Note 6

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.

During the first quarter of 2013, the Company incurred costs related to these portfolio realignment activities of $28.8 million ($24.6 million after-tax, or $0.58 per diluted share). Of the $28.8 million, $17.2 million ($17.2 million after-tax, or $0.41 per diluted share) was related to non-cash impairment charges and $11.6 million ($7.3 million after-tax, or $0.17 per diluted share) related to business exits and transaction costs. Of the $17.2 million of non-cash impairment charges, $12.5 million was reflected as discontinued operations and $4.7 million was reflected as impairment of assets held for sale in the condensed consolidated statement of earnings. All non-cash impairment charges were recorded in the Wholesale Operations segment. Of the $11.6 million, $11.1 million was included in discontinued operations and $0.5 million in restructuring and other special charges, net, in the condensed consolidating statement of earnings. Of the $11.1 million, $10.0 million was included in the Wholesale Operations segment and the $1.1 million was included in the Other segment. The $0.5 million was recorded in the Wholesale Operations segment.

During the first quarter of 2012, the Company incurred costs related to these portfolio realignment activities of $12.1 million ($7.9 million after-tax, or $0.18 per diluted share). These costs were reflected on the condensed consolidated statement of earnings as $10.2 million in restructuring and other special charges, net, $1.3 million in cost of goods sold and $0.6 million in discontinued operations. Of the $10.2 million in restructuring and other special charges, net, $7.0 million is included in the Famous Footwear segment, $1.9 million is included in the Wholesale Operations segment, $0.8 million is included in the Specialty Retail segment and $0.5 million is included in the Other segment. Of the $1.3 million in cost of goods sold, $1.1 million was included in the Wholesale Operations segment and $0.2 million is included in the Specialty Retail segment. The $0.6 million was recorded in the Wholesale Operations segment.

The Company expects to incur an additional $3 million to $5 million in 2013 related to its portfolio realignment initiatives.

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



($ millions)		Employee	Markdowns and Royalty Shortfalls			Facility		Other		Total
Reserve balance at January 28, 2012	$	5.8	$	1.6	$	1.3	$	1.3	$	10.0
Additional charges in 2012		6.0		3.1		11.4		9.4		29.9
Amounts settled in 2012		(10.1)		(4.5)		(9.4)		(10.4)		(34.4)
Reserve balance at February 2, 2013	$	1.7	$	0.2	$	3.3	$	0.3	$	5.5
Additional charges in first quarter 2013		0.4		3.0		0.1		25.3		28.8
Amounts settled in first quarter 2013		(1.0)		(2.8)		(0.8)		(18.2)		(22.8)
Reserve balance at May 4, 2013	$	1.1	$	0.4	$	2.6	$	7.4	$	11.5

Integration Related Costs

During the first quarter 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). All of the first quarter of 2012 costs were included in the Wholesale Operations segment as a component of discontinued operations.