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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2016
Accounting Policies [Abstract] |
Significant Accounting Policies [Text Block] | ## 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation — The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include all of the Company’s majority-owned subsidiaries after elimination of intercompany accounts and transactions. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 reported periods. Actual results could differ materially from those estimates. Cash and Cash Equivalents — The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. At December 31, 2016 and 2015, the Company’s cash and cash equivalents included investments in money market accounts and cash deposits at various banks. The Company periodically has cash balances in excess of insured amounts. The Company has not experienced any losses on deposits in excess of insured amounts. Investments — All of the Company’s municipal bond investments are classified as held-to-maturity securities and reported at amortized cost pursuant to Accounting Standards Codification (“ASC”) 320, Investments — Debt and Equity Securities (“ASC 320”) as the Company has the intent and ability to hold all investments to maturity. See Note 4. Accounts Receivable — Trade accounts receivable arise from the sale of products on unsecured trade credit terms. On a quarterly basis, the Company reviews all significant accounts with past due balances, as well as the collectability of other outstanding trade accounts receivable for possible write-off. It is the Company’s policy to write-off accounts receivable against the allowance account when receivables are deemed to be uncollectible. The allowance for doubtful accounts reflects the Company’s best estimate of probable losses in the accounts receivable balances. The Company determines the allowance based on known troubled accounts, historical experience and other evidence currently available. Inventories — Inventories are valued at cost, which is not in excess of market value. The majority of inventories are determined on a last-in, first-out (“LIFO”) basis. Inventory costs include the cost of shoes purchased from third-party manufacturers, as well as related freight and duty costs. The Company generally takes title to product at the time of shipping. See Note 5. Property, Plant and Equipment and Depreciation — Property, plant and equipment are stated at cost. Plant and equipment are depreciated using primarily the straight-line method over their estimated useful lives as follows: buildings and improvements, 10 to 39 years; machinery and equipment, 3 to 5 years; furniture and fixtures, 5 to 7 years. For income tax reporting purposes, depreciation is calculated using applicable methods. Impairment of Long-Lived Assets — Property, plant and equipment are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment if events or changes in circumstances indicate that the carrying amounts may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to its related estimated undiscounted future cash flows. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. To derive the fair value, the Company utilizes the income approach and the fair value determined is categorized as Level 3 in the fair value hierarchy. The fair value of each asset group is determined using the estimated future cash flows discounted at an estimated weighted-average cost of capital. For purposes of the impairment review, the Company groups assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. In the case of its retail stores, the Company groups assets at the individual store level. In connection with the Company’s impairment review, the Company’s retail segment recognized an impairment charge of $113,000 in 2016 which was recorded within selling and administrative expenses in the Consolidated Statements of Earnings. No impairment charges were recorded in 2015 or 2014. Goodwill and Intangible Assets — Goodwill represents the excess of the purchase price over the estimated fair value of the underlying assets acquired and liabilities assumed in the acquisition of a business. Goodwill is not subject to amortization. Other intangible assets consist of trademarks, customer relationships, and a non-compete agreement. Intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets which are not amortized are reviewed for impairment annually and whenever events or changes in circumstances indicate the carrying amounts may not be recoverable. See Note 7. Life Insurance — Life insurance policies are recorded at the amount that could be realized under the insurance contracts as of the balance sheet date. These assets are included within other assets in the Consolidated Balance Sheets. See Note 8. Contingent Consideration — Contingent consideration was comprised of two earn-out payments that the Company was obligated to pay the former shareholders of The Combs Company (“Bogs”) in connection with the Company’s acquisition of Bogs in 2011. The Company revalued the contingent consideration liability on a quarterly basis and recorded increases or decreases in its fair value as an adjustment to operating earnings. Changes to the liability resulted from accretion of the discount due to the passage of time as well as changes in the actual or projected performance of Bogs. The assumptions used to determine the fair value of the contingent consideration liability included a significant amount of judgment. See Note 10. Income Taxes — Deferred income taxes are provided on temporary differences arising from differences in the basis of assets and liabilities for income tax and financial reporting purposes. Deferred tax assets and liabilities are measured using enacted income tax rates in effect. Tax rate changes affecting deferred tax assets and liabilities are recognized in income at the enactment date. The Company’s policy related to interest and penalties associated with unrecognized tax benefits are recorded within interest expense and income tax expense, respectively. See Note 12. Noncontrolling Interest — The Company’s noncontrolling interest is accounted for under ASC 810, Consolidation (“ASC 810”) and represents the minority shareholder’s ownership interest related to the Company’s wholesale and retail businesses in Australia, South Africa and Asia Pacific. In accordance with ASC 810, the Company reports its noncontrolling interest in subsidiaries as a separate component of equity in the Consolidated Balance Sheets and reports both net (loss) earnings attributable to the noncontrolling interest and net earnings attributable to the Company’s common shareholders on the face of the Consolidated Statements of Earnings. In accordance with the subscription agreement entered into in connection with the acquisition of Florsheim Australia in January 2009, the Company’s equity interest in Florsheim Australia decreases from 60% to 51% of equity issued under the subscription agreement as intercompany loans are paid in accordance with their terms. To date, the Company’s equity interest in Florsheim Australia has decreased from 60% to 55% and the noncontrolling shareholder’s interest has increased from 40% to 45%. This change is reflected in the Consolidated Statements of Equity. Revenue Recognition — Revenue from the sale of product is recognized when title and risk of loss transfers to the customer and the customer is obligated to pay the Company. Sales to independent dealers are recorded at the time of shipment to those dealers. Sales through Company-owned retail outlets are recorded at the time of delivery to retail customers. All product sales are recorded net of estimated allowances for returns and discounts. The Company’s estimates of allowances for returns and discounts are based on such factors as specific customer situations, historical experience, and current and expected economic conditions. The Company evaluates the reserves and the estimation process and makes adjustments when appropriate. Revenue from third-party licensing agreements is recognized in the period earned. Licensing revenues were $2.8 million for 2016, $3.6 million for 2015 and $3.2 million for 2014. Shipping and Handling Fees — The Company classifies shipping and handling fees billed to customers as revenues. Shipping and handling expenses incurred by the Company are included in selling and administrative expenses in the Consolidated Statements of Earnings. Wholesale segment shipping and handling expenses totaled $1.6 million in 2016, $1.9 million in 2015, and $2.4 million in 2014. Retail segment shipping and handling expenses, which result primarily from the Company’s shipments to its U.S. internet consumers, totaled $1.4 million in 2016, $1.2 million in 2015, and $1.1 million in 2014. Cost of Sales — The Company’s cost of sales includes the cost of products and inbound freight and duty costs. Selling and Administrative Expenses — Selling and administrative expenses primarily include salaries and commissions, advertising costs, employee benefit costs, distribution costs (e.g., receiving, inspection and warehousing costs), rent and depreciation. Distribution costs included in selling and administrative expenses were $11.7 million in 2016, $11.3 million in 2015, and $11.0 million in 2014. Advertising Costs — Advertising costs are expensed as incurred. Total advertising costs were $11.8 million, $12.8 million, and $10.5 million in 2016, 2015 and 2014, respectively. All advertising expenses are included in selling and administrative expenses with the exception of co-op advertising expenses which are recorded as a reduction of net sales. Co-op advertising expenses, which are included in the above totals, reduced net sales by $4.0 million, $4.2 million, and $3.5 million in 2016, 2015 and 2014, respectively. Foreign Currency Translations — The Company accounts for currency translations in accordance with ASC 830, Foreign Currency Matters. The Company’s non-U.S. subsidiaries’ local currencies are the functional currencies under which the balance sheet accounts are translated into U.S. dollars at the rates of exchange in effect at fiscal year-end and income and expense accounts are translated at the weighted average rates of exchange in effect during the year. Translation adjustments resulting from this process are recognized as a separate component of accumulated other comprehensive loss, which is a component of equity. Foreign Currency Transactions — Gains and losses from foreign currency transactions are included in other income (expense), net, in the Consolidated Statements of Earnings. Net foreign currency transaction gains (losses) totaled $513,000 of gains in 2016, as compared to losses of ($961,000) and ($268,000) in 2015 and 2014, respectively. The foreign currency transaction gains recognized in 2016 resulted mainly from unrealized gains on foreign exchange contracts entered into by Florsheim Australia. The foreign currency transaction losses recognized in 2015 resulted mainly from unrealized losses on foreign exchange contracts entered into by Florsheim Australia, as well as losses from the revaluation of intercompany loans between the Company’s wholesale segment and Florsheim Australia. The foreign currency transaction losses recognized in 2014 resulted mainly from the revaluation of intercompany loans between the Company’s wholesale segment and Florsheim Australia Financial Instruments — At December 31, 2016, the Company had foreign exchange contracts outstanding to sell $6.0 million Canadian dollars at a price of approximately $4.5 million U.S. dollars. Additionally, the Company’s majority-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $2.6 million U.S. dollars at a price of approximately $3.5 million Australian dollars. These contracts all expire in 2017. Realized gains and losses on foreign exchange contracts are related to the purchase and sale of inventory and therefore are included in the Company’s net sales or cost of sales. In 2016, there were no significant realized gains or losses on foreign exchange contracts. In 2015, the Company recognized realized gains of $1.4 million related to foreign exchange contracts, and in 2014, there were no significant realized gains or losses related to foreign exchange contracts. Earnings Per Share — Basic earnings per share excludes any dilutive effects of restricted stock and options to purchase common stock. Diluted earnings per share includes any dilutive effects of restricted stock and options to purchase common stock. See Note 15. Comprehensive Income — Comprehensive income includes net earnings and changes in accumulated other comprehensive loss. Comprehensive income is reported in the Consolidated Statements of Comprehensive Income. The components of accumulated other comprehensive loss as recorded on the accompanying Consolidated Balance Sheets were as follows:
|  | 2016 |  | 2015
|  | (Dollars in thousands)
Foreign currency translation adjustments |  | $ | (5,489) |  |  | $ | (5,691 | )
Pension liability, net of tax |  |  | (11,080 | ) |  |  | (12,776 | )
Total accumulated other comprehensive loss |  | $ | (16,569) |  |  | $ | (18,467 | )
The noncontrolling interest as recorded in the Consolidated Balance Sheets at December 31, 2016 and 2015, included foreign currency translation adjustments of approximately ($1,065,000) and ($1,061,000), respectively. The following presents a tabular disclosure about changes in accumulated other comprehensive loss (dollars in thousands):
|  | Foreign Currency Translation Adjustments |  | Defined Benefit Pension Items |  | Total
Balance, December 31, 2014 |  | $ | (2,894 | ) |  | $ | (15,136 | ) |  | $ | (18,030 | )
Other comprehensive (loss) income before reclassifications |  |  | (2,797 | ) |  |  | 1,285 |  |  |  | (1,512 | )
Amounts reclassified from accumulated other comprehensive loss |  |  | — |  |  |  | 1,075 |  |  |  | 1,075 |
Net current period other comprehensive (loss) income |  |  | (2,797 | ) |  |  | 2,360 |  |  |  | (437 | )
Balance, December 31, 2015 |  | $ | (5,691 | ) |  | $ | (12,776 | ) |  | $ | (18,467 | )
Other comprehensive income before reclassifications |  |  | 202 |  |  |  | 765 |  |  |  | 967 |
Amounts reclassified from accumulated other comprehensive loss |  |  | — |  |  |  | 931 |  |  |  | 931 |
Net current period other comprehensive income |  |  | 202 |  |  |  | 1,696 |  |  |  | 1,898 |
Balance, December 31, 2016 |  | $ | (5,489 | ) |  | $ | (11,080 | ) |  | $ | (16,569 | )
The following presents a tabular disclosure about reclassification adjustments out of accumulated other comprehensive loss during the years ended December 31, 2016 and 2015 (dollars in thousands):
|  | Amounts reclassified from accumulated other comprehensive loss for the year ended December 31, |  | Affected line item in the statement where net income is presented
|  | 2016 |  | 2015
Amortization of defined benefit pension items |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  | $ | (262) |  |  | $ | (112 | ) |  |  | (1) |
Actuarial losses |  |  | 1,789 |  |  |  | 1,874 |  |  |  | (1) |
Total before tax |  |  | 1,527 |  |  |  | 1,762 |  |  |  |  |
Tax benefit |  |  | (596 | ) |  |  | (687 | ) |  |  |  |
Net of tax |  | $ | 931 |  |  | $ | 1,075 |  |  |  |  |
| (1) | These amounts were included in the computation of net periodic pension cost. See Note 11 for additional details.
Stock-Based Compensation — At December 31, 2016, the Company had two stock-based employee compensation plans, which are described more fully in Note 17. The Company accounts for these plans under the recognition and measurement principles of ASC 718, Compensation — Stock Compensation, (“ASC 718”). The Company’s policy is to estimate the fair market value of each option award granted on the date of grant using the Black-Scholes option pricing model. The Company estimates the fair value of each restricted stock award based on the fair market value of the Company’s stock price on the grant date. The resulting compensation cost for both the options and restricted stock is amortized on a straight-line basis over the vesting period of the respective awards. Concentration of Credit Risk — The Company had one individual customer accounts receivable balance outstanding that represented 11% of the Company’s gross accounts receivable balance at December 31, 2016. There was no single customer that represented more than 10% of the Company’s gross accounts receivable balance at December 31, 2015. Additionally, there were no individual customers with sales above 10% of the Company’s total sales in 2016, 2015 and 2014. Recent Accounting Pronouncements — In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04 “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This new standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. The amendments in this update are effective for annual impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on or after January 1, 2017. The Company does not anticipate that the adoption of this new standard will have a material impact on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This new standard simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain reclassifications on the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842).” This new standard requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by finance and operating leases with lease terms of more than 12 months. The amendments in this update are effective for fiscal years beginning after December 15, 2018 and interim periods therein. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” The new standard clarifies that, for inventories measured at the lower of cost and net realizable value, net realizable value should be determined based on the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. The amendments in this update are effective for fiscal years beginning after December 15, 2016. The Company does not anticipate that the adoption of this new accounting standard will have a material impact on its consolidated financial statements. ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.” The amendment in this update defers the effective date of ASU No. 2014-09 for all entities by one year. Additional ASUs have been issued as part of the overall new revenue guidance. This new revenue standard permits the use of either the retrospective or cumulative effect transition method. The Company has begun its initial assessment of the new revenue standard, with a focus on identifying the contracts with customers and assessing whether and what performance obligations exist. Based on our preliminary assessment to date, the Company does not expect that the adoption of this new standard will have a material impact on its consolidated financial statements. The Company currently plans to adopt the new standard in the first quarter of 2018. The Company is continuing its assessment, which may identify other impacts.

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