Famous Footwear 2011 Annual Report Download - page 57

2011 BROWN SHOE COMPANY, INC. FORM 10-K 55
The following is a summary of the charges and settlements by category of costs:
Markdowns
and Royalty
($ millions) Employee Shortfalls Facility Other Total
Original charges and reserve balance . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8.9 $ 6.1 $ 1.4 $ 2.8 $ 19.2
Amounts settled in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.1) (4.5) (0.1) (1.5) (9.2)
Reserve balance at January 28, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.8 $ 1.6 $ 1.3 $ 1.3 $ 10.0
Information Technology Initiatives
During 2008, the Company began implementation of an integrated enterprise resource planning (“ERP”) system provided
by third-party vendors. The ERP system replaced certain existing internally developed and certain other third-party
applications. Although the Company went live on the wholesale portion of its new ERP system in the fourth quarter of
2010, system transition e orts and alignment of existing business processes continued into 2011.
During 2010, the Company incurred expenses of $6.8 million ($4.6 million on an after-tax basis, or $0.10 per diluted share)
related to these initiatives. Of the $6.8 million in expenses recorded during 2010, $6.1 million was recorded in the Other
segment, and the remaining expense was recorded in the Wholesale Operations segment. During 2009, the Company
incurred expenses of $9.2 million ($5.8 million on an after-tax basis, or $0.14 per diluted share) related to these initiatives.
Of the $9.2 million in expenses recorded during 2009, $8.9 million was recorded in the Other segment, and the remaining
expense was recorded in the Wholesale Operations segment. All expenses incurred were recorded as a component of
restructuring and other special charges, net.
Organizational Changes
The Company made a series of changes within its leadership team in 2009 after two executives announced plans to
retire in 2010. During 2009, the Company incurred charges of $4.6 million ($2.8 million on an after-tax basis, or $0.07 per
diluted share) related to their retirement. All of these costs were refl ected within the Other segment as a component of
restructuring 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.
During 2009, the Company recorded income of $1.9 million ($1.1 million on an after-tax basis, or $0.03 per diluted share)
as a result of an expanded sublease arrangement. The Company incurred no additional charges or income related to this
initiative during 2011 or 2010.
The following is a summary of the charges and settlements by category of costs:
Employee Employee Employee
($ millions) Severance Relocation Recruiting Facility Other Total
Original charges and reserve balance . . . . . . . . . . . . . . . $ 6.6 $ 8.3 $ 4.6 $ 9.2 $ 1.1 $ 29.8
Amounts settled in 2008 . . . . . . . . . . . . . . . . . . . . . . (4.7) (6.2) (4.3) (3.6) (1.0) (19.8)
Reserve reduction in 2009. . . . . . . . . . . . . . . . . . . . . . – – – (1.9) – (1.9)
Amounts settled in 2009 . . . . . . . . . . . . . . . . . . . . . . (1.9) (1.7) (0.2) (1.9) (0.1) (5.8)
Reserve balance at January 30, 2010. . . . . . . . . . . . . . . . $ – $ 0.4 $ 0.1 $ 1.8 $ – $ 2.3
Amounts settled in 2010 . . . . . . . . . . . . . . . . . . . . . . . – (0.4) (0.1) (1.4) – (1.9)
Reserve balance at January 29, 2011 . . . . . . . . . . . . . . . . $ – $ – $ – $ 0.4 $ – $ 0.4
Amounts settled in 2011 . . . . . . . . . . . . . . . . . . . . . . . – – – (0.4) – (0.4)
Reserve balance at January 28, 2012 . . . . . . . . . . . . . . . . $ – $ – $ – $ – $ – $ –
Expense and Capital Containment Initiatives
During 2008, the Company announced expense and capital containment initiatives in an e ort to proactively position itself
for continued challenges in the retail environment. These initiatives included a voluntary separation program, changes in
compensation structure, further rationalization of operating expenses and the closing of certain functions at the Company’s
Fredericktown, Missouri distribution center. The Company incurred no charges during 2011, 2010 or 2009.
The following is a summary of the charges and settlements by category of costs:
Employee
($ millions) Severance Facility Other Total
Original charges and reserve balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24.7 $ 6.0 $ 0.2 $ 30.9
Amounts settled in 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.3) (2.7) – (8.0)
Amounts settled in 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15.3) (2.1) (0.2) (17.6)
Reserve balance at January 30, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4.1 $ 1.2 $ – $ 5.3
Amounts settled in 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.3) (1.2) – (4.5)
Reserve balance at January 29, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.8 $ – $ – $ 0.8
Amounts settled in 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.8) – – (0.8)
Reserve balance at January 28, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ – $ – $ – $ –