Famous Footwear 2010 Annual Report Download

Download and view the complete annual report

Please find the complete 2010 Famous Footwear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 139

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139

Table of contents

  • Page 1

  • Page 2
    ... number 1-2191 BROWN SHOE COMPANY, INC. (Exact name of registrant as specified in its charter) New York (State or other jurisdiction of incorporation or organization) 8300 Maryland Avenue 43-0197190 (IRS Employer Identification Number) St. Louis, Missouri (Address of principal executive offices...

  • Page 3
    The aggregate market value of the stock held by non-affiliates of the registrant as of July 31, 2009, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $332.2 million. As of March 19, 2010, 43,420,055 common shares were outstanding. Documents ...

  • Page 4
    ... Market Risk Financial Statements and Supplementary Data Management's Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Balance...

  • Page 5
    ..., value-priced footwear; located in shopping centers, outlet malls and regional malls in the United States and Yuam; primarily includes stores operated under the Famous Footwear and Factory Brand Shoes names 1,129 1,138 1,074 Specialty Retail Stores selling women's footwear, primarily Naturalizer...

  • Page 6
    ..., Wisconsin, and Lebanon, Tennessee, we opened a new west coast distribution center in Bakersfield, California, during the second quarter of 2009 for our retail operations. Famous Footwear's in-store point-of-sale systems provide detailed sales transaction data to the corporate offices in St. Louis...

  • Page 7
    ... Spiga names. At the end of 2009, we operated 16 Brown Shoe Closet retail stores located in United States outlet malls, averaging 2,200 square feet. These multi-branded outlet stores carry Brown Shoe brands, including Etienne Aigner, Franco Sarto, Original Dr. Scholl's, Carlos by Carlos Santana, and...

  • Page 8
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K WHOLESALE OPERATIONS Our Wholesale Operations segment designs, sources and markets branded and nonbranded casual, dress and athletic footwear for women, men and children at a variety of price points. Certain of our branded footwear products are developed ...

  • Page 9
    ... $79 for boots. We have a long-term license agreement, which is renewable through 2014 for the United States, Canada and Latin America, to market the Dr. Scholl's brand of affordable casual, athletic, work and dress shoes for women, men and children. Franco Sarto : The Franco Sarto brand has a loyal...

  • Page 10
    ... true fashion brand. This brand sells at suggested retail price points from $148 for shoes to $498 for boots. The brand holds the No. 7 market share position in the bridge/designer zone within the women's fashion footwear category for U.S. department stores, national chains, shoe chains and athletic...

  • Page 11
    BROWN SHOE COMPANY, INC. Brands and Licensed Products The following is a listing of our brands and licensed products: 2009 FORM 10-K Women's AirStep Basswood Carlos by Carlos Santana (1) Connie Dr. Scholl's(2) EA by Etienne Aigner (3) Etienne Aigner (3) Eurosole Eurostep Men's and Athletic ...

  • Page 12
    (7) (8) RebaWear Yretta Enterprises, Inc. LLC (15) (16) Marvel Entertainment LLC Hasbro, Inc. All other brands are owned by and, in most cases, are registered trademarks of Brown Shoe Company, Inc. or its consolidated subsidiaries. 9

  • Page 13
    ... teams create collections of footwear and work closely with our product development and sourcing offices to translate our designs into new footwear styles. AVAILABLE INFORMATION Our internet address is www.brownshoe.com. Our internet address is included in this annual report on Form 10-K as an...

  • Page 14
    ... 2003. Series of management positions with Stride Rite Corporation from April 1995 to September 2001, most recently as President and Chief Operating Officer. Richard M. Ausick, Division President - Famous Footwear since January 2010. Division President, Brown Shoe Wholesale from July 2006 to...

  • Page 15
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K ITEM 1A RISK FACTORS Certain statements in this Form 10-K, as well as other statements made by us from time to time, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ ...

  • Page 16
    ... be unable to sell the products we have ordered in advance from manufacturers or that we have in our inventory. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair the brand image and have...

  • Page 17
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K China We rely heavily on manufacturing facilities located in China. Historically, the trade relationship between the United States and China has not had a material adverse effect on our business, financial condition or results of operations. There have been,...

  • Page 18
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K To support our business strategy while streamlining and transforming day-to-day operations for our integrated business model, we are converting select existing internally developed and certain other third-party applications to an integrated enterprise ...

  • Page 19
    ... results for the full year. Any shortfall in sales or earnings from the levels expected by investors or securities analysts could cause a decrease in the trading price of our stock. We could be adversely affected by changes in tax laws, policies and treaties. Our financial results are significantly...

  • Page 20
    ...conducted throughout the United States, Canada, China and Yuam and involve the operation of 1,411 shoe stores, including 131 in Canada and 14 in China. All store locations are leased, with over one-half having renewal options. Famous Footwear operates a leased 750,000 square-foot distribution center...

  • Page 21
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K PART II MARKET FOR REYISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange (the "NYSE") and the Chicago Stock Exchange under the trading symbol "BWS." As of ...

  • Page 22
    ... Rite Corporation are included within the graph through the date of acquisition. Our fiscal year ends on the Saturday nearest to each January 31; accordingly, share prices are as of the last business day in each fiscal year. The graph assumes that the value of the investment in our common stock and...

  • Page 23
    .... (1) Return on average invested capital is calculated by dividing operating earnings (loss) for the period, adjusted for income taxes at the applicable effective rate, by the average of each month-end invested capital balance during the year. Invested capital is defined as Brown Shoe Company, Inc...

  • Page 24
    20

  • Page 25
    ..., sharing consumer insights across our businesses and testing new and innovative products. Our major brands, both owned and licensed, include Naturalizer, Dr. Scholl's, Franco Sarto, Sam Edelman, LifeStride, Buster Brown, Etienne Aigner, Carlos by Carlos Santana, Via Spiga, Fergie/Fergalicious by...

  • Page 26
    ...an increase in net sales of our Famous Footwear segment of $43.6 million. · Consolidated operating earnings were $31.5 million in 2009, compared to a consolidated operating loss of $173.3 million last year. · Consolidated net earnings attributable to Brown Shoe Company, Inc. were $9.5 million, or...

  • Page 27
    ... statements for additional information regarding our business segments and financial information by geographic area. · Our Famous Footwear segment's net sales increased 3.3%, to $1.364 billion in 2009, compared to $1.320 billion last year due to an increase in net sales from net closed stores...

  • Page 28
    ... consolidated financial statements for additional information related to these charges and recoveries. Outlook for 2010 As we look to 2010, we will continue our focus on improving profits and returns, while driving sales from our core brands (e.g., Famous Footwear, Naturalizer, Dr. Scholl's). We...

  • Page 29
    ...net sales at Shoes.com and a decline in the Canadian dollar exchange rate, partially offset by an increase in same-store sales of 0.8% in our retail stores. Our Famous Footwear segment's net sales increased by $43.6 million, reflecting an increase in net sales from net closed stores and a same-store...

  • Page 30
    ...Shoe, Inc. and new brand launches, partially offset by a decline in marketing expenses and savings from our expense and capital containment initiatives implemented at the beginning of 2009. As a percent of net sales, selling and administrative expenses increased to 38.4% in 2009 from 37.4% last year...

  • Page 31
    ... 16 and Note 17 to the consolidated financial statements for additional information related to Edelman Shoe. Operating Earnings (Loss) We reported operating earnings of $31.5 million in 2009 compared to an operating loss of $173.3 million last year due primarily to the nonrecurrence of the charge...

  • Page 32
    ... income for state tax incentives related to our headquarters consolidation initiatives during 2008, with no corresponding income during 2007. See Note 6 to the consolidated financial statements for additional information regarding our tax rates. Net Earnings (Loss) Attributable to Brown Shoe Company...

  • Page 33
    ... with strong sales in our boots and toning products categories. Sales per square foot was relatively flat compared to last year. We continue to focus on new ways of connecting with and engaging our customers to maintain a strong brand preference for Famous Footwear, including our customer loyalty...

  • Page 34
    ...in 2007. The decrease was due to a decline in gross profit rate, primarily as a result of increased promotional activity and higher markdowns as we sought to manage inventory and maintain market share during the year. As a percent of net sales, our gross profit decreased to 43.3% in 2008 compared to...

  • Page 35
    ... softened demand for many of our brands as our retail partners sought to manage their inventories and open to buy more tightly. We experienced sales declines from most of our major brands, including our Women's Specialty, Dr. Scholl's, Naturalizer, LifeStride, Nickels Soft and Via Spiga divisions...

  • Page 36
    ... statement of earnings. See Note 16 and Note 17 to the consolidated financial statements for additional information related to Edelman Shoe. Operating Earnings (Loss) Wholesale Operations reported operating earnings of $41.1 million in 2009 compared to an operating loss of $108.1 million last year...

  • Page 37
    ... Sales change from new and closed stores, net Impact of changes in Canadian exchange rate on sales Sales change of e-commerce subsidiary (on a 52-week basis) Sales per square foot, excluding e-commerce (on a 52-week basis) Square footage (thousand sq. ft.) Stores opened Stores closed Ending stores...

  • Page 38
    ... last year as a result of the deterioration of general economic conditions, industry trends and the resulting decline in our share price and market capitalization, with no corresponding charges in 2009 or 2007. See Note 1 and Note 9 to the consolidated financial statements for additional information...

  • Page 39
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K · Headquarters consolidation - Last year, we incurred charges of $29.8 million related to the relocation and transition of our Famous Footwear division headquarters. During 2009, we recorded income of $1.9 million as a result of an expanded sublease ...

  • Page 40
    ... borrowings under our revolving credit agreement at the end of 2009 and our increase in total Brown Shoe Company, Inc. shareholders' equity as a result of our net earnings attributable to Brown Shoe Company, Inc. in 2009. Credit Agreement On January 21, 2009, Brown Shoe Company, Inc. and certain of...

  • Page 41
    ... of receipts and sales; and · An increase in accrued expenses and other liabilities last year due to the establishment of reserves related to our expense and capital containment plan and the relocation of our Famous Footwear division headquarters from Madison, Wisconsin, to St. Louis, Missouri...

  • Page 42
    ... of financial statements. Our most significant policies requiring the use of estimates and judgments are listed below. Revenue Recognition Retail sales, recognized at the point of sale, are net of returns and exclude sales tax. Wholesale sales and sales through our internet sites are recorded...

  • Page 43
    ... income. As deemed appropriate, valuation reserves are recorded to adjust the recorded value of these carryforwards to the expected realizable value. We are audited periodically by domestic and foreign tax authorities and tax assessments may arise several years after tax returns have been filed. Tax...

  • Page 44
    ... require all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values. The fair value of stock options is calculated by using the Black-Scholes option pricing formula that requires estimates...

  • Page 45
    ... plan to update these forward-looking statements, even though our situation may change. ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FOREIGN CURRENCY EXCHANGE RATES The market risk inherent in our financial instruments and positions represents the potential loss arising from...

  • Page 46
    ... officer have concluded that the Company's internal control over financial reporting was effective as of January 30, 2010. The effectiveness of our internal control over financial reporting as of January 30, 2010, has been audited by Ernst & Young LLP, an independent registered public accounting...

  • Page 47
    ... States), the consolidated balance sheets of Brown Shoe Company, Inc. as of January 30, 2010, and January 31, 2009, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended January 30, 2010, and our report dated March...

  • Page 48
    ... the employers' accounting for defined benefit pension and other postretirement plans. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Brown Shoe Company, Inc.'s internal control over financial reporting as of January 30, 2010...

  • Page 49
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K Consolidated Balance Sheets January 30, ($ thousands, except number of shares and per share amounts) ASSETS Current assets Cash and cash equivalents Receivables, net of allowances of $14,311 in 2009 and $12,878 in 2008 Inventories, net of adjustment to last...

  • Page 50
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K Consolidated Statements of Earnings ($ thousands, except per share amounts) Net sales Cost of goods sold Yross profit Selling and administrative expenses Restructuring and other special charges, net Impairment of goodwill and intangible assets Equity in net...

  • Page 51
    ... options exercised Tax (deficiency) benefit related to share-based plans Debt issuance costs Acquisition of treasury stock Net cash (used for) provided by financing activities Effect of exchange rate changes on cash Increase in cash and cash equivalents Cash and cash equivalents at beginning of year...

  • Page 52
    ..., except number of shares and per share amounts) BALANCE FEBRUARY 3, 2007 Net earnings (loss) Foreign currency translation adjustment Unrealized losses on derivative financial Common Stock Shares Dollars Accumulated Other Comprehensive Income (Loss) Retained Earnings Brown Shoe Company, Inc...

  • Page 53
    ...437 instruments, net of tax benefit of $399 Pension and other postretirement benefits (985) (985) (985) adjustments, net of tax provision of $2,485 Comprehensive income Dividends ($0.28 per share) Stock issued under employee and director benefit and restricted stock plans Tax deficiency related to...

  • Page 54
    ... branded and private-label casual, dress and athletic footwear products to women, men and children. Footwear is sold at a variety of price points through multiple distribution channels both domestically and internationally. The Company currently operates 1,411 retail shoe stores in the United States...

  • Page 55
    ... reserves for products to be returned. Inventories All inventories are valued at the lower of cost or market, with 93% of consolidated inventories using the last-in, first-out ("LIFO") method. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on...

  • Page 56
    ... consolidated balance sheets. The Company recognized $0.5 million, $0.4 million and $0.4 million of gift card breakage in 2009, 2008 and 2007, respectively. Loyalty Program The Company maintains a customer loyalty program ("Rewards") for Famous Footwear stores in which customers earn points towards...

  • Page 57
    ...tax positions within the income tax (provision) benefit balance on the consolidated statements of earnings. Operating Leases The Company leases its store premises and distribution center premises under operating leases. Many leases entered into by the Company include options under which the Company...

  • Page 58
    ... statements of earnings amounts are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive income (loss) in total Brown Shoe...

  • Page 59
    ... statements for the calculation of basic and diluted earnings (loss) per common share attributable to Brown Shoe Company, Inc. shareholders. In April 2009, the FASB issued a pronouncement that requires, on an interim basis, disclosures about the fair value of financial instruments for public...

  • Page 60
    ...years ending after December 15, 2009, with early application permitted. The adoption did not have a material impact on the Company's consolidated financial statements although changes in related disclosures were required. See Note 5 to the consolidated financial statements for additional information...

  • Page 61
    ... to Brown Shoe Company, Inc. shareholders. 3. COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes changes in equity related to foreign currency translation adjustments, unrealized gains or losses from derivatives used for hedging activities and pension and other postretirement benefits...

  • Page 62
    ... and other special charges, net. Headquarters Consolidation During 2008, the Company relocated its Famous Footwear division headquarters from Madison, Wisconsin, to St. Louis, Missouri, to foster collaboration, increase the Company's speed to market and strengthen its connection with consumers...

  • Page 63
    ... to date, respectively. Inventory markdowns and the write-off of assets are noncash items. 5. RETIREMENT AND OTHER BENEFIT PLANS The Company sponsors pension plans in both the United States and Canada. The Company's domestic pension plans cover substantially all United States employees. Under...

  • Page 64
    ... Used to Determine Benefit Obligations, End of Year Discount rate Rate of compensation increase 2009 2008 2009 2008 6.00% 4.25% 6.50% 4.25% 6.00% N/A 6.50% N/A Plan Assets Pension assets are managed in accordance with the prudent investor standards of Employee Retirement Income Security...

  • Page 65
    ...put and call options (traded on security exchanges) are classified within Level 1 of the fair value hierarchy because the fair values are based on unadjusted quoted market prices in active markets with sufficient volume and frequency. Other select interest rate swap agreements and all corporate debt...

  • Page 66

  • Page 67
    ... amortization of the January 30, 2010 amounts as components of net periodic benefit cost (income) for the year ended January 29, 2011, are as follows: Pension Benefits ($ thousands) 2009 Components of accumulated other comprehensive (income) loss, net of tax: Net actuarial loss (gain) $ 3,967...

  • Page 68
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K Pension Benefits Weighted-Average Assumptions Used to Determine Net Cost Discount rate Rate of compensation increase Expected return on plan assets 2009 Other Postretirement Benefits 6.50% 4.25% 8.50% 2008 6.00% 4.25% 2007 6.00% 4.00% 2009 8.75% 9.00%...

  • Page 69
    ... financial statements and the amounts calculated at the federal statutory income tax rate of 35% were as follows: ($ thousands) Income taxes at statutory rate State income taxes, net of federal tax benefit State income tax credits, net of federal tax expense Tax impact of nondeductible stock option...

  • Page 70
    ...January 30, 2010, additional deferred taxes of approximately $32.3 million would have been provided. Uncertain Tax Positions FASB ASC 740, Income Taxes, establishes a single model to address accounting for uncertain tax positions. The standard clarifies the accounting for income taxes by prescribing...

  • Page 71
    ...numerous states for which various tax years are subject to examination. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months. 7. BUSINESS SEGMENT INFORMATION The Company's reportable segments include Famous Footwear, Wholesale...

  • Page 72
    ...consolidated financial statements for additional information related to Edelman Shoe. Following is a reconciliation of operating earnings (loss) to earnings (loss) before income taxes: ($ thousands) Operating earnings (loss) Interest expense Interest income Earnings (loss) before income taxes 2009...

  • Page 73
    66

  • Page 74
    ... to the Company's Earnings Enhancement Plan. For geographic purposes, the domestic operations include the wholesale distribution of licensed, branded and private-label footwear to a variety of retail customers and nationwide operation of the Company's retail chains, including Famous Footwear and...

  • Page 75
    ... conditions and industry trends, and the resulting decline in the market price of the Company's common stock at the end of 2008, the Company performed an impairment test as of January 31, 2009 and determined that the fair values, estimated using discounted cash flow analyses and reconciled to its...

  • Page 76
    ... of Bennett. The goodwill impaired for the Company's Specialty Retail and Famous Footwear segments were primarily related to goodwill associated with the acquisition of Shoes.com and goodwill associated with the acquisition of retail stores, respectively. The non-cash goodwill and intangible...

  • Page 77
    ... store leases are subject to renewal options for varying periods. The office and distribution centers have renewal options of five to 20 years. In addition to minimum rental payments, certain of the retail store leases require contingent payments based on sales levels. A majority of the Company...

  • Page 78
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K The Company's Wholesale Operations segment sells to national chains, mass merchandisers and department stores primarily in the United States, Canada and China. Receivables arising from these sales are not collateralized; however, a portion is covered by ...

  • Page 79
    ... that is significant to the fair value measurement. Measurement of Fair Value The Company measures fair value as an exit price, the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date, using the procedures described below for...

  • Page 80
    ... 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...

  • Page 81
    ... Options Stock options are granted to employees at exercise prices equal to the quoted market price of the Company's stock at the date of grant. Stock options generally vest over four years and have a term of ten years. Compensation cost for all stock options is recognized over the requisite service...

  • Page 82
    ..., respectively. Intrinsic value for stock options is calculated based on the exercise price of the underlying awards as compared to the quoted price of the Company's common stock as of the reporting date. The following table summarizes stock option activity for 2009 under the current and prior plans...

  • Page 83
    ... upon the fair value of the awards on the date of grant and the anticipated number of shares to be awarded on a straight-line basis over the three-year service period. The fair value of the stock performance awards is the quoted market price for the Company's common stock on the date of grant. The...

  • Page 84
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K The following table summarizes stock performance activity for the year ended January 30, 2010: Number of Nonvested Stock Performance Awards at Target Level Number of Nonvested Stock Performance Awards at Maximum Level WeightedAverage Yrant Date Fair ...

  • Page 85
    ... consolidated financial statements. Accordingly, all intercompany sales activity is eliminated. OgilvyOne LLC Prior to 2008, the Company used OgilvyOne LLC ("Ogilvy") to provide certain marketing and consulting services. A member of the Company's Board of Directors, Carla C. Hendra, is an officer of...

  • Page 86
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K Other 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 ...

  • Page 87
    ...840,643) $ (840,643) CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE FISCAL YEAR ENDED JANUARY 30, 2010 ($ thousands) Net sales Cost of goods sold Yross profit Selling and administrative expenses Restructuring and other special charges, net Equity in (earnings) loss of subsidiaries Operating...

  • Page 88
    ...Borrowings under revolving credit agreement Repayments under revolving credit agreement Proceeds from stock options exercised Tax deficiency related to share-based plans Dividends paid Intercompany financing Net cash (used for) provided by financing activities Effect of exchange rate changes on cash...

  • Page 89
    ... liabilities Borrowings under revolving credit agreement Trade accounts payable Accrued expenses Total current liabilities Other liabilities Long-term debt Other liabilities Intercompany payable (receivable) Total other liabilities Equity Brown Shoe Company, Inc. shareholders' equity Noncontrolling...

  • Page 90
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE FISCAL YEAR ENDED JANUARY 31, 2009 NonYuarantors $ 285,138 238,898 46,240 18,320 3,835 - 216 - 23,869 (98) 1,051 924 25,746 (1,014) $ 24,732 ($ thousands) Net sales Cost of goods sold Yross profit ...

  • Page 91
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE FISCAL YEAR ENDED FEBRUARY 2, 2008 NonYuarantors $ 368,405 297,144 71,261 38,379 - 439 - 32,443 - 1,532 1,758 35,733 (1,317) $ 34,416 (436) ($ thousands) Net sales Cost of goods sold Yross profit Selling...

  • Page 92
    ... changes and · $2.3 million of charges ($1.4 million on an after-tax basis) related to the Company's information technology initiatives, partially offset by · $1.9 million of income ($1.1 million on an after-tax basis) related to the relocation and transition of the Company's Famous Footwear...

  • Page 93
    ...Expenses Col. C Charged to Other AccountsDescribe Col. D Col. E Balance at End of Period Deductions Describe YEAR ENDED JANUARY 30, 2010 Deducted from assets or accounts: Doubtful accounts and allowances Inventory valuation allowances Deferred tax asset valuation allowance $12,878 15,027 6,723...

  • Page 94
    ...registered public accounting firm, as stated in their report, which can also be found in Item 8 of this report. Based on the evaluation of internal control over financial reporting, the Chief Executive Officer and Chief Financial Officer have concluded that there have been no changes in the Company...

  • Page 95
    ... under the caption Stock Ownership by Directors, Executive Officers and 5% Shareholders in the Proxy Statement for the Annual Meeting of Shareholders to be held May 27, 2010, which information is incorporated herein by reference. ITEM 12 Equity Compensation Plan Information The following table...

  • Page 96
    ...Registered Public Accountants in the Proxy Statement for the Annual Meeting of Shareholders to be held May 27, 2010, which information is incorporated herein by reference. PART IV ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (1) and (2) The list of financial statements and Financial Statement...

  • Page 97

  • Page 98
    .... Form of Non-Employee Director Restricted Stock Unit Agreement between the Company and each of its Non-Employee Directors (for grants prior to 2008), incorporated herein by reference to Exhibit 10(u) to the Company's Form 10-K dated January 29, 2005 and filed April 1, 2005. Brown Shoe Company, Inc...

  • Page 99
    BROWN SHOE COMPANY, INC. 2009 FORM 10-K 21 23 24 31.1 31.2 32.1 Subsidiaries of the registrant. Consent of Registered Public Accounting Firm. Power of attorney (contained on signature page). Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002...

  • Page 100
    ...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. By: /s/ Mark E. Hood Mark E. Hood Senior Vice President and Chief Financial Officer Date: March 31, 2010 Know all men...

  • Page 101
    Hal J. Upbin /s/ Harold B. Wright Harold B. Wright March 15, 2010 Director 92

  • Page 102

  • Page 103

  • Page 104
    ... stock's market value at fiscal quarterend on or following termination of the director's service, either in a lump sum or over a five-year or ten-year period, at the director's election. The plan also provides for earlier payment of a participating director's account based on demonstrated financial...

  • Page 105

  • Page 106

  • Page 107
    ... e , with such changes as may be made by the Company in its sole discretion in order to comply with and stay current with applicable laws and regulations. Unless Employee executes such release and returns it to the Company within 45 days of his Termination Date, all benefits except under Sections...

  • Page 108
    ...be a specified employee within the meaning of Code Section 409e, for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent...

  • Page 109

  • Page 110

  • Page 111
    ... Date") by and between Mark D. Lardie ("Employee") and Brown Shoe Company, Inc., a New York corporation ("Brown Shoe" and, together with its subsidiaries, the "Company"). WHEREAS, Brown Shoe is engaged, directly and indirectly through its subsidiaries, in the sourcing and retail and wholesale sale...

  • Page 112
    ... the sum of (A) Employee's base annual salary at the highest rate in effect at any time during the twelve (12) months immediately preceding the Termination Date, and (B) Employee's targeted bonus for the current year, and (ii) Employee's targeted bonus payment for the year of termination prorated to...

  • Page 113
    ...-vested option to purchase Brown Shoe stock held by Employee shall vest and be exercisable as of the Termination Date. (f) For purposes of determining Employee's benefit under the Company's Supplemental Employment Retirement Plan, an additional two (2) years of Credited Service shall be credited to...

  • Page 114
    ...with such changes as may be made by the Company in its sole discretion in order to comply with and stay current with applicable laws and regulations. Unless Employee executes such release and returns it to the Company within forty-five (45) days of his termination of employment, all benefits except...

  • Page 115
    ...positions Employee has had with Brown Shoe and/or any Relevant Business Unit(s), the national and international nature of both the Company's collective business and competition in the footwear industry, and the legitimate interests of the Company in protecting its confidential, proprietary and trade...

  • Page 116
    ... prospective suppliers and the nature and type of products or services rendered to such customers (or proposed to be rendered to prospective customers); (g) Brown Shoe's and/or any Relevant Business Unit's relations with its employees (including, without limitation, salaries, job classifications and...

  • Page 117
    Brown Shoe Company, Inc. 8300 Maryland Avenue St. Louis, Missouri 63105 Attention: General Counsel If to Employee: Mark D. Lardie _____ _____ Any party may change the address to which notices are to be addressed by giving the other party written notice in the manner herein set forth. 12.3 ...

  • Page 118
    ... Agreement as of the day and year first above written. Brown Shoe Company, Inc. Employee By: Name: Title: Date: /s/ Douglas Koch Douglas W. Koch Senior Vice President and Chief Talent Officer 3/14/09 /s/ Mark D. Lardie Mark D. Lardie Senior Vice President and GMM, Famous Footwear Date:3/13/09

  • Page 119

  • Page 120

  • Page 121
    ... A , with such changes as may be made by the Company in its sole discretion in order to comply with and stay current with applicable laws and regulations. Unless Employee executes such release and returns it to the Company within 45 days of his Termination Date, all benefits except under Sections...

  • Page 122
    ... be a specified employee within the meaning of Code Section 409A, for purposes of any payment on termination of employment hereunder, payment(s) shall be made or begin, as applicable, on the first payroll date which is more than six months following the date of separation from service, to the extent...

  • Page 123

  • Page 124

  • Page 125
    ...Brown Shoe Company of Canada Ltd. Brown Shoe International Corp. Brown Shoe International Sales and Licensing S.r.l. Brown Shoe International Sales and Licensing Limited Brown Shoe International (Macau) Company Limited Brown Shoe Investment Company, Inc. Brown Shoe Service Company Limited Brown Shoe...

  • Page 126
    ...) Brown Group Retail, Inc. does business under the following names: Brown Shoe Closet Factory Brand Shoes Famous Footwear Naturalizer Naturalizer Outlet Supermarket of Shoes Via Spiga Brown Shoe Company of Canada Ltd does business under the following names: F. X. LaSalle Naturalizer Naturalizer...

  • Page 127

  • Page 128

  • Page 129
    ... internal control over financial reporting of Brown Shoe Company, Inc., included in this dnnual Report (Form 10-K) for the year ended January 30, 2010. Registration Form Number Form S-8 Form S-8 Form S-8 Statement Number 333-83717 Description Incentive and Stock Compensation Plan of 1999 Brown...

  • Page 130

  • Page 131

  • Page 132
    ..., whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) /s/ Ronald A. Fromm Ronald A. Fromm Chairman of the Board of Directors and Chief Executive Officer Brown Shoe Company, Inc. March 31...

  • Page 133

  • Page 134

  • Page 135
    ... information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b) /s/ Mark E. Hood Mark E. Hood Senior Vice President and Chief Financial Officer Brown Shoe Company...

  • Page 136

  • Page 137

  • Page 138
    ...Act of 2002 In connection with the Annual Report of Brown Shoe Company, Inc. (the "Registrant") on Form 10-K for the year ended January 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Ronald A. Fromm, Chairman of the Board of Directors and Chief...

  • Page 139