Famous Footwear 2004 Annual Report Download - page 34

Table of Contents
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
We provide reserves for estimated costs associated with our environmental remediation matters. We continually assess the level of reserves
required. We base such assessments 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. We believe the reserves carried at January 31, 2004, of $10.4 million, are appropriate,
but changes in estimates and actions necessary to complete the regulatory requirements may cause the required levels of reserves to
change.
OFF-BALANCE SHEET ARRANGEMENTS
At January 31, 2004, we were contingently liable for remaining lease commitments of approximately $12 million in the aggregate, which
primarily relate to the Cloth World and Meis specialty retailing chains, which were sold in prior years. These obligations will continue to
decline over the next several years as leases expire. In addition, we are a guarantor of an Industrial Development Bond financing of
$3.5 million for a manufacturing and warehouse facility in Bedford County, Pennsylvania. In 1985, these facilities and the business that
operated them were sold to another party, which assumed this obligation. This financing is scheduled to be paid annually beginning in 2004
through 2009. In order for us to incur any liability related to these lease commitments and guarantees, the current owners would have to
default. At this time, we do not believe this is reasonably likely to occur.
CONTRACTUAL OBLIGATIONS
In the normal course of business, we enter into contracts and commitments which obligate us to make payments in the future. The table
below sets forth our significant future obligations by time period. Further information on these commitments is provided in the notes to our
consolidated financial statements, which are cross-referenced in this table. Our obligations outstanding as of January 31, 2004 include the
following:
Payments Due by Period
Less Than 1-3 3-5 More Than
($ millions) Total 1 Year Years Years 5 Years
Notes payable(1) $19.5 $ 19.5 $ — $ — $ —
Long-term debt(2) 100.0 — 100.0 — —
Operating lease commitments (Note 10) 560.6 118.2 184.0 125.3 133.1
Minimum license commitments 10.5 6.0 4.5 — —
Purchase obligations(3) 353.7 351.5 2.2 — —
Total $1,044.3 $495.2 $290.7 $125.3 $133.1
(1) Notes payable bear interest at the LIBOR rate plus 2.25%. Interest obligations are not included in the table above. See Note 9 to the
consolidated financial statements.
(2) Long-term debt bears interest at the LIBOR rate plus 2.25%. The Company has interest rate swap agreements, with notional amounts of
$50 million expiring in each of October 2004 and October 2006, that convert variable rate interest payable on $100 million of long-term
borrowings under the revolving credit agreement to a fixed rate of 6.88%. Interest obligations are not included in the table above. See
Note 9 to the consolidated financial statements.
(3) Purchase obligations include agreements to purchase goods or services in the normal course of business that specify all significant
terms, including quantity and price provisions.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND FORWARD-
LOOKING STATEMENTS
This “Management’s Discussion and Analysis of Operations and Financial Condition” contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected, as they are subject
to various risks and uncertainties. These risks and uncertainties include, without limitation, the risks detailed in Item 1, “Business” under
the caption “Risk Factors,” and those described in other documents and reports filed from time to time with the Securities and Exchange
Commission, press releases and other communications. We do not undertake any obligation or plan to update these forward-looking
statements, even though our situation may change.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL INSTRUMENTS