Famous Footwear 2014 Annual Report Download - page 62

2014 BROWN SHOE COMPANY, INC. FORM 10-K 61
Uncertain Tax Positions
ASC 740, Income Taxes, establishes a single model to address accounting for uncertain tax positions. The standard
clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required
to meet before being recognized in the financial statements. The standard also provides guidance on derecognition,
measurement classification, interest and penalties, accounting in interim periods, disclosure and transition.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
($ thousands)
Balance at January 28, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 209
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,015
Reductions for tax positions of prior years due to a lapse in the statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (75)
Balance at February 2, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,149
Reductions for tax positions of prior years due to a lapse in the statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (134)
Balance at February 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,015
Reductions for tax positions of prior years due to a lapse in the statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –
Balance at January 31, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,015
If the unrecognized tax benefits were to be recognized in full, the net amount that would be reflected in the income tax
provision, thereby impacting the eective tax rate, would be $1.1 million at January 31, 2015 and February 1, 2014, and
$0.8 million at February 2, 2013.
Estimated interest related to the underpayment of income taxes was classified as a component of the income tax provision
in the consolidated statements of earnings and was insignificant in 2014, 2013 and 2012. Accrued interest was $0.2 million
at January 31, 3015 and $0.1 million at February 1, 2014.
For federal purposes, the Company’s tax years 2011 to 2013 (fiscal years ending January 28, 2012, February 2, 2013 and
February 1, 2014) remain open to examination. The Company also files tax returns in various foreign jurisdictions and
numerous states for which various tax years are subject to examination. The Company does not expect any significant
changes to its liability for unrecognized tax benefits during the next 12 months.
7. BUSINESS SEGMENT INFORMATION
During the fourth quarter of 2014, following the sale of the Company’s e-commerce subsidiary, Shoes.com, the
Company revised its reportable segments. This change reflects the Company’s omni-channel approach to managing its
branded footwear business across all distribution channels. The two new reportable segments are Famous Footwear
and Brand Portfolio.
The Famous Footwear segment is comprised of Famous Footwear, on a historical and continuing basis, and Shoes.com
through December 12, 2014 (the date of sale). Famous Footwear operated 1,038 stores at the end of 2014, primarily
selling branded footwear for the entire family.
The Brand Portfolio segment is comprised of our branded footwear, our branded retail stores and e-commerce sites
associated with those brands. This segment sources and markets licensed, branded and private-label footwear primarily
to national chains, department stores, independent retailers, mass merchandisers, online retailers and catalogs as well as
Company-owned Famous Footwear, Naturalizer and Sam Edelman stores, and e-commerce businesses. The Brand Portfolio
segment included 82 branded retail stores in the United States and 89 branded retail stores in Canada at the end of 2014,
selling primarily Naturalizer brand footwear in regional malls and outlet centers.
The Company’s Famous Footwear and Brand Portfolio reportable segments are operating units that are managed
separately. An operating segment’s performance is evaluated and resources are allocated based on operating earnings
(loss). Operating earnings (loss) represent gross profit, less selling and administrative expenses, restructuring and other
special charges, net and impairment of assets held for sale. The accounting policies of the reportable segments are the
same as those described in Note 1 to the consolidated financial statements. Intersegment sales are generally recorded
at a profit to the selling segment. All intersegment earnings related to inventory on hand at the purchasing segment are
eliminated against the earnings of the selling segment.
Corporate assets, administrative expenses, and other costs and recoveries that are not allocated to the operating units are
reported in the Other category.