Fair Value Measurements

9 Months Ended

Oct. 29, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 13 Fair Value Measurements

Fair Value Hierarchy

FASB guidance on fair value measurements and disclosures specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources ("observable inputs") or reflect the Company's own assumptions of market participant valuation ("unobservable inputs"). In accordance with the fair value guidance, the hierarchy is broken down into three levels based on the reliability of the inputs as follows:

· Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

· Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

· Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. Classification of the financial or non-financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Measurement of Fair Value

The Company measures fair value as an exit price, the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date, using the procedures described below for all financial and non-financial assets and liabilities measured at fair value.

Money Market Funds

The Company has cash equivalents consisting of short-term money market funds backed by U.S. Treasury securities. The primary objective of these investing activities is to preserve its capital for the purpose of funding operations and it does not enter into money market funds for trading or speculative purposes. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1).

Deferred Compensation Plan Assets and Liabilities

The Company maintains a non-qualified deferred compensation plan (the "Deferred Compensation Plan") for the benefit of certain management employees. The investment funds offered to the participant generally correspond to the funds offered in the Company's 401(k) plan, and the account balance fluctuates with the investment returns on those funds. The Deferred Compensation Plan permits the deferral of up to 50% of base salary and 100% of compensation received 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 are presented in other accrued expenses and the assets held by the trust are classified as trading securities within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. Changes in deferred compensation are charged to selling and administrative expenses. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1).

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 that is 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 are based on the fair value of the outstanding PSUs and are presented in other liabilities in the accompanying condensed consolidated balance sheets. Gains and losses resulting from changes in the fair value of the PSUs are reported in the Company's condensed consolidated statement of earnings. The fair value of the liabilities is based on an unadjusted quoted market price for the Company's common stock in an active market with sufficient volume and frequency (Level 1).

Derivative Financial Instruments

The Company uses derivative financial instruments, primarily foreign exchange contracts, to reduce its exposure to market risks from changes in foreign exchange rates. These foreign exchange contracts are measured at fair value using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2). Additional information related to the Company's derivative financial instruments are disclosed within Note 12 to the condensed consolidated financial statements.

The following table presents the Company's assets and liabilities that are measured at fair value on a recurring basis. The Company did not have any transfers between Level 1 and Level 2 during 2010 or the thirty-nine weeks ended October 29, 2011.

				Fair Value Measurements
($ thousands)		Total			Level 1			Level 2			Level 3
Asset (Liability)
As of October 29, 2011:
Cash equivalents – money market funds	$	5,909		$	5,909		$	–		$	–
Non-qualified deferred compensation plan assets		1,842			1,842			–			–
Non-qualified deferred compensation plan liabilities		(1,842	)		(1,842	)		–			–
Deferred compensation plan liabilities for non-employee directors		(586	)		(586	)		–			–
Derivative financial instruments, net		(18	)		–			(18	)		–
As of October 30, 2010:
Cash equivalents– money market funds	$	14,612		$	14,612		$	–		$	–
Non-qualified deferred compensation plan assets		1,341			1,341			–			–
Non-qualified deferred compensation plan liabilities		(1,341	)		(1,341	)		–			–
Deferred compensation plan liabilities for non-employee directors		(727	)		(727	)		–			–
Derivative financial instruments, net		(53	)		–			(53	)		–
As of January 29, 2011:
Cash equivalents – money market funds	$	50,000		$	50,000		$	–		$	–
Non-qualified deferred compensation plan assets		1,447			1,447			–			–
Non-qualified deferred compensation plan liabilities		(1,447	)		(1,447	)		–			–
Deferred compensation plan liabilities for non-employee directors		(792	)		(792	)		–			–
Derivative financial instruments, net		(344	)		–			(344	)		–

Store Impairment Charges

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include underperformance relative to expected historical or projected future operating results, a significant change in the manner of the use of the asset or a negative industry or economic trend. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC 820, Fair Value Measurements and Disclosures. Long-lived store assets held and used with a carrying amount of $48.3 million were assessed for impairment and written down to their fair value, resulting in an impairment charge of $0.3 million, which was recorded within selling and administrative expenses for the thirteen weeks ended October 29, 2011. Of the $0.3 million impairment charge, $0.2 million related to the Famous Footwear segment and $0.1 million related to the Specialty Retail segment. Impairment charges of $1.1 million were recorded within selling and administrative expenses for the thirty-nine weeks ended October 29, 2011, of which $0.7 million related to the Famous Footwear segment and $0.4 million related to the Specialty Retail segment.

Acquisition Purchase Accounting Estimates

See Note 3 for information related to the fair value estimates associated with the ASG acquisition and the subsequent disposition of TBMC.

Fair Value of the Company's Other Financial Instruments

The fair values of cash and cash equivalents (excluding money market funds discussed above), receivables and trade accounts payable approximate their carrying values due to the short-term nature of these instruments.

The carrying amounts and fair values of the Company's other financial instruments subject to fair value disclosures are as follows:

	October 29, 2011					October 30, 2010			January 29, 2011
($ thousands)	Carrying Amount		Fair Value			Carrying Amount		Fair Value	Carrying Amount		Fair Value
Borrowings under revolving credit agreement	$	222,000	$	222,000	$	113,000	$	113,000	$	198,000	$	198,000
2019 Senior Notes		198,586		182,000		–		–		–		–
2012 Senior Notes		–		–		150,000		153,000		150,000		152,157

The fair value of borrowings under the revolving credit agreement approximated their carrying value due to the short-term nature. The fair value of the Company's 2012 Senior Notes and 2019 Senior Notes were based upon quoted prices as of the end of the respective periods.