Famous Footwear 2013 Annual Report Download - page 72

70 2013 BROWN SHOE COMPANY, INC. FORM 10-K
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis
at February 1, 2014 and February 2, 2013. The Company did not have any transfers between Level 1 and Level 2 during
2013 or 2012.
Fair Value Measurements
($ thousands) Total Level 1 Level 2 Level 3
Asset (Liability)
As of February 1, 2014:
Cash equivalents – money market funds . . . . . . . . . . . . . . . . . . $ 41,236 $ 41,236 $ – $ –
Non-qualified deferred compensation plan assets . . . . . . . . . . . . . 2,191 2,191 – –
Non-qualified deferred compensation plan liabilities . . . . . . . . . . . (2,191) (2,191) – –
Deferred compensation plan liabilities for non-employee directors . . . (1,668) (1,668) – –
Restricted stock units for non-employee directors . . . . . . . . . . . . . (7,769) (7,769) – –
Performance share units . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,300) (2,300) – –
Derivative financial instruments, net . . . . . . . . . . . . . . . . . . . . . 834 – 834 –
As of February 2, 2013:
Cash equivalents – money market funds . . . . . . . . . . . . . . . . . . $ 27,223 $ 27,223 $ – $ –
Non-qualified deferred compensation plan assets . . . . . . . . . . . . . 1,411 1,411 – –
Non-qualified deferred compensation plan liabilities . . . . . . . . . . . (1,411) (1,411) – –
Deferred compensation plan liabilities for non-employee directors . . . (1,139) (1,139) – –
Restricted stock units for non-employee directors . . . . . . . . . . . . . (4,723) (4,723) – –
Performance share units . . . . . . . . . . . . . . . . . . . . . . . . . . . (561) (561) – –
Derivative financial instruments, net . . . . . . . . . . . . . . . . . . . . . 7 – 7 –
Impairment Charges
The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. Factors the Company considers important that could trigger an impairment
review include underperformance relative to expected historical or projected future operating results, a significant
change in the manner of the use of the asset or a negative industry or economic trend. When the Company determines
that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the
aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors,
such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered
Level 3 inputs. Long-lived assets held and used with a carrying amount of $81.4 million were written down to their fair
value, resulting in impairment charges included in selling and administrative expenses of $1.4 million in 2013. Of the
$1.4 million impairment charges, $0.7 million related to the Famous Footwear segment and $0.7 million related to the
Specialty Retail segment.
During the first quarter of 2013, the Company recognized an impairment charge of $4.7 million ($4.7 million after tax,
$0.11 per diluted share) related to certain supply chain and sourcing assets, which represented the excess net asset value
over the estimated fair value of the assets less costs to sell. The fair value of net assets was estimated based on the
anticipated sales proceeds. This is considered a Level 2 input as the assets were not sold on an active market.
The impairment charge was recorded as impairment of assets held for sale in the consolidated statement of earnings
and was included in the Wholesale Operations segment. These assets were sold in the second quarter of 2013, and the
Company recognized an additional loss on sale of $0.6 million. See Note 4 to the consolidated financial statements for
additional information.
During the second quarter of 2013, the Company sold ASG. In anticipation of this transaction, the assets of ASG were
determined to be held for sale at May 4, 2013, and an impairment charge of $12.6 million was recorded in the first quarter
of 2013 within the discontinued operations section of the consolidated statement of earnings. The Company recognized
a gain on disposition of $1.0 million in the second quarter of 2013. ASG was previously included within the Wholesale
Operations segment. The fair value of assets was estimated based on the anticipated sales proceeds less costs to sell.
This is considered a Level 2 input as the assets were not sold on an active market. See Note 2 to the condensed
consolidated financial statements for additional information.
During 2012, the Company terminated the Etienne Aigner license agreement, due to a dispute with the licensor and
recognized an impairment charge of $5.8 million ($3.5 million on an after-tax basis, or $0.08 per diluted share), to reduce
the remaining unamortized value of the licensed trademark intangible asset to zero.
In 2012, the Company also recognized impairment charges of $4.1 million, including $1.6 million related to the Famous
Footwear segment, $1.4 million related to the Wholesale Operations segment, and $1.1 million related to the Specialty
Retail segment. Of the $1.6 million related to the Famous Footwear segment, $1.3 million is included in restructuring and
other special charges, net, and $0.3 million is included in selling and administrative expenses. The $1.4 million related
to the Wholesale Operations segment is included in restructuring and other special charges, net. Of the $1.1 million related
to the Specialty Retail segment, $0.9 million is included in restructuring and other special charges, net, and $0.2 million
is included in selling and administrative expenses.