Famous Footwear 2003 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)


(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 ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [X] No
[ ]
As of April 4, 2003, 17,764,557 common shares were outstanding, and the aggregate market value of the common
shares held by non-affiliates of the registrant was approximately $500 million.

Portions of the annual shareholders report for the year ended February 1, 2003, are incorporated by reference into

Table of contents

  • Page 1
    ... St. Louis, Missouri (Address of principal executive offices) 63105 (Zip Code) (314) 854-4000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Tct: Title of each class Name of each exchange on which registered Common Stock - par value...

  • Page 2
    .... In 1999, the Company changed its name from Brown Group, Inc., to Brown Shoe Company, Inc. Current activities include the operation of retail shoe stores and the sourcing and marketing of footwear for women, men and children. The Company's business is seasonal in nature due to consumer spending...

  • Page 3
    ...-name, value-priced athletic, casual and dress shoes for the entire family. Brands carried include, among others, Skechers, Nike, New Balance, Reebok, adidas, Naturalizer, Aerosoles, K-Swiss, Connie, Rockport, Vans, LifeStride and Buster Brown. Famous Footwear stores are located in strip and power...

  • Page 4
    ... database marketing program, which targets and rewards frequent customers primarily through catalogs, which are mailed four times per year and which display the brand's current product. Customers can purchase the product in these catalogs from the Company's stores, via the Naturalizer.com website or...

  • 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. This footwear is primarily distributed through mass merchandisers. The Company also sells the Original Dr. Scholl's Exercise Sandal and a related line of footwear under this...

  • Page 6
    ...and marketing communications. At April 5, 2003, the Company's wholesale operations had a backlog of unfilled orders of approximately $151 million compared to $142 million on April 6, 2002. Most orders are for delivery within the next 90-120 days, and although orders are subject to cancellation, the...

  • Page 7
    ... resources than the Company. The Company's success depends upon its ability to remain competitive in the areas of style, price and quality, among others, and in part on its ability to anticipate and respond to changing merchandise and fashion trends and consumer preferences and demands in a timely...

  • Page 8
    ...require that we devote substantial resources and executive time to defend the Company. Available Information Our Internet address is www.brownshoe.com. Our Internet address is included in this annual report on Form 10-K as an inactive textual reference only. The information contained on our website...

  • Page 9
    ...1,307 shoe stores, including 172 in Canada. All store locations are leased, with approximately half having renewal options. Famous Footwear operates a leased 750,000 square foot distribution center, including a mezzanine level, in Sun Prairie, Wisconsin, and a leased 800,000 square foot distribution...

  • Page 10
    ... Wholesale Senior Vice President, Chief Financial Officer and Treasurer Richard C. Schumacher David H. Schwartz 55 57 55 Senior Vice President and Chief Accounting Officer Chief Operating Officer and President, Brown Shoe International President, Famous Footwear Page 16 Joseph W. Wood EXECUTIVE...

  • Page 11
    ... Stock market prices and dividends on page 49 of the Annual Report to Shareholders and the number of shareholders of record on page 52 of the Annual Report to Shareholders for the year ended February 1, 2003, are incorporated herein by reference. ITEM 6 - SELECTED FINTNCITL DTTT Selected Financial...

  • Page 12
    ... reporting, management review of monthly, quarterly and annual results, an established system of internal controls and internal control reviews by the Company's internal auditors. During the fourth quarter, management of the Company, including the Chief Executive Officer and Chief Financial Officer...

  • Page 13
    ...A the form of Rights Certificate evidencing the Company's Common Stock Purchase Rights, incorporated herein by reference to the Company's Form 8-K dated March 8, 1996. Amendment to Rights Agreement between Brown Shoe Company, Inc. and First Chicago Trust Company of New York, dated as of July 8, 1997...

  • Page 14
    ... copy of any such instrument to the Securities and Exchange Commission upon request. Fourth Amendment to the Brown Group, Inc. Executive Retirement Plan, amended and restated as of January 1, 1998, incorporated herein by reference to the Company's Form 10-K dated January 29, 2000. Fifth Amendment to...

  • Page 15
    ... Directors, incorporated by reference to the Company's Form 10-K dated January 29, 2000. Brown Shoe Company, Inc. Deferred Compensation Plan effective February 1, 2003, filed herewith. (m) * 13. Annual Report to Shareholders of Brown Shoe Company, Inc. for the fiscal year ended February 1, 2003...

  • Page 16
    ...requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BROWN SHOE COMPANY, INC. Date: April 16, 2003 /s/ Andrew M. Rosen Senior Vice President, Chief Financial...

  • Page 17
    ...A. Fromm, Chairman, President and Chief Executive Officer of Brown Shoe Company, Inc. (the "Registrant"), certify that: 1. I have reviewed this annual report on Form 10-K of the registrant; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit...

  • Page 18
    ... weaknesses. Date: April 16, 2003 /s/ Ronald A. Fromm Chairman, President and Chief Executive Officer Page 28 I, Andrew M. Rosen, Senior Vice President, Chief Financial Officer and Treasurer of Brown Shoe Company, Inc. (the "Registrant"), certify that: 1. I have reviewed this annual report on...

  • Page 19
    ... Chief Financial Officer and Treasurer Page 29 ANNUAL REPORT ON FORM 10-K ITEM 15 (a) (1) and (2) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE YEAR ENDED FEBRUARY 1, 2003 BROWN SHOE COMPANY, INC. ST. LOUIS, MISSOURI Page 30 FORM 10-K - ITEM 15 (a) (1) and (2) BROWN SHOE COMPTNY...

  • Page 20
    ... and allowances taken. B. Adjustment upon disposal of related inventories. NOTE: Amounts presented for the years ended February 2, 2002 and February 3, been restated to conform to current year presentation. 2001, have Page 32 BROWN SHOE COMPANY, INC. ANNUAL REPORT TO SHAREHOLDERS ON FORM 10...

  • Page 21
    24. Power of Attorney (see signature page) 26 99. Section 906 of the Sarbanes-Oxley Act of 2002 133 Page 33

  • Page 22
    ...COMPANY, INC. A New York corporation BYLAWS Effective March 6, 2003 BYLAWS of Brown Shoe Company, Inc. _____ ARTICLE I Meetings of Stockholders Section 1. Annual Meeting. The annual meeting of the stockholders shall be held at such place within or without the State of New York as may from time...

  • Page 23
    ... for the term of three years so that the term of office of one class of directors shall expire in each year. Section 2. Meetings of the Board . Meetings of the Board of Directors shall be held at such place within or without the State of New York as may from time to time be fixed by resolution of...

  • Page 24
    ...election as a Director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Company which are beneficially owned by such person and (iv) any other information relating to such...

  • Page 25
    ...person who at any time is serving or has served as a director or officer of the Company or at the request of the Company is serving or has served as a director or officer (or in a similar capacity) of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise...

  • Page 26
    ... Board of Directors may from time to time prescribe. ARTICLE VII Checks, Notes, etc. All checks and drafts on the Company's bank accounts and all bills of exchange and promissory notes and all acceptances, obligations and other instruments for the payment of money, shall be signed by the President...

  • Page 27
    ...first, and each ensuing fiscal year shall commence on the day following the ending date of the immediately preceding fiscal year as so determined. ARTICLE IX Corporate Seal The corporate seal shall have inscribed thereon the name of the Company and the words "New York", arranged in a circular form...

  • Page 28
    ... shoes of more than $20,000,000 or is reasonably expected to have such sales or revenues in either the current fiscal year or the next following fiscal year. d. "Confidential Information" shall have the meaning set forth in Section 10. e. "Customer" shall mean any wholesale customer of the Company...

  • Page 29
    ... pay the reasonable costs of outplacement services selected by the Company. e. For purposes of determining Employee's benefit under the Brown Shoe Company, Inc. Supplemental Employment Retirement Plan, additional Credited Service shall be credited to the Employee's actual or deemed Credited Service...

  • Page 30
    ... (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 31
    ...productsy d. financial, sales and marketing data relating to the Company or to the industry or other areas pertaining to the Company's activities and contemplated activities (including, without limitation, manufacturing, transportation, distribution and sales costs and non-public pricing information...

  • Page 32
    ...to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 11.c.) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount...

  • Page 33
    ... on the first business day following the mailing thereof by overnight 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: Joseph W. Wood...

  • Page 34
    ...in St. Louis City or County, Missouriy 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 35
    ... relevant federal, state, or local statutes or ordinances, or any claims for pay, vacation pay, insurance, or welfare benefits or any other benefits of employment with any Company Released Person arising from events occurring prior to the date of this Release other than those payments and benefits...

  • Page 36
    ... certain management and highly compensated employees; NOW, THEREFORE, effective February 1, 2003, the Company hereby establishes the Brown Shoe Company, Inc. Deferred Compensation Plan as set forth below: TABLE OF CONTENTS Page No. 1. PURPOSE ...1 2. DEFINIOIONS 2.1 Account ...1 2.2 Accounting Date...

  • Page 37
    ... no person or persons are so designated, the estate of a deceased Participant. 2.4 Board. "Board" means the Board of Directors of Brown Shoe Company, Inc. or its designee. 2.5 Business Day . Business Day" means a day on which the New York Stock Exchange is open for trading activity. 2.6 Committee...

  • Page 38
    ..." means this Brown Shoe Company, Inc. Deferred Compensation Plan, as amended from time to time. 2.15 Plan Year. "Plan Year" means the period beginning on February 1, 2003 and ending on December 31, 2003 and, thereafter, means the annual period commencing January 1 and ending the following December...

  • Page 39
    ... except as otherwise determined by the Committee or as stated in the Plan. 3 Newly employed Employees who are eligible to participate in the Plan may elect to participate for the current Plan Year within the first 30 days after commencing employment. Such election shall be effective on the first...

  • Page 40
    ... forth the basis of the claim with the Chief Executive Officer of the Company ("CEO"). A written notice of the CEO's disposition of any such claim shall be furnished to the claimant within a reasonable time (not to exceed ninety (90) days) after the claim is received by the CEO. Notwithstanding...

  • Page 41
    ... approval by the Board, materially increase the benefits accruing to Participants under the Plan. IN WITNESS WHEREOF, this Plan is adopted effective the first day of February, 2003. BROWN SHOE COMPANY, INC. By: Andrew M. Rosen Title: Senior Vice President, Chief Financial Officer and Treasurer 7

  • Page 42
    fashionIMPACT ANNUAL REPORT 2002 (PHOTO) (BROCN SHOE LOTO) IMPACT. Improved performance and competitive transformation FINANCIAL HITHLITHTS (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) FISCAL YEAR 2002 FISCAL YEAR 2001 FISCAL YEAR 2000 RESULTS OF OPERATIONS Net sales Net earnings (loss) ...

  • Page 43
    ...52 SALES SETMENTED BY DISTRIBUTION CHANNEL (PIE CHART) 69% RETAIL 31% CHOLESALE FAMOUS FOOTCEAR - 918 STORES Largest retailer of brand-name, value-priced footwear for the family NATURALIZER - 389 STORES Showcase for Naturalizer brand in the United States and Canada No. 1 outside footwear supplier...

  • Page 44
    ... level of inventory at Famous Footwear by 20 percent, saved $8 million last year in carrying costs, and simultaneously freshened our product assortments. Ce improved our consumer-focused footwear design processes to win more market share for our wholesale business. Ce established a Shared Services...

  • Page 45
    ... dominant retailer of brand-name, value-priced footwear in every market where we compete. To get there, we stepped up our research to better understand our customers and their buying habits. Ce made it our objective to sell more shoes to the "Fashion Value" customer-who balances her love of shopping...

  • Page 46
    ... by Carlos Santana shoes, a better brand, achieved dramatic increases in distribution-now in about 400 department store doors and independent retailers. In 2003, we'll target the junior market by launching Hot Kiss OUR LATEST NATURALIZER STORE DESITN: SHOCCASINT THE BRAND (PHOTO) 4 footwear...

  • Page 47
    ... with on-time, on-spec footwear. In 2003, our investments to grow our business will be even bolder than our initiatives of last year. Ce'll invest in more consumer research, store remodeling, footwear design talent, brand building and marketing-and we'll set the stage for Brown Shoe's sustained...

  • Page 48
    fashionREVOLUTION (PHOTO) 8 Naturalizer Today's Naturalizer, fashioned for a new generation. (PHOTO) 9 fashionSENSE LifeStride Committed to fashion-right footwear a. a value. (PHOTO) 10 fashionPASSION

  • Page 49
    Carlos by Carlos Santana Inspired by the creativity and energy of music by Carlos Santana. (PHOTO) 11 fashionICON Original Dr. Scholl's A familiar favorite, now a fashion statement. (PHOTO) 12 fashionATTITUDE

  • Page 50
    Hot Kiss Trend-setting styles heat up the junior market. (PHOTO) 13 fashionFUN Buster Brown Nearly 100 years of keeping little feet happy. (PHOTO) 14 fashionIDENTITY Brown Shoe Men's footwear with a modern edge. (PHOTO) 15

  • Page 51
    ... STATES FAMOUS FOOTCEAR Family footwear stores that feature "brand names for less," located in shopping centers, regional malls and outlet centers in the U.S. NATURALIZER Stores selling the Naturalizer brand of women's footwear, located in regional malls and outlet centers in the U.S. and Canada...

  • Page 52
    ... (3) LifeStride LS Studio Marquise Maserati Naturalizer NaturalSport NightLife Opale Original Dr. Scholl's (2) TX Traction Vision Comfort MEN'S AND ATHLETIC Basswood Big Country Brown Shoe Dr. Scholl's (2) F.X. LaSalle FX Francois Xavier Collection Nature Sole Regal TX Traction CHILDREN'S Airborne...

  • Page 53
    ... other brands are owned by and, in most cases, are registered trademarks of Brown Shoe Company, Inc. (PHOTO) 19 FINANCIAL STATEMENTS MANATEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION FIVE-YEAR SUMMARY OF KEY FINANCIAL INFORMATION CONSOLIDATED FINANCIAL STATEMENTS NOTES...

  • Page 54
    ... rate generated by a better and more current mix of inventory. Operating expenses in fiscal 2002, as a percent of sales, were higher than fiscal 2001 due to higher operating costs of the new, larger stores and higher incentive plan costs. In fiscal 2003, Famous Footwear plans to open approximately...

  • Page 55
    ...fourth position at the end of fiscal 2001. Sales gains also were achieved by LifeStride, Dr. Scholl's-licensed and Children's-licensed footwear, and Comen's private label product. The Company also continued to build sales and broaden distribution of its Carlos by Carlos Santana and Hot Kiss-licensed...

  • Page 56
    ... AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION o $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 moved to a new Shared Services platform, which was designed to eliminate redundancy...

  • Page 57
    ...division, driven by higher sales, partially offset by a higher expense rate at Famous Footwear and outside consulting costs associated 2002 ANNUAL REPORT 23 MANATEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION with the inventory and Shared Services initiatives. Including the...

  • Page 58
    ... of fiscal 2001, the Company established a reserve of $3.5 million for severance costs related to the elimination of 117 positions as the Company moved to a new Shared Services platform for its Human Resources, Finance and Information Systems functions. As of February 1, 2003, 88 positions had been...

  • Page 59
    ...loss of $4.9 million (net of $2.6 million in taxes) to a separate line item on the Consolidated Earnings statement. The Company's long-term debt is rated Ba3 by Moody's Investors Service and BB by Standard & Poor's Corporation. In fiscal 2002, the Company's total debt decreased $63.8 million to $152...

  • Page 60
    ... exchange risk. The level of outstanding contracts during the year is dependent on the seasonality of the Company's business and demand for footwear from various locations throughout the world. The changes in market value of foreign exchange contracts have a high correlation to the price changes...

  • Page 61
    ... value of its inventories based on current selling prices. At 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 gross profit rates at Famous...

  • Page 62
    ... and customers are purchasing more current-season merchandise, which has improved the gross profit rates at the division. INCOME TAXES The Company provides taxes for the effects of timing differences between financial and tax reporting. These differences relate principally to employee benefit plans...

  • Page 63
    ... federal and state authorities have identified the Company as a potentially responsible party for remediation at certain landfills from the sale or disposal of solvents and other by-products from the closed New York tannery. Chile the Company currently operates no domestic manufacturing facilities...

  • Page 64
    ...financing is scheduled to be paid annually beginning in 2004 through 2009. In order for the Company to incur any liability related to these guarantees, the current owners would have to default. At this time, the Company does not believe this is reasonably likely to occur. 28 BROCN SHOE COMPANY, INC...

  • Page 65
    ... inventory. These factors are listed and further discussed in the Company's Annual Report on Form 10-K. Ce do not undertake any obligation or plan to update these forward-looking statements, even though our situation may change. 2002 ANNUAL REPORT 29 FIVE-YEAR SUMMARY OF KEY FINANCIAL INFORMATION...

  • Page 66
    ...2002 ANNUAL REPORT 31 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED EARNINTS THOUSANDS, EXCEPT PER SHARE AMOUNTS Net sales Cost of goods sold Tross profit Selling and administrative expenses Interest expense Loss on early redemption of debt Other expense, net Earnings (loss) before income taxes...

  • Page 67
    ...-(8,699) 27 (7,202 39,423 -----------16,333 34,158 50,491 See notes to consolidated financial statements. 2002 ANNUAL REPORT 33 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED SHAREHOLDERS' EQUITY THOUSANDS, EXCEPT NUMBER OF SHARES COMMON STOCK ADDITIONAL UNAMORTIZED VALUE OF RESTRICTED

  • Page 68
    ... -----------Comprehensive loss Adjustment for change in year end Dividends ($0.40 per share) Treasury stock acquired Stock issued under employee benefit plans Stock issued under restricted stock plan, net Amortization of deferred compensation under restricted stock plan BALANCE FEBRUARY 2, 2002...

  • Page 69
    ... and men. Footwear is sold at a variety of price points through multiple distribution channels both domestically and internationally. The Company currently operates 1,307 retail shoe stores in the United States and Canada primarily under the Famous Footwear, Naturalizer and F. X. LaSalle names. In...

  • Page 70
    2001 of $0.2 million were credited directly to retained earnings. ACCOUNTINT PERIOD The Company's fiscal year is the 52- or 53-week period ending the Saturday nearest to January 31. Fiscal years 2002, 2001 and 2000 ended on February 1, 2003, February 2, 2002, and February 3, 2001, respectively. ...

  • Page 71
    ... as impaired are written down to fair value. INCOME TAXES 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 depreciation. EARNINTS PER SHARE Basic earnings...

  • Page 72
    employee compensation expense determined under fair value based method for all awards, net of related tax effect Pro forma net earnings (loss) Earnings (loss) per share: Basic - as reported Basic - pro forma Diluted - as reported Diluted - pro forma (1,977 43,195 2.60 2.49 2.52 2.41 (1,334 5,...

  • Page 73
    ... of 117 positions in the Company's Information Systems, Finance and Human Resources functions as it moves to a new Shared Services platform. $3.9 million of costs associated with the transition to new management at the Famous Footwear division. This charge is primarily related to the retirement of...

  • Page 74
    ... was associated with the recoveries. 2002 ANNUAL REPORT 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [4] RETIREMENT AND OTHER BENEFIT PLANS The Company's pension plans substantially cover all full-time United States employees. Under the plans, salaried, management and certain hourly employees...

  • Page 75
    ...health care benefits was assumed. A 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 contribution 401(k) plan covers salaried and certain hourly employees...

  • Page 76
    ...made federal, state and foreign tax payment, net of refunds, of $1.8 million, $12.5 million and $13.9 million in fiscal 2002, 2001 and 2000, respectively. The differences between the tax expense reflected in the financial statements and the amounts calculated at the federal statutory income tax rate...

  • Page 77
    ... CONSOLIDATED FINANCIAL STATEMENTS Significant components of the Company's deferred income tax assets and liabilities were as follows (in thousands): FEBRUARY 1, 2003 FEBRUARY 2, 2002 DEFERRED TAX ASSETS Foreign tax credit carryforwards Employee benefits, compensation and insurance Inventory...

  • Page 78
    ... Naturalizer Retail and Famous Footwear stores. Naturalizer Retail specialty store operations include 217 stores in the United States and 172 stores in Canada at year-end, selling primarily Naturalizer brand footwear in regional malls and outlet centers. The "Other" segment includes the corporate...

  • Page 79
    ... retailing in Canada. The Far East operations include "first-cost" operations, where footwear is sold at foreign ports to customers who then import the footwear into the United States. 2002 ANNUAL REPORT 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of the Company's net sales and long...

  • Page 80
    ...: $3.5 million for Famous Footwear, $10.3 million for Cholesale operations, $4.6 million for Naturalizer Retail and $0.2 for the "Other" segment. [8] PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): FEBRUARY 1, 2003 FEBRUARY 2, 2002 Land and buildings...

  • Page 81
    ... receivable and inventory less certain adjustments, less outstanding borrowings and letters of credit. If Availability falls below certain levels, certain 42 BROCN SHOE COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS covenants are triggered including fixed charge coverage requirements if...

  • Page 82
    ... Notes are secured by the accounts receivable and inventory of the parent company and its wholly owned domestic and Canadian subsidiaries. The 7.125% debentures are unsecured. The maximum amount of short-term borrowings under the current and previous revolving bank credit arrangements at the end of...

  • Page 83
    ... of footwear from foreign countries and the variability of cash flows paid on variable-rate debt. The Company is exposed to credit-related losses in the event of nonperformance by counterparties 2002 ANNUAL REPORT 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS to these financial instruments...

  • Page 84
    ... the relative credit standing of these financial institutions are considered in the Company's investment strategy. The Company's footwear wholesaling businesses sell primarily to department stores, mass merchandisers, and independent retailers across the United States and Canada. Receivables arising...

  • Page 85
    ...for any particular quarter or annual period could be materially affected by changes in facts or assumptions related to this matter. The Company has completed its remediation efforts at its closed New York tannery and two associated landfills. In 1995, state environmental authorities reclassified the...

  • Page 86
    .... Pro forma information regarding net income and earnings per share is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant...

  • Page 87
    ... SHOE COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Following is a summary of stock options outstanding as of February 1, 2003, which have exercise prices ranging from $10 to $38: NUMBER OF OPTIONS CEITHTED AVERATE EXERCISE PRICE CEITHTED AVERATE REMAININT LIFE (YEARS OPTIONS...

  • Page 88
    ...million [17] SUPPLEMENTARY INFORMATION BALANCE SHEET Cash equivalents of $33.3 million and $17.4 million at February 1, 2003 and February 2, 2002, respectively, are stated at cost, which approximates fair value. STATEMENT OF CONSOLIDATED EARNINTS Advertising and marketing costs totaled $55.0 million...

  • Page 89
    ... 2,959 (1,399 164 ========== Total 2002 ANNUAL REPORT 47 REPORTS ON FINANCIAL STATEMENTS MANATEMENT REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTINT The management of Brown Shoe Company, Inc. has the responsibility for preparing the accompanying financial statements and for their integrity and...

  • Page 90
    ... Shoe Company, Inc. as of February 1, 2003 and February 2, 2002 and the related statements of consolidated earnings, shareholders' equity, and cash flows for each of the three years in the period ended February 1, 2003. These financial statements are the responsibility of the Company's management...

  • Page 91
    ... 2000, the Company extended the above policy for an additional year through October 31, 2003. The premium for this additional year is $122,900. To date, no claims have been paid under any policy of directors' and officers' liability insurance. 2002 ANNUAL REPORT 49 EXECUTIVE LEADERSHIP TEAM RONALD...

  • Page 92
    Human Resources SCOTT C. COOPER Senior Vice President, Marketing ELIZABETH A. FATAN Vice President, Corporate Communications KENNETH C. TILBERTSON President, Brown Shoe Canada Brown Shoe International division CHARLES C. TILLMAN President, Corldwide Sourcing TIMOTHY R. HEARD Senior Vice President, ...

  • Page 93
    ... Office Box 29 St. Louis, Missouri 63166-0029 Telephone:(314) 854-4000 Fax:(314) 854-4274 E-mail:[email protected] INTERNET ADDRESS www.brownshoe.com ANNUAL MEETINT 11:00 a.m. Central Daylight Time Thursday, May 22, 2003 Brown Shoe Company, Inc. Corporate Headquarters STOCK LISTED (BCS LISTED NYSE...

  • Page 94
    ... ALLOCS RETAIL PARTNERS TO CHECK INVENTORY, PLACE ORDERS, TRACK ARRIVALS, AND MORE. busterbrownshoes.com HERE, YOU'LL FIND BUSTER BROCN SHOES, RETAILER KIDS' SECTION CITH FUN TAMES AND ACTIVITIES. shoes.com AN ONLINE META STORE, CARRYINT MORE THAN 150 LEADINT FOOTCEAR BRANDS AND THOUSANDS OF THE...

  • Page 95
    ... Missouri New York Cayman Islands Brazil Hong Kong Hong Kong Missouri Delaware Missouri Hong Kong Exhibit 21 Subsidiaries of the Registrant (Continued) Brown Group Retail, Inc. does business under the following names: All About Shoes Factory Brand Shoes Famous Footwear Naturalizer Naturalizer Etc...

  • Page 96
    Brown Shoe Company of Canada, Ltd. does business under the following names: Exalt F. X. LaSalle Naturalizer

  • Page 97
    ...Inc. of our report dated February 26, 2003, included in the 2002 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 15(a). This schedule is the responsibility of the Company's management. Our...

  • Page 98
    ... 2002 In connection with the Annual Report of Brown Shoe Company, Inc. (the "Registrant") on Form 10-K for the year ending February 1, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald A. Fromm, Chairman, President and Chief Executive Officer of...