Famous Footwear 2003 Annual Report Download - page 9

Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished, as required by
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 through our Internet website as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the SEC. You may access these SEC filings via the hyperlink that we provide on our
website to a third-party SEC filings website.
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The Company owns its principal executive, sales and administrative offices in Clayton (St. Louis), Missouri. The Famous Footwear
division operates from a leased office building in Madison, Wisconsin. The Canadian wholesale division operates from an owned office
building in Perth, Ontario, and the retail division from leased office space in Laval, Quebec. A leased sales office and showroom is
maintained in New York, New York.
Most of the Company's footwear sold through its domestic wholesale divisions is processed through two company-owned distribution
centers in Sikeston, Missouri and Fredericktown, Missouri, which have 720,000 and 465,000 square feet, including mezzanine levels,
respectively. In fiscal 2002, the Company closed one of its two manufacturing facilities in Canada and now owns and operates one
manufacturing facility and a 150,000 square-foot distribution facility in Perth, Ontario.
The Company's retail footwear operations are conducted throughout the United States and Canada and involve the operation of 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 center, including mezzanine levels, in Lebanon, Tennessee. The Canadian retailing division operates a leased
21,000 square foot distribution center, which is adjacent to the division's office in Laval, Quebec.
The Brown Shoe Sourcing division leases office space in Hong Kong, China, Taiwan, Italy, Indonesia and Mexico.
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The Company is involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management,
after consulting with legal counsel, the outcome of such ordinary course of business proceedings and litigation currently pending will not
have a materially adverse effect on the Company's results of operations or financial position.
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The Company is involved in environmental remediation and ongoing compliance activities at several sites.
The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned facility in
Colorado and residential neighborhoods adjacent to and near the property, which have been affected by solvents previously used at the
facility. During fiscal 2002, 2001 and 2000, the Company incurred charges of $4.1 million, $1.4 million and $3.0 million, respectively,
related to this remediation.
In March 2000, a class-action lawsuit was filed in Colorado State Court (District for the City and County of Denver) related to the
Colorado site described above against the Company, a prior operator at the site and two individuals. Plaintiffs allege claims for trespass,
nuisance, strict liability, negligence and exemplary damages arising from the alleged release of solvents that are contaminating the
groundwater and indoor air in the areas adjacent to and near the site. In July 2002, the court granted the plaintiffs' motion for class
certification and scheduled a trial for early 2003. The plaintiffs are seeking damages of approximately $80 million for diminution in property
values and remediation damages to their property, and unspecified damages, such as for loss of use and enjoyment and discomfort. The
Company is vigorously contesting this lawsuit, believes it has meritorious defenses and believes the specified claims are without merit. In
May 2001, the Company filed a lawsuit in the Federal district court in Denver seeking contribution from parties the Company believes to
have contributed to pollution in and around the Colorado site. In addition, the Company filed suit against another such party in February 2003
in Colorado State Court. The Company is not able to assess the ultimate outcome of these matters, but it does not believe these proceedings
will have a material adverse effect on the Company's consolidated financial position, based upon the Company's current assessment of its
legal position and anticipated recoveries from, and/or allocations of damages (if any) to, third parties. It is possible, however, future results of
operations 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 status of these sites as being properly closed and requiring only continued maintenance and
monitoring over the next 21 years.
In addition, various 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 tannery and shoe manufacturing facilities.
Based on information currently available, the Company had an accrued liability of $7.3 million, as of February 1, 2003, to complete the