Famous Footwear 2014 Annual Report Download - page 64

2014 BROWN SHOE COMPANY, INC. FORM 10-K 63
8. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
($ thousands) January 31, 2015 February 1, 2014
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,078 $ 37,206
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,466 183,266
Technology equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,406 51,074
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,988 36,029
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,254 116,501
Construction in progress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,504 4,464
Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438,696 428,540
Allowances for depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (288,953) (284,980)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 149,743 $ 143,560
Useful lives of property and equipment are as follows:
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-30 years
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-20 years
Technology equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 years
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-20 years
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10 years
The Company recorded charges for impairment, primarily for leasehold improvements and furniture and fixtures in
the Company’s retail stores, of $2.0 million, $1.6 million and $4.1 million in 2014, 2013 and 2012, respectively. All of the
impairment charges in 2014 and 2013 are included in selling and administrative expenses. Of the $4.1 million impairment
charges in 2012, $3.6 million is included in restructuring and other special charges, net and $0.5 million is included in
selling and administrative expenses. Fair value was based on estimated future cash flows to be generated by retail stores,
discounted at a market rate of interest.
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill and intangible assets were as follows:
($ thousands) January 31, 2015 February 1, 2014
Intangible Assets
Famous Footwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,800 $ 3,000
Brand Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183,068 118,003
Total intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,868 121,003
Accumulated amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65,235) (61,284)
Total intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,633 59,719
Goodwill
Brand Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,954 13,954
Total goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,954 13,954
Goodwill and intangible assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 134,587 $ 73,673
On February 3, 2014, the Company entered into and simultaneously closed an Asset Purchase Agreement (the “Asset
Purchase Agreement”), pursuant to which the Company acquired the Franco Sarto trademarks. As consideration, the
Company paid a cash purchase price of $65.0 million at the time of closing. As a result of entering into and closing the
Asset Purchase Agreement, the Company’s license agreement, granting the Company the right to sell footwear and other
products using the Franco Sarto trademarks through 2019, was terminated. The purchase price of $65.0 million, as well as
transaction costs of $0.1 million, are being amortized over a useful life of 40 years.
In December 2014, in conjunction with the disposition of Shoes.com as further described in Note 2 to the consolidated
financial statements, the Company sold intangible assets of $0.2 million. The intangible assets were previously included in
the Famous Footwear segment.
Intangible assets consist primarily of owned and licensed trademarks, of which $20.8 million and $21.0 million as of
January 31, 2015 and February 1, 2014, respectively, are not subject to amortization. All remaining intangible assets
are subject to amortization and have useful lives ranging from four to 40 years. Amortization expense for continuing
operations related to intangible assets was $4.0 million, $6.0 million and $6.3 million in 2014, 2013 and 2012, respectively.
The Company estimates $3.7 million of amortization expense related to intangible assets in each of the years from 2015
through 2019. As a result of its annual impairment testing, the Company did not record any other impairment charges
during 2014, 2013 and 2012 related to intangible assets.