Famous Footwear 2014 Annual Report Download - page 76

2014 BROWN SHOE COMPANY, INC. FORM 10-K 75
Redfield
The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned
facility in Colorado (the “Redfield site” or, when referring to remediation activities at or under the facility, the “on-site
remediation”) and residential neighborhoods adjacent to and near the property (the “o-site remediation”) that have
been aected by solvents previously used at the facility. The on-site remediation calls for the operation of a pump
and treat system (which prevents migration of contaminated groundwater o the property) as the final remedy for
the site, subject to monitoring and periodic review of the on-site conditions and other remedial technologies that
may be developed in the future. O-site groundwater concentrations have been reducing over time since installation
of the pump and treat system in 2000 and injection of clean water beginning in 2003. However, localized areas of
contaminated bedrock just beyond the property line continue to impact o-site groundwater. The modified workplan
for addressing this condition includes converting the o-site bioremediation system into a monitoring well network
and employing dierent remediation methods in these recalcitrant areas. In accordance with the workplan, a pilot
test was conducted of certain groundwater remediation methods and the results of that test were used to develop
more detailed plans for remedial activities in the o-site areas, which were approved by the authorities and are being
implemented in a phased manner. The results of groundwater monitoring are being used to evaluate the eectiveness
of these activities. The Company submitted a proposed expanded remedy workplan and is awaiting public comment
and feedback from the oversight authorities. The liability for the on-site remediation was discounted at 4.8%. On
an undiscounted basis, the on-site remediation liability would be $15.4 million as of January 31, 2015. The Company
expects to spend approximately $0.2 million in each of the next five years and $14.4 million in the aggregate thereafter
related to the on-site remediation.
The cumulative expenditures for both on-site and o-site remediation through January 31, 2015 were $26.9 million.
The Company has recovered a portion of these expenditures from insurers and other third parties. The reserve for the
anticipated future remediation activities at January 31, 2015 is $9.8 million, of which $9.1 million is recorded within other
liabilities and $0.7 million is recorded within other accrued expenses. Of the total $9.8 million reserve, $5.2 million is for
on-site remediation and $4.6 million is for o-site remediation.
Other
The Company has completed its remediation eorts at its closed New York tannery and two associated landfills. In
1995, state environmental authorities reclassified the status of these sites as being properly closed and requiring only
continued maintenance and monitoring through 2024. The Company has an accrued liability of $1.3 million at January
31, 2015 related to these sites, which has been discounted at 6.4%. On an undiscounted basis, this liability would be
$1.8 million. The Company expects to spend approximately $0.2 million in each of the next five years and $0.8 million
in the aggregate thereafter related to these sites. In addition, various federal and state authorities have identified the
Company as a potentially responsible party for remediation at certain other sites. However, the Company does not
currently believe that its liability for such sites, if any, would be material.
The Company continues to evaluate its estimated costs in conjunction with its environmental consultants and records
its best estimate of such liabilities. However, future actions and the associated costs are subject to oversight and
approval of various governmental authorities. Accordingly, the ultimate costs may vary, and it is possible costs may
exceed the recorded amounts.
Litigation
The Company is involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion
of management, the outcome of such ordinary course of business proceedings and litigation currently pending is not
expected to have a material adverse eect on the Company’s results of operations or financial position. Legal costs
associated with litigation are generally expensed as incurred.
During 2014, the Company signed a settlement agreement to resolve a putative class action lawsuit involving wage and
hour claims in California for an amount not to exceed $1.5 million. If approved by the court, under the settlement the
Company will pay a minimum of $1.0 million in attorneys’ fees, costs of administering the settlement and settlement
payments to class members who submit claims. The ultimate amount paid to resolve the case may exceed that amount
depending on the number of valid claims submitted. In the event that the settlement is not consummated, the parties
will continue to litigate whether the action should proceed as a class action with a hearing scheduled for the second
quarter of 2015. The reserve for this matter as of January 31, 2015 is $1.5 million.