Note 6

Restructuring Initiatives

Portfolio Realignment

The Company's portfolio realignment efforts include the sale of ASG; the sale of the AND 1 division; exiting certain women’s specialty and private label brands; exiting the children’s wholesale business; the sale and closure of sourcing and supply chain assets; closing or relocating numerous underperforming or poorly aligned retail stores; the termination of the Etienne Aigner license agreement; the election not to renew the Vera Wang license in accordance with agreement terms and other infrastructure changes. These portfolio realignment efforts began in 2011 and will continue through 2013. The Company expects to incur an immaterial amount of additional costs during the second half of 2013 related to its portfolio realignment initiatives.

The following is a summary of the Company’s portfolio realignment expense (income) for our continuing and discontinued operations:



		Thirteen Weeks Ended						Twenty-six Weeks Ended
						Loss						Loss
($ millions, except per share data)		Pre-tax Expense (Income)		After-tax Expense (Income)		(Earnings) Per Diluted Share		Pre-tax Expense (Income)		After-tax Expense (Income)		(Earnings) Per Diluted Share
August 3, 2013
Continuing Operations
Business exits and cost reductions	$	0.7	$	0.5	$	0.01	$	1.2	$	0.8	$	0.02
Non-cash impairments/dispositions		–		–		–		4.7		4.7		0.11
Total Continuing Operations		0.7		0.5		0.01		5.9		5.5		0.13
Discontinued Operations
Business exits and cost reductions		2.1		(0.7)		(0.01)		13.3		6.4		0.13
Non-cash impairments/dispositions		(1.0)		(1.0)		(0.02)		11.5		11.5		0.28
Total Discontinued Operations		1.1		(1.7)		(0.03)		24.8		17.9		0.41
Total	$	1.8	$	(1.2)	$	(0.02)	$	30.7	$	23.4	$	0.54

July 28, 2012
Continuing Operations
Business exits and cost reductions	$	5.1	$	3.5	$	0.08	$	16.6	$	11.0	$	0.26
Non-cash impairments/dispositions		–		–		–		–		–		–
Total Continuing Operations		5.1		3.5		0.08		16.6		11.0		0.26
Discontinued Operations
Business exits and cost reductions		7.3		4.5		0.11		7.8		4.8		0.11
Non-cash impairments/dispositions		–		–		–		–		–		–
Total Discontinued Operations		7.3		4.5		0.11		7.8		4.8		0.11
Total	$	12.4	$	8.0	$	0.19	$	24.4	$	15.8	$	0.37

The business exits and cost reductions of the Company’s continuing operations were recorded within restructuring and other special charges, net and cost of goods sold in the condensed consolidated statements of earnings. The business exits and cost reductions of the Company’s discontinued operations were recorded within earnings (loss) from discontinued operations, net of tax, in the condensed consolidated statements of earnings. The non-cash impairments/dispositions of the Company’s continuing operations were recorded within impairment of assets held for sale in the condensed consolidated statements of earnings. The non-cash impairments/dispositions of the Company’s discontinued operations were recorded within impairment of net assets/disposition of discontinued operations in the condensed consolidated statements of earnings. The non-cash impairments/dispositions are included in Other in the following table.

All of the $0.7 million of continuing operations costs incurred during the second quarter of 2013 was included in the Wholesale Operations segment. Of the $5.1 million of continuing operations costs incurred during the second quarter of 2012, $2.5 million is included in the Specialty Retail segment, $2.0 million is included in the Wholesale Operations segment, $0.3 million is included in the Famous Footwear segment and $0.3 million is included in the Other segment.

All of the $5.9 million of continuing operations costs incurred during the first half of 2013 was included in the Wholesale Operations segment. Of the $16.6 million of continuing operations costs incurred during the first half of 2012, $7.3 million is included in the Famous Footwear segment, $5.1 million is included in the Wholesale Operations segment, $3.5 million is included in the Specialty Retail segment and $0.7 million is included in the Other segment.

The following is a summary of the charges and settlements by category of costs:



											Total by Classification
($ millions)		Employee	Markdowns and Royalty Shortfalls			Facility		Other		Total			Continuing Operations		Discontinued Operations
Reserve balance at January 28, 2012	$	5.8	$	1.6	$	1.3	$	1.3	$	10.0		$	10.0	$	–
Additional charges in 2012		6.0		3.1		11.4		9.4		29.9			21.9		8.0
Amounts settled in 2012		(10.1)		(4.5)		(9.4)		(10.4)		(34.4)			(26.6)		(7.8)
Reserve balance at February 2, 2013	$	1.7	$	0.2	$	3.3	$	0.3	$	5.5		$	5.3	$	0.2
Additional charges in first quarter 2013		0.4		3.0		0.1		25.3		28.8			5.2		23.6
Amounts settled in first quarter 2013		(1.0)		(2.8)		(0.8)		(18.2)		(22.8)			(7.0)		(15.8)
Reserve balance at May 4, 2013	$	1.1	$	0.4	$	2.6	$	7.4	$	11.5		$	3.5	$	8.0
Additional charges (recoveries) in second quarter 2013		2.3		(0.4)		–		(0.1)		1.8			0.7		1.1
Amounts settled in second quarter 2013		(1.0)		0.3		(0.6)		(7.0)		(8.3)			(1.8)		(6.5)
Reserve balance at August 3, 2013	$	2.4	$	0.3	$	2.0	$	0.3	$	5.0		$	2.4	$	2.6

Integration Related Costs

During the first half of 2012, the Company incurred integration costs related to ASG of $0.7 million ($0.4 million after-tax, or $0.01 per diluted share), with no charges during the first half of 2013. These costs were recognized as earnings (loss) from discontinued operations.

Organizational Change

During the second quarter and first half of 2012, the Company incurred costs of $2.3 million ($1.4 million on an after-tax basis, or $0.03 per diluted share) related to an organizational change at the corporate headquarters. These costs were recognized as restructuring and other special charges, net and included in the Other segment.