 Maryland Tvenue St. Louis, Missouri (Address of principal executive offices) 63105 (Zip...

  • Page 2
    ... brand-name, value-priced athletic, casual and dress shoes for the entire family. Brands carried include, among others, Nike, Skechers, New Balance, Reebok, adidas, Rockport, Vans, Connie, K-Swiss, Naturalizer and Westies. Famous Footwear stores are located in strip and power strip shopping centers...

  • Page 3
    ... at the same time a year earlier. With two distribution centers located in Sun Prairie, Wisconsin and Lebanon, Tennessee, Famous Footwear's distribution systems allow for merchandise to be delivered to each store weekly. In addition to the delivery of new styles and current promotional items, these...

  • Page 4
    ... stores operated by the Company at each of the prior three fiscal year-ends follows: 2001 Famous Footwear Family footwear stores which feature a wide selection of brand-name, valuepriced footwear; located in shopping centers and outlet and regional malls in the U.S. Naturalizer Stores selling...

  • Page 5
    ...to market the Dr. Scholl's brand of affordable casual and work shoes for women and men both in the United States and Canada. In 2001, the Company's Wholesale division launched a collection of women's shoes - Carlos by Carlos Santana - to major department stores. This footwear is being marketed under...

  • Page 6
    ... random in-line quality control checks during production and before footwear leaves the manufacturing facility. The Company maintains separate design teams for each of its brands which are responsible for the creation and development of new product styles. The Company's designers monitor trends in...

  • Page 7
    ... such common ownership, a decision by the controlling owner of a group of department stores and/or mass merchandisers, or any other significant customer, to decrease the amount of footwear products purchased from the Company could have a material adverse effect on the Company's business, financial...

  • Page 8
    ... in New York City. The Company's retail footwear operations are conducted throughout the United States and Canada and involve the operation of 1,376 shoe stores, including 160 in Canada. All store locations are leased, with approximately half having renewal options. Famous Footwear operates a leased...

  • Page 9
    ... Shoe Wholesale Senior Vice President, Chief Financial Officer and Treasurer Vice President and Chief Accounting Officer Chief Operating Officer and President, Brown Shoe International Richard C. Schumacher David H. Schwartz Joseph W. Wood 54 President, Famous Footwear 16 EXECUTIVE OFFICERS...

  • Page 10
    ... of Shareholders to be held May 23, 2002, is incorporated herein by reference. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Company Stock Ownership by Directors and Executive Officers on page 9 of the Proxy Statement for the Annual Meeting of Shareholders to be held May...

  • Page 11
    ... Agreement between Brown Shoe Company, Inc., First Chicago Trust Company of New York and EquiServe Trust Company, N.A., dated and effective as of December 6, 2001, incorporated herein by reference to the Company's Form 10-Q dated November 3, 2001. 20 Exhibit No.: (b) Credit Agreement dated as of...

  • Page 12
    ... financial institutions party thereto, as lenders, filed herewith. (b) (ii) Second Amendment to Credit Agreement, dated as of February 5, 2002, between the Company as Borrower, Bank of America, National Association, as administration agent, Fleet Retail Finance, Inc., as syndication agent, and the...

  • Page 13
    ... * (l) * Brown Shoe Company, Inc. Deferred Compensation Plan for Non-Employee Directors, incorporated by reference to the Company's Form 10-K dated January 29, 2000. 13. Annual Report to Shareholders of Brown Shoe Company, Inc. for the fiscal year ended February 2, 2002. Such report, except for...

  • Page 14
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BROWN SHOE COMPANY, INC. Date: April 16, 2002 /s/ Andrew M. Rosen Senior Vice President, Chief Financial Officer and Treasurer On Behalf of the Company as the Principal Financial Officer Know all men by...

  • Page 15
    ... Jerry E. Ritter 26 Director ANNUAL REPORT ON FORM 10-K ITEM 14 (a) (1) and (2) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE YEAR ENDED FEBRUARY 2, 2002 BROWN SHOE COMPANY, INC. ST. LOUIS, MISSOURI 27 FORM 10-K - ITEM 14 (a) (1) and (2) BROWN SHOE COMPANY, INC. AND SUBSIDIARIES...

  • Page 16
    ...is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 28 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS BROWN SHOE COMPANY, INC. Col. A. Col. B Balance at Col...

  • Page 17
    ...(j) Severance Agreement between the Company and Byron D. Norfleet Severance Agreement between the Company and Andrew M. Rosen (k) 13. 2001 Annual Report to Shareholders of Brown Shoe Company, Inc. 21. 23. 24. Subsidiaries of the registrant Consent of Independent Auditors Power of Attorney (see...

  • Page 18
    ... This First Amendment to Credit Agreement (this " Amendment "), dated effective as of January 19, 2002, is by and among BROWN SHOE COMPANY, INC., a New York corporation, BROWN GROUP RETAIL, INC., a Delaware corporation, BROWN GROUP INTERNATIONAL, INC., a Delaware corporation, CLAYTON LICENSE, INC...

  • Page 19
    ...and all other documents related hereto (whether or not any borrowing under the Credit Agreement, as amended, shall be consummated), including, without limitation, the reasonable fees and expenses of the Agent's counsel and any filing fees and recordation tax required in connection with the filing of...

  • Page 20
    BORROWERS : BROWN SHOE COMPANY, INC. By: /s/ Andrew M. Rosen Andrew M. Rosen Senior Vice President, Chief Financial Officer, and Treasurer BROWN GROUP RETAIL, INC. By: /s/ Andrew M. Rosen Andrew M. Rosen Senior Vice President, Chief Financial Officer, and Treasurer BROWN GROUP INTERNATIONAL, INC. ...

  • Page 21
    ... CONFIRMATION OF GUARANTY The undersigned, BROWN SHOE COMPANY, INC., a New York corporation (the "Guarantor "), executed and delivered to the Agent, for the benefit of the Lenders, that certain Parent Guaranty Agreement, dated as of December 20, 2002 (the " Parent Guaranty "). The Guarantor hereby...

  • Page 22
    By: /s/ Andrew M. Rosen Andrew M. Rosen Vice President, Chief Financial Officer, and Treasurer SIDNEY RICH ASSOCIATES, INC. By: /s/ Andrew M. Rosen Andrew M. Rosen Vice President, Chief Financial Officer, and Treasurer

  • Page 23
    ... This Second Amendment to Credit Agreement (this " Amendment "), dated effective as of February 5, 2002, is by and among BROWN SHOE COMPANY, INC., a New York corporation, BROWN GROUP RETAIL, INC., a Delaware corporation, BROWN GROUP INTERNATIONAL, INC., a Delaware corporation, CLAYTON LICENSE, INC...

  • Page 24
    ... Borrowers and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, shall have...

  • Page 25
    ... written. AGENT: BORROWERS: BROWN SHOE COMPANY, INC. BROWN GROUP RETAIL, INC. By: /s/ Andrew M. Rosen Andrew M. Rosen Senior Vice President, Chief Financial Officer, and Treasurer BROWN GROUP INTERNATIONAL, INC. CLAYTON LICENSE, INC. PAGODA TRADING COMPANY, INC. SIDNEY RICH ASSOCIATES, INC. By...

  • Page 26
    ...M. Murray Name: D. M. Murray Title: Managing Director RATIFICATION AND CONFIRMATION OF GUARANTY The undersigned, BROWN SHOE COMPANY, INC., a New York corporation (the "Guarantor "), executed and delivered to the Agent, for the benefit of the Lenders, that certain Parent Guaranty Agreement, dated as...

  • Page 27
    By: /s/ Andrew M. Rosen Andrew M. Rosen Vice President, Chief Financial Officer, and Treasurer

  • Page 28
    ... BCron Douglas Norfleet ("EmploCee") and Brown Shoe CompanC, Inc., a New York corporation (as further defined in Section 13, the "CompanC"). WHEREAS, in order to accomplish its objectives, the CompanC believes it is essential that members of its Operating Committee, such as EmploCee, be encouraged...

  • Page 29
    ... excess, if anC, of the fair market value (determined as of the Termination Date) of the CompanC stock subject to such option over the exercise price of such option. EmploCee's participation in and/or coverage under all other emploCee benefit plans, programs or arrangements sponsored or maintained...

  • Page 30
    ...'s own behalf or on behalf of anC other person, firm, corporation or entitC (whether as owner, partner, consultant, emploCee or otherwise): A. provide anC executive- or managerial-level services in the shoe industrC in the United States in competition with the CompanC, for anC Competitor; B. hold...

  • Page 31
    ... procedures, reports, specialized or technical data, schematics, source code, object code, documentation, and software used in connection with the development, manufacture, fabrication, assemblC, marketing and sale of the CompanC's products; d. financial, sales and marketing data relating to the...

  • Page 32
    ... maC be, anC other issue raised bC the Internal Revenue Service or anC other taxing authoritC. d. If, after the receipt bC the EmploCee of an amount advanced bC the CompanC pursuant to Section 11.c., the EmploCee becomes entitled to receive anC refund with respect to such claim, the EmploCee shall...

  • Page 33
    ... the CompanC: Brown Shoe CompanC, Inc. 8300 MarCland Avenue St. Louis, Missouri 63166-0029 Attention: Chief Executive Officer b. If to EmploCee: BCron Douglas Norfleet 1441 Haarman Oak Drive Chesterfield, MO 63005 AnC partC maC change the address to which notices are to be addressed bC giving the...

  • Page 34
    BROWN SHOE COMPANY, INC. BC: /S/ Robert D. Pickle. Vice President, General Counsel and Corporate SecretarC EMPLOYEE BC: /S/ BCron D. Norfleet BCron Douglas Norfleet

  • Page 35
    ...Employee") and Brown Shoe Company, Inc., a New York corporation (as further defined in Section 13, the "Company"). WHEREAS, in order to accomplish its objectives, the Company believes it is essential that members of its Operating Committee, such as Employee, be encouraged to remain with the Company...

  • Page 36
    ... by the Company. e. For purposes of determining Employee's benefit under the Brown Group, Inc. Supplemental Employment Retirement Plan, an additional one year of Credited Service shall be credited to the Employee's actual or deemed Credited Service. 4. Termination Within 24 Months After a Change in...

  • Page 37
    ... (i) his base annual salary at the highest rate in effect at any time during the twelve months immediately preceding the Termination Date, and (ii) his targeted bonus for the current year. In addition, the Company shall pay to Employee his targeted bonus payment for the year of termination prorated...

  • Page 38
    ... had with the Company, the national and international nature of both the Company's business and competition in the shoe industry, and the Company's legitimate interests in protecting its Confidential Information and its customer goodwill and relationships. Employee specifically hereby acknowledges...

  • Page 39
    ... firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by...

  • Page 40
    ... delivery service, in each case addressed as set forth below: a. If to the Company: Brown Shoe Company, Inc. 8300 Maryland Avenue St. Louis, Missouri 63166-0029 Attention: Chief Executive Officer b. If to Employee: Andrew M. Rosen 10 Frontenac Place Drive Frontenac, MO 63131 Any party may change...

  • Page 41
    ... St. Louis City or County, Missouri; and (ii) the Agreement shall be interpreted in accordance with and governed by the laws of the State of Missouri, without regard for any conflict of law principles. IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the day and year...

  • Page 42
    ...Brown Shoe is in [PHOTO] the business of family and...we've set our sights on the future. [PHOTO] Famous Footwear NIKE SKECHERS NEW B2L2NCE REEBOK 2 [PHOTO] 2DID2S ROCKPORT V2NS LIFE where america's families shop for branded footwear. Moms can tell you how to make shoe shopping fun. Just...

  • Page 43
    ...of brand-name, value-priced footwear for the 2merican family. STRIDE K-SWISS NUNN BUSH KEDS 3 N2TUR2LIZER WOLVERINE TIMBERL2ND [PHOTO] Naturalizer Retail: U.S.2. & Canada S2N FR2NCISCO TORONTO LOS 2NGELES 4 ORL2NDO BOSTON [PHOTO] where women of all ages are re-discovering Naturalizer...

  • Page 44
    ...Carlos Santana footwear, Brown Shoe has them all. We even have Buster Brown styles for the youngest of our customers. In the department store channel alone last year, Naturalizer grew sales by 40 percent, Carlos expanded to 130 stores nationwide, and LifeStride grew beyond our borders, placing shoes...

  • Page 45
    ... preceding pages, few companies can match our market share across channels of footwear distribution from the 120 million consumers who visit our stores annually, to the department stores, mass merchandisers and independent retailers who stock their 23,000 stores with our shoes. The opportunities to...

  • Page 46
    ... long-term growth in sales and earnings. In 2001, Famous Footwear took advantage of widespread construction of power strip shopping centers to open 66 new, mostly larger-format stores, which average 10,000 square feet. 2t the same time, we closed 71 of our smaller 5,000-square-foot stores.

  • Page 47
    ...wholesale sales. Naturalizer also was named "Brand of the Year" by Footwear News, the industry's leading trade publication. Naturalizer's success at wholesale comes after a repositioning the brand. It continues today with design. Innovative direct marketing delivers the hands of our target customers...

  • Page 48
    ...inventory, distribution network and information systems to bring our customers convenience and reliability when shopping for footwear brands and styles online. I invite you to browse our sites and shop for shoes, 24 hours a day/7 days a week. BUILDING 2 NEW BROWN SHOE. Looking back upon our 123-year...

  • Page 49
    ... greater value to our customers and shareholders in 2002, and in the years to come. Thank you for your continued support. /s/ Ronald 2. Fromm Ronald 2. Fromm, Chairman, President and Chief Executive Officer 14 FOOTWE2R BR2NDS [PHOTO] WOMEN'S 2irStep Basswood Bootalinos Carlos by Carlos Santana...

  • Page 50
    ... L.L.C. Nintendo of 2merica, Inc. (for Canada only) K.K.S.M. Inc. Marvel Characters, Inc. Dimension Films Lucasfilm Ltd. 2ll other brands owned by and, in most cases, are registered trademarks of Brown Shoe Company, Inc. 15 RET2IL STORES [U.S. M2P] NUMBER OF STORES 2001 2000 1999 920 925 867

  • Page 51
    1998 1997 827 815 Family footwear stores that feature "brand names for less," located in shopping centers, regional malls and outlet centers in the U.S. UNITED ST2TES 2L2B2M2 2L2SK2 2RIZON2 2RK2NS2S C2LIFORNI2 COLOR2DO CONNECTICUT DEL2W2RE FLORID2 GEORGI2 H2W2II ID2HO ILLINOIS INDI2N2 IOW2 K2NS2S...

  • Page 52
    NUMBER OF STORES 2001 2000 1999 1998 1997 456 481 486 462 464 N2TUR2LIZER Stores selling the Naturalizer brand of women's footwear, located in regional malls and outlet centers in the U.S. and Canada...MISSOURI MONT2N2 NEBR2SK2 NEV2D2 NEW H2MPSHIRE NEW JERSEY NEW MEXICO NEW YORK NORTH C2ROLIN2 NORTH ...

  • Page 53
    ... These include general economic conditions, competition, consumer apparel and footwear trends, and political and economic conditions in Brazil and China, which are significant footwear sourcing countries. These factors are listed and further discussed in the Company's 2nnual Report on Form 10-K. 17

  • Page 54
    ...-week year in fiscal 2000. This overall increase was achieved,in spite of a 5.7% decline in same-store sales,as a result of higher sales from the replacement of smaller stores with new and larger stores in power strip shopping centers that average 10,000 square feet per store. Sales per square foot...

  • Page 55
    ... of Famous Footwear's real estate portfolio by opening 8,000-12,000 square-foot stores and closing certain 5,000-6,000 square-foot stores. Square footage is expected to grow by approximately 4% in 2002. Management believes the larger store format, in power strip shopping centers will BROWN SHOE...

  • Page 56
    ... in the stores and the addition of new, larger stores in power strip shopping centers. The Company's Wholesale operations had net sales of $447.6 million in fiscal 2000, which was 4.9% lower than the $470.8 million in fiscal 1999. The decrease reflects lower sales of children's footwear compared to...

  • Page 57
    ..., 481 stores were in operation including 331 in the United States and 150 in Canada. Consolidated gross profit as a percent of sales was 40.5% in fiscal 2000, an improvement from 39.3% in fiscal 1999. This improvement reflects a higher margin rate at Famous Footwear and the Wholesale operations, and...

  • Page 58
    ... Rate, as defined. There is an unused line fee of .375% in 2002. Borrowings are collateralized by accounts receivable and inventory of the parent company and its wholly owned domestic and Canadian subsidiaries. In conjunction with entering into this new credit agreement, in January 2002 the Company...

  • Page 59
    ... openings and remodelings at Famous Footwear and Naturalizer Retail. In fiscal 2002, the Company expects capital expenditures to total approximately $28 million, primarily for new stores and store remodeling at Famous Footwear and Naturalizer Retail. BROWN SHOE COMP2NY, INC. 21 2001 2NNU2L REPORT...

  • Page 60
    ... where upon sale of the product, the Company will realize its initial gross profit rate. 2t its Famous Footwear division, markdowns are recognized when it becomes evident that inventory items will be sold at retail prices that are less than cost,plus the cost to sell the product.This policy causes...

  • Page 61
    .... INCOME T2XES The Company provides taxes for the effects of timing differences between financial and tax reporting. These differences relate principally to employee benefit plans, bad debt reserves, store closing reserves and inventory. The Company does not provide deferred taxes on the accumulated...

  • Page 62
    ... based on the most recent information available as to the actions that will be required by the various Federal and State authorities responsible for the various sites. The Company believes the reserves carried at February 2, 2002, of $4.1 million are appropriate, but changes in estimates and actions...

  • Page 63
    ... the fiscal year ended on the Saturday nearest to January 31. BROWN SHOE COMP2NY, INC. 25 2001 2NNU2L REPORT CONSOLID2TED FIN2NCI2L ST2TEMENTS CONSOLID2TED B2L2NCE SHEETS THOUS2NDS, EXCEPT NUMBER OF SH2RES 2ND PER SH2RE 2MOUNTS FEBRU2RY 2, 2002 FEBRU2RY 3, 2001 2SSETS CURRENT 2SSETS Cash...

  • Page 64
    ... 763 1,554 2,234 Changes in operating assets and liabilities: Receivables (4,665) 2,279 (3,769) Inventories 31,603 (61,841) (3,715) Prepaid expenses and other current assets (19,658) (617) 2,761 Trade accounts payable and accrued expenses (9,738) 14,474 (12,627) Income taxes (1,300) (2,552) (4,949...

  • Page 65
    ... cash equivalents at end of year $ 22,712 $ 50,491 $ 34,158 See notes to consolidated financial statements. BROWN SHOE COMP2NY, INC. 28 2001 2NNU2L REPORT CONSOLID2TED FIN2NCI2L ST2TEMENTS CONSOLID2TED SH2REHOLDERS' EQUITY UN2MORTIZED 2CCUMUL2TED COMMON STOCK V2LUE OF OTHER TOT2L 2DDITION2L...

  • Page 66
    ... dress footwear products to women, children and men. Footwear is sold at a variety of price points through multiple distribution channels both domestically and internationally. The Company currently operates 1,376 retail shoe stores in the United States and Canada primarily under the Famous Footwear...

  • Page 67
    ... are written down to fair value. INCOME T2XES Provision is made for the tax effects of timing differences between financial and tax reporting. These differences relate principally to employee benefit plans, bad debt reserves, inventory, and store closing reserves. BROWN SHOE COMP2NY, INC. 30 2001...

  • Page 68
    ...older merchandise as part of its initiative to improve inventory turns and "freshness." - $3.5 million of severance costs related to the elimination of 117 positions in the Company's Information Systems, Finance and Human Resources functions as it moves to a new Shared Services platform. BROWN SHOE...

  • Page 69
    ...; hourly employees' and union members' benefits are based on stated amounts for each year of service. The Company's funding policy for all plans is to make the minimum annual contributions required by applicable regulations. The Company also maintains an unfunded Supplemental Executive Retirement...

  • Page 70
    BROWN SHOE COMP2NY, INC. 32 2001 2NNU2L REPORT NOTES TO CONSOLID2TED FIN2NCI2L ST2TEMENTS PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS 2001 2000 2001 2000 Benefit obligation at beginning of year $ 109,926 $ 99,356 $ 4,962 $ 5,666 Service cost 4,433 4,431 1 4 Interest cost 7,583 7,497 327 354...

  • Page 71
    ..., a 6.5% annual rate of increase in the per capita cost of covered health care benefits was assumed. 2 one-percentage-point change in assumed health care cost trend rates would not have a material impact on service and interest cost and the postretirement benefit obligation. The Company's defined...

  • Page 72
    ...Company's deferred income tax assets and liabilities were as follows (in thousands): FEBRU2RY 2, FEBRU2RY 3, 2002 2001 DEFERRED T2X 2SSETS Inventory capitalization and inventory reserves $ 8,941 $ 3,531 Tax credit carryforwards 6,423 -Employee benefits, compensation and insurance 5,407 6,077 Store...

  • Page 73
    ... 2001, selling branded footwear for the entire family. Wholesale operations source and market branded, licensed and private-label footwear primarily to department stores, mass merchandisers and company-owned Naturalizer Retail and Famous Footwear stores. Naturalizer Retail specialty store operations...

  • Page 74
    ...private-label footwear to a variety of retail customers, and nationwide operation of the Famous Footwear and Naturalizer chains of footwear stores. The Company's foreign operations primarily consist of wholesale distribution operations in the Far East and wholesaling and retailing in Canada. The Far...

  • Page 75
    ... 3, 2002 2001 Land and ...selling and administrative expense for impaired assets of $0.7 million, $1.1 million and $1.3 million were recognized in fiscal 2001, 2000 and 1999, respectively. Fair value was based on estimated future cash flows to be generated by retail stores, discounted at a market rate...

  • Page 76
    ... Balance Sheet, as the Company does not expect these to be repaid in fiscal 2002. The Company has interest rate swap agreements, expiring between October 2004 and October 2006, that convert variable rate interest payable on $100 million of long-term borrowings under the revolving credit BROWN SHOE...

  • Page 77
    ... primarily relate to the Cloth World and Meis specialty retailing chains, which were sold in prior years. [10] DERIV2TIVE FIN2NCI2L INSTRUMENTS The Company uses derivative financial instruments, primarily foreign exchange contracts and interest rate caps and swaps, to reduce its exposure to market...

  • Page 78
    ...of inventory from foreign suppliers will be adversely affected by changes in exchange rates. The Company's outstanding derivative financial instruments related to foreign exchange risk consisted of the following (in thousands of U.S. dollars): BROWN SHOE COMP2NY, INC. 38 2001 2NNU2L REPORT NOTES...

  • Page 79
    ... the economy and the retail industry. The Company maintains an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. BROWN SHOE COMP2NY, INC. 39 2001 2NNU2L REPORT NOTES TO CONSOLID2TED FIN2NCI2L ST2TEMENTS

  • Page 80
    ...site. The Company has completed its remediation efforts 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 over the next 22 years...

  • Page 81
    ...market price of the underlying stock on the date of grant, no compensation expense is recognized. Pro forma information regarding net income and earnings per share is required by SF2S No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value...

  • Page 82
    The following summary sets forth the Company's stock option and stock appreciation rights activity for the three years ended February 2, 2002: WEIGHTED NUMBER OF NUMBER OF 2VER2GE OPTION 2PPRECI2TION EXERCISE SH2RES UNITS PRICE Outstanding January 30, 1999 1,445,094 256,038 $17 Granted 555,300 -19...

  • Page 83
    ...program, common stock of the Company may be granted at no cost to certain officers and key employees. Plan participants are entitled to cash dividends and to vote their respective shares. Restrictions limit the sale or transfer BROWN SHOE COMP2NY, INC. 41 2001 2NNU2L REPORT NOTES TO CONSOLID2TED...

  • Page 84
    ... M2N2GEMENT REPORT ON RESPONSIBILITY FOR FIN2NCI2L REPORTING The management of Brown Shoe Company, Inc. has the responsibility for preparing the accompanying financial statements and for their integrity and objectivity. The statements were prepared in accordance with generally accepted accounting...

  • Page 85
    ... years in the period ended February 2, 2002, in conformity with accounting principles generally accepted in the United States. St. Louis, Missouri February 27, 2002 /s/ 2ndrew M. Rosen 2ndrew M. Rosen Chief Financial Officer /s/ Ernst & Young LLP BROWN SHOE COMP2NY, INC. 43 2001 2NNU2L REPORT...

  • Page 86
    ...: The New York Business Corporation 2ct requires that New York corporations provide to their shareholders information regarding any policies of directors' and officers' liability insurance which have been purchased or renewed. 2ccordingly, notice is hereby given that on October 31, 1998, the Company...

  • Page 87
    ... Human Resources RICH2RD T. PRICE Vice President, Information Systems and Technology J2MES M. ROE* Senior Vice President, Real Estate ROBERT E. ST2DLER, JR.* Senior Vice President, 2dministration * Member of the Company's Operating Committee BROWN SHOE COMP2NY, INC. [45] 2001 2NNU2L REPORT

  • Page 88
    ... Office Box 29 St. Louis, Missouri 63166-0029 Telephone: (314) 854-4000 Fax: (314) 854-4274 E-mail: [email protected] INTERNET 2DDRESS www.brownshoe.com 2NNU2L MEETING 11:00 a.m. Central Daylight Time Thursday, May 23, 2002 Brown Shoe Company, Inc. Corporate Headquarters STOCK LISTED [LOGO] Brown...

  • Page 89
    ... New York Cayman Islands Brazil Hong Kong Hong Kong Missouri Missouri Delaware Missouri Hong Kong Exhibit 21 Subsidiaries of the Begistrant (Continued) Brown Group Retail, Inc. does business under the following names: All About Shoes Factory Brand Shoes Famous Footwear Naturalizer Naturalizer...

  • Page 90
    Naturalizer Outlet Naturalizer Shoes Naturalizer West Supermarket of Shoes Warehouse Shoes Brown Shoe Company of Canada, Ltd. does business under the following names: Exalt F. X. LaSalle Naturalizer

  • Page 91
    ... of Brown Shoe Company, Inc. of our report dated February 27, 2002, included in the 2001 Annual Report to Shareholders of Brown Shoe Company, Inc. Our audits also included the financial statement schedule of Brown Shoe Company, Inc. listed in Item 14(a). This schedule is the responsibility of the...