Famous Footwear 2012 Annual Report Download - page 72

70 2012 BROWN SHOE COMPANY, INC. FORM 10-K
As of February 2, 2013, the Company had forward contracts maturing at various dates through January 2014. The contract
amount represents the net amount of all purchase and sale contracts of a foreign currency.
Contract Amount
(U.S. $ equivalent in thousands) February 2, 2013 January 28, 2012
Financial Instruments
U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars) . . . . . . . . . . . . . . . . . $ 18,442 $ 19,002
Chinese yuan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,544 43,407
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,459 7,293
Japanese yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,665 1,365
New Taiwanese dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734 830
Great Britain pounds sterling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 2,947
Other currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729 1,107
$ 40,636 $ 75,951
The classification and fair values of derivative instruments designated as hedging instruments included within the
consolidated balance sheet as of February 2, 2013 and January 28, 2012 are as follows:
Asset Derivatives Liability Derivatives
($ in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Foreign exchange forwards contracts:
February 2, 2013 . . . . . . . . . . . . . . Prepaid expenses and other current assets $380 Other accrued expenses $373
January 28, 2012 . . . . . . . . . . . . . . Prepaid expenses and other current assets $839 Other accrued expenses $633
During 2012 and 2011, the eect of derivative instruments in cash flow hedging relationships on the consolidated statement
of earnings was as follows:
($ in thousands) Fiscal Year Ended 2012 Fiscal Year Ended 2011
Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss)
Foreign exchange forward contracts: Recognized in Reclassified from Recognized in Reclassified
Income Statement Classification OCI on Accumulated OCI OCI on from Accumulated
Gains (Losses) - Realized Derivatives into Earnings Derivatives OCI into Earnings
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6 $ (27) $ (99) $ (145)
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . (546) (325) 335 (90)
Selling and administrative expenses . . . . . . . . . . . . . . . (9) (16) 232 169
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . (7) – 14 –
All of the gains and losses currently included within accumulated other comprehensive income associated with the
Company’s foreign exchange forward contracts are expected to be reclassified into net earnings within the next 12 months.
Additional information related to the Company’s derivative financial instruments are disclosed within Note 1 and Note 13 to
the consolidated financial statements.
13. FAIR VALUE MEASUREMENTS
Fair Value Hierarchy
Fair value measurement disclosures specify a hierarchy of valuation techniques based upon whether the inputs to those
valuation techniques reflect assumptions other market participants would use based upon market data obtained from
independent sources (“observable inputs”) or reflect the Company’s own assumptions of market participant valuation
(“unobservable inputs”). In accordance with the fair value guidance, the hierarchy is broken down into three levels based
on the reliability of the inputs as follows:
• Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical,
unrestricted assets or liabilities;
• Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets
and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or
indirectly; and
• Level 3 – Prices or valuations that require inputs that are both signicant to the fair value measurement and unobservable.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its
assessment of fair value. Classification of the financial or non-financial asset or liability within the hierarchy is determined
based on the lowest level input 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 all financial and
non-financial assets and liabilities measured at fair value.