Famous Footwear 2013 Annual Report Download - page 39

2013 BROWN SHOE COMPANY, INC. FORM 10-K 37
reporting unit. We perform impairment tests during the fourth quarter of each fiscal year unless events indicate an interim
test is required. The goodwill impairment testing and other indefinite-lived intangible asset impairment reviews were
performed as of the first day of our fourth fiscal quarter and resulted in no impairment charges.
During 2012, we terminated the Etienne Aigner license agreement, due to a dispute with the licensor and recognized
an impairment charge of $5.8 million, to reduce the remaining unamortized value of the licensed trademark intangible
asset to zero.
Other intangible assets are amortized over their useful lives and are reviewed for impairment if and when impairment
indicators are present. See Note 9 to the consolidated financial statements for additional information related to the
impairment of goodwill and intangible assets.
Self-Insurance
We are self-insured and/or retain high deductibles for a significant portion of our workers’ compensation, employment
practices, health, disability, cyber risk, general liability, automobile and property programs, among others. We purchase
varying levels of insurance for losses in excess of our deductibles or self-insured retentions for these categories of loss.
At February 1, 2014 and February 2, 2013, self-insurance reserves were $10.9 million and $12.3 million, respectively.
We utilize (i) estimates from third-party actuaries and claims adjusters, (ii) statistical analyses of historical data for our
industry and our Company and (iii) our own estimates to determine required self-insurance reserves. Our reserves and
assumptions are reviewed, monitored and adjusted when warranted by changing circumstances. Actual experience may
vary from estimates and result in adjustments to our self-insurance liabilities.
Store Closing and Impairment Charges
We regularly analyze the results of all of our stores and assess the viability of underperforming stores to determine
whether events or circumstances exist that indicate the stores should be closed or whether the carrying amount of their
long-lived assets may not be recoverable. After allowing for an appropriate start-up period, unusual nonrecurring events
or favorable trends, we write down to fair value the fixed assets of stores indicated as impaired.
Litigation Contingencies
We are the defendant in several claims and lawsuits arising in the ordinary course of business. We do not believe any of
these ordinary- course-of-business proceedings will have a material adverse eect on our consolidated financial position
or results of operations. We accrue our best estimate of the cost of resolution of these claims. Legal defense costs of such
claims are recognized in the period in which we incur the costs. See Note 17 to the consolidated financial statements for a
further description of commitments and contingencies.
Environmental Matters
We are involved in environmental remediation and ongoing compliance activities at several sites. We are remediating,
under the oversight of Colorado authorities, the groundwater and indoor air at our Redfield site and residential
neighborhoods adjacent to and near the property, which have been aected by solvents previously used at the facility.
In addition, various federal and state authorities have identified us as a potentially responsible party for remediation at
certain landfills. While we currently do not operate manufacturing facilities in the United States, prior operations included
numerous manufacturing and other facilities for which we may have responsibility under various environmental laws to
address conditions that may be identified in the future. See Note 17 to the consolidated financial statements for a further
description of specific properties.
Environmental expenditures relating to an existing condition caused by past operations and that do not contribute to
current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or
remedial eorts are probable and the costs can be reasonably estimated and are evaluated independently of any future
claims recovery. Generally, the timing of these accruals coincides with completion of a feasibility study or our commitment
to a formal plan of action, and our estimates of cost are subject to change as new information becomes available. Costs
of future expenditures for environmental remediation obligations are discounted to their present value in those situations
requiring only continuing maintenance and monitoring based upon a schedule of fixed payments.
Business Combination Accounting
We allocate the purchase price of an acquired entity to the assets and liabilities acquired based upon their estimated fair
values at the business combination date. We also identify and estimate the fair values of intangible assets that should be
recognized as assets apart from goodwill. A single estimate of fair value results from a complex series of judgments about
future events and uncertainties and relies heavily on estimates and assumptions. We have historically relied in part upon
the use of reports from third-party valuation specialists to assist in the estimation of fair values for intangible assets other
than goodwill. The carrying values of acquired receivables and trade accounts payable have historically approximated
their fair values at the business combination date. With respect to other acquired assets and liabilities, we use all available
information to make our best estimates of their fair values at the business combination date.