Famous Footwear 2014 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2014 Famous Footwear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 94

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94

2014 BROWN SHOE COMPANY, INC. FORM 10-K 55
Disposition of Shoes.com
As further discussed in Note 2 to the consolidated financial statements, in response to the sale of Shoes.com, the Company
incurred restructuring and other special charges of $1.5 million. The reserve balance of $1.5 million as of January 31, 2015 is
included in employee compensation and benefits on the consolidated balance sheets.
5. RETIREMENT AND OTHER BENEFIT PLANS
The Company sponsors pension plans in both the United States and Canada. The Company’s domestic pension plans
cover substantially all United States employees. Under the domestic plans, salaried, management and certain hourly
employees’ pension benefits are based on the employee’s highest consecutive five years of compensation during the
10 years before retirement. The Company’s Canadian pension plans cover certain employees based on plan specifications.
Under the Canadian plans, employees’ pension benefits are based on the employee’s highest consecutive five years of
compensation during the 10 years before retirement. The Company’s funding policy for all plans is to make the minimum
annual contributions required by applicable regulations. The Company also maintains an unfunded Supplemental
Executive Retirement Plan (“SERP”).
In addition to providing pension benefits, the Company sponsors unfunded defined benefit postretirement life insurance
plans that cover both salaried and hourly employees who became eligible for benefits by January 1, 1995. The life insurance
plans provide coverage of up to twenty-thousand dollars for qualifying retired employees.
Benefit Obligations
The following table sets forth changes in benefit obligations, including all domestic and Canadian plans:
Pension Benefits Other Postretirement Benefits
($ thousands) 2014 2013 2014 2013
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . $ 279,964 $ 290,534 $ 1,119 $ 3,207
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,650 10,638 – –
Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,230 13,241 49 55
Plan participants’ contribution . . . . . . . . . . . . . . . . . . . . . . . . . 12 12 4 19
Plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,671) 99 – –
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,105 (23,442) 483 (2,055)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,814) (11,107) (143) (107)
Foreign exchange rate changes . . . . . . . . . . . . . . . . . . . . . . . . . (1,136) (11) – –
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . $ 362,340 $ 279,964 $ 1,512 $ 1,119
The accumulated benefit obligation for the United States pension plans was $342.6 million and $256.0 million as of
January 31, 2015 and February 1, 2014, respectively. The accumulated benefit obligation for the Canadian pension plans
was $4.3 million and $4.7 million as of January 31, 2015 and February 1, 2014, respectively.
Pension Benefits Other Postretirement Benefits
Weighted–average assumptions used to determine benefit obligations,
end of year 2014 2013 2014 2013
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.90% 5.00% 3.90% 5.00%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . 3.00% 3.00% N/A N/A
At February 1, 2014, the domestic pension plan and other postretirement benefits mortality assumptions were based on
the RP-2000 mortality table using mortality improvement scale AA. In October 2014, the Society of Actuaries issued an
updated set of mortality tables and improvement scale collectively known as RP-2014 and MP-2014, respectively. The
Company has reviewed the findings and recommendations of these reports with its actuary and its actuary performed
a mortality study based on the Company’s plan participant population. Based on the results of that study, the Company
has elected to use the Society of Actuaries’ RP-2014 Bottom Quartile tables, projected using generational scale MP-2014
to better reflect anticipated future experience. Actuarial losses, related to the change in mortality tables, increased the
pension plan liability by approximately $18.4 million as of January 31, 2015.
During 2014, the Company announced amendments to the domestic qualified pension plan and the SERP, including certain
changes to eligibility and service period requirements as well as changes to the benefit formula, including the calculation
of participants’ final average compensation. Certain changes became eective in January 2015, while other changes will be
eective in January 2016. These plan amendments decreased the pension liability by $11.7 million as of January 31, 2015.