Famous Footwear 2014 Annual Report Download - page 46

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2014 BROWN SHOE COMPANY, INC. FORM 10-K 45
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Brown Shoe Company, Inc. (the “Company”), founded in 1878 and incorporated in 1913, is a global footwear retailer and
wholesaler. The Company’s shares are traded under the “BWS” symbol on the New York Stock Exchange.
The Company provides a broad oering of licensed, branded and private-label casual, dress and athletic footwear products
to women, men and children. Footwear is sold at a variety of price points through multiple distribution channels both
domestically and internationally. The Company currently operates 1,209 retail shoe stores in the United States, Canada
and Guam primarily under the Famous Footwear and Naturalizer names. In addition, through its Brand Portfolio segment,
the Company designs, sources and markets footwear to retail stores domestically and internationally, including national
chains, department stores, mass merchandisers, independent retailers and online retailers. In 2014, approximately 67% of
the Company’s net sales were at retail, compared to 70% in 2013 and 71% in 2012. See Note 7 for additional information
regarding the Company’s business segments.
The Company’s business is seasonal in nature due to consumer spending patterns with higher back-to-school and
Christmas season sales. Traditionally, the third fiscal quarter accounts for a substantial portion of the Company’s earnings
for the year.
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned
subsidiaries, after the elimination of intercompany accounts and transactions.
Noncontrolling Interests
Noncontrolling interests in the Company’s consolidated financial statements result from the accounting for noncontrolling
interests in partially-owned consolidated subsidiaries or aliates. Noncontrolling interests represent partially-owned
subsidiaries’ or consolidated aliates’ losses and components of other comprehensive income that are attributable to the
noncontrolling parties’ equity interests. The Company consolidates B&H Footwear Company Limited (“B&H Footwear”),
a joint venture, into its consolidated financial statements. Net earnings (loss) attributable to noncontrolling interests
represent the share of net earnings or losses that are attributable to the equity that is owned by the Company’s partners.
Transactions between the Company and B&H Footwear have been eliminated in the consolidated financial statements.
Accounting Period
The Company’s fiscal year is the 52- or 53-week period ending the Saturday nearest to January 31. Fiscal years 2014,
2013 and 2012 ended on January 31, 2015, February 1, 2014 and February 2, 2013, respectively. Fiscal years 2014 and 2013
each included 52 weeks, while fiscal year 2012 included 53 weeks. The impact of the 53rd week in 2012 was an increase
to our retail net sales of approximately $21.2 million. The net earnings impact of the 53rd week was immaterial to 2012.
Basis of Presentation
Certain prior period amounts on the consolidated financial statements have been reclassified to conform to the current
period presentation. These reclassifications did not aect net earnings attributable to Brown Shoe Company, Inc.
The consolidated statement of cash flows includes the cash flows from operating, financing and investing activities of
both continuing operations and discontinued operations. All other financial information is reported on a continuing
operations basis, unless otherwise noted. Refer to Note 2 to the consolidated financial statements for discussion
regarding discontinued operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that aect the amounts reported in the financial statements and
accompanying notes. Actual results could dier from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less when purchased to be
cash equivalents.
Receivables
The Company evaluates the collectibility of selected accounts receivable on a case-by-case basis and makes
adjustments to the bad debt reserve for expected losses. The Company considers factors such as ability to pay,