Famous Footwear 2014 Annual Report Download - page 60

2014 BROWN SHOE COMPANY, INC. FORM 10-K 59
under the Company’s annual incentive plan. The deferrals are held in a separate trust, which has been established by
the Company to administer the Deferred Compensation Plan. The assets of the trust are subject to the claims of the
Company’s creditors in the event that the Company becomes insolvent. Consequently, the trust qualifies as a grantor
trust for income tax purposes (i.e., a “Rabbi Trust”). The liabilities of the Deferred Compensation Plan of $2.9 million
and $2.2 million as of January 31, 2015 and February 1, 2014, respectively, are presented in employee compensation
and benefits in the accompanying consolidated balance sheets. The assets held by the trust of $2.9 million as of
January 31, 2015 and $2.2 million as of February 1, 2014 are classified as trading securities within prepaid expenses
and other current assets in the accompanying consolidated balance sheets, with changes in the deferred compensation
charged to selling and administrative expenses in the accompanying consolidated statements of earnings.
Deferred Compensation Plan for Non-Employee Directors
Non-employee directors are eligible to participate in a deferred compensation plan, whereby deferred compensation
amounts are valued as if invested in the Company’s common stock through the use of phantom stock units (“PSUs”).
Under the plan, each participating director’s account is credited with the number of PSUs equal to the number of
shares of the Company’s common stock that the participant could purchase or receive with the amount of the deferred
compensation, based upon the fair value (as determined based on the average of the high and low prices) of the
Company’s common stock on the last trading day of the fiscal quarter when the cash compensation was earned.
Dividend equivalents are paid on PSUs at the same rate as dividends on the Company’s common stock and are re-
invested in additional PSUs at the next fiscal quarter-end. The PSUs are payable in cash based on the number of PSUs
credited to the participating director’s account, valued on the basis of the fair value at fiscal quarter-end on or following
termination of the director’s service. The liabilities of the plan of $2.1 million as of January 31, 2015 and $1.7 million as of
February 1, 2014 are based on 67,488 and 67,263 outstanding PSUs, respectively, and are presented in other liabilities
in the accompanying consolidated balance sheets. Gains and losses resulting from changes in the fair value of the PSUs
are charged to selling and administrative expenses in the accompanying consolidated statements of earnings.
6. INCOME TAXES
The components of earnings before income taxes from continuing operations consisted of domestic earnings before
income taxes from continuing operations of $70.8 million, $40.9 million and $23.8 million in 2014, 2013 and 2012,
respectively, and foreign earnings before income taxes from continuing operations of $39.3 million, $36.8 million and
$28.0 million in 2014, 2013 and 2012, respectively. In addition to the income tax expense associated with continuing
operations, we also recorded income tax benefits associated with the loss from discontinued operations of $5.9 million
and $5.3 million in 2013 and 2012, respectively.
The components of income tax provision (benefit) on earnings from continuing operations were as follows:
($ thousands) 2014 2013 2012
Federal
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,311 $ 14,621 $ 2,803
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,502) 260 5,803
17,809 14,881 8,606
State
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,501 5,770 1,560
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (642) (1,210) 1,899
4,859 4,560 3,459
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,516 4,317 4,591
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,184 $ 23,758 $ 16,656
The Company made federal, state and foreign tax payments, net of refunds, of $20.1 million, $5.0 million and $5.7 million
in 2014, 2013 and 2012, respectively.
The dierences between the income tax provision reflected in the consolidated financial statements and the amounts
calculated at the federal statutory income tax rate of 35% were as follows:
($ thousands) 2014 2013 2012
Income taxes at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,544 $ 27,208 $ 18,139
State income taxes, net of federal tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,159 2,964 2,248
Foreign earnings taxed at lower rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,882) (8,090) (5,206)
Non-deductibility of impairment of assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . – 1,631 –
Tax on international subsidiary dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,040 – –
Disposal of Shoes.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,428) – –
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751 45 1,475
Total income tax provision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,184 $ 23,758 $ 16,656