Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ		Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarter Ended August 1, 2009

o		Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 1-3083

Genesco Inc.

A Tennessee Corporation
I.R.S. No. 62-0211340
Genesco Park
1415 Murfreesboro Road
Nashville, Tennessee 37217-2895
Telephone 615/367-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes o     No þ

Common Shares Outstanding September 4, 2009 — 22,672,720

 

 

INDEX

		Page
Part I. Financial Information
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets — August 1, 2009, January 31, 2009 and August 2, 2008			3
Condensed Consolidated Statements of Operations — Three Months and Six Months Ended August 1, 2009 and August 2, 2008			5
Condensed Consolidated Statements of Cash Flows — Three Months and Six Months Ended August 1, 2009 and August 2, 2008			6
Condensed Consolidated Statements of Shareholders’ Equity — Year Ended January 31, 2009 and Six Months Ended August 1, 2009			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			45
Item 3. Quantitative and Qualitative Disclosures About Market Risk			61
Item 4. Controls and Procedures			61
Part II. Other Information
Item 1. Legal Proceedings			62
Item 1A. Risk Factors			62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			62
Item 4. Submission of Matters to a Vote of Security Holders			63
Item 6. Exhibits			63
Signature			64
EX-10.A
EX-10.B
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Genesco Inc.
and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands, except share amounts)

		August 1,				January 31,				August 2,
Assets		2009				2009				2008
Current Assets
Cash and cash equivalents		$	21,457			$	17,672			$	24,283
Accounts receivable, net of allowances of $3,008 at August 1, 2009, $3,052 at January 31, 2009 and $2,489 at August 2, 2008			28,251				23,744				23,015
Inventories			332,917				306,078				327,986
Deferred income taxes			15,789				15,083				17,692
Prepaids and other current assets			44,197				35,542				23,507
Total current assets			442,611				398,119				416,483
Property and equipment:
Land			4,863				4,863				4,746
Buildings and building equipment			17,957				17,990				17,669
Computer hardware, software and equipment			80,194				79,255				78,234
Furniture and fixtures			100,225				99,954				96,248
Construction in progress			8,244				7,044				10,720
Improvements to leased property			273,859				274,613				272,924
Property and equipment, at cost			485,342				483,719				480,541
Accumulated depreciation			(256,630	)			(244,038	)			(231,474	)
Property and equipment, net			228,712				239,681				249,067
Deferred income taxes			9,866				5,302				422
Goodwill			111,666				111,680				107,618
Trademarks			51,782				51,749				51,395
Other intangibles, net of accumulated amortization of $8,703 at August 1, 2009, $8,250 at January 31, 2009 and $7,836 at August 2, 2008			1,638				2,082				1,071
Other noncurrent assets			7,726				7,450				9,550
Total Assets		$	854,001			$	816,063			$	835,606

Genesco Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
(In Thousands, except share amounts)

		August 1,				January 31,				August 2,
Liabilities and Shareholders’ Equity		2009				2009				2008
Current Liabilities
Accounts payable		$	119,891			$	73,143			$	133,806
Accrued employee compensation			12,389				15,780				14,647
Accrued other taxes			10,607				11,254				11,593
Accrued income taxes			-0-				634				17,413
Other accrued liabilities			27,666				28,727				28,071
Provision for discontinued operations			9,494				9,444				14,271
Total current liabilities			180,047				138,982				219,801
Long-term debt			53,042				113,735				99,820
Pension liability			22,231				25,968				3,324
Deferred rent and other long-term liabilities			83,626				81,499				82,047
Provision for discontinued operations			6,124				6,124				1,606
Total liabilities			345,070				366,308				406,598
Commitments and contingent liabilities
Shareholders’ Equity
Non-redeemable preferred stock			5,244				5,203				5,223
Common shareholders’ equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued/Outstanding:
August 1, 2009 — 23,160,810/22,672,346
January 31, 2009 — 19,731,979/19,243,515
August 2, 2008 — 19,715,650/19,227,186			23,161				19,732				19,716
Additional paid-in capital			113,376				49,780				46,380
Retained earnings			415,012				423,595				391,601
Accumulated other comprehensive loss			(30,005	)			(30,698	)			(16,055	)
Treasury shares, at cost			(17,857	)			(17,857	)			(17,857	)
Total shareholders’ equity			508,931				449,755				429,008
Total Liabilities and Shareholders’ Equity		$	854,001			$	816,063			$	835,606

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Operations

(In Thousands, except per share amounts)

		Three Months Ended								Six Months Ended
		August 1,				August 2,				August 1,				August 2,
		2009				2008				2009				2008
Net sales		$	334,658			$	353,138			$	705,024			$	710,073
Cost of sales			164,713				171,814				345,857				347,354
Selling and administrative expenses			168,598				173,420				349,967				353,466
Gain from settlement of merger-related litigation			-0-				-0-				-0-				(204,075	)
Restructuring and other, net			3,320				3,261				8,293				5,498
(Loss) earnings from operations			(1,973	)			4,643				907				207,830
Loss on early retirement of debt			-0-				-0-				5,119				-0-
Interest expense, net
Interest expense			1,866				2,897				4,957				6,097
Interest income			(4	)			(24	)			(12	)			(279	)
Total interest expense, net			1,862				2,873				4,945				5,818
(Loss) earnings before income taxes from continuing operations			(3,835	)			1,770				(9,157	)			202,012
Income tax (benefit) expense			(1,172	)			7,161				(891	)			77,963
(Loss) earnings from continuing operations			(2,663	)			(5,391	)			(8,266	)			124,049
Provision for discontinued operations, net			(59	)			(5,361	)			(218	)			(5,454	)
Net (Loss) Earnings		$	(2,722	)		$	(10,752	)		$	(8,484	)		$	118,595
Basic (loss) earnings per common share:
Continuing operations		$	(.12	)		$	(.29	)		$	(.41	)		$	6.27
Discontinued operations		$	(.01	)		$	(.29	)		$	(.01	)		$	(.28	)
Net (loss) earnings		$	(.13	)		$	(.58	)		$	(.42	)		$	5.99
Diluted (loss) earnings per common share:
Continuing operations		$	(.12	)		$	(.29	)		$	(.41	)		$	5.15
Discontinued operations		$	(.01	)		$	(.29	)		$	(.01	)		$	(.22	)
Net (loss) earnings		$	(.13	)		$	(.58	)		$	(.42	)		$	4.93

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In Thousands)

		Three Months Ended								Six Months Ended
		August 1,				August 2,				August 1,				August 2,
		2009				2008				2009				2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings		$	(2,722	)		$	(10,752	)		$	(8,484	)		$	118,595
Tax benefit of stock options exercised			-0-				(29	)			-0-				(29	)
Adjustments to reconcile net (loss) earnings to net cash provided by (used in) operating activities:
Depreciation			11,723				11,619				23,851				23,279
Amortization of deferred note expense and debt discount			426				968				1,444				1,920
Loss on early retirement of debt			-0-				-0-				5,119				-0-
Receipt of Finish Line stock			-0-				-0-				-0-				(29,075	)
Deferred income taxes			(129	)			606				1,546				149
Provision for losses on accounts receivable			(40	)			794				60				833
Impairment of long-lived assets			3,372				2,390				7,839				3,617
Share-based compensation and restricted stock			1,661				2,219				3,260				4,220
Provision for discontinued operations			97				8,813				359				8,965
Other			571				401				1,083				890
Effect on cash of changes in working capital and other assets and liabilities:
Accounts receivable			206				2,723				(4,567	)			427
Inventories			(34,184	)			(43,113	)			(26,839	)			(27,438	)
Prepaids and other current assets			(4,608	)			997				(8,655	)			(1,068	)
Accounts payable			36,022				53,069				47,139				59,596
Other accrued liabilities			(3,121	)			(44,089	)			(7,713	)			6,953
Other assets and liabilities			1,153				7,216				(1,901	)			5,339
Net cash provided by (used in) operating activities			10,427				(6,168	)			33,541				177,173
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(10,052	)			(12,654	)			(21,060	)			(29,621	)
Acquisitions, net of cash acquired			-0-				-0-				(5	)			-0-
Proceeds from assets sales			11				-0-				13				4
Net cash used in investing activities			(10,041	)			(12,654	)			(21,052	)			(29,617	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of capital leases			(51	)			(41	)			(96	)			(88	)
Tax benefit of stock options exercised			-0-				29				-0-				29
Shares repurchased			-0-				(2,517	)			-0-				(90,903	)
Change in overdraft balances			3,265				9,053				(391	)			(1,092	)
Borrowings under revolving credit facility			75,000				54,000				116,100				93,000
Payments on revolving credit facility			(73,900	)			(34,000	)			(124,100	)			(142,000	)
Dividends paid on non-redeemable preferred stock			(49	)			(50	)			(99	)			(99	)
Exercise of stock options			117				151				172				177
Other			(1	)			-0-				(290	)			-0-
Net cash provided by (used in) financing activities			4,381				26,625				(8,704	)			(140,976	)
Net increase in cash and cash equivalents			4,767				7,803				3,785				6,580
Cash and cash equivalents at beginning of period			16,690				16,480				17,672				17,703
Cash and cash equivalents at end of period		$	21,457			$	24,283			$	21,457			$	24,283
Supplemental Cash Flow Information:
Net cash paid for:
Interest		$	1,907			$	2,763			$	3,019			$	4,403
Income taxes			3,772				45,558				4,636				54,496

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity
(In Thousands)

		Total																Accumulated												Total
		Non-Redeemable								Additional								Other												Share-
		Preferred				Common				Paid-In				Retained				Comprehensive				Treasury				Comprehensive				holders’
		Stock				Stock				Capital				Earnings				Loss				Stock				Income				Equity
Balance February 2, 2008 (as adjusted, see Note 2)		$	5,338			$	23,285			$	129,179			$	302,181			$	(16,010	)		$	(17,857	)						$	426,116
Net earnings			-0-				-0-				-0-				150,756				-0-				-0-			$	150,756				150,756
Dividends paid on non-redeemable preferred stock			-0-				-0-				-0-				(198	)			-0-				-0-				-0-				(198	)
Dividend declared — Finish Line stock			-0-				-0-				-0-				(29,075	)			-0-				-0-				-0-				(29,075	)
Exercise of stock options			-0-				83				1,355				-0-				-0-				-0-				-0-				1,438
Issue shares — Employee Stock Purchase Plan			-0-				2				53				-0-				-0-				-0-				-0-				55
Shares repurchased			-0-				(4,000	)			(86,903	)			-0-				-0-				-0-				-0-				(90,903	)
Restricted stock issuance			-0-				416				(416	)			-0-				-0-				-0-				-0-				-0-
Employee and non-employee restricted stock			-0-				-0-				6,341				-0-				-0-				-0-				-0-				6,341
Share-based compensation			-0-				-0-				1,690				-0-				-0-				-0-				-0-				1,690
Restricted shares withheld for taxes			-0-				(53	)			(1,092	)			-0-				-0-				-0-				-0-				(1,145	)
Tax benefit of stock options exercised			-0-				-0-				(563	)			-0-				-0-				-0-				-0-				(563	)
Adjustment of measurement date provision of SFAS 158 (net of tax of $0.0 million)			-0-				-0-				-0-				(69	)			-0-				-0-				-0-				(69	)
Loss on foreign currency forward contracts (net of tax of $0.2 million)			-0-				-0-				-0-				-0-				(275	)			-0-				(275	)			(275	)
Pension liability adjustment (net of tax benefit of $8.5 million)			-0-				-0-				-0-				-0-				(13,355	)			-0-				(13,355	)			(13,355	)
Postretirement liability adjustment (net of tax of $0.1 million)			-0-				-0-				-0-				-0-				119				-0-				119				119
Foreign currency translation adjustment			-0-				-0-				-0-				-0-				(1,177	)			-0-				(1,177	)			(1,177	)
Other			(135	)			(1	)			136				-0-				-0-				-0-				-0-				-0-
Comprehensive income																										$	136,068
Balance January 31, 2009			5,203				19,732				49,780				423,595				(30,698	)			(17,857	)							449,755
Net loss			-0-				-0-				-0-				(8,484	)			-0-				-0-			$	(8,484	)			(8,484	)
Dividends paid on non-redeemable preferred stock			-0-				-0-				-0-				(99	)			-0-				-0-				-0-				(99	)
Exercise of stock options			-0-				12				160				-0-				-0-				-0-				-0-				172
Employee and non-employee restricted stock			-0-				-0-				3,018				-0-				-0-				-0-				-0-				3,018
Share-based compensation			-0-				-0-				242				-0-				-0-				-0-				-0-				242
Restricted stock issuance			-0-				405				(405	)			-0-				-0-				-0-				-0-				-0-
Restricted shares withheld for taxes			-0-				(44	)			(590	)			-0-				-0-				-0-				-0-				(634	)
Conversion of 4 1/8% debentures			-0-				3,067				61,202				-0-				-0-				-0-				-0-				64,269
Loss on foreign currency forward contracts (net of tax of $0.1 million)			-0-				-0-				-0-				-0-				(125	)			-0-				(125	)			(125	)
Foreign currency translation adjustment			-0-				-0-				-0-				-0-				818				-0-				818				818
Other			41				(11	)			(31	)			-0-				-0-				-0-				-0-				(1	)
Comprehensive loss*																										$	(7,791	)
Balance August 1, 2009		$	5,244			$	23,161			$	113,376			$	415,012			$	(30,005	)		$	(17,857	)						$	508,931

*

Comprehensive loss was $(2.3) million and $(10.7) million for the second quarter ended August 1, 2009 and August 2, 2008, respectively.

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

Genesco Inc.
and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies

Interim Statements

The condensed consolidated financial statements contained in this report are unaudited but reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending January 30, 2010 (“Fiscal 2010”) and of the fiscal year ended January 31, 2009 (“Fiscal 2009”). The results of operations for any interim period are not necessarily indicative of results for the full year. The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K.

Nature of Operations

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 August 1, 2009 of 2,241 Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hat World, Lids, Hat Shack, Hat Zone, Head Quarters, Cap Connection and Lids Locker Room retail footwear and headwear stores. In November 2008, the Company acquired Impact Sports, a dealer of branded athletic and team products for college and high school teams, as part of the Hat World Group.

Principles of Consolidation

All subsidiaries are consolidated in the condensed consolidated financial statements. All significant intercompany transactions and accounts have been eliminated.

Financial Statement Reclassifications

Certain reclassifications have been made to conform prior years’ data to the current year presentation.

Use of Estimates

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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Significant areas requiring management estimates or judgments include the following key financial areas:

Inventory Valuation

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.

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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Impairment of Long-Lived Assets

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 also Note 6.

The goodwill impairment test involves a two-step process. The first step is a comparison of the fair value and carrying value of the reporting unit with which the goodwill is associated. The Company estimates fair value using the best information available, and computes the fair value by an equal weighting of the results arrived by a market approach and an income approach utilizing discounted cash flow projections. The income approach uses a projection of a business unit’s estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions. The projection uses management’s best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements.

If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the carrying value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, the Company would allocate the fair value to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that would calculate the implied fair value of goodwill. If the implied fair value of goodwill is less than the recorded goodwill, the Company would record an impairment charge for the difference.

A key assumption in the Company’s fair value estimate is the weighted average cost of capital utilized for discounting its cash flow projections in its income approach. The Company believes the rate it used in its annual test was consistent with the risks inherent in its business and with industry discount rates.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Environmental and Other Contingencies

The Company is subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Note 10. The Company has made pretax accruals for certain of these contingencies, including approximately $0.1 million and $9.0 million in the second quarter of Fiscal 2010 and Fiscal 2009, respectively, and $0.5 million and $9.2 million for the first six months of Fiscal 2010 and Fiscal 2009, respectively. These charges are included in provision for discontinued operations, net in the Condensed Consolidated Statements of Operations (see Note 4). 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.

Revenue Recognition

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 and exclude sales taxes. 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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Income Taxes

As part of the process of preparing Condensed 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 Condensed 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 Condensed Consolidated Statements of Operations.

Income tax reserves are determined using the methodology established by the Financial Accounting Standards Board (“FASB”) Interpretation 48, “Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement 109” (“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.

Postretirement Benefits Plan Accounting

Substantially all full-time employees (except employees in the Hat World segment), who also had 1,000 hours of service in calendar year 2004, are covered by a defined benefit pension plan. The Company froze the defined benefit pension plan effective January 1, 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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (SFAS No. 158”) which requires companies to recognize the overfunded or underfunded status of postretirement benefit plans as an asset or liability in their condensed 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. 132(R), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” On February 3, 2007, the Company adopted the recognition and disclosure provisions of SFAS No. 158. SFAS No. 158 also requires companies to measure the funded status of a plan as of the date of its fiscal year end. The Company adopted the measurement date change of SFAS No. 158 as of January 31, 2009. SFAS No. 158 required the Company to change the measurement date for its defined benefit pension plan and postretirement benefit plan from December 31 to January 31 (end of fiscal year). As a result of this change, pension expense and actuarial gains/losses for the one-month period ended January 31, 2009 were recognized as adjustments to retained earnings and accumulated other comprehensive loss, respectively. The after-tax charge to retained earnings was $0.1 million. The adoption of the measurement date provision of SFAS No. 158 had no effect on the Company’s Condensed Consolidated Statements of Operations for Fiscal 2009 or any prior period presented. It will not affect the Company’s operating results in future periods.

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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Share-Based Compensation

The Company has share-based compensation plans covering certain members of management and non-employee directors. Pursuant to SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”), the Company recognizes compensation expense for share-based payments based on the fair value of the awards. For the second quarters of Fiscal 2010 and 2009, share-based compensation expense was $0.1 million and $0.5 million, respectively. For the second quarters of Fiscal 2010 and 2009, restricted stock expense was $1.5 million and $1.8 million, respectively. For the first six months of Fiscal 2010 and 2009, share-based compensation expense was $0.2 million and $1.1 million, respectively. For the first six months of Fiscal 2010 and 2009, restricted stock expense was $3.0 million and $3.2 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. Share-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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

The Company did not grant any stock options for the three months and six months ended August 1, 2009 or August 2, 2008. During the three months and six months ended August 1, 2009, the Company issued 383,745 shares of employee restricted stock at a grant date fair value of $19.25 per share of which 359,096 shares vest over a four-year term and the remaining 24,649 shares vest over a three-year term. During the three months and six months ended August 2, 2008, the Company issued 26,057 shares and 397,273 shares, respectively, of employee restricted stock which vest over a three-year term. The Company issued 26,057 employee restricted shares at a grant date fair value of $29.74 per share and 371,216 employee restricted shares at a grant date fair value of $20.16 per share. For the three months and six months ended August 1, 2009, the Company issued 21,204 shares of director restricted stock at a weighted average price of $25.46. For the three months and six months ended August 2, 2008, the Company issued 18,792 shares of director restricted stock at a weighted average price of $28.72. There was no director retainer stock issued for the three months and six months ended August 1, 2009 or August 2, 2008.

Cash and Cash Equivalents

Included in cash and cash equivalents at August 1, 2009, January 31, 2009 and August 2, 2008 are cash equivalents of $0.1 million, $0.1 million and $1.5 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 August 1, 2009, January 31, 2009 and August 2, 2008 outstanding checks drawn on zero-balance accounts at certain domestic banks exceeded book cash balances at those banks by approximately $28.4 million, $28.8 million and $25.3 million, respectively. These amounts are included in accounts payable.

Concentration of Credit Risk and Allowances on Accounts Receivable

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 14% of the Company’s trade receivables balance and no other customer accounted for more than 8% of the Company’s trade receivables balance as of August 1, 2009.

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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Property and Equipment

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		3-10 years
Furniture and fixtures		10 years

Leases

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 Condensed Consolidated Statements of Operations.

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.

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 $23.3 million, $24.6 million and $25.5 million at August 1, 2009, January 31, 2009 and August 2, 2008, respectively, and deferred rent of $30.1 million, $29.0 million and $27.8 million at August 1, 2009, January 31, 2009 and August 2, 2008, respectively, are included in deferred rent and other long-term liabilities on the Condensed Consolidated Balance Sheets.

Goodwill and Other Intangibles

Under the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” (“SFAS No. 142”), goodwill and intangible assets with indefinite lives are not amortized, but are tested at least annually, during the fourth quarter, for impairment. The Company will update the tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of the business unit with which the goodwill is associated below its carrying amount. SFAS No. 142 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. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”).

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Intangible assets of the Company with indefinite lives are primarily goodwill and identifiable trademarks acquired in connection with the acquisition of Hat World Corporation in April 2004, Hat Shack, Inc. in January 2007 and Impact Sports in November 2008. The Condensed Consolidated Balance Sheets include goodwill for the Hat World Group of $111.7 million at August 1, 2009 and January 31, 2009 and $107.6 million at August 2, 2008. 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, projected future cash flows and observable market data. 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.

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at August 1, 2009 and January 31, 2009 are:

Fair Values
						August 1,								January 31,
In thousands						2009								2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Fixed Rate Long-term Debt		$	29,815			$	40,548			$	86,220			$	77,518
Revolver Borrowings			24,300				24,086				32,300				29,186

Carrying amounts reported on the balance sheet for cash, cash equivalents, receivables 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 a third party valuation using the Discounted Cash Flow method.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Cost of Sales

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.

Selling and Administrative Expenses

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 $1.0 million and $0.9 million for the second quarter of Fiscal 2010 and Fiscal 2009, respectively, and $2.0 million and $1.8 million for the first six months ended of Fiscal 2010 and Fiscal 2009, respectively.

Gift Cards

The Company has a gift card program that began in calendar 1999 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.

Gift card breakage is recognized in revenues each period. Gift card breakage recognized as revenue was $0.3 million and $0.1 million for the second quarter of Fiscal 2010 and 2009, respectively, and $0.3 million and $0.2 million for the first six months of Fiscal 2010 and 2009, respectively. The Condensed Consolidated Balance Sheets include an accrued liability for gift cards of $6.0 million, $7.5 million and $5.7 million at August 1, 2009, January 31, 2009 and August 2, 2008, respectively.

Buying, Merchandising and Occupancy Costs

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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Shipping and Handling Costs

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.

Preopening Costs

Costs associated with the opening of new stores are expensed as incurred, and are included in selling and administrative expenses on the accompanying Condensed Consolidated Statements of Operations.

Store Closings and Exit Costs

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. 144, 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 Condensed Consolidated Statements of Operations, 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. 144, 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. 146, “Accounting for Costs Associated with Exit or Disposal Activities.”

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Advertising Costs

Advertising costs are predominantly expensed as incurred. Advertising costs were $7.5 million and $7.8 million for the second quarter of Fiscal 2010 and 2009, respectively, and $16.4 million and $16.6 million for the first six months of Fiscal 2010 and Fiscal 2009, 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 Condensed Consolidated Balance Sheets include prepaid assets for direct response advertising costs of $1.7 million, $1.2 million and $1.6 million at August 1, 2009, January 31, 2009 and August 2, 2008, respectively.

Consideration to Resellers

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.

Cooperative Advertising

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. 01-9, “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 $0.7 million and $0.6 million for the second quarter of Fiscal 2010 and 2009, respectively, and $1.7 million and $1.2 million for the first six months of Fiscal 2010 and 2009, respectively. During the first six months of Fiscal 2010 and 2009, the Company’s cooperative advertising reimbursements paid did not exceed the fair value of the benefits received under those agreements.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Vendor Allowances

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 specific 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 $1.3 million and $1.1 million for the second quarter of Fiscal 2010 and 2009, respectively, and $2.1 million for each of the first six months of Fiscal 2010 and Fiscal 2009. During the second quarter of Fiscal 2010 and 2009, the Company’s cooperative advertising reimbursements received were not in excess of the costs incurred.

Environmental Costs

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.

Earnings Per Common Share

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 9).

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

Other Comprehensive Income

SFAS No. 130, “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 August 1, 2009 consisted of $30.0 million of cumulative pension liability adjustments, net of tax, a cumulative net loss of $0.2 million on foreign currency forward contracts, net of tax, offset by a foreign currency translation adjustment of $0.2 million.

Business Segments

SFAS No. 131, “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 11).

Derivative Instruments and Hedging Activities

SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of SFAS No. 133,” SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” (collectively “SFAS No. 133”) require an entity to recognize all derivatives as either assets or liabilities in the condensed 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. In the past, the Company has entered into foreign currency forward exchange contracts in order to reduce exposure to foreign currency exchange rate fluctuations in connection with inventory purchase commitments for its Johnston & Murphy Group. There were no contracts outstanding at August 1, 2009 and January 31, 2009.

New Accounting Principles

In December 2008, the FASB issued FSP FAS No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS No. 132(R)-1”) which amends SFAS No. 132 (revised 2003) “Employers’ Disclosures about Pensions and Other Postretirement Benefits — an Amendment of FASB Statements No. 87, 88, and 106.” FSP FAS No. 132(R)-1 requires more detailed disclosures about the assets of a defined benefit pension or other postretirement plan and is effective for fiscal years ending after December 15, 2009 (Fiscal 2010 for the Company). The Company is in the process of evaluating FSP FAS No. 132(R)-1 and does not expect it will have a significant impact on its results of operations or financial position.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

In April 2009, the FASB issued FSP FAS No. 107-1 and APB Opinion No. 28-1 (“FSP FAS No. 107-1 and APB No. 28-1”), “Interim Disclosures about Fair Value of Financial Instruments, which amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments,” and requires disclosures about the fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS No. 107-1 and APB No. 28-1 also amends APB Opinion No. 28, “Interim Financial Reporting,” to require those disclosures in summarized financial information at interim reporting periods. FSP FAS No. 107-1 and APB No. 28-1 is effective for interim reporting periods ending after June 15, 2009, and accordingly, the Company adopted this standard during the second quarter ended August 1, 2009. FSP FAS No. 107-1 and APB No. 28-1 does not require disclosures for earlier periods presented for comparative purposes at initial adoption, and, in periods after initial adoption, comparative disclosures are only required for periods ending after initial adoption. Adoption of this standard did not have a significant impact on the Company’s results of operations or financial position.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”). SFAS No. 165 provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS No. 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. SFAS No. 165 is effective for interim and annual periods ending after June 15, 2009, and accordingly, the Company adopted this standard during the second quarter ended August 1, 2009. The implementation of this standard did not have any impact on the Company’s results of operations or financial position. Subsequent events through the filing date of this Form 10-Q have been evaluated for disclosure and recognition.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140” (“SFAS No. 166”). SFAS No. 166 requires entities to provide more information regarding sales of securitized financial assets and similar transactions, particularly if the entity has continuing exposure to the risks related to transferred financial assets. SFAS No. 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets and requires additional disclosures. SFAS No. 166 is effective for fiscal years beginning after November 15, 2009. The Company does not expect this standard will have a significant impact on its results of operations or financial position.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 1
Summary of Significant Accounting Policies, Continued

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS No. 167”). SFAS No. 167 modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS No. 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. SFAS No. 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS No. 167 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS No. 167 is effective for fiscal years beginning after November 15, 2009. The Company does not expect this standard will have a significant impact on its results of operations or financial position.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles a Replacement of FASB Statement No. 162” (“SFAS No. 168”). SFAS No. 168 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents will be superseded. The Codification is effective for the Company in the third quarter of Fiscal 2010, and accordingly, its Quarterly Report on Form 10-Q for the quarter ending October 31, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 2
Change in Method of Accounting for Convertible Subordinated Debentures

In May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt Instruments That May be Settled in Cash Upon Conversion, (including partial cash settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The Company adopted FSP APB 14-1 as of February 1, 2009. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability is then recorded as additional paid-in capital. As a result, the debt is effectively recorded at a discount reflecting its below market coupon interest rate. The debt is subsequently accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected in the Condensed Consolidated Statements of Operations.

Upon adoption of FSP APB 14-1, the Company measured the fair value of the Company’s $86.2 million 4 1/8% Convertible Subordinated Debentures issued in June 2003, using an interest rate that the Company could have obtained at the date of issuance for similar debt instruments. Based on this analysis, the Company determined that the fair value of the debentures was approximately $66.6 million as of the issuance date, a reduction of approximately $19.6 million in the carrying value of the debentures, of which $11.5 million was recorded as additional paid-in capital, $7.4 million was recorded as a deferred tax liability and $0.7 million as a reduction to deferred note expense. In accordance with FSP APB 14-1, the Company is required to allocate a portion of the $2.9 million of debt issuance costs that were directly related to the issuance of the debentures between a liability component and an equity component as of the issuance date. Based on this analysis, the Company reclassified approximately $0.7 million from deferred note expense as discussed above.

The retroactive application of FSP APB 14-1 resulted in the recognition of additional pretax non-cash interest expense for the three months and six months ended August 2, 2008 of $0.8 million and $1.5 million, respectively.

The following table sets forth the effect of the retrospective application of FSP APB 14-1 on certain previously reported line items:

		Three Months ended August 2, 2008												Six Months ended August 2, 2008
		As Previously								As				As Previously								As
In thousands		Reported				Adjustment				Adjusted				Reported				Adjustment				Adjusted
Condensed Consolidated Statement of Operations:
Interest expense		$	2,138			$	759			$	2,897			$	4,596			$	1,501			$	6,097
Income taxes			7,458				(297	)			7,161				78,550				(587	)			77,963
Net (loss) earnings			(10,290	)			(462	)			(10,752	)			119,509				(914	)			118,595
Diluted (loss) earnings per common share:
Continuing operations		$	(.27	)		$	(.02	)		$	(.29	)		$	5.15			$	.00			$	5.15
Net (loss) earnings		$	(.56	)		$	(.02	)		$	(.58	)		$	4.93			$	.00			$	4.93

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 2
Change in Method of Accounting for Convertible Subordinated Debentures, Continued

		January 31, 2009												August 2, 2008
		As Previously								As				As Previously								As
In thousands		Reported				Adjustment				Adjusted				Reported				Adjustment				Adjusted
Condensed Consolidated Balance Sheets:
Noncurrent deferred income taxes		$	7,132			$	(1,830	)		$	5,302			$	2,854			$	(2,432	)		$	422
Other noncurrent assets			7,584				(134	)			7,450				9,731				(181	)			9,550
Total Assets			818,027				(1,964	)			816,063				838,219				(2,613	)			835,606
Long-term debt			118,520				(4,785	)			113,735				106,220				(6,400	)			99,820
Total Liabilities			371,093				(4,785	)			366,308				412,998				(6,400	)			406,598
Additional paid-in capital			38,230				11,550				49,780				34,829				11,551				46,380
Retained earnings			432,324				(8,729	)			423,595				399,365				(7,764	)			391,601
Total Shareholders’ Equity			446,934				2,821				449,755				425,221				3,787				429,008
Total Liabilities and Shareholders’ Equity			818,027				(1,964	)			816,063				838,219				(2,613	)			835,606

The amount of interest expense recognized and the effective interest rate for the Company’s convertible debentures were as follows:

		Three Months Ended								Six Months Ended
		August 1,				August 2,				August 1,				August 2,
(in thousands)		2009				2008				2009				2008
Contractual coupon interest		$	308			$	889			$	1,197			$	1,778
Amortization of discount on convertible debentures			294				783				1,127				1,549
Interest expense		$	602			$	1,672			$	2,324			$	3,327
Effective interest rate			8.5	%			8.5	%			8.5	%			8.5	%

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 3
Terminated Merger Agreement

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 refused to close the Proposed Merger and litigation ensued. The Proposed Merger and related agreement were terminated in March 2008 in connection with an agreement to settle the litigation with The Finish Line and UBS Loan Finance LLC and UBS Securities LLC (collectively, “UBS”) for a cash payment of $175.0 million to the Company and a 12% equity stake in The Finish Line, which the Company received in the first quarter of Fiscal 2009. The Company distributed the 12% equity stake, or 6,518,971 shares of Class A Common Stock of The Finish Line, Inc., on June 13, 2008, to its common shareholders of record on May 30, 2008, as required by the settlement agreement. During the second quarter and six months of Fiscal 2009, the Company expensed $0.3 million and $7.6 million, respectively, in merger-related litigation costs.

Note 4
Restructuring and Other Charges and Discontinued Operations

Restructuring and Other Charges

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 Condensed Consolidated Statements of Operations.

The Company recorded a pretax charge to earnings of $3.3 million in the second quarter of Fiscal 2010, including $3.4 million in asset impairments offset by a $0.1 million gain for other legal matters. The Company recorded a pretax charge to earnings of $8.3 million in the first six months of Fiscal 2010, including $7.9 million in asset impairments, $0.3 million for other legal matters and $0.1 million for lease terminations.

The Company recorded a pretax charge to earnings of $3.3 million in the second quarter of Fiscal 2009. The charge included $2.4 million in asset impairments, $0.6 million for lease terminations and $0.3 million for other legal matters. The Company recorded a pretax charge to earnings of $5.5 million in the first six months of Fiscal 2009. The charge included $3.6 million in retail store asset impairments, $1.1 million in other legal matters and $0.8 million for lease terminations.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 4
Restructuring and Other Charges and Discontinued Operations, Continued

Discontinued Operations

Accrued Provision for Discontinued Operations

		Facility
		Shutdown
In thousands		Costs
Balance February 2, 2008		$	7,494
Additional provision Fiscal 2009			9,006
Charges and adjustments, net			(932	)
Balance January 31, 2009			15,568
Additional provision Fiscal 2010			359
Charges and adjustments, net			(309	)
Balance August 1, 2009*			15,618
Current provision for discontinued operations			9,494
Total Noncurrent Provision for Discontinued Operations		$	6,124

Note 5
Inventories

		August 1,				January 31,
In thousands		2009				2009
Raw materials		$	4,335			$	2,059
Wholesale finished goods			28,672				44,155
Retail merchandise			299,910				259,864
Total Inventories		$	332,917			$	306,078

Note 6
Fair Value

The Company adopted SFAS No. 157 as of February 3, 2008, with the exception of the application of the statement to non-recurring, nonfinancial assets and liabilities. The adoption of SFAS No. 157 did not have a material impact on the Company’s results of operations or financial position. SFAS No. 157 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 February 2008, the FASB issued FSP 157-b. FSP 157-b amended SFAS No. 157, 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 Company adopted FSP 157-b as of February 1, 2009.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 6
Fair Value, Continued

SFAS No. 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No. 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table presents the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of August 1, 2009 aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

		August 1,																Total
		2009				Level 1				Level 2				Level 3				Losses
Long-lived assets held and used		$	1,430			$	—			$	—			$	1,430			$	3,372

In accordance with SFAS No. 144, the Company recorded $3.4 million of impairment charges as a result of the fair value measurement of its long-lived assets held and used on a nonrecurring basis during the three months ended August 1, 2009. These charges are reflected in restructuring and other, net on the Condensed Consolidated Statements of Operations.

The Company used a discounted cash flow model to estimate the fair value of these long-lived assets at August 1, 2009. Discount rate and growth rate assumptions are derived from current economic conditions, expectations of management and projected trends of current operating results. As a result, the Company has determined that the majority of the inputs used to value its long-lived assets held and used are unobservable inputs that fall within Level 3 of the fair value hierarchy.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Long-Term Debt

		August 1,				January 31,
In thousands		2009				2009
4 1/8% convertible subordinated debentures due June 2023		$	29,815			$	86,220
Debt discount on 4 1/8% convertible subordinated debentures*			(1,073	)			(4,785	)
Revolver borrowings			24,300				32,300
Total long-term debt			53,042				113,735
Current portion			-0-				-0-
Total Noncurrent Portion of Long-Term Debt		$	53,042			$	113,735

Long-term debt maturing during each of the next five years ending January is as follows: 2010 — $-0-; 2011 — $-0-; 2012 — $24,300,000; 2013 — $-0-, 2014 — $-0-, and thereafter — $29,815,000.

Credit Facility:

On December 1, 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 expires December 1, 2011. The Credit Facility replaced the Company’s $105.0 million revolving credit facility.

Deferred financing costs incurred of $1.2 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 Condensed Consolidated Balance Sheets.

The Company had $24.3 million of revolver borrowings outstanding under the Credit Facility at August 1, 2009. The Company had outstanding letters of credit of $10.3 million under the facility at August 1, 2009. These letters of credit support product purchases and lease and insurance indemnifications.

The material terms of the Credit Facility are as follows:

Availability

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 $100.0 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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Long-Term Debt, Continued

Collateral

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.

Interest and Fees

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 was 0.00%, and the initial applicable margin for LIBOR loans was 1.00%. Thereafter, the applicable margin will be subject to adjustment based on “Excess Availability” for the prior quarter. As of August 1, 2009, the margin for LIBOR loans was 0.75%. 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 was 0.25% per annum, subject to adjustment in the same manner as the applicable margins for interest rates.

Certain Covenants

The Company is not required to comply with any financial covenants unless Adjusted Excess Availability is less than 10% 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 1.00 to 1.00. Because Adjusted Excess Availability exceeded $20.0 million, the Company was not required to comply with this financial covenant at August 1, 2009.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Long-Term Debt, Continued

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.

Cash Dominion

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.

Events of Default

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% Convertible Subordinated Debentures due 2023:

On June 24, 2003 and June 26, 2003, the Company issued a total of $86.3 million of 4 1/8% Convertible Subordinated Debentures (the “Debentures”) due June 15, 2023. The Debentures are convertible at the option of the holders into shares of the Company’s common stock, par value $1.00 per share: (1) in any quarter in which the price of its common stock issuable upon conversion of a Debenture reached 120% or more of the conversion price ($24.07 or more) for 10 of the last 30 trading days of the immediately preceding fiscal quarter, (2) if specified corporate transactions occur or (3) if the trading price for the Debentures falls below certain thresholds. The Company’s common stock did not close at or above $24.07 for at least 10 of the last 30 trading days of the second quarter of Fiscal 2010. Therefore, the contingency was not 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 $1,000 principal amount of Debentures is convertible into 49.8462 shares (equivalent to a conversion price of $20.06 per share of common stock) subject to adjustment. There were $30,000 of debentures converted to 1,356 shares of common stock during Fiscal 2008.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Long-Term Debt, Continued

On April 29, 2009, the Company entered into separate exchange agreements whereby it acquired and retired $56.4 million in aggregate principal amount ($51.3 million fair value) of its Debentures due June 15, 2023 in exchange for the issuance of 3,066,713 shares of its common stock, which include 2,811,575 shares that were reserved for conversion of the Debentures and 255,138 additional inducement shares, and a cash payment of approximately $0.9 million. The inducement was not deductible for tax purposes. As a result of the exchange, the Company recognized a loss on the early retirement of debt of $5.1 million reflected on the Condensed Consolidated Statements of Operations. After the exchange, $29.8 million aggregate principal amount of Debentures remain outstanding. The Company’s $29.8 million Debentures were reduced by a debt discount of $1.1 million as of August 1, 2009. The Company’s $86.2 million Debentures were reduced by a debt discount of $4.8 million as of January 31, 2009. The Debentures are classified as long-term debt as of August 1, 2009 and January 31, 2009, since the earliest that the redemption and repurchase features can occur are in June 2010 and the Company intends to refinance the debentures on a long-term basis with revolver borrowings in June 2010. Revolver borrowings are not due until December 1, 2011. The Company adopted the provisions of FSP APB 14-1 for its Debentures as of February 1, 2009. The impact of the adoption of FSP APB 14-1 is discussed in more detail in Note 2.

The Company pays cash interest on the debentures at an annual rate of 4.125% of the principal amount at issuance, payable on June 15 and December 15 of each year, commencing on December 15, 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 15, 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 120% or more of the principal amount of the Debentures. This contingency was satisfied during the six-month period ended December 15, 2008. As a result, the Company paid $0.1 million in contingent interest on December 15, 2008. No contingent interest was paid with the June 15, 2009 interest payment.

The Company may redeem some or all of the Debentures for cash at any time on or after June 20, 2008 at 100% 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 15, 2010, 2013 or 2018, 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.

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 7
Long-Term Debt, Continued

Deferred financing costs of $2.9 million relating to the issuance were initially capitalized and being amortized over seven years. As a result of adoption of FSP APB 14-1, $0.7 million was reclassified from deferred note expense to additional paid-in capital. The remaining balance of the deferred note expense is being amortized until June 2010 and is included in other noncurrent assets on the Condensed 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.

Note 8
Defined Benefit Pension Plans and Other Benefit Plans

Components of Net Periodic Benefit Cost

		Pension Benefits								Other Benefits
		Three Months Ended								Three Months Ended
		August 1,				August 2,				August 1,				August 2,
In thousands		2009				2008				2009				2008
Service cost		$	63			$	62			$	37			$	33
Interest cost			1,642				1,574				44				41
Expected return on plan assets			(2,087	)			(2,147	)			-0-				-0-
Amortization:
Prior service cost			1				1				-0-				-0-
Losses			384				846				17				20
Net amortization			385				847				17				20
Net Periodic Benefit Cost		$	3			$	336			$	98			$	94

Genesco Inc.
and Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 8
Defined Benefit Pension Plans and Other Benefit Plans, Continued

		Pension Benefits								Other Benefits
		Six Months Ended								Six Months Ended
		August 1,				August 2,				August 1,				August 2,
In thousands		2009				2008				2009				2008
Service cost		$	126			$	125			$	74			$	66
Interest cost			3,278				3,169				88				82
Expected return on plan assets			(4,179	)			(4,275	)			-0-				-0-
Amortization:
Prior service cost			2				3				-0-				-0-
Losses			982				1,669				34				40
Net amortization			984				1,672				34				40
Net Periodic Benefit Cost		$	209			$	691			$	196			$	188

While there was no cash requirement for the Plan in 2009, the Company made a $4.0 million contribution to the Plan in February 2009.

Genesco Inc.
and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 9
(Loss) Earnings Per Share

		For the Three Months Ended												For the Three Months Ended
		August 1, 2009												August 2, 2008
(In thousands, except		Income				Shares				Per-Share				Income				Shares				Per-Share
per share amounts)		(Numerator)				(Denominator)				Amount				(Numerator)				(Denominator)				Amount
Loss from continuing operations		$	(2,663	)										$	(5,391	)
Less: Preferred stock dividends			(49	)											(50	)
Basic EPS
Income available to common shareholders			(2,712	)			21,798			$	(.12	)			(5,441	)			18,513			$	(.29	)
Effect of Dilutive Securities
Options							-0-												-0-
Convertible preferred stock(1)			-0-				-0-								-0-				-0-
4 1/8% Convertible Subordinated Debentures(2)			-0-				-0-								-0-				-0-
Employees’ preferred stock(3)							-0-												-0-
Diluted EPS
Income available to common shareholders plus assumed conversions		$	(2,712	)			21,798			$	(.12	)		$	(5,441	)			18,513			$	(.29	)

Genesco Inc.
and Consolidated Subsidiaries
Notes to Condensed Consolidated Financial Statements

Note 9
(Loss) Earnings Per Share

		For the Six Months Ended												For the Six Months Ended
		August 1, 2009												August 2, 2008
(In thousands, except		Income				Shares				Per-Share				Income				Shares				Per-Share
per share amounts)		(Numerator)				(Denominator)				Amount				(Numerator)				(Denominator)				Amount
(Loss) earnings from continuing operations		$	(8,266	)										$	124,049
Less: Preferred stock dividends			(99	)											(99	)
Basic EPS
Income available to common shareholders			(8,365	)			20,326			$	(.41	)			123,950				19,782			$	6.27
Effect of Dilutive Securities
Options							-0-												316
Convertible preferred stock(1)			-0-				-0-								76				59
4 1/8% Convertible Subordinated Debentures(2)			-0-				-0-								2,143				4,298
Employees’ preferred stock(3)							-0-												53
Diluted EPS
Income available to common shareholders plus assumed conversions		$	(8,365	)			20,326			$	(.41	)		$	126,169				24,508			$	5.15