Famous Footwear 2013 Annual Report Download - page 56

54 2013 BROWN SHOE COMPANY, INC. FORM 10-K
Vera Wang
During the first quarter of 2013, the Company communicated its intention not to renew the Vera Wang license agreement.
The results of Vera Wang were previously included in the Wholesale Operations segment. Discontinued operations
include net sales of $5.7 million, $14.8 million, and $21.8 million in 2013, 2012, and 2011, respectively. Discontinued
operations include losses before income taxes of $1.9 million in 2013, $1.8 million in 2012 and earnings before income
taxes of $1.4 million in 2011.
Etienne Aigner
During the second quarter of 2012, the Company terminated the Etienne Aigner license agreement due to a dispute
with the licensor. On April 29, 2013, an agreement to resolve the dispute was reached, pursuant to which the Company
agreed to pay Etienne Aigner $6.5 million. The results of Etienne Aigner were previously included in the Wholesale
Operations segment. Discontinued operations included net sales of $0.3 million, $27.9 million and $28.1 million in 2013,
2012, and 2011, respectively. It also included losses before income taxes of $7.0 million in 2013 and earnings before
income taxes of $1.4 million and $1.2 million in 2012 and 2011, respectively. As a result of the termination of the license
agreement in 2012, the Company recorded an impairment charge of $5.8 million ($3.5 million on an after-tax basis, or
$0.08 per diluted share) to reduce the value of the license intangible asset to zero.
The Basketball Marketing Company, Inc.
On October 25, 2011, the Company sold TBMC for $55.4 million in cash. TBMC markets and sells footwear bearing
the AND 1 brand-name and was acquired in the Company’s February 17, 2011 acquisition of American Sporting
Goods Corporation. In conjunction with the sale, the Company recorded a gain of $20.6 million ($14.0 million after-
tax, or $0.32 per diluted share), which is reflected in the consolidated statements of earnings as a component of
discontinued operations.
TBMC was previously included in the Wholesale Operations segment. Discontinued operations included net sales and
earnings before income taxes of $19.7 million and $3.0 million, respectively, in 2011.
Assets and liabilities of discontinued operations at February 1, 2014 and February 2, 2013 were as follows:
($ thousands) February 1, 2014 February 2, 2013
Assets of Discontinued Operations
Current assets
Receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ – $ 14,291
Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 29,587
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3,231
Current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 47,109
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 419
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 25,650
Intangible assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 27,275
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1,233
Noncurrent assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 54,577
Total assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 119 $ 101,686
Liabilities of Discontinued Operations
Current liabilities
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139 $ 9,082
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569 4,177
Current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 708 13,259
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 6,996
Noncurrent liabilities - discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 6,996
Total liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 708 $ 20,255
(Loss) earnings from discontinued operations, net of tax, for 2013, 2012, and 2011 were as follows:
($ thousands) 2013 2012 2011
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,318 $ 120,269 $ 167,753
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,927 98,485 127,828
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,391 21,784 39,925
Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,103 27,291 31,895
Restructuring and other special charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,768 1,587 –
Operating (loss) earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,480) (7,094) 8,030
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 409 712
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (75)
(Loss) earnings before income taxes from discontinued operations . . . . . . . . . . . . . . . (10,496) (7,503) 7,393
Income tax benefit (provision) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,922 3,066 (3,059)
(Loss) earnings from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . $ (4,574) $ (4,437) $ 4,334