Famous Footwear 2011 Annual Report Download - page 56

54 2011 BROWN SHOE COMPANY, INC. FORM 10-K
4. COMPREHENSIVE INCOME
Comprehensive income 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 benefi ts adjustments.
The following table sets forth the reconciliation from net earnings to comprehensive income for the periods ended
January 28, 2011, January 29, 2010 and January 30, 2009:
($ thousands) 2011 2010 2009
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,390 $ 37,060 $ 10,443
Other comprehensive income (loss) (“OCI”), net of tax:
Foreign currency translation adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 2,150 3,437
Pension and other postretirement benefi ts adjustments,
net of tax of $1,555, $2,197 and $2,485 in 2011, 2010 and 2009, respectively . . . . . . . . . . 2,941 3,433 3,509
Unrealized gains (losses) on derivative fi nancial instruments,
net of tax of $139, $63 and $481 in 2011, 2010 and 2009, respectively . . . . . . . . . . . . . . 343 171 (1,146)
Net loss from derivatives reclassifi ed into earnings,
net of tax of $22, $124 and $82 in 2011, 2010 and 2009, respectively . . . . . . . . . . . . . . 44 233 161
Other comprehensive income, net of tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,535 5,987 5,961
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,925 43,047 16,404
Comprehensive (loss) income attributable to noncontrolling interests . . . . . . . . . . . . . . . . (160) (150) 946
Comprehensive income attributable to Brown Shoe Company, Inc. . . . . . . . . . . . . . . . . . . $ 28,085 $ 43,197 $ 15,458
The following table sets forth the balance in accumulated other comprehensive income for the Company at January 28, 2012,
January 29, 2011 and January 30, 2010:
($ thousands) 2011 2010 2009
Foreign currency translation gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,449 $ 6,281 $ 4,154
Unrealized gains (losses) on derivative fi nancial instruments, net of tax . . . . . . . . . . . . . . . 74 (313) (717)
Pension and other postretirement benefi ts, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . 3,114 173 (3,260)
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,637 $ 6,141 $ 177
See additional information related to derivative fi nancial instruments in Note 1, Note 13 and Note 14 to the consolidated
fi nancial statements and additional information related to pension and other postretirement benefi ts in Note 6 to the
consolidated fi nancial statements.
5. RESTRUCTURING AND OTHER SPECIAL CHARGES, NET
Acquisition and Integration Related Costs
On February 17, 2011, the Company entered into a Stock Purchase Agreement with ASG and ASG’s stockholders, pursuant
to which a subsidiary of the Company acquired all of the outstanding capital stock of ASG from the ASG stockholders on
that date. During 2011, the Company incurred acquisition and integration related costs totaling $6.5 million ($4.5 million
on an after-tax basis, or $0.11 per diluted share). Of the $6.5 million costs recorded during 2011, $4.0 million was recorded
in the Other segment and $2.5 million was refl ected within the Wholesale Operations segment. In 2011, $2.9 million of the
ASG acquisition and integration costs related to severance, for which there is a remaining reserve balance of $1.7 million at
January 28, 2012. During 2010, the Company incurred acquisition-related costs totaling $1.1 million ($0.7 million on an after-
tax basis, or $0.02 per diluted share) to e ect the acquisition of ASG. All of the costs incurred in 2010 were refl ected within
the Other segment. All of the expenses incurred in 2011 and 2010 were recorded as a component of restructuring and other
special charges, net. See Note 2 to the consolidated fi nancial statements for further information.
Portfolio Realignment
In 2011, portfolio realignment e orts began that were designed to make the Company somewhat smaller but stronger and
more profi table in the future. The fi rst phase of the portfolio realignment includes selling the AND 1 division (TBMC, which
was acquired with ASG); closing two U.S. distribution centers and a factory in China; exiting certain women’s specialty and
private label brands; exiting the children’s wholesale business; closing or relocating numerous underperforming or poorly
aligned retail stores and other infrastructure changes. These e orts began in 2011 and will continue in 2012.
In conjunction with the sale of TBMC, the Company recorded a gain of $20.6 million ($14.0 million on an after-tax basis,
or $0.32 per diluted share), which is refl ected in the consolidated statements of earnings as a component of discontinued
operations. The Company incurred costs related to these portfolio realignment activities of $19.2 million ($12.0 million on
an after-tax basis, or $0.28 per diluted share). These costs are refl ected on the consolidated statements of earnings as
$17.2 million in restructuring and other special charges, net and $2.0 million in costs of goods sold. Of the $17.2 million,
$10.5 million was recorded in the Wholesale Operations segment, $3.3 million was recorded in the Other segment, $2.8 million
was recorded in the Famous Footwear segment and $0.6 million was recorded in the Specialty Retail segment. Of the $2.0 million,
$1.6 million was recorded in the Wholesale Operations segment and $0.4 million was recorded in the Specialty Retail segment.
The Company believes the fi rst phase of the portfolio realignment will result in expense of approximately $31 to $34 million,
of which $19.2 million was recognized during 2011. The Company expects approximately half of the $31 to $34 million of
expense will relate to severance and other employee-related costs.