Famous Footwear 2011 Annual Report Download - page 48

46 2011 BROWN SHOE COMPANY, INC. FORM 10-K
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Brown Shoe Company, Inc. (the “Company”), founded in 1878 and incorporated in 1913, is a global footwear retailer and
wholesaler. The Company’s shares are traded under the “BWS” symbol on the New York Stock Exchange.
The Company provides a broad o ering of licensed, 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 1,323 retail shoe stores in the United States, Canada,
China and Guam primarily under the Famous Footwear and Naturalizer names. In addition, through its Wholesale
Operations segment, the Company designs, sources and markets footwear to retail stores domestically and internationally,
including national chains, mass merchandisers, department stores, independent retailers, catalogs and online retailers.
In 2011, approximately 66% of the Company’s net sales were at retail compared to 70% in 2010 and 72% in 2009. See
Note 8 for additional information regarding the Company’s business segments.
The Company’s business is seasonal in nature due to consumer spending patterns with higher back-to-school and
Christmas and Easter holiday season sales. Traditionally, the third fi scal quarter accounts for a substantial portion of the
Company’s earnings for the year.
Consolidation
The consolidated fi nancial statements include the accounts of the Company and its wholly-owned and majority-owned
subsidiaries, after the elimination of intercompany accounts and transactions.
Noncontrolling Interests
Noncontrolling interests in the Company’s consolidated fi nancial statements result from the accounting for noncontrolling
interests in partially-owned consolidated subsidiaries or a liates. Noncontrolling interests represent partially-owned
subsidiaries’ or consolidated a liates’ earnings, losses and components of other comprehensive income (loss) that
are attributable to the noncontrolling parties’ equity interests. The Company consolidates B&H Footwear Company
Limited (“B&H Footwear”), a joint venture, into its consolidated fi nancial statements. Net (loss) earnings attributable to
noncontrolling interests represents the share of net (loss) earnings that is attributable to the equity that is owned by the
Company’s partners. Transactions between the Company and B&H Footwear have been eliminated in the consolidated
fi nancial statements. Prior to June 4, 2010, at which time the Company acquired the remaining 50% of the outstanding
stock of Edelman Shoe, Inc. (“Edelman Shoe”), the equity interests held by other parties in Edelman Shoe were accounted
for as a noncontrolling interest. Subsequent to June 4, 2010, Edelman Shoe became a wholly-owned subsidiary of the
Company. See Note 2 to the consolidated fi nancial statements for further information on Edelman Shoe.
Accounting Period
The Company’s fi scal year is the 52- or 53-week period ending the Saturday nearest to January 31. Fiscal years 2011, 2010
and 2009 ended on January 28, 2012, January 29, 2011, and January 30, 2010, respectively, and each included 52 weeks.
Basis of Presentation
Certain prior-period amounts on the consolidated fi nancial statements have been reclassifi ed to conform to current-period
presentation. These reclassifi cations did not a ect net earnings attributable to Brown Shoe Company, Inc.
Use of Estimates
The preparation of fi nancial statements in conformity with generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that a ect the amounts reported in the fi nancial statements and
accompanying notes. Actual results could di er from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be
cash equivalents.
Receivables
The Company evaluates the collectibility of selected accounts receivable on a case-by-case basis and makes adjustments to
the bad debt reserve for expected losses. The Company considers factors such as ability to pay, bankruptcy, credit ratings and
payment history. For all other accounts, the Company estimates reserves for bad debts based on experience and past-due
status of the accounts. If circumstances related to customers change, estimates of recoverability would be further adjusted.
The Company recognized a provision for doubtful accounts of $1.3 million in 2011, $0.5 million in 2010 and $0.7 million in 2009.
Certain additional reserves and allowances are carried as a reduction of gross receivables to refl ect co-op advertising and
other allowances to be granted to customers as well as anticipated reserves for products to be returned.