G e n e s c o 2 0 0 8 A n n uA l R e p o R t
t h e B u s i n e s s o f G e n e s c o
Founded in 1924, nashville, Tennessee-based Genesco Inc. (nYse: Gco) is a leading retailer of branded footwear,
licensed and branded headwear and wholesaler of branded footwear. It operates more than 2,150 footwear and
headwear retail stores in the United states, Puerto Rico and canada, principally under the names Journeys®, Journeys
Kidz®, shi by Journeys™, Johnston & Murphy®, Underground station®, Hat World®, Lids®, Hat shack®, Hat Zone®,
Head Quarters, cap connection™ and Lids Kids™. Genesco also designs, sources, markets and distributes footwear
under its own Johnston & Murphy brand and under the licensed Dockers® brand. Genesco relies on independent third
party manufacturers for the production of its footwear products sold at wholesale.
Table of Contents
Business of Genesco
Securities Information
Total Return to Shareholders
Financial Highlights
Shareholders’ Message
Brand Profiles
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Financial Summary
Management’s Responsibility for Financial Statements
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
Corporate Information
Board of Directors
Corporate Officers
Genesco’s Retail Network
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2
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3
4
6
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38
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RePRoDUcTIon oR DIsTRIbUTIon. LIFesTYLe anD PRoDUcT sHoTs PRovIDeD bY Genesco oPeRaTInG DIvIsIons. PaGe 4 PHoTo: Dana THoMas
S e c u r i t i e s I n f o r m a t i o n
C o m m o n S t o C k : n e w Y o r k a n d C h i C a g o S t o C k e x C h a n g e S
Quarter ended may 4
Quarter ended august 3
Quarter ended november 2
Quarter ended February 2
Fiscal 2008
Fiscal 2007
Fiscal 2006
High
51.30
54.15
52.06
45.67
Low
34.57
47.09
41.00
24.98
high
42.60
43.72
38.73
42.5
Low
37.33
25.50
26.05
35.46
high
3.50
4.0
40.27
42.89
Low
25.6
25.80
33.4
35.6
Approximate number of common shareholders of record: 4,800 as of March 21, 2008
Total Return To Shareholders
inCLudeS reinveStment oF dividendS
the graph below compares the cumulative total shareholder return on the Company’s common stock for the last five fiscal years with the
cumulative total return of (i) the S&P 500 index and (ii) the S&P 500 Footwear index. the graph assumes the investment of $00 in the
Company’s common stock, the S&P 500 index and the S&P 500 Footwear index at the market close on February , 2003 and the reinvestment
monthly of all dividends.
Comparison of 5 Year Cumulative Total Return
3 5 0
3 0 0
2 5 0
2 0 0
1 5 0
1 0 0
5 0
0
FYE 03
geneSCo inC.
S&P 500 index
S&P 500 Footwear index
FYE 04
FYE 05
FYE 06
FYE 07
FYE 08
Base
Period
Index Returns
Years Ended
genesco inc.
S&P 500 index
S&P 500 Footwear index*
* The S&P 1500 Footwear Index consists of Crocs Inc., Deckers Outdoor Corp., Iconix Brand Group, Inc., K-Swiss Inc., Skechers U.S.A. Inc., Wolverine World Wide, Nike Inc. and Timberland Co.
FYE 04
$ 04.03
36.34
5.78
FYE 05
$ 69.57
43.4
89.40
FYE 06
$ 230.9
59.60
97.4
FYE 07
$ 245.70
83.24
246.02
FYE 03
$ 00.00
00.00
00.00
FYE 08
$ 20.32
80.04
286.69
2
this annual report contains certain forward-looking statements. actual results could be materially different. For discussion of
some of the factors that could adversely affect future results, please see “management’s discussion and analysis of Financial
Condition and results of operations” and the material under the caption “risk Factors” in the Company’s annual report on form
0-k for Fiscal 2008 filed with the Securities and exchange Commission.
F i n a n c i a l H i g h l i g h t s
FoR THE YEaR:
net Sales
earnings From Continuing operations
net earnings
diluted earnings Per Common Share
From Continuing operations
diluted net earnings Per Share
aT YEaR End:
working Capital
Long-term debt
Shareholders’ equity
Shares outstanding
Book value Per Share
approximate number of Common
Shareholders of record
2008
2007
%Change
$ 1,502,119,000
8,488,000
$
6,885,000
$
$
$
0.36
0.29
$ 238,093,000
$ 155,220,000
$ 421,415,000
22,796,000
18.25
$
$ ,460,478,000
68,247,000
$
67,646,000
$
$
$
$
$
$
$
2.6
2.59
200,330,000
09,250,000
405,226,000
22,742,000
7.53
3 %
(88)%
(90)%
(86)%
(89)%
9 %
42 %
4 %
0 %
4 %
4,800
4,900
3
S H a R E H o L d E R S ’ M E S S a g E
bob De n n Is (Le FT) an D HaL Pe n n I nGTon
To our shareholders:
Fiscal 2008 was in many ways a challenging year for Genesco. The effects of a difficult retail environment on our
operating results were magnified by the distraction and expense of an unsolicited takeover attempt followed by a
negotiated transaction that ended in litigation, which we settled in March. While we cannot pretend to be pleased
with our performance during this past year, we are proud of the resilience of our fellow employees and encouraged
by the renewed commitment and excitement about our potential that we sense as we begin the next chapter in
the Genesco story.
“We are fortunate to have the same talented
When we reported to you a year ago, we outlined
management team, executing the same long-
term strategies in the same industry-leading
businesses that we celebrated last year.”
an optimistic vision and talked about the basis of
our optimism: “We are operating from a strong
base, more than 2,000 stores, each focused on
bringing our customers the products they want
in shopping environments that reflect their tastes and lifestyles. Most of all, we have a strong team – more than
12,500 people in stores, distribution centers and offices, united in their commitment to help us reach our goals.”
none of that has changed. We are fortunate to have the same talented management team, executing the same
long-term strategies in the same industry-leading businesses that we celebrated last year. In fact, we believe
that our recent experience has sharpened our focus, heightened our appreciation for the inherent strengths of
our company, and increased our determination to realize its potential.
4
Many apparel and footwear retailers felt the effects of weakening consumer demand in the course of last year,
reflecting a combination of macroeconomic factors and a lack of fashion direction in significant market segments.
our retail divisions were no exception; comparable sales for the year decreased in the Journeys, Hat World and
Underground station groups. on the branded side of our business, both Johnston & Murphy and Dockers Footwear
were bright spots, with increased sales and double-digit operating margins, confirming the success of their product
and marketing strategies and illustrating the benefits to the company of a diversified portfolio of businesses.
Looking ahead, while we expect the consumer environment to remain
“For the longer term, our years of
challenging for the near-term and have been prudent in our planning
for Fiscal 2009, we have responded to our markets in ways that we
expect to produce an improving performance trend in the course of
the year. For the longer term, our years of experience in a cyclical
business have taught us that strong companies emerge from periods
experience in a cyclical business
have
taught us
that strong
companies emerge from periods
of challenge even stronger, and
of challenge even stronger, and we expect to do just that.
we expect to do just that.”
We continue to plan for a promising future, drawing on the talent of all our Genesco associates and the strategic
strength of our businesses to lay the foundation for continued growth. We look forward to reporting to you on
our progress.
Hal n. Pennington
chairman and chief executive officer
Robert J. Dennis
President and chief operating officer
eva®
Genesco has been an eva company since 1999. eva advances the analysis of operating performance one step
beyond profitability by taking efficiency in capital usage into account. essentially, eva recognizes that companies
create the most wealth for their shareholders by making the greatest possible profit with the fewest possible
net assets. In fiscal 2008 we did not exceed our annual eva improvement goal. because everyone at Genesco
recognizes the link between eva improvement, shareholders wealth creation (and, not insignificantly, our own
incentive compensation), we are committed to continue growing earnings while tightly managing assets, to meet or
exceed our eva improvement goals.
EVA is a registered trademark of Stern Stewart & Co
5
Journeys is a leader in the teen retail scene, with more
than 800 stores across the united States, including
Puerto rico and the u.S. virgin islands. Journeys uses
fashion savvy and merchandising science to keep in step
with the fast-paced footwear and accessories market
for 3- to 22-year-old men and women. Journeys sells a
wide variety of hot teen brands including vans, Converse,
dC and Puma. the Journeys store is more than a retail
environment; it’s an extension of the customer’s lifestyle.
From cool lighting to in-store television monitors playing
fresh content and the latest music videos, to employees
whose lifestyle and self-image match their customers’,
the Journeys retail environment is designed to reflect its
customers’ tastes and attitudes every bit as much as the
merchandise selection. in addition, Journeys reaches
its customers through a direct mail catalog, through
the internet at www.journeys.com and
through strategic cross-promotions.
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Launched in 200 as an extension of the highly successful Journeys
footwear retail concept, Journeys kidz is a unique branded kids
footwear retailer, targeting customers five to 2 years old with trendy
footwear styles and accessories from brands including dC, Puma,
Converse and nike. whether it’s the skateboard-style footwear display,
the Playstation terminals, or the television monitors playing cartoons
and music, Journeys kidz, which operates 5 stores, has a visually
exciting atmosphere that is both fun for kids and functional for parents.
in addition, Journeys kidz reaches its customers through its own
website www.journeyskidz.com offering an
interactive ecommerce option or “big kidz shoes
in little kidz sizes.”
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•P hoto i s a prof essi onal athl ete and protective gear should be worn for safety when skateboardi ng.
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underground Station is a mall-based retail concept with stores located
across the united States. underground Station markets trendy footwear
and apparel to a brand-conscious consumer with a high-fashion
mindset who values cutting-edge styles and the latest brands. with
more than 75 stores, the division also markets through its website
www.undergroundstation.com. underground Station offers the latest
footwear and accessories from brands like Baby Phat, apple Bottoms,
Pastry, ed hardy, Puma, Converse and rocawear. underground Station
targets 20- to 35-year-old, culturally diverse, urban male and female
customers. underground Station’s up-to-date merchandising entices
customers to view the store as a destination
to find out about the latest arrivals from the
hottest brands.
0
Craftsmanship, innovation and style are the hallmarks of the Johnston & murphy brand.
Johnston & murphy continues to appeal to successful, affluent men with a broad array of
footwear and accessories appropriate for professional working environments. the brand
strives to position itself in international airports or at stores in better malls across america. at
Johnston & murphy, world-class service is the defining element of the shopping experience,
combining a warm and inviting store environment with a commitment to understand the
needs of our consumers and continually exceed their expectations in both product and
service. the brand also sells merchandise and promotes its stores through a direct mail
catalog, the internet at www.johnstonmurphy.com and through premier specialty and
department stores nationwide as well as internationally.
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3
Shi by Journeys is the Company’s newest concept, a brand extension
from genesco’s successful Journeys division. Shi by Journeys caters to
fashionable women from their early 20s to mid 30s, and is designed to
continue to serve the Journeys female customer as she matures and her
fashion tastes evolve. this specialty store features fashionable branded
and private label footwear and accessories relevant
to the lifestyle of its trendy customer.
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5
Founded in 995, hat world inc. is comprised of more than 850 mall-based, airport,
street level and factory outlet stores nationwide, and in Puerto rico and Canada,
operating primarily under the Lids and hat world retail brands. indianapolis-
based hat world inc. is recognized as a leading specialty retail leader of officially
licensed and branded headwear. hat world also operates smaller retail brands
hat Shack, hat Zone, head Quarters and Cap Connection. the stores offer a
vast assortment of officially-licensed and branded college, mLB, nBa, nFL and
nhL teams, as well as other specialty fashion categories all in the latest styles
and colors. Select stores also offer a strong complementary line of licensed
apparel and custom embroidery capability. the company serves the core sports
fan and fashion-conscious, trend-savvy mid-teen to mid-20s customer. hat world
also sells products and promotes the stores through
the internet sites lids.com™ and lidskids.com.™
in october 2006, hat world launched Lids kids, a retail concept offering licensed
and branded headwear, apparel, accessories and custom embroidery for the
younger sports fan and fashion forward youth up to 0 years old.
there were 4 Lids kids stores in operation as of the end of the
fiscal year with plans to grow the concept.
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dockers Footwear fills another important niche by offering men aged 30 to 55 superior styling,
quality and value in moderately priced casual fashion. marketed under license from Levi Strauss
& Co., dockers remains one of the nation’s most recognized brand names. offerings range from
business casual to weekend casual. this lifestyle brand is readily available through many of the
same national chains that carry dockers apparel, and in shoe chains and shoe
stores across the country.
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Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
F o r w a r d - lo o k I n G s TaT e m e n T s
this discussion and the notes to the Consolidated Financial Statements, as well as item , Business, include certain
forward-looking statements, which include statements regarding our intent, belief or expectations and all statements
other than those made solely with respect to historical fact. actual results could differ materially from those reflected
by the forward-looking statements in this discussion and a number of factors may adversely affect the forward-looking
statements and the Company’s future results, liquidity, capital resources or prospects. these include continuing
weakness in the consumer economy, fashion trends that affect the sales or product margins of the Company’s retail
product offerings, changes in the timing of holidays or in the onset of seasonal weather affecting period-to-period
sales comparisons, changes in buying patterns by significant wholesale customers, disruptions in product supply or
distribution, further unfavorable trends in fuel costs, foreign currency exchange rates, foreign labor and material costs,
and other factors affecting the cost of products, and competition in the Company’s markets. additional factors that
could affect the Company’s prospects and cause differences from expectations include the ability to open, staff and
support additional retail stores on schedule and at acceptable expense levels and to renew leases in existing stores
on schedule and at acceptable expense levels, the ability to negotiate acceptable lease terminations and otherwise
to execute the previously announced store closing plans on schedule and at expected expense levels, unexpected
changes to the market for our shares, variations from expected pension-related charges caused by conditions in the
financial markets, and the outcome of litigation, investigations and environmental matters involving the Company. For
a discussion of additional risk factors, See item a, risk Factors, in the Company’s annual report on Form 0-k.
o v e r v i e w
d e s c r I p T I o n o F B u s I n e s s
the Company is a leading retailer of branded footwear and of licensed and branded headwear, operating 2,75 retail
footwear and headwear stores throughout the united States and Puerto rico including 34 headwear stores in Canada
as of February 2, 2008. the Company also designs, sources, markets and distributes footwear under its own Johnston &
murphy brand and under the licensed dockers® brand to more than 975 retail accounts in the united States, including a
number of leading department, discount, and specialty stores.
the Company operates five reportable business segments (not including corporate): Journeys group, comprised of the
Journeys, Journeys kidz and Shi by Journeys retail footwear chains, catalog and e-commerce operations; underground
Station group, comprised of the underground Station and Jarman retail footwear chains and e-commerce operations;
hat world group, comprised of the hat world, Lids, hat Shack, hat Zone, head Quarters, Cap Connection and Lids kids
retail headwear chains and e-commerce operations; Johnston & murphy group, comprised of Johnston & murphy retail
operations, catalog and e-commerce operations and wholesale distribution; and Licensed Brands, comprised primarily
of dockers® Footwear sourced and marketed under a license from Levi Strauss & Company.
the Journeys retail footwear stores sell footwear and accessories primarily for 3- to 22-year-old men and women.
the stores average approximately ,875 square feet. the Journeys kidz retail footwear stores sell footwear primarily
for younger children, ages five to 2. these stores average approximately ,400 square feet. Shi by Journeys retail
footwear stores, the first of which opened in november 2005, sell footwear and accessories to a target customer
group consisting of fashion-conscious women in their early 20’s to mid 30’s. these stores average approximately
2,25 square feet.
the underground Station group retail footwear stores sell footwear and accessories primarily for men and women in the
20 to 35 age group. the underground Station group stores average approximately ,775 square feet. in may of 2007,
the Company announced a plan to close or convert up to 57 underperforming stores, including 49 underground Station
stores, due to the deterioration in the urban market. Previously, in the fourth quarter of Fiscal 2004, the Company made
the strategic decision to close 34 Jarman stores not suitable for conversion to underground Station stores subject to
its ability to negotiate lease terminations. the Company intends to convert or close the remaining Jarman stores as
quickly as it is financially feasible, subject to landlord approval. during Fiscal 2008, 2 Jarman stores were closed and
two Jarman stores were converted to underground Station stores. during Fiscal 2007, 6 Jarman stores were closed
and three were converted.
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m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
the hat world, Lids, hat Shack, hat Zone, head Quarters and Cap Connection retail stores and kiosks sell licensed
and branded headwear to men and women primarily in the early-teens to mid-20’s age group. hat world also operates
Lids kids, offering licensed and branded headwear, apparel and accessories to children up to 0 years old. the hat
world group locations average approximately 775 square feet and are primarily in malls, airports, street level stores
and factory outlet stores throughout the united States, Puerto rico and in Canada.
Johnston & murphy retail shops sell a broad range of men’s footwear and accessories. these shops average
approximately ,400 square feet and are located primarily in better malls nationwide. Johnston & murphy shoes are
also distributed through the Company’s wholesale operations to better department and independent specialty stores.
in addition, the Company sells Johnston & murphy footwear and accessories in factory stores located in factory outlet
malls. these stores average approximately 2,350 square feet.
the Company entered into an exclusive license with Levi Strauss and Company to market men’s footwear in the united
States under the dockers® brand name in 99. Levi Strauss & Co. and the Company have subsequently added
additional territories, including Canada and mexico. the dockers license agreement was renewed november , 2006.
the dockers license agreement, as amended, expires on december 3, 2009 with a Company option to renew through
december 3, 202, subject to certain conditions. the Company uses the dockers name to market casual and dress
casual footwear to men aged 30 to 55 through many of the same national retail chains that carry dockers slacks and
sportswear and in department and specialty stores across the country.
s T r aT e G y
the Company’s strategy has been to seek long-term, organic growth by: ) increasing the Company’s store base, 2)
increasing retail square footage, 3) improving comparable store sales, 4) increasing operating margin and 5) enhancing
the value of its brands. our future results are subject to various risks, uncertainties and other challenges, including those
discussed under the caption “Forward-Looking Statements,” above and those discussed in item a, risk Factors, in the
Company’s annual report on Form 0-k. generally, the Company attempts to develop strategies to help mitigate the risks it
views as material, including those discussed in item a, risk Factors. among the most important of these factors are those
related to consumer demand. Conditions in the external economy can affect demand, resulting in changes in sales and, as
prices are adjusted to drive sales and manage inventories, in gross margins. Because fashion trends influencing many of the
Company’s target customers (particularly customers of Journeys group, underground Station group and hat world group)
can change rapidly, the Company believes that its ability to react quickly to those changes has been important to its success.
even when the Company succeeds in aligning its merchandise offerings with consumer preferences, those preferences
may affect results by, for example, driving sales of products with lower average selling prices. moreover, economic factors,
such as current, high fuel prices and the possibility of recession, may reduce the consumer’s disposable income or his or
her willingness to purchase discretionary items, and thus may reduce demand for the Company’s merchandise, regardless
of the Company’s skill in detecting and responding to fashion trends. the Company believes its experience and discipline
in merchandising and the buying power associated with its relative size in the industry are important to its ability to mitigate
risks associated with changing customer preferences and other reductions in consumer demand. also important to the
Company’s long-term prospects are the availability and cost of appropriate locations for the Company’s retail concepts. the
Company is opening stores in airports and on streets in major cities and tourist venues, among other locations, in an effort
to broaden its selection of locations for additional stores beyond the malls that have traditionally been the dominant venue
for its retail concepts.
s u m m a r y o F o p e r aT I n G r e s u lT s
the Company’s net sales increased 2.9% during Fiscal 2008 compared to Fiscal 2007. the increase was driven primarily
by an 8% increase in Licensed Brands sales, an % increase in hat world group sales, a 3% increase in Johnston &
murphy group sales and a 2% increase in Journeys group sales offset by a 20% decrease in underground Station group
sales. gross margin was flat as a percentage of net sales for Fiscal 2008. Selling and administrative expenses increased
as a percentage of net sales during Fiscal 2008, reflecting increases as a percentage of net sales in Journeys group,
underground Station group, hat world group and Johnston & murphy group, as well as an additional $27.6 million
of expense associated with the Company’s now terminated merger with the Finish Line, inc. and related litigation
with the Finish Line and its investment bankers. the Company recorded an effective tax rate of 74.% for Fiscal 2008
2
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
compared to 38.6% for Fiscal 2007 as a result of the non-deductible expenses incurred in connection with the now
terminated merger. earnings from operations decreased as a percentage of net sales during Fiscal 2008, primarily due
to decreased earnings from operations in the Journeys group, underground Station group and hat world group, as a
result of a difficult retail environment, particularly in footwear, partially offset by an increase in earnings from operations
in the Johnston & murphy group and Licensed Brands, and as a result of the merger-related expense.
S i g n i f i c a n t d e v e l o p m e n t s
T e r m I n aT e d m e r G e r a G r e e m e n T
the Company announced in June 2007 that the boards of directors of both genesco and the Finish Line, inc. had unanimously
approved a definitive merger agreement under which the Finish Line would acquire all of the outstanding common shares of
genesco at $54.50 per share in cash (the “Proposed merger”). the Finish Line breached the merger agreement and litigation
ensued. the Proposed merger was terminated in march 2008 in connection with an agreement to settle the litigation with
the Finish Line and its investment bankers for a cash payment of $75.0 million to the Company and a 2% equity stake
in the Finish Line, which the Company has received. the Company will distribute to its shareholders 6,58,97 shares of
Class a Common Stock of the Finish Line, inc. the Company is required to distribute the shares to its shareholders as
soon as practicable once Finish Line registers the shares with the SeC and lists them on naSdaQ. the Company expects
to set the record date for the distribution soon after the registration and listing process is complete. during Fiscal 2008, the
Company expensed $27.6 million in merger-related costs and litigation expenses. as of march 25, 2008, the Company had
expensed an additional $6. million of such costs and expenses in the first quarter of Fiscal 2009. the Company believes that
most of the $27.6 million in merger-related costs and litigation expenses will be tax deductible in Fiscal 2009. For additional
information, see the “merger-related Litigation” section in note 4 to the Consolidated Financial Statements.
h aT s h a c k a c q u I s I T I o n
on January , 2007, hat world acquired 00% of the outstanding stock of hat Shack, inc., which operated 49 hat
Shack retail headwear stores located primarily in the southeastern united States, for a purchase price of $6.6 million
plus debt assumed of $2.2 million funded from cash on hand.
r e s T r u c T u r I n G a n d o T h e r c h a r G e s
the Company recorded a total pretax charge to earnings of $0.6 million ($6.4 million net of tax) in Fiscal 2008. the
charge reflected in restructuring and other, net included $8.7 million of charges for retail store asset impairments and
$.5 million for lease terminations, offset by $0.5 million in excise tax refunds and an antitrust settlement. the asset
impairments reflected deterioration in the urban market as well as underperforming stores in some of the Company’s
other markets. also included in the charge was $0.9 million in excess markdowns related to the underground Station
group store lease terminations which is reflected in cost of sales on the Consolidated Statements of earnings.
the Company recorded a pretax charge to earnings of $. million ($0.7 million net of tax) in Fiscal 2007. the charge
included $2.2 million of charges for asset impairments and the early termination of a license agreement offset by $.
million of gift card related income and a favorable litigation settlement.
the Company recorded a pretax charge to earnings of $2.3 million ($.4 million net of tax) in Fiscal 2006. the charge
included $.7 million for the settlement of a California employment class action and $0.6 million for retail store asset
impairments and lease terminations of 3 Jarman stores pursuant to the plan announced by the Company in Fiscal
2004 to close or convert into other retail concepts all remaining Jarman stores.
p o s T r e T I r e m e n T B e n e F I T l I a B I l I T y a d j u s T m e n T s
the return on pension plan assets was a gain of $9.2 million for Fiscal 2008 compared to a gain of $9.5 million in Fiscal
2007. the interest rate used to measure benefit obligations increased from 5.75% to 5.875% in Fiscal 2008. as a result
of the increase in return on plan assets and the increase in the discount rate, the pension liability was reduced to $6.6
million on the Consolidated Balance Sheets compared to $4.3 million in Fiscal 2007. there was a decrease in the
pension liability adjustment of $4. million (net of tax) in accumulated other comprehensive loss in shareholders’ equity.
depending upon future interest rates and returns on plan assets, and other known and unknown factors, there can be
no assurance that additional adjustments in future periods will not be required.
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Genesco Inc. and SuBSidiarieS
s h a r e r e p u r c h a s e p r o G r a m
in march 2008, the board authorized up to $00.0 million in stock repurchases primarily funded with the after-tax cash proceeds of
the settlement of the merger-related litigation discussed above under the heading “terminated merger agreement.”
d I s c o n T I n u e d o p e r aT I o n s
For the year ended February 2, 2008, the Company recorded an additional charge to earnings of $2.6 million ($.6 million
net of tax) reflected in discontinued operations, including $2.9 million primarily for anticipated costs of environmental
remedial alternatives related to former facilities operated by the Company offset by a $0.3 million gain for excess provisions
to prior discontinued operations. For additional information, see note 4 to the Consolidated Financial Statements.
For the year ended February 3, 2007, the Company recorded an additional charge to earnings of $.0 million ($0.6 million
net of tax) reflected in discontinued operations, including $. million primarily for anticipated costs of environmental
remedial alternatives related to former facilities operated by the Company offset by a $0. million gain for excess provisions
to prior discontinued operations. For additional information, see note 4 to the Consolidated Financial Statements.
For the year ended January 28, 2006, the Company recorded a credit to earnings of $0. million ($0. million net of tax)
reflected in discontinued operations, including a $0.9 million gain for excess provisions to prior discontinued operations
offset by $0.8 million primarily for anticipated costs of environmental remedial alternatives related to former facilities
operated by the Company. For additional information, see note 4 to the Consolidated Financial Statements.
C r i t i c a l a c c o u n t i n g Po l i c i e s
I n v e n T o r y v a l u aT I o n
as discussed in note to the Consolidated Financial Statements, the Company values its inventories at the lower of
cost or market.
in its wholesale operations, cost is determined using the first-in, first-out (FiFo) method. market is determined using
a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn,
average selling price, inventory level, and selling prices reflected in future orders. the Company provides reserves
when the inventory has not been marked down to market based on current selling prices or when the inventory is not
turning and is not expected to turn at levels satisfactory to the Company.
in its retail operations, other than the hat world segment, the Company employs the retail inventory method, applying
average cost-to-retail ratios to the retail value of inventories. under the retail inventory method, valuing inventory at the
lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.
inherent in the retail inventory method are subjective judgments and estimates including merchandise mark-on,
markups, markdowns, and shrinkage. these judgments and estimates, coupled with the fact that the retail inventory
method is an averaging process, could produce a range of cost figures. to reduce the risk of inaccuracy and to ensure
consistent presentation, the Company employs the retail inventory method in multiple subclasses of inventory with
similar gross margins, and analyzes markdown requirements at the stock number level based on factors such as
inventory turn, average selling price, and inventory age. in addition, the Company accrues markdowns as necessary.
these additional markdown accruals reflect all of the above factors as well as current agreements to return products
to vendors and vendor agreements to provide markdown support. in addition to markdown provisions, the Company
maintains provisions for shrinkage and damaged goods based on historical rates. a change of 0 percent from the
recorded amounts for all such provisions would have changed inventory by $.3 million at February 2, 2008.
the hat world segment employs the moving average cost method for valuing inventories and applies freight using an
allocation method. the Company provides a valuation allowance for slow-moving inventory based on negative margins
and estimated shrink based on historical experience and specific analysis, where appropriate.
inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market
conditions, fashion trends, and overall economic conditions. Failure to make appropriate conclusions regarding these
factors may result in an overstatement or understatement of inventory value.
23
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
I m pa I r m e n T o F lo n G - l I v e d a s s e T s
as discussed in note to the Consolidated Financial Statements, the Company periodically assesses the realizability of
its long-lived assets and evaluates such assets for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. asset impairment is determined to exist if estimated future
cash flows, undiscounted and without interest charges, are less than the carrying amount. inherent in the analysis of
impairment are subjective judgments about future cash flows. Failure to make appropriate conclusions regarding these
judgments may result in an overstatement or understatement of the value of long-lived assets.
e n v I r o n m e n Ta l a n d o T h e r c o n T I n G e n c I e s
the Company is subject to certain loss contingencies related to environmental proceedings and other legal matters,
including those disclosed in note 4 to the Company’s Consolidated Financial Statements. the Company has made
provisions for certain of these contingencies, including approximately $2.9 million reflected in Fiscal 2008, $. million
reflected in Fiscal 2007 and $0.8 million reflected in Fiscal 2006. the Company monitors these matters on an ongoing
basis and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of
them, adjusting provisions as management deems necessary in view of changes in available information. Changes in
estimates of liability are reported in the periods when they occur. Consequently, management believes that its reserve
in relation to each proceeding is a best estimate of probable loss connected to the proceeding, or in cases in which
no best estimate is possible, the minimum amount in the range of estimated losses, based upon its analysis of the
facts and circumstances as of the close of the most recent fiscal quarter. however, because of uncertainties and risks
inherent in litigation generally and in environmental proceedings in particular, there can be no assurance that future
developments will not require additional reserves to be set aside, that some or all reserves will be adequate or that
the amounts of any such additional reserves or any such inadequacy will not have a material adverse effect upon the
Company’s financial condition or results of operations.
r e v e n u e r e c o G n I T I o n
retail sales are recorded at the point of sale and are net of estimated returns and exclude sales taxes. Catalog and
internet sales are recorded at time of delivery to the customer and are net of estimated returns. wholesale revenue
is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the
related goods have been shipped and legal title has passed to the customer. Shipping and handling costs charged to
customers are included in net sales. estimated returns are based on historical returns and claims. actual amounts of
markdowns have not differed materially from estimates. actual returns and claims in any future period may differ from
historical experience.
I n c o m e Ta x e s
as part of the process of preparing Consolidated Financial Statements, the Company is required to estimate its income
taxes in each of the tax jurisdictions in which it operates. this process involves estimating actual current tax obligations
together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting
purposes, such as depreciation of property and equipment and valuation of inventories. these temporary differences
result in deferred tax assets and liabilities, which are included within the Consolidated Balance Sheets. the Company
then assesses the likelihood that its deferred tax assets will be recovered from future taxable income. actual results
could differ from this assessment if adequate taxable income is not generated in future periods. to the extent the
Company believes that recovery of an asset is at risk, valuation allowances are established. to the extent valuation
allowances are established or increase the allowances in a period, the Company includes an expense within the tax
provision in the Consolidated Statements of operations.
income tax reserves are determined using the methodology established by FaSB interpretation 48, accounting for
uncertainty in income taxes—an interpretation of FaSB Statement 09 (“Fin 48”). Fin 48, which was adopted by the
Company as of February 4, 2007, requires companies to assess each income tax position taken using a two step
process. a determination is first made as to whether it is more likely than not that the position will be sustained, based
upon the technical merits, upon examination by the taxing authorities. if the tax position is expected to meet the more
likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely
24
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
to be realized upon ultimate settlement of the respective tax position. uncertain tax positions require determinations
and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying
interpretation. if the Company’s determinations and estimates prove to be inaccurate, the resulting adjustments could
be material to its future financial results. See note 9 to the Consolidated Financial Statements for additional information
regarding income taxes.
p o s T r e T I r e m e n T B e n e F I T s p l a n a c c o u n T I n G
Substantially all full-time employees, who also had ,000 hours of service in Calendar 2004, except employees in the
hat world segment, are covered by a defined benefit pension plan. the Company froze the defined benefit pension plan
effective January , 2005. the Company also provides certain former employees with limited medical and life insurance
benefits. the Company funds at least the minimum amount required by the employee retirement income Security act.
in September 2006, the FaSB issued SFaS no. 58, which requires companies to recognize the overfunded or
underfunded status of postretirement benefit plans as an asset or liability in its Consolidated Balance Sheets and to
recognize changes in that funded status in accumulated other comprehensive loss, net of tax, in the year in which
the changes occur. this statement did not change the accounting for plans required by SFaS no. 87, “employers’
accounting for Pensions” (“SFaS no. 87”) and it did not eliminate any of the expanded disclosures required by SFaS
no. 32(r). on February 3, 2007, the Company adopted the recognition and disclosure provisions of SFaS no. 58. as
a result of the adoption of SFaS no. 58, the Company recognized a $0.8 million (net of tax) cumulative adjustment in
accumulated other comprehensive loss in shareholders’ equity for Fiscal 2007 related to the Company’s post-retirement
medical and life insurance benefits. SFaS no. 58 also requires companies to measure the funded status of a plan as
of the date of its fiscal year end. this requirement of SFaS no. 58 is not effective for the Company until Fiscal 2009.
the Company does not believe the adoption of the measurement date will have a material impact of the Company’s
results of operations or financial position.
the Company accounts for the defined benefit pension plans using SFaS no. 87, as amended. as permitted under
SFaS no. 87, pension expense is recognized on an accrual basis over employees’ approximate service periods. the
calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions,
including the expected long-term rate of return on plan assets and the assumed discount rate, as well as the recognition
of actuarial gains and losses. Changes in these assumptions can result in different expense and liability amounts, and
future actual experience can differ from these assumptions.
L o n g te r m r a t e o f r e t u r n a s s u m p t i o n – Pension expense increases as the expected rate of return on pension
plan assets decreases. the Company estimates that the pension plan assets will generate a long-term rate of return
of 8.25%. to develop this assumption, the Company considered historical asset returns, the current asset allocation
and future expectations of asset returns. the expected long-term rate of return on plan assets is based on a long-term
investment policy of 50% u.S. equities, 3% international equities, 35% u.S. fixed income securities and 2% cash
equivalents. For Fiscal 2008, if the expected rate of return had been decreased by %, net pension expense would have
increased by $.0 million, and if the expected rate of return had been increased by %, net pension expense would
have decreased by $.0 million.
d i s c o u n t r a t e – Pension liability and future pension expense increase as the discount rate is reduced. the Company
discounted future pension obligations using a rate of 5.875%, 5.75%, and 5.50% for Fiscal 2008, 2007 and 2006,
respectively. the discount rate is determined based on the current yields on a portfolio of high quality long-term
bonds. For Fiscal 2008, if the discount rate had been increased by 0.5%, net pension expense would have decreased
by $0.6 million, and if the discount rate had been decreased by 0.5%, net pension expense would have increased by
$0.6 million. in addition, if the discount rate had been increased by 0.5%, the projected benefit obligation would have
decreased by $5.4 million and the accumulated benefit obligation would have decreased by $5.4 million. if the discount
rate had been decreased by 0.5%, the projected benefit obligation would have been increased by $5.9 million and the
accumulated benefit obligation would have increased by $5.9 million.
25
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
a m o r t i z a t i o n o f g a i n s a n d L o s s e s – the significant declines experienced in the financial markets have unfavorably
impacted pension asset performance. the Company utilizes a calculated value of assets, which is an averaging
method that recognizes changes in the fair values of assets over a period of five years. at the end of Fiscal 2008, the
Company had unrecognized actuarial losses of $28.0 million. accounting principles generally accepted in the united
States require that the Company recognize a portion of these losses when they exceed a calculated threshold. these
losses might be recognized as a component of pension expense in future years and would be amortized over the
average future service of employees, which is currently five and a half years. Future changes in plan asset returns,
assumed discount rates and various other factors related to the pension plan will impact future pension expense and
liabilities, including increasing or decreasing unrecognized actuarial gains and losses.
the Company recognized expense for its defined benefit pension plans of $3. million, $3.4 million and $3.7 million in
Fiscal 2008, 2007 and 2006, respectively. the Company’s board of directors approved freezing the Company’s defined
pension benefit plan effective January , 2005. the Company’s pension expense is expected to decrease in Fiscal
2009 by approximately $.6 million due to the net effect of an increase in the discount rate from 5.75% to 5.875% and
a smaller actuarial loss to be amortized.
s h a r e - B a s e d c o m p e n s aT I o n
the Company has share-based compensation plans covering certain members of management and non-employee
directors. Prior to January 29, 2006, the Company accounted for these plans under the recognition and measurement
provisions of aPB no. 25, “accounting for Stock issued to employees,” and related interpretations, as permitted by
SFaS no. 23. accordingly, no compensation expense was recognized for fixed option plans in Fiscal 2006 because
the exercise prices of employee stock options equaled or exceeded the market prices of the underlying stock on the
date of grant.
Pursuant to SFaS no. 23 (revised 2004), “Share-Based Payment” (“SFaS no. 23(r)”), adopted on the first day of
Fiscal 2007, the Company recognizes compensation expense for share-based payments based on the fair value of
the awards. For Fiscal 2008 and 2007, share-based compensation was $3.2 million and $4. million, respectively. For
Fiscal 2008 and 2007, restricted stock expense was $4.6 million and $3.4 million, respectively. the benefits of tax
deductions in excess of recognized compensation expense are reported as a financing cash flow.
the Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing
model. the application of this valuation model involves assumptions that are judgmental and highly sensitive in the
determination of compensation expense, including expected stock price volatility. the Company bases expected
volatility on historical term structures. the Company bases the risk free rate on an interest rate for a bond with a
maturity commensurate with the expected term estimate. the Company estimates the expected term of stock options
using historical exercise and employee termination experience. the Company does not currently pay a dividend on
common stock. the fair value of employee restricted stock is determined based on the closing price of the Company’s
stock on the date of the grant.
in addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of
valuation (which is based on historical experience for similar options) is a critical assumption, as it reduces expense
ratably over the vesting period. Shared-based compensation expense is recorded based on a 2% expected forfeiture
rate and is adjusted annually for actual forfeitures. the Company reviews the expected forfeiture rate annually to
determine if that percent is still reasonable based on historical experience. the Company believes its estimates are
reasonable in the context of actual (historical) experience. See note 2 to the Consolidated Financial Statements for
additional information regarding the Company’s share-based compensation plans.
C o m p a r a b l e S a l e s
Comparable store sales begin in the fifty-third week of a store’s operation. temporarily closed stores are excluded from
the comparable store sales calculation for every full week of the store closing. expanded stores are excluded from
the comparable store sales calculation until the fifty-third week of operation in the expanded format. e-commerce and
catalog sales are excluded from comparable store sales calculations.
26
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
a d j u s t m e n t t o P r e v i o u s l y r e p o r t e d m e r g e r- r e l a t e d e x p e n s e s
after issuing its press release on march 3, 2008, reporting fourth quarter and Fiscal 2008 operating results, the Company
received late invoices totaling $865,000 for services rendered prior to February 2, 2008 in connection with litigation over
the Company’s now-terminated merger agreement with the Finish Line, inc. the Company determined that in accordance
with u.S. generally accepted accounting principles, such services should be expensed in the fourth quarter of Fiscal 2008.
accordingly, as reflected in the Consolidated Financial Statements and as discussed in this report, earnings from continuing
operations, net earnings and other financial measures, as applicable, for the fourth quarter and Fiscal 2008 have been
adjusted from the amounts reported in the march 3, 2008, earnings release by the amount of the additional expense.
r e s u l t s o f o p e r a t i o n s – F i s c a l 2 0 0 8 C o m p a r e d t o F i s c a l 2 0 0 7
the Company’s net sales for Fiscal 2008 (52 weeks) increased 2.9% to $.50 billion from $.46 billion in Fiscal 2007
(53 weeks). net sales for the 53rd week of Fiscal 2007 are estimated at $24.7 million, based on actual retail sales and
estimated wholesales sales. wholesale sales are recognized upon shipment. the Company believes that a portion of the
shipments that occurred in the final week would have occurred during the quarter even if it had not included the final week.
its estimate of the amount of such sales is excluded from the estimate of sales for the 53rd week. excluding the 53rd week
in Fiscal 2007, the net sales increase from the adjusted 52-week period last year was approximately 5%. the increase in net
sales was a result of a higher number of stores in operation offset by a decrease in comparable store sales in the Journeys
group, underground Station group and hat world group, reflecting generally challenging economic conditions and a
difficult retail environment, especially in footwear. gross margin increased 2.8% to $75.2 million in Fiscal 2008 from $730.8
million in Fiscal 2007 but was flat as a percentage of net sales at 50.0%. Selling and administrative expenses in Fiscal
2008 increased 4.4% from Fiscal 2007 and increased as a percentage of net sales from 4.7% to 46.4% including $27.6
million of expenses relating to the now-terminated merger agreement with the Finish Line, which accounted for 84 basis
points of the increase. the Company records buying and merchandising and occupancy costs in selling and administrative
expense. Because the Company does not include these costs in cost of sales, the Company’s gross margin may not be
comparable to other retailers that include these costs in the calculation of gross margin. explanations of the changes in
results of operations are provided by business segment in discussions following these introductory paragraphs.
earnings before income taxes from continuing operations (“pretax earnings”) for Fiscal 2008 were $32.7 million
compared to $. million for Fiscal 2007. Pretax earnings for Fiscal 2008 included restructuring and other charges
of $0.6 million, including $8.7 million of charges for asset impairments and $.5 million for lease terminations, offset
by $0.5 million in excise tax refunds and an antitrust settlement. also included in the charge was $0.9 million in excess
markdowns related to the underground Station group store lease terminations which is reflected in cost of sales on the
Consolidated Statements of earnings. Pretax earnings for Fiscal 2008 also included $27.6 million in expenses relating
to the merger agreement with the Finish Line and a $0.5 million gain from insurance proceeds relating to hurricane
katrina. Pretax earnings for Fiscal 2007 included restructuring and other charges of $. million, including $2.2 million
of charges for asset impairments and the termination of a small license agreement offset by $. million of income for
gift card breakage and a favorable litigation settlement.
net earnings for Fiscal 2008 were $6.9 million ($0.29 diluted earnings per share) compared to $67.6 million ($2.59
diluted earnings per share) for Fiscal 2007. net earnings for Fiscal 2008 included $.6 million ($0.07 diluted earnings
per share) charge to earnings (net of tax), including $.8 million primarily for anticipated costs of environmental
remedial alternatives related to former facilities operated by the Company offset by a $0.2 million gain for excess
provisions to prior discontinued operations. net earnings for Fiscal 2007 included $0.6 million ($0.02 diluted earnings
per share) charge to earnings (net of tax), including $0.7 million primarily for anticipated costs of environmental remedial
alternatives related to former facilities operated by the Company offset by a $0. million gain for excess provisions to
prior discontinued operations. the Company recorded an effective federal income tax rate of 74.% for Fiscal 2008
compared to 38.6% for Fiscal 2007. the variance in the effective tax rate for Fiscal 2008 compared to Fiscal 2007 is
primarily attributable to non-deductible expenses incurred in connection with merger-related expenses and to Fin 48
adjustments. the merger agreement was terminated on march 3, 2008 and the Company believes that most of the
$27.6 million in merger related costs and litigation expenses will be tax deductible in Fiscal 2009. See notes 9 and 4
to the Consolidated Financial Statements for additional information.
27
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Journeys group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 8
2 0 0 7
$ 7 1 3 , 3 6 6 $ 6 9 6 , 8 8 9
$ 5 1 , 0 9 7 $ 8 3 , 8 3 5
2 . 0 %
7 . 2 %
C H a n g E
2 . 4 %
( 3 9 . ) %
net sales from Journeys group increased 2.4% to $73.4 million for Fiscal 2008 from $696.9 million for Fiscal 2007.
the increase reflects a 3% increase in average Journeys stores operated (i.e., the sum of the number of stores open
on the first day of the fiscal year and the last day of each fiscal month during the year divided by thirteen) offset by a
4% decrease in comparable store sales. the comparable store sales decrease reflects a 2% decrease in footwear unit
comparable sales and a 3% decrease in average price per pair of shoes. the average price decrease primarily reflects
changes in product mix and increased markdowns. total unit sales increased 5% during the same period. the store
count for Journeys group was 967 stores at the end of Fiscal 2008, including 5 Journeys kidz stores and 47 Shi by
Journeys stores, compared to 853 Journeys group stores at the end of Fiscal 2007, including 73 Journeys kidz stores
and 2 Shi by Journeys stores.
Journeys group earnings from operations for Fiscal 2008 decreased 39.% to $5. million, compared to $83.8
million for Fiscal 2007. the decrease was primarily attributable to increased expenses as a percentage of net sales,
reflecting negative comparable store sales and increases in (i) rent expense related to relocation from smaller sized,
volume-constrained locations to bigger stores in order to offer a broader selection of products, new stores and lease
renewals, and (ii) employee expenses due to higher minimum wage costs combined with decreased gross margin as
a percentage of net sales reflecting increased markdowns.
underground Station group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
( L o s s ) e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
2 0 0 8
2 0 0 7
$ 1 2 4 , 0 0 2 $ 5 5 , 0 6 9
3 , 8 4 4
$ ( 7 , 7 1 0 ) $
2 . 5 %
( 6 . 2 ) %
P E R C E n T
C H a n g E
( 2 0 . 0 ) %
n m
net sales from the underground Station group decreased 20.0% to $24.0 million for Fiscal 2008 from $55. million for
Fiscal 2007. Sales for underground Station stores decreased 6% for Fiscal 2008. Sales for Jarman retail stores decreased
4% for Fiscal 2008, reflecting a 39% decrease in the average number of Jarman stores operated related to the Company’s
strategy of closing Jarman stores or converting them to underground Station stores. Comparable store sales decreased
6% for the underground Station group, 7% for underground Station stores and 0% for Jarman stores. the decrease in
comparable store sales was primarily due to the weak urban market, ongoing softness in athletic shoes and the absence
this year of the chain’s formerly most popular athletic brand from its product offering. the average price per pair of shoes
for underground Station group decreased 0% for Fiscal 2008 and unit sales decreased 0% during the same period. the
average price per pair of shoes at underground Station stores decreased % during the year, primarily reflecting changes
in product mix and increased markdowns. unit sales decreased 4% during Fiscal 2008. underground Station group
operated 92 stores at the end of Fiscal 2008, including 76 underground Station stores. during Fiscal 2008, two Jarman
stores were converted to underground Station stores. the Company had operated 223 underground Station group stores
at the end of Fiscal 2007, including 93 underground Station stores.
underground Station group loss from operations for Fiscal 2008 was $(7.7) million compared to earnings from operations of
$3.8 million for the same period last year. the decrease was due to decreased net sales, increased expenses as a percentage
of net sales reflecting negative leverage in expenses, particularly in store-related expenses from negative comparable store
sales, and decreased gross margin as a percentage of net sales reflecting increased markdowns.
28
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
hat world group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
2 0 0 8
2 0 0 7
$ 3 7 8 , 9 1 3 $ 3 4 2 , 6 4
$ 3 1 , 9 8 7 $ 4 , 3 5 9
8 . 4 %
2 . %
P E R C E n T
C H a n g E
0 . 6 %
( 2 2 . 7 ) %
net sales from the hat world group increased 0.6% to $378.9 million for Fiscal 2008 from $342.6 million for Fiscal
2007. the increase reflects primarily a 20% increase in average stores operated offset by a 2% decrease in comparable
store sales. the comparable store sales were impacted by a challenging urban market among other factors, partially
offset by strength in Core major League Baseball products and branded action headwear. hat world group operated
862 stores at the end of Fiscal 2008, including 34 stores in Canada and 4 Lids kids stores, compared to 785 stores
at the end of Fiscal 2007, including 26 stores in Canada and three Lids kids stores.
hat world group earnings from operations for Fiscal 2008 decreased 22.7% to $32.0 million compared to $4.4 million
for Fiscal 2007. the decrease in operating income was primarily due to increased expenses as a percentage of net
sales, resulting from store growth and negative leverage in store-related expenses from negative comparable store
sales, increased rent from lease renewals as well as decreased gross margin as a percentage of net sales reflecting
increased promotional activity.
Johnston & murphy group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 8
2 0 0 7
$ 1 9 2 , 4 8 7 $ 8 6 , 9 7 9
$ 1 9 , 8 0 7 $ 5 , 3 3 7
8 . 2 %
1 0 . 3 %
C H a n g E
2 . 9 %
2 9 . %
Johnston & murphy group net sales increased 2.9% to $92.5 million for Fiscal 2008 from $87.0 million for Fiscal
2007, reflecting a 2% increase in comparable store sales combined with a 4% increase in average stores operated
for Johnston & murphy retail operations and a 4% increase in Johnston & murphy wholesale sales. unit sales for the
Johnston & murphy wholesale business increased 2% in Fiscal 2008, and the average price per pair of shoes increased
2% for the same period. retail operations accounted for 74.2% of Johnston & murphy group sales in Fiscal 2008, down
slightly from 74.3% in Fiscal 2007 primarily due to increased wholesale sales. the average price per pair of shoes for
Johnston & murphy retail increased 4% (6% in the Johnston & murphy shops) in Fiscal 2008, primarily due to changes
in product mix and increased prices in certain styles, while unit sales decreased 6% during the same period. the store
count for Johnston & murphy retail operations at the end of Fiscal 2008 included 54 Johnston & murphy stores and
factory stores compared to 48 Johnston & murphy stores and factory stores at the end of Fiscal 2007.
Johnston & murphy earnings from operations for Fiscal 2008 increased 29.% to $9.8 million from $5.3 million
for Fiscal 2007, primarily due to increased gross margin as a percentage of net sales, reflecting fewer markdowns,
increased prices and better sourcing in both the retail and wholesale businesses and lower off-priced sales in the
wholesale business as well as increased net sales. the Company believes the gross margins in Fiscal 2008 reflect
most of the gains from better sourcing as weakness in the dollar is putting price pressures on the cost of products.
Licensed Brands
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 8
2 0 0 7
$ 9 2 , 7 0 6 $ 7 8 , 4 2 2
6 , 7 7 7
$ 1 0 , 9 7 6 $
1 1 . 8 %
8 . 6 %
C H a n g E
8 . 2 %
6 2 .0 %
Licensed Brands’ net sales increased 8.2% to $92.7 million for Fiscal 2008 from $78.4 million for Fiscal 2007. the
sales increase reflects a 4% increase in sales of dockers Footwear and incremental sales from the initial rollout of
a new line of footwear that the Company is sourcing exclusively for kohl’s department stores. unit sales for dockers
Footwear increased 0% for Fiscal 2008 and the average price per pair of shoes increased 3% for the same period.
29
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Licensed Brands’ earnings from operations for Fiscal 2008 increased 62.0%, from $6.8 million for Fiscal 2007 to $.0
million, primarily due to increased gross margin as a percentage of net sales, increased net sales and decreased
expenses as a percentage of net sales. the Company believes the sales gains will moderate in Fiscal 2009 due to both
the economic environment and limited opportunity to continue to grow the business with existing accounts.
c o r p o r aT e , I n T e r e s T e x p e n s e s a n d o T h e r c h a r G e s
Corporate and other expenses for Fiscal 2008 were $6.0 million compared to $30. million for Fiscal 2007. Corporate
expenses in Fiscal 2008 included $27.6 million in merger-related expenses and a $0.5 million gain from insurance
proceeds relating to hurricane katrina. Corporate and other expenses for Fiscal 2008 also included $9.7 million of
restructuring and other charges, primarily for asset impairments and lease terminations offset by excise tax refunds and
an antitrust settlement. Corporate and other cost of sales for Fiscal 2008 included $0.9 million in excess markdowns
related to underground Station group lease terminations. Corporate and other expenses for Fiscal 2007 included $.
million of restructuring and other charges, primarily for asset impairments and the termination of a small licensing
agreement offset by income for gift card breakage and a favorable litigation settlement.
interest expense increased 9.9% from $0.5 million in Fiscal 2007 to $2.6 million in Fiscal 2008, primarily due to the
increase in the average revolver borrowings from $6.8 million in Fiscal 2007 to $65.9 million this year due to decreased
net earnings and increased seasonal borrowings.
interest income decreased 74.3% from $0.6 million in Fiscal 2007 to $0. million in Fiscal 2008, due to the decrease in
average short-term investments.
R e s u l t s o f o p e r a t i o n s — F i s c a l 2 0 0 7 C o m p a r e d t o F i s c a l 2 0 0 6
the Company’s net sales for Fiscal 2007 (53 weeks) increased 3.8% to $.5 billion from $.3 billion in Fiscal 2006 (52
weeks). net sales for the 53rd week of Fiscal 2007 were $24.7 million based on actual retail sales and estimated wholesale
sales. wholesale sales are recognized upon shipment. the Company believes that a portion of the shipments that occurred
in the final week would have occurred during the quarter even if it had not included the final week. its estimate of the
amount of such sales is excluded from the estimate of sales for the 53rd week. excluding the 53rd week in Fiscal 2007, the
net sales increase from the comparable 52-week period in Fiscal 2006 was approximately 2%. gross margin increased
2.0% to $730.8 million in Fiscal 2007 from $652.4 million in Fiscal 2006 but decreased as a percentage of net sales from
50.8% to 50.0%. Selling and administrative expenses in Fiscal 2007 increased 3.3% from Fiscal 2006 but decreased
as a percentage of net sales from 4.9% to 4.7%. the Company records buying and merchandising and occupancy
costs in selling and administrative expense. Because the Company does not include these costs in cost of sales, the
Company’s gross margin may not be comparable to other retailers that include these costs in the calculation of gross
margin. explanations of the changes in results of operations are provided by business segment in discussions following
these introductory paragraphs.
Pretax earnings for Fiscal 2007 were $. million compared to $02.5 million for Fiscal 2006. Pretax earnings for Fiscal
2007 included restructuring and other charges of $. million, including $2.2 million of charges for asset impairments and
the termination of a small license agreement offset by $. million of income for gift card breakage and a favorable litigation
settlement. Pretax earnings for Fiscal 2006 included restructuring and other charges of $2.3 million, including $.7 million
for settlement of a previously announced class action lawsuit (see note 4 to the Consolidated Financial Statements), retail
store asset impairments and lease terminations of 3 Jarman stores. these lease terminations are the continuation of a
plan announced by the Company in Fiscal 2004 to close or convert into other retail concepts all remaining Jarman stores.
net earnings for Fiscal 2007 were $67.6 million ($2.59 diluted earnings per share) compared to $62.7 million ($2.38 diluted
earnings per share) for Fiscal 2006. net earnings for Fiscal 2007 included $0.6 million ($0.02 diluted earnings per share)
charge to earnings (net of tax), including $0.7 million primarily for anticipated costs of environmental remedial alternatives
related to former facilities operated by the Company offset by a $0. million gain for excess provisions to prior discontinued
operations. net earnings for Fiscal 2006 included $0. million ($0.00 diluted earnings per share) credit to earnings (net
of tax), including a $0.9 million gain for excess provisions to prior discontinued operations offset by $0.8 million primarily
for anticipated costs of environmental remedial alternatives related to former facilities operated by the Company. the
Company recorded an effective federal income tax rate of 38.6% for Fiscal 2007 compared to 38.9% for Fiscal 2006.
30
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
Journeys group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 7
2 0 0 6
$ 6 9 6 , 8 8 9 $ 5 9 3 , 5 6
$ 8 3 , 8 3 5 $ 7 3 , 3 4 6
2 . 0 %
2 . 4 %
C H a n g E
7 . 4 %
4 . 3 %
net sales from Journeys group increased 7.4% to $696.9 million for Fiscal 2007 from $593.5 million for Fiscal 2006.
the increase reflects a 3% increase in average Journeys stores operated and a 6% increase in comparable store
sales. the comparable store sales increase reflects an % increase in footwear unit comparable sales, offset by a
4% decrease in average price per pair of shoes. the average price decrease primarily reflects changes in product mix.
total unit sales increased 25% during the same period. the store count for Journeys was 853 stores at the end of Fiscal
2007, including 73 Journeys kidz stores and 2 Shi by Journeys stores, compared to 76 Journeys stores at the end
of Fiscal 2006, including 50 Journeys kidz stores and one Shi by Journeys store.
Journeys group earnings from operations for Fiscal 2007 increased 4.3% to $83.8 million, compared to $73.3 million
for Fiscal 2006, primarily attributable to the increase in sales and decreased expenses as a percentage of net sales,
reflecting lower bonus accruals.
underground Station group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
2 0 0 7
2 0 0 6
$ 5 5 , 0 6 9 $ 6 4 , 0 5 4
3 , 8 4 4 $ 0 , 8 9 0
$
2 . 5 %
6 . 6 %
P E R C E n T
C H a n g E
( 5 . 5 ) %
( 6 4 . 7 ) %
net sales from the underground Station group (comprised of underground Station and Jarman retail stores) decreased
5.5% to $55. million for Fiscal 2007 from $64. million for Fiscal 2006. Sales for underground Station stores increased
% for Fiscal 2007. Sales for Jarman retail stores decreased 29% for Fiscal 2007, reflecting a 29% decrease in the
average number of Jarman stores operated related to the Company’s strategy of closing Jarman stores or converting
them to underground Station stores. Comparable store sales decreased 0% for the underground Station group, 9%
for underground Station stores and 2% for Jarman stores. the decrease in comparable store sales was primarily
due to generally weak demand for athletic shoes, exacerbated in the second half of the year by the loss of the chain’s
most popular athletic brand from its product offering and what management believes was an overall softness in the
urban market. the average price per pair of shoes for underground Station group decreased 4% for Fiscal 2007 and
unit sales decreased 2% during the same period. the average price per pair of shoes at underground Station stores
decreased 5% during Fiscal 2007, primarily reflecting changes in product mix and increased markdowns. unit sales
increased 6% during Fiscal 2007. underground Station group operated 223 stores at the end of Fiscal 2007, including
93 underground Station stores. during Fiscal 2007, three Jarman stores were converted to underground Station
stores. the Company had operated 229 stores at the end of Fiscal 2006, including 80 underground Station stores.
underground Station group earnings from operations for Fiscal 2007 decreased 64.7% to $3.8 million from $0.9
million for the same period of Fiscal 2006. the decrease was due to decreased net sales, to decreased gross margin
as a percentage of net sales, reflecting increased markdowns, and to increased expenses as a percentage of net sales
from negative leverage in the store related expenses due to the negative comparable store sales.
hat world group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 7
2 0 0 6
$ 3 4 2 , 6 4 $ 2 9 7 , 2 7
$ 4 , 3 5 9 $ 4 0 , 3 3
2 . %
3 . 5 %
C H a n g E
5 . 3 %
3 . %
3
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
net sales from hat world group increased 5.3% to $342.6 million for Fiscal 2007 from $297.3 million for Fiscal
2006. the increase reflects primarily a 6% increase in average stores operated. hat world group comparable store
sales decreased % for Fiscal 2007. the Company believes the comparable store sales were impacted by decreased
demand in the urban market, which the Company believes is the primary market served by approximately 0 stores in
the hat world group. this was partially offset by strength in core and fashion-oriented major League Baseball products,
as well as branded action and performance headwear. hat world group operated 785 stores at Fiscal 2007, including
26 stores in Canada, three Lids kids and 49 hat Shack stores acquired in January 2007, compared to 64 stores at the
end of Fiscal 2006, including 8 stores in Canada.
hat world group earnings from operations for Fiscal 2007 increased 3.% to $4.4 million compared to $40. million
for Fiscal 2006. the increase in operating income was primarily due to increased net sales and to decreased expenses
as a percentage of net sales, offset by decreased gross margin as a percentage of net sales reflecting increased
promotional activity.
Johnston & murphy group
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 7
2 0 0 6
$ 8 6 , 9 7 9 $ 7 0 , 0 5
$ 5 , 3 3 7 $ 0 , 3 9 6
8 . 2 %
6 . %
C H a n g E
0 . 0 %
4 7 . 5 %
Johnston & murphy group net sales increased 0.0% to $87.0 million for Fiscal 2007 from $70.0 million for Fiscal 2006,
reflecting a 3% increase in comparable store sales, a 3% increase in average retail stores operated and a 4% increase in
Johnston & murphy wholesale sales. unit sales for the Johnston & murphy wholesale business increased 3% in Fiscal 2007,
and the average price per pair of shoes increased % for Fiscal 2006. retail operations accounted for 74.3% of Johnston
& murphy group sales in Fiscal 2007, down slightly from 75.2% in Fiscal 2006 primarily due to increased wholesale sales.
the average price per pair of shoes for Johnston & murphy retail decreased 2% (2% in the Johnston & murphy shops) in
Fiscal 2007, primarily due to changes in product mix, while footwear unit sales increased 8% during Fiscal 2006. the store
count for Johnston & murphy retail operations at the end of Fiscal 2007 included 48 Johnston & murphy stores and factory
stores compared to 42 Johnston & murphy stores and factory stores at the end of Fiscal 2006.
Johnston & murphy earnings from operations for Fiscal 2007 increased 47.5% to $5.3 million from $0.4 million for
Fiscal 2006, primarily due to increased net sales, to increased gross margin as a percentage of net sales, reflecting
improvement in the retail business due to improved sourcing and lower markdowns, and to decreased expenses as
percentage of net sales reflecting operating leverage from the comparable store and wholesale sales increases and
decreased advertising expenses.
Licensed Brands
d o L L a R S I n T H o u S a n d S
n e t s a l e s
e a r n i n g s f r o m o p e r a t i o n s
o p e r a t i n g m a r g i n
F I S C a L Y E a R E n d E d
P E R C E n T
2 0 0 7
2 0 0 6
$ 7 8 , 4 2 2 $ 5 8 , 7 3 0
4 , 6 7
$
6 , 7 7 7 $
8 . 6 %
7 . %
C H a n g E
3 3 . 5 %
6 2 . 6 %
Licensed Brands’ net sales increased 33.5% to $78.4 million for Fiscal 2007 from $58.7 million for Fiscal 2006. the
sales increase is primarily attributable to an increase in demand for dockers Footwear, related to retail sell-through,
due in part, to increased shelf space in existing accounts. unit sales for dockers Footwear increased 3% for Fiscal
2007 and the average price per pair of shoes increased % for the same period.
Licensed Brands’ earnings from operations for Fiscal 2007 increased 62.6%, from $4.2 million for Fiscal 2006 to $6.8
million, primarily due to increased net sales and to decreased expenses as a percentage of net sales.
c o r p o r aT e , I n T e r e s T e x p e n s e s a n d o T h e r c h a r G e s
Corporate and other expenses for Fiscal 2007 were $30. million compared to $26. million for Fiscal 2006. Corporate
and other expenses for Fiscal 2007 included $. million of restructuring and other charges, primarily for asset
impairments and the termination of a small licensing agreement offset by income for gift card breakage and a favorable
32
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
litigation settlement. Corporate and other expenses for Fiscal 2006 included $2.3 million of restructuring and other
charges, primarily for settlement of a previously announced class action lawsuit, retail store asset impairments and
lease terminations of 3 Jarman stores. in addition to the listed items in both periods, the increase in corporate
expenses for Fiscal 2007 is attributable primarily to a $6.4 million increase of share-based compensation and restricted
stock expense.
interest expense decreased 8.7% from $.5 million in Fiscal 2006 to $0.5 million in Fiscal 2007, primarily due to the
decrease in the average term loan outstanding. Borrowings under the Company’s revolving credit facility averaged
$6.8 million for Fiscal 2007. Borrowings under the Company’s revolving credit facility averaged less than $0. million
for Fiscal 2006.
interest income decreased 50.% from $. million in Fiscal 2006 to $0.6 million in Fiscal 2007, due to the decrease in
average short-term investments.
L i q u i d i t y a n d C a p i t a l r e s o u r c e s
the following table sets forth certain financial data at the dates indicated.
d o L L a R S I n M I L L I o n S
C a s h a n d c a s h e q u i v a l e n t s
w o r k i n g c a p i t a l
L o n g - t e r m d e b t
w o r k I n G c a p I Ta l
F e B . 2
F e B . 3
J a n . 2 8
2 0 0 8
$ 17.7
$ 238.1
$ 155.2
2 0 0 7
$ 6 . 7
$ 2 0 0 . 3
$ 0 9 . 3
2 0 0 6
$ 6 0 . 5
$ 85 . 0
$ 06 . 3
the Company’s business is somewhat seasonal, with the Company’s investment in inventory and accounts receivable
normally reaching peaks in the spring and fall of each year. historically, cash flow from operations has been generated
principally in the fourth quarter of each fiscal year.
Cash provided by operating activities was $23.9 million in Fiscal 2008 compared to $70.6 million in Fiscal 2007. the
$46.7 million decrease in cash flow from operating activities from last year reflects primarily a decrease in cash flow
from a decrease in net earnings of $60.8 million and changes in inventory of $.2 million, offset by an increase in cash
flow from changes in other accrued liabilities and accounts payable of $.0 million and $8.6 million, respectively, and
an increase in impairment of long-lived assets of $6.8 million. the $.2 million decrease in cash flow from inventory
was due to increases in retail inventory from a weaker than planned holiday selling season and growth in our retail
businesses with a net increase of 66 stores for Fiscal 2008. the $.0 million increase in cash flow from other accrued
liabilities was primarily due to a reduction in the change of accrued income and other taxes when compared to Fiscal
2007, combined with an increase in accrued professional fees and expenses relating to the merger agreement, and
subsequent litigation, with the Finish Line. the $8.6 million increase in cash flow from accounts payable was due to
changes in buying patterns and payment terms negotiated with individual vendors.
the $39.5 million increase in inventories at February 2, 2008 from February 3, 2007 levels reflects a weaker than planned
holiday selling season in retail and inventory purchased to support the net increase of 66 stores in Fiscal 2008.
accounts receivable at February 2, 2008 increased $0.3 million compared to February 3, 2007.
Cash provided by operating activities was $70.6 million in Fiscal 2007 compared to $05.0 million in Fiscal 2006. the
$34.4 million decrease in cash flow from operating activities reflects primarily a decrease in cash flow from changes
in other accrued liabilities of $29.3 million and a decrease in cash flow from changes in accounts payable of $7.8
million offset by an increase in cash flow from an increase in net earnings of $5.0 million. the $29.3 million decrease in
cash flow from other accrued liabilities was due to an $8.5 million increase in income taxes paid and increased bonus
payments combined with lower bonus accruals. the $7.8 million decrease in cash flow from accounts payable was
due to changes in buying patterns and payment terms negotiated with individual vendors.
the $28.4 million increase in inventories at February 3, 2007 from January 28, 2006 levels reflects inventory purchased to
support the net increase of 236 stores in Fiscal 2007 which included 49 hat Shack stores acquired in January 2007.
33
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
accounts receivable at February 3, 2007 increased $3. million compared to January 28, 2006 due primarily to increased
wholesale sales.
Cash provided (or used) due to changes in accounts payable and accrued liabilities are as follows:
F I S C a L Y E a R E n d E d
I n T H o u S a n d S
a c c o u n t s p a y a b l e
a c c r u e d l i a b i l i t i e s
$
2 0 0 8
2 0 0 7
( 4 3 0 ) $ ( 9 , 0 6 8 ) $ 8 , 7 4 4
7 , 3 5 7
( 9 2 3 )
( , 9 6 2 )
2 0 0 6
$ ( 1, 3 5 3 ) $ ( 2 , 0 3 0 ) $ 2 6 , 0
the fluctuations in cash provided due to changes in accounts payable for Fiscal 2008 from Fiscal 2007 and for Fiscal
2007 from Fiscal 2006 are due to changes in buying patterns and payment terms negotiated with individual vendors.
the change in cash provided due to changes in accrued liabilities for Fiscal 2008 from Fiscal 2007 was due primarily
to a reduction in the change in accrued income and other tax accruals and increased accrued professional fees and
expenses relating to the merger agreement, and subsequent litigation, with the Finish Line and the change in accrued
liabilities for Fiscal 2007 from Fiscal 2006 was due primarily to increased tax payments and increased bonus payments
combined with lower bonus accruals.
revolving credit borrowings averaged $65.9 million during Fiscal 2008 and $6.8 million during Fiscal 2007, as cash
generated from operations did not fund seasonal working capital requirements or its capital expenditures for Fiscal 2008.
the Company used cash to acquire hat Shack late in the fourth quarter of Fiscal 2007 for $6.6 million and to pay off
$.6 million of the $2.2 million debt assumed in the acquisition, paid off a $20.0 million term loan as well as the lower
net earnings the Company experienced in Fiscal 2008 compared to Fiscal 2007, all of which contributed to the need for
increased revolver borrowings for Fiscal 2008. the Company has a revolving credit facility entered into on december ,
2006, in the aggregate principal amount of $200.0 million, with a $20.0 million swingline loan sublimit and a $70.0 million
sublimit for the issuance of standby letters of credit, and has a five-year term (the “Credit Facility”).
c o n T r a c T u a l o B l I G aT I o n s
the following tables set forth aggregate contractual obligations and commitments as of February 2, 2008.
PaY M E n T S d u E BY P E R I o d
L e s s t h a n 1
1– 3
3 – 5
M o r e
t h a n 5
I n T H o u S a n d S
Long-term debt
interest on Long-term debt()
Capital Lease obligations
operating Lease obligations
Purchase obligations(2)
other Long-term Liabilities
Total Contractual obligations(3)
c o m m e r c I a l c o m m I T m e n T s
$
y e a r
y e a r s
y e a r s
-0- $
-0- $
To t a l
55,220 $
y e a r s
86,220
37,358
22
385,984
-0-
536
$ 1,508,765 $ 367,065 $ 307,343 $ 324 ,237 $ 510,120
55,43
407
,092,348
204,27
,520
3,557
76
59,004
204,27
20
7,4
7
247,724
-0-
382
7,4
92
299,636
-0-
40
69,000 $
a M o u n T o F C o M M I T M E n T E x P I R aT I o n P E R P E R I o d
I n T H o u S a n d S
Letters of Credit
Total Commercial Commitments
To t a l a m o u n t s
L e s s t h a n 1
c o m m i t t e d
$
$
9,052 $
9,052 $
y e a r
9,052 $
9,052 $
1– 3
y e a r s
3 – 5
y e a r s
-0- $
-0- $
-0- $
-0- $
M o r e
t h a n 5
y e a r s
-0-
-0-
(1) Includes interest to maturity on the $86.2 million 4 1/8% subordinated convertible debentures due June 2023.
Excludes interest on revolver borrowings since the line of credit is subject to almost daily repayment or borrowing
activity and as such does not readily lend itself to computing anticipated interest expense.
(2) Open purchase orders for inventory.
(3) Excludes FIN 48 liabilities of $4.9 million due to their uncertain nature in timing of payments.
34
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
c a p I Ta l e x p e n d I T u r e s
Capital expenditures were $80.7 million, $73.3 million and $56.9 million for Fiscal 2008, 2007 and 2006, respectively. the
$7.4 million increase in Fiscal 2008 capital expenditures as compared to Fiscal 2007 resulted primarily from the increase in
retail store capital expenditures due to 229 new store openings in Fiscal 2008 and increased major store renovations. the
$6.4 million increase in Fiscal 2007 capital expenditures as compared to Fiscal 2006 resulted primarily from the increase
in retail store capital expenditures due to 224 new store openings in Fiscal 2007.
total capital expenditures in Fiscal 2009 are expected to be approximately $6. million. these include expected retail
capital expenditures of $54.3 million to open approximately 28 Journeys stores, 24 Journeys kidz stores, 3 Shi by Journeys
stores, 0 Johnston & murphy shops and factory stores and 40 hat world stores including 0 stores in Canada and to
complete 65 major store renovations. the planned amount of capital expenditures in Fiscal 2009 for wholesale operations
and other purposes are expected to be approximately $6.8 million, including approximately $2.7 million for new systems to
improve customer service and support the Company’s growth.
F u T u r e c a p I Ta l n e e d s
the Company expects that cash on hand and cash provided by operations will not be sufficient to support seasonal working
capital requirements but the Company plans to borrow under the Credit Facility to partially fund its capital expenditures
during Fiscal 2009. the Company expects cash flow generated from operations to fund all of its capital expenditures by
the end of Fiscal 2009. the approximately $5.8 million of costs associated with discontinued operations that are expected
to be incurred during the next 2 months are also expected to be funded from cash on hand and borrowings under the
revolving credit facility during Fiscal 2009 but are expected to be paid out of cash flow generated by operations by the end
of Fiscal 2009.
there were $9. million of letters of credit outstanding and $69.0 million revolver borrowings outstanding under the Credit
Facility at February 2, 2008. at the end of Fiscal 2008, the Borrowing Base was $2.2 million. adjusted excess availability
is calculated based on the lesser of the $200.0 million facility amount or the Borrowing Base. therefore, gross availability
under the Credit Facility was $200.0 million leaving net availability under the Credit Facility of $2.9 million. the Company
is not required to comply with any financial covenants unless adjusted excess availability (as defined in the amended and
restated Credit agreement) is less than 0% of the total commitments under the Credit Facility (currently $20.0 million). if
and during such time as adjusted excess availability is less than such amount, the Credit Facility requires the Company
to meet a minimum fixed charge coverage ratio (eBitda less capital expenditures less cash taxes divided by cash interest
expense and scheduled payments of principal indebtedness) of .0 to .0. Because adjusted excess availability exceeded
$20.0 million, the Company was not required to comply with this financial covenant at February 2, 2008. See note 6 to the
Consolidated Financial Statements.
the Credit Facility prohibits the payment of dividends and other restricted payments (including stock repurchases) unless after
such dividend or restricted payment availability under the Credit Facility exceeds $50.0 million or if availability is between $30.0
million and $50.0 million, the fixed charge coverage must be greater than .0 to .0. the Company’s management does not
believe its availability under the Credit Facility will fall below $50.0 million during Fiscal 2009. the aggregate of annual dividend
requirements on the Company’s Subordinated Serial Preferred Stock, $2.30 Series , $4.75 Series 3 and $4.75 Series 4, and
on its $.50 Subordinated Cumulative Preferred Stock is $98,000.
c o mm on sT ock repur c h a s e s
in a series of authorizations from Fiscal 999–2003, the Company’s board of directors authorized the repurchase of up to
7.5 million shares of common stock. in June 2006, the board authorized an additional $20.0 million in stock repurchases. in
august 2006, the board authorized an additional $30.0 million in stock repurchases. the Company repurchased ,062,400
shares at a cost of $32. million during Fiscal 2007. the Company did not repurchase any shares during Fiscal 2008. in
total, the Company has repurchased 8.2 million shares at a cost of $03.4 million from all authorizations as of February
2, 2008. in march 2008, the board authorized up to $00.0 million in stock repurchases primarily funded with the after-tax
cash proceeds of the settlement of the merger-related litigation discussed above under the heading “terminated merger
agreement.”
35
Genesco Inc. and SuBSidiarieS
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
e n v i r o n m e n t a l a n d o t h e r C o n t i n g e n c i e s
the Company is subject to certain loss contingencies related to environmental proceedings and other legal matters,
including those disclosed in note 4 to the Company’s Consolidated Financial Statements. the Company has made
accruals for certain of these contingencies, including approximately $2.9 million reflected in Fiscal 2008, $. million
reflected in Fiscal 2007 and $0.8 million reflected in Fiscal 2006. the Company monitors these matters on an ongoing
basis and, on a quarterly basis, management reviews the Company’s reserves and accruals in relation to each of them,
adjusting provisions as management deems necessary in view of changes in available information. Changes in estimates
of liability are reported in the periods when they occur. Consequently, management believes that its reserve in relation
to each proceeding is a reasonable estimate of the probable loss connected to the proceeding, or in cases in which no
reasonable estimate is possible, the minimum amount in the range of estimated losses, based upon its analysis of the facts
and circumstances as of the close of the most recent fiscal quarter. however, because of uncertainties and risks inherent
in litigation generally and in environmental proceedings in particular, there can be no assurance that future developments
will not require additional reserves to be set aside, that some or all reserves may not be adequate or that the amounts of
any such additional reserves or any such inadequacy will not have a material adverse effect upon the Company’s financial
condition or results of operations.
F i n a n c i a l m a r k e t r i s k
the following discusses the Company’s exposure to financial market risk related to changes in interest rates and foreign
currency exchange rates.
outstanding debt of the Company – the Company’s outstanding long-term debt of $86.2 million 4 /8% Convertible
Subordinated debentures due June 5, 2023 bears interest at a fixed rate. accordingly, there would be no immediate impact on
the Company’s interest expense due to fluctuations in market interest rates. the Company also has $69.0 million outstanding
under its revolving credit facility at a weighted average interest rate of 5.4%. a 0% adverse change in interest rates would
increase interest expense by $0.4 million on the $69.0 million revolving credit debt.
C a s h a n d C a s h e q u i v a l e n t s – the Company’s cash and cash equivalent balances are invested in financial instruments
with original maturities of three months or less. the Company did not have significant exposure to changing interest rates
on invested cash at February 2, 2008. as a result, the Company considers the interest rate market risk implicit in these
investments at February 2, 2008 to be low.
F o r e i g n C u r r e n c y e x c h a n g e r a t e r i s k - most purchases by the Company from foreign sources are denominated
in u.S. dollars. to the extent that import transactions are denominated in other currencies, it is the Company’s practice to
hedge its risks through the purchase of forward foreign exchange contracts. at February 2, 2008, the Company had $2.5
million of forward foreign exchange contracts for euro. the Company’s policy is not to speculate in derivative instruments
for profit on the exchange rate price fluctuation and it does not hold any derivative instruments for trading purposes.
derivative instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged
and must be designated as a hedge at the inception of the contract. the unrealized gain on contracts outstanding at
February 2, 2008 was $4,000 based on current spot rates. as of February 2, 2008, a 0% adverse change in foreign
currency exchange rates from market rates would decrease the fair value of the contracts by approximately $0.2 million.
a c c o u n t s r e c e i v a b l e – the Company’s accounts receivable balance at February 2, 2008 is concentrated in its two
wholesale businesses, which sell primarily to department stores and independent retailers across the united States. one
customer accounted for 4% of the Company’s trade accounts receivable balance and another customer accounted for
% as of February 2, 2008. the Company monitors the credit quality of its customers and establishes an allowance for
doubtful accounts based upon factors surrounding credit risk of specific customers, historical trends and other information,
as well as customer specific factors; however, credit risk is affected by conditions or occurrences within the economy and
the retail industry, as well as company-specific information.
Summary – Based on the Company’s overall market interest rate and foreign currency rate exposure at February 2, 2008,
the Company believes that the effect, if any, of reasonably possible near-term changes in interest rates or foreign currency
exchange rates on the Company’s consolidated financial position, results of operations or cash flows for Fiscal 2009
would not be material.
36
m a n a G e m e n T ’ s d I s c u s s I o n a n d a n a ly s I s o F F i n a n C i a L C o n d i t i o n a n d r e S u Lt S o F o P e r at i o n S
Genesco Inc. and SuBSidiarieS
n e w a c c o u n t i n g P r i n c i p l e s
in September 2006, the FaSB issued SFaS no. 57. SFaS no. 57 defines fair value, establishes a framework for
measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value
measurements. in december 2007, the FaSB issued proposed FaSB Staff Position no. FaS 57-b, “effective date of FaSB
Statement no. 57” (the “proposed FSP”). the proposed FSP would amend SFaS no. 57, to delay the effective date for
all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial
statements on a recurring basis (that is, at least annually). the proposed FSP defers the effective date of SFaS no. 57
to fiscal years beginning after november 5, 2008 (Fiscal 200 for the Company), and interim periods within those fiscal
years for items within the scope of the proposed FSP. the Company is subject to the remaining provisions of SFaS no. 57
beginning February 3, 2008. the Company does not believe the adoption of SFaS no. 57 will have a material impact on the
Company’s results of operations or financial position.
in February 2007, the FaSB issued SFaS no. 59. SFaS no. 59 allows companies to measure many financial instruments
and certain other items at fair value that are not currently required to be measured at fair value. SFaS no. 59 is effective
for fiscal years beginning after november 5, 2007 (Fiscal 2009 for the Company). the Company does not believe that the
adoption of SFaS no. 59 will have a material impact on the Company’s results of operations or financial position.
in december 2007, the FaSB issued SFaS no. 4(r), “Business Combinations” (“SFaS no. 4(r)”). SFaS no. 4(r)
establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. the
statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and
determines what information to disclose to enable users of the financial statement to evaluate the nature and financial
effects of the business combination. SFaS no. 4(r) is to be applied prospectively to business combinations for which the
acquisition date is on or after an entity’s fiscal year that begins after december 5, 2008 (Fiscal 200 for the Company). the
Company expects the adoption will have an impact on the Consolidated Financial Statements when effective, but the nature
and magnitude of the specific effects will depend upon the nature, terms and size of any acquisitions consummated after
the effective date. the Company will assess the impact of this standard on the Consolidated Financial Statements if and
when a future acquisition occurs.
in december 2007, the FaSB issued SFaS no. 60, “noncontrolling interests in Consolidated Financial Statements–an
amendment of arB no. 5” (“SFaS no. 60”). SFaS no. 60 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of a noncontrolling interest (minority interest) as equity in the Consolidated Financial Statements and separate
from the parent’s equity. the amount of net income attributable to the noncontrolling interest will be included in consolidated
net earnings on the face of the Statements of earnings. SFaS no. 60 clarifies that changes in a parent’s ownership interest
in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest.
in addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated.
Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date.
SFaS no. 60 also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling
interest. SFaS no. 60 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after
december 5, 2008 (Fiscal 200 for the Company). earlier adoption is prohibited. the Company does not believe that the
adoption of SFaS no. 60 will have a material impact on the Company’s results of operations or financial position.
i n f l a t i o n
the Company does not believe inflation has had a material impact on sales or operating results during periods covered
in this discussion.
37
Genesco Inc. and SuBSidiarieS
F I n a n c I a l s u m m a r y
In THouSandS ExCEPT PER CoMMon SHaRE daTa
FInanCIaL STaTISTICS and oTHER daTa
R e s u l t s o f o p e r a t i o n s d a t a
net Sales
depreciation
earnings from operations
earnings before income taxes
from continuing operations
earnings from continuing operations
(Provisions for) earnings from
discontinued operations, net
net earnings
P e r C o m m o n S h a r e d a t a
earnings from continuing operations
Basic
diluted
discontinued operations
Basic
diluted
net earnings
Basic
diluted
B a l a n c e S h e e t d a t a
total assets
Long-term debt
non-redeemable preferred stock
Common shareholders’ equity
Capital expenditures
F i n a n c i a l S t a t i s t i c s
earnings from operations
as a percent of net sales
Book value per share (common
shareholders’ equity divided by
common shares outstanding)
working capital (int thousands)
Current ratio
Percent long-term debt to total capitalization
o t h e r d a t a ( E n d o f Ye a r )
number of retail outlets*
number of employees**
2008
2007
2006
2005
2004
FISCaL YEaR End
$ 1,502,119 $ ,460,478 $ ,283,876 $ ,2,68 $
45,114
45,161
32,735
8,488
40,306
2,045
,8
68,247
34,622
2,827
02,470
62,626
3,266
88,064
77,02
48,460
837,379
24,607
5,649
44,360
29,025
$
$
$
(1,603)
6,885 $
(60)
67,646 $
60
62,686 $
(2)
48,249 $
(888)
28,37
.37 $
.36
3.00 $
2.6
2.73 $
2.38
2.9 $
.92
(.07)
(.07)
.30
.29
(.02)
(.02)
2.98
2.59
.0
.00
2.74
2.38
(.0)
(.0)
2.8
.9
.32
.24
(.04)
(.04)
.28
.20
804,556 $
155,220
5,338
416,077
80,662
729,373 $
09,250
6,602
398,624
73,287
686,8 $
06,250
6,695
342,056
56,946
635,57 $
6,250
7,474
264,59
39,480
448,33
86,250
7,580
204,665
22,540
3.0%
8.3%
8.8%
7.9%
6.2%
$
$
18.25 $
238,093 $
2.6
26.9%
7.53 $
200,330 $
2.5
2.2%
4.7 $
84,986 $
2.2
23.4%
.79 $
76,245 $
2.4
37.2%
9.42
97,569
3.4
28.9%
2,175
13,950
2,009
2,750
,773
,00
,68
9,600
,046
6,200
*Includes 49 Hat Shack stores in Fiscal 2007 acquired January 11, 2007, 486 Hat World stores in Fiscal 2005 acquired April 1, 2004 and 17 Cap Connection
stores in Fiscal 2005 acquired July 1, 2004. See Note 2 to the Consolidated Financial Statements.
**Includes the addition of over 2,800 Hat World employees in Fiscal 2005 due to the acquisition.
Reflected in earnings from continuing operations for Fiscal 2008 were $27.6 million in merger-related costs and litigation expenses. These expenses were not
deductible for tax purposes in Fiscal 2008. See Notes 13 and 14 to the Consolidated Financial Statements for additional information regarding these charges.
Reflected in earnings from continuing operations for Fiscal 2008, 2007, 2006, 2005 and 2004 were restructuring and other charges of $9.7 million, $1.1 million,
$2.3 million, $1.2 million and $1.9 million, respectively. See Note 3 to the Consolidated Financial Statements for additional information regarding these charges.
Reflected in earnings from continuing operations for Fiscal 2005 was a favorable tax settlement of $0.5 million and for Fiscal 2005 and Fiscal 2004 were tax
benefits of $0.2 million and $1.1 million, respectively, resulting from the reversal of previously accrued income taxes. See Note 9 to the Consolidated Financial
Statements for additional information regarding these charges.
Long-term debt includes current obligations. In December 2006, the Company entered into an amended and restated credit agreement in the aggregate principal
amount of $200.0 million. In April 2004, the Company entered into a credit facility totaling $175.0 million. Included in the facility was a $100.0 million term
loan used to fund a portion of the Hat World acquisition. In June 2003, the Company issued $86.3 million of 4 1/8% convertible subordinated debentures due
2023. The Company used the proceeds plus additional cash to pay off $103.2 million of its 5 1/2% convertible subordinated notes which resulted in a $2.6
million loss on the early retirement of debt reflected in earnings from continuing operations for Fiscal 2004. See Note 6 to the Consolidated Financial Statements
for additional information regarding the Company’s debt.
The Company has not paid dividends on its Common Stock since 1973. See Notes 6 and 8 to the Consolidated Financial Statements and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Future Capital Needs” for a description of
limitations on the Company’s ability to pay dividends.
38
m a n a G e m e n T ’ s r e s p o n s I B I l I T y F o r F i n a n C i a L S tat e m e n t S
Genesco Inc. and SuBSidiarieS
the consolidated financial statements presented in this report are the responsibility of management and have been
prepared in conformity with u.S. generally accepted accounting principles. Some of the amounts included in the
financial information are necessarily based on the estimates and judgments of management, which are based on
currently available information and management’s view of current conditions and circumstances.
an independent registered public accounting firm audits the Company’s consolidated financial statements and the
effectiveness of internal control over financial reporting in accordance with the standards established by the Public
Company accounting oversight Board.
the audit committee of the board of directors, composed entirely of directors who are not employees of the Company,
meets regularly with management, internal audit and the independent registered public accounting firm to review
accounting, control, auditing and financial reporting matters. internal audit and the independent auditors have full and
free access to the audit committee and meet (with and without management present) to discuss appropriate matters.
James S. gulmi
Senior vice President – Finance
and Chief Financial officer
Paul d. williams
vice President and
Chief accounting officer
39
Genesco Inc. and SuBSidiarieS
r e p o r T o F I n d e p e n d e n T r e G I s T e r e d p u B l I c a c c o u n T I n G F I r m
T h e B o a r d o F d I r e c T o r s a n d s h a r e h o l d e r s
G e n e s c o I n c .
we have audited the accompanying consolidated balance sheets of genesco inc. and Subsidiaries (the “Company”)
as of February 2, 2008 and February 3, 2007, and the related consolidated statements of earnings, shareholders’ equity
and cash flows for each of the three fiscal years in the period ended February 2, 2008. these financial statements
are the responsibility of the Company’s management. our responsibility is to express an opinion on these financial
statements based on our audits.
we conducted our audits in accordance with the standards of the Public Company accounting oversight Board (united
States). those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. an audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. an audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. we believe that our audits provide a reasonable basis for our opinion.
in our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of genesco inc. and Subsidiaries at February 2, 2008 and February 3, 2007, and the consolidated
results of its operations and its cash flows for each of the three fiscal years in the period ended February 2, 2008, in
conformity with u.S. generally accepted accounting principles.
as discussed in notes , 9 and 2 to the consolidated financial statements, in fiscal 2008 the Company changed its
method of accounting for income tax contingencies, and in fiscal 2007 the Company changed its method of accounting for
shared-based payments and its method of accounting for defined benefit pension and other postretirement benefit plans.
we also have audited, in accordance with the standards of the Public Company accounting oversight Board (united
States), the Company’s internal control over financial reporting as of February 2, 2008, based on criteria established
in internal Control—integrated Framework issued by the Committee of Sponsoring organizations of the treadway
Commission and our report dated march 3, 2008 expressed an unqualified opinion thereon.
nashville, tennessee
march 3, 2008
40
Genesco Inc. and SuBSidiarieS
r e p o r T o F I n d e p e n d e n T r e G I s T e r e d p u B l I c a c c o u n T I n G F I r m
o n i n t e r n a L C o n t r o L o v e r F i n a n C i a L r e P o r t i n g
T h e B o a r d o F d I r e c T o r s a n d s h a r e h o l d e r s
G e n e s c o I n c .
we have audited genesco inc.’s internal control over financial reporting as of February 2, 2008, based on criteria
established in internal Control—integrated Framework issued by the Committee of Sponsoring organizations of the
treadway Commission (the CoSo criteria). genesco inc.’s management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting
included in the accompanying management’s report on internal Control over Financial reporting. our responsibility is
to express an opinion on the Company’s internal control over financial reporting based on our audit.
we conducted our audit in accordance with the standards of the Public Company accounting oversight Board (united
States). those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such
other procedures as we considered necessary in the circumstances. we believe that our audit provides a reasonable
basis for our opinion.
a company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. a company’s internal control over financial reporting includes those policies
and procedures that () pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
in our opinion, genesco inc. maintained, in all material respects, effective internal control over financial reporting as of
February 2, 2008, based on the CoSo criteria.
we also have audited, in accordance with the standards of the Public Company accounting oversight Board (united
States), the consolidated balance sheets of genesco inc. as of February 2, 2008 and February 3, 2007, and the related
consolidated statements of earnings, shareholders’ equity, and cash flows for each of the three fiscal years in the
period ended February 2, 2008 and our report dated march 3, 2008 expressed an unqualified opinion thereon.
nashville, tennessee
march 3, 2008
4
Genesco Inc. and SuBSidiarieS
c o n s o l I d aT e d B a l a n c e s h e e T s
I n T H o u S a n d S , E xC E P T S H a R E a M o u n T S
a S S E T S
C u r r e n t a s s e t s
Cash and cash equivalents
accounts receivable, net of allowances of $,767 at February 2, 2008
and $,90 at February 3, 2007
inventories
deferred income taxes
Prepaids and other current assets
To t a l c u r r e n t a s s e t s
Property and equipment:
Land
Buildings and building equipment
Computer hardware, software and equipment
Furniture and fixtures
Construction in progress
improvements to leased property
Property and equipment, at cost
accumulated depreciation
Property and equipment, net
deferred income taxes
goodwill
trademarks
other intangibles, net of accumulated amortization of
$7,426 at February 2, 2008 and $6,096 at February 3, 2007
other noncurrent assets
Total assets
L I a B I L I T I E S a n d S H a R E H o L d E R S ’ E q u I T Y
C u r r e n t L i a b i l i t i e s
acounts payable
accrued employee compensation
accrued other taxes
accrued income taxes
other accrued liabilities
Provision for discontinued operations
total current liabilities
Long-term debt
Pension liability
deferred rent and other long-term liabilities
Provision for discontinued operations
total liabilities
Commitments and contingent liabilities
Shareholders’ equity
non-redeemable preferred stock
Common shareholders’ equity:
Common stock, $ par value: authorized: 80,000,000 shares
issued/outstanding: February 2, 2008 – 23,284,74/22,796,277
February 3, 2007 – 23,230,458/22,74,994
additional paid-in capital
retained earnings
accumulated other comprehensive loss
treasury shares, at cost
total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying Notes are an integral part of these Consolidated Financial Statements.
42
aS oF FISCaL YEaR End
2008
2 0 0 7
$ 17,703
$ 6,739
24,275
300,548
18,702
22,439
24,084
26,037
2,940
20,266
383,667
335,066
4,861
17,165
76,700
93,703
9,120
263,184
464,733
4,86
7,445
72,404
82,542
2,005
222,493
4,750
(217,492)
(89,46)
247,241
222,334
2,641
107,618
51,403
1,486
10,500
-0-
07,65
5,36
2,86
0,45
$ 804,556
$ 729,373
$ 75,302
$
65,083
13,715
10,576
4,725
35,470
5,786
145,574
155,220
6,572
74,067
1,708
2,954
9,829
7,845
25,570
4,455
34,736
09,250
4,306
64,245
,60
383,141
324,47
5,338
6,602
23,285
117,629
309,030
(16,010)
(17,857)
23,230
07,956
306,622
(2,327)
(7,857)
421,415
405,226
$ 804,556
$ 729,373
c o n s o l I d aT e d s TaT e m e n T s o F e a r n I n G s
I n T h o u s a n d s , e x c e p T p e r s h a r e a m o u n T s
net sales
Cost of sales
Selling and administrative expenses
restructuring and other, net
earnings from operations
interest expense, net:
interest expense
interest income
total interest expense, net
earnings before income taxes from continuing operations
income tax expense
earnings from continuing operations
(Provision for) earnings from discontinued operations, net
net earnings
Basic earnings per common share:
Continuing operations
discontinued operations
net earnings
diluted earnings per common share:
Continuing operations
discontinued operations
net earnings
Genesco Inc. and SuBSidiarieS
Fiscal Year
2007
$ ,460,478
729,643
608,685
,05
2,045
0,488
(56)
9,927
,8
42,87
68,247
(60)
67,646
3.00
(.02)
2.98
2.6
(.02)
2.59
$
$
$
$
$
$
$
2006
$ ,283,876
63,469
537,327
2,253
2,827
,482
(,25)
0,357
02,470
39,844
62,626
60
62,686
2.73
.0
2.74
2.38
.00
2.38
$
$
$
$
$
$
$
2008
$ 1,502,119
750,904
696,352
9,702
45,161
12,570
(144)
12,426
32,735
24,247
8,488
(1,603)
6,885
.37
(.07)
.30
.36
(.07)
.29
$
$
$
$
$
$
$
the accompanying notes are an integral part of these Consolidated Financial Statements.
43
Genesco Inc. and SuBSidiarieS
c o n s o l I d aT e d s TaT e m e n T s o F c a s h F lo w s
In THouSandS
C a s h F l o w s f r o m o p e r a t i n g a c t i v i t i e s :
net earnings
tax benefit of stock options exercised
adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
depreciation
deferred income taxes
Provision for losses on accounts receivable
impairment of long-lived assets
Share-based compensation and restricted stock
Provision for (earnings from) discontinued operations
other
effect on cash of changes in working capital and
other assets and liabilities, net of acquisitions:
accounts receivable
inventories
Prepaids and other current assets
accounts payable
other accrued liabilities
other assets and liabilities
net cash provided by operating activities
C a s h F l o w s f r o m I n v e s t i n g a c t i v i t i e s :
Capital expenditures
acquisitions, net of cash acquired
Proceeds from sale of property and equipment
net cash used in investing activities
C a s h F l o w s f r o m F i n a n c i n g a c t i v i t i e s :
Payments of long-term debt
Payments of capital leases
Borrowings under revolving credit facility
Payments on revolving credit facility
tax benefit of stock options exercised
Shares repurchased
Change in overdraft balances
dividends paid on non-redeemable preferred stock
exercise of stock options and issue shares–
employee Stock Purchase Plan
Financing costs paid
FISCaL YEaR
2008
2007
2006
$ 6,885
$ 67,646
$ 62,686
(694)
(2,405)
3,850
45,114
(12,683)
40,306
(6,29)
137
8,722
7,851
2,633
2,643
274
,92
7,43
988
,509
34,622
(5,065)
29
376
972
(98)
5,462
(349)
(3,080)
(3,294)
(39,511)
(28,357)
(23,452)
(2,174)
(430)
(923)
6,722
23,943
,593
(9,068)
(,962)
9,97
(2,220)
8,744
7,357
5,032
70,566
05,00
(80,662)
(73,287)
(56,946)
(34)
(6,569)
6
6
-0-
2
(80,690)
(89,850)
(56,925)
-0-
(2,600)
(55,000)
(210)
(4)
365,000
262,000
(319,000)
(239,000)
694
2,405
-0-
(32,088)
10,649
(217)
795
-0-
(,477)
(256)
6,779
(,87)
(358)
,000
(,000)
-0-
-0-
(44)
(273)
8,352
-0-
net cash provided by (used in) financing activities
57,711
(24,428)
(47,693)
net Increase (decrease) in cash and cash equivalents
964
(43,72)
383
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
S u p p l e m e n t a l C a s h F l o w I n f o r m a t i o n :
net cash paid for:
interest
income taxes
The accompanying Notes are an integral part of these Consolidated Financial Statements.
16,739
60,45
60,068
$ 17,703
$ 6,739
$ 60,45
$ 11,448
$
9,730
$ 0,368
37,560
5,053
32,50
44
c o n s o l I d aT e d s TaT e m e n T s o F s h a r e h o l d e r s ’ e q u I T y
Genesco Inc. and SuBSidiarieS
In THouSandS
Balance January 29, 2005
net earnings
dividends paid on non-redeemable
preferred stock
exercise of options
employee restricted stock
issue shares – employee Stock
Purchase Plan
tax benefit of stock
options exercised
Conversion of Series 4
preferred stock
Loss on foreign currency forward contracts
(net of tax benefit of $0.7 million)
gain on interest rate swaps
(net of tax of $0. million)
minimum pension liability adjustment
(net of tax of $0.7 million)
other
Comprehensive income
Balance January 28, 2006
net earnings
dividends paid on non-redeemable
preferred stock
exercise of stock options
issue shares – employee Stock
Purchase Plan
Shares repurchased
employee and non-employee
restricted stock
Share-based compensation
tax benefit of stock options exercised
gain on foreign currency forward contracts
(net of tax of $0.6 million)
Loss on interest rate swaps
Pension liability adjustment
(net of tax of $3.2 million)
Cumulative adjustment to adopt
SFaS no. 58 (net of tax benefit
of $0.5 million)
Foreign currency translation adjustment
other
Comprehensive income
Balance February 3, 2007
Cumulative effect of change in
accounting principle (see note 9)
net earnings
dividends paid on non-redeemable
preferred stock
exercise of stock options
issue shares – employee Stock
Purchase Plan
employee and non-employee
restricted stock
Share-based compensation
restricted shares withheld for taxes
tax benefit of stock options exercised
Conversion of Series 3 preferred stock
Conversion of Series 4 preferred stock
gain on foreign currency forward contracts
(net of tax of $0.0 million)
Pension liability adjustment
(net of tax of $2.7 million)
Postretirement liability adjustment
(net of tax of $0.4 million)
Foreign currency translation adjustment
other
Comprehensive income
Balance February 2, 2008
total
non-redeemable
Preferred Stock
$ 7,474
Common
Stock
$ 22,926
additional
Paind-in
Capital
accumulate
other
retained Comprehensive
Loss
earnings
$09,005 $ 76,89
62,686
-0-
Stock
$(26,302) $ (7,857)
-0-
-0-
treasury Comprehensive
income
-0- $ 62,686
total
Shareholders’
equity
$ 272,065
62,686
-0-
-0-
-0-
-0-
-0-
547
229
-0-
8,297
400
(273)
-0-
-0-
-0-
25
483
-0-
-0-
-0-
3,850
-0-
(723)
72
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(273)
8,844
629
-0-
508
-0-
3,850
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(56)
-0-
0
-0-
390
-0-
(,047)
-0-
(,047)
(,047)
-0-
-0-
-0-
6
,084
-0-
-0-
-0-
-0-
6
6
,084
-0-
,084
344
6,695
23,748
23,37 239,232
67,646
-0-
-0-
$ 62,784
(26,204) (7,857)
-0-
-0- $ 67,646
348,75
67,646
-0-
-0-
-0-
-0-
357
-0-
6,0
(256)
-0-
-0-
-0-
0
(,062)
3
(3,026)
-0-
-0-
-0-
82
-0-
-0-
3,64
4,067
2,405
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
37
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(256)
6,458
-0-
-0-
32
(32,088)
-0-
-0-
-0-
3,346
4,067
2,405
848
848
(28)
(28)
5,094
5,094
-0-
(45)
-0-
(802)
(45)
(30)
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
$ -0-
6,885
(4,260)
6,885
-0-
-0-
(27)
584
-0-
2
-0-
-0-
-0-
-0-
-0-
-0-
4,62
3,230
(906)
694
-0-
-0-
37
37
4,3
4,3
644
505
-0-
$ 2,202
644
505
30
-0-
-0-
-0-
-0-
-0-
-0-
-0-
33
-0-
-0-
(4,260)
6,885
-0-
55
(27)
-0-
-0-
5
206
-0-
-0-
-0-
-0-
-0-
(533)
(56)
-0-
-0-
(9)
-0-
9
4,62
3,230
(887)
694
522
552
-0-
-0-
-0-
-0-
-0-
-0-
(70)
-0-
-0-
6
-0-
-0-
-0-
-0-
84
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
4,3
-0-
-0-
-0-
644
505
-0-
(net of tax benefit of $0.2 million)
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
848
-0-
(28)
-0-
5,094
-0-
-0-
(93)
-0-
-0-
(5)
-0-
-0-
(203)
-0-
-0-
-0-
(802)
(45)
-0-
6,602
23,230
07,956 306,622
(2,327) (7,857)
405,226
$ 73,325
The accompanying Notes are an integral part of these Consolidated Financial Statements.
45
$ 5,338 $ 23,285 $ 117,629 $ 309,030
$ (16,010) $ (17,857)
$ 421,415
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s
n aT u r e o F o p e r aT I o n s
the Company’s businesses include the design or sourcing, marketing and distribution of footwear, principally under the
Johnston & murphy and dockers brands and the operation at February 2, 2008 of 2,75 Journeys, Journeys kidz, Shi
by Journeys, Johnston & murphy, underground Station, Jarman, hat world, Lids, hat Shack, hat Zone, head Quarters,
Cap Connection and Lids kids retail footwear and headwear stores.
p r I n c I p l e s o F c o n s o l I d aT I o n
all subsidiaries are consolidated in the consolidated financial statements. all significant intercompany transactions and
accounts have been eliminated.
F I s c a l y e a r
the Company’s fiscal year ends on the Saturday closest to January 3. as a result, Fiscal 2008 was a 52-week year with
364 days, Fiscal 2007 was a 53-week year with 37 days and Fiscal 2006 was a 52-week year with 364 days. Fiscal 2008
ended on February 2, 2008, Fiscal 2007 ended on February 3, 2007 and Fiscal 2006 ended on January 28, 2006.
u s e o F e s T I m aT e s
the preparation of financial statements in conformity with u.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. actual results could differ from those estimates.
Significant areas requiring management estimates or judgments include the following key financial areas:
i n v e n t o r Y v a L u at i o n
the Company values its inventories at the lower of cost or market.
in its wholesale operations, cost is determined using the first-in, first-out (“FiFo”) method. market is determined using
a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn,
average selling price, inventory level, and selling prices reflected in future orders. the Company provides reserves
when the inventory has not been marked down to market based on current selling prices or when the inventory is not
turning and is not expected to turn at levels satisfactory to the Company.
in its retail operations, other than the hat world segment, the Company employs the retail inventory method, applying
average cost-to-retail ratios to the retail value of inventories. under the retail inventory method, valuing inventory at the
lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.
inherent in the retail inventory method are subjective judgments and estimates, including merchandise mark-on,
markups, markdowns, and shrinkage. these judgments and estimates, coupled with the fact that the retail inventory
method is an averaging process, could produce a range of cost figures. to reduce the risk of inaccuracy and to ensure
consistent presentation, the Company employs the retail inventory method in multiple subclasses of inventory with
similar gross margins, and analyzes markdown requirements at the stock number level based on factors such as
inventory turn, average selling price, and inventory age. in addition, the Company accrues markdowns as necessary.
these additional markdown accruals reflect all of the above factors as well as current agreements to return products
to vendors and vendor agreements to provide markdown support. in addition to markdown provisions, the Company
maintains provisions for shrinkage and damaged goods based on historical rates.
the hat world segment employs the moving average cost method for valuing inventories and applies freight using an
allocation method. the Company provides a valuation allowance for slow-moving inventory based on negative margins
and estimated shrink based on historical experience and specific analysis, where appropriate.
46
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market
conditions, fashion trends, and overall economic conditions. Failure to make appropriate conclusions regarding these
factors may result in an overstatement or understatement of inventory value.
i m Pa i r m e n t o F Lo n g - L i v e d a S S e t S
the Company periodically assesses the realizability of its long-lived assets and evaluates such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are
less than the carrying amount. inherent in the analysis of impairment are subjective judgments about future cash flows.
Failure to make appropriate conclusions regarding these judgments may result in an overstatement or understatement
of the value of long-lived assets (see note 3).
e n v i r o n m e n ta L a n d o t h e r C o n t i n g e n C i e S
the Company is subject to certain loss contingencies related to environmental proceedings and other legal matters,
including those disclosed in note 4. the Company has made provisions for certain of these contingencies, including
approximately $2.9 million reflected in Fiscal 2008, $. million reflected in Fiscal 2007 and $0.8 million reflected
in Fiscal 2006. the Company monitors these matters on an ongoing basis and, on a quarterly basis, management
reviews the Company’s reserves and accruals in relation to each of them, adjusting provisions as management deems
necessary in view of changes in available information. Changes in estimates of liability are reported in the periods when
they occur. Consequently, management believes that its reserve in relation to each proceeding is a best estimate of
probable loss connected to the proceeding, or in cases in which no best estimate is possible, the minimum amount
in the range of estimated losses, based upon its analysis of the facts and circumstances as of the close of the most
recent fiscal quarter. however, because of uncertainties and risks inherent in litigation generally and in environmental
proceedings in particular, there can be no assurance that future developments will not require additional reserves to be
set aside, that some or all reserves will be adequate or that the amounts of any such additional reserves or any such
inadequacy will not have a material adverse effect upon the Company’s financial condition or results of operations.
r e v e n u e r e C o g n i t i o n
retail sales are recorded at the point of sale and are net of estimated returns and exclude sales taxes. Catalog and
internet sales are recorded at time of delivery to the customer and are net of estimated returns. wholesale revenue
is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the
related goods have been shipped and legal title has passed to the customer. Shipping and handling costs charged to
customers are included in net sales. estimated returns are based on historical returns and claims. actual amounts of
markdowns have not differed materially from estimates. actual returns and claims in any future period may differ from
historical experience.
i n C o m e ta x e S
as part of the process of preparing Consolidated Financial Statements, the Company is required to estimate its income
taxes in each of the tax jurisdictions in which it operates. this process involves estimating actual current tax obligations
together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting
purposes, such as depreciation of property and equipment and valuation of inventories. these temporary differences
result in deferred tax assets and liabilities, which are included within the Consolidated Balance Sheets. the Company
then assesses the likelihood that its deferred tax assets will be recovered from future taxable income. actual results
could differ from this assessment if adequate taxable income is not generated in future periods. to the extent the
Company believes that recovery of an asset is at risk, valuation allowances are established. to the extent valuation
allowances are established or increase the allowances in a period, the Company includes an expense within the tax
provision in the Consolidated Statements of operations.
47
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
income tax reserves are determined using the methodology established by Fin 48. Fin 48, which was adopted by the
Company as of February 4, 2007, requires companies to assess each income tax position taken using a two step
process. a determination is first made as to whether it is more likely than not that the position will be sustained, based
upon the technical merits, upon examination by the taxing authorities. if the tax position is expected to meet the more
likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely
to be realized upon ultimate settlement of the respective tax position. uncertain tax positions require determinations
and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying
interpretation. if the Company’s determinations and estimates prove to be inaccurate, the resulting adjustments could
be material to its future financial results. See note 9 for additional information regarding income taxes.
P o S t r e t i r e m e n t B e n e F i t S P L a n a C C o u n t i n g
Substantially all full-time employees (except employees in the hat world segment), who also had ,000 hours of service
in Calendar 2004, are covered by a defined benefit pension plan. the Company froze the defined benefit pension plan
effective January , 2005. the Company also provides certain former employees with limited medical and life insurance
benefits. the Company funds at least the minimum amount required by the employee retirement income Security act.
in September 2006, the FaSB issued SFaS no. 58 which requires companies to recognize the overfunded or
underfunded status of postretirement benefit plans as an asset or liability in its Consolidated Balance Sheets and to
recognize changes in that funded status in accumulated other comprehensive loss, net of tax, in the year in which
the changes occur. this statement did not change the accounting for plans required by SFaS no. 87, and it did not
eliminate any of the expanded disclosures required by SFaS no. 32(r). on February 3, 2007, the Company adopted
the recognition and disclosure provisions of SFaS no. 58. as a result of the adoption of SFaS no. 58, the Company
recognized a $0.8 million (net of tax) cumulative adjustment in accumulated other comprehensive loss in shareholders’
equity for Fiscal 2007 related to the Company’s post-retirement medical and life insurance benefits. SFaS no. 58 also
requires companies to measure the funded status of a plan as of the date of its fiscal year end. this requirement of
SFaS no. 58 is not effective for the Company until Fiscal 2009. the Company does not believe the adoption of the
measurement date will have a material impact on the Company’s results of operations or financial position.
the Company accounts for the defined benefit pension plans using SFaS no. 87, as amended. as permitted under
SFaS no. 87, pension expense is recognized on an accrual basis over employees’ approximate service periods. the
calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions,
including the expected long-term rate of return on plan assets and the assumed discount rate, as well as the recognition
of actuarial gains and losses. Changes in these assumptions can result in different expense and liability amounts, and
future actual experience can differ from these assumptions.
S h a r e - B a S e d C o m P e n S at i o n
the Company has share-based compensation plans covering certain members of management and non-employee
directors. Pursuant to SFaS no. 23(r), adopted on the first day of Fiscal 2007, the Company recognizes compensation
expense for share-based payments based on the fair value of the awards. For Fiscal 2008 and 2007, share-based
compensation expense was $3.2 million and $4. million, respectively. For Fiscal 2008 and 2007, restricted stock
expense was $4.6 million and $3.4 million, respectively. the benefits of tax deductions in excess of recognized
compensation expense are reported as a financing cash flow.
the Company estimates the fair value of each option award on the date of grant using a Black-Scholes option pricing
model. the application of this valuation model involves assumptions that are judgmental and highly sensitive in the
determination of compensation expense, including expected stock price volatility. the Company bases expected
volatility on historical term structures. the Company bases the risk free rate on an interest rate for a bond with a
maturity commensurate with the expected term estimate. the Company estimates the expected term of stock options
using historical exercise and employee termination experience. the Company does not currently pay a dividend on
common stock. the fair value of employee restricted stock is determined based on the closing price of the Company’s
stock on the date of the grant.
48
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
in addition to the key assumptions used in the Black-Scholes model, the estimated forfeiture rate at the time of valuation
(which is based on historical experience for similar options) is a critical assumption, as it reduces expense ratably over
the vesting period. Shared-based compensation expense is recorded based on a 2% expected forfeiture rate and is
adjusted annually for actual forfeitures. the Company reviews the expected forfeiture rate annually to determine if that
percent is still reasonable based on historical experience. the Company believes its estimates are reasonable in the
context of actual (historical) experience. See note 2 for additional information regarding the Company’s share-based
compensation plans.
c a s h a n d c a s h e q u I v a l e n T s
included in cash and cash equivalents at February 2, 2008 and February 3, 2007 are cash equivalents of $0.4 million
and $0.9 million, respectively. Cash equivalents are highly-liquid financial instruments having an original maturity of
three months or less. the majority of payments due from banks for customer credit card transactions process within
24–48 hours and are accordingly classified as cash and cash equivalents.
at February 2, 2008 and February 3, 2007 outstanding checks drawn on zero-balance accounts at certain domestic
banks exceeded book cash balances at those banks by approximately $26.4 million and $5.8 million, respectively.
these amounts are included in accounts payable.
c o n c e n T r aT I o n o F c r e d I T r I s k a n d a l lo w a n c e s o n a c c o u n T s r e c e I v a B l e
the Company’s footwear wholesale businesses sell primarily to independent retailers and department stores across the
united States. receivables arising from these sales are not collateralized. Customer credit risk is affected by conditions
or occurrences within the economy and the retail industry as well as by customer specific factors. one customer
accounted for 4% and another customer accounted for % of the Company’s trade receivables balance and no other
customer accounted for more than 0% of the Company’s trade receivables balance as of February 2, 2008.
the Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information, as well as customer specific factors. the Company also establishes
allowances for sales returns, customer deductions and co-op advertising based on specific circumstances, historical
trends and projected probable outcomes.
p r o p e r T y a n d e q u I p m e n T
Property and equipment are recorded at cost and depreciated or amortized over the estimated useful life of related
assets. depreciation and amortization expense are computed principally by the straight-line method over the following
estimated useful lives:
BuiLdingS and BuiLding eQuiPment
20–45 YearS
ComPuter hardware, SoFtware and eQuiPment
3–0 YearS
Furniture and FixtureS
0 YearS
l e a s e s
Leasehold improvements and properties under capital leases are amortized on the straight-line method over the shorter
of their useful lives or their related lease terms and the charge to earnings is included in selling and administrative
expenses in the Consolidated Statements of earnings.
Certain leases include rent increases during the initial lease term. For these leases, the Company recognizes the
related rental expense on a straight-line basis over the term of the lease (which includes any rent holidays and the pre-
opening period of construction, renovation, fixturing and merchandise placement) and records the difference between
the amounts charged to operations and amounts paid as a rent liability.
49
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
the Company occasionally receives reimbursements from landlords to be used towards construction of the store the
Company intends to lease. Leasehold improvements are recorded at their gross costs including items reimbursed by
landlords. the reimbursements are amortized as a reduction of rent expense over the initial lease term.
G o o d w I l l a n d o T h e r I n Ta n G I B l e s
under the provisions of SFaS no. 42, “goodwill and other intangible assets,” (“SFaS no. 42”), goodwill and
intangible assets with indefinite lives are not amortized, but are tested at least annually for impairment. SFaS no. 42
also requires that intangible assets with finite lives be amortized over their respective lives to their estimated residual
values, and reviewed for impairment in accordance with SFaS no. 44, “accounting for the impairment or disposal of
Long-Lived assets” (“SFaS no. 44”).
intangible assets of the Company with indefinite lives are primarily goodwill and identifiable trademarks acquired in
connection with the acquisition of hat world Corporation on april , 2004 and hat Shack, inc. on January , 2007.
the Consolidated Balance Sheets include goodwill for the hat world group of $07.6 million and $07.7 million at
February 2, 2008 and February 3, 2007, respectively. the Company tests for impairment of intangible assets with an
indefinite life, at a minimum on an annual basis, relying on a number of factors including operating results, business
plans and projected future cash flows. the impairment test for identifiable assets not subject to amortization consists
of a comparison of the fair value of the intangible asset with its carrying amount.
identifiable intangible assets of the Company with finite lives are primarily in-place leases and customer lists. they
are subject to amortization based upon their estimated useful lives. Finite-lived intangible assets are evaluated for
impairment using a process similar to that used to evaluate other definite-lived long-lived assets, a comparison of the
fair value of the intangible asset with its carrying amount. an impairment loss is recognized for the amount by which
the carrying value exceeds the fair value of the asset.
Fa I r v a l u e o F F I n a n c I a l I n s T r u m e n T s
the carrying amounts and fair values of the Company’s financial instruments at February 2, 2008 and February 3, 2007 are:
Fa I r v a l u e s
I n T H o u S a n d S
Fixed rate Long-term debt
2 0 0 8
2 0 0 7
C a R R Y I n g
a M o u n T
$ 86,220
Fa I R
v a L u E
$ 115,489
C a r r Y i n g
a m o u n t
$ 86,250
Fa i r
v a L u e
$ 63,634
Carrying amounts reported on the balance sheet for cash, cash equivalents, receivables, foreign currency hedges and
accounts payable approximate fair value due to the short-term maturity of these instruments.
the fair value of the Company’s long-term debt was based on dealer prices on the respective balance sheet dates.
c o s T o F s a l e s
For the Company’s retail operations, the cost of sales includes actual product cost, the cost of transportation to the
Company’s warehouses from suppliers and the cost of transportation from the Company’s warehouses to the stores.
additionally, the cost of its distribution facilities allocated to its retail operations is included in cost of sales.
For the Company’s wholesale operations, the cost of sales includes the actual product cost and the cost of transportation
to the Company’s warehouses from suppliers.
s e l l I n G a n d a d m I n I s T r aT I v e e x p e n s e s
Selling and administrative expenses include all operating costs of the Company excluding (i) those related to the
transportation of products from the supplier to the warehouse, (ii) for its retail operations, those related to the transportation
of products from the warehouse to the store and (iii) costs of its distribution facilities which are allocated to its retail
operations. wholesale and unallocated retail costs of distribution are included in selling and administrative expenses in
the amounts of $3.7 million, $4.4 million and $4.5 million for Fiscal 2008, Fiscal 2007 and Fiscal 2006, respectively.
50
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
G I F T c a r d s
the Company has a gift card program that began in calendar 999 for its hat world operations and calendar 2000 for
its footwear operations. the gift cards issued to date do not expire. as such, the Company recognizes income when:
(i) the gift card is redeemed by the customer; or (ii) the likelihood of the gift card being redeemed by the customer for
the purchase of goods in the future is remote and there are no related escheat laws (referred to as “breakage”). the gift
card breakage rate is based upon historical redemption patterns and income is recognized for unredeemed gift cards
in proportion to those historical redemption patterns.
the Company recognized income of $0.6 million in the fourth quarter of Fiscal 2007 due to the Company’s belief that
it had sufficient historical information to support the recognition of gift card breakage after a review of state escheat
laws in which it operates. this initial recognition of gift card breakage was included as a reduction in restructuring and
other, net on the Consolidated Statements of earnings. effective February 4, 2007, gift card breakage is recognized
in revenues each period. gift card breakage recognized as revenue in Fiscal 2008 was $0.3 million. the Consolidated
Balance Sheets include an accrued liability for gift cards of $7.5 million and $6.3 million at February 2, 2008 and
February 3, 2007, respectively.
B u y I n G , m e r c h a n d I s I n G a n d o c c u pa n c y c o s T s
the Company records buying, merchandising and occupancy costs in selling and administrative expense. Because the
Company does not include these costs in cost of sales, the Company’s gross margin may not be comparable to other
retailers that include these costs in the calculation of gross margin.
s h I p p I n G a n d h a n d l I n G c o s T s
Shipping and handling costs related to inventory purchased from suppliers is included in the cost of inventory and is
charged to cost of sales in the period that the inventory is sold. all other shipping and handling costs are charged to
cost of sales in the period incurred except for wholesale and unallocated retail costs of distribution, which are included
in selling and administrative expenses.
p r e o p e n I n G c o s T s
Costs associated with the opening of new stores are expensed as incurred, and are included in selling and administrative
expenses on the accompanying Consolidated Statements of earnings.
s T o r e c lo s I n G s a n d e x I T c o s T s
From time to time, the Company makes strategic decisions to close stores or exit locations or activities. if stores or
operating activities to be closed or exited constitute components, as defined by SFaS no. 44, and will not result in a
migration of customers and cash flows, these closures will be considered discontinued operations when the related
assets meet the criteria to be classified as held for sale, or at the cease-use date, whichever occurs first. the results
of operations of discontinued operations are presented retroactively, net of tax, as a separate component on the
Consolidated Statements of earnings, if material individually or cumulatively. to date, no store closings meeting the
discontinued operations criteria have been material individually or cumulatively.
assets related to planned store closures or other exit activities are reflected as assets held for sale and recorded at
the lower of carrying value or fair value less costs to sell when the required criteria, as defined by SFaS no. 44, are
satisfied. depreciation ceases on the date that the held for sale criteria are met.
assets related to planned store closures or other exit activities that do not meet the criteria to be classified as held for
sale are evaluated for impairment in accordance with the Company’s normal impairment policy, but with consideration
given to revised estimates of future cash flows. in any event, the remaining depreciable useful lives are evaluated and
adjusted as necessary.
exit costs related to anticipated lease termination costs, severance benefits and other expected charges are accrued for
and recognized in accordance with SFaS no. 46, “accounting for Costs associated with exit or disposal activities.”
5
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
a d v e r T I s I n G c o s T s
advertising costs are predominantly expensed as incurred. advertising costs were $33.7 million, $3. million and $29.
million for Fiscal 2008, 2007 and 2006, respectively. direct response advertising costs for catalogs are capitalized
in accordance with the american institute of Certified Public accountants (“aiCPa”) Statement of Position no. 93-7,
“reporting on advertising Costs.” Such costs are amortized over the estimated future revenues realized from such
advertising, not to exceed six months. the Consolidated Balance Sheets include prepaid assets for direct response
advertising costs of $.4 million and $. million at February 2, 2008 and February 3, 2007, respectively.
c o n s I d e r aT I o n T o r e s e l l e r s
the Company does not have any written buy-down programs with retailers, but the Company has provided certain
retailers with markdown allowances for obsolete and slow moving products that are in the retailer’s inventory. the
Company estimates these allowances and provides for them as reductions to revenues at the time revenues are
recorded. markdowns are negotiated with retailers and changes are made to the estimates as agreements are reached.
actual amounts for markdowns have not differed materially from estimates.
c o o p e r aT I v e a d v e r T I s I n G
Cooperative advertising funds are made available to all of the Company’s wholesale customers. in order for retailers
to receive reimbursement under such programs, the retailer must meet specified advertising guidelines and provide
appropriate documentation of expenses to be reimbursed. the Company’s cooperative advertising agreements require
that wholesale customers present documentation or other evidence of specific advertisements or display materials used
for the Company’s products by submitting the actual print advertisements presented in catalogs, newspaper inserts or
other advertising circulars, or by permitting physical inspection of displays. additionally, the Company’s cooperative
advertising agreements require that the amount of reimbursement requested for such advertising or materials be
supported by invoices or other evidence of the actual costs incurred by the retailer. the Company accounts for these
cooperative advertising costs as selling and administrative expenses, in accordance with emerging issues task Force
(“eitF”) issue no. 0-9, “accounting for Consideration given by a vendor to a Customer (including a reseller of the
vendor’s Products).”
Cooperative advertising costs recognized in selling and administrative expenses were $3.3 million, $2.7 million and $2.2
million for Fiscal 2008, 2007 and 2006, respectively. during Fiscal 2008, 2007 and 2006, the Company’s cooperative
advertising reimbursements paid did not exceed the fair value of the benefits received under those agreements.
v e n d o r a l lo w a n c e s
From time to time, the Company negotiates allowances from its vendors for markdowns taken or expected to be
taken. these markdowns are typically negotiated on specific merchandise and for specific amounts. these specific
allowances are recognized as a reduction in cost of sales in the period in which the markdowns are taken. markdown
allowances not attached to specific inventory on hand or already sold are applied to concurrent or future purchases
from each respective vendor.
the Company receives support from some of its vendors in the form of reimbursements for cooperative advertising and
catalog costs for the launch and promotion of certain products. the reimbursements are agreed upon with vendors
and represent specific, incremental, identifiable costs incurred by the Company in selling the vendor’s products. Such
costs and the related reimbursements are accumulated and monitored on an individual vendor basis, pursuant to
the respective cooperative advertising agreements with vendors. Such cooperative advertising reimbursements are
recorded as a reduction of selling and administrative expenses in the same period in which the associated expense
is incurred. if the amount of cash consideration received exceeds the costs being reimbursed, such excess amount
would be recorded as a reduction of cost of sales.
vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses
were $4.3 million, $3.9 million and $3.6 million for Fiscal 2008, 2007 and 2006, respectively. during Fiscal 2008, 2007 and
2006, the Company’s cooperative advertising reimbursements received were not in excess of the costs reimbursed.
52
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
e n v I r o n m e n Ta l c o s T s
environmental expenditures relating to current operations are expensed or capitalized as appropriate. expenditures
relating to an existing condition caused by past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated and are evaluated independently of any future claims for recovery.
generally, the timing of these accruals coincides with completion of a feasibility study or the Company’s commitment
to a formal plan of action. Costs of future expenditures for environmental remediation obligations are not discounted
to their present value.
e a r n I n G s p e r c o m m o n s h a r e
Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period. diluted earnings per share reflects the
potential dilution that could occur if securities to issue common stock were exercised or converted to common stock
(see note ).
o T h e r c o m p r e h e n s I v e I n c o m e
SFaS no. 30, “reporting Comprehensive income,” requires, among other things, the Company’s pension liability
adjustment, postretirement liability adjustment, unrealized gains or losses on foreign currency forward contracts and
foreign currency translation adjustments to be included in other comprehensive income net of tax. accumulated other
comprehensive loss at February 2, 2008 consisted of $6.7 million of cumulative pension liability adjustments, net of
tax and a $0.2 million cumulative postretirement liability adjustment, net of tax, offset by cumulative net gains of $0.3
million on foreign currency forward contracts, net of tax, and a foreign currency translation adjustment of $0.6 million.
B u s I n e s s s e G m e n T s
SFaS no. 3, “disclosures about Segments of an enterprise and related information,” requires that companies
disclose “operating segments” based on the way management disaggregates the Company’s operations for making
internal operating decisions (see note 5).
d e r I v aT I v e I n s T r u m e n T s a n d h e d G I n G a c T I v I T I e s
SFaS no. 33, “accounting for derivative instruments and hedging activities,” SFaS no. 37, “accounting for derivative
instruments and hedging activities – deferral of the effective date of SFaS no. 33,” SFaS no. 38, “accounting for
Certain derivative instruments and Certain hedging activities” and SFaS no. 49, “amendment of Statement 33
on derivative instruments and hedging activities,” (collectively “SFaS no. 33”) require an entity to recognize all
derivatives as either assets or liabilities in the consolidated balance sheet and to measure those instruments at fair
value. under certain conditions, a derivative may be specifically designated as a fair value hedge or a cash flow hedge.
the accounting for changes in the fair value of a derivative are recorded each period in current earnings or in other
comprehensive income depending on the intended use of the derivative and the resulting designation.
n e w a c c o u n T I n G p r I n c I p l e s
in September 2006, the FaSB issued SFaS no. 57. SFaS no. 57 defines fair value, establishes a framework for
measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair
value measurements. in december 2007, the FaSB issued proposed FaSB Staff Position no. FaS 57-b, “effective
date of FaSB Statement no. 57” (the “proposed FSP”). the proposed FSP would amend SFaS no. 57, to delay
the effective date for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed
at fair value in the financial statements on a recurring basis (that is, at least annually). the proposed FSP defers the
effective date of SFaS no. 57 to fiscal years beginning after november 5, 2008 (Fiscal 200 for the Company), and
interim periods within those fiscal years for items within the scope of the proposed FSP. the Company is subject to
the remaining provisions of SFaS no. 57 beginning February 3, 2008. the Company does not believe the adoption of
SFaS no. 57 will have a material impact on the Company’s results of operations or financial position.
53
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : S u m m a r y o f S i g n i f i c a n t a c c o u n t i n g Po l i c i e s c o n t i n u e d
in February 2007, the FaSB issued SFaS no. 59. SFaS no. 59 allows companies to measure many financial instruments
and certain other items at fair value that are not currently required to be measured at fair value. SFaS no. 59 is effective
for fiscal years beginning after november 5, 2007 (Fiscal 2009 for the Company). the Company does not believe that
the adoption of SFaS no. 59 will have a material impact on the Company’s results of operations or financial position.
in december 2007, the FaSB issued SFaS no. 4(r), “Business Combinations” (“SFaS no. 4(r)”). SFaS no. 4(r)
establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. the
statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination
and determines what information to disclose to enable users of the financial statement to evaluate the nature and
financial effects of the business combination. SFaS no. 4(r) is to be applied prospectively to business combinations
for which the acquisition date is on or after an entity’s fiscal year that begins after december 5, 2008 (Fiscal 200
for the Company). the Company expects the adoption will have an impact on the Consolidated Financial Statements
when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms and size of
any acquisitions consummated after the effective date. the Company will assess the impact of this standard on the
Consolidated Financial Statements if and when a future acquisition occurs.
in december 2007, the FaSB issued SFaS no. 60, “noncontrolling interests in Consolidated Financial Statements–an
amendment of arB no. 5” (“SFaS no. 60”). SFaS no. 60 establishes new accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires
the recognition of a noncontrolling interest (minority interest) as equity in the Consolidated Financial Statements and
separate from the parent’s equity. the amount of net income attributable to the noncontrolling interest will be included in
consolidated net earnings on the face of the Statements of earnings. SFaS no. 60 clarifies that changes in a parent’s
ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its
controlling financial interest. in addition, this statement requires that a parent recognize a gain or loss in net income
when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity
investment on the deconsolidation date. SFaS no. 60 also includes expanded disclosure requirements regarding the
interests of the parent and its noncontrolling interest. SFaS no. 60 is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after december 5, 2008 (Fiscal 200 for the Company). earlier adoption
is prohibited. the Company does not believe that the adoption of SFaS no. 60 will have a material impact on the
Company’s results of operations or financial position.
n o t e 2 : a c q u i s i t i o n s
h aT s h a c k a c q u I s I T I o n
on January , 2007, hat world acquired 00% of the outstanding stock of hat Shack, inc., which operated 49 hat
Shack retail headwear stores located primarily in the southeastern united States, for a purchase price of $6.6 million
plus debt assumed of $2.2 million funded from cash on hand. the Company allocated $.4 million of the purchase
price to goodwill and $3.7 million to tradenames. the goodwill related to the hat Shack acquisition is not deductible
for tax purposes.
h aT w o r l d a c q u I s I T I o n
the trademarks acquired include the concept names and are deemed to have an indefinite life. Finite-lived intangibles
include a $0.3 million customer list and an $8.6 million asset to reflect the adjustment of acquired leases to market. the
weighted average amortization period for the asset to adjust acquired leases to market is 4.2 years. the amortization of
intangibles was $.3 million, $.8 million and $2.3 million for Fiscal 2008, 2007 and 2006, respectively. the amortization
of intangibles for Fiscal 2009, 200, 20, 202 and 203 will be $0.7 million, $0.4 million, $0.2 million, $0. million and
$0. million, respectively.
54
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e 3 : r e s t r u c t u r i n g a n d o t h e r C h a r g e s a n d d i s c o n t i n u e d o p e r a t i o n s
r e s T r u c T u r I n G a n d o T h e r c h a r G e s
in accordance with Company policy, assets are determined to be impaired when the revised estimated future cash
flows are insufficient to recover the carrying costs. impairment charges represent the excess of the carrying value over
the fair value of those assets.
asset impairment charges are reflected as a reduction of the net carrying value of property and equipment, and in
restructuring and other, net in the accompanying Consolidated Statements of earnings.
the Company recorded a total pretax charge to earnings of $0.6 million ($6.4 million net of tax) in Fiscal 2008. the
charge reflected in restructuring and other, net included $8.7 million of charges for retail store asset impairments and
$.5 million for lease terminations, offset by $0.5 million in excise tax refunds and an antitrust settlement. the asset
impairments reflected deterioration in the urban market as well as underperforming stores in some of the Company’s
other markets. also included in the charge was $0.9 million in excess markdowns related to the underground Station
group store lease terminations which is reflected in cost of sales on the Consolidated Statements of earnings.
the Company recorded a pretax charge to earnings of $. million ($0.7 million net of tax) in Fiscal 2007. the charge
included $2.2 million of charges for asset impairments and the early termination of a license agreement offset by $.
million of gift card related income and a favorable litigation settlement.
the Company recorded a pretax charge to earnings of $2.3 million ($.4 million net of tax) in Fiscal 2006. the charge
included $.7 million for the settlement of a California employment class action and $0.6 million for retail store asset
impairments and lease terminations of 3 Jarman stores pursuant to the plan announced by the Company in Fiscal
2004 to close or convert into other retail concepts all remaining Jarman stores.
d I s c o n T I n u e d o p e r aT I o n s
For the year ended February 2, 2008, the Company recorded an additional charge to earnings of $2.6 million ($.6 million
net of tax) reflected in discontinued operations, including $2.9 million primarily for anticipated costs of environmental
remedial alternatives related to former facilities operated by the Company offset by a $0.3 million gain for excess
provisions to prior discontinued operations (see note 4).
For the year ended February 3, 2007, the Company recorded an additional charge to earnings of $.0 million ($0.6 million
net of tax) reflected in discontinued operations, including $. million primarily for anticipated costs of environmental
remedial alternatives related to former facilities operated by the Company offset by a $0. million gain for excess
provisions to prior discontinued operations (see note 4).
For the year ended January 28, 2006, the Company recorded a credit to earnings of $0. million ($0. million net of
tax) reflected in discontinued operations, including a $0.9 million gain for excess provisions to prior discontinued
operations offset by $0.8 million primarily for anticipated costs of environmental remedial alternatives related to former
facilities operated by the Company (see note 4).
accrued Provision for discontinued operations
In THouSandS
Balance January 28, 2006
additional provision Fiscal 2007
Charges and adjustments, net
Balance February 3, 2007
additional provision Fiscal 2008
Charges and adjustments, net
Balance February 2, 2008*
current provision for discontinued operations
Total noncurrent provision for discontinued operations
FaCILITY
SHuTdown
CoSTS
$ 5,70
988
(633)
6,065
2,633
(,204)
7,494
5,786
$ 1,708
oTHER
$ 3
-0-
(3)
-0-
-0-
-0-
-0-
-0-
$ -0-
ToTaL
$ 5,73
988
(636)
6,065
2,633
(,204)
7,494
5,786
$ 1,708
*Includes a $7.8 million environmental provision, including $5.7 million in current provision, for discontinued operations.
55
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 4 : i n v e n t o r i e s
inventories
I n T H o u S a n d S
raw materials
wholesale finished goods
retail merchandise
Total Inventories
F E B R u a R Y 2 ,
F e B r u a r Y 3 ,
$
2 0 0 8
204
31,081
269,263
$ 300,548
$
2007
22
29,272
23,553
$ 26,037
n o t e 5 : d e r i v a t i v e i n s t r u m e n t s a n d h e d g i n g a c t i v i t i e s
in order to reduce exposure to foreign currency exchange rate fluctuations in connection with inventory purchase
commitments for its Johnston & murphy group (primarily the euro), the Company enters into foreign currency forward
exchange contracts with a maximum hedging period of twelve months. derivative instruments used as hedges must be
effective at reducing the risk associated with the exposure being hedged. the settlement terms of the forward contracts
correspond with the payment terms for the merchandise inventories. as a result, there is no hedge ineffectiveness
to be reflected in earnings. the notional amount of such contracts outstanding at February 2, 2008 and February 3,
2007 was $2.5 million and $8.0 million, respectively. Forward exchange contracts have an average remaining term of
approximately three months. the gain based on spot rates under these contracts at February 2, 2008 was $4,000 and
the loss based on spot rates under these contracts at February 3, 2007 was $4,000. For the year ended February 2,
2008, the Company recorded an unrealized gain on foreign currency forward contracts of $0. million in accumulated
other comprehensive loss, before taxes. the Company monitors the credit quality of the major national and regional
financial institutions with which it enters into such contracts.
the Company estimates that the majority of net hedging gains related to forward exchange contracts will be reclassified
from accumulated other comprehensive loss into earnings through lower cost of sales over the succeeding year.
n o t e 6 : L o n g -te r m d e b t
I n T H o u S a n d S
4 /8% convertible subordinated debentures due June 2023
revolver borrowings
total long-term debt
Current portion
Total noncurrent Portion of Long-Term debt
2 0 0 8
2 0 0 7
$ 86,220
$ 86,250
69,000
23,000
155,220
09,250
-0-
-0-
$ 155,220
$ 09,250
Long-term debt maturing during each of the next five years ending January is as follows: 2009 - $-0-; 200 - $-0-; 20
- $-0-; 202 - $69,000,000, 203 - $-0-; and thereafter - $86,220,000.
c r e d I T Fa c I l I T y:
on december , 2006, the Company entered into an amended and restated Credit agreement (the “Credit Facility”)
by and among the Company, certain subsidiaries of the Company party thereto, as other borrowers, the lenders party
thereto and Bank of america, n.a., as administrative agent. the Credit Facility replaced the Company’s $05.0 million
revolving credit facility.
deferred financing costs incurred of $.2 million related to the Credit Facility were capitalized and are being amortized
over four years. these costs are included in other non-current assets on the Consolidated Balance Sheets.
the Company had $69.0 million of revolver borrowings outstanding under the Credit Facility at February 2, 2008. the
Company had outstanding letters of credit of $9. million under the facility at February 2, 2008. these letters of credit
support product purchases and lease and insurance indemnifications.
56
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 6 : L o n g -te r m d e b t c o n t i n u e d
the material terms of the Credit Facility are as follows:
a v a i L a B i L i t Y
the Credit Facility is a revolving credit facility in the aggregate principal amount of $200.0 million, with a $20.0 million
swingline loan sublimit and a $70.0 million sublimit for the issuance of standby letters of credit, and has a five-year term.
any swingline loans and letters of credit will reduce the availability under the Credit Facility on a dollar-for-dollar basis.
in addition, the Company has an option to increase the availability under the Credit Facility by up to $00.0 million (in
increments no less than $25.0 million) subject to, among other things, the receipt of commitments for the increased
amount. the aggregate amount of the loans made and letters of credit issued under the restated Credit agreement
shall at no time exceed the lesser of the facility amount ($200.0 million or, if increased at the Company’s option, up
to $300.0 million) or the “Borrowing Base”, which generally is based on 85% of eligible inventory plus 85% of eligible
accounts receivable less applicable reserves.
C o L L at e r a L
the loans and other obligations under the Credit Facility are secured by substantially all of the presently owned and
hereafter acquired non-real estate assets of the Company and certain subsidiaries of the Company.
i n t e r e S t a n d F e e S
the Company’s borrowings under the Credit Facility bear interest at varying rates that, at the Company’s option, can
be based on either:
• a base rate generally defined as the sum of the prime rate of Bank of america, n.a. and an applicable margin.
• a LiBo rate generally defined as the sum of LiBor (as quoted on the British Banking association telerate Page
3750) and an applicable margin.
the initial applicable margin for base rate loans is 0.00%, and the initial applicable margin for LiBor loans is .00%.
thereafter, the applicable margin will be subject to adjustment based on “excess availability” for the prior quarter. the
term “excess availability” means, as of any given date, the excess (if any) of the Borrowing Base over the outstanding
credit extensions under the Credit Facility.
interest on the Company’s borrowings is payable monthly in arrears for base rate loans and at the end of each interest
rate period (but not less often than quarterly) for LiBor loans.
the Company is also required to pay a commitment fee on the difference between committed amounts and the
aggregate amount (including the aggregate amount of letters of credit) of the credit extensions outstanding under the
Credit Facility, which initially is 0.25% per annum, subject to adjustment in the same manner as the applicable margins
for interest rates.
C e r ta i n C o v e n a n t S
the Company is not required to comply with any financial covenants unless adjusted excess availability is less than
0% of the total commitments under the Credit Facility (currently $20.0 million). the term “adjusted excess availability”
means, as of any given date, the excess (if any) of (a) the lesser of the total commitments under the Credit Facility
and the Borrowing Base over (b) the outstanding credit extensions under the Credit Facility. if and during such time
as adjusted excess availability is less than such amount, the Credit Facility requires the Company to meet a minimum
fixed charge coverage ratio (eBitda less capital expenditures less cash taxes divided by cash interest expense and
scheduled payments of principal indebtedness) of .00 to .00. Because adjusted excess availability exceeded $20.0
million, the Company was not required to comply with this financial covenant at February 2, 2008.
in addition, the Credit Facility contains certain covenants that, among other things, restrict additional indebtedness, liens
and encumbrances, loans and investments, acquisitions, dividends and other restricted payments, transactions with
affiliates, asset dispositions, mergers and consolidations, prepayments or material amendments of other indebtedness
and other matters customarily restricted in such agreements.
57
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 6 : L o n g -te r m d e b t c o n t i n u e d
C a S h d o m i n i o n
the Credit Facility also contains cash dominion provisions that apply in the event that the Company’s adjusted excess
availability fails to meet certain thresholds or there is an event of default under the Credit Facility.
e v e n t S o F d e Fa u Lt
the Credit Facility contains customary events of default, including, without limitation, payment defaults, breaches of
representations and warranties, covenant defaults, cross-defaults to certain other material indebtedness in excess
of specified amounts, certain events of bankruptcy and insolvency, certain eriSa events, judgments in excess of
specified amounts and change in control.
Certain of the lenders under the Credit Facility or their affiliates have provided, and may in the future provide, certain
commercial banking, financial advisory, and investment banking services in the ordinary course of business for the
Company, its subsidiaries and certain of its affiliates, for which they receive customary fees and commissions.
4 1 / 8 % c o n v e r T I B l e s u B o r d I n aT e d d e B e n T u r e s d u e 2 0 2 3 :
on June 24, 2003 and June 26, 2003, the Company issued a total of $86.3 million of 4 /8% Convertible Subordinated
debentures (the “debentures”) due June 5, 2023. the debentures are convertible at the option of the holders into
shares of the Company’s common stock, par value $.00 per share, if: () the price of its common stock issuable upon
conversion of a debenture reaches 20% or more of the initial conversion price ($26.54 or more) for 0 of the last 30
trading days of the immediately preceding fiscal quarter, (2) specified corporate transactions occur or (3) the trading
price for the debentures falls below certain thresholds. as of January 3, 2005, the debentures became convertible
into shares of common stock at the option of the holders. the Company’s common stock closed at or above $26.54
for at least 0 of the last 30 trading days of the fourth quarter of Fiscal 2005. therefore, the contingency was satisfied.
upon conversion, the Company will have the right to deliver, in lieu of its common stock, cash or a combination of
cash and shares of its common stock. Subject to the above conditions, each $,000 principal amount of debentures is
convertible into 45.2080 shares (equivalent to an initial conversion price of $22.2 per share of common stock) subject
to adjustment. there were $30,000 of debentures converted to ,356 shares of common stock during Fiscal 2008.
the Company pays cash interest on the debentures at an annual rate of 4.25% of the principal amount at issuance,
payable on June 5 and december 5 of each year, commencing on december 5, 2003. the Company will pay
contingent interest (in the amounts set forth in the debentures) to holders of the debentures during any six-month
period from and including an interest payment date to, but excluding, the next interest payment date, commencing with
the six-month period ending december 5, 2008, if the average trading price of the debentures for the five consecutive
trading day measurement period immediately preceding the applicable six-month period equals 20% or more of the
principal amount of the debentures.
the Company may redeem some or all of the debentures for cash at any time on or after June 20, 2008 at 00% of their
principal amount, plus accrued and unpaid interest, contingent interest and liquidated damages, if any.
each holder of the debentures may require the Company to purchase all or a portion of the holder’s debentures on
June 5, 200, 203 or 208, at a price equal to the principal amount of the debentures to be purchased, plus accrued
and unpaid interest, contingent interest and liquidated damages, if any, to the purchase date. each holder may also
require the Company to repurchase all or a portion of such holder’s debentures upon the occurrence of a change of
control (as defined in the debentures). the Company may choose to pay the change of control purchase price in cash
or shares of its common stock or a combination of cash and shares.
deferred financing costs of $2.9 million relating to the issuance were capitalized and are being amortized over seven
years and are included in other non-current assets on the Consolidated Balance Sheets.
the indenture pursuant to which the debentures were issued does not restrict the incurrence of senior debt by the
Company or other indebtedness or liabilities by the Company or any of its subsidiaries.
58
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 7 : C o m m i t m e n t s u n d e r L o n g -te r m L e a s e s
o p e r aT I n G l e a s e s
the Company leases its office space and all of its retail store locations and transportation equipment under various
noncancelable operating leases. the leases have varying terms and expire at various dates through 2023. the store
leases typically have initial terms of between 5 and 0 years. generally, most of the leases require the Company to
pay taxes, insurance, maintenance costs and contingent rentals based on sales. approximately 3% of the Company’s
leases contain renewal options.
rental expense under operating leases of continuing operations was:
In THouSandS
minimum rentals
Contingent rentals
Sublease rentals
Total rental expense
minimum rental commitments payable in future years are:
FISCaL YEaRS
2009
200
20
202
203
Later years
Total minimum rental commitments
2008
$ 145,763
4,221
(806)
$ 149,178
2007
$ 26,833
5,320
(744)
$ 3,409
2006
$ 0,028
4,668
(768)
$ 3,928
In THouSandS
$ 59,004
55,37
44,39
30,09
7,705
385,984
$ ,092,348
For leases that contain predetermined fixed escalations of the minimum rentals, the related rental expense is
recognized on a straight-line basis and the cumulative expense recognized on the straight-line basis in excess of the
cumulative payments is included in deferred rent and other long-term liabilities on the Consolidated Balance Sheets.
the Company occasionally receives reimbursements from landlords to be used towards construction of the store the
Company intends to lease. Leasehold improvements are recorded at their gross costs including items reimbursed
by landlords. the reimbursements are amortized as a reduction of rent expense over the initial lease term. tenant
allowances of $25.5 million and $23.7 million for Fiscal 2008 and 2007, respectively, and deferred rent of $26.3 million
and $22.3 million for Fiscal 2008 and 2007, respectively, are included in deferred rent and other long-term liabilities
on the Consolidated Balance Sheets.
59
n/a
2
00
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 8 : S h a r e h o l d e r s ’ e q u i t y
n o n - r e d e e m a B l e p r e F e r r e d s T o c k
Shares
number of Shares
amounts in thousands Convertible
no of
Common
2008
2007
2006
2008
2007
2006
Ratio
votes
Class (in order of preference)
authorized
Subordinated Serial Preferred (Cumulative)
aggregate
3,000,000**
-
64,368 33,658
40,449 12,326
3,579
53,764
-0-
800,000
-
36,045
7,660
9,84
-0-
-
-
36,295 $1,346
1,233
7,660
358
9,84
-0-
-0-
-
$,442
,766
98
-0-
-
$,452
,766
98
-0-
n/a
.83
2.
.52
$2.30 Series
$4.75 Series 3
$4.75 Series 4
Series 6
$.50 Subordinated
Cumulative Preferred
5,000,000 30,017
79,580
30,07
92,906
30,07
93,56
900
3,837
900
5,026
90
5,037
employees’ Subordinated
Convertible Preferred
Stated value of issued Shares
employees’ Preferred Stock Purchase accounts
Total non-redeemable preferred stock
5,000,000 54,825
*In order of preference for liquidation and dividends.
58,328
6,403
1,645
5,482
(144)
$5,338
,750
6,776
(74)
$6,602
,842 .00***
6,879
(84)
$6,695
**The Company’s charter permits the board of directors to issue Subordinated Serial Preferred Stock in as many series, each with as many shares and
such rights and preferences as the board may designate.
***Also convertible into one share of $1.50 Subordinated Cumulative Preferred Stock.
P R E F E R R E d S T o C k T R a n S a C T I o n S
In THouSandS
Balance January 29, 2005
Conversion of Series 4
other
Balance January 28, 2006
other
Balance February 3, 2007
Conversion of Series 3
Conversion of Series 4
other
non-redeemable
Preferred Stock
total
non-redeemable
employees’
Purchase
non-redeemable
Preferred Stock
$5,772
Preferred Stock
$,89
acounts
$(89)
Preferred Stock
$7,474
(723)
(2)
5,037
()
5,026
(533)
(56)
(95)
-0-
(49)
,842
(92)
,750
-0-
-0-
(05)
-0-
5
(84)
0
(74)
-0-
-0-
30
(723)
(56)
6,695
(93)
6,602
(533)
(56)
(70)
Balance February 2, 2008
$3,837
$1,645
$(144)
$5,338
s u B o r d I n aT e d s e r I a l p r e F e r r e d s T o c k ( c u m u l aT I v e ) :
Stated and redemption values for Series are $40 per share and for Series 3 and 4 are each $00 per share plus
accumulated dividends; liquidation value for Series is $40 per share plus accumulated dividends and for Series 3 and
4 is $00 per share plus accumulated dividends.
the Company’s shareholders’ rights plan grants to common shareholders the right to purchase, at a specified exercise
price, a fraction of a share of subordinated serial preferred stock, Series 6, in the event of an acquisition of, or an
announced tender offer for, 5% or more of the Company’s outstanding common stock. upon any such event, each
right also entitles the holder (other than the person making such acquisition or tender offer) to purchase, at the exercise
price, shares of common stock having a market value of twice the exercise price. in the event the Company is acquired
in a transaction in which the Company is not the surviving corporation, each right would entitle its holder to purchase,
60
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 8 : S h a r e h o l d e r s ’ e q u i t y c o n t i n u e d
at the exercise price, shares of the acquiring company having a market value of twice the exercise price. the rights
expire in august 200, are redeemable under certain circumstances for $.0 per right and are subject to exchange for
one share of common stock or an equivalent amount of preferred stock at any time after the event which makes the
rights exercisable and before a majority of the Company’s common stock is acquired.
$ 1 . 5 0 s u B o r d I n aT e d c u m u l aT I v e p r e F e r r e d s T o c k :
Stated and liquidation values and redemption price are 88 times the average quarterly per share dividend paid on common
stock for the previous eight quarters (if any), but in no event less than $30 per share plus accumulated dividends.
e m p lo y e e s ’ s u B o r d I n aT e d c o n v e r T I B l e p r e F e r r e d s T o c k :
Stated and liquidation values are 88 times the average quarterly per share dividend paid on common stock for the
previous eight quarters (if any), but in no event less than $30 per share.
c o m m o n s T o c k :
Common stock - $ par value. authorized: 80,000,000 shares; issued: February 2, 2008 – 23,284,74 shares; February
3, 2007–23,230,458 shares. there were 488,464 shares held in treasury at February 2, 2008 and February 3, 2007.
each outstanding share is entitled to one vote. at February 2, 2008, common shares were reserved as follows: 4,244
shares for conversion of preferred stock; ,49,83 shares for the 996 Stock incentive Plan; 970,969 shares for the
2005 Stock incentive Plan; and 328,909 shares for the genesco employee Stock Purchase Plan.
For the year ended February 2, 2008, 32,75 shares of common stock were issued for the exercise of stock options at
an average weighted market price of $7.83, for a total of $0.6 million; 3,547 shares of common stock were issued as
restricted shares as part of the 2005 equity incentive Plan; 4,83 shares of common stock were issued for the purchase
of shares under the employee Stock Purchase Plan at an average weighted market price of $43.82, for a total of $0.2
million; 6,76 shares were issued to directors for no consideration; 9,397 shares were withheld for taxes on restricted
stock vested in Fiscal 2008; 686 shares of restricted stock were forfeited in Fiscal 2008; and 26,494 shares were issued
in miscellaneous conversions of Series , Series 3, Series 4, employees’ Subordinated Convertible Preferred Stock and
debentures. the 32,75 options exercised were all fixed stock options (see note 2).
For the year ended February 3, 2007, 357,423 shares of common stock were issued for the exercise of stock options at
an average weighted market price of $8.07, for a total of $6.5 million; 66,769 shares of common stock were issued
as restricted shares as part of the 2005 equity incentive Plan; 9,787 shares of common stock were issued for the
purchase of shares under the employee Stock Purchase Plan at an average weighted market price of $32.75, for a total
of $0.3 million; 9,422 shares were issued to directors for no consideration; 7,948 shares were withheld for taxes on
restricted stock vested in Fiscal 2007; 4,0 shares of restricted stock were forfeited in Fiscal 2007; and 3,282 shares
were issued in miscellaneous conversions of Series and employees’ Subordinated Convertible Preferred Stock. the
357,423 options exercised were all fixed stock options (see note 2). in addition, the Company repurchased and retired
,062,400 shares of common stock at an average weighted market price of $30.20 for a total of $32. million.
For the year ended January 28, 2006, 547,350 shares of common stock were issued for the exercise of stock options at
an average weighted market price of $6.6, for a total of $8.8 million; 228,594 shares of common stock were issued as
restricted shares as part of the 2005 equity incentive Plan; 24,978 shares of common stock were issued for the purchase
of shares under the employee Stock Purchase Plan at an average weighted market price of $20.34, for a total of $0.5
million; 8,500 shares were issued to directors for no consideration; and 2,855 shares were issued in miscellaneous
conversions of Series , Series 4 and employees’ Subordinated Convertible Preferred Stock. the 547,350 options
exercised include 50,586 shares of fixed stock options and 36,764 shares of restricted stock (see note 2).
r e s T r I c T I o n s o n d I v I d e n d s a n d r e d e m p T I o n s o F c a p I Ta l s T o c k :
the Company’s charter provides that no dividends may be paid and no shares of capital stock acquired for value if
there are dividend or redemption arrearages on any senior or equally ranked stock. exchanges of subordinated serial
preferred stock for common stock or other stock junior to such exchanged stock are permitted.
6
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 8 : S h a r e h o l d e r s ’ e q u i t y c o n t i n u e d
the Company’s Credit Facility prohibits the payment of dividends and other restricted payments unless after such
dividend or restricted payment availability under the Credit Facility exceeds $50.0 million or if availability is between
$30.0 million and $50.0 million, the Company’s fixed charge coverage must be greater than .0 to .0. the Company’s
management does not believe its availability under the Credit Facility will fall below $50.0 million during Fiscal 2009.
the June 24 and June 26, 2003 indentures, under which the Company’s 4 /8% convertible subordinated debentures
due 2023 were issued, does not restrict the payment of preferred stock dividends.
dividends declared for Fiscal 2008 for the Company’s Subordinated Serial Preferred Stock, $2.30 Series , $4.75 Series 3
and $4.75 Series 4, and the Company’s $.50 Subordinated Cumulative Preferred Stock were $27,000 in the aggregate.
C H a n g E S I n T H E S H a R E S o F T H E C o M Pa n Y ’ S C a P I Ta L S T o C k
issued at January 29, 2005
exercise of options
issue restricted stock
issue shares–employee Stock Purchase Plan
Conversion of Series 4 preferred stock
other
issued at January 28, 2006
exercise of options
issue restricted stock
issue shares–employee Stock Purchase Plan
Shares repurchased
other
issued at February 3, 2007
exercise of options
issue restricted stock
issue shares–employee Stock Purchase Plan
Conversion of Series 3 preferred stock
Conversion of Series 4 preferred stock
other
issued at February 2, 2008
Less shares repurchased and held in treasury
outstanding at February 2, 2008
Common
Stock
22,925,857
547,350
228,594
24,978
0,985
0,370
23,748,34
357,423
66,769
9,787
(,062,400)
0,745
23,230,458
32,75
3,547
4,83
,25
8,59
(6,598)
23,284,74
488,464
22,796,277
non-redeemable
Preferred
Stock
00,709
-0-
-0-
-0-
(7,228)
(325)
93,56
-0-
-0-
-0-
-0-
(250)
92,906
-0-
-0-
-0-
(5,334)
(5,605)
(2,387)
79,580
-0-
79,580
employees’
Preferred
Stock
63,03
-0-
-0-
-0-
-0-
(,628)
6,403
-0-
-0-
-0-
-0-
(3,075)
58,328
-0-
-0-
-0-
-0-
-0-
(3,503)
54,825
-0-
54,825
62
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 9 : i n c o m e ta x e s
in June 2006, the FaSB issued Fin 48. this interpretation clarifies the accounting for uncertainty in income taxes
recognized in the financial statements in accordance with SFaS no. 09, “accounting for income taxes.” this
interpretation prescribes that a company should use a more-likely-than-not recognition threshold based on the
technical merits of the tax position taken. tax positions that meet the more-likely-than-not recognition threshold should
be measured in order to determine the tax benefit to be recognized in the financial statements. Fin 48 is effective in
fiscal years beginning after december 5, 2006.
effective February 4, 2007, the Company adopted the provisions of Fin 48. as a result of the adoption of Fin 48,
the Company recognized a $4.3 million increase in the liability for unrecognized tax benefits which, as required, was
accounted for as a reduction to the February 4, 2007 balance of retained earnings.
the following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year.
I n T H o u S a n d S
unrecognized tax Benefit – February 4, 2007
gross decreases – tax Positions in a Prior Period
gross increases – tax Positions in a Current Period
Settlements
Lapse of Statutes of Limitations
unrecognized Tax Benefit – February 2, 2008
2008
$ 8,175
(3,370)
414
(247)
(73)
$ 4,899
in addition, the following information required by Fin 48 is provided:
• unrecognized tax benefits were approximately $4.9 million and $8.2 million as of February 2, 2008 and February 4,
2007, respectively. included in the unrecognized tax benefit balance was $4.9 million of tax positions on both February
2, 2008 and February 4, 2007 which if recognized would impact the annual effective tax rate. the decrease in the
unrecognized tax benefit balance from February 4, 2007 to February 2, 2008, was due to the resolution of a state audit
and the irS approving of the Company’s filing of an application for change in accounting method. upon approval, the
Company reclassified approximately $3.4 million between unrecognized tax benefits and deferred taxes. the Company
believes that it is reasonably possible that an increase of up to $0.4 million in unrecognized tax benefits related to state
exposures may be necessary within the coming year. in addition, the Company believes that it is reasonably possible
that approximately $0.3 million of its currently remaining unrecognized tax positions, each of which are individually
insignificant, may be recognized by the end of Fiscal 2009 as a result of a lapse of the statute of limitations.
• the Company recognizes interest expense and penalties related to the above unrecognized tax benefits within
income tax expense on the Consolidated Statements of earnings. related to the uncertain tax benefits noted above,
the Company accrued interest and penalties of approximately $0.5 million and $4,000, respectively, during Fiscal 2008.
the Company recognized a liability for accrued interest and penalities of $.3 million and $0.7 million, respectively, as
of February 2, 2008 included in deferred rent and other long-term liabilities on the Consolidated Balance Sheets.
• the Company and its subsidiaries file income tax returns in federal and in many state and local jurisdictions as well
as foreign jurisdictions. with a few exceptions, the Company’s u.S. federal and state and local income tax returns for
tax years 2004 and beyond remain subject to examination. in addition, the Company has subsidiaries in various foreign
jurisdictions that have statutes of limitation generally ranging from 3 to 6 years.
63
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 9 : i n c o m e ta x e s c o n t i n u e d
income tax expense from continuing operations is comprised of the following:
I n T H o u S a n d S
Current
u.S. federal
Foreign
State
total Current income tax expense
deferred
u.S. federal
Foreign
State
total deferred income tax Benefit
Total Income Tax expense – continuing operations
2 0 0 8
2 0 0 7
2 0 0 6
$ 30,625
1,351
4,954
36,930
$ 4,455
,0
6,435
49,000
(10,732)
(230)
(1,721)
(12,683)
$ 24,247
(4,865)
(6)
(,48)
(6,29)
$ 42,87
$ 38,486
23
6,92
44,909
(4,429)
(57)
(579)
(5,065)
$ 39,844
discontinued operations were recorded net of income tax expense (benefit) of approximately ($.0) million, ($0.4)
million and $38,000 in Fiscal 2008, 2007 and 2006, respectively.
as a result of the exercise of stock options and vesting of restricted stock during Fiscal 2008, 2007 and 2006, the Company
realized an additional income tax benefit of approximately $0.7 million, $2.4 million and $3.9 million, respectively. these
tax benefits are reflected as an adjustment to either additional paid-in capital or deferred tax asset.
in addition, during Fiscal 2006, the Company also realized a federal income tax benefit of $0.7 million related to stock
options exercised as a result of the hat world acquisition. this benefit was accounted for as a decrease to current taxes
payable and a reduction to goodwill.
deferred tax assets and liabilities are comprised of the following:
F E B R u a R Y 2 ,
F e B r u a r Y 3 ,
I n T H o u S a n d S
identified intangibles
Convertible bonds
total deferred tax liabilities
options
deferred rent
Pensions
expense accruals
uniform capitalization costs
Book over tax depreciation
Provisions for discontinued operations and restructurings
inventory valuation
tax net operating loss and credit carryforwards
allowances for bad debts and notes
other
deferred tax assets
n e t d e f e r r e d Ta x a s s e t s
2 0 0 8
$ (20,575)
(7,854)
(28,429)
1,568
6,739
1,078
6,758
4,006
14,296
401
5,969
1,446
303
7,208
49,772
$ 21,343
2 0 0 7
$ (2,064)
(5,84)
(26,905)
82
7,656
4,545
6,409
2,89
6,090
636
2,4
,00
98
4,566
36,864
9,959
$
the deferred tax balances have been classified in the Consolidated Balance Sheets as follows:
net current asset
net non-current asset*
n e t d e f e r r e d Ta x a s s e t s
F E B R u a R Y 2 ,
F E B R u a R Y 3 ,
2 0 0 8
$ 18,702
2,641
$ 21,343
2 0 0 7
$ 2,940
(2,98)
9,959
$
*Included in Deferred rent and other long-term liabilities on the Consolidated Balance Sheets for Fiscal 2007.
64
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e 9 : i n c o m e ta x e s c o n t i n u e d
reconciliation of the united States federal statutory rate to the Company’s effective tax rate from continuing operations
is as follows:
u.S. federal statutory rate of tax
State taxes (net of federal tax benefit)
transaction costs deductible in future periods
other
effective Tax rate
2 0 0 8
35.00%
6.05
29.74
3.28
74.07%
2 0 0 7
35.00%
3.09
.00
.49
38.58%
2 0 0 6
35.00%
3.56
.00
.32
38.88%
the provision for income taxes resulted in an effective tax rate for continuing operations of 74.% for Fiscal 2008,
compared with an effective tax rate of 38.6% for Fiscal 2007. the increase in the effective tax rate for Fiscal 2008 was
primarily attributable to non-deductible expenses in Fiscal 2008 incurred in connection with the now terminated merger
with the Finish Line and related litigation and the accounting for uncertain tax positions (Fin 48). See notes 3 and 4
for additional information.
as of February 2, 2008 and February 3, 2007, the Company had a Federal net operating loss carryforward of $.5 million for
each period as a result of an acquisition. internal revenue Code Section 382 imposes limitations due to ownership changes.
as of February 2, 2008, February 3, 2007 and January 28, 2006, the Company had state net operating loss carryforwards
of $5.8 million, $5.7 million and $6.4 million, respectively, expiring in tax years 200 through 2027.
as of February 2, 2008, February 3, 2007 and January 28, 2006, the Company had state tax credits of $0.0 million, $0.3
million and $0.3 million, respectively. these credits expire in tax years 2006 through 202.
as of February 2, 2008 and February 3, 2007, the Company had foreign tax credits of $0.7 million and $0.2 million,
respectively. these credits will expire in tax year 207.
management believes a valuation allowance is not necessary because it is more likely than not that the Company will
ultimately utilize the entire loss carryforwards, credits and other deferred tax assets based on existing carryback ability
and expectations as to future taxable income in the jurisdictions in which it operates.
n o t e 0 : d e f i n e d B e n e f i t Pe n s i o n P l a n s a n d o t h e r Po s t r e t i r e m e n t B e n e f i t P l a n s
d e F I n e d B e n e F I T p e n s I o n p l a n s
the Company sponsored a non-contributory, defined benefit pension plan. as of January , 996, the Company
amended the plan to change the pension benefit formula to a cash balance formula from the then existing benefit
calculation based upon years of service and final average pay. the benefits accrued under the old formula were frozen
as of december 3, 995. upon retirement, the participant will receive this accrued benefit payable as an annuity.
in addition, the participant will receive as a lump sum (or annuity if desired) the amount credited to the participant’s
cash balance account under the new formula. effective January , 2005, the Company froze the defined benefit cash
balance plan which prevents any new entrants into the plan as of that date as well as effects the amounts credited to
the participants’ accounts as discussed below.
under the cash balance formula, beginning January , 996, the Company credited each participants’ account annually
with an amount equal to 4% of the participant’s compensation plus 4% of the participant’s compensation in excess of
the Social Security taxable wage base. Beginning december 3, 996 and annually thereafter, the account balance of
each active participant was credited with 7% interest calculated on the sum of the balance as of the beginning of the
plan year and 50% of the amounts credited to the account, other than interest, for the plan year. the account balance
of each participant who was inactive would be credited with interest at the lesser of 7% or the 30 year treasury rate.
under the frozen plan, each participants’ cash balance plan account will be credited annually only with interest at the
30 year treasury rate, not to exceed 7%, until the participant retires. the amount credited each year will be based on
the rate at the end of the prior year.
65
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 0 : d e f i n e d B e n e f i t Pe n s i o n P l a n s a n d o t h e r Po s t r e t i r e m e n t B e n e f i t P l a n s c o n t i n u e d
o T h e r p o s T r e T I r e m e n T B e n e F I T p l a n s
the Company provides health care benefits for early retirees and life insurance benefits for certain retirees not covered
by collective bargaining agreements. under the health care plan, early retirees are eligible for limited benefits until age
65. employees who meet certain requirements are eligible for life insurance benefits upon retirement. the Company
accrues such benefits during the period in which the employee renders service.
o B L I g aT I o n S a n d F u n d E d S TaT u S
CHangE In BEnEFIT oBLIgaTIon
In THouSandS
Benefit obligation at beginning of year
Service cost
interest cost
Plan amendments
Plan participants’ contributions
Benefits paid
actuarial (gain) or loss
Benefit obligation at end of year
CHangE In PLan aSSETS
In THouSandS
Fair value of plan assets at beginning of year
actual gain on plan assets
employer contributions
Plan participants’ contributions
Benefits paid
Fair value of plan assets at end of year
Pension Benefits
other Benefits
2008
$ 117,279
250
6,451
-0-
-0-
(8,792)
(1,198)
$ 113,990
2007
$ 2,943
250
6,423
5
-0-
(9,246)
(2,42)
$ 7,279
2008
$ 3,951
123
159
-0-
144
(339)
(965)
$ 3,073
2007
$ 3,927
26
200
-0-
58
(35)
(99)
$ 3,95
Pension Benefits
other Benefits
2008
$ 102,973
9,237
4,000
-0-
(8,792)
$ 107,418
2007
$ 98,72
9,498
4,000
-0-
(9,246)
$ 02,973
2008
-0-
-0-
195
144
(339)
-0-
$
$
2007
-0-
-0-
93
58
(35)
-0-
$
$
Funded status at end of ye a r
$ 6,572
$ 4,306
$ 3,073
$ 3,95
amounts recognized in the Consolidated Balance Sheets consist of:
In THouSandS
noncurrent assets
Current liabilities
noncurrent liabilities
net amount recognized
Pension Benefits
other Benefits
$
2008
-0-
-0-
6,572
$ 6,572
$
2007
-0-
-0-
4,306
$ 4,306
$
2008
-0-
291
2,782
$ 3,073
$
2007
-0-
280
3,67
$ 3,95
amounts recognized in accumulated other comprehensive income consist of:
In THouSandS
Prior service cost
net loss
Total recognized in accumulated other
comprehensive (Income) loss
Pension Benefits
other Benefits
2008
$
42
27,549
2007
$
5
34,377
$
2008
-0-
259
2007
$
-0-
,37
$ 27,591
$ 34,428
$ 259
$ ,37
PEnSIon BEnEFITS
In THouSandS
Projected benefit obligation
accumulated benefit obligation
Fair value of plan assets
2007
$ 113,990
113,990
107,418
december 31
2006
$ 7,279
7,279
02,973
66
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e 0 : d e f i n e d B e n e f i t Pe n s i o n P l a n s a n d o t h e r Po s t r e t i r e m e n t B e n e f i t P l a n s c o n t i n u e d
C o M P o n E n T S o F n E T P E R I o d I C B E n E F I T C o S T
n e T p e r I o d I c B e n e F I T c o s T
In THouSandS
Service cost
interest cost
expected return on plan assets
amortization:
Prior service cost
Losses
net amortization
net periodic Benefit cost
Pension Benefits
other Benefits
2007
2008
2006
$ 250 $ 250 $ 250
6,639
6,423
6,451
(7,702)
(8,024) (7,779)
8
-0-
-0-
4,418
4,480
4,502
4,502
4,480
4,426
$ 3,103 $ 3,374 $ 3,689
2008
$ 123
159
-0-
2007
$ 26
200
-0-
-0-
93
93
$ 375
-0-
87
87
$ 503
2006
$ 205
97
-0-
-0-
83
83
$ 485
R E C o n C I L I aT I o n o F a C C u M u L aT E d o T H E R C o M P R E H E n S I v E I n C o M E
In THouSandS
net gain
amortization of prior service cost (credit)
amortization of net actuarial loss
Total recognized in other comprehensive Income
Total recognized in net periodic Benefit cost and
other comprehensive Income
Pension Benefits
other Benefits
2008
$ (2,411)
(8)
(4,418)
$ (6,837)
$
2008
(93)
-0-
(965)
$ (1,058)
$ (3,734)
$
(683)
the estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from
accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $3.3 million and
$8,000, respectively. the estimated net loss for the other postretirement benefit plans that will be amortized from
accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0. million.
w E I g H T E d - a v E R a g E a S S u M P T I o n S u S E d T o d E T E R M I n E B E n E F I T o B L I g aT I o n S
discount rate
rate of compensation increase
measurement date
Pension Benefits
other Benefits
2008
5.875%
na
12-31-2007
2007
5.75%
na
2-3-2006
2008
5.875%
-
2007
5.75%
-
2-2-2008
2-3-2007
w E I g H T E d - a v E R a g E a S S u M P T I o n S u S E d T o d E T E R M I n E n E T B E n E F I T P E R I o d I C C o S T S
discount rate
expected long-term rate of return on
plan assets
rate of compensation increase
Pension Benefits
other Benefits
2008
5.75%
2007
5.50%
2006
5.75%
2008
5.75%
2006
2007
5.50% 5.75%
8.25%
na
8.25%
na
8.25%
na
-
-
-
-
-
-
the weighted average discount rate used to measure the benefit obligation for the pension plan increased from 5.75%
to 5.875% from Fiscal 2007 to Fiscal 2008. the increase in the rate decreased the accumulated benefit obligation by
$.3 million and decreased the projected benefit obligation by $.3 million. the weighted average discount rate used
to measure the benefit obligation for the pension plan increased from 5.50% to 5.75% from Fiscal 2006 to Fiscal 2007.
the increase in the rate decreased the accumulated benefit obligation by $3. million and decreased the projected
benefit obligation by $3. million.
to develop the expected long-term rate of return on assets assumption, the Company considered historical asset
returns, the current asset allocation and future expectations. Considering this information, the Company selected an
8.25% long-term rate of return on assets assumption.
67
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 0 : d e f i n e d B e n e f i t Pe n s i o n P l a n s a n d o t h e r Po s t r e t i r e m e n t B e n e f i t P l a n s c o n t i n u e d
a S S u M E d H E a LT H C a R E C o S T T R E n d R aT E S aT d E C E M B E R 3 1
health care cost trend rate assumed for next year
rate to which the cost trend rate is assumed to decline
(the ultimate trend rate)
Year that the rate reaches the ultimate trend rate
2008
2007
9%
5%
9%
5%
2012
20
the effect on disclosed information of one percentage point change in the assumed health care cost trend rate for
each future year is shown below.
(In THouSandS)
aggregated service and interest cost
accumulated postretirement benefit obligation
P L a n a S S E T S
% increase
% decrease
in rates
$ 48
$ 298
in rates
$ 3
$ 25
the Company’s pension plan weighted average asset allocations as of december 3, 2007, and 2006, by asset
category are as follows:
aSSET CaTEgoRY
equity securities
debt securities
other
total
Plan assets
at december 31
2007
63%
36%
1%
100%
2006
65%
34%
%
00%
the investment strategy of the trust is to ensure over the long-term an asset pool, that when combined with company
contributions, will support benefit obligations to participants, retirees and beneficiaries. investment management
responsibilities of plan assets are delegated to outside investment advisers and overseen by an investment Committee
comprised of members of the Company’s senior management that is appointed by the Board of directors. the Company
has an investment policy that provides direction on the implementation of this strategy.
the investment policy establishes a target allocation for each asset class and investment manager. the actual asset
allocation versus the established target is reviewed at least quarterly and is maintained within a +/- 5% range of the
target asset allocation. target allocations are 50% domestic equity, 3% international equity, 35% fixed income and 2%
cash investments.
all investments are made solely in the interest of the participants and beneficiaries for the exclusive purposes of
providing benefits to such participants and their beneficiaries and defraying the expenses related to administering the
trust as determined by the investment Committee. all assets shall be properly diversified to reduce the potential of a
single security or single sector of securities having a disproportionate impact on the portfolio.
the Committee utilizes an outside investment consultant and a team of investment managers to implement its various investment
strategies. Performance of the managers is reviewed quarterly and the investment objectives are consistently evaluated.
at February 2, 2008 and February 3, 2007, there were no Company related assets in the plan.
68
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
Genesco Inc. and SuBSidiarieS
n o t e 0 : d e f i n e d B e n e f i t Pe n s i o n P l a n s a n d o t h e r Po s t r e t i r e m e n t B e n e f i t P l a n s c o n t i n u e d
C a S H F Lo w S
C o n t r i B u t i o n S
there was no eriSa cash requirement for the plan in 2007 and none is projected to be required in 2008. however,
the Company’s current cash policy is to fund the cost of benefits accruing each year (the “normal cost”) plus an
amortization of the unfunded accrued liability. the Company made a $4.0 million contribution in march 2008.
e S t i m at e d F u t u r e B e n e F i t PaY m e n t S
expected benefit payments from the trust, including future service and pay, are as follows:
ESTIMaTEd FuTuRE PaYMEnTS
2008
2009
200
20
202
203–206
s e c T I o n 4 0 1 ( k ) s a v I n G s p l a n
Pension
Benefits
($ in millions)
$0.0
9.6
9.2
9.
8.8
4.6
other
Benefits
($ in millions)
$ 0.3
0.3
0.3
0.3
0.2
.0
the Company has a Section 40(k) Savings Plan available to employees who have completed one full year of service
and are age 2 or older.
Concurrent with the January , 996 amendment to the pension plan (discussed previously), the Company amended
the 40(k) savings plan to make matching contributions equal to 50% of each employee’s contribution of up to 5% of
salary. Concurrent with freezing the defined benefit pension plan effective January , 2005, the Company amended
the 40(k) savings plan to make matching contributions. Beginning January , 2005, the Company will match 00% of
each employee’s contribution of up to 3% of salary and 50% of the next 2% of salary. in addition, for those employees
hired before december 3, 2004, who were eligible for the Company’s cash balance retirement plan before it was
frozen, the Company will make an additional contribution of 2 /2 % of salary to each employee’s account. Company
funds contributed prior to 2002 are not vested until a participant has completed five years of service. For matching
contributions made in calendar 2002-2004, participants are vested in the matching contribution of their accounts on
a graduated basis of 25% a year beginning after two years of service. Full vesting occurs after five years of service. in
calendar 2005 and future years, participants are vested immediately in the matching contribution of their accounts. the
contribution expense to the Company for the matching program was approximately $3.0 million for Fiscal 2008 and $3.6
million for both Fiscal 2007 and Fiscal 2006.
69
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : e a r n i n g s p e r S h a r e
For the Year Ended
February 2, 2008
For the Year ended
February 3, 2007
For the Year ended
January 28, 2006
in thouSandS,
Income
Shares
Per-Share
income
Shares
Per-Share
income
Shares
Per-Share
exCePt Per Share amountS
(numerator) (denominator) amount
(numerator) (denominator) amount
(numerator) (denominator) amount
earnings from
continuing operations
$8,488
$68,247
$62,626
Less: Preferred
stock dividends
(217)
(256)
(273)
BaSIC EPS
income available to
common shareholders
8,271
22,441
$0.37 67,99
22,646 $3.00
62,353
22,804 $2.73
eFFecT oF dIluTIve securITIes
options
Convertible
preferred stock()
4 /8% Convertible
Subordinated
debentures(2)
employees’
preferred stock(3)
dILuTEd EPS
income available to common
shareholders plus assumed
486
396
463
-0-
-0-
67
67
84
37
-0-
-0-
2,45
3,899
2,467
3,899
57
60
62
conversions
$8,271
22,984
$0.36 $70,573
27,068 $2.6 $64,904
27,265 $2.38
(1) The amount of the dividend on the convertible preferred stock per common share obtainable on conversion of the convertible preferred stock is higher than
basic earnings per share for Series 4 for all periods presented, Series 3 for Fiscal 2008 and Series 1 for Fiscal 2006 and 2008. Therefore, conversion of Series
4 convertible preferred stock is not reflected in diluted earnings per share for all periods presented, Series 3 in Fiscal 2008 and Series 1 in Fiscal 2006 and
2008, because it would have been antidilutive. The amount of the dividend on Series 3 convertible preferred stock per common share obtainable on conversion
of the convertible preferred stock was less than basic earnings per share for Fiscal 2006 and 2007. Therefore, conversion of Series 3 preferred shares were
included in diluted earnings per share for Fiscal 2006 and 2007. The amount of the dividend on Series 1 convertible preferred stock per common share
obtainable on conversion of the convertible preferred stock was less than basic earnings per share for Fiscal 2007. Therefore, conversion of Series 1 preferred
shares were included in diluted earnings per share for Fiscal 2007. The shares convertible to common stock for Series 1, 3 and 4 preferred stock would have
been 28,047 and 25,949 and 5,423, respectively, as of February 2, 2008.
(2) The amount of the interest on the convertible subordinated debentures for Fiscal 2008 per common share obtainable on conversion is higher than basic
earnings per share, therefore the convertible debentures are not reflected in diluted earnings per share because it is antidilutive.
(3) The Company’s Employees’ Subordinated Convertible Preferred Stock is convertible one for one to the Company’s common stock. Because there are no
dividends paid on this stock, these shares are assumed to be converted.
options to purchase 74,98 shares of common stock at $36.40 per share, 2,378 shares of common stock at $40.05
per share, 08,509 shares of common stock at $38.4 per share, 95 shares of common stock at $37.4 per share and
2,35 shares of common stock at $42.82 per share were outstanding at the end of Fiscal 2008 but were not included
in the computation of diluted earnings per share because the options’ exercise prices were greater than the average
market price of the common shares.
options to purchase 75,459 shares of common stock at $36.40 per share, 2,378 shares of common stock at $40.05 per
share, 09,68 shares of common stock at $38.4 per share and 95 shares of common stock at $37.4 per share were
outstanding at the end of Fiscal 2007 but were not included in the computation of diluted earnings per share because
the options’ exercise prices were greater than the average market price of the common shares.
options to purchase 2,378 shares of common stock at $40.05 per share were outstanding at the end of Fiscal 2006
but were not included in the computation of diluted earnings per share because the options’ exercise price was greater
than the average market price of the common shares.
70
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e : e a r n i n g s p e r S h a r e c o n t i n u e d
the weighted shares outstanding reflects the effect of stock buy back programs. in a series of authorizations from
Fiscal 999-2003, the Company’s board of directors authorized the repurchase of up to 7.5 million shares. in June
2006, the board authorized an additional $20.0 million in stock repurchases. in august 2006, the board authorized
an additional $30.0 million in stock repurchases. the Company repurchased ,062,400 shares at a cost of $32.
million during Fiscal 2007. the Company did not repurchase any shares during Fiscal 2008. in total, the Company has
repurchased 8.2 million shares at a cost of $03.4 million from all authorizations as of February 2, 2008. in march 2008,
the board authorized up to $00.0 million in stock repurchases primarily funded with the after-tax cash proceeds of the
settlement of merger-related litigation with the Finish Line and its investment bankers (see notes 3 and 4).
n o t e 2 : S h a r e d - B a s e d C o m p e n s a t i o n P l a n s
the Company’s stock-based compensation plans, as of February 2, 2008, are described below. Prior to January 29,
2006, the Company accounted for these plans under the recognition and measurement provisions of aPB no. 25,
“accounting for Stock issued to employees,” and related interpretations, as permitted by SFaS no. 23.
effective January 29, 2006, the Company adopted SFaS no. 23(r), using the modified prospective transition
method. under the modified prospective transition method, compensation cost recognized for Fiscal 2007 includes (i)
compensation cost for all share-based payments granted prior to, but not yet vested as of January 29, 2006, based
on the grant date fair value estimated in accordance with the provisions of SFaS no. 23; and (ii) compensation cost
for all share-based payments granted on or after January 29, 2006, based on the grant date fair value estimated in
accordance with SFaS no. 23(r). in accordance with the modified prospective method, the Company has not restated
prior period results.
s T o c k I n c e n T I v e p l a n s
the Company has two fixed stock incentive plans. under the 2005 equity incentive Plan (the “2005 Plan”), effective as
of June 23, 2005, the Company may grant options, restricted shares and other stock-based awards to its employees
and consultants as well as directors for up to .0 million shares of common stock. under the 996 Stock incentive
Plan (the “996 Plan”), the Company could grant options to its officers and other key employees of and consultants to
the Company as well as directors for up to 4.4 million shares of common stock. there will be no future awards under
the 996 Stock incentive Plan. under both plans, the exercise price of each option equals the market price of the
Company’s stock on the date of grant and an option’s maximum term is 0 years. options granted under both plans
vest 25% per year.
For Fiscal 2008 and 2007, the Company recognized share-based compensation cost of $3.2 million and $4. million,
respectively, for its fixed stock incentive plans included in selling and administrative expenses in the accompanying
Consolidated Statements of earnings. the Company also recognized a total income tax benefit for share-based
compensation arrangements of $0.7 million and $2.4 million for Fiscal 2008 and 2007, respectively. the Company did
not capitalize any share-based compensation cost.
7
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 2 : S h a r e d - B a s e d C o m p e n s a t i o n P l a n s c o n t i n u e d
the following table illustrates the effect on net earnings per common share as if the Company had applied the fair value
recognition provisions of SFaS no. 23 for Fiscal 2006:
I n T H o u S a n d S ,
E x C E P T P E R S H a R E a M o u n T
net earnings, as reported
add:
Stock-based employee compensation expense
included in reported net earnings, net of related tax effects
deduct:
total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax effects
Pro forma net earnings
earnings per share:
Basic–as reported
Basic–pro forma
diluted–as reported
diluted–pro forma
F i s c a l Ye a r
2 0 0 6
$ 62,686
648
(3,699)
$ 59,635
$
$
$
$
2.74
2.60
2.38
2.27
Prior to adopting SFaS no. 23(r), the Company presented the tax benefit of stock option exercises as operating
cash flows. SFaS no. 23(r) requires that the cash flows resulting from tax benefits for tax deductions in excess of the
compensation cost recognized for those options (excess tax benefit) be classified as financing cash flows. accordingly,
the Company classified excess tax benefits of $0.7 million and $2.4 million as financing cash inflows rather than as
operating cash inflows on its Consolidated Statement of Cash Flows for Fiscal 2008 and 2007, respectively.
SFaS no. 23(r) also requires companies to calculate an initial “pool” of excess tax benefits available at the adoption
date to absorb any unused deferred tax assets that may be recognized under SFaS no. 23(r). the Company elected
to calculate the pool of excess tax benefits under the alternative transition method described in FaSB Staff Position
(“FSP”) no. 23(r)-3, “transition election related to accounting for tax effects of Share-Based Payment awards,”
which also specifies the method the Company must use to calculate excess tax benefits reported on the Consolidated
Statements of Cash Flows.
the Company granted 2,35 shares, 0,632 shares and 80,973 shares of fixed stock options in Fiscal 2008, 2007 and
2006, respectively. For Fiscal 2008, the Company estimated the fair value of each option award on the date of grant
using a Black-Scholes option pricing model. the Company based expected volatility on historical term structures.
the Company based the risk free rate on an interest rate for a bond with a maturity commensurate with the expected
term estimate. the Company estimated the expected term of stock options using historical exercise and employee
termination experience. the Company does not currently pay a dividend. the following table shows the weighted
average assumptions used to develop the fair value estimates for Fiscal 2008, 2007 and 2006:
volatility
risk Free rate
expected term (years)
dividend Yields
F i s c a l Ye a r s
2008
35.3%
4.7%
4.7
0.0%
2007
42.4%
4.6%
4.8
0.0%
2006
4.5%
4.4%
5.2
0.0%
72
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 2 : S h a r e d - B a s e d C o m p e n s a t i o n P l a n s c o n t i n u e d
a summary of fixed stock option activity and changes for Fiscal 2008, 2007 and 2006 is presented below:
Genesco Inc. and SuBSidiarieS
outstanding, January 29, 2005
granted
exercised
Forfeited
outstanding at January 28, 2006
granted
exercised
Forfeited
outstanding, February 3, 2007
granted
Exercised
Forfeited
outstanding, February 2, 2008
exercisable, February 2, 2008
Shares
,894,099
80,973
(50,586)
-0-
,464,486
0,632
(357,423)
(56,909)
,60,786
2,351
(32,751)
(712)
1,129,674
880,425
weighted-average
Remaining
value (in
weighted-average
aggregate Intrinsic
Exercise Price
$ 8.70
Contractual Term
thousands)(1)
36.5
5.36
-
$ 20.84
38.3
8.07
22.68
$ 23.25
42.82
17.83
38.14
$ 23.44
$ 21.26
6.09
5.67
$ 12,104
$ 11,001
(1) Based upon the difference between the closing market price of the Company’s common stock on the last trading day of the year and the grant price
of in-the-money options.
the total intrinsic value, which represents the difference between the underlying stock’s market price and the option’s exercise
price, of options exercised during Fiscal 2008, 2007 and 2006 was $0.9 million, $7.3 million and $0. million, respectively.
a summary of the status of the Company’s nonvested shares of its fixed stock incentive plans as of February 2, 2008,
are presented below:
n o n v E S T E d S H a R E S
nonvested at February 3, 2007
granted
vested
Forfeited
nonvested at February 2, 2008
we i g h t e d - a v e r a g e
g r a n t - d a t e
F a i r va l u e
$ 4.38
6.28
3.4
3.69
$ 5.45
S h a r e s
520,474
2,35
(272,864)
(72)
249,249
as of February 2, 2008 there were $2.4 million of total unrecognized compensation costs related to nonvested
share-based compensation arrangements granted under the stock incentive plans discussed above. that cost is
expected to be recognized over a weighted average period of .26 years.
Cash received from option exercises under all share-based payment arrangements for Fiscal 2008, 2007 and 2006
was $0.6 million, $6.5 million and $7.8 million, respectively. the actual tax benefit realized for the tax deductions from
option exercise of the share-based payment arrangements totaled $0.7 million, $2.4 million and $3.9 million for Fiscal
2008, 2007 and 2006, respectively.
r e s T r I c T e d s T o c k I n c e n T I v e p l a n s
d i r e C t o r r e S t r i C t e d S t o C k
the 996 Plan provided for an automatic grant of restricted stock to non-employee directors on the date of the annual
meeting of shareholders at which an outside director is first elected. the outside director restricted stock so granted
was to vest with respect to one-third of the shares each year as long as the director is still serving as a director. once
the shares have vested, the director is restricted from selling, transferring, pledging or assigning the shares for an
additional two years. the 2005 Plan includes no automatic grant provisions, but permits the board of directors to make
73
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 2 : S h a r e d - B a s e d C o m p e n s a t i o n P l a n s c o n t i n u e d
awards to non-employee directors. the board granted restricted stock pursuant to the terms of the 2005 Plan to two
new non-employee directors in Fiscal 2006 on substantially the same terms as the automatic awards under the 996
Plan, except that transfer restrictions are to lapse after three years. there were no shares issued in Fiscal 2008 and
2007. there were ,370 shares of restricted stock issued to directors for Fiscal 2006.
in addition, under the 996 Plan an outside director could elect irrevocably to receive all or a specified portion of his
annual retainers for board membership and any committee chairmanship for the following fiscal year in a number of
shares of restricted stock (the “retainer Stock”). Shares of the retainer Stock were granted as of the first business day
of the fiscal year as to which the election is effective, subject to forfeiture to the extent not earned upon the outside
director’s ceasing to serve as a director or committee chairman during such fiscal year. once the shares were earned,
the director was restricted from selling, transferring, pledging or assigning the shares for an additional four years.
under the 2005 Plan, retainer Stock awards were made during Fiscal 2008, 2007 and 2006 on substantially the same
terms as the grants under the 996 Plan, except that transfer restrictions are to lapse three years from the date of grant.
For Fiscal 2008, 2007 and 2006, the Company issued 6,76 shares, 3,022 shares and 2,465 shares, respectively, of
retainer Stock.
also pursuant to the 996 Plan, annually on the date of the annual meeting of shareholders, beginning in Fiscal 2004,
each outside director received restricted stock valued at $44,000 based on the average of stock prices for the first five
days in the month of the annual meeting of shareholders. For Fiscal 2007, each outside director received restricted
stock pursuant to the terms of the 2005 Plan valued at $60,000 based on the average of stock prices for the first five
days in the month of the annual meeting of shareholders. the outside director restricted stock vests with respect to one-
third of the shares each year as long as the director is still serving as a director. once the shares vest, the director is
restricted from selling, transferring, pledging or assigning the shares for an additional two years. there were no shares
of director restricted stock issued for Fiscal 2008. For Fiscal 2007 and 2006, the Company issued 6,400 shares and
8,855 shares, respectively, of director restricted stock.
For Fiscal 2008, 2007 and 2006, the Company recognized $0.6 million, $0.5 million and $0.3 million, respectively, of
director restricted stock related share-based compensation in selling and administrative expenses in the accompanying
Consolidated Statements of earnings.
e m P Lo Y e e r e S t r i C t e d S t o C k
on april 24, 2002, the Company issued 36,764 shares of restricted stock to the President and Ceo of the Company
under the 996 Plan. Pursuant to the terms of the grant, these shares vested on april 23, 2005, provided that on such
date the grantee remained continuously employed by the Company since the date of the agreement. Compensation
cost recognized in selling and administrative expenses in the accompanying Consolidated Statements of earnings for
these shares was $0. million for Fiscal 2006. the 36,764 shares were issued in april 2005.
under the 2005 Plan, the Company issued 3,547 shares and 66,769 shares of employee restricted stock in Fiscal
2008 and 2007, respectively. these shares vest 25% per year over four years, provided that on such date the grantee
has remained continuously employed by the Company since the date of grant. the Company issued 228,594 shares of
employee restricted stock in Fiscal 2006. of the restricted shares issued in Fiscal 2006, 06,445 shares vest at the end
of three years and the remaining shares vest 25% per year over four years, provided that on such date the grantee has
remained continuously employed by the Company since the date of grant. the fair value of employee restricted stock
is charged against income as compensation cost over the vesting period. Compensation cost recognized in selling and
administrative expenses in the accompanying Consolidated Statements of earnings for these shares was $4.0 million,
$2.9 million and $0.6 million for Fiscal 2008, 2007 and 2006, respectively. a summary of the status of the Company’s
nonvested shares of its employee restricted stock as of February 2, 2008 are presented below:
74
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 2 : S h a r e d - B a s e d C o m p e n s a t i o n P l a n s c o n t i n u e d
n o n v E S T E d S H a R E S
nonvested at January 29, 2005
granted
vested
withheld for federal taxes
Forfeited
nonvested at January 28, 2006
granted
vested
withheld for federal taxes
Forfeited
nonvested at February 3, 2007
granted
vested
withheld for federal taxes
Forfeited
nonvested at February 2, 2008
e m p lo y e e s T o c k p u r c h a s e p l a n
Genesco Inc. and SuBSidiarieS
we i g h t e d - a v e r a g e
g r a n t - d a t e
F a i r va l u e
-
$ 36.46
-
-
-
36.46
38.3
36.5
36.5
36.40
37.23
42.82
37.46
37.47
38.14
$ 37.23
S h a r e s
-
228,594
-
-
-
228,594
66,769
(2,607)
(7,948)
(4,0)
36,797
3,547
(51,720)
(19,397)
(976)
293,251
under the employee Stock Purchase Plan, the Company is authorized to issue up to .0 million shares of common
stock to qualifying full-time employees whose total annual base salary is less than $90,000, effective october , 2002.
Prior to october , 2002, the total annual base salary was limited to $00,000. under the terms of the Plan, employees
could choose each year to have up to 5% of their annual base earnings or $8,500, whichever is lower, withheld to
purchase the Company’s common stock. the purchase price of the stock was 85% of the closing market price of the
stock on either the exercise date or the grant date, whichever was less. the Company’s board of directors amended
the Company’s employee Stock Purchase Plan effective october , 2005 to provide that participants may acquire
shares under the Plan at a 5% discount from fair market value on the last day of the Plan year. employees can choose
each year to have up to 5% of their annual base earnings or $9,500, whichever is lower, withheld to purchase the
Company’s common stock. under SFaS no. 23(r), shares issued under the Plan as amended are non-compensatory.
no participant contributions were accepted by the Company under the Plan after September 28, 2007 as a result of
the now terminated merger agreement. the merger agreement was terminated in march 2008. a new “short” plan year
began april , 2008. under the Plan, the Company sold 4,83 shares, 9,787 shares and 24,978 shares to employees in
Fiscal 2008, 2007 and 2006, respectively.
s T o c k p u r c h a s e p l a n s
Stock purchase accounts arising out of sales to employees prior to 972 under certain employee stock purchase
plans amounted to $44,000 and $74,000 at February 2, 2008 and February 3, 2007, respectively, and were secured
at February 2, 2008, by 7,895 employees’ preferred shares. Payments on stock purchase accounts under the stock
purchase plans have been indefinitely deferred. no further sales under these plans are contemplated.
75
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 3 : te r m i n a t e d m e r g e r a g r e e m e n t
the Company announced in June 2007 that the boards of directors of both genesco and the Finish Line, inc. had
unanimously approved a definitive merger agreement under which the Finish Line would acquire all of the outstanding
common shares of genesco at $54.50 per share in cash (the “Proposed merger”). the Finish Line breached the merger
agreement and litigation ensued. the Proposed merger was terminated in march 2008 in connection with an agreement
to settle the litigation with the Finish Line and its investment bankers for a cash payment of $75.0 million to the
Company and a 2% equity stake in the Finish Line, which the Company has received. the Company will distribute
to its shareholders 6,58,97 shares of Class a Common Stock of the Finish Line, inc. the Company is required to
distribute the shares to its shareholders as soon as practicable once Finish Line registers the shares with the SeC
and lists them on naSdaQ. the Company expects to set the record date for the distribution soon after the registration
and listing process is complete. during Fiscal 2008, the Company expensed $27.6 million in merger-related costs and
litigation expenses. as of march 25, 2008, the Company had expensed an additional $6. million of such costs and
expenses in the first quarter of Fiscal 2009. the Company believes that most of the $27.6 million in merger-related
costs and litigation expenses will be tax deductible in Fiscal 2009. For additional information, see the “merger-related
Litigation” section in note 4.
n o t e 4 : L e g a l P r o c e e d i n g s
e n v I r o n m e n Ta l m aT T e r s
n e w Y o r k S tat e e n v i r o n m e n ta L m at t e r S
in august 997, the new York State department of environmental Conservation (“nYSdeC”) and the Company entered
into a consent order whereby the Company assumed responsibility for conducting a remedial investigation and
feasibility study (“riFS”) and implementing an interim remediate measure (“irm”) with regard to the site of a knitting
mill operated by a former subsidiary of the Company from 965 to 969. the Company undertook the irm and riFS
voluntarily, without admitting liability or accepting responsibility for any future remediation of the site. the Company has
concluded the irm and the riFS. in the course of preparing the riFS, the Company identified remedial alternatives with
estimated undiscounted costs ranging from $-0- to $24.0 million, excluding amounts previously expended or provided
for by the Company, as described in this footnote. the united States environmental Protection agency (“ePa”), which
has assumed primary regulatory responsibility for the site from nYSdeC, issued a record of decision in September
2007. the record of decision requires a remedy of a combination of groundwater extraction and treatment and in-site
chemical oxidation at an estimated present worth cost of approximately $0.7 million.
the village of garden City, new York, has asserted that the Company is liable for the costs associated with enhanced
treatment required by the impact of the groundwater plume from the site on two public water supply wells, including
historical costs ranging from approximately $.8 million to in excess of $2.5 million, and future operation and
maintenance costs which the village estimates at $26,400 annually while the enhanced treatment continues. on
december 4, 2007, the village filed a complaint against the Company and the owner of the property under provisions
of various federal environmental statutes in the u.S. district Court for the eastern district of new York, seeking an
injunction requiring the defendants to remediate contamination from the site and to establish their liability for future
costs that may be incurred in connection with it, which the complaint alleges could exceed $4 million over a 70-year
period. the Company has not verified the estimates of either historic or future costs asserted by the village, but
believes that an estimate of future costs based on a 70-year remediation period is unreasonable given the expected
remedial period reflected in the ePa’s record of decision.
Because of uncertainty about when the contamination occurred, the short duration of the Company’s operations at
the site, and the activities of at least one unrelated business operation at the site, among other reasons, the Company
has not ascertained what responsibility, if any, it has for any contamination in connection with the facility or what other
parties may be liable in that connection and is unable to predict the extent of its liability, if any. the Company’s voluntary
assumption of certain responsibility to date was based upon its judgment that such action was preferable to litigation
to determine its liability, if any for contamination related to the site. the Company intends to continue to evaluate the
costs of further voluntary remediation and compromise of the claims asserted by the village of garden City compared
to the costs and uncertainty of litigation.
76
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 4 : L e g a l P r o c e e d i n g s c o n t i n u e d
in december 2005, the ePa notified the Company that it considers the Company a potentially responsible party (“PrP”)
with respect to contamination at two Superfund sites in upstate new York. the sites were used as landfills for process
wastes generated by a glue manufacturer, which acquired tannery wastes from several tanners, allegedly including
the Company’s whitehall tannery, for use as raw materials in the gluemaking process. the Company has no records
indicating that it ever provided raw materials to the gluemaking operation and has not been able to establish whether
ePa’s substantive allegations are accurate. the Company, together with other tannery PrP’s, has entered into cost
sharing agreements and Consent decrees with ePa with respect to both sites. Based upon the current estimates of the
cost of remediation, the Company’s share is expected to be less than $50,000 in total for the two sites. while there is
no assurance that the Company’s share of the actual cost of remediation will not exceed the estimate, the Company
does not presently expect that its aggregate exposure with respect to these two landfill sites will have a material
adverse effect on its financial condition or results of operations.
w h i t e h a L L e n v i r o n m e n ta L m at t e r S
the Company has performed sampling and analysis of soil, sediments, surface water, groundwater and waste
management areas at the Company’s former volunteer Leather Company facility in whitehall, michigan.
the Company has submitted to the michigan department of environmental Quality (“mdeQ”) and provided for certain
costs associated with a remedial action plan (the “Plan”) designed to bring the property into compliance with regulatory
standards for non-industrial uses and has subsequently engaged in negotiations regarding the scope of the Plan. the
Company estimates that the costs of resolving environmental contingencies related to the whitehall property range
from $4.2 million to $4.8 million, and considers the cost of implementing the Plan, as it is modified in the course
of negotiations with mdeQ, to be the most likely cost within that range. until the Plan is finally approved by mdeQ,
management cannot provide assurances that no further remediation will be required or that its estimate of the range of
possible costs or of the most likely cost of remediation will prove accurate.
a C C r u a L F o r e n v i r o n m e n ta L C o n t i n g e n C e S
related to all outstanding environmental contingencies, the Company had accrued $7.8 million as of February 2, 2008
and $5.8 million as of February 3, 2007. all such provisions reflect the Company’s estimates of the most likely cost
(undiscounted, including both current and noncurrent portions) of resolving the contingencies, based on facts and
circumstances as of the time they were made. there is no assurance that relevant facts and circumstances will not
change, necessitating future changes to the provisions. Such contingent liabilities are included in the liability arising
from provision for discontinued operations on the accompanying Consolidated Balance Sheets.
m e r G e r - r e l aT e d l I T I G aT I o n
g e n e S C o i n C . v. t h e F i n i S h L i n e , e t a L .
u B S S e C u r i t i e S L L C a n d u B S Lo a n F i n a n C e L L C v. g e n e S C o i n C . , et aL.
on June 8, 2007, the Company announced that the boards of directors of genesco and the Finish Line had unanimously
approved a definitive merger agreement under which the Finish Line would acquire all of the outstanding common
shares of genesco at $54.50 per share in cash. on September 2, 2007, the Company filed suit against the Finish
Line, inc. in Chancery Court in nashville, tennessee seeking a court order requiring the Finish Line to consummate
the merger with the Company (the “tennessee action”). on September 28, 2007, the Finish Line filed an answer and
counterclaim seeking a declaratory judgment as to whether a “Company material adverse effect” had occurred under
the merger agreement. the Finish Line also filed a third-party claim against uBS Securities LLC and uBS Finance
LLC (collectively, “uBS”), who provided the Finish Line with a commitment letter with respect to the financing for the
merger transaction. on october 0, 2007, the Finish Line voluntarily dismissed its claims against uBS, and uBS filed a
motion to intervene as a defendant in the case and an answer to the Company’s complaint. on november 3, 2007, the
Company amended its complaint to add an alternative claim for damages. on november 5, 2007, the Finish Line
77
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 4 : L e g a l P r o c e e d i n g s c o n t i n u e d
filed an answer to the amended complaint asserting that a Company material adverse effect had occurred under the
merger agreement and asserting a counterclaim against the Company for intentional or negligent misrepresentation in
connection with the merger agreement.
on november 5, 2007, uBS filed an answer to the amended complaint and a counterclaim asserting fraud against the
Company. that same day, uBS also filed a separate lawsuit in the united States district Court for the Southern district
of new York (the “new York action”), naming the Company and the Finish Line as defendants. in the new York action,
uBS sought a declaration that its commitment to provide the Finish Line with financing for the merger transaction was
void and/or could be terminated by uBS because the Finish Line would not be able to provide, prior to the expiration
of the financing commitment on april 30, 2008, a valid solvency certificate attesting to the solvency of the combined
entities resulting from the merger, which certificate was a condition precedent to the closing of the financing. the
Company was named in the new York action as an interested party.
trial of the tennessee action began on december 0, 2007 and concluded on december 8, 2007. on december 27,
2007, the Chancery Court ordered the Finish Line to specifically perform the terms of the merger agreement. in its order,
the Court rejected uBS’s and Finish Line’s claims of fraud and misrepresentation and declared that all conditions to
the merger agreement had been met. the Court also declared that Finish Line had breached the merger agreement
by not closing the merger. the Court ordered Finish Line to close the merger pursuant to section .2 of the merger
agreement, to use its reasonable best efforts to take all actions to consummate the merger as required by section 6.4(d)
of the merger agreement, and to use its reasonable best efforts to obtain financing as per section 6.8(a) of the merger
agreement. the Court excluded from its order any ruling on the issue of the solvency of the combined company, finding
that the issue of solvency was reserved for determination by the new York Court in the new York action filed by uBS.
on January 8, 2008, the Finish Line and uBS each filed a notice of appeal and a motion For Permission For
interlocutory appeal of the Chancery Court’s december 27, 2007 order requiring the Finish Line to specifically perform
the terms of the merger agreement. on February 3, 2008, the tennessee Court of appeals dismissed the notices
of appeal filed by the Finish Line and uBS on the ground that the order of the Chancery Court was not a final order.
Subsequently, on February 28, 2008, the Court of appeals also denied the Finish Line’s and uBS’s motions For
Permission For interlocutory appeal.
on February 25, 2008, the Company filed a motion with the Chancery Court for permission to file a second amended
complaint alleging claims directly against uBS for procurement of a breach of contract under tennessee law.
on march 3, 2008, the Company, the Finish Line, and uBS entered into a definitive agreement for the termination of
the merger agreement with the Finish Line and the settlement of all related litigation among the Finish Line and the
Company and uBS, including the tennessee action and the new York action. Pursuant to the settlement agreement,
the parties agreed that: () the merger agreement between the Company and the Finish Line would be terminated;
(2) the financing commitment from uBS to the Finish Line would be terminated; (3) on or before march 7, 2008, uBS
and the Finish Line would pay to the Company an aggregate of $75 million in cash; (4) on or before march 7, 2008,
the Finish Line would transfer to the Company a number of Class a shares of the Finish Line common stock equal to
2.0% of the total post-issuance outstanding shares of the Finish Line common stock; (5) the Company and the Finish
Line would be subject to a mutual standstill agreement; and (6) the parties would execute customary mutual releases.
the cash payment and the Class a shares of the Finish Line common stock have been received by the Company in
accordance with the settlement agreement. a Stipulation of dismissal with Prejudice was filed in the new York action
on march 4, 2008. the parties will also file a Stipulation of dismissal in the tennessee action.
i n v e S t i g at i o n BY t h e o F F i C e o F t h e u. S . at t o r n e Y F o r t h e S o u t h e r n d i S t r i C t o F n e w Y o r k
on november 2, 2007, the Company received a grand jury subpoena from the office of the u.S. attorney for the Southern
district of new York for documents relating to the Company’s negotiations and merger agreement with the Finish Line.
the subpoena states that the documents are sought in connection with alleged violations of federal fraud statutes. the
Company is cooperating fully with the u.S. attorney’s office and producing documents pursuant to the subpoena.
78
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 4 : L e g a l P r o c e e d i n g s c o n t i n u e d
r o e g L i n v. g e n e S C o i n C . , e t a L .
on december 5, 2007, a class action complaint alleging violations of the federal securities laws on behalf of all
purchasers of the Company’s common stock between april 20, 2007 and november 26, 2007 was filed against the
Company and four of its officers in the u.S. district Court for the middle district of tennessee. the complaint alleges
that the defendants violated federal securities laws by making false and misleading statements about the Company’s
business during that period. it seeks unspecified damages and interest, costs and attorneys’ fees and other relief. the
Company does not believe there is any merit to the allegations and intends to defend these claims vigorously.
ko S h t i v. g e n e S C o i n C . , e t a L .
on december 3, 2007, a second class action complaint alleging violations of the federal securities laws on behalf of
all purchasers of the Company’s common stock between april 20, 2007 and november 26, 2007 was filed against the
Company and three of its officers in the u.S. district Court for the middle district of tennessee. the Complaint alleges
that the defendants violated federal securities laws by failing to disclose material adverse facts about the Company’s
financial well being and prospects during the class period. the complaint seeks unspecified damages and interest,
costs and attorneys’ fees and other relief. the Company does not believe there is any merit to the allegations and
intends to defend these claims vigorously. on January 22, 2008, the u.S. district Court entered a stipulation and order
consolidating the koshti case with the roeglin case.
Fa L Z o n e v. g e n e S C o i n C . , e t a L .
on december , 2007, a class action complaint alleging violations of the federal securities laws on behalf of all
purchasers of the Company’s common stock between may 3, 2007 and november 6, 2007 was filed against the
Company and one of its officers in the u.S. district Court for the Southern district of new York. the complaint alleged
that the defendants violated federal securities laws by making false and misleading statements about the Company’s
business during that period. it sought unspecified damages and interest, costs and attorneys’ fees and other relief. on
February 5, 2008, the plaintiff filed a Stipulation and order of discontinuance without Prejudice dismissing the case in
light of the earlier filed cases in tennessee.
P h i L L i P S v. g e n e S C o i n C . , e t a L .
on april 24, 2007, a putative class action, maxine Phillips, on Behalf of herself and all others Similarly Situated vs.
genesco inc., et al., was filed in the tennessee Chancery Court in nashville. the original complaint alleged, among
other things, that the individual defendants (officers and directors of the Company) refused to consider properly the
proposal by Foot Locker, inc. to acquire the Company. the complaint sought class certification, a declaration that
defendants have breached their fiduciary and other duties, an order requiring defendants to implement a process to
obtain the highest possible price for shareholders’ shares, and an award of costs and attorney’s fees. the defendants
have not filed a response to the complaint as of the date of this report. Following the execution of the merger agreement
with the Finish Line, inc., the plaintiff filed an amended complaint alleging breach of fiduciary duties by the individual
defendants in connection with the board of directors’ approval of the merger agreement and the disclosures made in
the preliminary proxy statement related to the merger and seeking injunctive relief. the Company and the individual
defendants reached an agreement with plaintiff under which the Company agreed to include certain additional
disclosures in its definitive proxy statement related to the merger that was filed on august 3, 2007. the parties
executed a memorandum of understanding to formalize the settlement on September 0, 2007. under the terms of the
memorandum, the Company agreed to pay $450,000 in attorneys’ fees and expenses if the settlement and payment
of fees were approved by the Court and certain other conditions, including the consummation of the merger with the
Finish Line, were to occur.
c a l I F o r n I a e m p lo y m e n T m aT T e r
on november 4, 2005, a former employee gave notice to the California Labor work Force development agency (“Lwda”)
of a claim against the Company for allegedly failing to provide a payroll check that is negotiable and payable in cash,
on demand, without discount, at an established place of business in California, as required by the California Labor
Code. on may 8, 2006, the same claimant filed a putative class, representative and private attorney general
79
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 4 : L e g a l P r o c e e d i n g s c o n t i n u e d
action alleging the same violations of the Labor Code in the Superior Court of California, alameda County, seeking
statutory penalties, damages, restitution, and injunctive relief. on February 2, 2007, the court granted leave for the
plaintiff to file an amended complaint adding the Company’s wholly-owned subsidiary, hat world, inc., as a defendant.
the Company disputes the material allegations of the complaint. the parties have agreed to third-party mediation of
the claims in the litigation. if the mediation does not resolve the issues in the litigation, we will continue to defend the
matter vigorously.
paT e n T a c T I o n
the Company is named as a defendant in Paul Ware and Financial Systems Innovation, L.L.C. v. Abercrombie & Fitch
Stores, Inc., et al., filed on June 9, 2007, in the united States district Court for the northern district of georgia,
against more than 00 retailers. the suit alleges that the defendants have infringed u.S. Patent no. 4,707,592 by
using a feature of their retail point of sale registers to generate transaction numbers for credit card purchases. the
complaint seeks treble damages in an unspecified amount and attorneys’ fees. the Company has filed an answer
denying the substantive allegations in the complaint and asserting certain affirmative defenses. on december 4, 2007,
the Company filed a third-party complaint against datavantage Corporation and miCroS Systems, inc., its vendor
for the technology at issue in the case, seeking indemnification and defense against the infringement allegations
in the complaint. on december 27, 2007, the court stayed proceedings in the litigation pending the outcome of a
reexamination of the patent by the u. S. Patent and trademark office.
T e n n e s s e e d e pa r T m e n T o F e n v I r o n m e n T a n d c o n s e r v aT I o n I n q u I r y
the Company has received an inquiry from the tennessee department of environment and Conservation concerning
waste disposal on the premises of a manufacturing facility operated by the Company more than 25 years ago. the
letter of inquiry did not disclose the reason for the inquiry. the Company is gathering information for its response to
the inquiry, which is due may , 2008.
n o t e 5 : B u s i n e s s S e g m e n t i n f o r m a t i o n
the Company operates five reportable business segments (not including corporate): Journeys group, comprised of the
Journeys, Journeys kidz and Shi by Journeys retail footwear chains, catalog and e-commerce operations; underground
Station group, comprised of the underground Station and Jarman retail footwear chains and e-commerce operations;
hat world group, comprised of the hat world, Lids, hat Shack, hat Zone, head Quarters, Cap Connection and Lids
kids retail headwear chains and e-commerce operations; Johnston & murphy group, comprised of Johnston & murphy
retail operations, catalog and e-commerce operations and wholesale distribution; and Licensed Brands, comprised
primarily of dockers® Footwear sourced and marketed under a license from Levi Strauss & Company.
the accounting policies of the segments are the same as those described in the summary of significant
accounting policies.
the Company’s reportable segments are based on the way management organizes the segments in order to make
operating decisions and assess performance along types of products sold. Journeys group, underground Station
group and hat world group sell primarily branded products from other companies while Johnston & murphy group
and Licensed Brands sell primarily the Company’s owned and licensed brands.
Corporate assets include cash, deferred income taxes, deferred note expense and corporate fixed assets. the
Company charges allocated retail costs of distribution to each segment and unallocated retail costs of distribution to
the corporate segment. the Company does not allocate certain costs to each segment in order to make decisions and
assess performance. these costs include corporate overhead, stock compensation, interest expense, interest income,
restructuring charges and other, including litigation.
80
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 5 : B u s i n e s s S e g m e n t i n f o r m a t i o n c o n t i n u e d
FIscal 2008
In THouSandS
Sales
intercompany sales
underground
Johnston
Journeys
group
Station
group
Hat world
& Murphy
Licensed Corporate
group
group
Brands
& other
Consolidated
$ 713,366 $ 124,002 $ 378,913 $ 192,487 $ 93,064 $
645 $ 1,502,477
-0-
-0-
-0-
-0-
(358)
-0-
(358)
net sales to external customers
$ 713,366 $ 124,002 $ 378,913 $ 192,487 $ 92,706 $
645 $ 1,502,119
Segment operating income (loss)
$ 51,097 $
(7,710) $ 31,987 $ 19,807 $ 10,976 $ (51,294) $
54,863
restructuring and other
-0-
-0-
-0-
-0-
-0-
(9,702)
(9,702)
earnings (loss) from operations
51,097
(7,710)
31,987
19,807
10,976
(60,996)
45,161
interest expense
interest income
earnings (loss) before income taxes
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0- (12,570)
(12,570)
-0-
144
144
from continuing operations
$ 51,097 $
(7,710) $ 31,987 $ 19,807 $ 10,976 $ (73,422) $
32,735
total assets*
depreciation
Capital expenditures
$ 257,327 $ 45,734 $ 299,820 $ 71,574 $ 24,774 $ 105,327 $ 804,556
18,985
41,635
4,017
1,701
13,277
27,121
3,270
6,376
80
106
5,485
3,723
45,114
80,662
*Total assets for Hat World Group include $107.6 million goodwill.
FiSCaL 2007
in thouSandS
Sales
intercompany sales
underground
Journeys
group
Station
group
hat world
group
Johnston
& murphy
Licensed Corporate
group
Brands
& other
Consolidated
$ 696,889 $ 55,069 $ 342,64 $ 86,979 $ 79,58 $
478 $ ,46,24
-0-
-0-
-0-
-0-
(736)
-0-
(736)
net sales to external customers
$ 696,889 $ 55,069 $ 342,64 $ 86,979 $ 78,422 $
478 $ ,460,478
Segment operating income (loss)
$ 83,835 $
3,844 $ 4,359 $ 5,337 $ 6,777 $ (29,002) $ 22,50
restructuring and other
-0-
-0-
-0-
-0-
-0-
(,05)
(,05)
Earnings (loss) from operations
83,835
3,844
4,359
5,337
6,777
(30,07)
2,045
interest expense
interest income
Earnings (loss) before income taxes
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(0,488)
(0,488)
56
56
from continuing operations
$ 83,835 $
3,844 $ 4,359 $ 5,337 $ 6,777 $ (40,034) $ ,8
total assets
depreciation
Capital expenditures
FiSCaL 2006
in thouSandS
Sales
intercompany sales
$ 204,28 $ 56,385 $ 282,989 $ 67,732 $ 22,290 $ 95,759 $ 729,373
6,294
33,250
4,604
4,723
0,705
23,722
2,957
6,255
62
85
5,684
5,252
40,306
73,287
underground
Journeys
group
Station
group
hat world
group
Johnston
& murphy
Licensed Corporate
group
Brands
& other
Consolidated
$ 593,56 $ 64,054 $ 297,27 $ 70,05 $ 59,94 $
290 $ ,284,340
-0-
-0-
-0-
-0-
(464)
-0-
(464)
net sales to external customers
$ 593,56 $ 64,054 $ 297,27 $ 70,05 $ 58,730 $
290 $ ,283,876
Segment operating income (loss)
$ 73,346 $ 0,890 $ 40,33 $ 0,396 $ 4,67 $ (23,852) $ 5,080
restructuring and other
-0-
-0-
-0-
-0-
-0-
(2,253)
(2,253)
Earnings (loss) from operations
73,346
0,890
40,33
0,396
4,67
(26,05)
2,827
interest expense
interest income
Earnings (loss) before income taxes
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
(,482)
(,482)
,25
,25
from continuing operations
$ 73,346 $ 0,890 $ 40,33 $ 0,396 $ 4,67 $ (36,462) $ 02,470
total assets
depreciation
Capital expenditures
$ 66,890 $ 57,80 $ 244,86 $ 60,978 $ 23,207 $ 33,677 $ 686,8
3,23
24,292
4,057
6,93
9,73
2,26
2,833
2,443
47
32
5,299
2,040
34,622
56,946
8
Genesco Inc. and SuBSidiarieS
n o T e s T o c o n s o l I d aT e d F I n a n c I a l s TaT e m e n T s
n o t e 6 : Q u a r t e r l y F i n a n c i a l i n f o r m a t i o n ( u n a u d i t e d )
( I n T H o u S a n d S , E x C E P T
1 s t q u a r t e r
2 n d q u a r t e r
3 r d q u a r t e r
4 t h q u a r t e r
F i s c a l Ye a r
P E R S H a R E a M o u n T S )
2 0 0 8
2 0 0 7
2 0 0 8
2 0 0 7
2 0 0 8
2 0 0 7
2 0 0 8
2 0 0 7
2 0 0 8
2 0 0 7
net sales
gross margin
$334,651 $35,08 $327,977 $304,30 $372,496 $364,298 $466,995 $476,86 $1,502,119 $,460,478
171,844
6,369 163,619 53,390 188,051
8,454
227,70
234,622
751,215
730,835
earnings (loss) before income taxes
from continuing operations
3,774(1) 7,480(2) (5,598)(4) 0,3(6) 10,297(7)
26,43(8) 24,262(10) 57,076(2) 32,735
,8
earnings (loss) from
continuing operations
2,203
0,666
(2,940)
5,944
5,610
5,975
3,615
35,662
8,488
net earnings (loss)
2,203
0,477(3)
(4,165)(5)
5,944
5,600
5,877(9)
3,247(11) 35,348(3)
6,885
68,247
67,646
diluted earnings (loss)
per common share:
Continuing operations
net earnings (loss)
.10
.10
.4
.40
(.13)
(.19)
.24
.24
.23
.23
.62
.62
.16
.14
.36
.35
.36
.29
2.6
2.59
(1) Includes a net restructuring and other charge of $6.6 million (see Note 3) and a $0.1 million
charge for merger-related expenses (see Notes 13 and 14).
(2) Includes a net restructuring and other charge of $0.1 million (see Note 3).
(3) Includes a loss of $0.2 million, net of tax, from discontinued operations (see Note 3).
(4) Includes a net restructuring and other charge of $0.2 million (see Note 3) and a $5.4 million
charge for merger-related expenses (see Notes 13 and 14).
(5) Includes a loss of $1.2 million, net of tax, from discontinued operations (see Note 3).
(6) Includes a net restructuring and other charge of $0.5 million (see Note 3).
(7) Includes a net restructuring and other charge of $0.1 million (see Note 3) and a $6.1 million
charge for merger-related expenses (see Notes 13 and 14).
(8) Includes a net restructuring and other charge of $1.1 million (see Note 3).
(9) Includes a loss of $0.1 million, net of tax, from discontinued operations (see Note 3).
(10) Includes a net restructuring and other charge of $2.9 million (see Note 3) and a $16.0 million
charge for merger-related expenses (see Notes 13 and 14).
(11) Includes a loss of $0.4 million, net of tax, from discontinued operations (see Note 3).
(12) Includes a net restructuring and other credit of $0.6 million (see Note 3).
(13) Includes a loss of $0.3 million, net of tax, from discontinued operations (see Note 3).
(a) 14 week period in Fiscal 2007 and 13 week period in Fiscal 2008.
(b) 53 week period in Fiscal 2007 and 52 week period in Fiscal 2008.
82
c o r p o r aT e I n F o r m aT I o n
Genesco Inc. and SuBSidiarieS
a n n u a l m e e T I n G o F s h a r e h o l d e r s
o T h e r I n F o r m aT I o n
the annual meeting of shareholders will be held
Certifications by the Chief executive officer and the Chief
wednesday, June 8, 2008, at 0:00 a.m. Cdt, at the corporate
Financial officer of the Company pursuant to Section 302
headquarters in genesco Park, nashville, tennessee.
of the Sarbanes-oxley act of 2002 have been filed as
c o r p o r aT e h e a d q u a r T e r s
genesco Park
45 murfreesboro road – P.o. Box 73
nashville, tn 37202-073
I n d e p e n d e n T a u d I T o r s
ernst & Young LLP
50 Fourth avenue north
Suite 400
nashville, tennessee 3729
T r a n s F e r a G e n T a n d r e G I s T r a r
Communications concerning stock transfer, preferred stock
dividends, consolidating accounts, change of address
and lost or stolen stock certificates should be directed to
the transfer agent. when corresponding with the transfer
agent, shareholders should state the exact name(s) in
which the stock is registered and certificate number, as
exhibits of the Company’s 2008 annual report on Form
0-k. the Chief executive officer has submitted to the new
York Stock exchange (nYSe) the annual Ceo certification
for fiscal 2008 regarding the Company’s compliance with
the nYSe’s corporate governance listing standards.
F o r m 1 0 - k
each year genesco files with the Securities and exchange
Commission a Form 0-k which contains more detailed
information. any shareholder who would like to receive,
without charge, a single copy (without exhibits), or
who would like to receive extra copies of any genesco
shareholder publication should send a request to:
Claire S. mcCall
director, Corporate relations
genesco Park, Suite 490 – P.o. Box 73
nashville, tennessee 37202-073
(65) 367-8283
well as old and new information about the account.
c o m m o n s T o c k l I s T I n G
Computershare Phone #: 78-575-2879
new York Stock exchange, Chicago Stock exchange
Symbol: gCo
s h a r e h o l d e r I n F o r m aT I o n
Shareholder
information may be accessed at
www.genesco.com.
address: Computershare
P. o. Box 43078
Providence, rhode island 02940-3078
Private Couriers/registered mail:
Computershare
250 royall Street
Canton, massachusetts 0202
Questions & inquiries via our website:
http://www.computershare.com
hearing impaired #: tdd: -800-952-9245
I n v e s T o r r e l aT I o n s
Security analysts, portfolio managers or other investment
community representatives should contact:
James S. gulmi, Senior vice President – Finance
and Chief Financial officer
genesco Park, Suite 490 – P.o. Box 73
nashville, tennessee 37202-073
(65) 367-8325
83
Genesco Inc. and SuBSidiarieS
B o a r d o F d I r e c T o r s
J a m e S S . B e a r d
retired President, Caterpillar Financial
Services Corporation
nashville, tennessee
m at t h e w C . d i a m o n d
Chairman and Chief executive officer
alloy, inc.
new York, new York
member of the audit and finance committees
Chairman of the compensation committee, member
L e o n a r d L . B e r r Y
of the finance committee
distinguished Professor of marketing and Professor of
m a r t Y g . d i C k e n S
humanities in medicine
texas a&m university
College Station, texas
retired President
at&t–tennessee
nashville, tennessee
member of the compensation and nominating and
Chairman of the finance committee, member of
governance committees
w i L L i a m F. B L a u F u S S , J r .
Consultant, Certified Public accountant
nashville, tennessee
member of the audit and finance committees
J a m e S w. B r a d F o r d
dean, owen School of management
vanderbilt university
nashville, tennessee
the nominating and governance committee
B e n t. h a r r i S
Former Chairman
genesco inc.
k at h L e e n m a S o n
President and Chief executive officer
tuesday morning inc.
dallas, texas
member of the audit and compensation committees
member of the finance and nominating and
h a L n . P e n n i n g t o n
governance committees
r o B e r t v. d a L e
Consultant
nashville, tennessee
Chairman of the audit and nominating and
governance committees
r o B e r t J . d e n n i S
President and Chief operating officer
genesco inc.
Chairman and Chief executive officer
genesco inc.
w i L L i a m a . w i L L i a m S o n , J r .
Private investor
montgomery, alabama
member of the compensation and nominating and
governance committees
c o r p o r aT e o F F I c e r s
h a L n . P e n n i n g t o n
J o h n w. C L i n a r d
Chairman and Chief executive officer
Senior vice President–administration and human resources
46 years with genesco
r o B e r t J . d e n n i S
36 years with genesco
r o g e r g . S i S S o n
President and Chief operating officer
Senior vice President, Secretary and general Counsel
4 years with genesco
J a m e S S . g u L m i
4 years with genesco
m i m i e . v a u g h n
Senior vice President–Finance and Chief Financial officer
Senior vice President–Strategy and Business development
36 years with genesco
J a m e S C . e S t e Pa
5 years with genesco
m at t h e w n . J o h n S o n
Senior vice President–genesco retail
vice President and treasurer
23 years with genesco
J o n at h a n d. C a P L a n
5 years with genesco
Pa u L d. w i L L i a m S
Senior vice President–genesco Branded
vice President and Chief accounting officer
5 years with genesco
k e n n e t h J . ko C h e r
Senior vice President–hat world/Lids
4 years with genesco
3 years with genesco
84
G e n e s c o r e Ta I l s T o r e s a S o F 2 / 2 / 0 8
Genesco Inc. and SuBSidiarieS
aLaSka
anCHoRagE LidS (2), JourneYS (2)
FaIRBankS LidS, JourneYS
aLaBaMa
auBuRn hat ShaCk, JourneYS
anTIoCH LidS, JourneYS
aRCadIa LidS, JourneYS
San BERnadIno LidS, JourneYS
San BRuno JourneYS
dISTRICT oF CoLuMBIa
waSHIngTon, d.C. LidS, JohnSton & murPhY
BakERSFIELd LidS, JourneYS,
San dIEgo LidS (3), JohnSton & murPhY ShoP,
JourneYS kidZ, Shi
BREa JourneYS
BuEna PaRk LidS
JourneYS (3)
San FRanCISCo LidS (3), JohnSton & murPhY ShoP
San JoSE LidS (2), JourneYS (2), JourneYS kidZ
ShoP (4)
FLoRIda
aLTaMonTE SPRIngS LidS, JourneYS
avEnTuRa LidS, JohnSton & murPhY ShoP,
JourneYS
BoCa RaTon LidS, JohnSton & murPhY ShoP,
JourneYS
BoYnTon BEaCH LidS, JourneYS,
underground Station
BRadEnTon JourneYS, LidS
BRandon LidS, JourneYS, JourneYS kidZ, Shi
CLEaRwaTER hat ShaCk, LidS, JourneYS, Shi
CoRaL SPRIngS hat ShaCk, JourneYS,
underground Station
daYTona BEaCH LidS, JourneYS
dESTIn LidS, JohnSton & murPhY outLet, JourneYS
ELLEnTon JourneYS, JohnSton & murPhY outLet
ESTERo LidS, JourneYS (2), JohnSton & murPhY
outLet
FT. LaudERdaLE JourneYS
FT. MYERS LidS (3), JourneYS (2),
underground Station
gaInESvILLE hat ShaCk, LidS, JourneYS
HIaLEaH hat ShaCk
JaCkSonvILLE hat ShaCk, LidS (2), JourneYS (2),
underground Station (2)
JEnSEn BEaCH JourneYS
kISSIMMEE LidS, JourneYS
LakE waLES JourneYS
LakELand hat worLd, JourneYS
MaRY ESTHER hat ShaCk, JourneYS
MELBouRnE hat ShaCk, JourneYS
MERRITT ISLand JourneYS, LidS
MIaMI hat ShaCk, LidS, JourneYS (2), JourneYS kidZ,
underground Station (4), Shi
MIaMI BEaCH JourneYS
naPLES LidS, JourneYS, JourneYS kidZ
oCoEE LidS, JourneYS, underground Station
oRangE PaRk LidS, JourneYS
oRLando hat ShaCk, LidS (4), JohnSton &
murPhY outLet, JourneYS (5),
JourneYS kidZ (2), underground Station (2)
ovIEdo JourneYS
PaLM BEaCH gaRdEnS JohnSton & murPhY ShoP,
JourneYS
PanaMa CITY LidS, JourneYS
PEMBRokE PInES LidS, JourneYS
PEnSaCoLa LidS, JourneYS,
underground Station
PLanTaTIon JourneYS, LidS
PoRT CHaRLoTTE JourneYS, LidS
PoRT RICHEY hat ShaCk, JourneYS
ST. PETERSBuRg JourneYS, LidS,
BIRMIngHaM hat ShaCk, hat worLd, LidS,
BuRBank LidS, JourneYS
JohnSton & murPhY ShoP, JourneYS (2),
CaBazon JohnSton & murPhY outLet
underground Station
CaMaRILLo JohnSton & murPhY outLet
doTHan hat worLd, JourneYS
FaIRFIELd underground Station
FLoREnCE JourneYS, LidS
Canoga PaRk LidS, JohnSton & murPhY ShoP,
JourneYS
CaPIToLa LidS, JourneYS
San LEandRo LidS
San MaTEo LidS, JourneYS
San RaFaEL JourneYS
San YSIdRo JourneYS
SanTa ana LidS, JourneYS
SanTa CLaRa hat worLd, JourneYS,
FoLEY LidS, JohnSton & murPhY outLet,
CaRLSBad LidS (2), JohnSton & murPhY outLet,
JourneYS kidZ, LidS kidS
JourneYS
gadSdEn hat ShaCk
HoMEwood JourneYS
HoovER JourneYS, Shi
HunTSvILLE hat ShaCk, LidS, JourneYS (2),
underground Station
MoBILE hat ShaCk, JourneYS,
underground Station
MonTgoMERY hat ShaCk,
underground Station
oxFoRd hat ShaCk, underground Station
SPanISH FoRT JourneYS
TuSCaLooSa hat ShaCk, JourneYS
aLBERTa
CaLgaRY LidS
EdMonTon CaP ConneCtion (2), LidS,
head QuarterS (2)
REd dEER LidS
aRkanSaS
JourneYS, underground Station
SanTa MonICa LidS, JourneYS
CERRIToS LidS, JourneYS
CHICo LidS, JourneYS
CHuLa vISTa hat worLd, JourneYS (2), LidS
CITRuS HEIgHTS JourneYS
CITY oF InduSTRY JourneYS
CoMMERCE LidS, JourneYS
ConCoRd LidS, JourneYS
CoSTa MESa JohnSton & murPhY ShoP,
JourneYS
CuLvER CITY LidS
daLY CITY JourneYS
downEY LidS, JourneYS
EL CaJon LidS, JourneYS
EL CEnTRo LidS, JourneYS
ESCondIdo LidS, JourneYS
EuREka hat worLd, JourneYS
SanTa RoSa LidS, JourneYS
SHERMan oakS JourneYS
SIERRa vISTa LidS
SIMI vaLLEY JourneYS
SToCkTon JourneYS, LidS
TEMECuLa JourneYS
THouSand oakS JourneYS
TRaCY hat worLd, JourneYS
TuLaRE JourneYS
TuSTIn LidS
vaLEnCIa JourneYS, LidS
vEnTuRa hat worLd, JourneYS
vICToRvILLE LidS
vISaLIa LidS, JourneYS
wEST CovIna LidS, JourneYS,
underground Station
FaIRFIELd JourneYS, LidS, underground Station
wESTMInSTER LidS, JourneYS
FoLSoM LidS
FRESno LidS, Jarman Shoe Store
FaYETTEvILLE hat worLd, JourneYS,
gILRoY LidS, JohnSton & murPhY outLet
JourneYS kidZ
gLEndaLE LidS
FoRT SMITH hat worLd, JourneYS
HanFoRd LidS, JourneYS
HoT SPRIngS JourneYS
HaYwaRd underground Station
JonESBoRo LidS, JourneYS
IRvInE LidS
LITTLE RoCk LidS
LakEwood LidS, JourneYS,
noRTH LITTLE RoCk JourneYS (2), hat worLd,
underground Station
underground Station
Long BEaCH LidS
PInE BLuFF hat worLd, JourneYS
LoS angELES LidS (4), JohnSton & murPhY
RogERS LidS, JourneYS
ShoP, underground Station
MILPITaS LidS, JourneYS
ModESTo LidS, Jarman Shoe Store, JourneYS,
JourneYS kidZ, Shi
MonTCLaIR JourneYS, LidS,
MonTEBELLo LidS, JourneYS
MonTEREY LidS
MoREno vaLLEY LidS, JourneYS
YuBa CITY LidS, JourneYS
CoLoRado
auRoRa LidS (2), JourneYS (2),
underground Station
BRooMFIELd LidS, JourneYS
CaSTLE RoCk LidS, JohnSton & murPhY outLet,
JourneYS
CoLoRado SPRIngS LidS(2), JourneYS,
underground Station
dEnvER LidS, JourneYS (3)
FT. CoLLInS JourneYS
gRand JunCTIon LidS, JourneYS
gREELEY JourneYS
LakEwood LidS, JourneYS
LITTLETon hat worLd, JourneYS (2)
LongMonT JourneYS
LovELand LidS, JourneYS
PuEBLo LidS, JourneYS
SILvERTHoRnE JourneYS
aRIzona
CHandLER JourneYS, JourneYS kidZ
FLagSTaFF JourneYS, LidS
gILBERT JourneYS
gLEndaLE LidS, JourneYS
MESa JourneYS (2), JourneYS kidZ, LidS (2),
underground Station
PHoEnIx hat worLd, LidS (2), Jarman Shoe Store,
JohnSton & murPhY ShoP, JourneYS(4),
JourneYS kidZ, underground Station (2)
PRESCoTT JourneYS
SCoTTSdaLE JohnSton & murPhY ShoP,
JourneYS, JourneYS kidZ
TEMPE LidS (2), JourneYS (2), JourneYS kidZ
TuCSon hat worLd, LidS (2), JourneYS (2),
JourneYS kidZ, Shi, underground Station
YuMa JourneYS
BRITISH CoLuMBIa
BuRnaBY LidS
kELowna head QuarterS
LangLEY head QuarterS
nanaIMo LidS
SuRREY LidS
vICToRIa head QuarterS
CaLIFoRnIa
aLPInE JourneYS
naTIonaL CITY LidS, JourneYS, JourneYS kidZ,
underground Station
nEwaRk LidS, JourneYS
wESTMInSTER LidS, JourneYS, JourneYS kidZ,
underground Station
noRTHRIdgE LidS, JourneYS, JourneYS kidZ,
ConnECTICuT
underground Station
CLInTon JohnSton & murPhY outLet
onTaRIo LidS, JourneYS, JourneYS kidZ
danBuRY LidS, JourneYS, JourneYS kidZ
oRangE LidS
FaRMIngTon LidS, JohnSton & murPhY ShoP
underground Station
PaLM dESERT LidS, JohnSton & murPhY ShoP,
ManCHESTER LidS, JourneYS
JourneYS
PaLMdaLE LidS, JourneYS
PanoRaMa CITY LidS
PISMo BEaCH JourneYS
PLEaSanTon JourneYS
MERIdEn LidS, JourneYS
MILFoRd LidS, JourneYS, underground Station
SunRISE hat ShaCk, LidS, JourneYS,
STaMFoRd JohnSton & murPhY ShoP, JourneYS
underground Station
SanFoRd hat ShaCk, JourneYS
SaRaSoTa LidS, JourneYS
TRuMBuLL LidS, JourneYS
waTERBuRY LidS, JourneYS
TaLLaHaSSEE hat ShaCk, hat worLd, LidS,
JourneYS (2), underground Station
TaMPa hat ShaCk, LidS (3), JohnSton &
RanCHo CuCaMonga JourneYS
waTERFoRd LidS, JourneYS
REddIng JourneYS
wESTPoRT JohnSton & murPhY ShoP
murPhY ShoP (2), JourneYS (3), JourneYS kidZ,
REdondo BEaCH LidS, JourneYS
RICHMond LidS, underground Station
RIvERSIdE LidS, JourneYS
RoSEvILLE JourneYS
dELawaRE
dovER hat worLd, JourneYS
nEwaRk LidS, JohnSton & murPhY ShoP,
JourneYS
SaCRaMEnTo LidS (3), JourneYS (2)
REHoBoTH BEaCH LidS, JourneYS
SaLInaS LidS, JourneYS
wILMIngTon JourneYS
underground Station
vERo BEaCH LidS, JourneYS
wELLIngTon JohnSton & murPhY ShoP,
JourneYS, LidS
wEST PaLM BEaCH Jarman Shoe Store,
JourneYS (2), underground Station
85
Genesco Inc. and SuBSidiarieS
G e n e s c o r e Ta I l s T o r e s a S o F 2 / 2 / 0 8
gEoRgIa
aLBanY JourneYS, LidS
aLPHaRETTa hat ShaCk, LidS, JourneYS
aTHEnS hat ShaCk, JourneYS
aTLanTa hat ShaCk (3), LidS (2), Jarman Shoe Store,
JohnSton & murPhY ShoP (3),
JourneYS (3), underground Station (3)
auguSTa LidS, JourneYS, hat ShaCk,
underground Station
BRunSwICk JourneYS
BuFoRd hat ShaCk, LidS, JourneYS,
JourneYS kidZ
CEnTERvILLE JourneYS
guRnEE LidS, JourneYS, Shi
JoLIET LidS, underground Station
LInCoLnwood LidS, underground Station
LoMBaRd LidS, JourneYS
MaTTESon hat worLd
MoLInE hat worLd, JourneYS
noRRIdgE LidS, JourneYS,
underground Station
noRTH RIvERSIdE LidS, JourneYS,
underground Station
noRTHBRook JohnSton & murPhY ShoP
oakBRook JohnSton & murPhY ShoP
oRLand PaRk LidS, LidS kidS, JourneYS,
CoLuMBuS hat ShaCk, LidS, JourneYS,
JourneYS kidZ
PEoRIa LidS, JourneYS, JourneYS kidZ
PERu LidS
RoCkFoRd LidS, JourneYS
SCHauMBuRg LidS, JohnSton & murPhY ShoP,
JourneYS
SPRIngFIELd LidS, JourneYS
vERnon HILLS JourneYS, LidS
wEST dundEE JourneYS, LidS
IndIana
kEnTuCkY
aSHLand JourneYS, LidS
BowLIng gREEn LidS, JourneYS
FLoREnCE hat worLd, JourneYS
HEBRon JohnSton & murPhY ShoP
LExIngTon hat worLd, LidS, JourneYS,
JourneYS kidZ, Shi
BRaInTREE LidS, JohnSton & murPhY ShoP,
JourneYS, underground Station
BRoCkTon underground Station
BuRLIngTon LidS, JohnSton & murPhY ShoP,
JourneYS
CaMBRIdgE LidS, JourneYS
CHESTnuT HILL JohnSton & murPhY ShoP
LouISvILLE LidS (3), JohnSton & murPhY ShoP,
daRTMouTH LidS, JourneYS
JourneYS, JourneYS kidZ,
underground Station (2)
nEwPoRT JourneYS
owEnSBoRo JourneYS
PaduCaH hat worLd, JourneYS
LouISIana
aLExandRIa LidS, underground Station
BaTon RougE hat ShaCk, LidS (2),
JohnSton & murPhY ShoP, JourneYS (2),
JourneYS kidZ, underground Station
BoSSIER CITY hat worLd, JourneYS,
underground Station
EaST BoSTon LidS, JohnSton & murPhY ShoP
HadLEY LidS
HanovER LidS, JourneYS
HoLYokE LidS, JourneYS, JourneYS kidZ ,
LidS kidS, Shi
HYannIS LidS, JourneYS
kIngSTon LidS, JourneYS
LanESBoRo LidS, JourneYS
LEE JohnSton & murPhY outLet
LEoMInSTER LidS, JourneYS
MaRLBoRo LidS, JourneYS
naTICk LidS, JourneYS, LidS kidS,
JohnSton & murPhY ShoP, Shi
gRETna JourneYS, LidS, underground Station
noRTH aTTLEBoRo LidS, JourneYS,
HouMa JourneYS
kEnnER hat ShaCk, Jarman Shoe Store,
BLooMIngTon LidS, JourneYS, JourneYS kidZ
JourneYS, JourneYS kidZ
CaRMEL LidS
CLaRkSvILLE hat worLd, JourneYS
EdInBuRgH LidS
ELkHaRT hat worLd
EvanSvILLE LidS, JourneYS, JourneYS kidZ
FT. waYnE hat worLd, JourneYS,
JourneYS kidZ, LidS kidS Shi
gREEnwood LidS, JourneYS, LidS kidS, Shi
IndIanaPoLIS hat worLd (3), LidS (2),
JohnSton & murPhY ShoP (2), JourneYS (2),
LidS kidS, underground Station (2)
LaFaYETTE LidS, JourneYS, JourneYS kidZ
LakE CHaRLES LidS, JourneYS,
underground Station
METaIRIE JohnSton & murPhY ShoP
MonRoE LidS, JourneYS, JourneYS kidZ,
underground Station
SHREvEPoRT JourneYS
SLIdELL JourneYS
MaInE
BangoR LidS, JourneYS
kokoMo LidS, JourneYS
LaFaYETTE hat worLd, JourneYS, JourneYS kidZ
kITTERY JohnSton & murPhY outLet
SouTH PoRTLand LidS, JourneYS
MERRILLvILLE LidS, JourneYS,
underground Station
MICHIgan CITY LidS
MISHawaka LidS, LidS kidS, JourneYS,
ManIToBa
wInnIPEg LidS (2)
MaRYLand
underground Station
PEaBodY LidS, JourneYS
SauguS LidS (2), JourneYS,
underground Station
SPRIngFIELd JourneYS
SwanSEa LidS
TaunTon LidS, JourneYS
waTERTown underground Station
wREnTHaM LidS, JohnSton & murPhY outLet,
JourneYS
MICHIgan
ann aRBoR LidS, JohnSton & murPhY ShoP,
JourneYS
auBuRn HILLS LidS, JourneYS,
JourneYS kidZ, Shi
BaTTLE CREEk hat worLd, JourneYS
BIRCH Run JourneYS
CLInTon TownSHIP Shi
dEaRBoRn LidS, JourneYS, underground Station,
JourneYS kidZ, Shi
MunCIE LidS, JourneYS
PLaInFIELd LidS, JourneYS
RICHMond JourneYS
TERRE HauTE LidS, JourneYS
Iowa
aMES JourneYS
CEdaR FaLLS hat worLd
CEdaR RaPIdS JourneYS
CoRaLvILLE hat worLd, JourneYS
CounCIL BLuFFS JourneYS
davEnPoRT hat worLd, JourneYS
dES MoInES JourneYS (2)
SIoux CITY JourneYS
waTERLoo JourneYS
wEST dES MoInES JourneYS (2)
kanSaS
LawREnCE LidS
ManHaTTan hat worLd, JourneYS
oLaTHE LidS, JourneYS
annaPoLIS LidS (2), JohnSton & murPhY ShoP,
JohnSton & murPhY ShoP
JourneYS, JourneYS kidZ
FLInT LidS, JourneYS
BaLTIMoRE LidS (2), Jarman Shoe Store,
FoRT gRaTIoT LidS, JourneYS
JohnSton & murPhY ShoP (2), JourneYS,
gRand RaPIdS LidS, JohnSton & murPhY ShoP,
JourneYS kidZ, hat worLd,
JourneYS
underground Station
BEL aIR LidS, JourneYS
BETHESda LidS, JourneYS
CoLuMBIa LidS, JohnSton & murPhY ShoP,
JourneYS
FREdERICk hat worLd, JourneYS
gaITHERSBuRg LidS, JourneYS,
underground Station
gLEn BuRnIE LidS, JourneYS
gRandvILLE hat worLd, JourneYS, Shi
gREEn oak TownSHIP JourneYS
HaRPER woodS LidS, underground Station
HowELL LidS, JourneYS
JaCkSon hat worLd
LanSIng LidS, JourneYS
LIvonIa JohnSton & murPhY ShoP
MIdLand hat worLd, JourneYS
MuSkEgon JourneYS, LidS
HagERSTown hat worLd, JourneYS
novI LidS, JohnSton & murPhY ShoP, JourneYS,
JohnSton & murPhY outLet
JourneYS kidZ, Shi
HanovER LidS, Jarman Shoe Store, JourneYS
okEMoS hat worLd, JourneYS
HYaTTSvILLE LidS, underground Station
PoRTagE LidS, JourneYS
owIngS MILLS underground Station
RoSEvILLE LidS, underground Station
quEEnSTown JohnSton & murPhY outLet
SagInaw hat worLd, JourneYS
SaLISBuRY hat worLd, JourneYS
SouTHFIELd hat Zone, underground Station
ovERLand PaRk LidS, JohnSton & murPhY ShoP,
TowSon JourneYS
STERLIng HEIgHTS LidS, JohnSton & murPhY ShoP,
underground Station
CoMMERCE LidS, JourneYS
daLTon JourneYS
daRIEn JohnSton & murPhY outLet
dawSonvILLE LidS, JourneYS,
JohnSton & murPhY outLet
dECaTuR LidS, Jarman Shoe Store
dougLaSvILLE hat ShaCk, JourneYS,
JourneYS kidZ
duLuTH hat ShaCk, LidS, JourneYS,
underground Station
kEnnESaw hat ShaCk, LidS, JourneYS,
JourneYS kidZ, Shi
LawREnCEvILLE JourneYS,
LITHonIa hat ShaCk, JourneYS,
underground Station
MaCon hat ShaCk, JourneYS,
underground Station
MoRRow LidS (2),underground Station
RoME LidS, JourneYS
SavannaH LidS (2), JourneYS (2),
underground Station
unIon CITY LidS, underground Station
vaLdoSTa JourneYS
HawaII
aIEa LidS, JourneYS
HILo LidS, JourneYS
HonoLuLu LidS (4), JourneYS, hat ShaCk
kaHuLuI LidS, JourneYS
kaILua-kona LidS
kanEoHE LidS, JourneYS
LaHaIna LidS
LIHuE LidS
waIkoLoa LidS
IdaHo
BoISE JourneYS, JourneYS kidZ
IdaHo FaLLS JourneYS
TwIn FaLLS JourneYS
ILLInoIS
auRoRa LidS (2), JohnSton & murPhY outLet,
JourneYS (2), underground Station
BLooMIngdaLE hat worLd, JourneYS
BLooMIngTon hat worLd, JourneYS
BoLIngBRook JourneYS
CaLuMET CITY LidS, underground Station
CaRBondaLE JourneYS
CHaMPaIgn LidS, JourneYS
CHICago LidS (4), JourneYS, Jarman Shoe Store,
JohnSton & murPhY ShoP (2),
underground Station
CHICago RIdgE LidS, JourneYS,
underground Station
JourneYS
SaLIna JourneYS
ToPEka LidS, JourneYS
wICHITa LidS (2), JourneYS (2),
EvERgREEn PaRk LidS, underground Station
underground Station
FaIRvIEw HEIgHTS JourneYS, LidS, LidS kidS
FoRSYTH JourneYS
waLdoRF hat worLd, underground Station
JourneYS, underground Station
wESTMInSTER JourneYS
wHEaTon hat ShaCk, LidS, JourneYS,
underground Station
MaSSaCHuSETTS
auBuRn LidS, JourneYS
BoSTon LidS, JohnSton & murPhY ShoP (2)
TaYLoR LidS, JourneYS, underground Station
TRavERSE CITY LidS, JourneYS
TRoY LidS, JohnSton & murPhY ShoP,
JourneYS (2), underground Station
wESTLand LidS, JourneYS,
underground Station
86
Genesco Inc. and SuBSidiarieS
HunTIngTon STaTIon JohnSton & murPhY ShoP
BEaCHwood JohnSton & murPhY ShoP
JoHnSon CITY LidS, JourneYS
BEavERCREEk JourneYS kidZ, hat worLd,
kIngSTon LidS, JourneYS
JourneYS (2)
LakE gRovE LidS, JourneYS,
CanTon LidS, JourneYS
JourneYS kidZ, LidS kidS
CInCInnaTI hat worLd, hat Zone, LidS (2),
LakEwood LidS
MaSSaPEqua LidS, JourneYS
MIddLETown LidS, JourneYS
nEw HaRTFoRd LidS, JourneYS
JourneYS (4), JourneYS kidZ,
underground Station (2), LidS kidS
CLEvELand LidS (2), JohnSton & murPhY ShoP (2),
Shi, underground Station
nEw YoRk LidS (6), JohnSton & murPhY ShoP (2),
CoLuMBuS hat worLd, LidS (2), JohnSton &
JourneYS (3)
murPhY ShoP, JourneYS, JourneYS kidZ, Shi,
nIagaRa FaLLS LidS, JohnSton & murPhY outLet,
underground Station
PLaTTSBuRgH LidS, JourneYS
PougHkEEPSIE LidS, JourneYS
RIvERHEad LidS, JourneYS
RoCHESTER LidS (2), JourneYS,
underground Station
RoTTERdaM JourneYS
daYTon LidS (2), JourneYS, Shi
duBLIn hat Zone, JourneYS, JourneYS kidZ, Shi
ELYRIa LidS, JourneYS
FIndLaY JourneYS
HEaTH JourneYS
JEFFERSonvILLE JohnSton & murPhY outLet,
JourneYS
SaRaToga SPRIngS hat worLd, JourneYS
LanCaSTER hat worLd, JourneYS
SCHEnECTadY LidS
LIMa LidS, JourneYS
STaTEn ISLand LidS, JourneYS,
ManSFIELd hat worLd, JourneYS
underground Station
SYRaCuSE LidS, JourneYS, JourneYS kidZ
MauMEE JourneYS, LidS
MEnToR LidS, JourneYS
vaLLEY STREaM LidS, underground Station
nILES JourneYS, hat worLd
vICToR LidS, JohnSton & murPhY ShoP, JourneYS
noRTH oLMSTEd LidS, JourneYS
waTERLoo LidS, JourneYS
waTERTown LidS
wEST nYaCk JourneYS, LidS,
underground Station, Shi
wHITE PLaInS LidS (2), JourneYS,
underground Station
wILLIaMSvILLE JourneYS
PaRMa LidS, JourneYS
RICHMond HEIgHTS underground Station
SanduSkY LidS, JourneYS
SPRIngFIELd LidS, JourneYS
ST. CLaIRSvILLE hat worLd
STRongSvILLE LidS, JohnSton & murPhY ShoP,
JourneYS, JourneYS kidZ
YoRkTown HEIgHTS LidS, JourneYS
ToLEdo LidS, JourneYS, Shi, underground Station
CHERRY HILL LidS, JohnSton & murPhY ShoP,
JourneYS
G e n e s c o r e Ta I l s T o r e s a S o F 2 / 2 / 0 8
MInnESoTa
nEw HaMPSHIRE
aLBERTvILLE LidS, JourneYS
ConCoRd LidS, JourneYS
BLaInE LidS, JourneYS
ManCHESTER LidS, JourneYS
BLooMIngTon hat worLd, LidS (4),
naSHua LidS, JourneYS
JohnSton & murPhY ShoP, JourneYS,
nEwIngTon LidS, JourneYS
JourneYS kidZ, Shi, underground Station
noRTH ConwaY LidS, JourneYS
BRookLYn CEnTER JourneYS
SaLEM LidS, JourneYS
BuRnSvILLE LidS, JourneYS, JourneYS kidZ
duLuTH LidS, JourneYS
EdEn PRaIRIE JourneYS
MankaTo JourneYS
MaPLE gRovE JourneYS
MaPLEwood JourneYS
MInnETonka LidS, JourneYS
RoCHESTER LidS, JourneYS
RoSEvILLE hat worLd, JourneYS, Shi
ST. CLoud hat worLd, JourneYS
ST. PauL LidS (2), JohnSton & murPhY ShoP
woodBuRY JourneYS
MISSISSIPPI
nEw JERSEY
BRIdgEwaTER LidS, JohnSton & murPhY ShoP,
JourneYS
BuRLIngTon underground Station
JourneYS, underground Station
dEPTFoRd LidS, JourneYS, JourneYS kidZ
EaST BRunSwICk LidS, JourneYS
EaTonTown LidS, JourneYS, JourneYS kidZ,
underground Station, Shi
EdISon LidS
ELIzaBETH hat ShaCk, LidS, JourneYS,
JourneYS kidZ
BILoxI hat ShaCk, JourneYS,
FREEHoLd hat worLd, JourneYS
underground Station
JaCkSon JourneYS
gREEnvILLE JourneYS
JERSEY CITY LidS, JourneYS,
HaTTIESBuRg hat ShaCk, JourneYS,
underground Station, Shi
JourneYS kidZ
LawREnCEvILLE LidS, JourneYS,
JaCkSon hat worLd, underground Station
underground Station
MERIdIan hat ShaCk
LIvIngSTon LidS, JourneYS
RIdgELand hat worLd, JourneYS
MaRLTon JohnSton & murPhY ShoP
MaYS LandIng LidS, JourneYS
MooRESTown LidS, JourneYS
nEwaRk hat worLd, JohnSton & murPhY ShoP
PaRaMuS LidS (3), JourneYS, JourneYS kidZ,
underground Station, Shi
RoCkawaY LidS, JourneYS, Shi
SHoRT HILLS JohnSton & murPhY ShoP
ToMS RIvER LidS, JourneYS
SouTHavEn JourneYS
TuPELo LidS
MISSouRI
BRanSon LidS, JourneYS
CaPE gIRaRdEau LidS, JourneYS
CHESTERFIELd LidS, JohnSton & murPhY ShoP,
JourneYS, JourneYS kidZ
CoLuMBIa LidS, JourneYS
dES PERES JourneYS, JourneYS kidZ, Shi
FLoRISSanT underground Station
HazELwood LidS, JourneYS
IndEPEndEnCE LidS, JourneYS,
noRTH CaRoLIna
aSHEvILLE LidS, JourneYS, underground Station
wESTLakE JourneYS
YoungSTown LidS, JourneYS
zanESvILLE hat worLd
okLaHoMa
waYnE LidS, JourneYS, underground Station
woodBRIdgE LidS (2), JourneYS, JourneYS kidZ,
BuRLIngTon JourneYS
CaRY hat ShaCk, LidS, JourneYS
Shi, underground Station
nEw MExICo
CHaRLoTTE LidS (5), JohnSton & murPhY ShoP (3),
BaRTLESvILLE JourneYS
JourneYS (2), underground Station (2)
ConCoRd hat ShaCk, LidS, JourneYS (2)
LawTon LidS, JourneYS
noRMan LidS, JourneYS
JourneYS kidZ, Shi
aLBuquERquE LidS (2), JourneYS (2),
JoPLIn hat worLd, JourneYS
JourneYS kidZ (2), underground Station (2)
duRHaM LidS, JourneYS, underground Station
okLaHoMa CITY hat worLd (2), LidS,
FaYETTEvILLE LidS, JourneYS, JourneYS kidZ,
JourneYS (3), JourneYS kidZ (2)
kanSaS CITY LidS, JohnSton & murPhY ShoP,
CLovIS JourneYS
JourneYS
FaRMIngTon JourneYS
oSagE BEaCH LidS, JourneYS,
gaLLuP JourneYS
JohnSton & murPhY outLet
LaS CRuCES JourneYS
SPRIngFIELd LidS, JourneYS, JourneYS kidZ
SanTa FE JohnSton & murPhY outLet, JourneYS
ST. ann hat Zone, JourneYS,
underground Station
ST. JoSEPH LidS, JourneYS
ST. LouIS LidS (4), JohnSton & murPhY ShoP (2),
JourneYS (3), JourneYS kidZ,
underground Station
ST. PETERS JourneYS, JourneYS kidZ, Shi
nEw YoRk
aLBanY LidS (3), JourneYS,
underground Station, Shi
aMHERST hat worLd, JourneYS
auBuRn JourneYS
BaY SHoRE LidS, JourneYS
BRonx LidS
underground Station
gaSTonIa hat worLd, JourneYS
goLdSBoRo JourneYS
SHawnEE JourneYS
TuLSa LidS (2), JourneYS (2), JourneYS kidZ,
underground Station
gREEnSBoRo hat ShaCk, LidS, Jarman Shoe Store,
onTaRIo
JohnSton & murPhY ShoP, JourneYS,
underground Station
gREEnvILLE underground Station
HICkoRY hat ShaCk, JourneYS
HIgH PoInT hat worLd
JaCkSonvILLE LidS, JourneYS,
underground Station
PInEvILLE hat ShaCk, JourneYS,
BaRRIE CaP ConneCtion
BRaMPTon LidS
CaMBRIdgE head QuarterS
guELPH LidS
HaMILTon head QuarterS
kIngSTon LidS
kITCHnER LidS
London LidS (2)
MonTana
BRookLYn LidS (2), underground Station
RaLEIgH hat ShaCk, LidS, JohnSton & murPhY ShoP,
MISSISSauga LidS (2), head QuarterS
BILLIngS LidS, JourneYS
BuFFaLo LidS, JourneYS (2),
BozEMan LidS
MISSouLa JourneYS
nEBRaSka
LInCoLn LidS, JourneYS (2)
oMaHa hat worLd, LidS (2), JourneYS (2)
nEvada
underground Station, LidS kidS
CEnTRaL vaLLEY LidS, JourneYS,
JohnSton & murPhY outLet
CLaY JourneYS
dEwITT JourneYS
ELMHuRST LidS, JourneYS,
underground Station, LidS kidS
JourneYS (2), JourneYS kidZ, Shi
RoCkY MounT LidS, underground Station
SMITHFIELd JourneYS
wILMIngTon LidS, JourneYS
wInSTon-SaLEM LidS, JourneYS, JourneYS kidZ
noRTH dakoTa
BISMaRCk LidS, JourneYS
FaRgo JourneYS
nEwMaRkET head QuarterS
noRTH BaY CaP ConneCtion
SCaRBoRougH head QuarterS
SudBuRY LidS
ToRonTo head QuarterS
vaugHn head QuarterS
wIndSoR head QuarterS
oREgon
HEndERSon LidS, JourneYS, JourneYS kidZ
FLuSHIng LidS
gRand FoRkS LidS, JourneYS
EugEnE LidS, JourneYS
LaS vEgaS LidS (6), JohnSton & murPhY outLet,
gaRdEn CITY LidS (2), JohnSton & murPhY ShoP,
JohnSton & murPhY ShoP, JourneYS (7),
JourneYS
JourneYS kidZ, underground Station
gREECE JourneYS
PRIMM JourneYS
REno JourneYS (2), LidS
HICkSvILLE LidS, JourneYS
HoRSEHEadS LidS, JourneYS
MInoT JourneYS
oHIo
akRon LidS (2), JourneYS (2)
auRoRa JourneYS
MEdFoRd hat worLd, JourneYS
PoRTLand LidS (2), JourneYS (2)
SaLEM LidS, JourneYS
TIgaRd LidS, JourneYS
woodBuRn LidS, JourneYS
87
Genesco Inc. and SuBSidiarieS
G e n e s c o r e Ta I l s T o r e s a S o F 2 / 2 / 0 8
PEnnSYLvanIa
aLToona LidS, JourneYS
SouTH CaRoLIna
aIkEn LidS
daLLaS hat worLd, LidS (3),
ogdEn LidS, JourneYS
JohnSton & murPhY ShoP (3), JourneYS (3),
oREM LidS, JourneYS, JourneYS kidZ
BEnSaLEM LidS, JourneYS
andERSon hat worLd, JourneYS
CaMP HILL hat worLd, JourneYS
BLuFFTon JohnSton & murPhY outLet,
CaRoLIna Shi
JourneYS
CEnTER vaLLEY LidS, JohnSton & murPhY ShoP,
CHaRLESTon hat ShaCk, LidS, JourneYS,
JourneYS kidZ, underground Station (2)
PaRk CITY JourneYS
dEnTon hat worLd, JourneYS
PRovo JourneYS
EagLE PaSS JourneYS
SaLT LakE CITY LidS, JourneYS
EL PaSo hat Zone (2), JourneYS (3),
SandY LidS, JourneYS, JourneYS kidZ
hat worLd
JourneYS kidZ (2)
ST. gEoRgE JourneYS
CoLuMBIa hat worLd (2), LidS, JourneYS (3),
FoRT woRTH hat worLd, LidS, Jarman Shoe Store,
vaLLEY CITY Jarman Shoe Store
JourneYS
dICkSon CITY JourneYS
ERIE LidS, JourneYS
ExTon LidS, JourneYS, JourneYS kidZ
FLoREnCE hat worLd, JourneYS
underground Station
JourneYS (2), underground Station
FRIEndSwood LidS, JourneYS, JourneYS
gREEnSBuRg hat worLd, JourneYS
gaFFnEY JourneYS
kidZ, Shi
wEST vaLLEY CITY JourneYS
vERMonT
gRovE CITY JohnSton & murPhY outLet,
gREEnvILLE LidS, LidS kidS, Jarman Shoe Store,
FRISCo hat worLd, JourneYS, JourneYS kidZ, Shi
BuRLIngTon LidS, JourneYS
JourneYS
HaRRISBuRg JourneYS (2)
HoMESTEad JourneYS
JourneYS, JourneYS kidZ
MYRTLE BEaCH LidS (3), JohnSton & murPhY outLet,
JourneYS (2)
gaRLand LidS, JourneYS
gRaPEvInE LidS, JourneYS
HaRLIngEn LidS, JourneYS
kIng oF PRuSSIa LidS, JohnSton & murPhY
noRTH CHaRLESTon JourneYS (2),
HouSTon LidS (8), JohnSton & murPhY ShoP (2),
ShoP, JourneYS, JourneYS kidZ
underground Station
LanCaSTER LidS (2), JohnSton & murPhY outLet,
noRTH MYRTLE BEaCH LidS
JourneYS (2)
SPaRTanBuRg LidS, JourneYS,
JourneYS (8), JourneYS kidZ (2),
underground Station (5)
ManCHESTER JohnSton & murPhY outLet
SouTH BuRLIngTon LidS, JourneYS
vIRgInIa
aRLIngTon hat Zone, JohnSton & murPhY ShoP,
underground Station
HuMBLE LidS, JourneYS, JourneYS kidZ,
CHaRLoTTESvILLE hat worLd, JourneYS
LangHoRn LidS, JourneYS, JourneYS kidZ
underground Station
underground Station, Shi
CHESaPEakE hat worLd (2), JourneYS (2),
MEdIa LidS, JourneYS, underground Station
MonaCa hat worLd, JourneYS
MonRoEvILLE LidS, JohnSton & murPhY ShoP,
JourneYS
MooSIC LidS, JourneYS
SouTH dakoTa
RaPId CITY LidS, JourneYS
SIoux FaLLS hat worLd, JourneYS
TEnnESSEE
noRTH waLES LidS, JourneYS, JourneYS kidZ
anTIoCH LidS, JourneYS, JourneYS kidZ,
PHILadELPHIa LidS (3), JohnSton & murPhY ShoP,
underground Station (2)
underground Station
BaRTLETT LidS
HuRST LidS, JourneYS
underground Station (2)
IRvIng LidS, JourneYS, JourneYS kidZ,
CHRISTIanSBuRg hat worLd, JourneYS
underground Station
kaTY LidS, JourneYS
kILLEEn hat worLd, JourneYS
LakE JaCkSon LidS, JourneYS
LaREdo JourneYS, JourneYS kidZ,
underground Station
CoLonIaL HEIgHTS hat worLd,
underground Station
danvILLE hat ShaCk, JourneYS
duLLES LidS, JourneYS
FaIRFax LidS, JohnSton & murPhY ShoP,
PITTSBuRgH LidS (4), JohnSton & murPhY ShoP (2),
CHaTTanooga LidS, JourneYS, JourneYS kidZ
LEwISvILLE LidS, JourneYS, JourneYS kidZ
JourneYS
JourneYS (3), hat worLd
PLYMouTH MEETIng JourneYS
CLaRkSvILLE hat worLd, JourneYS
CoLLIERSvILLE LidS, JourneYS
PoTTSTown JohnSton & murPhY ShoP, LidS
FRankLIn hat worLd, JohnSton & murPhY ShoP,
SCRanTon LidS (2), JourneYS
SELInSgRovE hat worLd
SPRIngFIELd LidS, JourneYS
STaTE CoLLEgE hat worLd, JourneYS
STRoudSBuRg LidS, JourneYS
TannERSvILLE JohnSton & murPhY outLet,
JourneYS
TaREnTuM LidS, JourneYS
unIonTown hat worLd
uPPER daRBY LidS
waSHIngTon hat worLd
wEST MIFFLIn LidS (2), JourneYS
wHITEHaLL LidS
wILkES-BaRRE hat worLd, JourneYS
wILLow gRovE hat worLd, JourneYS, Shi
wYoMISSIng LidS, JourneYS
YoRk JourneYS
PuERTo RICo
aguadILLa JourneYS
BaRCELonETa LidS, JourneYS
BaYaMon LidS (2), JourneYS (2)
CaguaS LidS (3), JourneYS (2)
CanovanaS LidS, JourneYS
FaJaRdo JourneYS
guaYaMa JourneYS, LidS
HaTILLo LidS, JourneYS
HaTo REY JourneYS
HuMaCao LidS, JourneYS
ISaBELa LidS, JourneYS
MaYaguEz LidS, JourneYS (2)
PonCE LidS, JourneYS
San Juan LidS
SIERRa BaYaMon JourneYS
vEga aLTa LidS, JourneYS
RHodE ISLand
PRovIdEnCE LidS, JohnSton & murPhY ShoP,
JourneYS
JourneYS, JourneYS kidZ, Shi
gaTLInBuRg LidS
goodLETTSvILLE LidS, JourneYS,
underground Station
JaCkSon hat worLd, JourneYS
JoHnSon CITY LidS, JourneYS
knoxvILLE hat worLd, LidS, JourneYS (3)
MEMPHIS JohnSton & murPhY ShoP,
JourneYS (2), JourneYS kidZ,
underground Station (2)
MoRRISTown JourneYS
MuRFREESBoRo hat worLd, LidS, JourneYS
naSHvILLE LidS, JohnSton & murPhY outLet,
JohnSton & murPhY ShoP, JourneYS,
JourneYS kidZ, Shi
SEvIERvILLE LidS, JohnSton & murPhY outLet,
JourneYS
TExaS
LongvIEw LidS, JourneYS
FREdERICkSBuRg hat worLd, JourneYS
LuBBoCk hat worLd, JourneYS, JourneYS kidZ,
underground Station
LuFkIn JourneYS
MCaLLEn LidS, Jarman Shoe Store, JourneYS,
JourneYS kidZ, underground Station
gLEn aLLEn LidS, JourneYS,
underground Station
HaRRISonBuRg LidS, JourneYS
LEESBuRg JohnSton & murPhY outLet
MERCEdES JourneYS, JohnSton & murPhY outLet
LYnCHBuRg hat worLd, JourneYS
MESquITE LidS (2), JourneYS, JourneYS kidZ,
ManaSSaS LidS, JourneYS
underground Station
MCLEan LidS, JourneYS
MIdLand LidS, JourneYS
odESSa LidS, JourneYS
PaSadEna JourneYS
PLano LidS (2), JohnSton & murPhY ShoP,
JourneYS
PoRT aRTHuR JourneYS
nEwPoRT nEwS hat worLd, JourneYS,
underground Station
noRFoLk LidS (2), JohnSton & murPhY ShoP,
JourneYS, underground Station (2)
RICHMond hat worLd, LidS, JourneYS (3)
Round RoCk LidS, JohnSton & murPhY outLet,
JourneYS
JohnSton & murPhY ShoP
RoanokE LidS, JourneYS
San angELo hat worLd, JourneYS
SPRIngFIELd LidS, JourneYS
San anTonIo LidS (7), Jarman Shoe Store,
vIRgInIa BEaCH LidS (2), JourneYS (2),
JohnSton & murPhY ShoP (2), JourneYS (6),
JohnSton & murPhY ShoP
JourneYS kidZ (2), underground Station (2),
wILLIaMSBuRg JohnSton & murPhY outLet,
Shi
JourneYS
aBILEnE hat worLd, JourneYS
San MaRCoS LidS, JohnSton & murPhY outLet,
aMaRILLo LidS, JourneYS, JourneYS kidZ
JourneYS, JourneYS kidZ
aRLIngTon LidS (2), JourneYS, JourneYS kidZ,
SHERMan JourneYS
Shi, underground Station
SPRIng LidS
JourneYS (3), underground Station
TEMPLE JourneYS
BaYTown JourneYS
TExaRkana LidS, JourneYS
BEauMonT LidS, JourneYS, JourneYS kidZ,
THE woodLandS JourneYS
underground Station
TYLER LidS, JourneYS, underground Station
BRownSvILLE LidS, JourneYS, JourneYS kidZ,
vICToRIa JourneYS
wInCHESTER LidS, JourneYS
woodBRIdgE LidS, JourneYS
waSHIngTon
auBuRn LidS, JourneYS
BELLEvuE LidS, JohnSton & murPhY ShoP
BELLIngHaM LidS, JourneYS
BuRLIngTon JourneYS
EvERETT LidS, JourneYS
underground Station
waCo LidS, JourneYS
kEnnEwICk LidS, JourneYS, JourneYS kidZ
CanuTILLo JohnSton & murPhY outLet,
wICHITa FaLLS LidS, JourneYS
kEnT JourneYS
JourneYS
CEdaR PaRk hat worLd, JourneYS,
JourneYS kidZ
CoLLEgE STaTIon hat worLd, JourneYS
ConRoE LidS
CoRPuS CHRISTI LidS, JourneYS, JourneYS kidZ,
Shi, underground Station
woodLandS JourneYS kidZ
u.S. vIRgIn ISLandS
ST. THoMaS LidS, JourneYS
uTaH
LaYTon JourneYS
Logan JourneYS
MuRRaY LidS, JourneYS, JourneYS kidZ
LYnnwood LidS, JourneYS
oLYMPIa LidS, JourneYS
PuYaLLuP JourneYS
REdMond JourneYS
SEaTTLE LidS, JohnSton & murPhY outLet,
JourneYS (2)
88
CaRoLIna LidS, JourneYS, underground Station
auSTIn LidS (3), JohnSton & murPhY ShoP (2),
SugaRLand LidS, JourneYS, JourneYS kidZ
G e n e s c o r e Ta I l s T o r e s a S o F 2 / 2 / 0 8
Genesco Inc. and SuBSidiarieS
SILvERdaLE LidS, JourneYS
SPokanE LidS, JourneYS (2)
TaCoMa LidS, JourneYS
TukwILa LidS
TuLaLIP LidS, JourneYS
unIon gaP JourneYS
vanCouvER LidS, JourneYS
wEST vIRgInIa
BaRBouRSvILLE hat worLd, JourneYS,
JourneYS kidZ
BRIdgEPoRT hat worLd. JourneYS
CHaRLESTon LidS, JourneYS
MoRganTown hat worLd, JourneYS
PaRkERSBuRg hat worLd
wISConSIn
aPPLETon LidS, JourneYS
BaRaBoo LidS, JourneYS
BRookFIELd LidS
Eau CLaIRE JourneYS
gLEndaLE LidS, JourneYS,
JohnSton & murPhY ShoP
gREEn BaY LidS, JourneYS
gREEndaLE LidS, JourneYS
JanESvILLE LidS, JourneYS
LaCRoSSE JourneYS
MadISon LidS (3), JourneYS (2)
MILwaukEE LidS, underground Station
oSHkoSH JourneYS
PLEaSanT PRaIRIE JohnSton & murPhY outLet,
JourneYS
RaCInE LidS, JourneYS
wauwaToSa hat worLd, JourneYS
wYoMIng
CaSPER JourneYS
CHEYEnnE JourneYS
89
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