Famous Footwear 2012 Annual Report Download - page 94

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* NON-GAAP FINANCIAL MEASURES
In this annual report, the company’s financial results are provided both in accordance with generally accepted accounting
principles (GAAP) and using certain non-GAAP financial measures. In particular, the company provides historic operating
earnings, net earnings (loss) and earnings (loss) per diluted share adjusted to exclude certain gains, charges and
recoveries, which are non-GAAP financial measures. These results are included as a complement to results provided
in accordance with GAAP because management believes these non-GAAP financial measures help identify underlying
trends in the company’s business and provide useful information to both management and investors by excluding certain
items that may not be indicative of the company’s core operating results. These measures should not be considered a
substitute for or superior to GAAP results.
SELECTED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
DILUTED EARNINGS PER SHARE 2012 2011 2010 2009 2008
GAAP earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.64 $ 0.56 $ 0.85 $ 0.22 $ (3.21)
Charges, other items
ASG acquisition and integration-related costs . . . . . . . 0.01 0. 1 1 0.02 - -
ASG cost of goods sold adjustment(1) . . . . . . . . . . . . - 0.05 - - -
Insurance recoveries, net . . . . . . . . . . . . . . . . . . . - - - - (0.1 5)
Expense and capital containment initiatives. . . . . . . . . - - - - 0.46
Headquarters consolidation. . . . . . . . . . . . . . . . . . - - - (0.03) 0.44
Impairment of goodwill and intangible assets . . . . . . . - - - - 2.87
IT initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 0.10 0. 1 4 0.06
Loss on early extinguishment of debt . . . . . . . . . . . . - 0.02 - - -
Organizational changes . . . . . . . . . . . . . . . . . . . . 0.03 - - 0.07 -
Portfolio realignment
Gain on sale of subsidiary . . . . . . . . . . . . . . . . . - (0.32) - - -
Brand exits and cost reductions . . . . . . . . . . . . . . 0.45 0.28 - - -
Total charges, other items . . . . . . . . . . . . . . 0.49 0.14 0.12 0.18 3.68
Adjusted earnings . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.13 $ 0.70 $ 0.97 $ 0.40 $ 0.47
(1) In accordance with GAAP, purchase accounting rules require the company to record inventory at fair value (i.e., expected selling price less
costs to sell) on the acquisition date. This results in lower than typical gross margins when the acquired inventory is sold. This adjustment
reflects the elimination of the unfavorable impact of lower gross margins for ASG product sold in the first half of 2011.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This document contains certain forward-looking statements and expectations regarding the company’s future performance
and the future performance of its brands. Such statements are subject to various risks and uncertainties that could
cause actual results to dier materially. These risks include (i) changing consumer demands, which may be influenced by
consumers’ disposable income, which in turn can be influenced by general economic conditions; (ii) intense competition
within the footwear industry; (iii) rapidly changing fashion trends and purchasing patterns; (iv) customer concentration
and increased consolidation in the retail industry; (v) political and economic conditions or other threats to the continued
and uninterrupted flow of inventory from China, where ASG has manufacturing facilities and both ASG and Brown Shoe
Company rely heavily on third-party manufacturing facilities for a significant amount of their inventory; (vi) the ability
to recruit and retain senior management and other key associates; (vii) the ability to attract, retain and maintain good
relationships with licensors and protect intellectual property rights; (viii) the ability to secure/exit leases on favorable
terms; (ix) the ability to maintain relationships with current suppliers; (x) compliance with applicable laws and standards
with respect to lead content in paint and other product safety issues; (xi) the ability to source product at a pace consistent
with increased demand for footwear; and (xii) the impact of rising prices in a potentially inflationary global environment.
The company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors,
including, without limitation, the information under the caption Risk Factors in Item 1A of the company’s Annual Report
on Form 10-K for the year ended February 2, 2013, which information is incorporated by reference herein and updated by
the company’s Quarterly Reports on Form 10-Q. The company does not undertake any obligation or plan to update these
forward-looking statements, even though its situation may change.