Note 6

Restructuring and Other Special Charges, Net

Acquisition and Integration Costs

On February 17, 2011, the Company entered into a Stock Purchase Agreement with ASG and ASG's stockholders, pursuant to which a subsidiary of the Company acquired all of the outstanding capital stock of ASG from the ASG stockholders on that date. During the thirteen and thirty-nine weeks ended October 29, 2011, the Company incurred acquisition and integration costs totaling $1.1 million ($0.8 million on an after-tax basis, or $0.02 per diluted share) and $3.5 million ($2.9 million on an after-tax basis, or $0.08 per diluted share), respectively. For the full year of 2010, the Company incurred acquisition costs totaling $1.1 million ($0.7 million on an after-tax basis, or $0.02 per diluted share). All of the costs recorded during 2011 and 2010 were reflected within the Other segment and recorded as a component of restructuring and other special charges, net. See Note 3 to the condensed consolidated financial statements for further information.

Business Exits

During 2011, the Company continued its portfolio assessment to evaluate underperforming or poorly aligned assets. As a result of this assessment, the Company announced in the third quarter of 2011 that it would be exiting the children's wholesale business and certain women's and specialty private label brands. In addition to the wholesale brand exits, the Company also announced plans to close between 70 and 75 Famous Footwear stores in each of fiscal 2011 and 2012, for a total of approximately 145 stores, and all of the Brown Shoe Closet and F.X. LaSalle retail stores. The Company also announced the closing of a retail distribution center in Sun Prairie, Wisconsin. The Company currently believes these business exits will cost approximately $20 million in expense to implement, of which approximately $4.5 million has been recognized through the third quarter of 2011. The Company expects approximately half of the $20 million expense will relate to severance and other employee-related costs.

During the third quarter of 2011, the Company incurred costs related to the children's and certain women's specialty and private label brand exit activities of $3.6 million ($2.3 million on an after-tax basis, or $0.06 per diluted share) related to severance and other employee-related costs and certain contractual license obligations. This charge is presented as restructuring and other special charges. The Company also incurred costs related to wholesale inventory markdowns of $0.9 million ($0.5 million on an after-tax basis, or $0.01 per diluted share), which are included in cost of goods sold, during the third quarter of 2011.

Information Technology Initiatives

During 2008, the Company began implementation of an integrated enterprise resource planning ("ERP") information technology system provided by third-party vendors. The ERP information technology system replaced certain of the Company's internally developed and certain other third-party applications and is expected to better support the Company's business model. Although the Company went live on the wholesale portion of its new ERP system in the fourth quarter of 2010, system transition efforts and alignment of existing business processes continued in 2011. The Company incurred expenses of $1.9 million ($1.2 million on an after-tax basis, or $0.03 per diluted share) and $5.5 million ($3.6 million on an after-tax basis, or $0.09 per diluted share) during the thirteen weeks and thirty-nine weeks ended October 30, 2010, respectively, as a component of restructuring and other special charges, net, related to these initiatives. Of the $1.9 million in expenses recorded during the thirteen weeks ended October 30, 2010, $1.7 million was recorded in the Other segment and $0.2 million was recorded in the Wholesale Operations segment. Of the $5.5 million in expenses recorded during the thirty-nine weeks ended October 30, 2010, $4.9 million was recorded in the Other segment and $0.6 million was recorded in the Wholesale Operations segment. During 2010, the Company incurred expenses of $6.8 million ($4.6 million on an after-tax basis, or $0.10 per diluted share) related to these initiatives. Of the $6.8 million in expenses recorded during 2010, $6.1 million was recorded in the Other segment, and the remaining expense was recorded in the Wholesale Operations segment. The expenses incurred through 2010 were recorded as a component of restructuring and other special charges, net. Beginning in 2011, expenses incurred related to the ongoing enhancement of the ERP system have been presented as a component of selling and administrative expenses.