COLLECTIVE BRANDS, INC. Form 10-K Annual Report Filed 2012-03-22

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K Annual report pursuant to section 13 and 15(d)

Filing Date: 2012-03-22 | Period of Report: 2012-01-28 SEC Accession No. 0001193125-12-127340

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FILER COLLECTIVE BRANDS, INC. Mailing Address Business Address 3231 S E 6TH ST 3231 SOUTH EAST SIXTH CIK:1060232| IRS No.: 431813160 | State of Incorp.:DE | Fiscal Year End: 0202 TOPEKA KS 66607-2207 STREET Type: 10-K | Act: 34 | File No.: 001-14770 | Film No.: 12709294 TOPEKA KS 66607-2207 SIC: 5661 Shoe stores 7852335171

Copyright © 2014 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 28, 2012 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-14770 COLLECTIVE BRANDS, INC. (Exact name of registrant as specified in its charter)

Delaware 43-1813160 State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.)

3231 Southeast Sixth Avenue, Topeka, Kansas 66607-2207 (Address of principal executive offices) (Zip Code) Registrants telephone number, including area code (785) 233-5171 Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered Common Stock, $.01 par value per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes ¨ No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. ¨ Yes x No 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. x Yes ¨ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). x Yes ¨ No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 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 definition of large accelerated filer and accelerated filer in Rule 12b-2 of the Exchange Act.: Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No The aggregate market value of the registrants common stock held by non-affiliates of the registrant was $713.1 million based on the closing price of $11.78 as reported on the New York Stock Exchange on July 29, 2011, the last trading day of the registrants second fiscal quarter. Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date. Common Stock, $.01 par value 60,624,604 shares at March 14, 2012 DOCUMENTS INCORPORATED BY REFERENCE

Document Parts Into Which Incorporated Proxy Statement for the Annual Meeting of Stockholders to be held on May 24, 2012 (Proxy Statement) Part III

Forward Looking Statements This report contains forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, products, future store openings and closings, international expansion opportunities, possible strategic initiatives, new business concepts, capital expenditure plans, fashion trends, consumer spending patterns and similar matters. Statements including the words expects, anticipates, intends, plans, believes, seeks, or variations of such words and similar expressions are forward-looking statements. We note that a variety of factors could cause actual results and experience to differ materially from the anticipated results or expectations expressed in our forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of our business include, but are not limited to, the following: litigation including intellectual property and employment matters; the inability to renew material leases, licenses or contracts upon their expiration on acceptable terms; changes in consumer spending patterns; changes in consumer preferences and overall economic conditions; the impact of competition and pricing; changes in weather patterns; the financial condition of the suppliers and manufacturers; changes in existing or potential duties, tariffs or quotas and the application thereof; changes in relationships between the United States and foreign countries, changes in relationships between Canada and foreign countries; economic and political instability in foreign countries, or restrictive actions by the governments of foreign countries in which suppliers and manufacturers from whom we source are located or in which we operate stores or otherwise do business; changes in trade, intellectual property, customs and/or tax laws; fluctuations in currency exchange rates; availability of suitable store locations on acceptable terms; the ability to terminate leases on acceptable terms; the risk that we will not be able to integrate recently acquired businesses successfully, or that such integration will take longer than anticipated; expected cost savings or synergies from acquisitions will not be achieved or unexpected costs will be incurred; customers will not be retained or that disruptions from acquisitions will harm relationships with customers, employees and suppliers; costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; the ability to hire and retain associates; performance of other parties in strategic alliances; general economic, business and social conditions in the countries from which we source products, supplies or have or intend to open stores; performance of partners in joint ventures or franchised operations; the ability to comply with local laws in foreign countries; threats or acts of terrorism or war; strikes, work stoppages and/or slowdowns by unions that play a significant role in the manufacture, distribution or sale of product; congestion at major ocean ports; changes in commodity prices such as oil; and changes in the value of the dollar relative to the Chinese Yuan and other currencies. See also Risk Factors. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents COLLECTIVE BRANDS, INC. FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 28, 2012 INDEX

Page PART I Item 1. Business 1 Item 1A. Risk Factors 16 Item 1B. Unresolved Staff Comments 23 Item 2. Properties 23 Item 3. Legal Proceedings 24 Item 4. Mine Safety Disclosures 24

PART II Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. Selected Financial Data 27 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53 Item 8. Financial Statements and Supplementary Data 55 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 108 Item 9A. Controls and Procedures 108 Item 9B. Other Information 108

PART III Item 10. Directors, Executive Officers and Corporate Governance 108 Item 11. Executive Compensation 109 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13. Certain Relationships and Related Transactions, and Director Independence 110 Item 14. Principal Accountant Fees and Services 110

PART IV Item 15. Exhibits and Financial Statement Schedules 111 Signatures 116

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ITEM 1. BUSINESS General Collective Brands, Inc. (Collective Brands or the Company) is a leader in bringing compelling lifestyle, fashion and performance brands for footwear and related accessories to consumers worldwide. We operate a portfolio of brands and private brand labels sold at multiple price points through multiple selling channels including retail, wholesale, e-commerce, licensing, and franchising. Collective Brands consists of three lines of business: Payless ShoeSource (Payless), Collective Brands Performance + Lifestyle Group (PLG), and Collective Licensing (CLI). Payless is one of the largest footwear specialty retailers in the world. We serve the everyday needs and fashion wants of women, moms, kids, teens, and men. Payless is dedicated to providing incredible values for on-trend and validated styles of footwear and accessories. PLG is a leading provider of iconic performance and lifestyle brands, each with strong marketplace positions focused on distinct and targeted consumer segments. PLG markets performance and lifestyle footwear and related accessories for adults and children under well-known brand names including Sperry Top-Sider®, Saucony®, Stride Rite®, and Keds®. CLI is a brand development and licensing company that specializes in building, launching, licensing and growing brands focused on the youth lifestyle market, including Above the Rim®, Airwalk®, Spot-Bilt®, Clinch Gear®, Lamar®, Sims®, Strikeforce®, and Vision Street Wear®. CLIs vision is to create the leading youth lifestyle and athletic fashion branded licensing company in the world. All references to years are to our fiscal year unless otherwise stated. Fiscal year 2011 ended on January 28, 2012.

At the end of 2011, there were 4,303 Payless stores, owned or franchised, in 34 countries and territories. Payless owned stores in the United States, Canada, Caribbean, Central America, and South America sold over 120 million pairs of footwear and 50 million units of accessories through nearly 450 million customer visits during 2011. Payless sells a broad assortment of footwear including casual and dress shoes, sandals, boots, slippers, and other footwear categories in a self-selection shopping format. We also sell a broad array of accessories such as handbags, jewelry, bath-and-beauty products, and hosiery. Our stores feature a variety of mainstream and designer footwear brands including Airwalk®, American Eagle, Champion®, Christian Siriano for Payless, Dexter®, Isabel Toledo for Payless, Lela Rose for Payless, and Safe T Step®. Generally, North American stores are company-owned; stores in the Central and South American regions (as defined in the Stores section below) operate as joint-ventures; and stores in Europe, Asia, and the Middle East are franchised. Stores operate in a variety of real estate formats. Approximately a quarter of the company-owned stores are mall- based while the rest are located in strip centers, central business districts, and other real estate formats. We also operate payless.com® where customers buy our products online and store associates order products for customers that are not sold in all of our stores or are out of stock. Payless stores possess an average of approximately $60,000 worth of inventory at cost depending upon the time of year (see Seasonality section). We focus our marketing efforts in a variety of traditional and electronic channels primarily on female, budget- conscious consumers who appreciate trend-right product. Our core customer is a female head-of-household about 35-54 years old with children. Her average annual household income is about $65,000 and she is more likely to be African-American or Hispanic as compared to overall women self-purchasers of footwear in the U.S. Paylesss most addressable consumer segment tends to be households with annual income of less than $75,000 in the market for non-athletic footwear below $30 per pair.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents PLG is a leading provider of iconic performance and lifestyle brands, each with unique personalities and strong marketplace positions focused on distinct and targeted consumer segments. PLG is predominantly a wholesaler of footwear, selling its products mostly in North America in a wide variety of retail formats including premier department stores, specialty stores, and athletic and sporting good stores. PLG markets products in countries outside North America through owned operations, independent distributors, and licensees. PLG designs and markets categories of footwear and related accessories under various brands and trademarks, including:

Brand and/or trademark Product categories Sperry Top-Sider® and Sperry® Nautical performance, outdoor recreational, dress-casual, and casual footwear for adults and children; and, apparel and accessories

Saucony® and Saucony Originals® Technical running, minimalist, athletic lifestyle, outdoor trail, and fashion athletic shoes for adults and children; and, athletic apparel and accessories

Keds®, Pro-Keds®, and Grasshoppers® Fashion-athletic and casual footwear and accessories for adults and children

Stride Rite®, Robeez®, and other trademarks Childrens dress, athletic, and casual footwear, boots and sandals

PLG also markets its products directly to consumers through a variety of owned formats: Stride Rite childrens stores, outlet stores, Stride Rite store-in-stores, Sperry Top-Sider stores, and e-commerce sites. At the end of 2011, there were 356 PLG stores, owned or franchised, in 10 countries.

History Payless was founded in Topeka, Kansas in 1956 with a strategy of selling low-cost, high-quality family footwear on a self-service basis. In 1962, Payless became a public company. In 1979, it was acquired by The May Department Stores Company (May Company). On May 4, 1996, Payless became an independent public company again as a result of a spin-off from May Company. In 1998, we reorganized forming a new Delaware corporation, Payless ShoeSource Inc., which changed its name to Collective Brands, Inc. in August 2007. In March 2007, we acquired Collective Licensing, a Denver-based brand development, management and licensing company. In August 2007, we completed our acquisition of The Stride Rite Corporation.

The Stride Rite Corporation was founded in Boston, Massachusetts in 1919, as the Green Shoe Manufacturing Company (Green Shoe). Green Shoe became a public company in 1960 and was listed on the New York Stock Exchange. It adopted The Stride Rite Corporation name in 1966 in recognition of its well-respected brand name. The first Stride Rite childrens store was opened in 1972. The Sperry Top-Sider and Keds brand names were acquired from Uniroyal in 1979. During 2005, The Stride Rite Corporation completed its acquisition of Saucony and in 2006 it purchased Robeez. In the third quarter of 2009, Collective Brands, Inc. announced that The Stride Rite Corporation will do business as Collective Brands Performance + Lifestyle Group.

Our principal executive offices are located at 3231 Southeast Sixth Avenue, Topeka, Kansas 66607-2207, and our telephone number is (785) 233-5171. Our common stock is listed for trading on the New York Stock Exchange under the symbol PSS.

Segments and Geographic Areas We operate our business in four reporting segments: Payless Domestic, Payless International, PLG Wholesale and PLG Retail. See Note 16 in the Notes to the Consolidated Financial Statements for a discussion on financial results by segment.

(i) The Payless Domestic reporting segment is comprised primarily of domestic retail stores under the Payless ShoeSource name, the Companys sourcing unit and Collective Licensing.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents (ii) The Payless International reporting segment is comprised of international retail stores under the Payless ShoeSource name in Canada, the South American Region, the Central American Region, Puerto Rico, and the U.S. Virgin Islands, as well as franchising arrangements under the Payless ShoeSource name.

(iii) The PLG Wholesale reporting segment consists of PLGs global wholesale operations.

(iv) The PLG Retail reporting segment consists of PLGs owned Stride Rite childrens stores, PLGs outlet stores, store-in-stores at select Macys Department Stores and Sperry Top-Sider retail stores.

Stores At the end of 2011, we operated a total of 4,496 wholly-owned or joint-ventured retail stores. This was comprised of 3,499 in the Payless Domestic segment, 661 stores in the Payless International segment, and 336 stores in the PLG Retail segment. In addition, we franchised 163 stores.

Payless Domestic The average size of a store in the Payless Domestic segment is approximately 3,200 square feet. Depending upon the season and the sales volume of the store, stores employ a varying number of associates, including a store manager or shared store manager. Stores use a combination of full-time and part-time associates. By including materially remodeled stores in our calculation as new stores, Payless Domestic stores were 12 years old on average at the end of 2011. Payless stores operate in a variety of real estate formats such as shopping malls, central business districts, free-standing buildings, strip centers, and leased departments in ShopKo® stores. As of year-end, there were 144 ShopKo® locations, and they are included in the table below.

Payless Domestic Alabama 30 Louisiana 50 Oklahoma 42 Alaska 8 Maine 11 Oregon 45 Arizona 78 Maryland 66 Pennsylvania 141 Arkansas 38 Massachusetts 80 Rhode Island 13 California 477 Michigan 117 South Carolina 24 Colorado 47 Minnesota 48 South Dakota 13 Connecticut 42 Mississippi 36 Tennessee 37 Delaware 7 Missouri 64 Texas 363 District of Columbia 7 Montana 13 Utah 49 Florida 246 Nebraska 30 Vermont 7 Georgia 82 Nevada 28 Virginia 73 Hawaii 14 New Hampshire 18 Washington 82 Idaho 29 New Jersey 120 West Virginia 9 Illinois 143 New Mexico 27 Wisconsin 83 Indiana 52 New York 240 Wyoming 4 Iowa 30 North Carolina 55 Kansas 31 North Dakota 6 Guam 2 Kentucky 28 Ohio 113 Saipan 1 Total Payless Domestic 3,499

Payless International We opened our first wholly-owned international store in Canada in 1997 and since then our international presence has grown substantially. We entered Latin America in 2000, and primarily operate stores there through joint ventures. In 2009, we franchised our first stores in the Middle East.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents The average size of our stores in the Payless International segment is approximately 2,800 square feet. By including materially remodeled stores in our calculation as new stores, our international stores were on average seven years old at the end of 2011. Our international stores operate in a variety of real estate formats, including shopping malls, central business districts, free-standing buildings, and strip centers.

As of year-end 2011, we had 661 stores in 14 foreign countries or territories that were either wholly-owned or operated as joint ventures. This includes 17 store-in-store locations within two retailers in Colombia.

Payless Owned & Joint Venture Stores Canada Central America South America Alberta 40 Costa Rica 25 Ecuador 38 British Columbia 39 Dominican Republic 18 Colombia 67 Manitoba 10 El Salvador 22 New Brunswick 7 Guatemala 47 Total South America 105 Newfoundland and Labrador 3 Honduras 22 Other Countries and Territories Nova Scotia 11 Jamaica 10 Puerto Rico 68 Ontario 131 Nicaragua 13 U.S. Virgin Islands 5 Prince Edward Island 2 Panama 20 Quebec 36 Trinidad/Tobago 17 Total Other Territories 73 Saskatchewan 10

Total Canada 289 Total Central America 194 Total Payless International 661

In addition, our franchisees operated 143 stores in 17 countries or regions.

Payless Franchised Stores Bahrain 2 Morocco 1 Egypt 2 Peru 21 Indonesia 18 Philippines 21 Israel 10 Russia 14 Jordan 2 Saudi Arabia 29 Kuwait 5 Singapore 3 Lebanon 1 Turkey 2 Malaysia 5 United Arab Emirates 5 Mexico 2 Total 143

Since year-end, we have signed agreements with franchisees to operate stores in South Korea, Thailand, and Vietnam.

PLG Retail Stride Rite childrens stores are located primarily in larger regional shopping centers, clustered generally in the major marketing areas of the U.S. The average size of a Stride Rite childrens store is approximately 1,300 square feet. Outlet stores average approximately 2,800 square feet because outlet stores carry a broad range of footwear for adults in addition to childrens footwear. Most of our outlet stores are located in shopping centers consisting only of outlet stores. Sperry Top-Sider stores average approximately 1,600 square feet and tend to be located in affluent areas that embrace the nautical lifestyle that the brand projects. Five of the Sperry stores have

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents a side-by-side Saucony store too, which are counted as one store in the table below. By including materially remodeled stores in our calculation as new stores, PLG Retail segment stores were on average approximately seven years old at the end of 2011. We also operate Stride Rite shoe departments within select Macys stores. This provides us with a capital efficient, additional distribution channel for our products.

The number of owned retail stores by type for the PLG Retail segment is represented in the following table:

PLG Retail Stride Rite childrens stores 204 Outlet stores 96 Sperry Top-Sider stores 18 Macys store-in-stores 18 Total PLG Retail stores 336

PLG also franchised 20 free-standing stores outside North America. Each of these stores is branded Stride Rite and sells all our owned brands in childrens sizes.

PLG Franchised Stores Brunei 1 Singapore 2 Hong Kong 2 South Korea 2 Indonesia 1 Turkey 4 Malaysia 4 Total 20 Philippines 4

PLG Wholesale In addition to the owned and franchised PLG retail stores, we had 97 stores managed by licensed dealers (not included in the store counts above) at the end of 2011. A licensed dealer is an independent shoe retailer that sells a high percentage of Stride Rite products. We generate sales from dealers by selling them our product. Dealers do not pay franchise or on-going fees, but must abide by certain requirements in exchange for permission to use the Stride Rite brand. Of the total, 81 stores were located in the U.S. and 16 were located internationally, predominantly in Latin America. Our sales representatives monitor the dealers assortments and appearance. We give guidance to the dealers on store remodeling. Dealers are not obliged to participate in our store promotions.

International Business In 2011, 18% of Collective Brands sales came from outside the U.S. We derived sales from approximately 100 countries or territories through retailing, wholesaling, e-commerce, licensing, and franchising.

Payless International Payless International sales were $469.6 million or 14% of total Company sales in 2011. Of the Payless International stores we wholly-own or operate through joint ventures, 44% are located in Canada; 46% are located in Latin America and the Caribbean; and 10% are located in Puerto Rico.

PLG Wholesale PLG Wholesale sells footwear in over 90 countries and territories. International wholesale sales totaled $156 million in 2011. We use our owned operations, independent distributors and licensees to market our various product lines outside of the U.S. The largest portion of our international PLG Wholesale sales came from Europe, followed by Canada. We record revenue from foreign sources through the sale of products by our company-owned sales offices in Canada, Germany, the Netherlands, and the United Kingdom, as well as through sales to independent distributors in other countries.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents In addition to owned and distributor operations, we also sell our branded products through licensing and development arrangements in multiple selling channels. These partners sell PLG products on-line as well as through wholesale and retail. Their retail business is conducted through stand-alone and store-in-store formats. We have 10 partners operating in 16 countries and territories.

Licensing and development enables us to sell in certain international markets without incurring development costs and the capital commitment required to maintain foreign operations, employees, inventories, and localized marketing programs. We assist in designing products that are appropriate to each foreign market, but are consistent with our global brand positioning. Licensing and development partners independently market and distribute our branded products in their respective territories with product and marketing support provided by us.

Store and Wholesale Operations Management Collective Brands manages certain support functions such as information technology and finance in a mostly centralized fashion from its Topeka, Kansas and Lexington, Massachusetts offices. The Company also manages other support functions, such as loss prevention and store-level human resources, in a more decentralized fashion.

Payless Domestic Our Retail Operations team is responsible for managing the operations of our stores, including functions such as opening and closing, store displays, inventory management, staffing, and managing the customer experience. Positions and scope are as follows:

Title (or position) Span of Control (or scope) Store Leader Manage one store Multiple Store Leader Manage two stores Group Leader Manage one store; generally oversee four others District Leader Oversee approximately 25 stores Director of Retail Operations Oversee approximately 300 stores

Payless International The international reporting structure is very similar to Payless Domestic. However, the international span of control is more narrow than domestic as we have fewer international stores that tend to be spread further apart.

PLG Wholesale The PLG Wholesale business is divided by major brands, each with its own dedicated sales forces. Generally each sales executive is assigned a specific geographic region.

PLG Retail Retail locations are managed by a Store Manager who reports to a District Leader. District Leaders typically oversee approximately 25-30 stores. These positions are responsible for managing the operations of our stores, including functions such as opening and closing, store displays, inventory management, and staffing.

Stride Rite childrens stores offer customers a full-service experience that includes personalized sizing and fitting of each child by trained specialists. Outlet stores offer limited service in conjunction with a self-selection environment. Sperry stores and store-in-store locations offer full-service and self-selection shopping together.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Employees At the end of 2011, Collective Brands employed approximately 30,000 associates worldwide. Over 26,000 associates worked in stores, while the remaining associates worked in other capacities such as corporate support, Asia-based procurement/sourcing, licensing, and distribution centers. Our associate base was 47% full-time and 53% part-time and we had 128 associates under collective bargaining agreements at year end.

Payless Domestic At year-end, nearly 23,000 associates worked in the Payless Domestic segment, of which approximately 40% are full-time and 60% are part-time.

Payless International The Payless International segment employed over 3,800 associates at year-end, of which approximately 80% are full-time and 20% are part time.

PLG Wholesale Approximately 900 associates at year-end were employed in various sales and support capacities in the PLG Wholesale segment, almost all of which were full-time associates.

PLG Retail The PLG Retail segment employed approximately 2,300 associates at year-end, of which approximately 30% are full-time and 70% are part-time.

Competition As a multi-channel provider of footwear and accessories, we face several different forms of competition.

The retail footwear and accessories market is highly competitive. It is comprised of department stores, footwear specialty stores, discount mass-merchandisers, sporting goods stores, and online competitors. The primary competitive levers to establish points of differentiation in our industry are merchandise selection, flow and timing, pricing, attractive styles, product quality and aesthetics, durability, comfort, convenience, and in-store experience.

Payless Domestic We seek to compete effectively by getting to market with differentiated, trend-right merchandise before mass-market discounters. Payless strives to get trend-right merchandise to market at the same time but at more compelling values than department stores and specialty retailers. Main competitors include DSW, Famous Footwear, J.C. Penney, Kmart, Kohls, Macys, Marshalls, Ross Stores, Sears, Target, TJ Maxx, and Wal-Mart.

Payless International Internationally, we also seek to compete effectively by getting to market with differentiated, trend-right merchandise before mass- market discounters, but at more compelling values than department stores and specialty retailers. Our main competitors in Canada are Spring, The Shoe Company, SportChek, Sears Canada, Walmart Canada, and Zellers. About 60% of our stores in Canada are in malls. The competitive environment in Canada is becoming more fragmented due to online and other competitors. In addition, the U.S. dollar exchange rate impacts competition.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents In Latin America, our competition varies by country. In Central America (except for Panama), we have two larger corporate competitors: Adoc and MD. In Colombia, our main competitors are Spring Step, Bata, and Calzatodo. We also compete in Latin America against small independent operators that vary by country.

PLG Wholesale On a wholesale level, we also compete with many suppliers of footwear. PLG Wholesales most significant competitors include:

PLG Wholesale Brand Sperry Stride Saucony Top-Sider Keds Rite adidas Coach Converse adidas / Reebok Asics Cole Haan Lacoste Geox Brooks Ecco Toms New Balance Mizuno Rockport Vans Nike /Brand Jordan /Converse New Balance Sam Edelman Pedipeds Nike Sebago Primigi Timberland Puma Ugg Skechers Teva Ugg

PLG Retail We compete in the childrens retail shoe industry with numerous businesses, ranging from large retail chains to single store operators. The chains include Childrens Place, Dillards, Gap, Gymboree, Nordstrom, and Target.

Seasonality As an international multi-channel provider of footwear and accessories, we have operations that are impacted by certain seasonal factors some of which are common across segments and channels while others are not. For the most part, our business is characterized by four high-volume seasons: Easter, the arrival of warm weather, back-to-school, and the arrival of cool weather. In preparation for each of these periods, we increase our inventory levels in our retail stores to support the increased demand for our products. For our wholesale business, we increase our inventory levels approximately three months in advance of these periods to support the increased demands from our wholesale customers for these products. We offer styles particularly suited for the relevant season such as sandals in the spring and boots during the fall. Our cash position tends to be higher in June as well as September to October, due primarily to cash received from sales during the Easter season and the cash received from sales during back-to-school, respectively. Our cash position tends to be lowest around February to March when Easter inventories are built-up but not yet sold.

Payless Domestic Sales are typically highest for Payless Domestic in the first quarter followed closely by the third then second quarters with lower sales in the fourth quarter. Our stores tend to have their highest sales around the Easter selling season because customers often shop our stores for holiday- specific footwear and accessories. This is typically about 1-3 weeks in advance of the holiday. In second quarter, the arrival of warm weather in most major markets is a meaningful sales catalyst, but typically not quite as strong as Easter.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Back-to-school is a significant sales catalyst in the third quarter as well as the start of cool weather which drives our boot business. We have lower sales in the fourth quarter compared to the other three quarters. Though holiday season customer traffic is busy relative to many other months, it does not disproportionately spike like other retailers because footwear tends to be less giftable than other retail alternatives. Furthermore, January tends to be our slowest month and we focus on clearance and spring transition.

Payless International Payless International seasonality tends to largely resemble Payless Domestic with a few important differences. First, a greater share of sales tends to come in December compared to Payless Domestic. In fact, December typically means more to Latin America than Easter does to Payless Domestic. In Puerto Rico and Latin America many workers get an incremental paycheck for the Christmas season. Secondly, compared to Payless Domestic, back-to-school is even more important for Payless International. Many Latin Americans come together and shop as family units. Back-to-school is culturally and economically a time to spend together. Finally, paydays are times when proportionally more is spent on footwear than on other days of a month.

PLG Wholesale The PLG Wholesale business is customarily driven by demand for spring (i.e. first half) and fall (i.e. second half) seasonal product lines. PLG Wholesale sales tend to be more first half-weighted compared to second half due to the nature of our brands, as well as meeting the wholesale customers seasonal needs of their end-consumers. The wholesale segments business is usually about three months earlier than Collective Brands other three segments. The wholesale segment tends to have its highest inventory position around January to February and its lowest inventory position around the November to December time frame.

PLG Retail Retail seasonal sales volume for our Stride Rite childrens stores and outlet stores tends to be approximately equivalent for the first half of the year versus the second half of the year. The arrival of warm weather in the first half of the year is the biggest annual sales catalyst. Easter tends not to be as significant compared to Payless. In the second half of the year, back-to-school and the merchandise mix shift to boots are significant sales drivers. PLG Retail tries to balance promotions evenly between the periods.

In their short history, Sperry Top-Sider stores have seen reasonably consistent seasonal sales patterns with notable spikes around Christmas and Fathers Day.

Supply Chain We run an integrated supply chain that supports the product life-cycle from concept to liquidation across all reporting segments. In 2011, we sold approximately 160 million pairs of footwear through retail and wholesale combined.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Merchandise Planning & Allocation We strive to get product to the right store at the right time and have product available for our wholesale customers at the right time in order to drive sales and margin growth. We do this through the use of a variety of systems and models related to planning, forecasting, pricing, and allocations. This helps us align our promotions, product flow, and pricing with customer shopping patterns.

We build and manage total inventory plans globally across multiple selling channels. Assortments are targeted based on customer demand and planned with specific product lifecycles. We base our decisions on how to stock stores using several criteria: For the Payless Domestic and Payless International segments, approximately 60%-65% of stores product portfolio is the same and we localize the balance. We employ a variety of tools based on lifestyle, demographics, shopping behavior, and appetite for fashion to increasingly localize our products in stores. We also consider seasonality and climate by geography which impacts the timing of our inventory distribution. We have sandal and boot zones to help guide our product flow and pricing. In addition, we use historical precedent of stores sales volumes and the categories of products they tend to sell. We also account for footwear sizes in how to stock stores. In retail, we use a size assortment matrix tool when allocating inventory to reduce aged product and markdowns in the least productive sizes.

All this is done to deliver proportionately correct assortments. Our goal is to optimize product flow and freshness as we transition between selling periods. This is intended to drive sales and improve the profitability of those sales by reducing markdowns and aged inventory.

For Payless stores in North America, our goal is to optimize price throughout products lifecycles by using tools which enable us to change pricing for every product at a store price cluster level. A store price cluster is a group of stores (usually about 125) with similar levels of price elasticity for a particular product.

Sourcing Our design, product development, and sourcing functions come together in our global supply chain organization. We utilize agents, as well as internal product design and development capabilities, to drive trend-right designs and improve speed to market of new products. Our Asia-based teams, responsible for product development and sourcing, perform several functions including sample creation and quality control. For strategic commodities and inputs (e.g. outsoles, components), we negotiate directly with suppliers of raw materials and generally require our factories to use our preferred suppliers.

We procure products two different ways through our direct sourcing organization or by engaging third party agents to assist in the procurement of products which we cannot or do not want to procure ourselves. Over 72% of our footwear in 2011 was procured by our direct sourcing organization 65% for Payless and 96% for PLG. In 2011, we procured a higher percentage of our Payless products from third party agents versus the prior year in an effort to utilize the agents more for additional product trend insights.

Our sourcing team is closely aligned with our core factory base which serves the bulk of our manufacturing needs. We balance several considerations in allocating our workflow to factories such as: present and future capacity needs, costs, compliance with regulatory issues, and the impact of product complexity. Thirty-two core factories accounted for 68% of Collective Brands footwear purchases. We have more than 100 other footwear factories with which we do a smaller amount of business.

Factories in China were a direct source of 82% of our footwear units in 2011 compared to 84% in 2010. We are diversifying our manufacturing base not only between countries but also within China in order to reduce

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents costs. In 2011, we sourced 15% of our footwear from Vietnam and the remaining 3% from a variety of countries including Indonesia, Thailand, and western hemisphere countries. Products are manufactured to meet our specifications and standards. We do not purchase seconds or overruns.

Logistics We maintain a flexible and efficient global logistics network that enables speed to market while mitigating transportation costs. Our systems provide perpetual planning and forecasting solutions, support multiple distribution centers, and provide information to allow us to optimize initial distribution planning and case pack configuration. During 2011, our days from order commitment-to-store (supply chain days) increased slightly versus the prior year due to ongoing implementation of a sourcing diversification strategy which involves sourcing footwear from more remote locations. Our efforts to reduce product costs by sourcing more from outside China increased logistics distance and complexity, which added to the supply chain days. This was partially offset by the impact of improved execution, process enhancements, and optimizing our physical distribution. To ensure product arrives at locations when our customers need it, we commit earlier to assortments given the slight increase in supply chain days.

We target high-demand, in-season product for accelerated delivery (rapid re-order) at both retail and wholesale. Through rapid re-order we attempt to maximize sales and margin on high-demand, proven items. Through rapid re-order, we reduce approximately three weeks worth of supply chain days from certain product runs.

Stores generally receive new merchandise on average twice a week from one of our pool points which are used to manage the flow- through of inventory from our distribution centers (DCs) to our stores in an effort to maintain a constant flow of fresh and replenished merchandise. We currently use six DCs worldwide which are listed below along with their approximate size: 1. We lease an 802,000 square foot DC in Brookville, Ohio which currently serves approximately 2,400 Payless stores in North America, all Stride Rite stores, and Stride Rites U.S. wholesale business. 2. We own a 520,000 square foot DC in Louisville, Kentucky which serves U.S. wholesale operations for Keds, Saucony, and Sperry Top-Sider. It also serves Sperry retail stores. 3. We lease a 414,000 square foot DC in Redlands, California which serves approximately 1,800 Payless stores in North America. 4. We contract for 67,500 square feet of distribution space, together with contiguous showroom and office space, in Mississauga, Ontario which serves our PLG Wholesale business in Canada. 5. We lease a 94,000 square feet of distribution and showroom space in Heerhugowaard, The Netherlands to support our PLG operations in Europe. 6. We contract with a third-party in Colon, Panama to operate a distribution facility for our Payless operations in Latin America.

We lease an 87,000 square feet of office space in multiple locations in China, Taiwan, and Vietnam. The functions of our associates in these Asia locations are primarily related to sourcing, inspection, costing, and logistics.

Intellectual Property Through our wholly-owned subsidiaries, we own certain copyrights, trademarks, patents and domain names which we use in our business and regard as valuable assets.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Payless Domestic and Payless International The trademarks and service marks used in our Payless business include Payless®, Payless ShoeSource®, and various logos used on our Payless ShoeSource store signs and in advertising, including our traditional yellow and orange signage and our orange and blue circle P logos. The domain names include Payless.com®, as well as derivatives of Payless ShoeSource. We also own and use the following trademarks and brands in Payless stores: Airwalk®, Above the Rim®, and Spot-Bilt®.

Currently, we have agreements in place regarding the following brands:

Trademark Licensor Expires Blues Clues, SpongeBob SquarePants, and Pro- MTV Networks, a division of December 31, 2012 Slime Viacom International, Inc. The Last Airbender® MTV Networks, a division of December 31, 2012 Viacom International, Inc. Star Wars® and Star Wars: The Clone Wars® Lucasfilm Ltd. December 31, 2012 properties American Ballet Theatre Ballet Theatre Foundation, Inc. January 31, 2013 Superball® Wham-o, Inc. December 31, 2013 Various Disney characters and properties Disney Enterprises, Inc. December 31, 2013 Dexter® HH Brown Shoe Company, Inc. December 31, 2014 Champion® HBI Branded Apparel Enterprises, LLC June 30, 2015 American Eagle American Eagle Outfitters None

We have agreements for development, licensing, marketing and distribution regarding the following designer brands:

Trademark Designer Expires Silvia Tcherassi for Payless Silvia Tcherassi September 1, 2012 Lela Rose for Payless Lela Rose July 31, 2013 Unforgettable Moments by Lela Rose Lela Rose July 31, 2013 Isabel Toledo for Payless Isabel Toledo August 31, 2013 Christian Siriano for Payless Christian Siriano December 31, 2013

The Silvia Tcherassi for Payless mark is used primarily in Latin America. Through agents, Payless also utilizes various character marks from time-to-time.

Collective Licensing markets trademarks outside of Payless stores including Above the Rim®, Airwalk®, Clinch Gear®, Dukes, genetic®, Hind®, Lamar®, LTD®, Rage®, Skate Attack®, Ultra-Wheels®, and Vision Street Wear®. We are also the exclusive agent for the Sims® brand mark. Collective Licensings focus is on the growing active sport lifestyle market driven predominantly by action sports and performance athletic trends. It is positioned with its authentic brand portfolio to reach both the younger consumer with strong ties to board sports, as well as appeal to the broad range of consumers drawn to this established lifestyle and fashion.

PLG Retail and Wholesale The trademarks and service marks used by our Performance + Lifestyle Group include Grasshoppers®, Keds®, Robeez®, Saucony®, Sperry Top-Sider®, and Stride Rite®. These marks extend to the various logos, packaging, store signs, point-of-purchase displays, and other marketing contexts in which we use them. The domain names include grasshoppers.com, keds.com, robeez.com, saucony.com, sperrytopsider.com, and striderite.com.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Through our Keds group, we license the Champion® name to Hanesbrands, Inc. for footwear. We also have other licensees of our Keds and Stride Rite marks.

We have entered into license agreements with various licensors, which are summarized in the following table:

Trademark Licensor Expires Various Star Wars and Clone Wars Lucasfilm Ltd. December 31, 2012 characters and properties Various Disney® characters and properties Disney Consumer Products, Inc. December 31, 2013 Superball® Wham-o, Inc. December 31, 2013 Jessica Simpson VCJS, LLC December 31, 2013 Hello Kitty Sanrio, Inc. December 31, 2013 Various Marvel characters and properties Marvel Characters, BV December 31, 2013 Various Sesame Street characters and Seasame Workshop June 30, 2014 properties

Backlog PLG Wholesale Our backlog of orders as of January 28, 2012 was approximately $354 million compared to approximately $343 million as of January 29, 2011. Of the January 28, 2012 backlog, the amount relating to orders for the first quarter of 2012 was $193 million. Of the January 29, 2011 backlog, $191 million related to orders for the first quarter of 2011. The backlog of orders in the first quarter of 2012 reflects the anticipation of a greater mix of reorders versus future orders compared to the first quarter of 2011 and, as such, we expect fewer cancellations in the first quarter of 2012 than we had in the first quarter of 2011. Due to the variability of the timing between future orders, reorders and cancellations, backlog does not necessarily translate directly into net sales.

Environmental Liability In connection with the acquisition of PLG, we acquired a property with a related environmental liability. The liability as of January 28, 2012 was $0.5 million, $0.1 million of which was included as an accrued expense and $0.4 million of which was included in other long-term liabilities in the accompanying Consolidated Balance Sheet. The assessment of the liability and the associated costs were based upon available information after consultation with environmental engineers, consultants and attorneys assisting the Company in addressing these environmental issues. As of January 28, 2012, the Company estimated the total cost related to this environmental liability to be $6.3 million, including $5.8 million of costs that have already been paid. Actual costs to address the environmental conditions may change based upon further investigations, the conclusions of regulatory authorities about information gathered in those investigations, the inherent uncertainties involved in estimating conditions in the environment, and the costs of addressing such conditions.

Available Information We file or furnish our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 with the SEC electronically. Copies of any of these documents will be provided in print to any shareholder who submits a request in writing to Collective Brands, Inc., Attn: Investor Relations, 3231 Southeast Sixth Avenue, Topeka KS 66607 or calls our Investor Relations Department at (785) 559-5321. The public may read or request a copy of any materials we file with the SEC at the Public Reference Room at 100 F Street N.E.,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Washington, D.C. 20549, on official business days during the hours of 10:00 a.m. and 3:00 p.m. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

We maintain an investor relations website at www.collectivebrands.com. On our investor relations website, one can access free of charge our reports that are filed with the SEC, the Guidelines for our Board of Directors, and the charters for the Board of Directors, the Audit and Finance Committee and the Compensation, Nominating and Governance Committee. No portion of our website or the information contained in or connected to the website is a part of, or incorporated into, this Annual Report on Form 10-K.

Directors of the Company Listed below are the names and present principal occupations or, if retired, most recent occupations of the Companys Directors:

Name Principal Occupation David Scott Olivet(1*)(2)(4) Executive Chairman, RED Digital Cinema and Chairman, Oakley Inc. Daniel Boggan Jr.(2) Retired Senior Vice President of the National Collegiate Athletic Association Mylle H. Mangum(1)(3*) Chief Executive Officer of IBT Enterprises, LLC John F. McGovern(1)(2*) Former Executive Vice President/Chief Financial Officer of Georgia-Pacific Corporation Robert F. Moran(2) Chairman and Chief Executive Officer of PetSmart, Inc. Matthew A. Ouimet(2) President and Chief Executive Officer of Cedar Fair Entertainment Company Michael A. Weiss(3) Chairman, President and Chief Executive Officer of Express, Inc. Robert C. Wheeler(3) Retired Chairman and Chief Executive Officer of Hills Pet Nutrition, Inc. Richard L. Markee(3) Executive Chairman of Vitamin Shoppe, Inc.

(1) Executive Committee Member (2) Audit and Finance Committee Member (3) Compensation, Nominating and Governance Committee Member (4) Non-Executive Chairman of the Board * Chairman

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Executive Officers of the Company Listed below are the names and ages of the executive officers of the Company as of March 22, 2012 and offices held by them with the Company.

Position and Name Age title Michael J. Massey 47 Chief Executive Officer, President, General Counsel and Secretary LuAnn Via 58 President and Chief Executive Officer Payless ShoeSource, Inc. Gregg S. Ribatt 43 President and Chief Executive Officer Perfomance + Lifestyle Group Bruce T. Pettet 47 President and Chief Executive Officer Collective Licensing International Darrel J. Pavelka 56 Executive Vice President Global Supply Chain Douglas J. Treff 54 Executive Vice President Chief Administrative Officer Betty J. Click 49 Senior Vice President Human Resources Douglas G. Boessen 49 Division Senior Vice President, Chief Financial Officer and Treasurer

Michael J. Massey is 47 years old and has served as Chief Executive Officer and President since June 2011. He has served as Senior Vice President General Counsel and Secretary since 2003. Prior to that, he served as Vice President of International Development from 2001 to 2003, Vice President of Contract Manufacturing from 2000 to 2001, Vice President, Group Counsel Intellectual Property from 1998 to 2000, and Senior Counsel from 1996 to 1998. Prior to joining Collective Brands, Inc., Mr. Massey was an attorney for The May Department Stores Company from 1990 to 1996.

LuAnn Via is 58 years old and has served as President and Chief Executive Officer of Payless since July 2008. Prior to joining the Company, she served as Group Divisional President of Charming Shoppes Lane Bryant and Cacique chains from June 2007 to July 2008 and served on the Charming Shoppes Group Executive Committee from January 2006 to July 2008. From January 2006 to June 2007, she served as President of Charming Shoppes Catherine Stores. She worked at Sears, Roebuck and Company from 2003 to 2006, serving as Vice President and General Merchandising Manager for the retailers footwear, accessories, fine jewelry and intimate apparel business. She served as Senior Vice President, General Merchandising Product Development from 1998 to 2003 at Saks, Inc. And from 1992 to 1998, she served as Executive Vice President at Trade Am International. From 1990 to 1992, Ms. Via was Senior Vice President and General Merchandising Manager at The Shoe Box/The Shoe Gallery; and from 1985 to 1990 she served as Divisional Vice President and Merchandise Manager for Accessories, as well as various other buying positions at the Richs Division of Federated Department Stores.

Gregg S. Ribatt is 43 years old and joined the Performance + Lifestyle Group of Collective Brands in January 2008 as President and Chief Executive Officer. Prior to that, he worked for Stuart Weitzman Holdings, LLC as President and CEO. Prior to joining Stuart Weitzman, he worked for Bennett Footwear Group holding positions of increasing responsibility. Prior to the companys sale to Brown Shoe in 2005, he served as Executive Vice President and Chief Operating Officer for Bennett. Mr. Ribatt holds a bachelor of arts from Wesleyan University and a masters of business administration from The University of Chicago.

Bruce T. Pettet is 47 years old and has served as the President and Chief Executive Officer of Collective Licensing International, LLC since its founding in December 2003. He served as President and CEO of Airwalk International, LLC, from July 2000 through December 2003. Previous to Airwalk, he worked for Brooks Sports,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Inc., from 1995 to 2000, ultimately serving as the companys President and CEO. He also served as a principal/partner for eight years for a Southern California-based lifestyle and performance brand sales agency, Performance Sales West. Mr. Pettet graduated from Pepperdine University with a B.S. in Management, received a certificate degree in Entrepreneurship from California State University Fullerton, and participated in Executive Education in Business Strategy at Dartmouth University.

Darrel J. Pavelka is 56 years old and has served as Executive Vice President Global Supply Chain since September 2007. Prior to that, he served as Senior Vice President Merchandise Distribution, Planning and Supply Chain from September 2004 to September 2007. He also served as Senior Vice President International Operations and Supply Chain from March 2003 to September 2004, Senior Vice President Merchandise Distribution from 1999 to 2003, Vice President of Retail Operations for Division R from 1997 to 1999, Vice President of Stores Merchandising from 1995 to 1997, Director of Stores Merchandising from 1990 to 1995, Director of Distribution for Womens from 1987 to 1990, Manager of Stores Merchandising for Division R from 1983 to 1987, and Manager of the Northeast store expansion from 1980 to 1983.

Douglas J. Treff is 54 years old and has served as the Companys Executive Vice President and Chief Administrative Officer since September 2007. Prior to joining the Company, he served as Executive Vice President and Chief Administrative Officer for Sears Canada, Inc. from 2006 to 2007. From 2000 to 2006 he served as Senior Vice President and Chief Financial Officer for Deluxe Corporation and from 1990 to 2000, as Chief Financial Officer and other leadership roles in finance at Wilsons, The Leather Experts, Inc.

Betty J. Click is 49 years old and has served as Senior Vice President Human Resources for Collective Brands, Inc. since July 2008. Prior to that, she served as Vice President, HR Operations and Learning and Development from December 2005 to August 2008 and as Vice President, HR Solutions from June 2002 to December 2005. Prior to joining Collective Brands, Inc., she spent 21 years with Verizon Communications, Inc. (formerly GTE) and served in various positions of increasing responsibility to support the Companys evolution and expansion, including Vice President Human Resources Corporate Staff and Executive Director of Compensation Strategy.

Douglas G. Boessen is 49 years old and has served as Division Senior Vice President, Chief Financial Officer and Treasurer since December 2008. He previously served as Vice President, Corporate Controller from 2004 to 2008. From 2000 to 2004, he was Vice President, Financial Planning and Analysis, from 1999 to 2000 he was Director Strategic Planning and from 1997 to 1999 he served as Associate Controller for the Company. Prior to joining Payless, he served as Senior Manager at Arthur Andersen LLP.

ITEM 1A. RISK FACTORS We May be Unable to Compete Effectively in the Competitive Worldwide Footwear Industry We face a variety of competitive challenges from other domestic and international footwear retailers and wholesalers, including a number of competitors that have substantially greater financial and marketing resources than we do. These competitors include mass- market discount retailers, department stores including, other footwear retailers and wholesalers. We compete with these competitors on the basis of: developing fashionable, high-quality merchandise in an assortment of sizes, colors and styles that appeals to our target consumers; anticipating and responding to changing consumer demands in a timely manner; ensuring product availability and optimizing supply chain effectiveness; the pricing of merchandise; creating an acceptable value proposition for consumers; providing an inviting, customer friendly shopping environment;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents using a customer focused sales staff to provide attentive, product knowledgeable customer service; and providing strong and effective marketing support.

Mass-market discount retailers aggressively compete with us on the basis of price and have added significant numbers of locations. Accordingly, there is substantial pressure on us to maintain the value proposition of our footwear and the convenience of our store locations. In addition, it is possible that mass-market discount retailers will increase their investment in their retail footwear operations, thereby achieving greater market penetration and placing additional competitive pressures on our business. If we are unable to respond effectively to these competitive pressures, our business, results of operations and financial condition could be adversely affected.

The Worldwide Footwear Industry is Heavily Influenced by General Economic Cycles Including Commodity and Labor Prices Footwear is a cyclical industry that is heavily dependent upon the overall level of consumer spending. Purchases of footwear and related goods tend to be highly correlated with the cycles of the levels of disposable income of our consumers. As a result, any substantial deterioration in general economic conditions could adversely affect our business. Further, the profitability of our industry is dependent on the prices of commodities used to make and transport our products (including cotton, rubber, petroleum, etc.) as well as labor prices. If we are unable to mitigate the impact of the deterioration of general economic conditions and the impact of higher commodity and labor prices, our results of operations and financial condition would be materially adversely affected.

A Majority of our Operating Expenses are Fixed Costs that are not Directly Dependent Upon our Sales Performance A majority of our operating expenses are fixed costs that are not directly dependent on our sales performance. These fixed costs include the leasing costs of our stores, our debt service expenses and, because stores require minimum staffing levels, the majority of our labor expenses. If our sales decline, we may be unable to reduce or offset these fixed operating expenses in the short term. Accordingly, the effect of any sales decline is magnified because a larger percentage of our earnings are committed to paying these fixed costs. As a result, our net earnings and cash flow would be disproportionately affected negatively as a result of a decline in sales.

We May be Unable to Maintain or Increase our Sales Volume and Profitability Our Payless stores have a substantial market presence in the United States and we currently derive a significant majority of our revenue from our U.S. stores. Our PLG retail stores and our PLG wholesale businesses also derive a significant majority of their revenue from U.S. sources. Because of our substantial market presence, because the U.S. footwear retailing industry is mature and because our domestic store count is decreasing, for us to increase our domestic sales volume on a unit basis, we must capture market share from our competitors. We have attempted to capture additional market share through a variety of strategies; however, if we are not successful we may be unable to increase or maintain our sales volumes and profitability in the United States, adversely affecting our business, results of operations and financial condition.

Our Payless Domestic and Payless International Reporting Segments are Heavily Influenced by the Economic Condition of our Core Customer Base Our Payless Domestic and Payless International reporting segments are highly dependent on the disposable income of our core customer base. High unemployment and rising prices for staple products like gasoline and food are factors that have a particularly negative impact on the disposable income of our core customer base. If the economic condition of certain segments of our core customer base does not improve, our financial results may be negatively impacted. Also, any deterioration in the general economic conditions for our core customer base could adversely affect our results of operations and financial condition.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We May Have Unseasonable Weather Where our Stores are Concentrated We increase our inventory levels to support the increased demand for our products, as well as to offer styles particularly suited for the relevant season, such as sandals in the early summer season and boots during the winter season. If the weather conditions for a particular season vary significantly from those typical for such season, such as an unusually cold early summer or an unusually warm winter, consumer demand for the seasonally appropriate merchandise that we have available in our stores could be adversely affected and negatively impact net sales and margins. Lower demand for seasonally appropriate merchandise may leave us with an excess inventory of our seasonally appropriate products, forcing us to sell these products at significantly discounted prices and adversely affecting our net sales margins and operating cash flow. Conversely, if weather conditions permit us to sell our seasonal product early in the season, this may reduce inventory levels needed to meet our customers needs later in that same season. Consequently, our results of operations are highly dependent on somewhat predictable weather conditions and our ability to react to changes in weather conditions.

We May be Unable to Adjust to Constantly Changing Fashion Trends Our success depends, in large part, upon our ability to gauge the evolving fashion tastes of our consumers and to provide merchandise that satisfies such fashion tastes in a timely manner. The worldwide footwear industry fluctuates according to changing fashion tastes and seasons, and merchandise usually must be ordered well in advance of the season, frequently before consumer fashion tastes are evidenced by consumer purchases. In addition, the cyclical nature of the worldwide footwear industry also requires us to maintain substantial levels of inventory, especially prior to peak selling seasons when we build up our inventory levels. As a result, if we fail to properly gauge the fashion tastes of consumers, or to respond in a timely manner, this failure could adversely affect consumer acceptance of our merchandise and leave us with substantial unsold inventory. If that occurs, we may be forced to rely on markdowns or promotional sales to dispose of excess, slow-moving inventory, which would negatively impact financial results.

The results of our wholesale businesses are affected by the buying plans of our customers, which include large department stores and smaller retailers. No customer accounts for 10% or more of our wholesale business. Our wholesale customers may not inform us of changes in their buying plans until it is too late for us to make the necessary adjustments to our product lines and marketing strategies. While we believe that purchasing decisions in many cases are made independently by individual stores or store chains, we are exposed to decisions by the controlling owner of a store chain that could decrease the amount of footwear products purchased from us. In addition, the retail industry periodically experiences consolidation. We face a risk that our wholesale customers may consolidate, restructure, reorganize, file for bankruptcy or otherwise realign in ways that could decrease the number of stores or the amount of shelf space that carry our products. We also face a risk that our wholesale customers could develop in-house brands or utilize the private labeling of footwear products, which would negatively impact financial results.

We May be Unsuccessful in Opening New Stores, Including Stores Operated by Franchise Partners, or Relocating Existing Stores to New Locations, Adversely Affecting our Ability to Grow Our growth, in part, is dependent upon our ability to expand our retail operations by opening new stores, as well as relocating existing stores to new locations and extending our expiring leases, on a profitable basis.

Our ability to open new stores and relocate existing stores to new locations on a timely and profitable basis is subject to various contingencies, some of which are beyond our control. These contingencies include our ability to: locate suitable store sites; negotiate acceptable lease terms; build-out or remodel sites on a timely and cost effective basis;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents hire, train and retain qualified managers and personnel; identify long-term shopping patterns; identify suitable franchise partners; obtain adequate capital resources; and successfully integrate new stores into our existing operations.

In addition, the opening of stores outside of the United States is subject to a number of additional contingencies, including compliance with local laws and regulations and cultural issues. Also, because we operate a number of our international stores under joint ventures, issues may arise in our dealings with our joint venture partners or their compliance with the joint venture agreements.

We may be unsuccessful in opening new stores or relocating existing stores for any of these reasons. In addition, we cannot be assured that, even if we are successful in opening new stores or relocating existing stores, those stores will achieve levels of sales and profitability comparable to our existing stores.

We Rely on Third Parties to Manufacture and Distribute Our Products We depend on third party manufacturers to manufacture the merchandise that we sell. If these manufacturers are unable to secure sufficient supplies of raw materials, produce products that meet our quality standards or maintain adequate manufacturing and shipping capacity, they may be unable to provide us with timely delivery of products. In addition, if the prices charged by these third parties increase for reasons such as increases in the price of raw materials, increases in labor costs or currency fluctuations, our cost of manufacturing would increase, adversely affecting our results of operations. We also depend on third parties to transport and deliver our products. Due to the fact that we do not have any independent transportation or delivery capabilities of our own, if these third parties are unable to transport or deliver our products for any reason, or if they increase the price of their services, our operations and financial performance would be adversely affected.

We require our third party manufacturers to meet our standards in terms of working conditions and other matters before we are willing to contract with them to manufacture our merchandise. As a result, we may not be able to obtain the lowest possible manufacturing costs. In addition, any failure by our manufacturers to meet these standards, to adhere to labor or other laws or to diverge from our mandated labor practices, and the potential negative publicity relating to any of these events, could harm our business and reputation.

We do not have long-term agreements with any of our third party manufacturers, and any of these manufacturers may unilaterally terminate their relationship with us at any time. There is also substantial competition among footwear retailers for quality manufacturers. To the extent we are unable to secure or maintain relationships with quality manufacturers, our business could be harmed.

There are Risks Associated with Our Importation of Products We import finished merchandise into the United States and other countries in which we operate from the Peoples Republic of China and other countries. Substantially all of this imported merchandise is subject to: customs, duties and tariffs imposed by the governments of countries into which this merchandise is imported; and penalties imposed for, or adverse publicity relating to, violations of labor and wage standards by foreign contractors.

The United States and countries in which our merchandise is manufactured or imported may from time to time impose additional new quotas, tariffs, duties or other restrictions on our merchandise or adversely change

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents existing restrictions or interpretations. These additional taxes and regulations could adversely affect our ability to import, and/or the cost of our products which could have a material adverse impact on the results of operations of our business.

Manufacturers in China are our major suppliers. During 2011, China was a direct source of approximately 82% of our merchandise based on cost. In addition to the products we import directly, a significant amount of the products we purchase from other suppliers has been imported from China. Any deterioration in the trade relationship between the United States and China or any other disruption in our ability to import footwear, accessories, or other products from China or any other country where we have stores could have a material adverse effect on our business, financial condition or results of operations.

In addition to the risks of foreign sourcing stemming from international trade laws, there are also operational risks of relying on such imported merchandise. Our ability to successfully import merchandise derived from foreign sources into the United States is dependent on stable labor conditions in the major ports we utilize to import or export product. Any instability or deterioration of the labor environment in these ports, such as the work stoppage at West Coast ports in 2002, could result in increased costs, delays or disruption in product deliveries that could cause loss of revenue, damage to customer relationships or materially affect our business.

If we are unable to maintain our current Customs-Trade Partnership Against Terrorism (C-TPAT) status, it would increase the time it takes to get products into our stores. Such delays could materially impact our ability to move the current product in our stores to meet customer demand.

Our International Operations are Subject to Political and Economic Risks In 2011, 18% of our sales were generated outside the United States and almost all of our merchandise was manufactured outside the United States. We are accordingly subject to a number of risks relating to doing business internationally, any of which could significantly harm our business, including: political and economic instability; inflation; quotas; regulation of importation of goods from certain countries; exchange controls and currency exchange rates; foreign tax treaties and policies; restrictions on the transfer of funds to and from foreign countries; ability to import product; and increase in duty rates

Certain countries have increased or are considering increases to duty rates. If the Company is unable to mitigate the impact of these increased duty rates or any other costs, it would adversely impact the profitability of our foreign operations which would adversely impact our financial position and results of operations.

Our financial performance on a U.S. dollar denominated basis is also subject to fluctuations in currency exchange rates. These fluctuations could cause our results of operations to vary materially.

From time to time, we may enter into agreements seeking to reduce the effects of our exposure to currency fluctuations, but these agreements may not be effective in reducing our exposure to currency fluctuations or may not be available at a cost effective price.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We May be Unable to Effectively Protect Our Trademarks and Other Intellectual Property Rights We believe that our trademarks and other intellectual property are important to our business and are generally sufficient to permit us to carry on our business as presently conducted. We cannot, however, know whether we will be able to secure patents or trademark protection for our intellectual property in the future or whether that protection will be adequate for future products. Further, we face the risk of ineffective protection of intellectual property rights in the countries where we source and distribute our products. If we are compelled to prosecute infringing parties or defend our intellectual property, we will incur additional costs. Costs associated with the defense of our intellectual property could be substantial and occupy a significant amount of management time and resources. These costs could negatively impact our results of operations and financial condition.

Adverse Changes in Our Results of Operations and Financial Position Could Impact Our Ability to Meet Our Debt Covenants We are subject to financial covenants under our Term Loan Facility, Revolving Credit Facility and our Senior Subordinated Notes (collectively, the Credit Facilities). These financial covenants are based largely on our results of operations and financial position. In the event of adverse changes in our results of operations or financial position, including those resulting from changes in generally accepted accounting principles, we may be unable to comply with the financial covenants contained in our Credit Facilities in which case we would be in default. To avoid a default, we may seek an amendment that would likely involve up-front costs, increased interest rate margins and additional covenants. If we were unable to negotiate an amendment of our Credit Facilities and defaulted on them we could be required to make immediate repayment. A default could also trigger increases in interest rates and difficulty obtaining other sources of financing. Such an event would adversely impact our financial position and results of operations.

We May be Subject to Liability if We Infringe the Trademarks or Other Intellectual Property Rights of Third Parties We may be subject to liability if we infringe the trademarks or other intellectual property rights of third parties. If we were to be found liable for any such infringement, we could be required to pay substantial damages and could be subject to injunctions preventing further infringement. Litigation could occupy a significant amount of management time and resources. Further, large verdicts and judgments against us may increase our exposure to legal claims in the future. Such payments and injunctions could materially adversely affect our financial results.

We Rely on Brands We Do Not Own As discussed in Item 1 of this Form 10-K under the caption Intellectual Property, we license trademarks and brands through various agreements with third parties. We, through our agents, also utilize various character marks from time-to-time. If we are unable to renew or replace any trademark, brand or character mark that accounts for a significant portion of our revenue, our results could be adversely affected.

Adverse Occurrences at Our Distribution Centers or the Ports We Use Could Negatively Impact Our Business We currently use six distribution centers, which serve as the source of replenishment of inventory for our stores and serve our wholesale operations. If complications arise with any of our operating distribution centers or our distribution centers are severely damaged or destroyed, our other distribution centers may not be able to support the resulting additional distribution demands and we may be unable to locate alternative persons or entities capable of doing so. This may adversely affect our ability to deliver inventory on a timely basis, which could adversely affect our results of operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Unstable Credit Markets Could Affect Our Ability to Obtain Financing Our Senior Subordinated Notes are due on August 1, 2013, our Term Loan Facility matures on August 17, 2014 and our Amended Revolving Loan Facility matures on August 16, 2016. In the event we need additional financing, or we need to refinance our current debt, there can be no assurances that these funds will be available on a timely basis or on reasonable terms. Failure to obtain such financing could constrain our ability to operate or grow the business. In addition, any ratings downgrade of our securities, or any negative impacts on the credit market, generally, could negatively impact the cost or availability of capital.

There are Risks Associated with Our Acquisitions Any acquisitions or mergers by us will be accompanied by the risks commonly encountered in acquisitions of companies. These risks include, among other things, higher than anticipated acquisition costs and expenses, the difficulty and expense of integrating the operations and personnel of the companies and the loss of key employees and customers as a result of changes in management.

In addition, geographic distances may make integration of acquired businesses more difficult. We may not be successful in overcoming these risks or any other problems encountered in connection with any acquisitions.

Our acquisitions may cause large one-time expenses or create goodwill or other intangible assets that could result in significant impairment charges in the future. We also make certain estimates and assumptions in order to determine purchase price allocation and estimate the fair value of acquired assets and liabilities. If our estimates or assumptions used to value acquired assets and liabilities are not accurate, we may be exposed to losses that may be material.

Adverse Changes in our Market Capitalization or Anticipated Future Operating Performance May be an Indication of Goodwill or Other Intangible Asset Impairment, Which Could Have a Material Impact on our Financial Position and Results of Operations We assess goodwill, which is not subject to amortization, for impairment on an annual basis or at any other interim reporting date when events or changes in circumstances indicate that the book value of these assets may exceed their fair value. We develop an estimate of the fair value of each reporting unit using both a market approach and an income approach. A significant adverse change in our market capitalization or anticipated future operating performance could result in the book value of a reporting unit exceeding its fair value, resulting in a goodwill impairment charge, which could adversely impact our financial position and results of operations.

We also assess certain finite and indefinite lived intangible assets for impairment on an annual basis or at any other interim reporting date when events or changes in circumstances indicate that the book value of these assets may exceed their fair value. Any significant changes in our anticipated future operating performance may be an indication of impairment to our trademarks or any other intangible asset. Any such impairment charges, if significant, would adversely impact our financial position and results of operations.

The Operation of our Business is Dependent on our Information Systems We depend on a variety of information technology systems for the efficient functioning of our business and security of our information and certain information of our customers. Our inability to continue to maintain and upgrade these information systems or to meet changing data security and privacy standards could disrupt or reduce the efficiency of our operations or result in fines or litigation. In addition, potential problems with the implementation of new or upgraded systems as our business grows or with maintenance of existing systems could also disrupt or reduce the efficiency of our operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Failure to Maintain the Security of Personally Identifiable and Other Information of our Customers, Stockholders and Employees Could Negatively Impact Our Business In connection with our business, we collect and retain significant volumes of certain types of personally identifiable and other information pertaining to our customers, stockholders and employees. Theft, loss, fraudulent use or misuse of customer, stockholder, employee or our other data by cybercrime or otherwise, could adversely impact our reputation and could result in significant costs, fines, litigation or regulatory action against us.

An Outbreak of Infectious Diseases May Have a Material Adverse Effect on Our Ability to Purchase Merchandise from Manufacturers and Our Operations An outbreak and spread of infectious diseases in countries in which our manufacturers are located could impact the availability or timely delivery of merchandise. Although our ability to purchase and import our merchandise has not been negatively impacted to date, an outbreak of infectious diseases could prevent the manufacturers we use from manufacturing our merchandise or hinder our ability to import those goods to the countries in which our stores are located, either of which could have an adverse effect on our results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS None.

ITEM 2. PROPERTIES Collective Brands uses six distribution facilities worldwide, which are listed below along with their approximate size: 1. We lease an 802,000 square foot Distribution Center (DC) in Brookville, Ohio which currently serves approximately 2,400 Payless stores in North America, all Stride Rite stores, and PLGs U.S. wholesale business. 2. We own a 520,000 square foot DC in Louisville, Kentucky which serves U.S. wholesale operations for Keds, Saucony, and Sperry Top-Sider. It also serves Sperry retail stores. 3. We lease a 414,000 square foot DC in Redlands, California which serves approximately 1,800 Payless stores in North America. 4. We contract for 67,500 square feet of distribution space, together with contiguous showroom and office space, in Mississauga, Ontario which serves our PLG Wholesale business in Canada. 5. We lease a 94,000 square feet of distribution and showroom space in Heerhugowaard, The Netherlands to support our PLG operations in Europe. 6. We contract with a third-party in Colon, Panama to operate a distribution facility for our Payless operations in Latin America.

Retail Properties The total square footage for our retail stores as of January 28, 2012, January 29, 2011 and January 30, 2010 was approximately 13.5 million, 14.6 million and 14.6 million, respectively. These square footage numbers do not include our franchised stores.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Payless Domestic and Payless International We lease substantially all of our Payless stores. Leases on new or relocated stores typically have initial terms of five or ten years and either one or two renewal options. Renewals on existing stores are, on average, approximately three years. This is because we have negotiated significant occupancy cost reductions with shorter terms on many of our stores.

During 2012, approximately 800 of our leases are due to expire. In addition, approximately 300 leases as of January 28, 2012 were month-to-month tenancies. Of all the roughly 1,100 expiring or month-to-month leases, approximately 200 have modifications that are pending execution. Leases usually require payment of base rent, applicable real estate taxes, common area expenses and, in some cases, percentage rent based on the stores sales volume.

In addition to our stores, we own a 290,000 square foot headquarters building in Topeka, Kansas. We lease approximately 10,000 square feet of office space in New York, N.Y. for our design center. We also lease 6,300 square feet of office space for our Collective Licensing headquarters in Englewood, Colorado. We lease office space totaling nearly 19,000 square feet in Latin America and another 3,800 square feet in Canada.

PLG Retail and PLG Wholesale We lease all of our PLG stores. Our leases typically have an initial term of up to ten years and may include a renewal option. Leases usually require payment of base rent, applicable real estate taxes, common area expenses and, in some cases, percentage rent based on the stores sales volume and merchants association fees.

We lease approximately 148,000 square feet of office space at our PLG headquarters building in Lexington, Massachusetts. We also lease approximately 24,000 square feet of call center space in Richmond, Indiana. We lease showroom space to conduct business with wholesale customers, the trade, and media in New York and London totaling 10,000 and 2,600 square feet, respectively.

ITEM 3. LEGAL PROCEEDINGS There are no pending legal proceedings other than ordinary, routine litigation incidental to the business to which the Company is a party or of which its property is subject, none of which the Company expects to have a material impact on its financial position, results of operations and cash flows.

ITEM 4. MINE SAFETY DISLOSURES None.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES There were approximately 8,900 registered holders of the Companys Common Stock as of January 28, 2012, compared to approximately 9,300 registered holders as of January 29, 2011.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Common Stock and Market Prices The Companys common stock is listed on the New York Stock Exchange under the trading symbol PSS. The quarterly intraday price ranges of the common stock in 2011 and 2010 were:

2011 2010 Fiscal Quarter High Low High Low First $23.96 $19.17 $26.65 $18.54 Second 21.11 11.65 24.37 14.99 Third 15.60 9.11 17.69 12.41 Fourth 16.78 11.38 21.90 15.07 Year $23.96 $9.11 $26.65 $12.41

Since becoming a public company in 1996, we have not paid a cash dividend on outstanding shares of common stock. We are subject to certain restrictions contained in our senior secured revolving loan facility, the indenture governing our 8.25% senior subordinated notes and our term loan which restrict our ability to pay dividends. We do not currently plan to pay any dividends.

Recent Sales of Unregistered Securities On May 26, 2011, May 27, 2010 and May 21, 2009, 19,644 shares, 22,300 shares and 37,937 shares, respectively, were credited to an account under the Companys Restricted Stock Plan for Non-Management Directors as the annual restricted stock grant portion of their directors fees. In addition, Mr. Olivet received 5,226 shares on June 17, 2011. Each director is permitted to defer receipt of a portion of their compensation including their annual restricted stock grant pursuant to the Companys Deferred Compensation Plan for Non-Management Directors. In the past three years, non-management directors have deferred an aggregate of 71,493 shares under the Deferred Compensation Plan for Non-Management Directors. These grants were made as partial compensation for the recipients services as directors. The offer and issuance of these securities are exempt from registration under Section 4(2) of the Securities Act of 1933 and the rules and regulations promulgated thereunder, as transactions by an issuer not involving any public offering or alternatively, registration of such shares was not required because their issuance did not involve a sale under Section 2(3) of the Securities Act of 1933.

Issuer Purchases of Equity Securities The following table provides information about purchases by the Company (and its affiliated purchasers) of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act, during the quarter ended January 28, 2012:

Total Number of Shares Purchased Approximate Dollar Average as Part of Value of Shares Total Number Price Publicly that May Yet Be of Shares Paid per Announced Plans Purchased Under the Period Purchased(1) Share or Programs Plans or Programs (in thousands) (in thousands) (in millions) 10/30/11 11/26/11 4 $15.05 $ 124.0 11/27/11 12/31/11 6 14.11 $ 124.0 01/01/12 01/28/12 5 14.26 $ 124.0 Total 15 $14.29 $ 124.0 (2)

(1) Includes an aggregate of approximately 15 thousand shares of our common stock that was repurchased in connection with our employee stock purchase and stock incentive plans.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (2) On March 2, 2007, our Board of Directors authorized an aggregate of $250 million of share repurchases. The timing and amount of share repurchases, if any, are limited by the terms of our Credit Agreement and Senior Subordinated Notes.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents New York Stock Exchange Corporate Governance Matters In 2011, the Company changed its Peer Group to align with the competitors used in determining bonuses under its performance- based incentive plans.

Companies comprising the New Peer Group are: Ross Stores, Inc., DSW, Inc., Limited Brands, Inc., Wolverine World Wide, Inc., The Childrens Place Retail Stores, Deckers Outdoor Corp., The Jones Group, Inc., Brown Shoe Company, Inc., Genesco, Inc., Abercrombie & Fitch Co., Foot Locker, Inc., Aeropostale, Inc., ANN, Inc., Urban Outfitters, Inc., American Eagle Outfitters, Inc., and Ascena Retail Group, Inc.

Companies comprising the Old Peer Group are: Gap, Inc., Limited Brands, Inc., V. F. Corporation, Skechers USA, Inc., Timberland Company, Ross Stores Inc., TJX Companies, Inc., Brown Shoe Company, Inc., Genesco Inc., Shoe Carnival, Inc., Finish Line, Inc., and Foot Locker, Inc.

The graph below compares the cumulative total stockholder return on Collective Brands, Inc. Common Stock against the cumulative returns of the Standard and Poors Corporation Composite Index (the S&P 500 Index), the New Peer Group and the Old Peer Group. The graph assumes $100 was invested on February 3, 2007, (the end of fiscal 2006) in Collective Brands, Inc. Common Stock, in the S&P 500 Index, the New Peer Group and the Old Peer Group and assumes the reinvestment of dividends.

Comparison of 5 Year Cumulative Total Returns of The Company, the S&P Index, New Peer Group and Old Peer Group

Investment Value at End of Fiscal Year:

2006 2007 2008 2009 2010 2011 Collective Brands, Inc. $100.00 $50.34 $30.52 $56.29 $57.89 $47.77 S&P 500 Index $100.00 $98.17 $59.52 $79.24 $96.09 $101.21 New Peer Group $100.00 $79.86 $38.89 $74.92 $103.78 $130.03 Old Peer Group $100.00 $91.12 $57.35 $101.83 $130.21 $183.33

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents ITEM 6. SELECTED FINANCIAL DATA Our summary consolidated financial information set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and our Notes to Consolidated Financial Statements, included elsewhere in this Form 10-K.

Fiscal Year(1) 2011 2010 2009 2008 2007(2) (dollars in millions, except per share) Selected Statements of (Loss) Earnings Data: Net sales $3,461.7 $3,375.7 $3,307.9 $3,442.0 $3,035.4 Cost of sales(3) 2,432.2 2,174.5 2,166.9 2,432.8 2,044.5 Gross margin 1,029.5 1,201.2 1,141.0 1,009.2 990.9 Selling, general and administrative expenses 1,046.3 1,011.5 982.4 1,007.2 899.4 Impairment of goodwill 10.0 42.0 Restructuring charges 0.1 0.2 0.2 Operating (loss) profit from continuing operations (26.8 ) 189.7 158.5 (40.2 ) 91.3 Interest expense, net 38.5 48.0 59.7 67.1 32.3 Loss on extinguishment of debt 0.5 1.7 1.2 (Loss) earnings from continuing operations before income taxes (65.8 ) 140.0 97.6 (107.3 ) 59.0 Provision (benefit) for income taxes 84.0 17.4 9.4 (48.0 ) 8.6 (Loss) earnings from continuing operations (149.8 ) 122.6 88.2 (59.3 ) 50.4 Earnings (loss) from discontinued operations, net of income taxes 0.1 (0.7 ) Net (loss) earnings (149.8 ) 122.6 88.3 (60.0 ) 50.4 Net earnings attributable to noncontrolling interests (10.4 ) (9.8 ) (5.6 ) (8.7 ) (7.7 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) $112.8 $82.7 $(68.7 ) $42.7 Basic (loss) earnings per share from continuing operations attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.77 $1.29 $(1.08 ) $0.66 Diluted (loss) earnings per share from continuing operations attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.75 $1.28 $(1.08 ) $0.65 Selected Balance Sheet Data: Working capital $537.5 $601.3 $659.2 $556.5 $525.1 Property and equipment, net 369.4 432.3 464.2 521.4 551.0 Total assets 2,047.2 2,268.5 2,284.3 2,251.3 2,415.2 Total long-term debt 609.9 664.5 849.3 913.2 922.3 Collective Brands, Inc. shareowners equity(4) 644.8 822.9 735.2 622.3 702.9 Selected Other Financial Data: Capital expenditures $98.9 $97.6 $84.0 $129.2 $167.4 Present value of operating leases 919.4 981.1 1,072.3 1,123.5 1,203.5 Net sales growth, continuing operations 2.5 % 2.0 % (3.9 )% 13.4 % 8.5 % Same-store sales growth, continuing operations(5) (2.7 )% (2.2 )% (2.3 )% (3.6 )% (0.9 )% Return on equity, including discontinued operations(6) (19.5 )% 15.3 % 13.3 % (9.8 )% 6.1 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Return on net assets, including discontinued operations(6) 2.4 % 9.5 % 8.5 % 1.8 % 8.0 % Return on invested capital, continuing operations(7) (4.5 )% 10.8 % 9.3 % (1.4 )% 6.2 % Stores open (at year-end) 4,496 4,844 4,833 4,877 4,892

(1) All years presented include 52 weeks. The reporting for our operations in the Central and South American Regions use a December 31 year-end.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents (2) Beginning in 2007, results include the effects of the acquisitions of PLG (acquired August 17, 2007) and Collective Licensing, Inc. (acquired March 30, 2007) as of the date of those acquisitions. (3) In the fourth quarter of 2008, we recorded charges of $88.2 million related to the impairment of trademarks. In the second quarter of 2011 we recorded charges of $31.1 million related to the impairment of trademarks. (4) During 2007, 2008, 2009, 2010 and 2011 we repurchased $48.4 million (2.4 million shares), $1.9 million (153 thousand shares), $7.6 million (389 thousand shares), $63.9 million (3.8 million shares), and $18.7 million (1.2 million shares) respectively, of common stock under our stock repurchase programs and in connection with our employee stock purchase, deferred compensation and stock incentive plans. (5) Same-store sales are presented on a 52 week fiscal basis for all years. Same-store sales are calculated on a weekly basis and exclude third-party liquidation sales. Generally, if a store is open the entire week in each of the last two years being compared, its sales are included in the same-store sales calculation for the week. Our Payless and Stride Rite childrens e-commerce businesses are considered stores in this calculation. PLG stores are included in the same-store sales calculation starting in fiscal year 2009. (6) The Company believes return on equity and return on net assets provide useful information regarding its profitability, financial condition and results of operations. (7) The Company uses return on invested capital as a means to measure its efficiency at allocating capital under its control toward profitable investments and the metric is a component of the long-term cash incentive award calculation for certain senior executives.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The following Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand Collective Brands, Inc., our operations and our present business environment. MD&A is provided as a supplement to and should be read in connection with our Consolidated Financial Statements and the accompanying notes thereto contained in Item 8 of this report. MD&A includes the following sections: Our Business a brief description of our business and key 2011 events. Consolidated Review of Operations an analysis of our consolidated results of operations for the three years presented in our Consolidated Financial Statements. Reporting Segment Review of Operations an analysis of our results of operations for the three years presented in our Consolidated Financial Statements for our four reporting segments: Payless Domestic, Payless International, PLG Wholesale and PLG Retail. Liquidity and Capital Resources an analysis of cash flows, aggregate financial commitments and certain financial condition ratios. Critical Accounting Policies a discussion of our critical accounting policies that involve a higher degree of judgment or complexity. This section also includes the impact of new accounting standards.

Our Business Collective Brands, Inc. consists of three lines of business: Payless ShoeSource (Payless), Collective Brands Performance + Lifestyle Group (PLG), and Collective Licensing. We operate a portfolio of brands through multiple selling channels including retail, wholesale, licensing and franchising. Payless is one of the worlds largest footwear retailers and is dedicated to providing incredible values of on-trend and validated styles of footwear and accessories. PLG markets products at wholesale and retail for children and adults under brand names that include Saucony®, Sperry Top-Sider®, Stride Rite® and Keds®. Collective Licensing is a youth lifestyle marketing and global licensing business within the Payless Domestic segment.

We measure the performance of our business using several metrics, but rely primarily on net sales, same-stores sales, operating profit (loss) from continuing operations, adjusted earnings before interest, income taxes, depreciation and amortization (Adjusted EBITDA), net debt and free cash flow (see Non-GAAP Financial Measures section). We also measure the performance of our business using our reporting segments net sales and operating (loss) profit (see Reporting Segment Review of Operations section).

Key 2011 Events In 2011, weak retail sales in Payless Domestic, particularly in the first three quarters of the year, drove down our overall results. Sales in our Payless Domestic segment decreased $86.4 million from 2010. At the same time, we had continued strong sales in our PLG Wholesale segment. In order to improve our Payless business, we initiated a strategic redirection based on a comprehensive and analytical review. While we have served, and will continue to serve, a wide array of customers, the cornerstone of the strategy is to re-engage with, and re-capture, budget conscious customers who have historically made up the largest portion of the Payless customer base. Beginning in the second half of 2011, we made meaningful changes to the Payless pricing and messaging to increase our relevance and reconnect with these customers.

Higher footwear product costs on like-products also negatively impacted our financial performance. The increase in like-product costs in 2011 was driven by higher commodity and labor costs that impacted all of our reporting segments. We expect like-product cost increases to continue in 2012. First quarter like-product costs are expected to increase a high-single digit percentage and second quarter increases are expected to be mid-single digits.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Several significant pre-tax charges also negatively impacted our results in 2011. These charges are summarized in the following table by location on the Consolidated Statement of (Loss) Earnings and by reporting segment:

Location on Consolidated Statement of (Loss) Payless Payless PLG PLG Earnings Domestic International Retail Wholesale Total (in millions) Q2 2011 increase in impairment of tangible assets Cost of sales $ 26.2 $ 2.5 $3.1 $ 0.7 $32.5 Impairment of trademarks Cost of sales 7.6 23.5 31.1 Impairment of goodwill Impairment of goodwill 10.0 10.0 CEO severance SG&A 10.0 10.0 Lease termination costs Cost of sales 9.3 0.5 0.8 10.6 Severance costs related to store closings SG&A 2.0 0.3 0.1 2.4 Impact of third-party store liquidations1 1.6 0.1 1.7 Strategic review expenses SG&A 3.4 0.4 3.8 Total $ 70.1 $ 3.4 $4.4 $ 24.2 $102.1

1 The impact of third-party store liquidations represents the impact on operating loss and impacts gross margin and SG&A on the Consolidated Statement of (Loss) Earnings.

The 2011 charges described in the table above represent the following: Q2 2011 increase in impairment of tangible assets: Due to a decline in our retail businesses, we recorded a $34.1 million non-cash tangible asset impairment charge in the second quarter of 2011. This charge represented a $32.5 million increase from the charge we recorded in the second quarter of 2010. Impairment of trademarks and impairment of goodwill: As a result of the decline in performance of our domestic retail businesses, we revised our financial projections related to certain trademarks and reporting units in the second quarter of 2011. These revisions indicated a potential impairment of our goodwill and intangible assets and, as such, we assessed the fair value of these items to determine if their book value exceeded their fair value. As a result of this assessment, we determined that the book value of certain indefinite-lived trademarks and goodwill exceeded their fair value and we recognized $31.1 million of pre-tax impairment charges for our indefinite-lived trademarks and $10.0 million of pre-tax impairment charges for goodwill in 2011. CEO severance: We recorded severance charges of $10.0 million related to the departure of our former Chief Executive Officer. These charges included a one-time cash payment of $6.8 million and the acceleration of share-based compensation expense related to outstanding awards of $3.2 million. Lease termination costs, severance related to store closings and impact of third party store liquidations: In 2011 we announced that, as part of our efforts to optimize the performance of our Payless and Stride Rite store fleet, we would close approximately 475 under-performing and low-volume, non-strategic stores over the next three years with approximately 350 of those closings coming in 2011. We closed 298 Payless stores in 2011 in the U.S., Canada and Puerto Rico and 54 Stride Rite Childrens locations. We took these actions to optimize the profitability of markets by removing many low sales volume stores that were cash flow negative or slightly positive but could not support the assortments and staffing that we believe our stores should offer. In fiscal 2010, the stores closed this year had sales of approximately $125 million. Once all of the approximately 475 stores are closed, we anticipate an annual improvement in operating profit between $18 million and $22 million including the benefit of estimated sales transfer to remaining locations from closed stores. Costs associated with this plan, which consist of lease termination costs, employee termination costs, and other exit costs, will be recorded at fair value when they are incurred. We estimate these costs will total

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents $20 million to $25 million of which $13.0 million was recorded in 2011; however, the ultimate financial impact of this plan is dependent upon the actual exit transactions. In 2011, we recorded $10.6 million of lease termination costs and $2.4 million of severance costs as part of this plan. Approximately 250 stores were operated by a third-party store liquidator as they closed. These third-party liquidation stores contributed $1.7 million to our operating loss for the year. Strategic review expenses: Our Board of Directors, together with management, is conducting a review of strategic and financial alternatives to further enhance shareholder value. We have recorded $3.8 million of pre-tax expenses associated with this strategic review.

In addition to the pre-tax adjustments described above, we also recognized a valuation allowance on domestic deferred tax assets that increased our provision for income taxes by $134.5 million in 2011.

Consolidated Review of Operations The following discussion summarizes the significant factors affecting consolidated operating results for the fiscal years ended January 28, 2012 (2011), January 29, 2011 (2010), and January 30, 2010 (2009). Each year contains 52 weeks of operating results. References to years relate to fiscal years rather than calendar years unless otherwise designated. Results for the past three years were as follows:

52 Weeks Ended % of % of % of 2011 Sales 2010 Sales 2009 Sales (dollars in millions, except per share) Net sales $3,461.7 100.0 % $3,375.7 100.0% $3,307.9 100.0% Cost of sales 2,432.2 70.3 2,174.5 64.4 2,166.9 65.5 Gross margin 1,029.5 29.7 1,201.2 35.6 1,141.0 34.5 Selling, general and administrative expenses 1,046.3 30.2 1,011.5 30.0 982.4 29.7 Impairment of goodwill 10.0 0.3 Restructuring charges 0.1 Operating (loss) profit from continuing operations (26.8 ) (0.8 ) 189.7 5.6 158.5 4.8 Interest expense 38.9 1.1 48.7 1.4 60.8 1.8 Interest income (0.4 ) (0.7 ) (1.1 ) Loss on early extinguishment of debt 0.5 1.7 1.2 Net (loss) earnings from continuing operations before income taxes (65.8 ) (1.9 ) 140.0 4.2 97.6 3.0 Provision for income taxes(1) 84.0 (127.7) 17.4 12.4 9.4 9.6 Net (loss) earnings from continuing operations (149.8 ) (4.3 ) 122.6 3.6 88.2 2.7 Income from discontinued operations, net of income taxes 0.1 Net (loss) earnings (149.8 ) (4.3 ) 122.6 3.6 88.3 2.7 Net earnings attributable to noncontrolling interests (10.4 ) (0.3 ) (9.8 ) (0.3 ) (5.6 ) (0.2 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) (4.6 )% $112.8 3.3 % $82.7 2.5 % Basic (loss) earnings per share attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.77 $1.29 Diluted (loss) earnings per share attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.75 $1.28 Return on equity, including discontinued operations(2) (19.5 )% 15.3 % 13.3 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Return on net assets, including discontinued operations(3) 2.4 % 9.5 % 8.5 % Return on invested capital, continuing operations(4) (4.5 )% 10.8 % 9.3 %

(1) Percent of sales columns for the provision for income taxes represents effective income tax rates.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents (2) Return on equity is computed as net (loss) earnings, including discontinued operations, divided by beginning shareowners equity attributable to Collective Brands, Inc. We believe that return on equity provides useful information regarding our profitability, financial condition and results of operations. (3) Return on net assets is computed as net (loss) earnings from continuing operations before income taxes plus discontinued operations, plus the loss on early extinguishment of debt, plus net interest expense and the interest component of operating leases, divided by beginning of year net assets, including present value of operating leases. We believe that return on net assets provides useful information regarding our profitability, financial condition and results of operations. (4) Return on invested capital is computed as operating (loss) profit from continuing operations, adjusted for income taxes at the applicable effective rate, divided by the average amount of long-term debt and shareowners equity. We use return on invested capital as a means to measure our efficiency at allocating capital under our control toward profitable investments. The metric is also a component of the long-term cash incentive award calculation for certain senior executives.

Net Earnings (Loss) Attributable to Collective Brands, Inc. Our 2011 net loss attributable to Collective Brands, Inc. was $160.2 million, or $2.66 per diluted share, compared to 2010 net earnings attributable to Collective Brands, Inc. of $112.8 million, or $1.75 per diluted share. The decrease in net earnings attributable to Collective Brands, Inc. was driven by the recognition of a valuation allowance recorded against our federal domestic net deferred tax assets ($134.5 million), as well as decreased gross margins primarily due to tangible ($32.5 million) and intangible asset impairment charges ($31.1 million), lease termination costs ($10.6 million), goodwill impairment ($10.0 million), increased selling, general and administrative expenses due to CEO and store closing severance ($12.4 million) and strategic review expenses ($3.8 million), partially offset by lower compensation-related expense ($13.1 million). Increased promotional activity and higher product costs also drove the decline from last year.

Our 2010 net earnings attributable to Collective Brands, Inc. was $112.8 million, or $1.75 per diluted share compared to 2009 net earnings attributable to Collective Brands, Inc. of $82.7 million, or $1.28 per diluted share. The increase in net earnings attributable to Collective Brands, Inc. was primarily driven by improved gross margins, higher net sales and lower interest expense, partially offset by increased selling, general and administrative expenses.

Net Sales Net sales at our retail stores are recognized at the time the sale is made to the customer. Net sales for wholesale and e-commerce transactions are recognized when title passes and the risks or rewards of ownership have transferred to the customer, based on the shipping terms. All sales are net of estimated returns and promotional discounts and exclude sales tax.

With the exception of total net sales, the table below summarizes net sales information for our retail stores for each of the last three fiscal years. Stores operated under franchise agreements are excluded from these calculations. Same-store sales are calculated on a weekly basis and exclude stores that closed with the services of a third-party liquidator. Generally, if a store is open the entire week in each of the last two years being compared, its sales are included in the same-store sales calculation for the week. Our Payless and Stride Rite childrens e-commerce net sales are included in the same-store sales calculation.

Percent increases (decreases) are as follows:

2011 2010 2009 Total net sales 2.5 % 2.0 % (3.9)% Same-store sales (2.7 ) (2.2) (2.3) Average selling price per unit (1.4 ) 0.1 4.1 Unit volume (2.1 ) (2.4) (6.2) Footwear average selling price per unit 3.2 1.4 6.1 Footwear unit volume (7.2 ) (4.8) (8.8) Non-footwear average selling price per unit (9.3 ) 3.4 5.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Please refer to the Reporting Segment Review of Operations section for the details of the changes in net sales for each of our reporting units.

Cost of Sales Cost of sales includes cost of merchandise sold and our buying, occupancy, warehousing and product movement costs, as well as depreciation of stores and distribution centers, net intellectual property litigation costs, tangible asset impairment charges, impairment of trademarks and lease termination costs.

Cost of sales was $2,432.2 million for 2011, up 11.9% from $2,174.5 million in 2010. The increase in cost of sales from 2010 to 2011 is primarily due to the impact of tangible and intangible asset impairment charges, lease termination costs, higher product costs and a greater mix of wholesale products, which have a higher cost of sales than our retail products.

Cost of sales was $2,174.5 million for 2010, up 0.4% from $2,166.9 million in 2009. The increase in cost of sales from 2009 to 2010 is primarily due to the impact of higher sales, offset by lower product costs in the first half of the year and lower occupancy costs in 2010 compared to 2009. Product costs were flat in the third quarter of 2010 compared to the third quarter 2009 and were higher in the fourth quarter of 2010 compared to the fourth quarter of 2009.

Gross Margin Gross margin rate for 2011 was 29.7% compared to a gross margin rate of 35.6% for 2010. The gross margin rate decreased principally due to the impact of intangible and tangible asset impairment charges, lease termination costs, higher product costs and increased promotional activity.

Gross margin rate for 2010 was 35.6% compared to a gross margin rate of 34.5% for 2009. The increase in gross margin rate is primarily due to lower product costs in the first half of the year and lower occupancy costs. Product costs were flat in the third quarter of 2010 compared to the third quarter 2009 and were higher in the fourth quarter of 2010 compared to the fourth quarter of 2009.

Selling, General and Administrative Expenses In 2011, selling, general and administrative expenses were $1,046.3 million, an increase of 3.4% from $1,011.5 million in the 2010 period. Selling, general and administrative expenses as a percentage of net sales were 30.2% in 2011 compared with 30.0% in 2010. The increase in SG&A expenses in 2011 compared to 2010 is primarily due to the impact of the severance costs of $12.4 million and continued marketing investments in the PLG Wholesale and Payless Domestic reporting segments, partially offset by the impact of lower compensation-related expenses.

In 2010, selling, general and administrative expenses were $1,011.5 million, an increase of 3.0% from $982.4 million in the 2009 period. Selling, general and administrative expenses as a percentage of net sales were 30.0% in 2010 compared with 29.7% in 2009. The increase of 0.3% as a percentage of net sales is primarily due to greater brand-building investments across the business to support wholesale and international expansion, as well as increases in payroll and related costs to facilitate the growth of our PLG business.

Impairment of Goodwill We assess goodwill for impairment annually and at any other date when events or changes in circumstances indicate that the book value of these assets may exceed their fair value. This assessment is performed at a reporting unit level. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. We

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents develop an estimate of the fair value of each reporting unit using both a market approach and an income approach. If potential for impairment exists, the fair value of the reporting unit is subsequently measured against the fair value of its underlying assets and liabilities, excluding goodwill, to estimate an implied fair value of the reporting units goodwill.

A change in events or circumstances, including a decision to hold an asset or group of assets for sale, a change in strategic direction, or a change in the competitive environment could adversely affect the fair value of one or more reporting units. In the second quarter of 2011, due to the departure of our former CEO and subsequent change in strategy, along with our commitment to close underperforming retail stores (which took place after the second quarter close but before our filing), we revised our financial projections related to certain reporting units. These circumstances indicated a potential impairment of our goodwill and, as such, we assessed the fair value of our goodwill to determine if its book value exceeded its fair value. We determined that the book value of our goodwill did exceed its fair value and we recorded an impairment charge of $10.0 million within the Payless Domestic reporting segment in the second quarter of 2011.

During the third quarter of 2011, we performed our required annual goodwill impairment test and concluded there was no additional impairment of goodwill.

Interest Expense, net Interest income and expense components were:

(dollars in millions) 2011 2010 2009 Interest expense $38.9 $48.7 $60.8 Interest income (0.4 ) (0.7 ) (1.1 ) Interest expense, net $38.5 $48.0 $59.7

The decline in interest expense in 2011 compared to 2010 is primarily a result of decreased borrowings on our Term Loan Facility and Senior Subordinated Notes and an average lower rate on our Term Loan Facility.

The decline in interest expense in 2010 compared to 2009 is primarily a result of decreased borrowings of $184.0 million on our Term Loan Facility and Senior Subordinated Notes and an average lower rate on our Term Loan Facility. The decline in interest income in 2010 compared to 2009 is primarily a result of lower interest rates on our invested cash balance.

Loss on Early Extinguishment of Debt In 2011, the loss on early extinguishment of debt relates to the acceleration of deferred debt costs and amortization of the discount on our Senior Subordinated Notes in proportion to the amounts extinguished. In 2010, the loss on early extinguishment of debt relates to the acceleration of deferred debt costs on our Term Loan Facility in proportion to the amounts extinguished. In 2009, the loss on early extinguishment of debt relates to the premium, in excess of par, paid to redeem a portion of our Senior Subordinated Notes, the acceleration of the discount on the Senior Subordinated Notes and the acceleration of deferred debt costs on both our Senior Subordinated Notes and our Term Loan Facility in proportion to the amounts extinguished.

Income Taxes The effective tax rate was a negative 127.7% in 2011 versus 12.4% in 2010. Our effective tax rate differs from the US statutory rate principally due to the impact of a valuation allowance recorded against our domestic net deferred tax assets which increased our provision for income taxes by $134.5 million, the impact of our operations conducted in jurisdictions with rates lower than the US statutory rate and the ongoing implementation of tax efficient business initiatives. The effective income tax rate reconciliation is depicted in Note 11 of the Consolidated Financial Statements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We recorded $75.8 million of net unfavorable discrete events in 2011, inclusive of recording a valuation allowance of $80.8 million against domestic deferred tax assets arising in prior years because of a change in circumstances that caused a change in judgment about the realization of the domestic deferred tax assets. The Company recorded $7.8 million of net favorable discrete events in 2010 relating primarily to the resolution of outstanding tax audits.

Our $65.8 million pre-tax loss was comprised of a $172.1 million domestic pre-tax loss, partially offset by foreign pre-tax income of $106.3 million. The reduction from the Companys federal statutory rate related to foreign earnings results primarily from its offshore entities in Asia (China, Hong Kong, Taiwan, and Vietnam) which source the majority of the Companys product and are subject to substantially lower local country income taxes. The Companys weighted average foreign effective tax rate for fiscal years 2011, 2010 and 2009 was 14.8%, 9.2% and 11.8%, respectively. The weighted average foreign effective tax rate is higher for 2011 due to payment of an audit settlement in Asia for years 2002 to 2009. Similarly, the rate differential on foreign earnings is lower than prior years due to the Asian audit settlement as well as US deferred taxes provided on certain foreign earnings which are not permanently reinvested.

Our estimate of uncertainty in income taxes is based on the framework established in income taxes accounting guidance. This guidance prescribes a recognition threshold and a measurement standard for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The recognition and measurement of tax benefits is often highly judgmental. Determinations regarding the recognition and measurement of a tax benefit can change as additional developments occur relative to the issue. Accordingly, our future results may include favorable or unfavorable adjustments to our unrecognized tax benefits.

We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits at January 28, 2012 will decrease by up to $2.3 million within the next 12 months due to potential settlements of on-going examinations with tax authorities and the potential lapse of the statutes of limitations in various taxing jurisdictions. To the extent that these tax benefits are recognized, the effective tax rate will be favorably impacted by up to $1.5 million.

The Company records valuation allowances against its deferred tax assets, when necessary, in accordance with the framework established in income taxes accounting guidance. Realization of deferred tax assets (such as net operating loss carryforwards) is dependent on future taxable earnings and is therefore uncertain. We assess the likelihood that our deferred tax assets in each of the jurisdictions in which we operate will be recovered from future taxable income. Deferred tax assets are reduced by a valuation allowance based upon an analysis of both positive and negative evidence, including, but not limited to, the consideration of operating results and other objectively verifiable evidence that is available. If our near-term forecasts are not achieved, we may be required to record additional valuation allowances against our deferred tax assets. This could have a material impact on our financial position and results of operations in a particular period. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude us from using the loss carryforwards or utilizing other deferred tax assets if we generate sufficient taxable income.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents In assessing the future realization of deferred tax assets for which a valuation allowance was not established, we concluded it is more likely than not that the assets will be realized. This conclusion was based in large part upon managements assessment that we will generate sufficient quantities of taxable income from offshore operations in future years in the appropriate tax jurisdictions. Further, a specific review of our foreign deferred tax assets was conducted with Canada being the most significant jurisdiction. Management has concluded that no valuation allowance is necessary on foreign deferred tax assets totaling $16.8 million. If near-term forecasts are not achieved, we may be required to record additional valuation allowances against our deferred tax assets. This could have a material impact on our financial position, and results of operations in a particular period.

The realizability of deferred tax assets will continue to be monitored quarterly. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude us from using our loss carryforwards or utilizing other deferred tax assets in the future. When the deferred tax assets currently subject to a valuation allowance are ultimately realized in the future, the benefit will be recorded in the Consolidated Statement of (Loss) Earnings, except for $23.1 million related to AOCI, which will be credited to Collective Brands, Inc. shareowners equity.

As of January 28, 2012, we have not provided tax on our cumulative undistributed earnings of foreign subsidiaries of approximately $244 million, because it is our intention to reinvest these earnings indefinitely. The calculation of the unrecognized deferred tax liability related to these earnings is complex and is not practicable. If earnings were distributed, we would be subject to U.S. taxes and withholding taxes payable to various foreign governments. Based on the facts and circumstances at that time, we would determine whether a credit for foreign taxes already paid would be available to reduce or offset the U.S. tax liability.

Net Earnings Attributable to Noncontrolling Interests Net earnings attributable to noncontrolling interests represent our joint venture partners share of net earnings or losses on applicable international operations.

Non-GAAP Financial Measures The Company uses certain non-GAAP financial measures to assess performance. These measures are included as a complement to results provided in accordance with GAAP because we believe these non-GAAP financial measures help us explain underlying performance trends in our business and provide useful information to both management and investors. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We use adjusted earnings before interest, income taxes, depreciation and amortization (adjusted EBITDA) as a non-GAAP performance measure because we believe it reflects the Companys core operating performance by excluding certain charges and the impact of the effect of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs. The following table presents the reconciliation of net earnings to adjusted EBITDA:

(dollars in millions) 2011 2010 2009 Net (loss) earnings $(149.8) $122.6 $88.3 Earnings from discontinued operations, net of tax (0.1 ) Provision for income taxes 84.0 17.4 9.4 Net interest expense (including loss on early extinguishment of debt) 39.0 49.7 60.9 Depreciation and amortization 129.3 135.4 139.9 Q2 2011 increase in impairment of tangible assets 32.5 Impairment of tradenames 31.1 Impairment of goodwill 10.0 CEO severance 10.0 Lease termination costs 10.6 Severance costs related to store closings 2.4 Impact of third-party store liquidations 1.7 Strategic review expenses 3.8 Adjusted EBITDA $204.6 $325.1 $298.4

The decrease in adjusted EBITDA in 2011 compared to 2010 is primarily driven by lower gross margins and an increase in selling, general and administrative expenses.

The increase in Adjusted EBITDA in 2010 compared to 2009 is primarily driven by improvement in gross margin and higher sales, partially offset by an increase in selling, general and administrative expenses.

We also use free cash flow, which is a non-GAAP performance measure, because we believe it provides useful information about our liquidity, our ability to make investments and to service debt. Free cash flow is defined as cash flow provided by operating activities less capital expenditures. The following table presents our calculation of free cash flow:

(dollars in millions) 2011 2010 2009 Cash flow provided by operating activities $45.7 $271.5 $307.6 Less: Capital expenditures 98.9 97.6 84.0 Free cash flow $(53.2) $173.9 $223.6

The decrease in free cash flow in 2011 compared to 2010 is primarily related to a decrease in cash flow provided by operating activities as a result of decreases in cash generated from net earnings and annualizing the extension of payment terms which reduced the favorable impact of changes to accounts payable compared to previous years.

The decrease in free cash flow in 2010 compared to 2009 is primarily driven by lower cash flow provided by operating activities. The decrease in cash provided by operating activities was driven by changes in the components of working capital due to increases in inventories (primarily due to more units at year-end 2010 versus lower-than-normal units at year-end 2009, a greater mix of higher-cost products at Payless and PLG, and higher costs per unit) and accounts receivable, partially offset by the impact of increases in accounts payable due to the extension of payment terms to our vendors and increases in net earnings.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Finally, we use net debt, which is a non-GAAP performance measure, because we believe it provides useful information about the relationship between our long-term debt obligations and our cash and cash equivalents balance at a point in time. Net debt is defined as total debt less cash and cash equivalents. The following table presents our calculation of net debt:

(dollars in millions) 2011 2010 2009 Total debt $609.9 $664.5 $849.3 Less: cash and cash equivalents 181.3 324.1 393.5 Net debt $428.6 $340.4 $455.8

The increase in net debt as of 2011 compared to 2010 was primarily due to a decreased cash balance in 2011 driven by unfavorable working capital changes related to accrued expenses and lower earnings.

The decrease in net debt as of 2010 compared to 2009 was primarily due to our use of operating cash flow to pay down debt in 2010.

Reporting Segment Review of Operations We operate our business using four reporting segments: Payless Domestic, Payless International, PLG Retail and PLG Wholesale. We evaluate the performance of our reporting segments based on segment net sales and segment operating profit (loss) from continuing operations as a measure of overall performance of the Company. The following table reconciles reporting segment net sales to consolidated net sales and operating profit (loss) from continuing operations to our consolidated operating profit (loss) from continuing operations for the three years presented in our Consolidated Financial Statements:

(in millions) 2011 2010 2009 Net sales: Payless Domestic $1,972.9 $2,059.3 $2,153.2 Payless International 469.6 460.3 422.4 PLG Wholesale 778.6 628.4 513.9 PLG Retail 240.6 227.7 218.4 Net sales $3,461.7 $3,375.7 $3,307.9 Operating (loss) profit from continuing operations: Payless Domestic $(96.0 ) $75.2 $98.1 Payless International 32.6 55.6 34.1 PLG Wholesale 43.9 61.7 30.0 PLG Retail (7.3 ) (2.8 ) (3.7 ) Operating (loss) profit from continuing operations $(26.8 ) $189.7 $158.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents The following table presents the change in store count during 2011, 2010 and 2009 by reporting segment. We consider a store relocation to be both a store opening and a store closing.

Payless Payless PLG Domestic International Retail Total Fiscal year ended January 28, 2012 Beginning store count 3,794 667 383 4,844 Stores opened 45 31 15 91 Stores closed (340 ) (37 ) (62 ) (439 ) Ending store count 3,499 661 336 4,496 Fiscal year ended January 29, 2011 Beginning store count 3,827 643 363 4,833 Stores opened 43 42 27 112 Stores closed (76 ) (18 ) (7 ) (101 ) Ending store count 3,794 667 383 4,844 Fiscal year ended January 30, 2010 Beginning store count 3,900 622 355 4,877 Stores opened 29 44 11 84 Stores closed (102 ) (23 ) (3 ) (128 ) Ending store count 3,827 643 363 4,833

As of January 28, 2012, we franchised 143 Payless and 20 PLG Retail stores compared to 62 Payless and 8 PLG Retail stores as of January 29, 2011. We had no franchised Payless or PLG Retail stores as of January 30, 2010. Franchised stores are not reflected in the table above.

For the Payless Domestic segment, our store activity plan for fiscal year 2012 includes a net decrease of approximately 65 stores. Including relocations as both a store opening and a store closing, this includes approximately 25 new stores and 90 store closings. For the Payless International segment, our store activity plan for fiscal year 2012 includes a net increase of approximately 5 stores. Including relocations as both a store opening and a store closing, this includes approximately 20 new stores and 15 store closings. For the PLG Retail segment, our store activity plan for fiscal year 2012 includes a net increase of approximately 10 stores. Including relocations as both a store opening and a store closing, this includes approximately 20 new stores and 10 store closings. We review our store activity plan at least on an annual basis.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Payless Domestic Segment Operating Results The Payless Domestic reporting segment is comprised primarily of operations from our domestic retail stores under the Payless ShoeSource name, the Companys sourcing operations and Collective Licensing. The following table presents selected financial data for our Payless segment for each of the past three fiscal years:

Percent change 2011 2010 2009 2011 vs. 2010 2010 vs. 2009 (dollars in millions) Net sales $1,972.9 $2,059.3 $2,153.2 (4.2 )% (4.4 )% Operating (loss) profit from continuing operations $(96.0 ) $75.2 $98.1 NM *% (23.3 )% Operating (loss) profit from continuing operations as % of net sales (4.9 )% 3.7 % 4.6 %

* NM = not meaningful

For the fiscal year 2011, net sales for the Payless Domestic reporting segment decreased 4.2% or $86.4 million, to $1,972.9 million, from 2010. The sales decline for 2011 was primarily due to higher retail prices that did not provide a compelling value to our core customer. Our failure to connect with our core customer, primarily in the first three quarters of the year, resulted in Payless Domestics comparable store sales declining 3.6% for the year. Operating fewer stores also contributed to the Payless Domestic decline in sales.

For the fiscal year 2010, net sales for the Payless Domestic reporting segment decreased 4.4% or $93.9 million, to $2,059.3 million, from 2009. The decrease in net sales from 2009 to 2010 is primarily due to comparable store sales declines driven by weaker economic conditions, lower traffic and fewer stores. These declines were partially offset by gains in fitness footwear and accessories.

As a percentage of net sales, operating loss from continuing operations was 4.9% for 2011 compared to operating profit of 3.7% for 2010. The percentage decrease is primarily driven by an increase in tangible asset impairments, impairment of goodwill of $10.0 million, impairment of trademarks of $7.6 million, CEO severance of $10.0 million, lease termination costs of $9.3 million, and strategic review expenses of $3.4 million. Higher product costs this year compared to last year also drove the percent decrease.

As a percentage of net sales, operating profit from continuing operations decreased to 3.7% for 2010 compared to 4.6% for 2009. The percentage decrease is primarily due to the deleveraging of fixed costs due to lower net sales as well as increased marketing investments.

Payless International Segment Operating Results Our Payless International reporting segment includes retail operations under the Payless ShoeSource name in Canada, the Central and South American Regions, Puerto Rico and the U.S. Virgin Islands, as well as franchising arrangements under the Payless ShoeSource name. For all years presented, our franchising operations were not significant. As a percent of net sales, operating profit from continuing operations in the Payless International segment is higher than in the Payless Domestic segment primarily due to lower payroll-related expenses.

Percent change 2011 2010 2009 2011 vs. 2010 2010 vs. 2009 (dollars in millions) Net sales $469.6 $460.3 $422.4 2.0 % 9.0 % Operating profit from continuing operations $32.6 $55.6 $34.1 (41.4 )% 63.0 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operating profit from continuing operations as % of net sales 6.9 % 12.1 % 8.1 %

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents For the fiscal year 2011, net sales for the Payless International reporting segment increased 2.0% or $9.3 million, to $469.6 million, from 2010. Net sales increases for the Payless International reporting segment were driven by Latin America and were partially offset by sales declines in Puerto Rico and Canada. Our comparable store sales for Payless International were down 0.9% for the year.

For the fiscal year 2010, net sales for the Payless International reporting segment increased 9.0% or $37.9 million, to $460.3 million, from 2009. Net sales for the Payless International reporting segment increased due to higher sales in Central and South America, driven by positive comparable store sales and higher store count. Our sales in Canada were impacted by favorable foreign exchange rates of $15.7 million.

As a percentage of net sales, operating profit from continuing operations decreased to 6.9% for 2011 compared to 12.1% for 2010. The percentage decrease is primarily due to tangible asset impairment charges, increased promotional activity and higher product costs this year compared to last year. The operating profit decline from 2010 to 2011 was primarily driven by Canada and Puerto Rico where higher retail prices did not provide a compelling value to our core customer.

As a percentage of net sales, operating profit from continuing operations increased to 12.1% for 2010 compared to 8.1% in the for 2009. The percentage increase is primarily due to increased gross margin rates in all regions and the leveraging of fixed costs due to higher net sales.

PLG Wholesale Segment Operating Results The PLG Wholesale reporting segment is comprised of PLGs wholesale operations, which primarily includes the Saucony, Sperry Top-Sider, Stride Rite and Keds brands.

Percent change 2011 2010 2009 2011 vs. 2010 2010 vs. 2009 (dollars in millions) Net sales $778.6 $628.4 $513.9 23.9 % 22.3 % Operating profit from continuing operations $43.9 $61.7 $30.0 (28.8 )% 105.7 % Operating profit from continuing operations as % of net sales 5.6 % 9.8 % 5.8 %

For the fiscal year 2011, net sales for the PLG Wholesale reporting segment increased 23.9% or $150.2 million, to $778.6 million, from 2010. The increase in net sales is due to global gains in the Sperry Top-Sider, Saucony, and Stride Rite brands.

For the fiscal year 2010, net sales for the PLG Wholesale reporting segment increased 22.3% or $114.5 million, to $628.4 million, from 2009. The increase in net sales was driven primarily by higher sales for Sperry Top-Sider and Saucony due to increased demand for these brands.

As a percentage of net sales, operating profit from continuing operations decreased to 5.6% for 2011 compared to 9.8% in 2010. The percentage decrease was primarily due to impairment of trademarks of $23.5 million, higher product costs, and higher marketing costs, offset by the leveraging of fixed costs due to higher net sales.

As a percentage of net sales, operating profit from continuing operations increased to 9.8% for 2010 compared to 5.8% in 2009. The percentage increase was primarily due to the leveraging of fixed costs due to higher net sales, offset by higher product, freight and marketing costs.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents PLG Retail Segment Operating Results The PLG Retail reporting segment is comprised of operations from PLGs owned Stride Rite childrens stores, PLGs outlet stores, store-in-stores at select Macys Department Stores and Sperry Top-Sider stores.

Percent change 2011 2010 2009 2011 vs. 2010 2010 vs. 2009 (dollars in millions) Net sales $240.6 $227.7 $218.4 5.7 % 4.3 % Operating loss from continuing operations $(7.3 ) $(2.8 ) $(3.7 ) 160.7 % (24.3 )% Operating loss from continuing operations as % of net sales (3.0 )% (1.2 )% (1.7 )%

For fiscal year 2011, net sales for the PLG Retail reporting segment increased 5.7% or $12.9 million, to $240.6 million, from 2010. The increase in net sales was primarily due to the contribution of the Sperry retail stores and a 1.8% comparable store sales increase.

For fiscal year 2010, net sales for the PLG Retail reporting segment increased 4.3% or $9.3 million, to $227.7 million, from 2009. The increase in net sales was due to an increase in the number of stores, offset by lower comparable store sales of 1.6%.

As a percentage of net sales, operating loss from continuing operations increased to 3.0% for 2011 compared to 1.2 % for 2010. The percentage increase was primarily due the increase in asset impairment charges and higher product costs in 2011 compared to 2010.

As a percentage of net sales, operating loss from continuing operations decreased to 1.2% for 2010 compared to 1.7 % for 2009. Operating loss as a percentage of net sales was positively impacted by selling, general and administrative expense improvement initiatives and fewer markdowns.

Liquidity and Capital Resources Our cash position tends to be higher in June as well as September to October, due primarily to the seasonality of our business, which is impacted by the cash received for sales during Easter and back-to-school, respectively. Our cash position tends to be lowest around February to March when Easter inventories are built-up but not yet sold. Any materially adverse change in customer demand, fashion trends, competitive market forces or customer acceptance of our merchandise mix and retail locations, uncertainties related to the effect of competitive products and pricing, risks associated with foreign global sourcing or economic conditions worldwide could affect our ability to continue to fund our needs from business operations. Internally generated cash flow from operations has been our primary source of cash and we believe projected operating cash flows and current credit facilities will be adequate to fund our working capital requirements, scheduled debt repayments, and to support the development of our short-term and long-term operating strategies. Substantially all of our real estate is financed through operating leases.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We ended 2011 with a cash and cash equivalents balance of $181.3 million, a decrease of $142.8 million from 2010. Our decrease in cash and cash equivalents from 2010 is primarily driven by lower operating results, voluntary early debt repayments of $50.0 million, capital expenditures and working capital requirements, primarily accounts receivable and accrued expenses. Significant sources and (uses) of cash are summarized below:

(dollars in millions) 2011 2010 2009 Net (loss) earnings $(149.8) $122.6 $88.3 Depreciation and amortization 131.7 138.2 143.2 Other non-cash items 183.3 36.7 36.2 Working capital (increases) decreases (102.3) (16.8 ) 64.6 Other operating activities (17.2 ) (9.2 ) (24.7 ) Cash flow provided by operating activities 45.7 271.5 307.6 Payments for capital expenditures (98.9 ) (97.6 ) (84.0 ) Other investing activities (1.4 ) (16.2 ) Cash flow used in investing activities (100.3) (97.6 ) (100.2) Net (purchases) issuances of common stock (16.9 ) (53.2 ) 0.6 Payments of debt and deferred financing costs (56.9 ) (185.2) (67.0 ) Net distributions to noncontrolling interests (13.2 ) (7.7 ) (0.7 ) Issuance of debt 2.1 Cash flow used in financing activities (87.0 ) (246.1) (65.0 ) Effect of exchange rate changes on cash (1.2 ) 2.8 1.8 (Decrease) increase in cash and cash equivalents $(142.8) $(69.4 ) $144.2

As of January 28, 2012, our foreign subsidiaries and joint ventures had $134.7 million in cash located in financial institutions outside of the United States. A majority of this cash represents undistributed earnings of our foreign subsidiaries, which are indefinitely reinvested. In the event of a distribution to the United States, those earnings could be subject to United States federal and state income taxes, net of foreign tax credits.

Cash Flow Provided by Operating Activities Cash flow from operations was $45.7 million in 2011 compared to $271.5 million in 2010 and $307.6 million in 2009. The change in cash flow from operations from 2011 compared with 2010 is primarily due to lower cash generated from net earnings and decreases in accounts payable and accrued expenses compared to 2010. The decrease in net earnings was offset by certain non-cash charges primarily related to the recognition of our valuation allowance and tangible and intangible asset impairments. The decrease in the cash flow provided by accounts payable is due to annualizing the extension of payment terms which reduced the favorable impact in 2011 compared to 2010. The decrease in accrued expenses is primarily due to lower variable compensation related accruals.

The change in cash flow from operations from 2010 compared with 2009 is primarily due to changes in working capital due to increases in inventories and accounts receivable; offset by increases in accounts payable and net earnings. The increase in inventories was driven by more units at year-end 2010, returning them to a more normal year-end level, a greater mix of higher-cost products at Payless and PLG, and higher costs per unit. The increase in accounts receivable was due to revenue growth in our PLG Wholesale reporting segment. The increase in accounts payable is primarily due to the extension of payment terms with our merchandise vendors.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents We contributed $0.4 million, $1.6 million and $9.5 million to the PLG pension plan in 2011, 2010, and 2009, respectively. We plan on making $4.0 million in contributions in 2012. Our contributions in 2012 and beyond will depend upon market conditions, interest rates and other factors and may vary significantly in future years based upon the plans funded status. We believe our internal cash flow will finance all of these future contributions.

Cash Flow Used in Investing Activities In 2011, our capital expenditures totaled $98.9 million. Capital expenditures for new and relocated stores were $26.0 million, capital expenditures to remodel existing stores were $36.6 million, capital expenditures for information technology hardware and systems development were $26.3 million, capital expenditures for supply chain were $2.7 million and capital expenditures for other necessary improvements including corporate expenditures were $7.3 million. We expect that cash paid for capital expenditures during 2012 will be approximately $80 million to $85 million. We intend to use internal cash flow from operations and available financing from the Amended Revolving Loan Facility, if necessary, to finance all of these capital expenditures. We also acquired certain intangible assets during 2011, which totaled $1.4 million.

In 2010, our capital expenditures totaled $97.6 million. Capital expenditures for new and relocated stores were $24.5 million, capital expenditures to remodel existing stores were $21.1 million, capital expenditures for information technology hardware and systems development were $33.3 million, capital expenditures for supply chain were $4.7 million and capital expenditures for other necessary improvements including corporate expenditures were $14.0 million.

In 2009, our capital expenditures totaled $84.0 million. Capital expenditures for new and relocated stores were $23.7 million, capital expenditures to remodel existing stores were $20.4 million, capital expenditures for information technology hardware and systems development were $27.2 million, capital expenditures for supply chain were $5.0 million and capital expenditures for other necessary improvements including corporate expenditures were $7.7 million. We also acquired certain trademarks, including Above the Rim, during 2009.

Cash Flow Used in Financing Activities The Company has made the following common stock repurchases:

2011 2010 2009 (dollars in millions, shares in thousands) Dollars Shares Dollars Shares Dollars Shares Stock repurchase program $14.9 993 $59.8 3,626 $ 6.0 274 Employee stock purchase, deferred compensation and stock incentive plans 3.8 212 4.1 208 1.6 115 $18.7 1,205 $63.9 3,834 $ 7.6 389

On August 17, 2007, we entered into a $725 million term loan (the Term Loan Facility) and a $350 million Amended and Restated Loan and Guaranty Agreement (the Revolving Loan Facility). The Term Loan Facility ranks pari passu in right of payment and have the lien priorities specified in an intercreditor agreement executed by the administrative agent to the Term Loan Facility. On August 16, 2011, we amended our $350 million Revolving Loan Facility with a $300 million Second Amended and Restated Loan and Guaranty Agreement (Amended Revolving Loan Facility and collectively with the Term Loan Facility, the Loan Facilities). The Loan Facilities are senior secured loans guaranteed by substantially all of the assets of the borrower and the guarantors, with the Amended Revolving Loan Facility having first priority in accounts receivable, inventory and certain related assets and the Term Loan Facility having first priority in substantially all of the borrowers and the guarantors remaining assets, including intellectual property, the capital stock of

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents each domestic subsidiary, any intercompany notes owned by the borrower and the guarantors, and 66% of the stock of non-U.S. subsidiaries directly owned by borrower or a guarantor.

The Term Loan Facility will mature on August 17, 2014. The Term Loan Facility will amortize quarterly in annual amounts of 1.0% of the original amount, reduced ratably by any prepayments, with the final installment payable on the maturity date. The Term Loan Agreement provides for customary mandatory prepayments, subject to certain exceptions and limitations and in certain instances, reinvestment rights, from (a) the net cash proceeds of certain asset sales, insurance recovery events and debt issuances, each as defined in the Term Loan Agreement, and (b) 25% of excess cash flow, as defined in the Term Loan Agreement, subject to reduction. The mandatory prepayment is not required if the total leverage ratio, as defined in the Term Loan Agreement, is less than 2.0 to 1.0 at fiscal year end. Based on our excess cash flow as of January 28, 2012, we are not required to make such a mandatory prepayment. Loans under the Term Loan Facility will bear interest at the Borrowers option, at either (a) the Base Rate as defined in the Term Loan Facility agreement plus 1.75% per annum or (b) the Eurodollar (LIBOR-indexed) Rate plus 2.75% per annum, with such margin to be agreed for any incremental term loans.

In 2010 and 2009, not including our required quarterly payments, we repaid $178.0 million and $18.0 million of our outstanding Term Loan Facility balance, respectively. We made no repayments, other than our required quarterly payments, on our Term Loan Facility balance in 2011. The balance remaining on our Term Loan Facility as of January 28, 2012 was $484.4 million.

On August 24, 2007, we entered into an interest rate swap arrangement for $540 million to hedge a portion of our variable rate Term Loan Facility. The interest rate swap provides for a fixed interest rate of approximately 7.75%, portions of which mature on a series of dates through May of 2012. The balance of the Term Loan Facility that is hedged under the interest rate swap is $90 million as of the end of 2011. This derivative instrument is designated as a cash flow hedge for accounting purposes.

The Amended Revolving Loan Facility matures on August 16, 2016 and bears interest at the London Inter-Bank Offer Rate (LIBOR), plus a variable margin of 1.75% to 2.25% or the base rate as defined in the agreement. The Amended Revolving Loan Facility provides increased flexibility for investments, incurrence of indebtedness and restricted payments including prepayments on our Senior Subordinated Notes, subject to excess line availability tests. The facility will be available as needed for general corporate purposes. As of January 28, 2012 the borrowing base on our Amended Revolving Loan Facility was $300.0 million less $28.6 million in outstanding letters of credit or $271.4 million. We did not have any borrowings on our Revolving Loan Facility at any time during 2011.

In July 2003, we sold $200.0 million of 8.25% Senior Subordinated Notes (the Senior Subordinated Notes) for $196.7 million, due 2013. The discount of $3.3 million is being amortized to interest expense over the life of the Notes. The Notes are guaranteed by all of our domestic subsidiaries. Interest on the Notes is payable semi-annually. We may, on any one or more occasions, redeem all or a part of the Notes at 100% of their face value, plus accrued and unpaid interest, if any, on the Senior Subordinated Notes redeemed.

In 2011 and 2009, we redeemed $50.0 million and $23.0 million of our outstanding Senior Subordinated Notes, respectively. We made no such redemptions in 2010. The balance remaining on our Senior Subordinated Notes as of January 28, 2012 was $125.0 million, which is recorded net of a $0.4 million discount. We are subject to financial covenants under our Loan Facilities. We have a financial covenant under our Term Loan Facility agreement that requires us to maintain, on the last day of each fiscal quarter, a total leverage ratio of not more than 4.0 to 1. As of January 28, 2012 our leverage ratio, as defined in our Term Loan Facility agreement, was 2.6 to 1 and we were in compliance with all of our covenants. We expect, based on our current financial projections, to be in compliance with our covenants for the next twelve months.

The Loan Facilities and the Senior Subordinated Notes contain other various covenants, including those that may limit our ability to pay dividends, repurchase stock, accelerate the retirement of debt or make certain investments.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Financial Commitments Our financial commitments as of January 28, 2012, are described below:

Cash Payments Due by Fiscal Year Less than More than Total One Year 1-3 Years 3-5 Years Five Years (dollars in millions) Senior Subordinated Notes (including unamortized discount) $125.0 $ $125.0 $ $ Term Loan Facility 484.4 5.0 479.4 Capital-lease obligations (including interest) 1.4 0.1 0.3 0.3 0.7 Operating lease obligations(1) 1,018.1 252.1 364.6 204.7 196.7 Interest on long-term debt(2) 64.0 26.5 37.5 Royalty obligations(3) 80.9 10.6 18.6 10.4 41.3 Pension obligations(4) 84.4 7.7 16.0 17.2 43.5 Service agreement obligations(5) 19.2 5.6 9.6 4.0 Employment agreement obligations(6) 21.2 12.6 8.6 Total $1,898.6 $320.2 $1,059.6 $236.6 $ 282.2

(1) We lease substantially all of our stores and are committed to making lease payments over varying lease terms. Operating lease obligations represent the total lease obligations due to landlords, including obligations related to closed stores, as well as our obligations related to leases that we have sublet. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of lease obligations includes renewal option periods. (2) Interest on long-term debt includes the expected interest payments on our 8.25% Senior Subordinated Notes, the portion of our Term Loan Facility that is fixed at approximately 7.75% under our interest rate swap and the unhedged portion of our Term Loan Facility that varies based on LIBOR rates. The interest rates used for the unhedged portion of our Term Loan Facility were based on our estimate of the forward LIBOR rate curve as of January 28, 2012. (3) Our royalty obligations consist of minimum royalty payments for the purchase of branded merchandise. (4) Our pension obligations consist of projected pension payments related to our pension plans. (5) Our service agreement obligations consist of minimum payments for services that we cannot avoid without penalty. (6) Our employment agreement obligations consist of minimum payments to certain of our executives and assume bonus target payouts are met.

Amounts not reflected in the table above: We issue cancelable purchase orders to various vendors for the purchase of our merchandise. As of January 28, 2012, we had merchandise purchase obligations in the amount of $301.8 million for which we will likely take delivery.

Our liability for unrecognized tax benefits, excluding interest and penalties, is $31.8 million as of January 28, 2012. We are unable to make a reasonably reliable estimate of the amount and period of related future payments on this balance.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Financial Condition Ratios A summary of key financial information for the periods indicated is as follows:

2011 2010 2009 Debt-capitalization Ratio* 48.6% 44.7% 53.6%

* Debt-to-capitalization has been computed by dividing total debt by capitalization. Total debt is defined as long-term debt including current maturities, notes payable and borrowings under the revolving line of credit, if applicable. Capitalization is defined as total debt and shareowners equity. The debt-to-capitalization ratio, including the present value of future minimum rental payments under operating leases as debt and as capitalization, was 70.3%, 66.7%, and 72.3%, respectively, for the periods referred to above.

The increase in the debt-capitalization ratio from 2010 to 2011 is primarily due to a decrease in shareowners equity due to a net loss attributable to Collective Brands, Inc.

The decrease in the debt-capitalization ratio from 2009 to 2010 is primarily due to a lower debt balance as a result of our early extinguishment of debt and an increase in shareowners equity due to increased earnings attributable to Collective Brands, Inc.

Critical Accounting Policies MD&A is based upon our Consolidated Financial Statements, which were prepared in accordance with accounting principles generally accepted in the United States of America. These principles require us to make estimates and assumptions that affect the reported amounts in the Consolidated Financial Statements and the notes thereto. Actual results may differ from these estimates, and such differences may be material to the Consolidated Financial Statements. We believe that the following critical accounting policies involve a higher degree of judgment or complexity. See the Notes to our Consolidated Financial Statements for a complete discussion of our significant accounting policies.

Inventories Merchandise inventories in our stores are valued by the retail method and are stated at the lower of cost, determined using the first- in, first-out (FIFO) basis, or market. Prior to shipment to a specific store, inventories are valued at the lower of cost using the FIFO basis, or market. The retail method is widely used in the retail industry due to its practicality. Under the retail method, cost is determined by applying a calculated cost-to-retail ratio across groupings of similar items, known as departments. As a result, the retail method results in an averaging of inventory costs across similar items within a department. The cost-to-retail ratio is applied to ending inventory at its current owned retail valuation to determine the cost of ending inventory on a department basis. Current owned retail represents the retail price for which merchandise is offered for sale on a regular basis, reduced for any permanent or clearance markdowns. As a result, the retail method normally results in an inventory valuation that is lower than a traditional FIFO cost basis.

Inherent in the retail method calculation are certain significant management judgments and estimates including markdowns and shrinkage, which can significantly impact the owned retail and, therefore, the ending inventory valuation at cost. Specifically, the failure to take permanent or clearance markdowns on a timely basis can result in an overstatement of cost under the retail method. We believe that our application of the retail method reasonably states inventory at the lower of cost or market.

Wholesale inventories are valued at the lower of cost or market using the FIFO method.

We make ongoing estimates relating to the net realizable value of inventories, based upon our assumptions about future demand and market conditions. If we estimate that the net realizable value of our inventory is less

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents than the cost of the inventory recorded on our books, we reduce inventory to the estimated net realizable value. If changes in market conditions result in reductions in the estimated net realizable value of our inventory below our previous estimate, we would increase our reserve in the period in which we made such a determination. We have continually managed these risks in the past and believe we can successfully manage them in the future. However, our revenues and operating margins may suffer if we are unable to effectively manage these risks.

Property and Equipment We evaluate our stores on a quarterly basis to determine if their assets are recoverable. Our primary indicator that store assets may not be recoverable is if a stores projected future undiscounted cash flows are less than the carrying amount of the stores assets. The underlying estimates of cash flows include estimates of future net sales, gross margin rates and store expenses as well as any potential for changes related to occupancy costs, store closures and transfer sales. These assumptions are based upon the stores past and expected future performance. An indicator of impairment may also exist if we commit to a plan to close stores. If an indicator of impairment exists, we model estimated future cash flows on a store-by-store basis and compare the present value, using an appropriate discount rate, of these cash flows to the carrying amount of the assets. An impairment loss is recognized when the carrying amount of the stores assets exceeds their fair value.

Our impairment calculations require us to apply judgment in estimating future net sales, gross margin rates and store expenses as well as any potential for changes related to occupancy costs, store closures and transfer sales. We also apply judgment in estimating asset fair values, including the selection of an appropriate discount rate. If we do not meet our projections, we may incur significant impairment charges in future periods.

Defined Benefit Plans The Company has defined benefit pension plans. One of the plans is frozen and no longer accrues future retirement benefits. Major assumptions used in the accounting for the other employee benefit plan include the discount rate, expected return on plan assets and rate of increase in employee compensation levels. Assumptions are determined based on our data and appropriate market indicators, and are evaluated each year as of the plans measurement date. A change in any of these assumptions would have an effect on net periodic pension and post-retirement benefit costs reported in the Consolidated Financial Statements.

We use a cash flow matching approach for determining the appropriate discount rate for the defined benefit pension plan. The approach is derived from U.S. Treasury rates, plus an option-adjusted spread varying by maturity, to derive hypothetical Aa corporate bond rates. The calculation of pension expense is dependent on the determination of the assumptions used. A 100 basis point decrease in the discount rate and a 100 basis point decrease in the expected long-term return on assets would increase the Companys annual pension expense by $1.0 million and $0.7 million, respectively.

Accounting for Taxes Our estimate of uncertainty in income taxes is based on the framework established in income taxes accounting guidance. This guidance prescribes a recognition threshold and a measurement standard for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. The recognition and measurement of tax benefits is often highly judgmental. Determinations regarding the recognition and measurement of a tax benefit can change as additional developments occur relative to the issue. Accordingly, our future results may include favorable or unfavorable adjustments to our unrecognized tax benefits.

We record valuation allowances against our deferred tax assets, when necessary, in accordance with the framework established in income taxes accounting guidance. Realization of deferred tax assets (such as net operating loss carryforwards) is dependent on future taxable earnings and is therefore uncertain. We assess the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents likelihood that our deferred tax assets in each of the jurisdictions in which we operate will be recovered from future taxable income. Deferred tax assets are reduced by a valuation allowance to recognize the extent to which, more likely than not, the future tax benefits will not be realized. If our near-term forecasts are not achieved, we may be required to record additional valuation allowances against our deferred tax assets. This could have a material impact on our financial position and results of operations in a particular period.

Our current year results generated a three year cumulative pre-tax loss in our domestic jurisdiction. The cumulative loss resulted in a requirement to record a non-cash valuation allowance on domestic deferred tax assets of $105.7 million during the third quarter of 2011, and $33.1 million in the fourth quarter of 2011, as realization of the deferred tax assets was not more likely than not. Of the $138.8 million increase in domestic valuation allowance during 2011, $80.8 million relates to assets established in a prior year, and $58.0 million relates to deferred tax assets established in the current year. Our total valuation allowance at January 28, 2012 is $155.0 million comprised of the domestic valuation allowance of $149.0 million and a foreign valuation allowance of $6.0 million relating primarily to net operating losses in countries where a pattern of profitability has not yet been established. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude us from using the loss carryforwards or utilizing other deferred tax assets if we generate sufficient taxable income. If the deferred tax assets currently subject to a valuation allowance are ultimately realized in the future, the benefit will likely be recorded in the Consolidated Statement of (Loss) Earnings, except for $23.1 million related to accumulated other comprehensive (loss) income (AOCI), which will be credited to Collective Brands, Inc. shareowners equity. As of January 28, 2012, we have $16.8 million of net deferred tax assets that have not been reduced by a valuation allowance.

Accounting for Goodwill We assess goodwill for impairment annually and at any other date when events or changes in circumstances indicate that the book value of our reporting units may exceed their fair value. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. We have five reporting units for the purposes of assessing goodwill: Payless Domestic, Payless International, PLG Wholesale, PLG Retail, and Collective Licensing.

The goodwill impairment test involves a two-step process. The first step is a comparison of each reporting units fair value to its book value. If the book value of a reporting unit exceeds its fair value, goodwill is considered potentially impaired and the Company must complete the second step of the goodwill impairment test. The amount of impairment is determined by comparing the implied fair value of reporting unit goodwill to the book value of the goodwill in the same manner as if the reporting unit was being acquired in a business combination. Specifically, we would allocate the fair value to all of the assets and liabilities of the reporting unit 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, we would recognize an impairment charge for the difference.

The fair value of the reporting units is determined using a combined income and market approach. The income approach uses a reporting units projection of estimated cash flows and is discounted using a weighted-average cost of capital that reflects current market conditions. The market approach may involve use of the guideline transaction method, the guideline company method, or both. The guideline transaction method makes use of available transaction price data of companies engaged in the same or a similar line of business as the respective reporting unit. The guideline company method uses market multiples of publicly traded companies with operating characteristics similar to the respective reporting unit. We consider value indications from both the income approach and market approach in estimating the fair value of each reporting unit in our analysis. We also compare the aggregate fair value of our reporting units to our market capitalization plus a control premium at each reporting period.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Our goodwill balance by reporting segment and reporting unit as of January 28, 2012 is as follows:

Reporting Segment Reporting Unit Goodwill Balance (in millions) PLG Wholesale PLG Wholesale $ 239.6 Payless Domestic Collective Licensing 30.2 Total $ 269.8

Management judgment is a significant factor in determining whether an indicator of impairment has occurred. We rely on estimates in determining the fair value of each reporting unit, which include the following critical quantitative factors: Anticipated future cash flows and long-term growth rates for each reporting unit. The income approach to determining fair value relies on the timing and estimates of future cash flows, including an estimate of long-term growth rates. The projections use our estimates of economic and market conditions over the projected period including growth rates in sales and estimates of expected changes in operating margins. Our projections of future cash flows are subject to change as actual results are achieved that differ from those anticipated. Actual results could vary significantly from estimates. A 550 basis point decrease in our assumed future cash flow growth rates, keeping all other variables constant, would cause our Collective Licensing reporting unit to fail step one of the goodwill impairment test. A 650 basis point decrease in our assumed future cash flow growth rates, keeping all other variables constant, would cause our PLG Wholesale reporting unit to fail step one of the goodwill impairment test. Under this scenario, we would be required to perform step two of the goodwill impairment test, which could result in the recognition of a significant impairment charge. Selection of an appropriate discount rate. The income approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is subject to changes in short-term interest rates and long-term yield, as well as variances in the typical capital structure of marketplace participants in our industry. The discount rate is determined based on assumptions that would be used by marketplace participants, and for that reason, the capital structure of selected marketplace participants is used in the weighted average cost of capital analysis. Because the selection of the discount rate is dependent on several variables, it is possible that the discount rate could change from year to year. A 300 basis point increase in our assumed discount rate, keeping all other variables constant, would cause our Collective Licensing reporting unit to fail step one of the goodwill impairment test. A 425 basis point increase in our assumed discount rate, keeping all other variables constant, would cause our PLG Wholesale reporting unit to fail step one of the goodwill impairment test. Under either scenario described above, we would be required to perform step two of the goodwill impairment test, which could result in the recognition of a significant impairment charge.

In the second quarter of 2011, due to underperformance in our retail businesses, we revised our financial projections related to our reporting units. These revisions indicated a potential impairment of our goodwill and, as such, we assessed the fair value of our reporting units to determine if their book value exceeded their fair value. As a result of this assessment, we determined that the book value of goodwill exceeded its fair value and we recognized $10.0 million of pre-tax impairment charges for goodwill in the second quarter of 2011. During the third quarter 2011, we performed our required annual goodwill impairment test and concluded there was no impairment of goodwill.

In future periods, if our goodwill were to become impaired, the resulting impairment charge could have a material impact on our financial position and results of operations.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Accounting for Intangible Assets Indefinite-lived intangible assets consist of certain trademarks that are not amortized, but are tested for impairment annually and more frequently if circumstances indicate potential impairment, through a comparison of their fair value to their carrying amount.

Favorable leases, certain trademarks and other intangible assets with finite lives are amortized over their useful lives using the straight-line method. Customer relationships are amortized based on the time period over which the benefits of the asset are expected to occur.

Each period we evaluate whether events and circumstances warrant a revision to the remaining estimated useful life of each intangible asset. If we were to determine that events and circumstances warrant a change to the estimate of an intangible assets remaining useful life, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life.

The impairment test for indefinite-lived trademarks compares each trademarks fair value to its book value. If the book value of a trademark exceeds its fair value, the trademark is considered impaired and the Company recognizes an impairment charge for the difference. The fair values of our trademarks are determined using either the relief from royalty method or the excess earnings method, which are forms of the income approach. The relief from royalty method is based on the theory that the owner of the trademark is relieved of paying a royalty or license fee for the use of the trademark. The excess earnings method calculates the value of the trademark by discounting its future cash flows. The Company evaluates the fair value of $301.4 million of its indefinite-lived trademarks using the relief from royalty method and the remaining $33.0 million of its indefinite-lived trademarks using the excess earnings method.

Management judgment is a significant factor in determining whether an indicator of impairment for trademarks has occurred. We rely on estimates in determining the fair value of certain trademarks using the relief from royalty method, which include the following critical quantitative factors: Anticipated future revenues and long-term growth rates for each trademark. The relief from royalty approach to determining fair value relies on the timing and estimates of future revenues, including an estimate of long-term growth rates. Our projections of future revenues are subject to change based on actual performance and the collection of additional information. Because our financial performance is dependent upon several factors including, but not limited to, general economic cycles, fashion trends and the behavior of core customers, actual results could vary significantly from estimates and our projections may change significantly from period to period. See Risk Factors for a more detailed list of factors that could impact our results.

The following table illustrates the impairment charge for those trademarks valued using the relief from royalty method at various basis point (bp) decreases in our assumed revenue growth rates, keeping all other variables constant (potential impairment in millions):

Decrease in revenue growth rate

BP Decrease Potential Impairment 200 $ 0.0 300 $ 0.9 400 $ 3.5 500 $ 5.9

Reasonable market royalty rate for each trademark. The relief from royalty approach used in determining fair value requires selection of appropriate royalty rates for each trademark. The rates selected depend upon, among other things, licensing agreements involving similar trademarks, historical and forecasted operating profit for each trademark and qualitative factors such as market awareness, history, longevity, and market size.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents While we do not expect the market royalty rate to change significantly from period to period, a small change in the royalty rate used in determining the fair value of our trademarks could result in a significant impairment charge. The following table illustrates the impairment charge for those trademarks valued using the relief from royalty method at various bp decreases in our assumed market royalty rates, keeping all other variables constant:

Decrease in royalty rate

BP Decrease Potential Impairment 25 $ 0.0 50 $ 5.3 75 $ 14.3 100 $ 23.9

Selection of an appropriate discount rate. The relief from royalty approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is subject to changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace participants in the Companys industry, as well as market conditions that impact the overall value of the Company. Because the selection of the discount rate is dependent on several variables, it is possible that the discount rate could change significantly from year to year. The following table illustrates the impairment charge for those trademarks valued using the relief from royalty method at various basis point (bp) increases in our assumed discount rate, keeping all other variables constant (potential impairment in millions):

Increase in discount rate

BP Decrease Potential Impairment 100 $ 3.4 200 $ 12.4 300 $ 20.7 400 $ 28.5

We also rely on estimates in determining the fair value of certain trademarks using the excess earnings method, which include the following critical quantitative factors: Anticipated future cash flows and long-term growth rates for each trademark. The excess earnings approach to determining fair value relies on the timing and estimates of future cash flows, including an estimate of long-term growth rates. Our projections of future cash flows are subject to change based on actual performance and the collection of additional information. Because our financial performance is dependent upon several factors including, but not limited to, general economic cycles, fashion trends and the behavior of core customers, actual results could vary significantly from estimates and our projections may change significantly from period to period. See Risk Factors for a more detailed list of factors that could impact our results.

The following table illustrates the impairment charge for those trademarks valued using the excess earnings method at various basis point (bp) decreases in our assumed cash flow growth rates, keeping all other variables constant (potential impairment in millions):

Decrease in cash flow growth rate

BP Decrease Potential Impairment 200 $ 0.0 300 $ 0.1 400 $ 1.1 500 $ 2.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Selection of an appropriate discount rate. The excess earnings approach requires the selection of an appropriate discount rate, which is based on a weighted average cost of capital analysis. The discount rate is subject to changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace participants in the Companys industry, and the overall value of the Company. Because the selection of the discount rate is dependent on several variables, it is possible that the discount rate could change significantly from year to year.

The following table illustrates the impairment charge for those trademarks valued using the excess earnings method at various basis point (bp) increases in our assumed discount rate, keeping all other variables constant (potential impairment in millions):

Increase in discount rate

BP Decrease Potential Impairment 100 $ 0.0 200 $ 2.5 300 $ 4.7 400 $ 6.5

In the second quarter of 2011, due to underperformance in our retail businesses, we revised our financial projections related to certain indefinite-lived trademarks. These revisions indicated a potential impairment of certain indefinite lived trademarks and, as such, we assessed the fair value of these indefinite-lived trademarks to determine if their book value exceeded their fair value. This assessment indicated that the book value of certain indefinite-lived trademarks exceeded their fair value and we recognized $31.1 million of pre-tax impairment charges in the second quarter of 2011. During the third quarter of 2011, we performed our required annual indefinite-lived intangible asset impairment test and concluded there was no impairment of its indefinite-lived intangible assets.

In future periods, if our indefinite-lived trademarks were to become impaired, the resulting impairment charge could have a material adverse impact on our financial position and results of operations.

New Accounting Standards See Note 19 of the Consolidated Financial Statements for new accounting standards, including the expected dates of adoption and estimated effects on our Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Interest on our Amended Revolving Loan Facility, which is entirely comprised of a revolving line of credit, is based on the London Inter-Bank Offered Rate (LIBOR) plus a variable margin of 1.75% to 2.25%, or the base rate, as defined in the credit agreement. There are no outstanding borrowings on the Revolving Loan Facility at any time during the 52 weeks ended January 28, 2012; however, if we were to borrow against our Revolving Loan Facility, borrowing costs may fluctuate depending upon the volatility of LIBOR. On August 24, 2007, we entered into an interest rate swap arrangement for $540 million to hedge a portion of our variable rate Term Loan Facility. As of January 28, 2012, we have hedged $90 million of our Term Loan Facility. The interest rate swap provides for a fixed interest rate of approximately 7.75%, portions of which mature on a series of dates through May of 2012. The unhedged portion of the Term Loan Facility is subject to interest rate risk depending on the volatility of LIBOR. As of January 28, 2012, a 100 basis point increase in LIBOR on the unhedged portion of the Companys Term Loan Facility debt, which totals $394.4 million, would impact pretax interest expense by approximately $4 million annually or approximately $1 million per quarter.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Foreign Currency Risk We have operations in foreign countries; therefore, our cash flows in U.S. dollars are impacted by fluctuations in foreign currency exchange rates. We adjust our retail prices, when possible, to reflect changes in exchange rates to mitigate this risk. To further mitigate this risk, we may, from time to time, enter into forward contracts to purchase or sell foreign currencies. For the 52 weeks ended January 28, 2012, fluctuations in foreign currency exchange rates did not have a material impact on our operations or cash flows.

A significant percentage of our footwear is sourced from the Peoples Republic of China (the PRC). The national currency of the PRC, the Yuan, is currently not a freely convertible currency. The value of the Yuan depends to a large extent on the PRC governments policies and upon the PRCs domestic and international economic and political developments. Since 1994, the official exchange rate for the conversion of the PRCs currency was pegged to the U.S. dollar at a virtually fixed rate of approximately 8.28 Yuan per U.S. dollar. However, during 2005, the PRCs government revalued the Yuan and adopted a more flexible system based on a trade-weighted basket of foreign currencies of the PRCs main trading partners. Under the new managed float policy, the exchange rate of the Yuan may shift each day up to 0.5% in either direction from the previous days close, and as a result, the valuation of the Yuan may increase incrementally over time should the PRC central bank allow it to do so, which could significantly increase the cost of the products we source from the PRC. As of January 27, 2012, the last day of trading in our fiscal year, the exchange rate was 6.28 Yuan per U.S. dollar compared to 6.57 Yuan per U.S. dollar at the end of our 2010 fiscal year and 6.82 Yuan per U.S. dollar at the end of our 2009 fiscal year.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page Report of Management 56 Managements Annual Report on Internal Control over Financial Reporting 57 Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm 58 Consolidated Statements of (Loss) Earnings 60 Consolidated Balance Sheets 61 Consolidated Statements of Equity and Comprehensive (Loss) Income 62 Consolidated Statements of Cash Flows 64 Notes to Consolidated Financial Statements 65

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Report of Management Management is responsible for the preparation, integrity and objectivity of the financial information included in this annual report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States applied on a consistent basis.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts. Although the financial statements reflect all available information and managements judgment and estimates of current conditions and circumstances, and are prepared with the assistance of specialists within and outside the Company, actual results could differ from those estimates.

Management has established and maintains an internal control structure to provide reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition that the accounting records provide a reliable basis for the preparation of financial statements, and that such financial statements are not misstated due to material fraud or error. Internal controls include the careful selection of associates, the proper segregation of duties and the communication and application of formal policies and procedures that are consistent with high standards of accounting and administrative practices. An important element of this system is a comprehensive internal audit and loss prevention program.

Management continually reviews, modifies and improves its systems of accounting and controls in response to changes in business conditions and operations and in response to recommendations by the independent registered public accounting firm and reports prepared by the internal auditors.

Management believes that it is essential for the Company to conduct its business affairs in accordance with the highest ethical standards and in conformity with the law. This standard is described in the Companys code of ethics, which is publicized throughout the Company.

Audit and Finance Committee of the Board of Directors The Board of Directors, through the activities of its Audit and Finance Committee (the Committee), participates in the reporting of financial information by the Company. The Committee meets regularly with management, the internal auditors and the independent registered public accounting firm. The Committee reviewed the scope, timing and fees for the annual audit and the results of the audits completed by the internal auditors and independent registered public accounting firm, including the recommendations to improve certain internal controls and the follow-up reports prepared by management. The independent registered public accounting firm and the internal auditors have free access to the Committee and the Board of Directors and attend each regularly scheduled Committee meeting.

The Committee consists of five outside directors all of whom have accounting or financial management expertise. The members of the Committee are Daniel Boggan Jr., Robert F. Moran, John F. McGovern, David Scott Olivet, and Matthew A. Ouimet. The Committee regularly reports the results of its activities to the full Board of Directors.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Managements Annual Report on Internal Control Over Financial Reporting The management of Collective Brands, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Principal Executive Officer and the Principal Financial and Accounting Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of January 28, 2012.

Collective Brands, Inc.s independent registered public accounting firm, Deloitte & Touche LLP, has issued an attestation report dated March 22, 2012 on our internal control over financial reporting which is included on page 58.

/s/ Michael J. Massey /s/ Douglas G. Boessen Chief Executive Officer and President Division Senior Vice President (Principal Executive Officer) Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareowners of Collective Brands, Inc. Topeka, Kansas We have audited the internal control over financial reporting of Collective Brands, Inc. and subsidiaries (the Company) as of January 28, 2012, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 28, 2012, based on the criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended January 28, 2012, of the Company and our report dated March 22, 2012, expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP Kansas City, Missouri March 22, 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareowners of Collective Brands, Inc. Topeka, Kansas We have audited the accompanying consolidated balance sheets of Collective Brands, Inc. and subsidiaries (the Company) as of January 28, 2012 and January 29, 2011, and the related consolidated statements of (loss) earnings, equity and comprehensive (loss) income, and cash flows for each of the three fiscal years in the period ended January 28, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15 (b). These consolidated financial statements and financial statement schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of January 28, 2012 and January 29, 2011, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended January 28, 2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal control over financial reporting as of January 28, 2012, based on the criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 22, 2012, expressed an unqualified opinion on the Companys internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP Kansas City, Missouri March 22, 2012

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 Net sales $3,461.7 $3,375.7 $3,307.9 Cost of sales 2,432.2 2,174.5 2,166.9 Gross margin 1,029.5 1,201.2 1,141.0 Selling, general and administrative expenses 1,046.3 1,011.5 982.4 Impairment of goodwill 10.0 Restructuring charges 0.1 Operating (loss) profit from continuing operations (26.8 ) 189.7 158.5 Interest expense 38.9 48.7 60.8 Interest income (0.4 ) (0.7 ) (1.1 ) Loss on early extinguishment of debt 0.5 1.7 1.2 Net (loss) earnings from continuing operations before income taxes (65.8 ) 140.0 97.6 Provision for income taxes 84.0 17.4 9.4 Net (loss) earnings from continuing operations (149.8 ) 122.6 88.2 Earnings from discontinued operations, net of income taxes 0.1 Net (loss) earnings (149.8 ) 122.6 88.3 Net earnings attributable to noncontrolling interests (10.4 ) (9.8 ) (5.6 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) $112.8 $82.7 Basic (loss) earnings per share attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.77 $1.29 Diluted (loss) earnings per share attributable to Collective Brands, Inc. common shareholders $(2.66 ) $1.75 $1.28

See Notes to Consolidated Financial Statements

January 28, January 29, 2012 2011 ASSETS Current Assets: Cash and cash equivalents $181.3 $324.1 Accounts receivable, net of allowance for doubtful accounts and returns reserve as of January 28, 2012 and January 29, 2011 of $6.3 and $6.0, respectively 146.0 114.4 Inventories, net 563.4 531.7 Current deferred income taxes 7.2 30.7 Prepaid expenses 61.5 55.1 Other current assets 21.8 22.2 Total current assets 981.2 1,078.2 Property and equipment, net 369.4 432.3 Intangible assets, net 384.7 428.4 Goodwill 269.8 279.8 Deferred income taxes 10.7 10.1 Other assets 31.4 39.7 Total Assets $2,047.2 $2,268.5 LIABILITIES AND EQUITY Current Liabilities: Current maturities of long-term debt $5.1 $5.1 Accounts payable 291.6 287.4 Accrued expenses 147.0 184.4 Total current liabilities 443.7 476.9 Long-term debt 604.8 659.4 Deferred income taxes 122.4 65.4 Other liabilities 202.8 212.4 Commitments and contingencies (Note 17) Equity: Collective Brands, Inc. shareowners equity: Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued Common stock, $.01 par value; 240,000,000 shares authorized; 75,000,000 issued; 60,577,077 and 61,466,038 shares outstanding in 2011 and 2010, respectively 0.7 0.7 Treasury stock, $.01 par value; 14,422,923 and 13,533,962 shares in 2011 and 2010, respectively (0.1 ) (0.1 ) Additional paid-in-capital (2.5 ) Retained earnings 665.8 834.9 Accumulated other comprehensive loss, net of income taxes (21.6 ) (10.1 ) Collective Brands, Inc. shareowners equity 644.8 822.9 Noncontrolling interests 28.7 31.5 Total equity 673.5 854.4 Total Liabilities and Equity $2,047.2 $2,268.5

See Notes to Consolidated Financial Statements

Collective Brands, Inc. Shareowners Outstanding Additional Accumulated Other Non- Common Stock Paid-in Retained Comprehensive controlling Total Comprehensive Shares Dollars Capital Earnings Loss Interests Equity Income (dollars in millions, shares in thousands) Balance at January 31, 2009 63,725 $ 0.7 $ 17.8 $ 639.4 $ (35.6 ) $ 23.7 $646.0

Net earnings 82.7 5.6 88.3 $ 88.3 Translation adjustments 8.0 0.1 8.1 8.1 Net change in fair value of derivative, net of taxes of $2.2 (Note 6) 3.9 3.9 3.9 Changes in unrecognized amounts of pension benefits, net of taxes of $0.3 (Note 8) 1.4 1.4 1.4 Issuances of common stock under stock plans 882 8.2 8.2 Purchases of common stock (389 ) (7.6 ) (7.6 ) Amortization of unearned nonvested shares 5.4 5.4 Stock option expense 10.9 10.9 Restricted stock cancellation (62 ) Contributions from noncontrolling interests 5.5 5.5 Distributions to noncontrolling interests (6.2 ) (6.2 )

Comprehensive income 101.7 Comprehensive income attributable to noncontrolling interests (5.7 )

Comprehensive income attributable to Collective Brands, Inc. 96.0

Balance at January 30, 2010 64,156 0.7 34.7 722.1 (22.3 ) 28.7 763.9

Net earnings 112.8 9.8 122.6 122.6 Translation adjustments 6.2 0.7 6.9 6.9 Net change in fair value of derivatives, net of taxes of $2.7 (Note 6) 5.0 5.0 5.0 Changes in unrecognized amounts of pension benefits, net of taxes of $0.7 (Note 8) 1.0 1.0 1.0 Issuances of common stock under stock plans 1,183 10.7 10.7 Purchases of common stock (3,834 ) (0.1 ) (63.8 ) (63.9 ) Amortization of unearned nonvested shares 7.9 7.9 Stock option expense 8.0 8.0 Restricted stock cancellation (39 ) Contributions from noncontrolling interests 3.1 3.1 Distributions to noncontrolling interests (10.8 ) (10.8 )

Comprehensive income 135.5 Comprehensive income attributable to noncontrolling interests (10.5 )

Comprehensive income attributable to Collective Brands, Inc. $ 125.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Balance at January 29, 2011 61,466 $ 0.6 $ (2.5 ) $ 834.9 $ (10.1 ) $ 31.5 $854.4

Collective Brands, Inc. Shareowners Outstanding Additional Accumulated Other Non- Common Stock Paid-in Retained Comprehensive controlling Total Comprehensive Shares Dollars Capital Earnings Loss Interests Equity Income (dollars in millions, shares in thousands) Balance at January 29, 2011 61,466 $ 0.6 $ (2.5 ) $ 834.9 $ (10.1 ) $ 31.5 $854.4

Net earnings (loss) (160.2 ) 10.4 (149.8) $ (149.8 ) Translation adjustments (1.1 ) (1.1 ) (1.1 ) Net change in fair value of derivatives, net of taxes of $ 0.1 (Note 6) 6.4 6.4 6.4 Changes in unrecognized amounts of pension benefits, net of taxes of $(0.4) (Note 8) (16.8 ) (16.8 ) (16.8 ) Issuances of common stock under stock plans 434 1.8 1.8 Purchases of common stock (1,205 ) (9.8 ) (8.9 ) (18.7 ) Amortization of unearned nonvested shares 6.3 6.3 Stock option expense 4.2 4.2 Restricted stock cancellation (118 ) Distributions to noncontrolling interests (13.2 ) (13.2 )

Comprehensive loss (161.3 ) Comprehensive income attributable to noncontrolling interests (10.4 )

Comprehensive loss attributable to Collective Brands, Inc. $ (171.7 )

Balance at January 28, 2012 60,577 $ 0.6 $ $ 665.8 $ (21.6 ) $ 28.7 $673.5

Outstanding common stock is net of shares held in treasury and is presented net of treasury stock of $0.1 million in 2011 and 2010 and $0.2 million in 2009. Treasury stock is accounted for using the par value method. Treasury share activity for the last three years is summarized below:

2011 2010 2009 (shares in thousands) Balance, beginning of year 13,534 23,975 24,406 Issuances of common stock: Stock options, employee stock purchases and stock appreciation rights (212 ) (625 ) (507 ) Deferred compensation plan (8 ) (5 ) Net restricted stock grants (96 ) (519 ) (308 ) (316 ) (1,144 ) (820 ) Purchases of common stock 1,205 3,834 389 Retirement of Treasury Stock (13,131) Balance, end of year 14,423 13,534 23,975

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Operating Activities: Net (loss) earnings $ (149.8 ) $ 122.6 $ 88.3 Earnings from discontinued operations, net of income taxes (0.1 ) Adjustments for non-cash items included in net (loss) earnings: Loss on impairment and disposal of assets 46.3 12.2 11.8 Impairment of goodwill and indefinite-lived tradenames 41.1 Depreciation and amortization 131.7 138.2 143.2 Provision for losses on accounts receivable 1.7 2.0 2.9 Share-based compensation expense 12.7 16.6 16.4 Deferred income taxes 81.0 4.2 3.8 Loss on extinguishment of debt 0.5 1.7 1.2 Other, net (0.1 ) Changes in working capital: Accounts receivable (34.2 ) (20.7 ) 0.6 Inventories (31.1 ) (86.7 ) 53.2 Prepaid expenses and other current assets (8.6 ) (7.5 ) 15.2 Accounts payable 5.4 92.2 20.2 Accrued expenses (33.8 ) 5.9 (24.6 ) Changes in other assets and liabilities, net (16.8 ) (7.6 ) (15.2 ) Contributions to pension plans (0.4 ) (1.6 ) (9.5 ) Net cash provided by discontinued operations 0.3

Cash flow provided by operating activities 45.7 271.5 307.6

Investing Activities: Capital expenditures (98.9 ) (97.6 ) (84.0 ) Proceeds from sale of property and equipment 2.8 Intangible asset additions (1.4 ) (19.0 )

Cash flow used in investing activities (100.3 ) (97.6 ) (100.2 )

Financing Activities: Proceeds from notes payable 0.9 Repayment of notes payable (0.9 ) Proceeds from issuance of debt 1.2 Repayment of debt (55.1 ) (185.2 ) (66.1 ) Payment of deferred financing costs (1.8 ) Issuances of common stock 1.8 10.7 8.2 Purchases of common stock (18.7 ) (63.9 ) (7.6 ) Contributions by noncontrolling interests 3.1 5.5 Distribution to noncontrolling interests (13.2 ) (10.8 ) (6.2 )

Cash flow used in financing activities (87.0 ) (246.1 ) (65.0 )

Effect of exchange rate changes on cash (1.2 ) 2.8 1.8

(Decrease) increase in cash and cash equivalents (142.8 ) (69.4 ) 144.2

Cash and cash equivalents, end of year $ 181.3 $ 324.1 $ 393.5

Supplemental cash flow information: Interest paid $ 40.4 $ 47.6 $ 60.1 Income taxes paid $ 29.0 $ 15.7 $ 14.3 Non-cash investing and financing activities: Accrued capital additions $ 13.4 $ 12.4 $ 13.1

See Notes to Consolidated Financial Statements

Note 1 Summary of Significant Accounting Policies Description of Business and Basis of Presentation Collective Brands, Inc. consists of three lines of business: Payless ShoeSource (Payless), Collective Brands Performance + Lifestyle Group (PLG), and Collective Licensing. Payless is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value. PLG markets the leading brand of high-quality childrens shoes in the United States under the Stride Rite brand. PLG also markets products for children and adults under well-known brand names, including Sperry Top-Sider, Saucony, and Keds. Collective Licensing is a youth lifestyle marketing and global licensing business within the Payless Domestic segment.

Fiscal Year The Companys fiscal year ends on the Saturday closest to January 31. Fiscal years 2011, 2010 and 2009 ended on January 28, 2012, January 29, 2011, and January 30, 2010, respectively. Fiscal years 2011, 2010, and 2009 contain 52 weeks of results. References to years in these financial statements and notes relate to fiscal years rather than calendar years.

Use of Estimates Management makes estimates and assumptions that affect the amounts reported within the Consolidated Financial Statements. Actual results could differ from these estimates.

Net Sales Net sales (sales) for transactions at the Companys retail stores are recognized at the time the sale is made to the customer. Sales for wholesale and e-commerce transactions are recognized when title passes and the risks or rewards of ownership have transferred to the customer based on the shipping terms, the price is fixed and determinable, and collectibility is reasonably assured. All sales are net of estimated returns, promotional discounts and exclude sales tax.

The Company has established an allowance for merchandise returns and markdowns based on historical experience, product sell- through performance by product and customer, current and historical trends in the footwear industry and changes in demand for its products. The returns allowance is recorded as a reduction to revenues for the estimated sales value of the projected merchandise returns and as a reduction in cost of sales for the corresponding cost amount. Allowances for markdowns are recorded as a reduction of revenue based on historical experience. From time to time actual results will vary from the estimates that were previously established.

Shipping and Handling Products are sold Free On Board (FOB) shipping point for wholesale customers. Any shipping charges that the Company pays are recorded as cost of sales and any reimbursement is recorded as revenue.

Gift Cards The Company records a liability in the period in which a gift card is issued and proceeds are received. As gift cards are redeemed, this liability is reduced and revenue is recognized as a sale. The estimated value of gift cards expected to go unused is recognized ratably in proportion to actual redemptions as gift cards are redeemed.

Cost of Sales Cost of sales includes the cost of merchandise sold and the Companys buying, occupancy, warehousing, product development and product movement costs, as well as depreciation of stores and the distribution centers, net litigation charges related to intellectual property, store impairment charges and trademark impairments.

Rent Expense Certain of the Companys lease agreements provide for scheduled rent increases during the lease term, as well as provisions for renewal options. Rent expense is recognized on a straight-line basis over the term of the lease from the time at which the Company takes possession of the property. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of straight-line rent expense includes renewal option periods. Also, landlord-provided tenant improvement allowances are recorded in other liabilities and amortized as a credit to rent expense over the term of the lease. Substantially all rental expense is recorded in cost of sales on the Consolidated Statement of (Loss) Earnings.

Pre-Opening Expenses Costs associated with the opening of new stores are expensed as incurred and are recorded in cost of sales.

Advertising Costs Advertising costs and sales promotion costs are expensed at the time the advertising takes place. Selling, general and administrative expenses include advertising and sales promotion costs of $176.9 million, $159.2 million and $145.5 million in 2011, 2010 and 2009, respectively.

Co-operative Advertising The Company engages in co-op advertising programs with some of its wholesale customers. Co-op advertising funds are available to all wholesale customers in good standing. Wholesale customers receive reimbursement under this program if they meet established advertising guidelines and trademark requirements. Costs are accrued on the basis of sales to qualifying customers and accounted for as an operating expense if the Company receives, or will receive, an identifiable benefit in exchange for the consideration and the Company can reasonably estimate the fair value of the benefit identified.

Share-Based Compensation Expense Compensation expense associated with share-based awards is recognized over the requisite service period, which is the period between the grant date and the awards stated vesting date. Share-based awards are expensed under the straight-line attribution method, with the exception of market or performance-based awards that are expensed under the tranche specific attribution method. With the exception of market-based awards, the actual expense recognized over the vesting period will be based on only those shares that vest. The amount of share-based compensation recognized during a period is based on the value of the portion of the awards that are

Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Companys estimate of uncertainty in income taxes is based on the framework established in the accounting for income taxes guidance. This guidance addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company includes its reserve for unrecognized tax benefits, as well as related accrued penalties and interest, in other long term liabilities on its Consolidated Balance Sheets and in the provision for income taxes in its Consolidated Statements of (Loss) Earnings.

Cash and Cash Equivalents Cash equivalents consist of liquid investments with an original maturity of three months or less. Amounts due from banks and credit card companies of $14.0 million and $13.5 million for the settlement of credit card transactions are included in cash and cash equivalents as of January 28, 2012, and January 29, 2011, respectively, as they are generally collected within three business days. Cash equivalents are stated at cost, which approximates fair value.

Reserve for Uncollectible Accounts Receivable The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains a reserve for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the reserve, the Company considers its historical level of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. These evaluations include, but are not limited to, analyzing its customers financial statements, maintaining a credit watch list to monitor accounts receivable exposure and reviewing the customers prior payment history.

Inventories Merchandise inventories in the Companys stores are valued by the retail method and are stated at the lower of cost, determined using the first-in, first-out (FIFO) basis, or market. The retail method is widely used in the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents COLLECTIVE BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) retail industry due to its practicality. Under the retail method, cost is determined by applying a calculated cost-to-retail ratio across groupings of similar items, known as departments. As a result, the retail method results in an averaging of inventory costs across similar items within a department. The cost-to-retail ratio is applied to ending inventory at its current owned retail valuation to determine the cost of ending inventory on a department basis. Current owned retail represents the retail price for which merchandise is offered for sale on a regular basis, reduced for any permanent or clearance markdowns. As a result, the retail method normally results in an inventory valuation that approximates a traditional FIFO cost basis.

Wholesale inventories are valued at the lower of cost or market using the FIFO method. The Company makes ongoing estimates relating to the net realizable value of inventories, based upon its assumptions about future demand and market conditions. If the Companys estimate of the net realizable value of its inventory is less than the cost of the inventory recorded on its books, a reduction to the estimated net realizable value is recorded. If changes in market conditions result in an increase in the estimated net realizable value of the Companys inventory above its previous estimate, such recoveries would be recognized as the related goods are sold.

Substantially all of the Companys inventories are finished goods.

Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. The costs of repairs and maintenance are expensed when incurred, while expenditures for store remodels, refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Projects in progress are stated at cost, which includes the cost of construction and other direct costs attributable to the project. No provision for depreciation is made on projects in progress until such time as the relevant assets are completed and put to use. The estimated useful life for each major class of property and equipment is as follows:

Buildings 10 to 30 years Leasehold improvements the lesser of 10 years or the remaining expected lease term that is reasonably assured (which may exceed the current non-cancelable term) Furniture, fixtures and equipment 2 to 10 years Property under capital lease 10 to 30 years

The following is a summary of the components of property and equipment:

(dollars in millions) 2011 2010 Land $5.9 $6.7 Buildings and leasehold improvements 671.3 711.6 Furniture, fixtures and equipment 680.3 677.6 Projects in progress 59.9 55.4 Accumulated depreciation and amortization (1,048.0) (1,019.0) Property and equipment, net $369.4 $432.3

Depreciation expense for 2011, 2010 and 2009 was $116.0 million, $119.5 million and $121.5 million, respectively.

The Company evaluates its store assets on a quarterly basis to determine if its assets are recoverable by analyzing historical results, trends, stores identified for closure and other qualitative considerations. If an indicator of impairment exists, the Company models estimated future cash flows on a store-by-store basis and compares the undiscounted future cash flows to the carrying amount of the stores assets. If the carrying value exceeds the undiscounted cash flows, the Company compares the present value, using an appropriate discount rate, of these cash flows to the carrying amount of the assets to calculate the impairment charge. The underlying estimates of cash flows include estimates of future revenues, gross margin rates and store expenses as well as any potential for changes related to occupancy costs, store closures and transfer sales. These assumptions are based upon the stores past and expected future performance.

For the 52 weeks ended January 28, 2012, the impairment testing indicated that $56.0 million of the Companys assets had a fair value of $13.8 million and, as such, the Company recorded a $42.2 million impairment charge in cost of sales on the Consolidated Statement of (Loss) Earnings. The following table summarizes the asset impairment charges by reporting segment:

52 Weeks Ended January 28, January 29, January 30, (dollars in millions) 2012 2011 2010 Payless Domestic $ 32.9 $ 6.3 $ 4.8 Payless International 5.2 1.1 0.2 PLG Wholesale 0.7 PLG Retail 3.4 1.4 1.0 Total $ 42.2 $ 8.8 $ 6.0

Insurance Programs The Company retains its normal expected losses related primarily to workers compensation, physical loss to property and business interruption resulting from such loss and comprehensive general, product, and vehicle liability. The Company purchases third-party coverage for losses in excess of the normal expected levels. Provisions for losses expected under these programs are recorded based upon estimates of the aggregate liability for claims incurred utilizing actuarial calculations based on historical results.

Foreign Currency Translation Local currencies are the functional currencies for most foreign subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are accumulated as part of other comprehensive (loss) income and are included as a separate component of equity. The changes in foreign currency translation adjustments were not adjusted for income taxes since they relate to indefinite term investments in non-United States subsidiaries. Income and expense items of these subsidiaries are translated at average rates of exchange. As of fiscal year-end 2011, 2010 and 2009, cumulative translation adjustments included in accumulated other comprehensive (loss) income were $18.6 million, $19.7 million and $12.8 million, respectively. The Company has recorded foreign currency transaction gains (losses) of $3.4 million, ($0.3) million and $0.5 million in the Consolidated Statement of (Loss) Earnings in fiscal years 2011, 2010 and 2009, respectively.

Asset Retirement Obligations The Company records a liability equal to the fair value of the estimated future cost to retire an asset; if the liabilitys fair value can be reasonably estimated. The Companys asset retirement obligation (ARO) liabilities are primarily associated with the disposal of personal property and trade fixtures which, at the end of a lease, the Company is contractually obligated to remove in order to restore the facility back to a condition specified in the lease agreement. The Company estimates the fair value of these liabilities based on current store closing costs and discounts the costs back as if they were to be performed at the inception of the lease. At the inception of such a lease, the Company records the ARO as a liability and also records a related asset in an amount equal to the estimated fair value of the liability. The capitalized asset is then depreciated on a straight-line basis over the useful life of the asset. Upon retirement of the asset, any difference between the actual retirement costs incurred and the previously recorded estimated ARO liability is recognized as a gain or loss in the Consolidated Statements of (Loss) Earnings.

The Companys ARO liability as of January 28, 2012 and January 29, 2011 was $7.1 million and $8.1 million, respectively, and was recorded in other long-term liabilities on its Consolidated Balance Sheets. There were no significant liabilities incurred, liabilities settled, nor accretion expense as of January 28, 2012, January 29, 2011 and January 30, 2010.

Franchise Arrangements The Company grants franchisees the right to develop and operate stores within a defined geographic area in exchange for royalty payments. Royalties are recognized when they are earned and become receivable from the franchisee. The Company did not have a significant amount of royalty revenue for the 52 weeks ended January 28, 2012, January 29, 2011 or January 28, 2010.

Company-Owned Life Insurance The Company owns various life insurance policies for certain associates. These Company-Owned Life Insurance (COLI) policies are recorded at their net cash surrender values as of each balance sheet date. Premiums and changes in the net cash surrender value during the period are recorded in selling, general and administrative expenses. The Company does not record deferred tax balances related to cash surrender value gains or losses as it has the intent to hold these policies until maturity. The total amounts related to the Companys investments in COLI policies, included in other assets in the Consolidated Balance Sheet as of January 28, 2012 and January 29, 2011, were $21.8 million and $21.6 million, respectively.

Goodwill The Company assesses goodwill, which is not subject to amortization, for impairment on an annual basis and also at any other date when events or changes in circumstances indicate that the book value of these assets may exceed their fair value. This assessment is performed at a reporting unit level. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. The Company develops an estimate of the fair value of each reporting unit using both a market approach and an income approach. If potential for impairment exists, the fair value of the reporting unit is subsequently measured against the fair value of its underlying assets and liabilities, excluding goodwill, to estimate an implied fair value of the reporting units goodwill.

Intangible Assets other than Goodwill Indefinite-lived intangible assets are not amortized, but are tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. Favorable leases, certain trademarks and other intangible assets with finite lives are amortized over their useful lives using the straight-line method. Customer relationships are amortized using an economic patterning technique based on when the benefits of the asset are expected to be used.

The estimated useful life for each class of intangible assets is as follows:

Favorable lease rights A weighted-average period of 3 years. Favorable lease rights are amortized over the term of the underlying lease, including renewal options in instances where failure to exercise renewals would result in an economic penalty. Trademarks and other intangible assets 3 to 20 years Customer relationships 8 years

Each period the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each intangible asset or its remaining book value. If the Company were to determine that events and circumstances warrant a change to the estimate of an intangible assets remaining useful life, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. If the Company were to determine that the fair value of trademarks with a finite life was lower than its book value, then it would record an impairment charge.

Derivatives The Company participates in interest rate related derivative instruments to manage its exposure on its debt instruments and forward contracts to hedge a portion of certain foreign currency purchases. The Company records all derivative instruments on the Consolidated Balance Sheet as either assets or liabilities measured at fair value in accordance with the framework established for derivatives and hedging and the framework established for fair value measurements and disclosures. For interest rate contracts, the Company uses a mark-to-market valuation technique based on an observable interest rate yield curve and adjusts for credit risk. For foreign currency contracts, the Company uses a mark-to-market technique based on observable foreign currency exchange rates and adjusts for credit risk. Changes in the fair value of these derivative instruments are recorded either through net (loss) earnings or as other comprehensive loss, depending on the type of hedge designation. Gains and losses on derivative instruments designated as cash flow hedges are reported in other comprehensive loss and reclassified into (loss) earnings in the periods in which earnings are impacted by the hedged item.

Contingencies The Company may be involved in legal proceedings that arise in the ordinary course of business. Except for income tax contingencies, it records accruals for contingencies to the extent that it concludes that their occurrence is probable and that the related liabilities are estimable and it records anticipated recoveries under existing insurance contracts when assured of recovery. The Company considers many factors in making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, the experience of the Company or other companies in similar cases, and its intent on how to respond. Because litigation and other contingencies are inherently unpredictable and excessive verdicts do occur, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

Note 2 Quarterly Results (Unaudited) The tables below summarize quarterly results for the last two years. Quarterly results are determined in accordance with annual accounting policies and all adjustments (consisting only of normal recurring adjustments, except as noted below) necessary for a fair statement of the results for the interim periods have been included; however, certain items are based upon estimates for the entire year.

2011 Quarter First Second Third Fourth(2) Year (dollars in millions, except per share) Net sales $869.0 $882.4 $894.4 $815.9 $3,461.7 Gross margin 309.9 208.5 283.8 227.3 1,029.5 Net earnings (loss) 28.2 (33.3 ) (111.7) (33.0 ) (149.8 ) Net earnings attributable to noncontrolling interests (1.8 ) (1.7 ) (2.6 ) (4.3 ) (10.4 ) Net earnings (loss) attributable to Collective Brands, Inc. $26.4 $(35.0 ) $(114.3) $(37.3 ) $(160.2 ) Basic earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.43 $(0.58 ) $(1.91 ) $(0.62 ) $(2.66 ) Diluted earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.42 $(0.58 ) $(1.91 ) $(0.62 ) $(2.66 )

(1) Earnings (loss) per share were computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding.

(2) In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses.

Note 3 Exit Costs In 2011, the Company announced that, as part of its efforts to optimize the performance of its Payless and Stride Rite store fleet, it would close approximately 475 under-performing and low-volume, non-strategic stores in the next three years. During 2011, the Company closed 352 stores, of which 298 of the stores are Payless locations in the U.S., Canada and Puerto Rico and 54 are Stride Rite Childrens locations.

In accordance with Accounting Standards Codification (ASC) 420, Exit or Disposal Cost Obligations, costs associated with this plan, which consist of lease termination costs, employee termination costs, and other exit costs, are recorded at fair value. The Company estimates that these costs will total $20 million to $25 million of which $13.0 million was recorded in 2011; however, the ultimate financial impact of this plan is dependent upon the actual exit transactions. The lease termination costs will be recorded on the earlier of the date that the store is closed or lease buyouts are negotiated with the landlords. Employee severance costs, which consist of severance payments made to certain terminated associates, are recorded ratably over the associates required service period from the date the termination has been communicated to the associate.

The significant components of the exit costs incurred as of January 28, 2012 are summarized as follows:

Accrual Balance as of Charges Cash Accrual Balance as of January 29, 2011 to Date Payments January 28, 2012 (dollars in millions) Lease termination costs $ $ 10.6 $ (9.0 ) $ 1.6 Employee severance costs 2.4 (0.7 ) 1.7 Total $ $ 13.0 $ (9.7 ) $ 3.3

Of the $10.6 million of lease termination costs, $9.3 million are recorded in the Payless Domestic reporting segment; $0.8 million are recorded in the PLG Retail reporting segment and $0.5 million are recorded in the Payless International reporting segment. The lease termination charges are recorded within cost of sales on the Consolidated Statements of (Loss) Earnings and are recorded within accrued expenses on the Consolidated Balance Sheet.

Of the $2.4 million of employee severance costs, $2.0 million are recorded in the Payless Domestic reporting segment, $0.3 million are recorded in the Payless International reporting segment and $0.1 million are recorded in the PLG Retail reporting segment. The employee severance costs are recorded within selling, general and administrative expenses on the Consolidated Statements of (Loss) Earnings and are recorded within accrued expenses on the Consolidated Balance Sheet.

Note 4 Intangible Assets and Goodwill The following is a summary of the Companys intangible assets:

January 28, January 29, 2012 2011 (dollars in millions) Intangible assets subject to amortization: Favorable lease rights: Gross carrying amount $ 20.5 $ 24.8 Less: accumulated amortization (17.6 ) (19.8 ) Carrying amount, end of period 2.9 5.0 Customer relationships: Gross carrying amount 74.2 74.2 Less: accumulated amortization (53.7 ) (45.2 ) Carrying amount, end of period 20.5 29.0 Trademarks and other intangible assets: Gross carrying amount 39.9 38.5 Less: accumulated amortization (13.0 ) (9.6 ) Carrying amount, end of period 26.9 28.9 Total carrying amount of intangible assets subject to amortization 50.3 62.9 Indefinite-lived tradenames 334.4 365.5 Total intangible assets $ 384.7 $ 428.4

The Company recorded $31.1 million of impairment charges related to its indefinite-lived trademarks and acquired $1.4 million of other intangible assets during 2011.

Amortization expense on intangible assets is as follows:

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Amortization expense on intangible assets $ 12.8 $ 16.2 $ 19.5

The Company expects amortization expense for the next five years to be as follows (in millions):

Year Amount 2012 $ 11.3 2013 9.7 2014 8.3 2015 6.0 2016 2.0

The following is a summary of the carrying amount of goodwill, by reporting segment:

Payless PLG Domestic Wholesale Consolidated (dollars in millions) Balance as of January 30, 2010 $40.2 $ 239.6 $ 279.8 Goodwill Adjustments Balance as of January 29, 2011 $40.2 $ 239.6 $ 279.8 Goodwill Impairment (10.0 ) (10.0 ) Balance as of January 28, 2012 $30.2 $ 239.6 $ 269.8

The Companys accumulated goodwill impairment as of January 28, 2012 was $52.0 million, $42.0 million of which relates to the PLG Retail reporting segment and $10.0 million of which relates to the Payless Domestic reporting segment.

Note 5 Long-term Debt On August 17, 2007, the Company entered into a $725 million term loan (the Term Loan Facility) and a $350 million Amended and Restated Loan and Guaranty Agreement (the Revolving Loan Facility). The Term Loan Facility ranks pari passu in right of payment and have the lien priorities specified in an intercreditor agreement executed by the administrative agent to the Term Loan Facility. On August 16, 2011, the Company amended its $350 million Revolving Loan Facility with a $300 million Second Amended and Restated Loan and Guaranty Agreement (Amended Revolving Loan Facility and collectively with the Term Loan Facility, the Loan Facilities). The Loan Facilities are senior secured loans guaranteed by substantially all of the assets of the borrower and the guarantors, with the Amended Revolving Loan Facility having first priority in accounts receivable, inventory and certain related assets and the Term Loan Facility having first priority in substantially all of the borrowers and the guarantors remaining assets, including intellectual property, the capital stock of each domestic subsidiary, any intercompany notes owned by the borrower and the guarantors, and 66% of the stock of non-U.S. subsidiaries directly owned by borrower or a guarantor.

The Term Loan Facility will mature on August 17, 2014. The Term Loan Facility will amortize quarterly in annual amounts of 1.0% of the original amount, reduced ratably by any prepayments, with the final installment payable on the maturity date. The Term Loan Agreement provides for customary mandatory prepayments, subject to certain exceptions and limitations and in certain instances, reinvestment rights, from (a) the net cash proceeds of certain asset sales, insurance recovery events and debt issuances, each as defined in the Term Loan Agreement, and (b) 25% of excess cash flow, as defined in the Term Loan Agreement, subject to reduction. The mandatory prepayment is not required if the total leverage ratio, as defined in the Term Loan Agreement, is less than 2.0 to 1.0 at fiscal year end. Based on our excess cash flow projections as of January 28, 2012, we are not required to make such a mandatory prepayment. Loans under the Term Loan Facility will bear interest at the Borrowers option, at either (a) the Base Rate as defined in the Term Loan Facility agreement plus 1.75% per annum or (b) the Eurodollar (London Inter-Bank Offer Rate (LIBOR)-indexed) Rate plus 2.75% per annum, with such margin to be agreed for any incremental term loans.

The Amended Revolving Loan Facility matures on August 16, 2016 and bears interest at LIBOR, plus a variable margin of 1.75% to 2.25% or the base rate, as defined in the agreement. The Amended Revolving Loan Facility provides increased flexibility for investments, incurrence of indebtedness and restricted payments including prepayments on our Senior Subordinated Notes, subject to excess line availability tests. The facility will be available as needed for general corporate purposes.

In July 2003, the Company sold $200.0 million of 8.25% Senior Subordinated Notes (the Notes) for $196.7 million, due 2013. The discount of $3.3 million is being amortized to interest expense over the life of the Notes. The Notes are guaranteed by all of the Companys domestic subsidiaries. Interest on the Notes is payable semi-annually. Under the terms of the note covenants the Company may, on any one or more occasions, redeem all or a part of the Notes at the redemption price of 100.0% of its face value, plus accrued and unpaid interest, if any, on the Notes redeemed.

The Loan Facilities and the Senior Subordinated Notes contain various covenants including those that may limit the Companys ability to pay dividends, repurchase stock, accelerate the retirement of debt or make certain investments. As of January 28, 2012, the Company was in compliance with all of its covenants.

Long-term debt and capital-lease obligations were:

2011 2010 (dollars in millions) Term Loan Facility(1) $484.4 $489.4 Senior Subordinated Notes(2) 124.6 174.1 Revolving Loan Facility(3) Capital-lease obligations 0.9 1.0 Total debt 609.9 664.5 Less: current maturities of long-term debt 5.1 5.1 Long-term debt $604.8 $659.4

(1) As of January 28, 2012 and January 29, 2011, the fair value of the Companys Term Loan was $479.5 million, and $489.4 million, respectively, based on market conditions and perceived risks as of those dates. (2) As of January 28, 2012 and January 29, 2011, the fair value of the Companys senior subordinated notes was $125.6 million and $177.8 million, respectively, based on trading activity as of those dates. (3) As of January 28, 2012, the Companys borrowing base on its revolving loan facility was $300.0 million less $28.6 million in outstanding letters of credit, or $271.4 million. The variable interest rate, including the applicable variable margin at January 28, 2012, was 2.30%.

Future debt maturities as of January 28, 2012 are as follows:

Senior Capital- Subordinated Term Loan lease Notes Facility obligations Total (dollars in millions) 2012 $ $ 5.0 $ 0.1 $5.1 2013 125.0 5.0 0.1 130.1 2014 474.4 0.1 474.5 2015 0.1 0.1 2016 0.1 0.1 Thereafter 0.4 0.4 Total $ 125.0 $ 484.4 $ 0.9 $610.3

Note 6 Derivatives The Company has entered into an interest rate contract for an initial amount of $540 million to hedge a portion of its variable rate $725 million Term Loan Facility (interest rate contract). The interest rate contract provides for a fixed interest rate of approximately 7.75%, portions of which mature on a series of dates through May of 2012. As of January 28, 2012, the Company has hedged $90 million of its Term Loan Facility.

The Company has also entered into a series of forward contracts to hedge a portion of certain foreign currency purchases (foreign currency contracts). The foreign currency contracts provide for a fixed exchange rate and mature over a series of dates through October of 2012. As of January 28, 2012 the Company has hedged $23.9 million of its forecasted foreign currency purchases. The fair value, amounts classified in other comprehensive (loss) income (OCI), and the amounts reclassified from accumulated other comprehensive (loss) income (AOCI) on the foreign currency contracts were not significant for any periods presented.

The interest rate contract is designated as a cash flow hedging instrument. The change in the fair value of the interest rate contract is recorded as a component of AOCI and reclassified into earnings in the periods in which earnings are impacted by the hedged item. The following table presents the fair value of the Companys hedging portfolio related to its interest rate contract:

Location on Fair Value Consolidated January 28, January 29, Balance Sheet 2012 2011 (dollars in millions) Interest rate contract Other liabilities $ $ 1.3 Interest rate contract Accrued expenses $ 2.0 $ 6.1

It is the Companys policy to enter into derivative instruments with terms that match the underlying exposure being hedged. As such, the Companys derivative instruments are considered highly effective, and the net gain or loss from hedge ineffectiveness is not significant. Realized gains or losses on the hedging instruments occur when a portion of the hedge settles or if it is probable that the forecasted transaction will not occur. The impact of the derivative instruments on the Consolidated Financial Statements is as follows:

Gain (Loss) Recognized Gain (Loss) Reclassified from in AOCI on Derivative AOCI into Earnings 52 Weeks Ended Location on Consolidated 52 Weeks Ended January 28, January 29, Statement of Earnings January 28, January 29, 2012 2011 (Loss) 2012 2011 (dollars in millions) Interest rate contract $ 1.0 $ (2.2 ) Interest expense $ (7.5 ) $ (7.5 )

The Company expects $2.0 million of the fair value of the interest rate contract recorded in AOCI to be recognized in earnings during the next 12 months. This amount may vary based on changes to LIBOR and foreign currency exchange rates.

Note 7 Fair Value Measurements The Companys estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: observable inputs such as quoted prices in active markets

Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly

Level 3: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

The following table presents financial assets and financial liabilities that the Company measures at fair value on a recurring basis (not including the Companys pension plan assets). The Company has classified these financial assets and liabilities in accordance with the fair value hierarchy:

Estimated Fair Value Measurements Quoted Prices in Significant Significant Active Markets Observable Other Unobservable Inputs (Level 1) Inputs (Level 2) (Level 3) Total Fair Value (dollars in millions) As of January 28, 2012 Financial assets: Money market funds $ 69.2 $ $ $ 69.2 Financial liabilities: Interest rate contract(1) $ $ 2.0 $ $ 2.0 As of January 29, 2011 Financial assets: Money market funds $ 174.8 $ $ $ 174.8 Financial liabilities: Interest rate contract(1) $ $ 7.4 $ $ 7.4

(1) The fair value of the interest rate contract is determined using a mark-to-market valuation technique based on an observable interest rate yield curve and adjusting for credit risk.

Note 8 Pension Plans The Company has a pension plan that covers a select group of management employees (Payless Plan), a pension plan that covers certain PLG employees (PLG Plan), and a pension plan that covers certain employees in Asia (Asia Plan). To calculate pension expense, the Company uses assumptions to estimate the total benefits ultimately payable to each management employee and allocates this cost to service periods. The actuarial assumptions used to calculate pension expense are reviewed annually by management for reasonableness. The measurement date used for these plans for the 2011 actuarial valuation was January 28, 2012.

Payless Plan The Payless Plan is a nonqualified, supplementary account balance defined benefit plan for a select group of management employees. The plan is an unfunded, noncontributory plan.

Included in AOCI are the following pre-tax amounts that have not yet been recognized in net periodic benefit cost:

Unrecognized Unrecognized Prior Service Losses/ Total Cost (Gains) AOCI (dollars in millions) Amount at January 29, 2011 $ 7.0 $ 12.7 $19.7 Amortization recognized (1.6 ) (1.5 ) (3.1 ) New amounts recognized 4.4 4.4 Amount at January 28, 2012 $ 5.4 $ 15.6 $21.0

The amount of unrecognized pre-tax loss and pre-tax prior service cost included in AOCI and expected to be recognized in net periodic benefit cost during fiscal year 2012 is $2.1 million and $1.6 million, respectively.

The following information provides a summary of the funded status of the plan, amounts recognized in the Consolidated Balance Sheets, and major assumptions used to determine these amounts:

2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at beginning of year $42.5 $46.6 Service cost 0.8 0.8 Interest cost 1.8 1.8 Actuarial loss 4.4 3.0 Settlement distribution (7.2 ) Benefits paid (4.7 ) (2.5 ) Obligation at end of year $44.8 $42.5 Assumptions: Discount rate 3.25 % 4.50 % Salary increases 4.0 % 4.0 %

As the plan is unfunded, the total benefit obligation at the end of each fiscal year is recognized as a liability on the Consolidated Balance Sheet. Of the $44.8 million liability recognized as of January 28, 2012, $4.1 million is recorded in accrued expenses and $40.7 million is recorded in other liabilities.

The components of net periodic benefit costs for the plan were:

2011 2010 2009 (dollars in millions) Components of pension expense: Service cost $0.8 $0.8 $0.6 Interest cost 1.8 1.8 2.5 Amortization of prior service cost 1.6 1.6 1.6 Amortization of actuarial loss 1.5 1.3 0.5 Amount recognized due to settlement 2.2 Total $5.7 $7.7 $5.2

Estimated future benefit payments for the next five years and the aggregate amount for the following five years for this plan are:

(dollars in millions) 2012 $ 4.1 2013 4.1 2014 4.2 2015 4.3 2016 4.3 2017-2021 17.7

PLG Plan The PLG Plan is a noncontributory defined benefit pension plan, which no longer accrues future benefits, that covers certain eligible PLG associates. Prior to the freezing of the plan, eligible PLG associates accrued pension benefits at a fixed unit rate based on the associates service and compensation.

Included in AOCI are the following pre-tax amounts that have not yet been recognized in net periodic pension cost:

(dollars in millions) Amount at January 31, 2010 $ 20.6 Amortization recognized (1.1 ) New amounts recognized 16.9 Amount at January 29, 2011 $ 36.4

The following tables present information about benefit obligations, plan assets, annual expense, assumptions and other information about PLGs defined benefit pension plan:

2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at prior measurement date $85.5 $78.4 Interest cost 4.8 4.6 Actuarial loss 13.4 5.5 Benefits paid (3.3 ) (3.0 ) Obligation at end of year $100.4 $85.5

Assumptions: Discount rate 4.70 % 5.75% Salary increases n/a n/a

The following table summarizes the change in plan assets:

2011 2010 (dollars in millions) Fair value of plan assets at prior measurement date $69.4 $61.9 Actual return on plan assets 1.9 8.9 Employer contributions 0.4 1.6 Benefits paid (3.3 ) (3.0 ) Fair value of plan assets at end of year $68.4 $69.4

Underfunded status at end of year $(32.0) $(16.1)

The $32.0 million and $16.1 million liabilities recognized as of January 28, 2012 and January 29, 2011, respectively, are included in other long-term liabilities on the Consolidated Balance Sheet.

The components of net periodic benefit costs for the plan were:

2011 2010 2009 (dollars in millions) Interest cost $4.8 $4.6 $4.5 Expected return on assets (5.4 ) (5.0 ) (3.6 ) Amortization of actuarial loss 1.1 1.3 1.8 Net periodic benefit cost $0.5 $0.9 $2.7

Assumptions: Discount rate 5.75% 5.90% 6.25% Expected long-term return on plan assets 8.00% 8.25% 8.25% Salary increases n/a n/a n/a

Both the accumulated and projected benefit obligations as of January 28, 2012 and January 29, 2011 were $100.4 million and $85.5 million, respectively.

The Company expects $2.6 million of pre-tax net loss included in AOCI to be recognized in net periodic benefit cost during fiscal year 2012.

In selecting the expected long-term rate of return on assets, the Company considers the average rate of earnings expected on the funds invested or to be invested to provide for the benefits of this plan. This includes considering the plans asset allocation and the expected returns likely to be earned over the life of the plan. This basis is consistent with the prior year. The calculation of pension expense is dependent on the determination of the assumptions used. A 100 basis point change in the discount rate and a 100 basis point change in the expected long-term return on assets would increase the Companys annual pension expense by $1.0 million and $0.7 million, respectively. As the result of stopping the accrual of future benefits, a salary growth assumption is no longer applicable.

The long term annualized time-weighted rate of return is calculated on the basis of a three year rolling average using market values and is expected to be at least 1% higher than the composite benchmark for the plan. Investment managers are evaluated semi-annually against commonly accepted benchmarks to ensure adherence to the stated strategy and that the risk posture assumed is commensurate with the given investment style and objectives.

The Companys written investment policy for the PLG Plan establishes investment principles and guidelines and defines the procedures that will be used to control, evaluate and monitor the investment practices for the plan. An administrative committee designated by the Board of Directors provides investment oversight for the plan. Stated investment objectives are: Maintain a portfolio of secure assets of appropriate liquidity and diversification that will generate investment returns, combined with expected future contributions, that should be sufficient to maintain the plans funded state or improve the funding level of the plan if it is in deficit. To control the long-term costs of the plan by maximizing return on the assets subject to meeting the objectives above.

The plans target allocation per the investment policy and weighted average asset allocations by asset category are:

Target Allocation 2011 2010 Domestic equity securities 48% - 58% 52 % 54 % International equity securities 10% - 14% 11 % 12 % Domestic fixed income securities 32% - 38% 35 % 32 % Cash 0% - 5% 2 % 2 % 100% 100%

The portfolio is designed to achieve a balanced return of current income and modest growth of capital, while achieving returns in excess of the rate of inflation over the investment horizon in order to preserve purchasing power of plan assets. All plan assets are required to be invested in liquid securities.

The PLG pension plan assets are valued at fair value. The Companys estimates of fair value for these pension plan assets are based on the framework established in the fair value accounting guidance. The three levels of the hierarchy are as follows: Level 1: observable inputs such as quoted prices in active markets Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly Level 3: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

The following table presents the PLG pension plan assets that the Company measures at fair value on a recurring basis. The Company has classified these financial assets in accordance with the fair value hierarchy:

Estimated Fair Value Measurements Quoted Significant Prices in Observable Significant Active Other Unobservable Total Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value (dollars in millions) As of January 28, 2012: Domestic equity securities $ 3.6 $ 32.1 $ $35.7 International equity securities 7.7 7.7 Domestic fixed income securities 23.7 23.7 Cash 1.3 1.3 Total $ 36.3 $ 32.1 $ $68.4 As of January 29, 2011: Domestic equity securities $ 3.5 $ 34.2 $ $37.7 International equity securities 8.0 8.0 Domestic fixed income securities 22.2 22.2 Cash 1.5 1.5 Total $ 27.2 $ 42.2 $ $69.4

The Company contributed $0.4 million to this pension plan during the 2011 fiscal year and plans to make $4.0 million of contributions during the 2012 fiscal year. The Companys future contributions will depend upon market conditions, interest rates and other factors and may vary significantly in future years based upon the plans funded status as of the 2012 measurement date.

Estimated future benefit payments for the next five years and the aggregate amount for the following five years for this plan are:

(dollars in millions) 2012 $ 3.6 2013 3.7 2014 3.9 2015 4.2 2016 4.4 2017-2021 25.8

Asia Plan The Asia Plan is a nonqualified, supplementary account balance defined benefit plan for a select group of employees in Asia. The plan is an unfunded, noncontributory plan. As the plan is unfunded, the total benefit obligation at the end of each fiscal year is recognized as a liability on the Consolidated Balance Sheet. Of the $5.0 million liability recognized as of January 28, 2012, $0.1 million is recorded in accrued expenses and $4.9 million is recorded in other liabilities. Of the $5.2 million liability recognized as of January 29, 2011, $0.1 million was recorded in accrued expenses and $5.1 million was recorded in other liabilities. The components of the funded status, the components of net periodic benefit costs and the estimated future benefit payments for the next five years for the Asia Plan were not significant for 2010 or 2011.

Note 9 Defined Contribution Plans The Company has two qualified profit sharing plans offered by Payless ShoeSource (Payless Profit Sharing Plans) that cover full-time associates who have worked for the Company for 60 days and have attained age 21 or part-time associates who have completed one full year of employment and have attained age 21. The Payless Profit Sharing Plans are defined contribution plans that provide for Company contributions at the discretion of the Board of Directors. Full-time associates are eligible for a Company matching contribution upon completion of 180 days of employment. Part-time associates must complete one full year of employment to be eligible for the Company match. The Payless Profit Sharing Plans provide that the Company has discretion to contribute up to 2.5% of its pre-tax earnings from continuing operations as defined by the Payless Profit Sharing Plans. Associate contributions up to 5% of their pay are eligible for the match. Associates may voluntarily contribute to the Payless Profit Sharing Plans on both a pre-tax and after-tax basis. Total profit sharing contributions made for the Plans for the 2011, 2010 and 2009 plan years were $0.9 million, $3.6 million and $2.6 million, respectively.

PLG also provides a qualified safe harbor defined contribution plan (401(k) Plan) for its associates. This qualified defined contribution plan enables eligible associates to defer a portion of their salary to be held by the trustees of the plan and invested as self- directed by associates. Associates are eligible to join the 401(k) Plan on the first of the month following the completion of six months of employment and the attainment of age 21. The matching contribution is 100% on the first 3% of salary deferred and 50% on the next 3% of salary deferred. Matching contributions are made on a regular basis as salary is deferred and are not subject to a true-up at the end of the year. Total profit sharing contributions for this plan for 2011, 2010 and 2009 plan years were $2.1 million, $1.9 million and $2.6 million, respectively.

Note 10 Share-Based Compensation Under its equity incentive plans, the Company currently grants share appreciation vehicles consisting of stock options, stock-settled stock appreciation rights (stock-settled SARs) and cash-settled stock appreciation rights (cash-settled SARs), as well as full value vehicles consisting of nonvested shares and phantom stock units. Appreciation vehicles granted under the 1996 and 2006 Stock Incentive Plans are granted at the fair market value on the date of grant and may be exercised only after stated vesting dates or other vesting criteria, as applicable, have been achieved. Generally, vesting of appreciation vehicles is conditioned upon continued employment with the Company, although appreciation vehicles may be exercised during certain periods following retirement, termination, disability or death. Historically, the Company has used treasury shares for settlement of share-based compensation.

Under the 1996 Stock Incentive Plan, which expired in April 2006, the Company was authorized to grant a maximum of 15,600,000 shares, of which no more than 1,200,000 could be issued pursuant to non-vested share grants. Appreciation vehicles granted under the plan had a maximum term of 10 years and could vest on a graded schedule or a cliff basis. The exercise prices of appreciation vehicles equaled the average of the high and low trading prices of the Companys stock on the grant date. Non-vested shares granted under the plan could be granted with or without performance restrictions. Restrictions, including performance restrictions, lapse over periods of up to ten years, as determined at the date of grant. Associates who received non-vested shares paid no monetary consideration.

On May 25, 2006, the Companys shareowners approved the 2006 Stock Incentive Plan. On May 21, 2009, the 2006 Stock Incentive Plan was amended to allow the Company to grant a maximum of 4,987,000 shares. Appreciation vehicles to be granted under the plan have a maximum term of seven years and can vest on a graded schedule, a cliff basis or based on performance. The exercise price of an appreciation vehicle may not be less than the fair market value of the Companys stock on the grant date. Associates who receive full value vehicles

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents COLLECTIVE BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) pay no monetary consideration. Awards under the 2006 Stock Incentive Plan can be granted with or without performance restrictions. Restrictions, including performance restrictions, lapse over periods of up to seven years, as determined at the date of grant.

On May 25, 2006, the Companys shareowners approved amendments to and restatement of the Stock Plan for Non-Management Directors (the Director Plan). Under the Companys amended and restated Director Plan, each Director who is not an officer of the Company is eligible to receive share-based compensation in the form of non-qualified stock options and/or stock awards, including, but not limited to, restricted and unrestricted stock awards. All shares of common stock issued under the Director Plan are subject to restrictions on transferability and to forfeiture during a specified restricted period. The Director Plan provides for the issuance of not more than 350,000 shares of common stock, subject to adjustment for changes in the Companys capital structure. The Company may not, without stockholder approval, amend the Director Plan in a manner that would increase the number of shares of common stock available for awards, decrease the exercise price of any award, or otherwise materially increase benefits or modify eligibility requirements.

Under the Companys Amended Stock Purchase Plan, a maximum of 6,000,000 shares of the Companys common stock may be purchased by employees at a 5% discount. The current terms of the Stock Purchase Plan are such that the plan is non-compensatory. As a result, the purchase of shares by employees does not give rise to compensation cost.

Stock Options Transactions for stock options for fiscal year 2011 as well as information about stock options outstanding, vested or expected to vest, and exercisable at January 28, 2012 were as follows:

52 Weeks Ended January 28, 2012 As of January 28, 2012 Weighted Weighted Average Average Aggregate Exercise Remaining Intrinsic Options Price Contractual Life Value (units in thousands) (in years) (in millions) Outstanding at beginning of period 1,461 $ 19 Granted Exercised (81 ) 17 Forfeited or expired (220 ) 20 Outstanding at end of period 1,160 19 1 $ Vested and expected to vest at end of period 1,160 19 1 $ Exercisable at end of period 1,160 19 1 $

The aggregate intrinsic value was calculated using the difference between the current market price and the grant price for only those awards that have a grant price that is less than the current market price.

The total intrinsic value of options exercised during 2011, 2010 and 2009 was $0.4 million, $3.0 million and $2.3 million, respectively. The cash received from option exercises for 2011, 2010 and 2009 was $1.3 million, $10.1 million and $7.2 million, respectively, and excludes the cash received from the Companys employee stock purchase and deferred compensation plans. There was not a significant tax benefit realized for the deductions from options exercised during 2011, 2010 or 2009. The Company did not grant any stock options in 2011, 2010 or 2009.

Stock-settled SARs During 2011, the Company granted 226 thousand maximum share equivalents in the form of 407 thousand stock-settled SARs under the 2006 Stock Incentive Plan. Of this amount, 213 thousand stock-settled SARs are subject to a three-year graded vesting schedule, 54 thousand stock-settled SARs are subject to a three-year cliff vesting schedule and 140 thousand stock-settled SARs are subject to a performance condition and a three-year graded vesting schedule. For the stock-settled SARS that are subject to performance condition and a three-year graded vesting schedule, the performance grants vest only if the performance condition is met. As of January 28, 2012, the Company has assessed the likelihood that the performance condition will be met and has recorded the related expense based on the estimated outcome.

Upon exercise of a stock-settled SAR, employees will receive a number of shares of common stock equal in value to the appreciation in the fair market value of the underlying common stock from the grant date to the exercise date of the stock-settled SAR. All of the stock- settled SARs issued by the Company since 2010 contain an appreciation cap, which limits the appreciation for which shares of common stock will be granted to 125% of the fair market value of the underlying common stock on the grant date of the stock-settled SAR. As a result of the appreciation cap, a maximum of 5/9 of a share of common stock may be issued for each stock-settled SAR granted. Prior to 2010, the appreciation cap was 200%, a maximum of 2/3 of a share of common stock for each stock-settled SAR granted.

Transactions for stocksettled SARs for fiscal year 2011 and information about stock-settled SARs outstanding, stock-settled SARs vested or expected to vest and stock-settled SARs exercisable at January 28, 2012 were as follows:

1 The 4,860 thousand stock-settled SARs outstanding at the end of the period could be settled for a maximum of 3,127 thousand shares based upon the maximum appreciation cap in place at the time of grant. Included in the stock-settled SARs outstanding at the end of the period are 133 thousand performance shares that will be forfeited due to the 2011 performance criteria not being met.

The total intrinsic value of stock-settled SARs exercised during 2011, 2010 and 2009 was $2.0 million, $0.6 million and $0.1 million, respectively. There was no significant tax benefit realized for the deductions from stock-settled SARs exercised during 2011, 2010 and 2009. The weighted average fair value of units granted per unit for 2011, 2010 and 2009 were $8, $8 and $5, respectively.

Nonvested Shares and Share Units During 2011, the Company granted 404 thousand nonvested shares under the 2006 Stock Incentive Plan. The Company granted 171 thousand shares subject to a three-year cliff vesting schedule, 133 thousand nonvested shares that are subject to a performance condition and a three-year graded vesting schedule, 100 thousand nonvested shares that are subject to a performance condition and a three-year cliff vesting schedule. For the nonvested shares that are subject to performance condition, the performance grant vests only if the performance condition is met. As of January 28, 2012, the Company has assessed the likelihood that the performance condition will be met and has recorded the related expense based on the estimated outcome.

During 2011, the Company granted 8 thousand phantom nonvested shares. Each phantom nonvested share is worth the cash value of one share of common stock. The Company granted six thousand phantom nonvested shares that are subject to a performance condition and a three-year cliff vesting schedule, one thousand phantom nonvested shares that are subject to a three-year cliff vesting schedule and one thousand phantom nonvested shares that are subject to a performance condition and a three-year graded vesting schedule. For the phantom nonvested shares that are subject to performance condition, the performance grant vests only if the performance condition is met. As of January 28, 2012, the Company has assessed the likelihood that the performance condition will be met and has recorded the related expense based on the estimated outcome.

During 2011, the Company granted 63 thousand nonvested shares under the Director Plan. Pursuant to the provisions of the Director Plan, certain Directors elected to defer this compensation into 38 thousand share units that will be issued as common stock subsequent to the Directors resignation from the Board. The nonvested shares and share units granted under the Director Plan will vest on May 26, 2012. Deferral does not affect vesting. Deferred share units are excluded from the summary table of nonvested shares.

Excluding deferred shares under the Director Plan, transactions for nonvested shares and share units for the fiscal year 2011 were as follows:

52 Weeks Ended January 28, 2012 Nonvested Shares Weighted Average and Share Units Grant Date Fair Value (shares in thousands) Nonvested at beginning of period 865 $ 17 Granted 437 19 Vested (467 ) 16 Forfeited or expired (163 ) 19 Nonvested at end of period 672 19

The weighted average grant date fair value of nonvested shares granted in 2011, 2010 and 2009 was $19, $20 and $11, respectively. Included in the 671 thousand shares and share units are the 25 thousand nonvested, non-deferred shares under the Director Plan and the 8 thousand phantom nonvested shares that will be settled in cash.

Cash-settled SARs During 2011, the Company did not issue cash-settled SARs.

Transactions for cash-settled SARs for the fiscal year 2011 were as follows:

52 Weeks Ended January 28, 2012 Cash-Settled Weighted Average SARs Grant Price (shares in thousands) Outstanding at beginning of period 145 $ 21 Granted Vested (1 ) 12 Forfeited or expired (20 ) 16 Outstanding at end of period 124 21 Exercisable or convertible at end of period 107 22

The Company did not grant cash-settled SARs in 2011. The weighted average fair value per unit granted for 2010 and 2009 was $8 and $5, respectively. Cash-settled SARs are liability awards and the fair value and expense recognized for all awards is updated each reporting period.

Fair Value The Company uses a binomial model to determine the fair value of its share-based awards. The binomial model considers a range of assumptions relative to volatility, risk-free interest rates and employee exercise behavior. The Company believes the binomial model provides a fair value that is representative of actual and future experience.

The fair value of stock-settled SARs granted was calculated using the following assumptions:

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 Risk-free interest rate 1.5 % 1.9 % 1.7 % Expected dividend yield % % % Expected appreciation vehicle life (in years) 4 4 4 Weighted-average expected volatility 62 % 60 % 58 %

Risk-free interest rate The rate is based on zero-coupon U.S. Treasury yields in effect at the date of grant, utilizing separate rates for each whole year up to the contractual term of the appreciation vehicle and interpolating for time periods between those not listed. Expected dividend yield the Company has not historically paid dividends and has no immediate plans to do so; as a result, the dividend yield is assumed to be zero. Expected appreciation vehicle life The expected life is derived from the output of the binomial lattice model and represents the period of time that the appreciation vehicles are expected to be outstanding. This model incorporates time-based early exercise assumptions based on an analysis of historical exercise patterns. Expected Volatility The rate used in the binomial model is based on an analysis of historical prices of the Companys stock. The Company currently believes that historical volatility is a good indicator of future volatility.

The total fair value of shares granted during 2011, 2010 and 2009 was $10.8 million, $9.6 million and $2.3 million, respectively.

Compensation Expense Total share-based compensation expense is summarized as follows:

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Cost of sales $ 3.2 $ 4.1 $ 4.1 Selling, general and administrative expenses 9.5 12.5 12.3 Share-based compensation expense before income taxes $ 12.7 $ 16.6 $ 16.4

No amount of share-based compensation has been capitalized. As of January 28, 2012, the Company had unrecognized compensation expense related to nonvested awards of approximately $6.7 million, which is expected to be recognized over a weighted average period of 0.8 years.

Note 11 Income Taxes Earnings (loss) before income taxes and noncontrolling interest include the following components:

2011 2010 2009 (dollars in millions) Domestic $(172.1) $26.2 $2.1 Foreign 106.3 113.8 95.5 Total $(65.8 ) $140.0 $97.6

The provision for income taxes consisted of the following:

2011 2010 2009 (dollars in millions) Federal $(11.8) $0.6 $1.2 State and local 0.9 1.6 0.3 Foreign 13.9 11.0 4.1 Current tax provision 3.0 13.2 5.6 Federal 58.8 3.8 3.3 State and local 21.6 (0.3 ) 0.1 Foreign 0.6 0.7 0.4 Deferred tax provision 81.0 4.2 3.8 Total provision $84.0 $17.4 $9.4

The reconciliation between the statutory federal income tax rate and the effective income tax rate as applied to continuing operations was as follows:

2011 2010 2009 (dollars in millions) Statutory federal income tax rate 35.0 % $(23.0 ) 35.0 % $49.0 35.0 % $34.2 State and local income taxes, net of federal tax benefit 7.8 (5.2 ) 0.9 1.3 0.5 0.4 Federal domestic valuation allowance (162.3) 106.8 State valuation allowance (42.0 ) 27.7 Rate differential on foreign earnings, net of valuation allowance 18.0 (11.8 ) (17.8) (24.9) (20.2) (19.7) Decrease in tax reserves 10.6 (7.0 ) (3.8 ) (5.3 ) (5.4 ) (5.3 ) Federal employment tax credits 3.2 (2.1 ) (1.1 ) (1.6 ) (1.6 ) (1.5 ) Other, net 2.0 (1.4 ) (0.8 ) (1.1 ) 1.3 1.3 Effective income tax rate (127.7)% 84.0 12.4 % $17.4 9.6 % $9.4

The Companys effective tax rates have differed from the U.S. statutory rate principally due to the impact of its operations conducted in jurisdictions with rates lower than the U.S. statutory rate, the benefit of jurisdictional and employment tax credits, and either favorable or unfavorable discrete events. The Company has recorded net unfavorable discrete events of $75.8 million in 2011, and net favorable discrete events of $7.8 million and $7.9 million in 2010 and 2009, respectively. The discrete events in 2009 and 2010 relate primarily to the resolution of outstanding tax audits, and the unfavorable discrete events in 2011 relate primarily to the establishment of a valuation allowance against domestic deferred tax assets.

The rate differential on foreign earnings, net of valuation allowance, arises primarily from the Companys offshore entities in Asia (China, Hong Kong, Taiwan, and Vietnam) which source the majority of the Companys product and are subject to substantially lower local country income taxes. The Companys weighted average foreign effective tax rate for fiscal years 2011, 2010 and 2009 was 14.8%, 9.2% and 11.8%, respectively. The weighted average foreign effective tax rate is higher for 2011 due to payment of an audit settlement in Asia for years 2002 to 2009. Similarly, the rate differential on foreign earnings is lower than prior years due to the Asian audit settlement as well as US deferred taxes provided on certain foreign earnings which are not permanently reinvested.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

2011 2010 2009 (dollars in millions) Gross unrecognized tax benefits at beginning of year 52.1 58.3 55.0 Increases in tax positions for prior years 0.4 1.4 0.2 Decreases in tax positions for prior years Increases in tax positions for current year 0.4 0.6 7.9 Settlements (0.2 ) (6.5 ) (3.4 ) Lapse in statute of limitations (20.9) (1.7 ) (1.4 ) Gross unrecognized tax benefits at end of year $31.8 $52.1 $58.3

The portions of the unrecognized tax benefits as of January 28, 2012, January 29, 2011 and January 30, 2010 which will favorably impact the effective tax rate if recognized are $19.1 million, $22.2 million and $34.6 million, respectively.

The net amount of interest and penalties related to unrecognized tax benefits included in the provision for income taxes in the Consolidated Statements of (Loss) Earnings was a benefit of $4.3 million and $1.8 million in 2011 and 2010, respectively and an expense of $1.1 million in 2009. Accrued interest and penalties as of January 28, 2012, January 29, 2011 and January 30, 2010 were $3.0 million, $7.3 million, and $9.1 million, respectively. The Companys U.S. federal income tax returns have been examined by the Internal Revenue Service through 2007. The Company has certain state and foreign income tax returns in the process of examination or administrative appeal.

The Company anticipates that it is reasonably possible that the total amount of unrecognized tax benefits at January 28, 2012 will decrease by up to $2.3 million within the next 12 months due to potential settlements of on-going examinations with tax authorities and the potential lapse of the statutes of limitations in various taxing jurisdictions. To the extent that these tax benefits are recognized, the effective tax rate will be favorably impacted by up to $1.5 million.

Major components of deferred tax assets (liabilities) were as follows:

2011 2010 (dollars in millions) Deferred Tax Assets: Accrued expenses and reserves $103.4 $93.9 Tax net operating losses and tax credits 111.2 69.0 Other 8.9 11.1 Gross deferred tax assets 223.5 174.0 Less: valuation allowance (155.0) (15.4 ) Deferred tax assets $68.5 $158.6 Deferred Tax Liabilities: Short term assets basis differences $ $(5.5 ) Depreciation/amortization and basis differences (152.5) (164.5) Other (21.4 ) (13.2 ) Deferred Tax Liabilities (173.9) (183.2) Net deferred tax liability $(105.4) $(24.6 )

The deferred tax assets and (liabilities) are included on the Consolidated Balance Sheets as follows:

2011 2010 (dollars in millions) Current deferred income tax assets $7.2 $30.7 Current deferred income tax liability (0.9 ) Deferred income tax assets (noncurrent) 10.7 10.1 Deferred income tax liability (noncurrent) (122.4) (65.4) $(105.4) $(24.6)

The Company provides a valuation allowance against net deferred tax assets if, based on operating results and other objectively verifiable evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Companys current year results generated a three year cumulative pre-tax loss in its domestic jurisdiction. The cumulative loss resulted in the Company recording a non-cash valuation allowance on domestic deferred tax assets of $105.7 million during the third quarter, and $33.1 million in the fourth quarter, as realization of the deferred tax assets was not more likely than not. Of the $138.8 million increase in domestic valuation allowance during 2011, $80.8 million relates to assets established in a prior year, and $58.0 million relates to deferred tax assets established in the current year. The Companys total valuation allowance at January 28, 2012 is $155.0 million comprised of the domestic valuation allowance of $149.0 million and a foreign valuation allowance of $6.0 million relating primarily to net operating losses in countries where a pattern of profitability has not yet been established. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from using its loss carryforwards or utilizing other deferred tax assets in the future. If the valuation allowance on deferred tax assets is reversed in the future, the benefit will likely be recorded in the Consolidated Statement of (Loss) Earnings, except for $23.1 million related to AOCI, which will be credited to Collective Brands, Inc. shareowners equity.

During 2011, the Company recorded a deferred income tax provision of $81.0 million in the Consolidated Statements of (Loss) Earnings. The Company recorded an increase to deferred tax assets of $0.3 million related to items within AOCI. The remaining change in its net deferred tax liabilities relates to foreign currency translation.

At January 28, 2012, deferred tax assets for federal, state and foreign net operating loss carryforwards are $48.8 million, less a valuation allowance of $44.0 million. These net operating loss carryforwards will expire as follows:

Valuation Expiration Amount Allowance (dollars in millions) Federal net operating losses 2031 $30.2 $ (30.2 ) State net operating losses 2012-2016 0.7 (0.7 ) State net operating losses 2017-2021 1.8 (1.8 ) State net operating losses 2022-2026 3.2 (3.2 ) State net operating losses 2027-2031 3.3 (3.3 ) Foreign net operating losses Indefinite 5.0 (4.8 ) Foreign net operating losses 2020 0.2 Foreign net operating losses 2029-2031 4.4 Total $48.8 $ (44.0 )

At January 28, 2012, deferred tax assets for federal, state and foreign tax credits are $59.4 million, less a valuation allowance of $58.2 million. These credits will expire as follows:

Valuation Expiration Amount Allowance (dollars in millions) Federal foreign tax credit carryforwards 2018-2021 $29.5 $ (29.5 ) Federal general business credit carryforwards 2028-2031 11.6 (11.6 ) State income tax credit carryforwards 2012-2016 2.1 (2.1 ) State income tax credit carryforwards 2017-2021 3.5 (3.5 ) State income tax credit carryforwards 2012-2028 4.1 (4.1 ) State income tax credit carryforwards Indefinite 6.5 (6.5 ) Puerto Rico alternative minimum tax credit carryforward Indefinite 2.1 (0.9 ) Total $59.4 $ (58.2 )

The Company also has a deferred tax asset relating to a federal capital loss carryforward of $1.7 million, expiring in 2012, and a charitable contributions carryforward of $1.3 million, expiring in 2016, which have been fully reserved with a valuation allowance.

As of January 28, 2012, the Company has not provided US tax on its cumulative undistributed earnings of foreign subsidiaries of approximately $244 million, because it is the Companys intention to reinvest these earnings indefinitely. The calculation of the unrecognized deferred tax liability related to these earnings is complex and the calculation is not practicable. If earnings were distributed, the Company would be subject to US taxes and withholding taxes payable to various foreign governments. Based on the facts and circumstances at that time, the Company would determine whether a credit for foreign taxes already paid would be available to reduce or offset the US tax liability.

Note 12 Earnings Per Share The Company calculates earnings per share under earnings per share accounting guidance which states that unvested share- based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that would otherwise have been available to common shareholders.

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions, except per share amounts; shares in thousands) Net (loss) earnings attributable to Collective Brands, Inc. from continuing operations $(160.2 ) $112.8 $82.6 Less: net earnings allocated to participating securities(1) 1.8 1.1 Net (loss) earnings available to common shareholders from continuing operations $(160.2 ) $111.0 $81.5 Weighted average shares outstanding basic 60,230 62,579 63,127 Net effect of dilutive stock options 154 139 Net effect of dilutive SARs 606 227 Weighted average shares outstanding diluted 60,230 63,339 63,493 Basic (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.77 $1.29 Diluted (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.75 $1.28

(1) Net earnings allocated to participating securities is calculated based upon a weighted average percentage of participating securities in relation to total shares outstanding. Net losses are not allocated to participating securities.

All of the Companys stock options and stock settled SARs outstanding were excluded from the calculation of diluted earnings per share for the 52 weeks ended January 28, 2012 as their effects were antidilutive. The Company excluded approximately 3.8 million and 4.8 million stock options and stock-settled SARs from the calculation of diluted earnings per share for the fifty-two weeks ended January 29, 2011 and January 30, 2010, respectively, as their effects were antidilutive.

Note 13 Accrued Expenses and Other Liabilities Major components of accrued expenses included:

2011 2010 (dollars in millions) Profit sharing, bonus and salaries $47.3 $76.0 Sales, use and other taxes 27.3 30.3 Accrued construction in process 9.0 8.4 Workers compensation and general liability insurance reserves 8.3 9.8 Accrued interest 6.8 10.8 Accrued occupancy 6.3 6.9 Accrued excess property 5.8 0.1 Straight-line rent 5.6 5.8 Accrued income taxes 4.6 5.1 Current portion of pension plan 4.2 4.9 Accrued advertising 4.0 4.4 Accrued royalty 3.4 4.0 Other accrued expenses 14.4 17.9 Total $147.0 $184.4

Major components of other liabilities included:

2011 2010 (dollars in millions) Pension plans $77.6 $58.9 Straight-line rent 29.0 30.1 Workers compensation and general liability insurance reserves 20.9 19.0 Noncurrent income taxes 20.0 44.7 Deferred tenant improvement allowances, net 18.9 23.5 Deferred compensation 15.6 15.8 Asset retirement obligation 7.1 7.9 Long-term compensation 7.4 5.1 Other liabilities 6.3 7.4 Total $202.8 $212.4

Note 14 Lease Obligations Rental expense for the Companys operating leases consisted of:

2011 2010 2009 (dollars in millions) Minimum rentals $327.9 $314.4 $313.5 Contingent rentals based on sales 8.7 7.8 7.4 Real property rentals 336.6 322.2 320.9 Equipment rentals 0.1 4.4 4.7 Total $336.7 $326.6 $325.6

Most store lease agreements contain renewal options and include escalating rents over the lease terms. Certain leases provide for contingent rentals based upon gross sales. Cumulative expense recognized on the straight-line basis in excess of cumulative payments is included in accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. Certain lease agreements provide for scheduled rent increases during the lease term, as well as provisions for renewal options. Rent expense is recognized on a straight- line basis over the term of the lease from the time at which the Company takes possession of the property. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of straight-line rent expense includes renewal option periods. Also, landlord-provided tenant improvement allowances are recorded as a liability and amortized as a credit to rent expense.

Future minimum lease payments under capital leases and non-cancelable operating lease obligations as of January 28, 2012, were as follows:

Capital Operating Leases Leases Total (dollars in millions) 2012 $ 0.1 $252.1 $252.2 2013 0.1 206.9 207.0 2014 0.1 157.7 157.8 2015 0.1 115.3 115.4 2016 0.1 89.4 89.5 2017 and thereafter 0.9 196.7 197.5 Minimum lease payments $ 1.4 $1,018.1 $1,019.4 Less: imputed interest component 0.5 Present value of net minimum lease payments of which $0.1 million is included in current liabilities $ 0.9

At January 28, 2012, the total amount of minimum rentals to be received in the future under non-cancelable subleases was $1.5 million.

Note 15 Common Stock Repurchases The Company has repurchased the following:

2011 2010 2009 Dollars Shares Dollars Shares Dollars Shares (dollars in millions, shares in thousands) Stock repurchase program $14.9 993 $59.8 3,626 $ 6.0 274 Employee stock purchase, deferred compensation and stock incentive plans 3.8 212 4.1 208 1.6 115 $18.7 1,205 $63.9 3,834 $ 7.6 389

As of January 28, 2012, the Company had approximately $124 million of remaining common stock repurchase authorization from its Board of Directors. Under the terms of the Companys Senior Subordinated Notes, Term Loan Facility and Revolving Loan Facility, the Company is restricted on the amount of common stock it may repurchase. This limit may increase or decrease on a quarterly basis based upon the Companys net earnings.

Note 16 Segment Reporting The Company has four reporting segments: (i) Payless Domestic, (ii) Payless International, (iii) PLG Wholesale and (iv) PLG Retail. The Company has defined its reporting segments as follows: (i) The Payless Domestic reporting segment is comprised primarily of domestic retail stores under the Payless ShoeSource name, the Companys sourcing unit and Collective Licensing. (ii) The Payless International reporting segment is comprised of international retail stores under the Payless ShoeSource name in Canada, the South American Region, the Central American Region, Puerto Rico, and the U.S. Virgin Islands as well as franchising arrangements under the Payless ShoeSource name. (iii) The PLG Wholesale reporting segment consists of PLGs global wholesale operations. (iv) The PLG Retail reporting segment consists of PLGs owned Stride Rite childrens stores, PLGs Outlet stores, store-in- stores at select Macys Department Stores and Sperry Top-Sider stores.

Payless Internationals operations in the Central American and South American Regions are operated as joint ventures in which the Company maintains a 60% ownership interest. Noncontrolling interest represents the Companys joint venture partners share of net earnings or losses on applicable international operations. Certain management costs for services performed by Payless Domestic and certain royalty fees and sourcing fees charged by Payless Domestic are allocated to the Payless International segment. The total costs and fees amounted to $37.4 million, $39.3 million and $36.0 million during 2011, 2010 and 2009, respectively.

The reporting period for operations in the Central and South American Regions use a December 31 year-end. The effect of this one- month lag on the Companys financial position and results of operations is not significant. Information on the segments is as follows:

Payless Payless PLG PLG Domestic International Wholesale Retail Consolidated (dollars in millions) Fiscal year ended January 28, 2012: Net sales $1,972.9 $ 469.6 $ 778.6 $240.6 $ 3,461.7 Operating (loss) profit (96.0 ) 32.6 43.9 (7.3 ) (26.8 ) Interest expense 38.9 38.9 Interest income (0.2 ) (0.2 ) (0.4 ) Loss on early extinguishment of debt 0.5 0.5 Net (loss) earnings before taxes $(135.2 ) $ 32.8 $ 43.9 $(7.3 ) $ (65.8 ) Depreciation and amortization $94.1 $ 15.9 $ 16.1 $5.6 $ 131.7 Total assets $834.6 $ 232.3 $ 912.0 $68.3 $ 2,047.2 Additions to long-lived assets $66.4 $ 15.0 $ 2.4 $15.1 $ 98.9 Fiscal year ended January 29, 2011: Net sales $2,059.3 $ 460.3 $ 628.4 $227.7 $ 3,375.7 Operating profit (loss) 75.2 55.6 61.7 (2.8 ) 189.7 Interest expense 48.6 0.1 48.7 Interest income (0.5 ) (0.2 ) (0.7 ) Loss on early extinguishment of debt 1.7 1.7 Net earnings (loss) before taxes $25.4 $ 55.7 $ 61.7 $(2.8 ) $ 140.0 Depreciation and amortization $97.9 $ 16.8 $ 17.1 $6.4 $ 138.2 Total assets $1,039.3 $ 258.4 $ 905.3 $65.5 $ 2,268.5 Additions to long-lived assets $73.3 $ 11.7 $ 6.6 $6.0 $ 97.6 Fiscal year ended January 30, 2010: Net sales $2,153.2 $ 422.4 $ 513.9 $218.4 $ 3,307.9 Operating profit (loss) from continuing operations 98.1 34.1 30.0 (3.7 ) 158.5 Interest expense 60.7 0.1 60.8 Interest income (1.0 ) (0.1 ) (1.1 ) Loss on early extinguishment of debt 1.2 1.2 Net earnings (loss) from continuing operations before taxes $37.2 $ 34.1 $ 30.0 $(3.7 ) $ 97.6 Depreciation and amortization $98.4 $ 17.4 $ 21.7 $5.7 $ 143.2 Total assets $1,151.1 $ 201.5 $ 866.3 $65.4 $ 2,284.3 Additions to long-lived assets $66.6 $ 17.5 $ 4.1 $3.6 $ 91.8

The following is a summary of net sales by geographical area:

2011 2010 2009 (dollars in millions) Domestic $2,836.1 $2,785.9 $2,781.8 International 625.6 589.8 526.1

The following is a summary of long-lived assets by geographical area:

2011 2010 2009 (dollars in millions) Domestic $302.3 $363.4 $396.7 International 67.1 68.9 67.5

Note 17 Commitments and Contingencies As of January 28, 2012, the Company has $80.9 million of royalty obligations consisting of minimum royalty payments for the purchase of branded merchandise, $84.4 million of future estimated pension obligations related to the Companys pension plans, $19.2 million of service agreement obligations relating to minimum payments for services that the Company cannot avoid without penalty and $21.2 million of employment agreement obligations related to minimum payments to certain of the Companys executives.

There are no pending legal proceedings other than ordinary, routine litigation incidental to the business to which the Company is a party or of which its property is subject, none of which the Company expects to have a material impact on its financial position, results of operations or cash flows.

Note 18 Environmental Liability The Company owns a property with a related environmental liability. The liability as of January 28, 2012 was $0.5 million, $0.1 million of which was included as an accrued expense and $0.4 million of which was included in other long-term liabilities in the accompanying Consolidated Balance Sheet. The assessment of the liability and the associated cost were based upon available information after consultation with environmental engineers, consultants and attorneys assisting the Company in addressing these environmental issues. The Company estimates the total cost related to this environmental liability to be $6.3 million, including $5.8 million of costs that have already been paid. Actual costs to address the environmental conditions may change based upon further investigations, the conclusions of regulatory authorities about information gathered in those investigations and due to the inherent uncertainties involved in estimating conditions in the environment and the costs of addressing such conditions.

Note 19 Impact of Recently Issued Accounting Standards In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The Company does not believe ASU 2011-04 will have a significant impact on its Consolidated Financial Statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (ASU 2011-05), which is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2011. The provisions of ASU 2011-05 require companies to display adjustments for items that are reclassified from other comprehensive income (OCI) to net income in both net income and OCI in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company does not believe ASU 2011-05 will have a significant impact on its Consolidated Financial Statements.

In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents COLLECTIVE BRANDS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) however, early adoption is permitted. Under the new guidance, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the entity determines that this threshold is not met, then performing the two-step impairment test is unnecessary. The Company does not believe ASU 2011-08 will have a significant impact on its Consolidated Financial Statements.

Note 20 Related Party Transactions The Company maintains banking relationships with certain financial institutions that are affiliated with some of the Companys Latin America joint venture partners. Total deposits in these financial institutions at the end of 2011 and 2010 were $10.7 million and $12.7 million, respectively. There were no borrowings from the Companys Latin American partners as of the end of 2011 and 2010.

Note 21 Shareholder Protection Rights Plan In the third quarter of 2011, the Company adopted a short duration Rights Plan to protect shareholder rights. Under the Rights Plan, the Shareholder Rights (the Rights) will become exercisable if a person or group acquires 15% or more of Collective Brands, Inc. outstanding common stock. The Record Date for the issuance of the Rights was September 6, 2011 and the Rights will expire on August 15, 2012 unless earlier redeemed or terminated.

Note 22 Subsidiary Guarantors of Senior Notes Consolidating Financial Information The Company has issued Notes guaranteed by certain of its subsidiaries (the Guarantor Subsidiaries). The Guarantor Subsidiaries are direct or indirect 100% owned domestic subsidiaries of the Company. The guarantees are full and unconditional and joint and several.

The following supplemental financial information sets forth, on a consolidating basis, the Condensed Statements of (Loss) Earnings for the Company (the Parent Company), for the Guarantor Subsidiaries and for the Companys non-guarantor subsidiaries (the Non- guarantor Subsidiaries) and total consolidated Collective Brands, Inc. and subsidiaries for the 52 week periods ended January 28, 2012, January 29, 2011, and January 30, 2010, Condensed Balance Sheets as of January 28, 2012, and January 29, 2011 and the Condensed Statements of Cash Flows for the 52 week periods ended January 28, 2012, January 29, 2011, and January 30, 2010. With the exception of operations in the Central and South American Regions in which the Company has a 60% ownership interest, the Non- guarantor Subsidiaries are direct or indirect wholly-owned subsidiaries of the Guarantor Subsidiaries. The equity investment for each subsidiary is recorded by its parent in Other Assets.

The Non-guarantor Subsidiaries are made up of the Companys operations in the Central and South American Regions, Canada, Mexico, Germany, the Netherlands, the United Kingdom, Ireland, Australia, Bermuda, Saipan and Puerto Rico and the Companys sourcing organization in Hong Kong, Taiwan, China, Vietnam, Indonesia and Brazil. The operations in the Central and South American Regions use a December 31 year-end. Operations in the Central and South American Regions are included in the Companys results on a one-month lag relative to results from other regions. The effect of this one-month lag on the Companys financial position and results of operations is not significant.

Under the indenture governing the Notes, the Companys subsidiaries in Singapore are designated as unrestricted subsidiaries. The effect of these subsidiaries on the Companys financial position and results of operations and cash flows is not significant. The Companys subsidiaries in Singapore are included in the Non-guarantor Subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 28, 2012 Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $ $2,907.1 $1,522.4 $ (967.8 ) $ 3,461.7 Cost of sales 2,123.2 1,244.6 (935.6 ) 2,432.2 Gross margin 783.9 277.8 (32.2 ) 1,029.5 Selling, general and administrative expenses 4.0 902.3 172.2 (32.2 ) 1,046.3 Impairment of goodwill 10.0 10.0 Operating (loss) profit (4.0 ) (128.4 ) 105.6 (26.8 ) Interest expense 49.9 25.5 0.5 (37.0 ) 38.9 Interest income (36.2 ) (1.2 ) 37.0 (0.4 ) Loss on early extinguishment of debt 0.5 0.5 Equity in earnings of subsidiaries 105.8 (81.4 ) (24.4 ) (Loss) earnings before income taxes (160.2 ) (36.3 ) 106.3 24.4 (65.8 ) Provision for income taxes 69.5 14.5 84.0 Net (loss) earnings (160.2 ) (105.8 ) 91.8 24.4 (149.8 ) Net earnings attributable to noncontrolling interests (10.4 ) (10.4 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) $(105.8 ) $81.4 $ 24.4 $ (160.2 )

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CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 29, 2011 Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $ $2,950.8 $1,440.6 $(1,015.7 ) $ 3,375.7 Cost of sales 2,015.6 1,073.7 (914.8 ) 2,174.5 Gross margin 935.2 366.9 (100.9 ) 1,201.2 Selling, general and administrative expenses 4.1 855.8 252.5 (100.9 ) 1,011.5 Restructuring charges Operating (loss) profit (4.1 ) 79.4 114.4 189.7 Interest expense 45.3 33.4 0.1 (30.1 ) 48.7 Interest income (30.7 ) (0.1 ) 30.1 (0.7 ) Loss on early extinguishment of debt 1.7 1.7 Equity in earnings of subsidiaries (144.7 ) (92.6 ) 237.3 Earnings before income taxes 95.3 167.6 114.4 (237.3 ) 140.0 (Benefit) provision for income taxes (17.5 ) 22.9 12.0 17.4 Net earnings 112.8 144.7 102.4 (237.3 ) 122.6 Net earnings attributable to noncontrolling interests (9.8 ) (9.8 ) Net earnings attributable to Collective Brands, Inc. $112.8 $144.7 $92.6 $(237.3 ) $ 112.8

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CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 30, 2010 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $ $2,917.0 $ 1,212.5 $ (821.6 ) $ 3,307.9 Cost of sales 2,022.8 864.4 (720.3 ) 2,166.9 Gross margin 894.2 348.1 (101.3 ) 1,141.0 Selling, general and administrative expenses 2.1 832.0 249.6 (101.3 ) 982.4 Restructuring charges 0.1 0.1 Operating (loss) profit from continuing operations (2.1 ) 62.1 98.5 158.5 Interest expense 24.4 43.4 0.1 (7.1 ) 60.8 Interest income (8.1 ) (0.1 ) 7.1 (1.1 ) Loss on early extinguishment of debt 1.0 0.2 1.2 Equity in earnings of subsidiaries (100.1 ) (88.4 ) 188.5 Earnings from continuing operations before income taxes 72.6 115.0 98.5 (188.5 ) 97.6 (Benefit) provision for income taxes (10.1 ) 15.0 4.5 9.4 Net earnings from continuing operations 82.7 100.0 94.0 (188.5 ) 88.2 Loss from discontinued operations, net of income taxes 0.1 0.1 Net earnings 82.7 100.1 94.0 (188.5 ) 88.3 Net earnings attributable to noncontrolling interests (5.6 ) (5.6 ) Net earnings attributable to Collective Brands, Inc. $82.7 $100.1 $ 88.4 $ (188.5 ) $ 82.7

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CONDENSED CONSOLIDATING BALANCE SHEET

As of January 28, 2012 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

ASSETS Current Assets: Cash and cash equivalents $ $46.3 $ 135.0 $ $ 181.3 Accounts receivable, net 127.9 36.7 (18.6 ) 146.0 Inventories 434.0 124.1 5.3 563.4 Current deferred income taxes 7.2 7.2 Prepaid expenses 35.6 16.3 9.6 61.5 Other current assets 356.0 160.3 (494.5 ) 21.8 Total current assets 35.6 980.5 472.9 (507.8 ) 981.2 Property and equipment, net 302.3 67.1 369.4 Intangible assets, net 358.7 26.0 384.7 Goodwill 133.5 136.3 269.8 Deferred income taxes 10.7 10.7 Other assets 1,409.9 979.5 25.7 (2,383.7 ) 31.4 Total Assets $1,445.5 $2,754.5 $ 738.7 $(2,891.5 ) $ 2,047.2

LIABILITIES AND EQUITY Current Liabilities: Current maturities of long-term debt $ $5.1 $ $ $ 5.1 Accounts payable 147.8 158.8 (15.0 ) 291.6 Accrued expenses 209.7 384.4 46.5 (493.6 ) 147.0 Total current liabilities 209.7 537.3 205.3 (508.6 ) 443.7 Long-term debt 587.5 504.2 7.9 (494.8 ) 604.8 Deferred income taxes 121.3 1.1 122.4 Other liabilities 3.5 183.2 16.1 202.8 Commitments and contingencies Equity: Collective Brands, Inc. shareowners equity 644.8 1,408.5 479.6 (1,888.1 ) 644.8 Noncontrolling interests 28.7 28.7 Total equity 644.8 1,408.5 508.3 (1,888.1 ) 673.5 Total Liabilities and Equity $1,445.5 $2,754.5 $ 738.7 $(2,891.5 ) $ 2,047.2

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CONDENSED CONSOLIDATING BALANCE SHEET

As of January 29, 2011 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

ASSETS Current Assets: Cash and cash equivalents $ $122.4 $ 201.7 $ $ 324.1 Accounts receivable, net 103.4 21.2 (10.2 ) 114.4 Inventories 418.5 122.5 (9.3 ) 531.7 Current deferred income taxes 23.1 7.6 30.7 Prepaid expenses 28.4 15.8 10.9 55.1 Other current assets 276.9 150.9 (405.6 ) 22.2 Total current assets 28.4 960.1 514.8 (425.1 ) 1,078.2 Property and equipment, net 361.3 71.0 432.3 Intangible assets, net 399.4 29.0 428.4 Goodwill 142.9 136.9 279.8 Deferred income taxes 10.1 10.1 Other assets 1,538.6 916.4 22.1 (2,437.4 ) 39.7 Total Assets $1,567.0 $2,780.1 $ 783.9 $(2,862.5 ) $ 2,268.5

LIABILITIES AND EQUITY Current Liabilities: Current maturities of long-term debt $ $5.1 $ $ $ 5.1 Accounts payable 140.0 237.1 (89.7 ) 287.4 Accrued expenses 103.8 376.4 32.9 (328.7 ) 184.4 Total current liabilities 103.8 521.5 270.0 (418.4 ) 476.9 Long-term debt 637.0 484.3 67.1 (529.0 ) 659.4 Deferred income taxes 64.0 1.4 65.4 Other liabilities 3.3 191.9 17.2 212.4 Commitments and contingencies Equity: Collective Brands, Inc. shareowners equity 822.9 1,518.4 396.7 (1,915.1 ) 822.9 Noncontrolling interests 31.5 31.5 Total equity 822.9 1,518.4 428.2 (1,915.1 ) 854.4 Total Liabilities and Equity $1,567.0 $2,780.1 $ 783.9 $(2,862.5 ) $ 2,268.5

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 28, 2012 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net (loss) earnings $(160.2 ) $ (105.8 ) $ 91.8 $ 24.4 $ (149.8 ) Adjustments for non-cash items included in net earnings 1.0 288.5 25.5 315.0 Changes in working capital 98.7 (105.9 ) (87.6 ) (7.5 ) (102.3 ) Other, net 127.4 (129.5 ) 1.8 (16.9 ) (17.2 ) Cash flow provided by (used in) operating activities 66.9 (52.7 ) 31.5 45.7 Investing Activities: Capital expenditures (74.8 ) (24.1 ) (98.9 ) Intangible asset additions (0.9 ) (0.5 ) (1.4 ) Cash flow used in investing activities (75.7 ) (24.6 ) (100.3 ) Financing Activities: Net repayment of debt or notes payable (50.0 ) 54.1 (59.2 ) (55.1 ) Payment of deferred financing costs (1.8 ) (1.8 ) Net purchases of common stock (16.9 ) (16.9 ) Net distributions to noncontrolling interests (13.2 ) (13.2 ) Cash flow (used in) provided by financing activities (66.9 ) 52.3 (72.4 ) (87.0 ) Effect of exchange rate changes on cash (1.2 ) (1.2 ) Decrease in cash and cash equivalents (76.1 ) (66.7 ) (142.8 ) Cash and cash equivalents, beginning of year 122.4 201.7 324.1 Cash and cash equivalents, end of year $ $ 46.3 $ 135.0 $ $ 181.3

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 29, 2011 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net earnings $112.8 $ 144.7 $ 102.4 $ (237.3 ) $ 122.6 Adjustments for non-cash items included in net earnings 0.3 156.5 18.1 174.9 Changes in working capital 72.6 (159.3 ) 68.0 1.9 (16.8 ) Other, net (132.5 ) (33.0 ) (79.1 ) 235.4 (9.2 ) Cash flow provided by operating activities 53.2 108.9 109.4 271.5 Investing Activities: Capital expenditures (82.2 ) (15.4 ) (97.6 ) Cash flow used in investing activities (82.2 ) (15.4 ) (97.6 ) Financing Activities: Net repayment of debt or notes payable (184.1 ) (1.1 ) (185.2 ) Net purchases of common stock (53.2 ) (53.2 ) Net distributions to noncontrolling interests (7.7 ) (7.7 ) Cash flow used in financing activities (53.2 ) (184.1 ) (8.8 ) (246.1 ) Effect of exchange rate changes on cash 2.8 2.8 Increase in cash and cash equivalents (157.4 ) 88.0 (69.4 ) Cash and cash equivalents, beginning of year 279.8 113.7 393.5 Cash and cash equivalents, end of year $ $ 122.4 $ 201.7 $ $ 324.1

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CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 30, 2010 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net earnings $ 82.7 $ 100.1 $ 94.0 $ (188.5 ) $ 88.3 Loss from discontinued operations, net of income taxes (0.1 ) (0.1 ) Adjustments for non-cash items included in net earnings 1.1 159.3 18.8 179.2 Changes in working capital 34.9 102.8 (43.0 ) (30.1 ) 64.6 Other, net (95.8 ) (95.5 ) (11.0 ) 177.9 (24.4 ) Cash flow provided by operating activities 22.9 266.6 58.8 (40.7 ) 307.6 Investing Activities: Capital expenditures (66.3 ) (17.7 ) (84.0 ) Proceeds from sale of property and equipment 2.8 2.8 Dividends received related party 1.6 (1.6 ) Issuance of intercompany debt (19.0 ) 19.0 Other, net (1.8 ) (17.2 ) (19.0 ) Cash flow used in investing activities (84.3 ) (33.3 ) 17.4 (100.2 ) Financing Activities: Net repayment of debt or notes payable, including deferred financing costs (23.5 ) (42.6 ) (9.8 ) 11.0 (64.9 ) Net issuances of common stock 0.6 0.6 Net distributions to noncontrolling interests (0.7 ) (0.7 ) Net distributions to parent (1.6 ) (10.7 ) 12.3 Cash flow used in financing activities (22.9 ) (44.2 ) (21.2 ) 23.3 (65.0 ) Effect of exchange rate changes on cash 1.8 1.8 Increase (decrease) in cash and cash equivalents 138.1 6.1 144.2 Cash and cash equivalents, beginning of year 141.7 107.6 249.3 Cash and cash equivalents, end of year $ $ 279.8 $ 113.7 $ $ 393.5

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Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures As of the end of the period covered by this Form 10-K for fiscal 2011, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective and designed to ensure that information required to be disclosed in periodic reports filed with the SEC is recorded, processed, summarized and reported within the time period specified. Our principal executive officer and principal financial officer also concluded that our controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to management including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm Managements annual report on internal control over financial reporting and the report of independent registered public accounting firm are incorporated by reference to pages 57 and 58 of Item 8 of this Form 10-K.

Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the fourth quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The Board of Directors has established a standing Audit and Finance Committee which currently consists of Mr. John F. McGovern Chairman, Mr. Daniel Boggan Jr., Mr. Robert F. Moran, Mr. David Scott Olivet, and Mr. Matthew A. Ouimet. The Board has determined that each of the members of the Audit and Finance Committee are audit committee financial experts (as that term is defined under Item 407(d) of Regulation S-K) and are independent.

Our Code of Ethics is applicable to all associates including our principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions and is available on our website at www.collectivebrands.com. The charters for the Board of Directors, the Audit and Finance Committee, and the Compensation Nominating and Governance Committee are also available on our investor relations website. The Company intends to satisfy its disclosure requirements under Item 5.05(c) of Form 8-K, regarding an amendment to or waiver from a provision of its Code of Ethics by posting such information on our website at www.collectivebrands.com.

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Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents Information with respect to our directors and the nomination process is incorporated herein by reference to information included in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012 under Charters and Corporate Governance Principles Selection of Directors and About Stockholder Proposals and Nominations for our 2013 Annual Meeting.

a) Directors The information set forth in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012, under the captions Election of Directors Directors and Nominees for Director and Additional Information Section 16(a) Beneficial Ownership Reporting Compliance is incorporated herein by reference.

b) Executive Officers Information regarding the Executive Officers of the Company is as set forth in Item 1 of this report under the caption Executive Officers of the Company. The information set forth in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012, under the caption Additional Information Section 16(a) Beneficial Ownership Reporting Compliance is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION No member of the Compensation, Nominating and Governance Committee (Messrs. Markee, Ms. Magnum, Messrs. Wheeler and Weiss) has served as one of the Companys officers or employees or had a relationship requiring disclosure under any paragraph of Item 404 of Regulation S-K. None of the Companys executive officers named in the Summary Compensation Table (included in the Companys proxy statement) serve as a member of the board of directors or as a member of a compensation committee of any other company that has an executive officer serving as a member of the Companys Board or the Compensation, Nominating and Governance Committee.

The information set forth in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012, under the captions Board Compensation, Compensation, Nominating and Governance Committee, Compensation Committee Interlocks and Insider Participation, Compensation, Nominating and Governance Committee Report, Compensation, Discussion and Analysis, Summary Compensation Table, Fiscal 2011 Grants of Plan-Based Awards, Outstanding Equity Awards at the end of Fiscal 2011, Fiscal 2011 Options Exercises and Stock Vested, Pension Benefits for Fiscal 2011, Nonqualified Deferred Compensation for Fiscal 2011, and Potential Payments upon Termination or Change in Control is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information set forth in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012, under the caption Beneficial Stock Ownership of Directors, Nominees, Executive Officers and More Than Five Percent Owners is incorporated herein by reference.

The following table summarizes information with respect to the Companys equity compensation plans at January 28, 2012 (shares in thousands):

Number of Securities Number of Securities Remaining Available for to be Issued Upon Weighted-Average Future Issuance Under Exercise of Outstanding Exercise Price of Equity Compensation Plans Options, Warrants Outstanding Options, (Excluding Securities Plan category and Rights Warrants and Rights Issued Upon Exercise) Equity compensation plans approved by security holders(1) 4,568 (2) $ 19.05 (3) 1,205 (4)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Equity compensation plans not approved by security holders(5) 639 (6) Total 5,207 1,205 (4)

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(1) Consists of the Companys 2006 Stock Incentive Plan (2006 Plan) and the Companys Stock Plan for Non-Management Directors (Director Plan.) (2) Includes grants under the 2006 Plan of 743 thousand stock options and 4,860 thousand SARs which could be settled for a maximum of 3,127 thousand shares based upon the maximum appreciation cap in place at the time of grant. SARs outstanding includes 27 thousand performance-vested SARs granted at target, which could be settled for a maximum of 15 thousand shares, that will be forfeited due to the 2011 performance criteria not being met. Further included are 438 thousand shares of common stock subject to outstanding restricted stock awards; 197 thousand shares of stock subject to outstanding performance-vested restricted stock units, of which 106 thousand will be forfeited due to the 2011 performance criteria not being met; and 63 thousand shares of stock subject to outstanding Board of Director stock grants made under the Director Plan. (3) Represents the weighted-average exercise price of outstanding SARs and options and is calculated without taking into account the 698 thousand shares of common stock subject to unvested stock awards. (4) Includes up to 1,058 thousand shares that may be issued under the Companys 2006 Plan; up to 147 thousand shares that can be issued under the Companys Director Plan. The amount does not include up to 5,262 thousand shares that may be purchased under the Collective Brands Stock Ownership Plan and forfeited performance-vested shares as described in (2) above. (5) Consists of the Collective Brands Inc., Deferred Compensation Plan (the CBI DCP), the Collective Brands Inc. Deferred Compensation Plan for Non-Management Directors (the Director DCP), and stand-alone equity grants. (6) Represents 418 thousand attraction stock options granted to Mr. Rubel in July 2005 under the terms of his employment agreement; Director stock and cash retainers that were deferred into an aggregate of 181 thousand shares of stock under the Director DCP; and employee compensation that has been deferred into 40 thousand shares under the CBI DCP. The value of these deferred shares are based on the fair market value on the date of deferral and they do not have an exercise price.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information set forth in the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012 under the captions Election of Directors Directors and Nominees for Director, Charters and Corporate Governance Principles Independence of Directors and Nominees for Director and Related Party Transactions is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information regarding principal accounting fees and services is incorporated herein by reference to the material under the heading Principal Accounting Fees and Services of the Companys definitive proxy statement to be filed in connection with its Annual Meeting to be held on May 24, 2012.

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements:

The following financial statements are set forth under Item 8 of this Annual Report on form 10-K:

Page Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm 58 Consolidated Statements of (Loss) Earnings 60 Consolidated Balance Sheets 61 Consolidated Statements of Equity and Comprehensive (Loss) Income 62 Consolidated Statements of Cash Flows 64 Notes to Consolidated Financial Statements 65

(b) Financial Statements Schedules:

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

Balance at Charged to Balance at beginning of period costs and expenses Deductions(1) end of period (dollars in millions) Year ended January 28, 2012 Allowance for doubtful accounts $ 4.0 $ 1.7 $ (1.6 ) $ 4.1 Deferred tax valuation allowance 15.4 139.6 155.0 Sales return reserve 3.6 51.5 (51.6 ) 3.5 Year ended January 29, 2011 Allowance for doubtful accounts $ 4.2 $ 2.0 $ (2.2 ) $ 4.0 Deferred tax valuation allowance 11.4 4.0 15.4 Sales return reserve 3.3 49.2 (48.9 ) 3.6 Year ended January 30, 2010 Allowance for doubtful accounts $ 3.8 $ 2.9 $ (2.5 ) $ 4.2 Deferred tax valuation allowance 8.1 3.3 11.4 Sales return reserve 3.0 45.1 (44.8 ) 3.3

(1) With regard to allowances for doubtful accounts, deductions relate to uncollectible receivables (both accounts and other receivables) that have been written off, net of recoveries. For the deferred tax valuation allowance, deductions relate to deferred tax assets that have been written off. For sales returns, deductions related to actual returns.

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Number Description

3.1 Amended and Restated Certificate of Incorporation of Payless ShoeSource, Inc., a Delaware corporation (the Company).(1) 3.2 Amended and Restated Bylaws of the Company.(2) 3.3 Certificate of Amendment of the Companys Certificate of Incorporation.(3) 4.1 Indenture, dated as of July 28, 2003, among Payless ShoeSource, Inc. and each of the Guarantors named therein and Wells- Fargo Bank Minnesota, National Association as Trustee, related to the 8.25% Senior Subordinated Notes Due 2013.(4) 4.2 Exchange and Registration Rights Agreement, Dated July 28, 2003, among Payless ShoeSource, Inc. and each of Guarantors named therein and Goldman Sachs & Co. as representative of the Several Purchasers.(4) 4.3 Stockholder Protection Rights Agreement, dated as of August 24, 2011 (the Rights Agreement), between Collective Brands, Inc. (the Company) and Computershare Trust Company, N.A., as Rights Agent, including as Exhibit A the forms of Rights Certificate and of Election to Exercise and as Exhibit B the form Certificate of Designation and Terms of the Participating Preferred Stock of the Company.(5) 10.1 Sublease, dated as of April 2, 1996, by and between The May Department Stores Company and Payless ShoeSource, Inc.(5) 10.2 Payless ShoeSource, Inc. 1996 Stock Incentive Plan, as amended September 18, 2003.(6) ± 10.3 2006 Collective Brands, Inc. Stock Incentive Plan, as amended May 21, 2009* ± 10.4 Stock Plan for Non-Management Directors of Collective Brands, Inc., as amended August 17, 2007.(7) ± 10.5 Form of Employment Agreement between Collective Brands, Inc. (formerly Payless ShoeSource, Inc.), and certain of its executives including Darrel Pavelka, Douglas Treff, Michael Massey & Betty Click.(8) ± 10.6 Form of Amendment to Employment Agreement between Collective Brands, Inc. and certain of its executives including Darrel Pavelka, Douglas Treff, Michael Massey, Douglas G. Boessen and Betty Click.(13) ± 10.7 Collective Brands, Inc. Supplementary Retirement Account Plan, as amended and restated January 1, 2008.(7) ± 10.8 Employment Agreement between Collective Brands, Inc. and Douglas G. Boessen.(13) ± 10.9 Employment Agreement between LuAnn Via and Payless ShoeSource, Inc.(12) ± 10.10 Amendment 1 to Employment Agreement between Payless ShoeSource, Inc. and LuAnn Via dated December 19, 2008.(13) ± 10.11 Form of Change of Control Agreement between Collective Brands, Inc. (formerly Payless ShoeSource, Inc.) and certain of its executives including Darrel Pavelka, Douglas Treff, Michael Massey and Betty Click.(9) ± 10.12 Form of Performance Share Unit Award Agreement. * ± 10.13 Form of Amendment to the Change of Control Agreement between Collective Brands, Inc. and certain of its executives including Darrel Pavelka, Douglas Treff, Michael Massey and Betty Click.(13) ±

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10.14 Change of Control Agreement between Collective Brands, Inc. and Douglas G. Boessen effective December 30, 2008.(13) ± 10.15 Form of Directors Indemnification Agreement.(8) 10.16 Form of Officers Indemnification Agreement.(9) ± 10.17 Collective Brands, Inc. Deferred Compensation Plan for Non-Management Directors, as amended January 1, 2008.(14) ± 10.18 Collective Brands, Inc. Deferred Compensation Plan, as amended and restated January 1, 2008.(7) ± 10.19 Collective Brands, Inc. Incentive Compensation Plan as amended August 17, 2007.(7) ± 10.20 Second Amended and Restated Loan and Guaranty Agreement, dated August 16, 2011, among the Borrower, the guarantors party thereto, the Lenders party thereto and Wells Fargo Bank, National Association, as the Administrative Agent, Wells Fargo Capital Finance, LLC as Sole Lead Arranger and Sole Bookrunner, Bank of America, N.A. as Syndication Agent and JPMorgan Chase Bank, N.A., as Documentation Agent(17) 10.21 Amended and Restated Employment Agreement between Collective Brands, Inc. and Matthew E. Rubel accepted and agreed to December 19, 2008.(13) ± 10.22 Form of Restricted Stock Award Agreement.(14) ± 10.23 Form of Stock Settled Stock Appreciation Rights Award Agreement.(14) ± 10.24 2006 Collective Brands, Inc. Stock Incentive Plan, amended August 17, 2007.(7) ± 10.25 Term Loan Agreement, dated as of August 17, 2007 (the Term Loan), among Collective Brands Finance, Inc. as Borrower, and the Lenders party thereto and CitiCorp North America, Inc., as Administrative Agent and Collateral Agent.(12) 10.26 CEO Restricted Stock Award Agreement.(11) ± 10.27 Amended and Restated Change of Control Agreement between Collective Brands, Inc. and Matthew E. Rubel agreed and accepted December 19, 2008.(13) ± 10.28 Second Amendment to the Term Loan Agreement dated as of March 11, 2008.(7) 10.29 Stock Appreciation Award Modification Agreement between Matthew E. Rubel and Collective Brands, Inc., dated May 18, 2011.(18 ) ± 10.30 Waiver and Release Agreement with Matthew E. Rubel, dated June 15, 2011. .(15 ) ± 10.31 Collective Brands, Inc. Employee Stock Purchase Plan, as amended November 10, 2011* 10.32 Employment Agreement between The Stride Rite Corporation and Gregg Ribatt dated January 7, 2008(15) 10.33 Amendment 1 to Employment Agreement between The Stride Rite Corporation and Gregg Ribatt dated December 19, 2008(15) 10.34 Change of Control Agreement between Collective Brands, Inc. and Gregg Ribatt dated January 7, 2008(15) 10.35 Amendment 1 to the Change of Control Agreement between The Stride Rite Corporation and Gregg Ribatt dated December 19, 2008(15) 10.36 Employment Agreement between Collective Licensing International LLC and Bruce Pettet (15)

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10.37 Amendment 1 to Employment Agreement between Collective Licensing International LLC and Bruce Pettet(15) 10.38 Change of Control Agreement between Collective Licensing International LLC and Bruce Pettet(15) 10.39 Amendment 1 to Change of Control Agreement between Collective Licensing International LLC and Bruce Pettet(15) 10.40 Amendment 2 to the Employment Agreement between Payless ShoeSource, Inc. and LuAnn Via dated November 22, 2011(16) 21.1 Subsidiaries of the Company.* 23.1 Consent of Independent Registered Public Accounting Firm.* 31.1 Certification Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as amended, of the Chief Executive Officer, President and Chairman of the Board.* 31.2 Certification Pursuant to Rules 13(a)-14(a) and 15(d)-14(a) under the Securities Exchange Act of 1934, as amended, of the Division Senior Vice President, Chief Financial Officer and Treasurer.* 32.1 Certification Pursuant to 18 U.S.C. 1350 of the Chief Executive Officer and President.* 32.2 Certification Pursuant to 18 U.S.C. 1350 of the Division Senior Vice President, Chief Financial Officer and Treasurer.* 101.INS XBRL Instance Document. ¥ 101.SCH XBRL Taxonomy Extension Schema Document. ¥ 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. ¥ 101.DEF XBRL Taxonomy Extension Definition Linkbase Document. ¥ 101.LAB XBRL Taxonomy Extension Label Linkbse Document. ¥ 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. ¥

± Indicates management contract or compensatory plan, contract or agreement. * Filed herewith. ¥ Furnished herewith. In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. 1. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on June 3, 1998. 2. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on November 13, 2008. 3. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on August 17, 2007. 4. Incorporated by reference from the Companys Quarterly Report on Form 10-Q (File Number 1-14770) for the quarter ended August 2, 2003, filed with the SEC on September 12, 2003.

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Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Table of Contents 5. Incorporated by reference from the Companys Current report on Form 8-K (File Number 1014770) filed with the SEC on August 24, 2011. 6. Incorporated by reference from the Companys Registration Statement on Form 10 (File Number 1-11633) dated February 23, 1996, as amended through April 15, 1996. 7. Incorporated by reference from the Companys Registration Statement on Form S-4 (File Number 333-109388) filed with the SEC on October 2, 2003, as amended. 8. Incorporated by reference from the Companys Annual Report on Form 10-K (File Number 1-14770) for the year ended February 2, 2008, filed with the SEC on April 1, 2008. 9. Incorporated by reference from the Companys Annual Report on Form 10-K (File Number 1-14770) for the year ended February 1, 2003, filed with the SEC on April 18, 2003. 10. Incorporated by reference from the Companys Annual Report on Form 10-K (File Number 1-14770) for the year ended January 31, 2004, filed with the SEC on April 9, 2004. 11. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on June 4, 2007. 12. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on July 9, 2008. 13. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on December 23, 2008. 14. Incorporated by reference from the Companys Annual Report on Form 10-K (File Number 1-14770) for the year ended January 31, 2009, filed with the SEC on March 30, 2009. 15. Incorporated by reference from the Companys Current Report on Form 8-K (File Number 1-14770) filed with the SEC on June 15, 2011. 16. Incorporated by reference from the Companys Annual Report on Form 8-K (File Number 1-4770) filed with the SEC on November 23, 2011. 17. Incorporated by reference from the Companys Current report on Form 8-K (File Number 1-4770) filed with the SEC on August 17, 2011. 18. Incorporated by reference from the Companys Current report on Form 8-K (File Number 1-4770) filed with the SEC on May 18, 2011.

The Company will furnish to stockholders upon request, and without charge, a copy of the 2011 Annual Report and the 2012 Proxy Statement, portions of which are incorporated by reference in the Form 10-K. The Company will furnish any other Exhibit at cost.

(d) Financial Statement Schedules have been either omitted due to inapplicability or because required information is shown in the Consolidated Financial Statements, Notes thereto, or Item 15(b).

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COLLECTIVE BRANDS, INC.

Date: March 22, 2012 By: /s/ Douglas G. Boessen Douglas G. Boessen Division Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Michael J. Massey Date: March 22, 2012 /s/ Douglas G. Boessen Date: March 22, 2012 Chief Executive Officer and Division Senior Vice President (Principal Executive President - Chief Financial Officer) Officer and Treasurer (Principal Financial and Accounting Officer)

/s/ Matthew A. Ouimet Date: March 22, 2012 /s/ Daniel Boggan Jr. Date: March 22, 2012 Director Director

/s/ David Scott Olivet Date: March 22, 2012 /s/ Mylle H. Mangum Date: March 22, 2012 Director and Chairman of the Board Director

/s/ Robert C. Wheeler Date: March 22, 2012 /s/ John F. McGovern Date: March 22, 2012 Director Director

/s/ Michael A. Weiss Date: March 22, 2012 /s/ Robert F. Moran Date: March 22, 2012 Director Director

/s/ Richard L. Markee Date: March 22, 2012 Director

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2006 COLLECTIVE BRANDS, INC. STOCK INCENTIVE PLAN

AMENDED AND RESTATED MAY 21, 2009

Section 1: Purpose The purpose of the 2006 Collective Brands, Inc. Stock Incentive Plan as amended and restated (the Plan) is to promote the interests of Collective Brands, Inc. (the Company), its Subsidiaries and stockholders by (i) attracting and retaining individuals eligible to participate in the Plan; (ii) motivating such individuals by providing incentive compensation; and (iii) aligning the interests of such individuals with the interests of the Companys stockholders.

Section 2: Definitions The following terms, as used in the Plan, shall have the meanings specified below. Other capitalized terms shall have the meanings specified in the Plan. a. Appreciation Value Award Vehicle means an Award type structured to correlate the realization of gains based on absolute Stock price appreciation. May include but not be limited to Options, cash-settled stock appreciation rights and stock-settled stock appreciation rights. b. Award means an award granted pursuant to Section 4. c. Award Agreement means a document described in Section 7 setting forth the terms and conditions applicable to the Award granted to the Participant. d. Board of Directors means the Board of Directors of the Company, as it may be comprised from time to time. e. Change of Control means Change of Control as defined in Section 11. f. Code means the Internal Revenue Code of 1986, and any successor statute, as it or they may be amended from time to time. g. Committee means the Compensation, Nominating & Governance Committee of the Board of Directors or such other committee as may be designated by the Board of Directors from time to time. To the extent that compensation realized in respect of Awards is intended to be performance based under Section 162(m) of the Code and the Committee is not comprised solely of individuals who are outside directors within the meaning of section 162(m) of the Code, or that any member of one Committee is not a non-employee director within the meaning of Rule 16b-3 under the Exchange Act, the Committee may from time to time delegate some or all of its functions under the Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term Committee includes only such committee or subcommittee, to the extent of the Committees delegation. h. Company means Collective Brands, Inc., a Delaware corporation, and any successor thereto. i. Confidential Information means any and all non-public information pertaining to the Companys business. Confidential Information includes information disclosed by the Company and its subsidiaries or affiliates to Participants, and information developed or learned by Participants during the course of or as a result of employment with the Company, or one of its subsidiaries. The Confidential Information includes, without limitation,

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document information and documents concerning the Companys processes; suppliers (including terms, conditions and other business arrangements with suppliers); supplier and customer lists; advertising and marketing plans and strategies; profit margins; seasonal plans, goals, objectives and projections; compilations, analyses and projections regarding the Company and/or its subsidiaries divisions, stores, product segments, product lines, suppliers, sales and expenses; files; trade secrets and patent applications (prior to their being public); salary, staffing and employment information (including information about performance of other employees); and know-how, techniques or any technical information not of a published nature relating, for example, to how the Company and its subsidiaries or affiliates conducts its business. j. Covered Employee means a covered employee within the meaning of Code section 162(m)(3). k. Disability means a permanent and total disability which enables the Participant to be eligible for and receive a disability benefit under the Federal Social Security Act. l. Dividend Equivalent means an amount equal to the amount of cash dividends, if any, payable with respect to a share of Stock after the date an Award is granted. m. Employee means any person employed by Collective Brands, Inc. or any of its Subsidiaries and classified as a common law employee. Employee does not include independent contractors or leased employees from third parties. n. Exchange Act means the Securities Exchange Act of 1934, and any successor statute, as it may be amended from time to time. o. Fair Market Value of a Stock (as defined below) means: (i) For Awards granted on or after May 25, 2007, the closing price of the Stock on the New York Stock Exchange Composite Transaction Tape on the date in question, (or if the Stock is not then traded on the New York Stock Exchange, the closing price of the Stock on the stock exchange or over-the-counter market on which the Stock is principally trading on such date) or, if no sale of the Stock occurred on such exchange on that day, the closing price of the Stock on the last preceding day when the Stock was sold on such exchange. In the event that no sale of the Stock occurred on such exchange or over the counter market on that day because the exchange was closed, then Fair Market Value shall be the closing price of the Stock on the next day the exchange is open for trading; or (ii) For Awards granted prior to May 25, 2007, the average of the high and low prices of the Stock on the New York Stock Exchange Composite Transaction Tape on the date in question, (or if the Stock is not then traded on the New York Stock Exchange, the average of the high and low prices of the Stock on the stock exchange or over-the-counter market on which the Stock is principally trading on such date) or, if no sale of the Stock occurred on such exchange on that day, the average of the high and low prices of the Stock on the last preceding day when the Stock was sold on such exchange. In the event that no sale of the Stock occurred on such exchange or over the counter market on that day because the exchange was closed, then Fair Market Value shall be the average of the high and low prices of the Stock on the next day the exchange is open for trading; or (iii) If the Stock is no longer traded on the New York Stock Exchange and if there is no public market for the Stock, Fair Market Value shall be determined in good faith by the Committee using other reasonable means.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document p. Full Value Award Vehicle means an Award type structured to provide equivalent value of a share of Stock based on a ratio of 1:1. Full Value Award Vehicles may include but not be limited to restricted Stock, Stock Equivalent Units and other Stock Awards such as unrestricted Stock, restricted Stock unit grants and performance based shares. q. Incentive Stock Option means an Option that is intended to qualify as an incentive stock option under Section 422 of the Code and which is so designated in the applicable Award Agreement. Under no circumstances shall an Option that is not specifically designated as an Incentive Stock Option be considered an Incentive Stock Option. r. Insider means any person who is subject to Section 16 of the Exchange Act, and any successor statutory provision, as it may be amended from time to time. s. Non-Qualified Stock Option means an Option that is not intended to qualify as an incentive stock option under Section 422 of the Code. t. Option means an option granted pursuant to Section 4(a). u. Participant means any Employee who has been granted an Award. v. Performance Goal means with respect to the Performance Measure(s) selected by the Committee, the goal or goals established by the Committee, for an Award, for a Performance Period. Performance Goals may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative. w. Performance Measure means one or more of the following, either alone or in combination, selected by the Committee to measure individual Participant, Company or one or more operating units, groups or any Subsidiary performance for a Performance Period, whether in absolute or relative terms: cash flow; cash flow from operations; total earnings; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from continuing operations; net asset turnover; inventory turnover; net earnings; operating earnings; operating margin; return on equity; return on assets or net assets; return on total assets; return on capital; return on investment; return on investment capital; return on sales; revenues; sales; store for store sales; net or gross sales; income or net income; operating income or net operating income; operating profit or net operating profit; gross margin; operating margin or profit margin; market share; economic value added; expense reduction levels; cost of capital; change in assets; stock price; total shareholder return; capital expenditures; debt; debt reduction; working capital, completion of acquisitions; business expansion; product diversification; productivity; new or expanded market penetration and other financial and non-financial operating and management performance objectives. For any Performance Period, Performance Measures may be determined on an absolute basis or relative to internal goals or relative to levels attained in a year or years prior to such Performance Period or relative to other companies or indices or as ratios expressing relationships between two or more Performance Measures. For any Performance Period, the Committee shall provide how any Performance Measure shall be adjusted to the extent necessary to prevent dilution or enlargement of any Award as a result of extraordinary events or circumstances, as determined by the Committee, or to exclude the effects of extraordinary, unusual, or non-recurring items; changes in applicable laws, regulations, or accounting principles; currency fluctuations; discontinued operations; non-cash items, such as amortization, depreciation, or reserves; or any recapitalization, restructuring, reorganization, merger, acquisition, divestiture, consolidation, spin-off, split-up, combination, liquidation, dissolution, sale of assets, or other similar corporate transaction, or stock dividends, or stock splits or combinations. Unless otherwise specified by the Committee, each such measure

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document shall be determined in accordance with generally accepted accounting principles as consistently applied by the Company. Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative. Other Performance Measures may be used by the Committee in its sole discretion, except that the Performance Measures set forth above in this paragraph v shall be used if the compensation under the Award (other than an Option) is intended to qualify as performance based under Section 162(m) of the Code. x. Performance Period means one or more periods of time, as the Committee may designate, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participants rights in respect of an Award. y. Plan means the 2006 Collective Brands, Inc. Stock Incentive Plan, as amended from time to time. z. Retirement means a Participants termination of employment on or after age 55 and after completing at least five (5) years of service with the Company or a Subsidiary of the Company. aa. Stock means common stock of the Company, $ .01 par value, or any other equity securities of the Company designated by the Committee, including any attached rights. bb. Stock Award means a grant of Stock or the right to receive Stock or its cash equivalent (or both). cc. Subsidiary means (i) any corporation or other entity in which the Company, directly or indirectly, controls fifty percent (50%) or more of the total combined voting power of such corporation or other entity or (ii) any other corporation or other entity in which the Company has a significant equity interest, in either case as determined by the Committee. dd. Ten-percent Stockholder means any person who owns, directly or indirectly, on the relevant date, securities having ten percent (10%) or more of the combined voting power of all classes of the Companys securities or of its parent or subsidiaries. For purposes of applying the foregoing ten percent (10%) limitation, the rules of Code section 424(d) shall apply.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Section 3: Eligibility The Committee may grant one or more Awards to any Employee designated by it to receive an Award as the Committee shall select in its sole discretion. To the extent permitted under Delaware law, the Committee may delegate to any Employee or Director of the Company the authority to grant Awards to any Employee; provided, however, any grant to a Covered Employee must satisfy the requirement of Code section 162(m).

Section 4: Awards The Committee may grant any one or more of the following types of Awards, either singly, in tandem or in combination with other types of Awards:

Appreciation Value Award Vehicles

a. Options. An Option is a right or rights (either an Incentive Stock Option or a Non-Qualified Stock Option) to purchase a specific number of shares of Stock exercisable at such time or times and subject to such terms and conditions as the Committee may determine in its sole discretion subject to the Plan, including but not limited to the achievement of specific Performance Goals. Options may be settled in cash or stock. (1) Incentive Stock Options shall be subject to the following provisions: A. The aggregate Fair Market Value (determined on the date that such Option is granted) of the shares of Stock subject to Incentive Stock Options which are exercisable by one person for the first time during a particular calendar year shall not exceed $100,000. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Stock with respect to which Incentive Stock Options are exercisable for the first time by any Option holder during any calendar year (under all plans of the Company and its Subsidiaries) exceeds $100,000, or such other limit as may be set by applicable law, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-Qualified Stock Options. B. Each Award Agreement with respect to an Incentive Stock Option shall set forth the periods during which the Option shall be exercisable, whether in whole or in part. Such periods shall be determined by the Committee in its discretion. No Incentive Stock Option may be exercisable more than: (i) in the case of an Employee who is not a Ten-Percent Stockholder on the date that such Option is granted, seven (7) years from the date the Option is granted or such earlier period as otherwise specified in the Plan or an Award Agreement, and (ii) in the case of an Employee who is a Ten-Percent Stockholder on the date such Option is granted, five (5) years from the date the Option is granted. C. Each Award Agreement with respect to an Incentive Stock Option shall set forth the price at which a share of Stock may be acquired under the Option (the Exercise Price), which shall be at least 100% of the Fair Market Value of a share of Stock on the date the option is granted (except as permitted under Section 424(a) of the Code with respect to Acquisition Awards (as defined in Section 4(i)). In the case of an Employee who is a Ten-Percent Stockholder on the date that such Option is granted, the Exercise Price of any Incentive Stock Option shall not be less than 110% of the Fair Market Value of the Stock subject to such Option on such date.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document D. No Incentive Stock Option may be granted to an Employee who is not a Employee of the Company or a Subsidiary (as defined in Section 2(bb) on the date that such Option is granted. E. Notwithstanding any other provision of the Plan to the contrary, the maximum aggregate number of shares of Stock that may be issued under the Plan pursuant to Incentive Stock Options is 2 million shares of Stock (the ISO Limit), subject to adjustments provided for in Section 10 of the Plan. b. Appreciation Rights. An Appreciation Right is a right to receive an amount that is based on the increase in the Stocks Fair Market Value after the grant date, and that is payable entirely in cash, entirely in Stock or partly in cash and partly in Stock and exercisable at such time or times and subject to such conditions as the Committee may determine in its sole discretion subject to the Plan, including but not limited to the achievement of specific Performance Goals. c. Other Awards. Subject to limitations under applicable law, the Committee may from time to time grant other Awards under this Plan, using Appreciation Value Award Vehicles, that provide the Participant with Stock or the right to purchase Stock, or provide other incentive Awards that have a value derived from the value of Stock, or an exercise or conversion privilege at a price related to Stock, or that are otherwise payable in or convertible into shares of Stock. These Awards shall be in a form and based upon the terms and conditions determined by the Committee (including but not limited to the achievement of specific Performance Goals if determined by the Committee), provided that the Award shall not be inconsistent with the other terms of this Plan.

Full Value Award Vehicles d. Stock Award. Stock Awards may include shares with or without restrictions. Restricted Stock is Stock that is issued to a Participant subject to restrictions on transfer and such other restrictions on incidents of ownership, and/or other terms and conditions as the Committee may determine, including but not limited to the achievement of specific Performance Goals. A certificate for the shares of Restricted Stock, which certificate shall be registered in the name of the Participant, shall bear an appropriate restrictive legend and shall be subject to appropriate stop-transfer orders; provided, however, that the certificates representing shares of Restricted Stock shall be held in custody by the Company until the restrictions relating thereto otherwise lapse, and the Participant shall deliver to the Company a stock power endorsed in blank relating to the Restricted Stock or other form as appropriate. e. Stock Equivalent Units. A Stock Equivalent Unit is an Award based on the Fair Market Value of one share of Stock. All or part of any Stock Equivalent Units Award may be subject to conditions and restrictions established by the Committee, including but not limited to the achievement of specific Performance Goals. Stock Equivalent Units may be settled in Stock or cash or both as determined by the Committee. f. Other Awards. Subject to limitations under applicable law, the Committee may from time to time grant other Full Value Awards under this Plan that provide the Participants with Stock or the right to purchase Stock, or provide other incentive Awards that have a value derived from the value of Stock, or an exercise or conversion privilege at a price related to Stock, or that are otherwise payable in or convertible into shares of Stock. These Awards shall be in a form and based upon the terms and conditions determined by the Committee (including but not limited to the achievement of specific Performance Goals if determined by the Committee), provided that the Award shall not be inconsistent with the other terms of this Plan.

g. Performance Units. A Performance Unit is an Award denominated in cash or shares of Stock, the amount of which may be based on the achievement of specific Performance Goals subject to terms and conditions established by the Committee. The maximum number of Performance Units that may be granted to a single Participant in any one calendar year may not exceed the limits established under Section 6a., Stock Available Under Plan, below. Performance Units may be settled in Stock or cash or both. h. Performance Compensation Awards. (1) The Committee may, at the time of grant of an Award (other than an Option), designate such Award as a Performance Compensation Award in order that such Award constitute qualified performance-based compensation under Code section 162(m). With respect to each such Performance Compensation Award, the Committee shall (on or before the ninetieth (90th) day of the applicable Performance Period), establish, in writing, the Performance Goal or Goals. (2) A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Goal(s) for such Award are achieved as certified by the Committee. i. Acquisition Awards. An Acquisition Award is an Award granted under this Plan in substitution for options, rights, and such other awards with respect to the capital stock of another corporation which is merged into, consolidated with, or all or a substantial portion of the property or stock of which is acquired by, the Company or one of its Subsidiaries. j. Other Awards. Subject to limitations under applicable law and the Plan, the Committee may from time to time grant other Awards under this Plan that provide the Participants with Stock or the right to purchase Stock, or provide other incentive Awards that have a value derived from the value of Stock, or an exercise or conversion privilege at a price related to Stock, or that are otherwise payable in or convertible into shares of Stock. The Awards shall be in a form and based upon the terms and conditions determined by the Committee (including but not limited to the achievement of specific Performance Goals), provided that the Awards shall not be inconsistent with the other terms of this Plan.

Section 5: Other General Terms and Conditions for Awards The term of an Award shall not exceed seven (7) years. a. Unless otherwise provided under the Plan or by the Committee, no Award (or any rights or obligations thereunder) may be sold, exchanged, transferred, assigned, pledged, hypothecated hedged, or otherwise disposed of (other than upon the death of the Participant, by beneficiary designation, by last will and testament or by the laws of descent and distribution) and shall be exercisable and subject to receipt during the Participants lifetime only by the Participant. b. The Award price for each Award that allows for the purchase of a share of Stock under an Award shall be specified in an Award Agreement containing the terms and conditions as determined by the Committee and subject to the provisions of Section 10, shall not be less than Fair Market Value on the date the Award is granted; provided, however, that in no event shall the Award price per share be less than the par value thereof. The Exercise Price, as applicable, of an Award shall not be less than 100% of the Fair Market Value of the Stock on the date such Award is granted and the exercise opportunity may be capped if the Committee determines appropriate and so specifies in the Award Agreement pertaining thereto.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document c. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Appreciation Value Awards may not be amended to reduce the exercise price of outstanding Appreciation Value Awards or cancel, exchange for cash (except upon exercise), other Awards, or other Appreciation Value Awards with an exercise price that is less than the exercise price of the Appreciation Value Awards without stockholder approval. d. The Exercise Price, as applicable, of an Award may be paid in cash, personal check (subject to collection), bank draft or such other method as the Committee may determine from time to time. The Exercise Price may also be paid by the tender, by either actual delivery or attestation, of Stock acceptable to the Committee and valued at its Fair Market Value on the date of exercise; through a combination of Stock and cash. Without limiting the foregoing, to the extent permitted by applicable law: the Committee may, on such terms and conditions as it may determine, permit a Participant to elect to pay the Exercise Price by authorizing a third party, pursuant to a brokerage or similar arrangement approved in advance by the Committee, to simultaneously sell all (or a sufficient portion) of the Stock acquired upon exercise of such Award and to remit to the Company a sufficient portion of the proceeds from such sale to pay the entire Exercise Price of such Award and any required tax withholding resulting therefrom. If a Participant utilizes any proceeds from the exercise of an Award to pay the Exercise Price, taxes or any other amounts owed, such proceeds shall count against the Plan Actual amounts as if they were received by the Participant. e. No Award may be granted under this Plan on or after the tenth anniversary of the date this Plan is approved by stockholders. f. The exercise or delivery of Stock or payment of cash pursuant to an Award shall be subject to the condition that if at any time the Company shall determine in its discretion that the satisfaction of withholding tax or other withholding liabilities under any state or Federal law, or that the listing, registration or qualification of any shares of Stock otherwise deliverable upon any securities exchange or under any state or Federal Law, or that the consent or approval of any regulatory body, is necessary or desirable as a condition of, or in connection with, such exercise or the delivery or purchase of shares thereunder, then in any such event such exercise or delivery shall not be effective unless such withholding, listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. g. Each Participant shall agree that, subject to the provisions of Section 5(i) below, (1) no later than the date as of which the restrictions mentioned in the instrument evidencing the Award shall lapse, such Participant will pay to the Company in cash, or, if the Committee approves, in Stock or make other arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to such Award, and (2) the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any Federal, state or local taxes of any kind required by law to be withheld with respect to the Award. h. If any Participant properly elects, as permitted by Code Section 83b (or any successor Code provisions) within thirty (30) days of the date of the grant, to include in gross income for Federal income tax purposes, an amount equal to the Fair Market Value of the shares of Stock granted pursuant to an Award, such Participant shall pay to the Company, or make arrangements

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document satisfactory to the Committee to pay to the Company, any Federal, state or local taxes required to be withheld with respect to such shares. If such Participant shall fail to make such payments, the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the employee any Federal, state or local taxes of any kind required by law to be withheld with respect to such shares. i. Dividends or Dividend Equivalents may be granted with respect to all or part of an Award. If dividends are granted they may be paid, as determined by the Committee (i) in cash, (ii) in Dividend Equivalents or (iii) accumulated or reinvested in Stock and held subject to the same restrictions as the Stock under the Award. j. Unless expressly provided otherwise in the Award Agreement (and as provided in Section 4d) no Participant shall have any rights as a stockholder with respect to any Stock covered by an Award until the date the Participant becomes the holder of record thereof. k. With respect to each type of Award, the Committee may establish such Performance Goals it deems appropriate, in its sole discretion. For each Award established with Performance Goals, as soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Goals(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award earned by the Participant for such Performance Period based upon such Participants achievement of the Performance Goals. The Committee shall then determine the actual amount of the Performance Compensation Award to be paid to the Participant. In so doing, the Committee may use negative discretion to decrease any Participant Award based upon such performance, but may not increase, the amount of the Award otherwise payable to a Covered Employee based upon such performance. The maximum Performance Compensation Award for any one Participant for any one Performance Period shall be determined in accordance with Sections 4 and 6. If Performance Goals are established for an Award to a Covered Employee, once established for a Performance Period, such Performance Goals shall not be amended or otherwise modified to the extent such amendment or modification would cause the compensation payable pursuant to the Award to fail to constitute qualified performance-based compensation under Code section 162(m). l. Unless an Award Agreement specifies otherwise, the Committee may cancel at any time any Award or rescind any prior delivery of shares or value of shares, cash or property, if the Participant is not in compliance with all other applicable provisions of the Award Agreement or the Plan or if, within sixth months or such longer period as specified with respect to the Participant, in any noncompete entered into between the Participant and the Company, after exercise, as applicable, the Participant: (i) engages in a Competing Business, as such term is defined in the Award Agreement; or (ii) solicits for employment, hires or offers employment to, or discloses information to or otherwise aids or assists any other person or entity other than the Company in soliciting for employment, hiring or offering employment to, any employee of the Company; or (iii) takes any action which is intended to harm the Company or its reputation, which the Company reasonably concludes could harm the Company or its reputation or which the Company reasonably concludes could lead to unwanted or unfavorable publicity to the Company; or (iv) discloses to anyone outside of the Company, or uses in other than the Companys business, any Confidential Information.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (v) The Company shall immediately notify the Participant in writing of any cancellation of any unexercised or unvested Award. Following such notice, the Participant shall have no further rights with respect to such Award. In the event of the rescission of the exercise of an Award within six months (or such longer period specified in any agreement between Participant and Company) after the activity referred to above in this Section 5(l), the Company shall notify the Participant in writing. Within ten (10) days after receiving such notice from the Company, the Participant shall either (i) pay to the Company the excess of the Fair Market Value of the Stock on the date of exercise of an Award over the exercise price for the Award or the Fair Market Value of the Stock and/or cash distributed to the Participant as a result of the exercise of an Award or (ii) return the Stock received upon the exercise of an Award (in which case the Company will return the exercise price to the Participant) or return the Stock and/or cash delivered upon the exercise of this Award. m. The Participant shall agree and consent to a deduction from any amounts the Company owes to the Participant from time to time (including amounts owed as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to the Participant by the Company), to the extent of the amounts the Participant owes the Company under Section 5(l) above. Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amount owed by the Participant, calculated as set forth in Section 5(l) above, then the Participant agrees to pay immediately the unpaid balance to the Company. n. The Committee may establish such other terms and conditions for an Award as it deems appropriate. o. The Committee may, at any time and in its sole discretion, determine that any outstanding Awards granted under the Plan will be canceled and terminated and that in connection with such cancellation and termination the holder of such Awards may receive for each share of Stock subject to such Award a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) as follows: (1) Appreciation Value Award Vehicles-whether or not exercisable, a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock, and securities equivalent to such cash payment) equal to the difference, if any, between the amount determined by the Committee to be the Fair Market Value of the Stock and the exercise price per share multiplied by the number of shares of Stock subject to such Award; provided that if such product is zero or less or to the extent that the Award is not then exercisable, the Awards will be canceled and terminated without payment therefore. (2) Full Value Award Vehicles-a cash payment equal to the Fair Market Value of the shares of Stock under the Award, as designated by the Committee. (3) Other Awards-a payment amount as determined in the sole discretion of the Committee.

Section 6: Stock Available Under Plan a. Subject to the adjustment provisions of Section 10, the number of shares of Stock with respect to which Awards may be granted (or, in the cases of Awards that may be settled in cash or Stock) under the Plan shall not exceed 4.987 million shares of Stock (the Maximum Limit). The following amounts shall be reserved against the Maximum Limit for each type of Award:

RESERVES Full Value Award Vehicles

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The greater of (i) one share of Stock for each Full Value Award or (ii) the maximum potential issuable pursuant to each Award.

Appreciation Value Award Vehicle (other than Stock Settled Stock Appreciation Rights) For each Appreciation Value Award Vehicle (other than Stock Settled Stock Appreciation Rights), the plan shall reserve 0.719 shares.

Stock Settled Stock Appreciation Rights (SSSAR) The lesser of (i) 1 share of Stock for each SSSAR granted under an Award or (ii) the maximum potential of shares issuable upon exercise of a SSSAR.

Other Awards The maximum number of shares of Stock authorized to be issued pursuant to such Other Award Vehicle. No single Participant shall receive, in any one calendar year, Awards in the form of (i) Appreciation Value Award Vehicles with respect to more than 500,000 shares of Stock, (ii) Full Value Award Vehicles for more than 500,000 shares of Stock, and/or (iii) Other Awards Vehicles with respect to more than 500,000 shares of Stock; provided, however, the aggregate number of Appreciation Value Award Vehicles, Full Value Award Vehicles and Other Award Vehicles that may be granted to a single Participant in one calendar year may not exceed 500,000 shares of Stock. For purposes of calculating the maximum aggregate number of Awards that may be granted under this Plan during a calendar year, shares of Stock will be counted based upon the appropriate reserve under this Plan for the respective Award.

ACTUALS Upon exercise of each Award, all shares of Stock reserved for such Award shall be released and the Maximum Limit shall be reduced by the number following: Full Value Awards & Other Awards- by the shares of Stock actually issued pursuant to such Award, including any amounts used to pay taxes. Appreciation Value Awards (other than a SSSAR) - by 0.719 Shares. Any Shares utilized to pay taxes or the exercise price of an Appreciation Value Award shall be counted against the Maximum Limit as if they were received by the Participant. SSSAR - by the amount of shares actually issued under the Award. Any Shares utilized to pay taxes or the exercise price of an Appreciation Value Award shall be counted against the Maximum Limit as if they were received by the Participant. b. Awards payable entirely in cash shall not be counted against the Maximum Limit. c. If at the time of payment of dividends or Dividend Equivalents there are shares of Stock available that have not been previously reserved, then upon payment they will be deducted from the Plan Maximum Limit. If such shares to pay dividends are not available because all shares of Stock are currently reserved under the Plan Maximum Limit, then such dividends will be paid in cash. d. Shares of Stock covered by the unexercised or terminated or forfeited portion of any Award that did not result in the delivery of Stock shall be available for further Awards. Subject to Section 10, additional rules for determining the number of shares of Stock granted under an Award type under the Plan may be adopted by the Committee, as it deems necessary and appropriate and consistent with the overall limits set forth in the Plan. e. The Stock that may be issued pursuant to an Award under the Plan may be authorized and issued Stock held in the Companys treasury or authorized but unissued Stock, or Stock may be acquired, subsequently or in anticipation of the transaction, in the open market to satisfy the requirements of the Plan.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document f. If any stock based award granted under the Companys 1996 Stock Incentive Plan shall for any reason subsequent to April 30, 2006 (i) expire, be cancelled or otherwise terminate, in whole or in part, without having been exercised or redeemed in full, or (ii) be reacquired by the Company prior to issuance without restriction to the holder of such Award will be added to the Maximum Limit and will become available for issuance under this Plan based on the following formula: Full Value Award Vehicles made available under this provision shall increase the Maximum Limit on a ratio of 1:1. Appreciation Value Vehicle Awards, including SSSARs under this provision shall increase the Maximum Limit by 0.719 for each share of Stock covered by an Appreciation Value Vehicle Award. g. Any shares of Stock delivered by the Company, any shares of Stock with respect to which Awards are made by the Company and any shares of Stock with respect to which the Company becomes obligated to make Awards, through the assumption of, or in substitution for, outstanding awards previously granted by an acquired entity, shall not be counted against the shares of Stock available for Awards under this Plan. h. The Committee may direct that any stock certificate evidencing shares issued pursuant to the Plan shall bear a legend setting forth such restrictions on transferability as may apply to such shares pursuant to the Plan.

Section 7: Award Agreements Each Award granted under the Plan shall be evidenced by an Award Agreement. Each Award Agreement shall set forth the terms and conditions applicable to the Award, as determined by the Committee in its discretion and subject to the Plan, including but not limited to provisions describing the treatment of an Award in the event of the termination of a Participants status as an Employee for reasons of Retirement, death or otherwise, or in the event of Participants Disability or in the event the Participant engages in a competing business as such term shall be defined in the Award Agreement. The Committee may deliver the Award Agreement by interoffice mail, U.S. mail, email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder and other documents that the Company is required to deliver to its security holders unless otherwise prohibited by law. A Participant shall have no rights with respect to an Award unless such Participant accepts the Award within such period as the Committee shall specify by executing an Award Agreement in such form as the Committee shall determine and, if the Committee shall so require, makes payment to the Company in such amount as the Committee may determine.

Section 8: Amendment and Termination The Board of Directors may at any time amend, suspend or terminate the Plan, in whole or in part, and the Committee may, subject to the Plan, at any time alter or amend any or all Award Agreements to the extent permitted by applicable law and the Plan; provided that no such action shall impair the rights of any holder of an Award without the holders consent. For purposes of the Plan, any action of the Board of Directors or the Committee that alters or affects the tax treatment of any Award shall not be considered to materially impair any rights of any holder. Notwithstanding the foregoing, neither the Board of Directors nor the Committee shall (except pursuant to Section 10) amend the Plan or any Award Agreement, without the approval of the stockholders of the Company to (i) increase the number of shares of Stock available for Awards as set forth in Section 6 or (ii) decrease the Exercise Price of any Award or (iii) make any other amendments to the Plan or Award Agreement which would require stockholder approval under the General Corporation Law of the State of Delaware, New York Stock Exchange Rules or such other rules as may govern the trading or quotation of the Companys Stock, Rule 16b-3 of the Securities Exchange Act of 1934, as amended, or Section 162(m) of the Code.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Notwithstanding the above, the Board may, by resolution, amend the Plan in any way that it deems necessary or appropriate in order to make income with respect to the Plan deductible for Federal income tax purposes under Section 162(m) of the Code and any such amendment shall be effective as of such date as is necessary to make such income under the Plan so deductible.

Notwithstanding anything to the contrary in this Section, the Board of Directors or the Committee shall have full discretion to amend the Plan to the extent necessary to preserve fixed accounting treatment with respect to any Award and any outstanding Award Agreement shall be deemed to be so amended to the same extent, without obtaining the consent of any holder, without regard to whether such amendment adversely affects a holders rights under the Plan or such Award Agreement.

Section 9: Administration a. The Plan and all Awards shall be administered by the Committee, provided that, in the absence of the Committee or to the extent determined by the Board of Directors, any action that could be taken by the Committee may be taken by the non- employee members of the Board of Directors. A majority of the members of the Committee shall constitute a quorum. The majority of non-employee Board of Director members shall constitute a quorum of the Board. The vote of a majority of a quorum shall constitute action by the Committee and/or the Board. b. The Committee shall have full and complete authority, in its sole and absolute discretion, (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan, any Award Agreement and any related document, (iii) to prescribe, amend and rescind rules relating to the Plan including rules governing its own operation, (iv) to make all determinations necessary or advisable in administering the Plan, (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan, (vi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Committee, (vii) to impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by the Participant of any shares of Stock issued as a result of or under an Award, including without limitation, restrictions under the Companys Trading in Securities Policy as may be amended from time to time, (viii) to amend the Plan to reflect changes in applicable law, and (ix) to determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, shares of Stock, other securities, other Awards or other property, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, canceled, forfeited or suspended. The actions and determinations of the Committee on all matters relating to the Plan and any Awards will be final and conclusive. The Committees determinations under the Plan need not be uniform and may be made by it selectively among Employees and Participants who receive, or who are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. c. The Committee and others to whom the Committee has allocated or delegated authority or duties shall keep a record of all their proceedings and actions and shall maintain all such books of account, records and other data as shall be necessary for the proper administration of the Plan. d. The Committee may appoint such accountants, counsel, and other experts as it deems necessary or desirable in connection with the administration of the Plan. e. The Company shall pay all reasonable expenses of administering the Plan, including, but not limited to, the payment of professional fees. f. It is the intent of the Company that this Plan and Awards hereunder satisfy, and be interpreted in a manner that satisfy, (i) in the case of Participants who are or may be Insiders, the applicable requirements of Rule 16b-3 of the Exchange Act, so that such persons will be

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document entitled to the benefits of Rule 16b-3, or other exemptive rules under Section 16, and will not be subjected to avoidable liability thereunder and (ii) in the case of Performance Compensation Awards, the applicable requirements of Code section 162(m). If any provision of this Plan or of any Award Agreement would otherwise frustrate or conflict with the intent expressed in this Section 9(f), that provision to the extent possible shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Insiders and/or Covered Employees, as applicable. g. Except to the extent prohibited by applicable law or otherwise, the Committee may from time to time allocate to one or more of its members and delegate to one or more Employees all or any portion of its authority and duties, provided that the Committee may not allocate or delegate any discretionary authority with respect to substantive decisions or functions regarding the Plan or Awards to the extent inconsistent with the intent expressed in Section 9(f). h. No member of the Board of Directors or the Committee or any employee of the Company or any of its subsidiaries or affiliates (each such person a Covered Person) shall have any liability to any person (including, without limitation, any Participant) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award. Each Covered Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense (including attorneys fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan and against and from any and all amounts paid by such Covered Person, with the Companys approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Companys choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Persons bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Companys Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.

Section 10: Adjustment Provisions a. Except as otherwise provided in this Section 10 below, in the event of a (i) stock dividend or multiple stock dividends that, in the aggregate, equal ten percent (10%) or more of the Stocks Fair Market Value on the date such stock dividend is declared (or in the case of multiple stock dividends, the date on which the dividend causing the ten percent (10%) threshold to be met or exceeded is declared), (ii) stock split, (iii) reverse stock split, (iv) recapitalization, (v) reorganization, (vi) exchange or reclassification of shares, (vii) spin-off, (viii) extraordinary dividend, greater than ten percent (10%) of the Fair Market Value of shares of Stock on the date of dividend, payable in cash or property, or (ix) any similar corporate transaction that affects the value of all outstanding shares of Company Stock and is determined by the Committee to warrant an adjustment under this Section 10, the Committee shall make a corresponding adjustment to (1) the number of shares of Stock (or other securities) then remaining subject to this Plan, including those that are then covered by outstanding Awards, and the maximum number of shares of Stock that may be issued, or with respect to which

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Awards may be granted, to any single Participant or in the aggregate pursuant to this Plan, (2) the price or exercise price for each share or right then covered by an outstanding Award, and/or (3) the terms and conditions of each outstanding Award, in each case solely to prevent dilution or enlargement of the Participants rights under this Plan and the value of an Award granted to a Participant. No such adjustment shall be made by the Committee, however, for any of the following corporate transactions: (1) The issuance of Stock as compensation to any Company employee, director, consultant or other service provider; (2) The issuance of Stock pursuant to an Incentive Stock Option under Section 422 of the Code; (3) The issuance or sale of Stock to a third-party at an arms length price that is negotiated and agreed to between the Company and such third-party; (4) The issuance or sale of Stock to a Company employee or director at a discount pursuant to a plan maintained in accordance with, and to the extent permitted under, Section 423 of the Code; or (5) A redemption of Stock by the Company at a price equal to the Fair Market Value of the Stock on the date of such redemption. Notwithstanding the forgoing, no such adjustment shall be made or authorized to the extent such adjustment would cause the Plan or any Option or Award to violate Section 422 (in the case of an Incentive Stock Option) or Section 409A of the Code. Any adjustment made pursuant to this Section 10 shall be made in accordance with the rules of any securities exchange, stock market or stock quotation system to which the Company is subject. Any adjustment made by the Committee under this Section shall be final, binding and conclusive on all persons. b. The existence of the Plan and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Board of Directors or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other capital structure of its business, any merger or consolidation of the Company, any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, or any similar transaction. c. No fractional shares of Stock will be issued or accepted. Any fractional shares will be paid in the equivalent amount of cash. The Committee may impose such other conditions, restrictions and contingencies with respect to shares of Stock delivered pursuant to the exercise of an Award as it deems desirable.

Section 11: Change of Control a. In the event of a Change of Control, in addition to any action required or authorized by the terms of an Award Agreement, the Committee may, in its sole discretion, take any of the following actions as a result, or in anticipation, of any such event to assure fair and equitable treatment of Participants: (1) accelerate time periods for purposes of vesting in, or realizing gain from, any outstanding Award made pursuant to this Plan and/or extend the time during which an Award may be exercised following a Participants termination of employment;

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (2) offer to purchase any outstanding Award made pursuant to this Plan from the holder for its equivalent cash value, as determined by the Committee, as of the date of the Change of Control; or (3) make adjustments or modifications to outstanding Awards as the Committee deems appropriate to maintain and protect the rights and interests of Participants following such Change of Control. b. Change of Control means: (1) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a Person) acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the Outstanding Company Common Stock) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the Outstanding Company Voting Securities); provided, however, that, for purposes of this Section 11, none of the following shall constitute a Change of Control: (a) any acquisition directly from the Company of 30% or less of Outstanding Company Common Stock or Outstanding Company Voting Securities provided that at least a majority of the members of the Board of Directors of the Company following such acquisition were members of the incumbent Board at the time of the Boards approval of such acquisition, (b) any acquisition by the Company, (c) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company, or (d) any acquisition by the Company which by reducing the number of shares of Outstanding Company Common Stock or Outstanding Company Voting Securities, increases the proportionate number of shares of Outstanding Company Common Stock or Outstanding Company Voting Securities beneficially owned by any Person to 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities; provided, however, that, if such Person shall thereafter become the beneficial owner of any additional shares of Outstanding Company Common Stock or Outstanding Company Voting Securities and beneficially owns 20% or more of either the Outstanding Company Common Stock or the Outstanding Company Voting Securities, then such additional acquisition shall constitute a Change of Control; or (2) Individuals who, as of the date hereof, constitute the Board (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Companys stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (3) A reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a Business Combination) is consummated, in each case, unless, immediately following such Business Combination, (A), more than 50%, respectively, of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of (x) the corporation resulting from such Business Combination or (y) a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Companys assets whether directly or through one or more Subsidiaries, is represented

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document by the Outstanding Company Common Stock and the Outstanding Company Voting Securities (or, if applicable, is represented by shares into which Outstanding Company Common Stock or Outstanding Company Voting Securities were converted pursuant to such Business Combination) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then- outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (4) The stockholders of the Company approve of a complete liquidation or dissolution of the Company.

Section 12: Miscellaneous a. Other Payments or Awards. Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company or a Subsidiary from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. b. Unfunded Plan. The Plan shall be unfunded. No provision of the Plan or any Award Agreement shall require the Committee, the Company or a Subsidiary, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company or a Subsidiary maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company or a Subsidiary. c. Limits of Liability. Any liability of the Company or a Subsidiary to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan and the Award Agreement. d. Rights of Employees. Status as an eligible Employee shall not be construed as a commitment that any Award shall be made under this Plan to such eligible Employee or to eligible Employees generally. Nothing contained in this Plan or in any Award Agreement shall confer upon any Employee or Participant any right to continue in the employ or other service of the Company or a Subsidiary or constitute any contract or limit in any way the right of the Company or a Subsidiary to change such persons compensation or other benefits or to terminate the employment or other service of such person with or without cause. Except as provided otherwise in an Award Agreement, an Employees (i) transfer from the Company to a Subsidiary or affiliate of the Company, whether or not incorporated, or visa versa, or from one Subsidiary to another or (ii) leave of absence, duly authorized in writing by the Company or a Subsidiary, shall not be deemed a termination of such Employees employment or other service.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document e. Section Headings. The section headings contained herein are for the purpose of convenience only, and in the event of any conflict, the text of the Plan, rather than the section headings, shall control. f. Construction. In interpreting the Plan, the masculine gender shall include the feminine, the neuter gender shall include the masculine or feminine, and the singular shall include the plural unless the context clearly indicates otherwise. g. Invalidity. If any term or provision contained herein or in any Award Agreement shall to any extent be invalid or unenforceable, such term or provision will be reformed so that it is valid, and such invalidity or unenforceability shall not affect any other provision or part thereof. h. Applicable Law. The Plan, the Award Agreements and all actions taken hereunder or thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to the conflict of law principles thereof. i. Supplementary Plans. The Committee may authorize Supplementary Plans applicable to Employees subject to the tax laws of one or more countries other than the United States and providing for the grant of Awards to such Employees on terms and conditions, consistent with the Plan, determined by the Committee which may differ from the term and conditions of such Awards pursuant to the Plan for the purpose of complying with the conditions for qualification of Awards for favorable treatment under foreign tax and/or securities laws. Notwithstanding any other provision hereof, Options granted under any Supplementary Plan shall include provisions that conform with Sections 4(a); and Restricted Stock granted under any Supplementary Plan shall include provisions that conform with Section 4(d). j. Effective Date and Term. The Plan was adopted by the Board of Directors effective as of May 25, 2006, subject to approval by the Companys stockholders. The Committee may grant Awards prior to stockholder approval, provided, however, that Awards granted prior to such stockholder approval are automatically canceled if stockholder approval is not obtained at or prior to the period ending twelve months after the date the Plan is effective and provided further that no Award may be settled prior to the date stockholder approval is obtained. Unless sooner terminated, the Plan shall remain in effect until May 25, 2016. Termination of the Plan shall not affect any Award previously made. k. No Third Party Beneficiaries. Except as expressly provided therein, neither the Plan nor any Award Agreement shall confer on any person other than the Company and the grantee of any Award any rights or remedies thereunder. l. Successors and Assigns. The terms of this Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns.

COLLECTIVE BRANDS, INC. 2011 PERFORMANCE SHARE UNIT AGREEMENT

Pursuant to the terms and conditions of the 2006 Collective Brands, Inc. Stock Incentive Plan (the 2006 Plan), you have been granted the performance share units outlined below:

Granted to: name SSN

Grant Date: date

Performance Share Units Granted: units

Expiration Date: expiration

Performance Metrics & Vesting Schedule: If the following 2011 EBITDA results for CBI are met for Fiscal 2011 (the Performance Period), the performance share units will be converted to shares of restricted stock. Any performance shares converted to restricted stock (the number of resulting shares which are determined by the percentages below) will vest in 1/3 increments on March 24, 2012, March 24, 2013 and March 24, 2014:

Achieve less than 85% of plan No shares will vest Achieve 85% of plan 25% of shares will vest Achieve 90% of plan 50% of shares will vest Achieve 95% of plan 75% of shares will vest Achieve 100% of plan 100% of shares will vest Achieve 105% of plan 125% of shares will vest Achieve 110% of plan 150% of shares will vest

The number of shares to be vested will be interpolated between each performance level if actual 2011 EBITDA results are greater than 85% of plan.

In addition to the Company performance requirements, the Board of Directors reserves the right to cancel all or part of this Award, at its absolute discretion, based on individual performance.

Collective Brands, Inc. has caused this Agreement, which includes the Terms and Conditions contained on the following pages (and by this reference incorporates the terms of any Non-Competition and Company Work Product Agreement entered into between the parties), to be executed in its corporate name and Executive has executed the same in evidence of the Executives acceptance hereof upon the terms and conditions herein set forth as of the grant date shown above. By accepting this award, Executive agrees to conform to all terms and conditions of this Agreement and the 2006 Plan.

Page 1 of 3 (CBI/PSS 2011 ECG PSU - Performance)

The Committee under the 2006 Stock Incentive Plan (2006 Plan) of Collective Brands, Inc., a Delaware corporation, has approved granting Executive performance share units to be settled in Restricted Stock, if at all, on the terms and subject to the conditions set forth in this Agreement.

Therefore, the Company and Executive hereby agree as follows:

1. The Company hereby grants to Executive, in the aggregate, the number of performance share units, to be settled in Restricted Stock which shall be subject to the terms, conditions and adjustments set forth in this Agreement and the 2006 Plan.

2. If the Performance Metric conditions set forth on page 1 of this Agreement are satisfied, your performance share units will be converted to shares of Restricted Stock and the Restricted Stock will vest in accordance with the vesting schedule on page 1. The Company shall hold the certificates for the Restricted Stock in custody until the restrictions thereon shall lapse, at which time the Company shall deliver the certificates for such shares to Executive or place the shares in an account at the brokerage firm administering the 2006 Plan, less any required withholding.

3. The restrictions on the Restricted Stock are that the shares (i) may not be sold, assigned, conveyed, transferred, pledged, hypothecated or otherwise disposed of, and (ii) shall be returned to the Company forthwith, and all of the Executives rights to such shares shall immediately terminate without any payment or consideration by the Company regardless of any notice period or period of pay in lieu of such notice required under local statute or at common law, on the earlier of (a) the date established by the Company on which your employment with the Company terminates, or (b) the date your employment with the Company terminates, if Executives continuous employment with the Company or any Subsidiary shall terminate for any reason except for Executives death, termination for good reason (if applicable), or involuntary termination without cause, as provided in Sections 7 and 8.

4. Executive agrees to abide by the terms of any Non-Competition and Company Work Product Agreement entered into by the parties, the terms of which are incorporated by reference into this Agreement. Executive further agrees that, subject to Section 5 of this Agreement, (a) no later than the date(s) as of which the restrictions on the Restricted Stock shall lapse with respect to all or any of the shares of Restricted Stock covered by this Agreement, Executive shall pay to the Company (in cash or shares of Company common stock whose Fair Market Value on the date the Restricted Stock vests is equal to the amount of Executives tax withholding liability) or make other arrangements satisfactory to the Committee regarding payment of any Federal, state or local taxes of any kind required by law to be withheld with respect to the shares of Restricted Stock for which the restrictions shall lapse; and (b) the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to Executive any Federal, state or local taxes of any kind required by law to be withheld with respect to the shares of Restricted Stock.

5. If Executive properly elects, within thirty (30) days after the Performance Metrics are met and the units are converted to Restricted Stock and made to Executive subject to restrictions, to include in gross income for Federal income tax purposes an amount equal to the fair market value of the shares of Restricted Stock, Executive shall pay to the Company, or make other arrangements satisfactory to the Committee to pay to the Company as of the election date, any Federal, state or local taxes required to be withheld with respect to such shares. If Executive fails to make such payments, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to Executive any Federal, state or local taxes of any kind required by law to be withheld with respect to such shares.

6. The restrictions on the Restricted Stock shall lapse on the date(s) indicated on page 1 and with respect to the corresponding number of shares resulting from the conversion of performance share units to Restricted Stock upon attainment of the Performance Metric conditions, subject to all the other terms and conditions of this Agreement.

Page 2 of 3 (CBI/PSS 2011 ECG PSU - Performance)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 7. Notwithstanding the foregoing, if (i) Executive ceases to be an employee of the Company by reason of death and (ii) Executive has been in the continuous employment of the Company from the Grant Date shown above through the date of death, then the restrictions shall lapse as to all shares of Restricted Stock (resulting from the conversion of performance share units to Restricted Stock upon attainment of the Performance Metrics) on the date of the Executives death.

8. Notwithstanding the foregoing, (a) if Executive is the Chief Executive Officer of the Company on the Grant Date and Executives employment with the Company is involuntarily terminated without cause (as that term is defined in Executives employment agreement with the Company) or Executive terminates his employment for good reason (as that term is defined in Executives employment agreement with the Company), then all shares of Restricted Stock under this Agreement (resulting from the conversion of performance share units to Restricted Stock upon attainment of the Performance Metrics) that would have vested during the twenty four (24) month period immediately following Executives termination, if Executives employment was not terminated, shall immediately vest and (b) if Executive is a designated member of the Companys Executive Committee (other than the Chief Executive Officer) on the Grant Date and Executives employment with the Company is involuntarily terminated without cause (as that term is defined in Executives employment agreement with the Company), then all shares of Restricted Stock under this Agreement (resulting from the conversion of performance share units to Restricted Stock upon attainment of the Performance Metrics) that would have vested during the twelve (12) month period immediately following Executives termination, if Executives employment was not terminated, shall immediately vest.

9. If there is (i) any change in the capital structure of the Company through merger, consolidations, reorganization, recapitalization, spin-off or otherwise, (ii) any dividend on the Restricted Stock, payable in common stock of the Company, or (iii) a stock split or a combination of shares, the Board shall make appropriate adjustments in the number of shares relating to Restricted Stock, which resulted from the conversion of the performance share units under this Agreement, as it deems equitable, in its absolute discretion.

10. If a Change of Control as defined under the 2006 Plan occurs and Executive is actively employed on the date of such event, then from and after such date, the restrictions on all Restricted Stock which resulted from the conversion of the performance share units under this Agreement shall immediately lapse.

11. Nothing in this Agreement shall be deemed by implication or otherwise to impose any limitation on any right of the Company to terminate the Executives employment at any time, in the absence of a specific agreement to the contrary.

12. If the Company determines that the listing, registration or qualification of any shares of stock is necessary or desirable as a condition of or in connection with the Restricted Stock under this Agreement resulting from the conversion of the performance share units, then delivery of certificates for such shares of Restricted Stock or placement of shares into an account shall not be made until such listing, registration or qualification shall have been completed.

13. So long as this Agreement shall remain in effect, the Company will furnish to Executive, as and when available, a copy of any prospectus issued with respect to the shares of stock covered hereby, and also copies of all material hereafter distributed by the Company to its shareowners.

14. This Agreement shall be governed by the laws of the State of Delaware, except that the terms of any Non-Competition & Work Product Agreement between the parties that is incorporated by reference herein shall be governed by the laws of the State of Kansas. This Agreement may not be modified except in writing signed by both parties.

15. Executive acknowledges that Executive has received a copy of the 2006 Incentive Stock Plan and/or Plan Summary, as such Plan is in effect on the date of this Agreement, has read and understands the terms of the 2006 Plan and of this Agreement, and agrees to all the terms and conditions provided for in the 2006 Plan and in this Agreement.

16. Except as otherwise provided herein, or unless the context clearly indicates otherwise, capitalized terms herein which are defined in the 2006 Plan have the same definitions as provided in the 2006 Plan.

Page 3 of 3 (CBI/PSS 2011 ECG PSU - Performance)

COLLECTIVE BRANDS, INC. EMPLOYEE STOCK PURCHASE PLAN (as amended and restated effective November 10, 2011)

1. PURPOSE AND EFFECT OF PLAN The purpose of the Plan is to provide associates, including executive officers, an opportunity to purchase Common Stock of Collective Brands, Inc. (the Company) through payroll deductions at a discount on a tax deferred basis. It is believed that this will help attract, motivate and retain highly qualified and talented associates who are important to the Companys success. The Plan is also intended to offer equity ownership in the Company to associates to encourage them to enhance the value of the Company and therefore the price of the Companys Common Stock and the shareowners return.

The Plan is intended to comply with Code section 423 and to be a tax conditioned plan within the meaning of SEC Rule 16b-3(c).

2. SHARES RESERVED FOR THE PLAN There shall be reserved for issuance and purchase by Eligible Associates under the Plan an aggregate of 6,000,000 shares of Common Stock, subject to adjustment as provided in Section 16. Shares purchased for the Plan shall be purchased in the open market or in private transactions, or a combination thereof.

3. DEFINITIONS Where indicated by initial capital letters, the following terms shall have the following meanings:

ACT: The Securities Exchange Act of 1934.

BASE COMPENSATION: The regular earnings of an Eligible Associate (before withholding or other deductions), including overtime, after any salary reduction contributions pursuant to elections under a plan subject to Code sections 125 or 401(k) and excluding bonuses and any other special payments; provided, that the Committee may expand or narrow the definition of Base Compensation from time to time so long as such definition is consistent with the requirements of Section 423 of the Code.

BOARD: The Board of Directors of the Company.

BUSINESS DAY: Each day on which shares of Common Stock are or could be traded on the New York Stock Exchange, or such other definition as the Committee may from time to time specify.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document CODE: The Internal Revenue Code of 1986, as amended, or any subsequently enacted federal revenue law. A reference to a particular section of the Code shall include a reference to any regulations issued under the section and to the corresponding section of any subsequently enacted federal revenue law.

COMMITTEE: The committee established pursuant to Section 13 to be responsible for the general administration of the Plan.

COMMON STOCK: The Companys common stock, $.01 par value.

COMPANY: Collective Brands, Inc., a Delaware corporation, and any successor by merger, consolidation or otherwise.

ELIGIBLE ASSOCIATE: Each employee, including each executive officer, of the Company and its domestic Subsidiaries who meet the eligibility requirements of Section 4.

EMPLOYER: A Participating Company that is the employer of a Participant.

ENROLLMENT PROCEDURE: The procedure specified from time to time by the Committee to enable an Eligible Associate to participate in the Plan and to authorize payroll deductions pursuant to Section 5.

FAIR MARKET VALUE: The weighted average price per share paid for all shares purchased on the date in question with respect to a determination of the Purchase Price of Common Stock purchased other than from the Company by an independent trustee or purchasing agent in arms-length transactions. For all other purposes, Fair Market Value shall mean the average of the reported lowest and highest sales prices per share for the Common Stock on the New York Stock Exchange on the date in question, or, if there are no such sales on that date, the reported lowest and highest sales prices per share for the Common Stock on the New York Stock Exchange for the last Business Day prior to the date in question for which sales of the Common Stock were reported.

INVESTMENT ACCOUNT: The account established for each Participating Associate to hold Common Stock purchased under the Plan pursuant to Section 5.

INVESTMENT DATE: The date on which the shares of Common Stock are purchased for the Plan.

MONTH: A calendar month.

PARENT: Any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, as of an Investment Date, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

PARTICIPANT OR PARTICIPATING ASSOCIATE: Eligible Associates who elect to participate in the Plan pursuant to Section 5.

PAYROLL DEDUCTION ACCOUNT: The account established for a Participating Associate to hold payroll deductions pursuant to Section 5.

PLAN: The Collective Brands, Inc. Employee Stock Purchase Plan (formerly the Payless ShoeSource, Inc. Stock Ownership Plan), as set forth herein and as amended from time to time.

PURCHASE PRICE: The price for each whole and fractional share of Common Stock, including those purchased by dividend reinvestment, which shall be 95% of the lower of the (a) Fair Market Value of such whole or fractional share on the first day of the Purchase Period or (b) the Fair Market Value of such whole or fractional share on the Investment Date; provided, however, the Committee may change such purchase price so long as the purchase price is not lower than the lesser of (i) 85% of the Fair Market Value of the Common Stock on the first day of the applicable purchase period, and (ii) 85% of the Fair Market Value of the Common Stock on the Investment Date.

PURCHASE PERIOD: That period specified by the Committee during which payroll deductions shall be accumulated for the purchase of Common Stock under the Plan; provided, that such period shall not have a duration that exceeds the limitations provided in Section 423(b)(7) of the Code.

RULE 16B-3: Rule 16b-3 of the Securities and Exchange Commission promulgated under the Act, as now and hereafter amended.

SUBSIDIARY OR SUBSIDIARIES: Any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, as of an Investment Date, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

TRUSTEE: The trustee of the Plan designated by the Committee as provided in Section 13.

4. ELIGIBLE ASSOCIATES Participation in the Plan shall be open to each associate of a Participating Company (including each executive officer of the Company) who has been continuously employed by one or more Participating Companies for at least six months; provided, that the Committee may establish such other or different employment requirements as it may deem appropriate so long as such other or different requirements are consistent with the provisions of Section 423 of the Code. For purposes of this section any break in service of less than thirty-one days shall not be deemed to constitute a discontinuance of employment, unless the Committee shall otherwise provide.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document No director of the Company or of any its Subsidiaries who is not an associate shall be eligible to participate in the Plan.

5. ELECTION TO PARTICIPATE; METHOD OF PURCHASE; INVESTMENT ACCOUNTS; DIVIDENDS 5.1 ELECTION TO PARTICIPATE. Each Eligible Associate may become a Participant effective on the first day of any Month coincident with or following the date the Participant becomes an Eligible Associate by complying with the Enrollment Procedure authorizing specified regular payroll deductions from the Participants Base Compensation. Such regular payroll deductions shall be subject to a minimum deduction of $5.00 per weekly pay period and $10.00 per bi-weekly pay period and a maximum deduction of $480.00 per weekly pay period and $960.00 per bi-weekly pay period; provided, that the Committee may increase or decrease such minimum and maximum deductions from time to time. All regular payroll deductions shall be credited to the Payroll Deduction Account that the Company has established in the name of the Participant.

5.2 PURCHASE OF COMMON STOCK. Each Participating Associate having eligible funds in the Participants Payroll Deduction Account on an Investment Date shall be deemed, without any further action, to have purchased the number of shares which the eligible funds in the Participants Payroll Deduction Account could purchase at the Purchase Price on that Investment Date. All shares purchased shall be maintained by the Trustee in separate Investment Accounts for Participating Associates. Fractional shares will be allocated to accounts under the Plan unless the Committee otherwise provides; provided that share certificates shall only be issued for whole shares. If fractional shares are not allocated to accounts under the Plan, amounts that otherwise would have been applied to the purchase of fractional shares will continue to be held for the Participant and be applied towards the purchase of shares on the last day of the next Purchase Period.

5.3 TIMING AND MANNER OF PURCHASE. The Committee shall designate Purchase Periods during which funds shall be accumulated in Payroll Deduction Accounts for the purchase of Common Stock. Until otherwise specified the Purchase Periods shall consist of each Month in a year. The Investment Date shall occur during an interval immediately following the end of each Purchase Period having such duration as the Committee shall from time to time specify, provided that until the Committee otherwise specifies, such interval shall be the ten Business Days immediately following the end of the quarterly Purchase Period. However, nothing contained in this Plan shall authorize the Committee, the Company or any affiliate of the Company to exercise any direct or indirect control or influence over the times when, or the prices at which, the Trustee or its independent agent may purchase the Common Stock for the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Plan, the amounts of the Common Stock to be purchased, the manner in which the Common Stock is to be purchased, or the selection of a broker or dealer (other than the Trustee) through which purchases may be executed; provided, that the Company, the Committee and affiliates of the Company, shall not be deemed to have such control or influence solely because the Committee revises not more than once in any three month period the basis for determining the amount of the Companys contributions to the Plan, the basis for determining the frequency of the Companys allocations to the Plan, or any formula in the Plan that determines the amount or timing of shares to be purchased by the Trustee.

5.4 DIVIDENDS AND OTHER DISTRIBUTIONS. All cash dividends paid with respect to the whole and fractional shares of the Common Stock and shares so purchased shall be reinvested in Common Stock on the immediately following Investment Date and added to the shares held for a Participating Associate in the Participants Investment Account. Stock dividends and stock splits received by the Plan will be credited to Participants having Common Stock allocated to their Investment Account to the extent that they are attributable to such allocated Common Stock. Property, other than shares of Common Stock or cash, received by the Trustee as a distribution with respect to Common Stock allocated to Participant Common Stock accounts will be distributed in kind to Participants in proportion to the number of shares of Common Stock contained in their Investment Account.

5.5 STOCK PURCHASES. The Trustee shall effect purchases of Common Stock on the open market or in private transactions. Purchases shall be made using total amounts contained in all Payroll Deduction Accounts immediately preceding the purchase. The Company will pay the difference between the Purchase Price and the price at which such shares are purchased for the Plan on or prior to the required closing date for the purchase. Expenses incurred in the purchase of shares shall also be paid by the Company.

5.6 PAYMENT OF DEDUCTIONS TO THE TRUSTEE. Participating Companies shall pay to the Trustee or to the order of the Trustee payroll deductions made during a Month prior to the time required for the closing of purchases of Common Stock for the Plan, as directed by the Committee. Interest shall not accrue on any amount paid to the Trustee or otherwise allocated to an Investment Account pending investment in Common Stock or other distribution.

6. CHANGE IN PARTICIPATION, WITHDRAWALS AND DISTRIBUTIONS 6.1 PERIOD OF PARTICIPATION. After an Eligible Associate has become a Participant in the Plan, such participation will continue thereafter, so long as the Plan continues in effect, until the employment of the Participant with all Participating Companies terminates, the Participant ceases to make contributions to the Plan and makes a complete withdrawal from the Plan, or the Participant ceases to be an Eligible Associate.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 6.2 CHANGE IN PARTICIPATION. A Participant may change the amount of the Participants payroll deductions in accordance with rules established by the Committee.

6.3 PARTIAL WITHDRAWALS. The Trustee shall deliver whole shares allocated to a Participants Investment Account upon written request for a partial withdrawal received in accordance with rules established by the Committee so long as the Participants Investment Account following such delivery contains at least one share or such other amount as the Committee may from time to time require. Deliveries shall be made as soon as practicable after the request is received.

6.4 COMPLETE WITHDRAWAL, TERMINATION OF EMPLOYMENT, DEATH. A Participant may effect a complete withdrawal from the Plan by giving notice in accordance with rules established by the Committee. A withdrawal from the Plan shall also be deemed to occur at such time as the Participant ceases to be an Eligible Associate for any reason, including death, or upon the occurrence of such other event as may herein be specified as one which triggers a withdrawal. The Employer shall give prompt notice to the Trustee of such withdrawal. Upon any such withdrawal the Participant, or the Participants beneficiary or estate in the case of death, shall be entitled to receive from the Trustee, as soon as practicable after the Trustee shall have completed its purchases of Common Stock hereunder with all funds attributable to amounts received by the Trustee with respect to the part of the Purchase Period that precedes the effective date of such withdrawal: (a) the number of whole shares of Common Stock credited to the account of such Participant, (b) cash in the amount of any fractional share credited to the Participants Investment Account and (c) any cash balance credited to such Participants Accounts which has not been invested by the Trustee. In the case of the death of the Participant the deliveries shall be made to the beneficiary designated by the Participating Associate in a writing filed with the Company. If no beneficiary has been designated, or if the designated beneficiary does not survive the Participating Associate, such amount and all shares shall be delivered to the Participants estate.

6.5 PLAN RE-ENTRY; SUSPENSION DURING APPROVED LEAVE. A Participant who withdraws from the Plan and continues to otherwise be an Eligible Associate may re-enter the Plan in accordance with such rules as the Committee may establish; provided that until the Committee otherwise specifies, re-entry may be effected at any time in accordance with the Enrollment Procedure. A Participant whose contributions under the Plan shall have been temporarily discontinued shall not be considered to have withdrawn from the Plan.

7. REGISTRATION OF SHARES The shares to be delivered to a Participant will be issued in such registration as shall have been specified by the Participant in accordance with procedures established by the Committee. The Committee may, in its discretion, restrict the use of any form of registration other than registration solely in the name of the Participant and may permit such other registrations as may be permitted under Section 423 of the Code and related Code sections and rules. The shares of a Participant who is a minor may, with the consent of the Committee, and upon written instructions by such associate, be registered in the name of an adult as custodian for such minor associate.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 8. REQUIRED NOTICE OF SUBSEQUENT SALE As a condition of participation in the Plan, each Participating Associate agrees to notify the Company if the Participant sells or otherwise disposes of any of the Participants shares of Common Stock within two years of the Investment Date on which such shares were purchased.

9. STATEMENT OF ACCOUNT As soon as practicable after the end of each calendar quarter each Participant will receive from the Trustee or the Company a statement of the Participants account with respect to such period, subject to the right of the Committee to prescribe the form and content of such statement and to otherwise change the frequency, coverage and delivery of such statement.

10. EXERCISE OF VOTING AND OTHER RIGHTS Prior to the time when the Trustee makes delivery to the Participating Associate of the shares of Common Stock held in the Participants Investment Account, the Trustee will exercise all voting rights pertaining to the shares of Common Stock allocated to the Investment Account of each Participant only in accordance with written directions, if any, given to the Trustee by such Participant prior to the date fixed for the exercise of such voting rights. In the absence of such direction, the Trustee shall not vote allocated shares but may vote any unallocated Common Stock in its discretion. All stock rights or offers received by the Trustee with respect to any Common Stock held by it hereunder shall be exercised by the Trustee to the extent appropriately specified in writing by Participants with respect to Common Stock allocated to the Investment Accounts of such Participants. Rights or offers relating to any unallocated Common Stock shall be exercised or otherwise disposed of by the Trustee in its discretion.

11. DESIGNATION OF BENEFICIARY A Participant may file with the Company a written designation of a beneficiary with respect to the assets in the accounts of the Participant in the event of the Participants death, provided that no such designation shall be effective unless so filed prior to the death of the Participant. The written designation of a beneficiary filed with the Company may be changed or revoked by the sole action of the Participant unless such action is precluded by statute. If upon the death of a Participant there is doubt as to the right of any beneficiary to receive any amount, the Committee may direct the Trustee to retain such amount, without liability for any interest thereon, until the rights thereto are determined, or the Committee may direct the Trustee to distribute such amount into any court of appropriate jurisdiction, in either of which events neither the Trustee nor the Committee nor any Employer shall be under any further liability to anyone with respect to such amount.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12. SALE OF SHARES A Participating Associate shall have the right to direct the Trustee to sell shares in the Participants Investment Account in lieu of a withdrawal or distribution of the shares in kind; provided that the Committee may adopt rules regulating such elections, the timing of such sales, and requirements that sales be aggregated with other sales. The Committee may also choose to completely or temporarily suspend or terminate such rights. Upon any permitted direction to sell, the Trustee will sell all shares allocated to the Investment Account that are covered by the direction together with any fractional interest that may be aggregated with other fractional interests into a whole share, and remit the proceeds of such sale, less brokerage commissions and other selling expenses to the Participant or other permitted distributee. The Trustee may, consistent with applicable securities laws, sell the shares in private transactions, in the open market, or to the Company. If so directed the Trustee shall sell the shares to the Company. Any sale of shares to the Company shall be effected at Fair Market Value on the date of purchase.

13. ADMINISTRATION OF THE PLAN 13.1 THE COMMITTEE. The Plan shall be administered by the Committee, which shall consist of not less than two members appointed by the Board. Committee members shall be directors, officers or salaried employees of the Company. The Board from time to time may appoint members previously appointed and may fill vacancies, however caused, in the Committee.

13.2 THE TRUSTEE. The Committee will designate one or more individuals, a bank, trust company or investment firm having trust powers to act as trustee under the Plan (the Trustee), with the right in the Committee to change such designation in its discretion. The Trustee will hold all funds received by it under the Plan and, until delivery thereof to the Participants hereunder, all shares of Common Stock acquired by the Trustee under the Plan. The Trustee may rely on all orders, requests, and instructions with respect to the Plan given in writing and signed by any person authorized by the Committee or the Companys Board of Directors, and the Trustee shall not be liable to any person for any action taken in accordance therewith. The Trustee or such other agent as the Trustee may appoint to effect purchases under the Plan shall be an agent independent of the issuer within the meaning of Regulation M of the Securities and Exchange Commission, as amended.

13.3 AUTHORITY OF THE COMMITTEE. Subject to the express provisions of the Plan, the Committee shall have the authority to take any and all actions (including directing the Trustee as to the acquisition of shares) necessary to implement the Plan, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable in administering the Plan. All of such determinations shall be final and binding upon all persons. A quorum of the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Committee shall consist of a majority of its members and the Committee may act by vote of a majority of its members at a meeting at which a quorum is present, or without a meeting by a written consent to the action taken signed by all members of the Committee. The Committee may request advice or assistance or employ such other persons as are necessary for proper administration of the Plan. To the extent that the Committee exercises discretionary authority with respect to the establishment and modification of rules, regulations and guidelines for the administration of the Plan, such rules and rule changes shall be made to apply uniformly to all Participants, consistent with the requirements of Section 423 of the Code.

14. LIMITATION ON PURCHASES No Participating Associate may purchase during any one calendar year under the Plan (or under any other plan of the Company, a Parent or Subsidiary qualified under Code section 423) shares of Common Stock having an aggregate Fair Market Value (determined by reference to the Fair Market Value on each Investment Date) in excess of the limitations of Code section 423(b)(8).

A Participating Associates Payroll Deduction Account may not be used to purchase Common Stock on any Investment Date to the extent that after such purchase the Participating Associate would own (or be considered as owning within the meaning of Code section 424(d)) stock possessing 5 percent or more of the total combined voting power of the Company or its Parent or Subsidiary. For this purpose, Common Stock which the Participating Associate may purchase under any outstanding rights to purchase shall be treated as owned by such Participating Associate. As of the first Investment Date on which this paragraph limits a Participating Associates ability to purchase Common Stock, the associate shall cease to be an Eligible Associate.

15. RIGHTS NOT TRANSFERABLE Rights under the Plan are not transferable by a Participating Associate otherwise than by will or the laws of descent and distribution, and are exercisable, during the Associates lifetime, only by the Associate.

16. CHANGE IN CAPITAL STRUCTURE In the event of a stock dividend, stock split or combination of shares, recapitalization or merger in which the Company is the surviving corporation or other change in the Companys capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of Common Stock or preferred stock of the Company), the number and kind of shares of stock or securities of the Company to be subject to the Plan, the maximum number of shares or securities which may be delivered under the Plan, the selling price and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If the Company is a party to a consolidation or a merger in which the Company is not the surviving corporation, a transaction that results in the acquisition of substantially all of the Companys outstanding stock by a single person or entity, or a sale or transfer of substantially all of the Companys assets, the Committee may take such actions with respect to the Plan as the Committee deems appropriate.

Notwithstanding anything in the Plan to the contrary, the Committee may take the foregoing actions without the consent of any Participant, and the Committees determination shall be conclusive and binding on all persons for all purposes.

17. AMENDMENT OF THE PLAN The Board of Directors may at any time, or from time to time, amend the Plan in any respect; provided, however, that the shareholders of the Company must approve any amendment that would (i) increase the number of securities that may be issued under the Plan, or (ii) modify the requirements as to eligibility for participation in the Plan.

18. TERMINATION OF THE PLAN The Plan and all rights of associates hereunder shall terminate: a. on the Investment Date that Participating Associates become entitled to purchase a number of shares greater than the number of reserved shares remaining available for purchase; or b. at any date at the discretion of the Board of Directors.

In the event that the Plan terminates under circumstances described in (a) above, reserved shares remaining as of the termination date shall be issued to Participating Associates on a pro rata basis. Upon termination of the Plan, all amounts in an associates Payroll Deduction Account that are not used to purchase Common Stock will be refunded.

19. EFFECTIVE DATE OF PLAN The Plan was approved by the Board of Directors on March 20, 1997, and shall become effective on August 1, 1997, subject to receiving shareholder approval.

20. GOVERNMENT AND OTHER REGULATIONS The Plan, and the grant and exercise of the rights to purchase shares hereunder, and the Companys obligation to sell and deliver shares upon the exercise of rights to purchase shares, shall be subject to all applicable federal, state and foreign laws, rules and regulations, and to such approvals by any regulatory or government agency as may, in the opinion of counsel for the Company, be required.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 21. INDEMNIFICATION AND LIABILITY OF COMMITTEE AND TRUSTEE The Committee and all persons employed by each Participating Company who are engaged in administering the Plan shall be entitled to rely upon all valuations, certificates and reports furnished by the Trustee or by any accountant or actuary selected by the Committee and upon all opinions given by any legal counsel selected by the Committee. The members of the Committee, the Trustee, each Participating Company, and all persons employed by each Participating Company and the Trustee who are engaged in administering the Plan (a) shall be fully protected with respect to any action taken by them in good faith and all actions so taken shall be conclusive and binding upon all persons having or claiming to have any interest under the Plan; and (b) shall not be personally liable by reason of any instrument made or executed by them or on their behalf or in the course of administering the Plan or for any mistake of judgment made by them or any other person, or for any neglect, omission or wrongdoing of any other person or for any loss to the Plan unless resulting from their own willful misconduct. No member of the Committee shall have any liability to any person for any action or omission except each for his own individual willful misconduct.

Service on the Committee shall constitute service as a director of the Company so that members of the Committee shall be entitled to indemnification and reimbursement as directors of the Company pursuant to its Articles of Incorporation and Bylaws.

In addition to the foregoing, each member of the Committee, the Trustee, and each director and officer of each Participating Company shall be indemnified by the Company against all expenses (including costs and attorneys fees) actually and necessarily incurred or paid by such person in connection with the defense of any action, suit or proceeding in any way relating to or arising from the Plan to which the Participant may be made a party by reason of the party being or having been such member of the Committee, Trustee, director or officer or by reason of any action or omission or alleged action or omission by him in such capacity, and against any amount or amounts which may be paid by him (other than to the Employer) in reasonable settlement of any such action, suit or proceeding, where the Company has consented to such settlement. In cases where such action, suit or proceeding shall proceed to final adjudication, such indemnification shall not extend to matters as to which it shall be adjudged that such member of the Committee, Trustee, director or officer is liable for willful misconduct in the performance of the duties of such person as such. The right of indemnification herein provided shall not be exclusive of other rights to which any member of the Committee, Trustee, director or officer may now or hereafter be entitled, shall continue as to a person who has ceased to be such member of the Committee, Trustee, director or officer and shall inure to the benefit of the heirs, executors, administrators, successor or assigns of such members of the Committee, director or officer.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 22. APPLICABLE LAW The place of administration of the Plan shall conclusively be deemed to be within the State of Kansas and the validity, construction, interpretation and administration of the Plan and of any rules or regulations or determinations or decisions made thereunder, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be governed by and be determined exclusively and solely in accordance with, the laws of the State of Kansas. Without limiting the generality of the foregoing, the period within which any action arising under or in connection with the Plan, or any payment or award made or purportedly made under or in connection therewith, must be commenced shall be governed by the laws of the State of Kansas, irrespective of the place where the act or omission complained of took place and of the residence of any party to such action and irrespective of the place where the action may be brought.

SUBSIDIARIES OF REGISTRANT

The corporations listed below are subsidiaries of Registrant, and all are included in the consolidated financial statements of Registrant as subsidiaries (unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary):

Jurisdiction in which Name organized Collective Brands Finance, Inc. Nevada Payless ShoeSource, Inc. Missouri Payless ShoeSource Distribution, Inc. Kansas Payless ShoeSource Merchandising, Inc. Kansas Payless ShoeSource Worldwide, Inc. Kansas PSS Canada, Inc. Kansas Payless ShoeSource Canada Inc. Canada Payless ShoeSource Canada GP Inc. Canada Payless ShoeSource Canada LP Canada Payless ShoeSource (BVI) Holdings, Ltd. British Virgin Islands Dyelights, Inc. Delaware Shoe Sourcing, Inc. Kansas Payless CA Management Ltd. British Virgin Islands PSS Holdings Cayman Islands PSS Latin America Holdings Cayman Islands Payless ShoeSource Gold Value, Inc. Kansas Payless ShoeSource International Limited Hong Kong Dynamic Assets Limited Hong Kong Payless NYC, Inc. Kansas Payless ShoeSource Andean Holdings Cayman Islands Payless ShoeSource Uruguay SRL Uruguay Payless ShoeSource Spain, S.L. Spain Payless ShoeSource of Puerto Rico, Inc. Puerto Rico Eastborough, Inc. Kansas Payless International Finance BV Netherlands Payless ShoeSource International Limited (Shenzen) China Payless ShoeSource Ecuador Cia. Ltda. Ecuador Payless ShoeSource Honduras S. De R.L. Honduras Payless ShoeSource of El Salvador, Ltda de C.V. El Salvador Payless ShoeSource, Limitada Costa Rica Payless ShoeSource Limitada Compania Limitada (Nicaragua) Nicaragua

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Payless ShoeSource de Guatemala LTDA Guatemala Payless ShoeSource de la Republica Dominicana, S.A. Dominican Republic Payless ShoeSource of St. Lucia, Ltd. St. Lucia Payless ShoeSource of Trinidad Unlimited Trinidad & Tobago Payless ShoeSource Overseas S.R.L. Panama PSS Canada Investments, LP Canada PSS Canada Financial Services ULC Canada PSS US Investments, LP Nevada Payless PSS Canada Holdings ULC Canada PSS US Holdings LLC Nevada PSS Canada Financial Management ULC Canada Collective Licensing, LP Delaware Lifestyle Brands Corporation Nova Scotia Collective Licensing International, LLC Delaware PSS International Holdings, Limited Cayman Islands Collective Brands International Holdings, Limited I Cayman Islands Collective Brands Logistics, Limited Hong Kong Collective Brands International Holdings, Limited II Cayman Islands Collective Brands Services, Limited Hong Kong Collective Brands Trust I Peoples Republic of China Collective Brands Trust II Peoples Republic of China Payless CO Management Ltd. British Virgin Islands Collective Franchising, Ltd. Cayman Islands Collective Brands Cayman Finance, Limited Cayman Islands Collective Brands Holdings, Limited Hong Kong Payless Colombia (BVI) Holdings, Ltd. British Virgin Islands Payless ShoeSource PSS De Colombia Ltda. Colombia The Stride Rite Corporation Massachusetts Stride Rite Childrens Group, LLC Massachusetts Keds, LLC Massachusetts Stride Rite Sourcing International, Inc. Massachusetts Saucony/Ecom, Inc. Delaware Sperry Top-Sider, LLC Massachusetts Saucony, Inc. Massachusetts STS/ECOM, Inc. Delaware SR/Ecom, Inc. Massachusetts Stride Rite International Corp. Massachusetts Stride Rite Investment Corp. Massachusetts SR Holdings, LLC Delaware SRR Inc. Delaware SRL, LLC Delaware Tommy Hilfiger Footwear, LLC Massachusetts SRGC/Ecom, Inc. Delaware SRCG LLC Delaware Payless Customer Service Solution, LLC Delaware Keds Services, LLC Delaware Saucony UK, Inc. Massachusetts

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Collective Brands Performance + Lifestyle Group GmbH Germany Robeez Logistic Inc. Nevada Robeez US Holdings, Inc. Nevada Robeez US Inc. Washington Stride Rite International LLC Delaware Collective Brands Bermuda Holdings, L.P. Bermuda Stride Rite Bermuda, LP Bermuda Robeez (UK) Ltd. United Kingdom Robeez European Sales Ltd. United Kingdom Stride Rite UK Limited United Kingdom Stride Rite Europe B.V. Netherlands Stride Rite Canada Limited Canada Payless ShoeSource (Panama) S.A. Panama Payless Purchasing Services, Inc. Kansas Payless ShoeSource Asia Pte. Ltd. Singapore Payless Collective GP, LLC Delaware Collective Brands, LLC Kansas Collective Brands Franchising Services, LLC Kansas Payless International Franchising, LLC Kansas Collective Brands Coöperatief U.A. Netherlands Collective Brands International Franchising, LLC Kansas Collective Brands Cayman Finance, Limited II Cayman Islands Saucony Corporate Services, LLC Massachusetts Sperry Top-Sider Corporate Services, LLC Massachusetts Collective Brands Services Vietnam Company Ltd. Vietnam Clinch, LLC Delaware Collective Indonesia Franchising, LLC Kansas Payless ShoeSource Jamaica Limited Jamaica Collective Brands II Coöperatief U.A. Netherlands Collective Brands Performance + Lifestyle Group France France PSS Investment I, Inc. Nevada PSS Investment III, Inc. Kansas Payless Controladora, S.A. de C.V. Mexico Payless Servicios, S.A. de C.V. Mexico Payless ShoeSource International Sericios Tecnicos E Inspectoria de Calcados S/C LTDA Brazil Payless ShoeSource, S.A. de C.V. Mexico Payless ShoeSource Leasing LLC Delaware Import Solutions de Mexico. S. de R.L. de C.V. Mexico Stride Rite de Mexico, S.A. de C.V. Mexico PT Collective Brands Indonesia Indonesia Payless ShoeSource (Barbados) SRL Barbados

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement Nos. 333-25877, 333-30371, 333-67684, 333-133098, 333-134558, 333-143698, 333-143699, and 333-159704 on Form S-8 and No. 333-126670 on Form S-3 of our reports dated March 22, 2012, relating to the financial statements and financial statement schedule of Collective Brands, Inc., and subsidiaries and the effectiveness of Collective Brands, Inc., and subsidiaries internal control over financial reporting, appearing in this Annual Report on Form 10-K of Collective Brands, Inc., and subsidiaries for the year ended January 28, 2012.

/s/ DELOITTE & TOUCHE LLP March 22, 2012

CERTIFICATIONS

I, Michael J. Massey, certify that: 1. I have reviewed this Form 10-K of Collective Brands, Inc., a Delaware corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Date: March 22, 2012

/s/ Michael J. Massey Michael J. Massey Chief Executive Officer and President (Principal Executive Officer)

CERTIFICATION

I, Douglas G. Boessen, certify that: 1. I have reviewed this Form 10-K of Collective Brands, Inc., a Delaware corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and 5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.

Date: March 22, 2012

/s/ Douglass G. Boessen Douglas G. Boessen Division Senior Vice President, Chief Financial Officer and Treasurer

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Collective Brands, Inc. (the Company) on Form 10-K for the period ending January 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Michael J. Massey, Chief Executive Officer and President, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 22, 2012

/s/ Michael J. Massey Michael J. Massey Chief Executive Officer and President (Principal Executive Officer)

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report of Collective Brands, Inc. (the Company) on Form 10-K for the period ending January 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Douglas G. Boessen, Division Senior Vice PresidentChief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 22, 2012

/s/ Douglass G. Boessen Douglas G. Boessen Division Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements 12 Months Ended (Tables) Jan. 28, 2012 Fair Value Measurements [Abstract] Financial Assets And Liabilities At Estimated Fair Value Measurements Fair Value, Measured On A Quoted Prices in Significant Significant Recurring Basis Active Markets Observable Other Unobservable Inputs (Level 1) Inputs (Level 2) (Level 3) Total Fair Value (dollars in millions) As of January 28, 2012 Financial assets: Money market funds $ 69.2 $ — $ — $ 69.2 Financial liabilities: Interest rate contract(1) $ — $ 2.0 $ — $ 2.0 As of January 29, 2011 Financial assets: Money market funds $ 174.8 $ — $ — $ 174.8 Financial liabilities: Interest rate contract(1) $ — $ 7.4 $ — $ 7.4 (1) The fair value of the interest rate contract is determined using a mark-to-market valuation technique based on an observable interest rate yield curve and adjusting for credit risk.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exit Costs (Components Of 12 Months Ended The Exit Costs) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Restructuring Cost and Reserve [Line Items] Accrual Balance as of January 29, 2011 Charges to Date 13.0 Cash Payments (9.7) Accrual Balance as of January 28, 2012 3.3 Lease Termination Costs [Member] Restructuring Cost and Reserve [Line Items] Accrual Balance as of January 29, 2011 Charges to Date 10.6 Cash Payments (9.0) Accrual Balance as of January 28, 2012 1.6 Employee Severance Costs [Member] Restructuring Cost and Reserve [Line Items] Accrual Balance as of January 29, 2011 Charges to Date 2.4 Cash Payments (0.7) Accrual Balance as of January 28, 2012 $ 1.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of 12 Months Ended Senior Notes - Consolidating Financial Information Jan. 28, 2012 (Tables) Subsidiary Guarantors Of Senior Notes - Consolidating Financial Information [Abstract] Condensed Consolidating Statements Of 52 Weeks Ended January 28, 2012 (Loss) Earnings Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $— $2,907.1 $1,522.4 $ (967.8 ) $ 3,461.7 Cost of sales — 2,123.2 1,244.6 (935.6 ) 2,432.2 Gross margin — 783.9 277.8 (32.2 ) 1,029.5 Selling, general and administrative expenses 4.0 902.3 172.2 (32.2 ) 1,046.3 Impairment of goodwill — 10.0 — — 10.0 Operating (loss) profit (4.0 ) (128.4 ) 105.6 — (26.8 ) Interest expense 49.9 25.5 0.5 (37.0 ) 38.9 Interest income — (36.2 ) (1.2 ) 37.0 (0.4 ) Loss on early extinguishment of debt 0.5 — — — 0.5 Equity in earnings of subsidiaries 105.8 (81.4 ) — (24.4 ) — (Loss) earnings before income taxes (160.2 ) (36.3 ) 106.3 24.4 (65.8 ) Provision for income taxes — 69.5 14.5 — 84.0 Net (loss) earnings (160.2 ) (105.8 ) 91.8 24.4 (149.8 ) Net earnings attributable to noncontrolling interests — — (10.4 ) — (10.4 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) $(105.8 ) $81.4 $ 24.4 $ (160.2 )

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 29, 2011

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $— $2,950.8 $1,440.6 $(1,015.7 ) $ 3,375.7 Cost of sales — 2,015.6 1,073.7 (914.8 ) 2,174.5 Gross margin — 935.2 366.9 (100.9 ) 1,201.2 Selling, general and administrative expenses 4.1 855.8 252.5 (100.9 ) 1,011.5 Restructuring charges — — — — — Operating (loss) profit (4.1 ) 79.4 114.4 — 189.7 Interest expense 45.3 33.4 0.1 (30.1 ) 48.7 Interest income — (30.7 ) (0.1 ) 30.1 (0.7 ) Loss on early extinguishment of debt — 1.7 — — 1.7 Equity in earnings of subsidiaries (144.7 ) (92.6 ) — 237.3 — Earnings before income taxes 95.3 167.6 114.4 (237.3 ) 140.0 (Benefit) provision for income taxes (17.5 ) 22.9 12.0 — 17.4 Net earnings 112.8 144.7 102.4 (237.3 ) 122.6 Net earnings attributable to noncontrolling interests — — (9.8 ) — (9.8 ) Net earnings attributable to Collective Brands, Inc. $112.8 $144.7 $92.6 $(237.3 ) $ 112.8

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Restructuring charges — 0.1 — — 0.1 Operating (loss) profit from continuing operations (2.1 ) 62.1 98.5 — 158.5 Interest expense 24.4 43.4 0.1 (7.1 ) 60.8 Interest income — (8.1 ) (0.1 ) 7.1 (1.1 ) Loss on early extinguishment of debt 1.0 0.2 — — 1.2 Equity in earnings of subsidiaries (100.1 ) (88.4 ) — 188.5 — Earnings from continuing operations before income taxes 72.6 115.0 98.5 (188.5 ) 97.6 (Benefit) provision for income taxes (10.1 ) 15.0 4.5 — 9.4 Net earnings from continuing operations 82.7 100.0 94.0 (188.5 ) 88.2 Loss from discontinued operations, net of income taxes — 0.1 — — 0.1 Net earnings 82.7 100.1 94.0 (188.5 ) 88.3 Net earnings attributable to noncontrolling interests — — (5.6 ) — (5.6 ) Net earnings attributable to Collective Brands, Inc. $82.7 $100.1 $ 88.4 $ (188.5 ) $ 82.7

Condensed Consolidating Balance Sheet As of January 28, 2012 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

ASSETS Current Assets: Cash and cash equivalents $— $46.3 $ 135.0 $— $ 181.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accounts receivable, net — 127.9 36.7 (18.6 ) 146.0 Inventories — 434.0 124.1 5.3 563.4 Current deferred income taxes — — 7.2 — 7.2 Prepaid expenses 35.6 16.3 9.6 — 61.5 Other current assets — 356.0 160.3 (494.5 ) 21.8 Total current assets 35.6 980.5 472.9 (507.8 ) 981.2 Property and equipment, net — 302.3 67.1 — 369.4 Intangible assets, net — 358.7 26.0 — 384.7 Goodwill — 133.5 136.3 — 269.8 Deferred income taxes — — 10.7 — 10.7 Other assets 1,409.9 979.5 25.7 (2,383.7 ) 31.4 Total Assets $1,445.5 $2,754.5 $ 738.7 $(2,891.5 ) $ 2,047.2

LIABILITIES AND EQUITY Current Liabilities: Current maturities of long-term debt $— $5.1 $ — $— $ 5.1 Accounts payable — 147.8 158.8 (15.0 ) 291.6 Accrued expenses 209.7 384.4 46.5 (493.6 ) 147.0 Total current liabilities 209.7 537.3 205.3 (508.6 ) 443.7 Long-term debt 587.5 504.2 7.9 (494.8 ) 604.8 Deferred income taxes — 121.3 1.1 — 122.4 Other liabilities 3.5 183.2 16.1 — 202.8 Commitments and contingencies Equity: Collective Brands, Inc. shareowners' equity 644.8 1,408.5 479.6 (1,888.1 ) 644.8 Noncontrolling interests — — 28.7 — 28.7 Total equity 644.8 1,408.5 508.3 (1,888.1 ) 673.5 Total Liabilities and Equity $1,445.5 $2,754.5 $ 738.7 $(2,891.5 ) $ 2,047.2

CONDENSED CONSOLIDATING BALANCE SHEET

As of January 29, 2011

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

ASSETS Current Assets: Cash and cash equivalents $— $122.4 $ 201.7 $— $ 324.1 Accounts receivable, net — 103.4 21.2 (10.2 ) 114.4 Inventories — 418.5 122.5 (9.3 ) 531.7 Current deferred income taxes — 23.1 7.6 — 30.7 Prepaid expenses 28.4 15.8 10.9 — 55.1 Other current assets — 276.9 150.9 (405.6 ) 22.2 Total current assets 28.4 960.1 514.8 (425.1 ) 1,078.2 Property and equipment, net — 361.3 71.0 — 432.3 Intangible assets, net — 399.4 29.0 — 428.4 Goodwill — 142.9 136.9 — 279.8 Deferred income taxes — — 10.1 — 10.1 Other assets 1,538.6 916.4 22.1 (2,437.4 ) 39.7 Total Assets $1,567.0 $2,780.1 $ 783.9 $(2,862.5 ) $ 2,268.5

LIABILITIES AND EQUITY Current Liabilities: Current maturities of long-term debt $— $5.1 $ — $— $ 5.1 Accounts payable — 140.0 237.1 (89.7 ) 287.4 Accrued expenses 103.8 376.4 32.9 (328.7 ) 184.4 Total current liabilities 103.8 521.5 270.0 (418.4 ) 476.9 Long-term debt 637.0 484.3 67.1 (529.0 ) 659.4 Deferred income taxes — 64.0 1.4 — 65.4 Other liabilities 3.3 191.9 17.2 — 212.4 Commitments and contingencies Equity: Collective Brands, Inc. shareowners' equity 822.9 1,518.4 396.7 (1,915.1 ) 822.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Noncontrolling interests — — 31.5 — 31.5 Total equity 822.9 1,518.4 428.2 (1,915.1 ) 854.4 Total Liabilities and Equity $1,567.0 $2,780.1 $ 783.9 $(2,862.5 ) $ 2,268.5

Condensed Consolidating Statement Of 52 Weeks Ended January 28, 2012 Cash Flows Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net (loss) earnings $(160.2 ) $ (105.8 ) $ 91.8 $ 24.4 $ (149.8 ) Adjustments for non-cash items included in net earnings 1.0 288.5 25.5 — 315.0 Changes in working capital 98.7 (105.9 ) (87.6 ) (7.5 ) (102.3 ) Other, net 127.4 (129.5 ) 1.8 (16.9 ) (17.2 ) Cash flow provided by (used in) operating activities 66.9 (52.7 ) 31.5 — 45.7 Investing Activities: Capital expenditures — (74.8 ) (24.1 ) — (98.9 ) Intangible asset additions — (0.9 ) (0.5 ) — (1.4 ) Cash flow used in investing activities — (75.7 ) (24.6 ) — (100.3 ) Financing Activities: Net repayment of debt or notes payable (50.0 ) 54.1 (59.2 ) — (55.1 ) Payment of deferred financing costs — (1.8 ) — — (1.8 ) Net purchases of common stock (16.9 ) — — — (16.9 ) Net distributions to — — (13.2 ) — (13.2 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document noncontrolling interests Cash flow (used in) provided by financing activities (66.9 ) 52.3 (72.4 ) — (87.0 ) Effect of exchange rate changes on cash — — (1.2 ) — (1.2 ) Decrease in cash and cash equivalents — (76.1 ) (66.7 ) — (142.8 ) Cash and cash equivalents, beginning of year — 122.4 201.7 — 324.1 Cash and cash equivalents, end of year $— $ 46.3 $ 135.0 $ — $ 181.3

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net repayment of debt or notes payable — (184.1 ) (1.1 ) — (185.2 ) Net purchases of common stock (53.2 ) — — — (53.2 ) Net distributions to noncontrolling interests — — (7.7 ) — (7.7 ) Cash flow used in financing activities (53.2 ) (184.1 ) (8.8 ) — (246.1 ) Effect of exchange rate changes on cash — — 2.8 — 2.8 Increase in cash and cash equivalents — (157.4 ) 88.0 — (69.4 ) Cash and cash equivalents, beginning of year — 279.8 113.7 — 393.5 Cash and cash equivalents, end of year $— $ 122.4 $ 201.7 $ — $ 324.1

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash flow provided by operating activities 22.9 266.6 58.8 (40.7 ) 307.6 Investing Activities: Capital expenditures — (66.3 ) (17.7 ) — (84.0 ) Proceeds from sale of property and equipment — 2.8 — — 2.8 Dividends received — related party — — 1.6 (1.6 ) — Issuance of intercompany debt — (19.0 ) — 19.0 — Other, net — (1.8 ) (17.2 ) — (19.0 ) Cash flow used in investing activities — (84.3 ) (33.3 ) 17.4 (100.2 ) Financing Activities: Net repayment of debt or notes payable, including deferred financing costs (23.5 ) (42.6 ) (9.8 ) 11.0 (64.9 ) Net issuances of common stock 0.6 — — — 0.6 Net distributions to noncontrolling interests — — (0.7 ) — (0.7 ) Net distributions to parent — (1.6 ) (10.7 ) 12.3 — Cash flow used in financing activities (22.9 ) (44.2 ) (21.2 ) 23.3 (65.0 ) Effect of exchange rate changes on cash — — 1.8 — 1.8 Increase (decrease) in cash and cash equivalents — 138.1 6.1 — 144.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash and cash equivalents, beginning of year — 141.7 107.6 — 249.3 Cash and cash equivalents, end of year $ — $ 279.8 $ 113.7 $ — $ 393.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Summarizes 12 Months Ended The Change In Plan Assets) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011 In Millions, unless otherwise specified Defined Benefit Plan Disclosure [Line Items] Employer contributions $ 4.0 $ 0.4 PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of plan assets at prior measurement date 69.4 61.9 Actual return on plan assets 1.9 8.9 Employer contributions 0.4 1.6 Benefits paid (3.3) (3.0) Fair value of plan assets at end of year 68.4 69.4 Underfunded status at end of year $ (32.0) $ (16.1)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill (Narrative) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Impaired Intangible Assets [Line Items] Impairment charges related to indefinite-lived trademarks $ 31.1 Acquired other intangible assets 1.4 Accumulated goodwill impairment 52.0 PLG Retail [Member] Impaired Intangible Assets [Line Items] Accumulated goodwill impairment 42.0 Payless Domestic [Member] Impaired Intangible Assets [Line Items] Accumulated goodwill impairment $ 10.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months (Transactions For Stock- Ended Settled/Cash-Settled SARs) (Details) (USD $) Jan. 28, 2012 In Millions, except Share years data in Thousands, unless otherwise specified Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Outstanding at end of period, Weighted Average Remaining Contractual Life (in years) 3 [1] Vested and expected to vest at end of period, Weighted Average Remaining Contractual Life 3 (in years) Exercisable at end of period, Weighted Average Remaining Contractual Life (in years) 3 Outstanding at end of period, Aggregate Intrinsic Value $ 6.4 [1] Vested and expected to vest at end of period, Aggregate Intrinsic Value 6.3 Exercisable at end of period, Aggregate Intrinsic Value $ 3.6 Maximum Share Equivalents [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Granted, Shares 3,127 Stock-Settled SARs [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Outstanding at beginning of period, Shares 5,513 Granted, Shares 408 Exercised, Shares (628) Forfeited or expired, Shares (433) Outstanding at end of period, Shares 4,860 [1] Vested and expected to vest at end of period, Stock-Settled SARs 4,821 Exercisable at end of period, Stock-Settled SARs 3,580 Outstanding at beginning of period, Weighted Average Exercise Price $ 18 Granted, Weighted Average Exercise Price $ 17 Exercised, Weighted Average Exercise Price $ 12 Forfeited or expired, Weighted Average Exercise Price $ 22 Outstanding at end of period, Weighted Average Exercise Price $ 19 [1] Vested and expected to vest at end of period, Weighted Average Exercise Price $ 19 Exercisable at end of period, Weighted Average Exercise Price $ 20 Performance Shares Forfeited [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Outstanding at end of period, Shares 133 [1]The 4,860 thousand stock-settled SARs outstanding at the end of the period could be settled for a maximum of 3,127 thousand shares based upon the maximum appreciation cap in place at the time of grant. Included in the stock-settled SARs outstanding at the end of the period are 133 thousand performance shares that will be forfeited due to the 2011 performance criteria not being met.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shareholder Protection 3 Months Ended Rights Plan (Details) Oct. 29, 2011 Shareholder Protection Rights Plan [Line Items] Rights payable date of record Sep. 06, 2011 Rights expiration date Aug. 15, 2012 Minimum [Member] Shareholder Protection Rights Plan [Line Items] Percentage of common stock a person or group acquires to make the rights exercisable 15.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Common Stock Repurchases 12 Months Ended (Tables) Jan. 28, 2012 Common Stock Repurchases [Abstract] Schedule Of Common Stock 2011 2010 2009 Repurchases Dollars Shares Dollars Shares Dollars Shares (dollars in millions, shares in thousands) Stock repurchase program $14.9 993 $59.8 3,626 $ 6.0 274 Employee stock purchase, deferred compensation and stock incentive plans 3.8 212 4.1 208 1.6 115 $18.7 1,205 $63.9 3,834 $ 7.6 389

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant 12 Months Ended Accounting Policies (Tables) Jan. 28, 2012 Summary Of Significant Accounting Policies [Abstract] Components Of Property And Equipment (dollars in millions) 2011 2010 Land $5.9 $6.7 Buildings and leasehold improvements 671.3 711.6 Furniture, fixtures and equipment 680.3 677.6 Projects in progress 59.9 55.4 Accumulated depreciation and amortization (1,048.0) (1,019.0) Property and equipment, net $369.4 $432.3 Asset Impairment Charges By Reporting Segment 52 Weeks Ended January 28, January 29, January 30, (dollars in millions) 2012 2011 2010 Payless Domestic $ 32.9 $ 6.3 $ 4.8 Payless International 5.2 1.1 0.2 PLG Wholesale 0.7 — — PLG Retail 3.4 1.4 1.0 Total $ 42.2 $ 8.8 $ 6.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months Ended (Transactions For Nonvested Shares) (Details) (Nonvested Shares And Share Units [Member], USD $) Jan. 28, 2012 In Thousands, except Per Share data, unless otherwise specified Nonvested Shares And Share Units [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Outstanding at beginning of period, Shares 865 Granted, Shares 437 Vested, Shares (467) Forfeited or expired, Shares (163) Outstanding at end of period, Shares 672 Outstanding at beginning of period, Weighted Average Exercise Price $ 17 Granted, Weighted Average Grant Date Fair Value $ 19 Vested, Weighted Average Grant Date Fair Value $ 16 Forfeited or expired, Weighted Average Grant Date Fair Value $ 19 Outstanding at end of period, Weighted Average Exercise Price $ 19

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Schedule Of Defined Benefit Pension Plan Estimated Fair Value Measurements) (Details) Jan. 28, Jan. 29, Jan. 30, (PLG Plan [Member], USD 2012 2011 2010 $) In Millions, unless otherwise specified Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets $ 68.4 $ 69.4 $ 61.9 Quoted Prices In Active Markets (Level 1) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 36.3 27.2 Significant Observable Other Inputs (Level 2) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 32.1 42.2 Domestic Equity Securities [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 35.7 37.7 Domestic Equity Securities [Member] | Quoted Prices In Active Markets (Level 1) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 3.6 3.5 Domestic Equity Securities [Member] | Significant Observable Other Inputs (Level 2) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 32.1 34.2 International Equity Securities [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 7.7 8.0 International Equity Securities [Member] | Quoted Prices In Active Markets (Level 1) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 7.7 International Equity Securities [Member] | Significant Observable Other Inputs (Level 2) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 8.0 Domestic Fixed Income Securities [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 23.7 22.2 Domestic Fixed Income Securities [Member] | Quoted Prices In Active Markets (Level 1) [Member] Defined Benefit Plan Disclosure [Line Items]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair value of pension plan assets 23.7 22.2 Cash [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets 1.3 1.5 Cash [Member] | Quoted Prices In Active Markets (Level 1) [Member] Defined Benefit Plan Disclosure [Line Items] Fair value of pension plan assets $ 1.3 $ 1.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Deferred Tax Assets And (Liabilities) Included On Consolidated Balance Sheets) (Details) Jan. 28, 2012Jan. 29, 2011 (USD $) In Millions, unless otherwise specified Income Taxes [Abstract] Current deferred income tax assets $ 7.2 $ 30.7 Current deferred income tax liability (0.9) Deferred income tax assets (noncurrent) 10.7 10.1 Deferred income tax liability (noncurrent) (122.4) (65.4) Net deferred tax liability $ (105.4) $ (24.6)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill (Amortization Expense On Intangible Assets) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 In Millions, unless otherwise specified Intangible Assets And Goodwill [Abstract] Amortization expense on intangible assets $ 12.8 $ 16.2 $ 19.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation And Qualifying 12 Months Ended Accounts (Details) (USD $) In Millions, unless otherwise Jan. 28, 2012 Jan. 29, 2011 Jan. 30, 2010 specified Allowance For Doubtful Accounts [Member] Valuation and Qualifying Accounts Disclosure [Line Items] Balance at beginning of period $ 4.0 $ 4.2 $ 3.8 Charged to costs and expenses 1.7 2.0 2.9 Deductions (1.6) [1] (2.2) [1] (2.5) [1] Balance at end of period 4.1 4.0 4.2 Deferred Tax Valuation Allowance [Member] Valuation and Qualifying Accounts Disclosure [Line Items] Balance at beginning of period 15.4 11.4 8.1 Charged to costs and expenses 139.6 4.0 3.3 Balance at end of period 155.0 15.4 11.4 Sales Return Reserve [Member] Valuation and Qualifying Accounts Disclosure [Line Items] Balance at beginning of period 3.6 3.3 3.0 Charged to costs and expenses 51.5 49.2 45.1 Deductions (51.6) [1] (48.9) [1] (44.8) [1] Balance at end of period $ 3.5 $ 3.6 $ 3.3 [1]With regard to allowances for doubtful accounts, deductions relate to uncollectible receivables (both accounts and other receivables) that have been written off, net of recoveries. For the deferred tax valuation allowance, deductions relate to deferred tax assets that have been written off. For sales returns, deductions related to actual returns.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 12 Months 0 Months 0 Months 0 Months 12 Months Ended 12 Months Ended 12 Months Ended Months 12 Months Ended 12 Months Ended 12 Months Ended Ended Ended Ended Ended Ended Jan. 28, Jan. 28, Jan. 28, 2012 Jan. 28, 2012 2012 Jan. 28, Jan. 28, May 25, Jan. 28, 2006 2012 Jan. 28, Jan. 28, 2006 Stock 2012 Jan. 28, 2012 2006 2012 Jan. 28, Jan. 29, Jan. 30, Stock Jan. 28, Jan. 29, Jan. 30, Stock 2012 Jan. 28, Jan. 28, Jan. 28, 2012 Stock Subject To Stock 2012 Three- 2006 2006 2012 2011 2010 Incentive 2012 2011 2010 Jan. 28, Jan. 28, Subject To May 25, Share-Based Compensation Jan. 28, Jan. 29, Two Year 2012 2012 2012 2006 Incentive Performance Subject To Three- Year Cliff Jan. 28, May 25, Jan. 28, Stock Stock 2006 2006 2006 Plan Director Director Director 2012 2012 May 25, Performance May 25, 2006 (Narrative) (Details) (USD $) Jan. 28, 2012 2011 Jan. 28, Jan. 29, Jan. 28, Jan. 29, Jan. 30, Jan. 28, Graded Three- 2006 Stock 2006 Stock Plan Condition Performance Jan. 28, Year Vesting 2012 2006 2012 Incentive Incentive Stock Stock Stock [Member] Plan Plan Plan Director Director 2006 Condition 2006 Maximum In Millions, except Share Jan. 2012 NonvestedNonvested 2012 2011 2012 2011 2010 2012 Vesting Year Cliff Incentive Stock Incentive [Member] [Member] Condition 2012 Jan. Jan. Graded [Member] 1996 2006 2006 Plan Plan Incentive Incentive Incentive Three- [Member] [Member] [Member] Plan Plan Amended [Member] Maximum [Member] data, unless otherwise 28, Maximum Shares Shares Stock- Stock- Phantom Cash- Cash- Cash- [Member] Vesting Plan Incentive Plan Three- Three-Year [Member] Performance 29, 30, Vesting Nonvested Stock Stock Stock [Member] [Member] Plan Plan Plan Year NonvestedNonvestedNonvested[Member] [Member] Stock Three-Year [Member] Amended specified 2012 Share And And Settled Settled Nonvested Settled Settled Settled Nonvested [Member] [Member] Plan [Member] Year Cliff Graded Three-Year Shares 20112010 [Member] Shares Incentive Incentive Incentive NonvestedNonvested[Member][Member][Member] Graded Shares Shares Shares Non- Phantom Purchase Graded Director Stock years Equivalents Share Share SARs SARs Shares SARs SARs SARs Shares Phantom Maximum [Member] Three- Vesting Vesting Cliff Vesting Forfeited Phantom And Plan Plan Plan Shares Shares Stock- Stock- Stock- Vesting And And And Deferred Nonvested Plan Vesting Plan Purchase [Member] Units Units [Member] [Member] [Member] [Member][Member][Member] And Nonvested Share Prior To Year Cliff [Member] [Member] [Member] [Member] Nonvested Share [Member] [Member][Member] And And Settled Settled Settled [Member] Share Share Share Shares Shares [Member] [Member] [Member] Plan [Member] [Member] Share Shares Equivalents 2010 Vesting Stock- Nonvested Phantom Shares Units Share Share SARs SARs SARs Stock- Units Units Units [Member] [Member] Stock- [Member] Units [Member] [Member] [Member] [Member] Settled Shares And Nonvested [Member] [Member] Units Units [Member][Member][Member] Settled [Member] [Member] [Member] Settled [Member] years SARs Share Units Shares years [Member] [Member] SARs SARs [Member] [Member] [Member] [Member] [Member] years years years Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] Expiration date of stock April 2006 incentive plan Shares authorized under stock 15,600,0004,987,000 incentive plan Number of shares authorized 1,200,000 38,000 350,000 6,000,000 for issuance Maximum vesting term (in 10 seven seven ten years) Discount rate for purchase of 5.00% stock Total intrinsic value of options $ $ 0.4 $ 2.3 exercised 3.0 Cash received from option 1.3 10.1 7.2 exercises Shares granted under stock 3,127,000 437,000 408,000 100,000 171,000 226,000 404,000 407,000 213,000 54,000 63,000 133,000 140,000 incentive plan Period of vesting schedule 3 3 3 3 3 Appreciation cap on fair market value for shares of 125.00% 200.00% common stock granted Method of issuance of each a a common stock share for each maximum maximum stock-settled SAR of 5/9 of a of 2/3 of a share of share of common common stock may stock for be issued each for each stock- stock- settled settled SAR SAR granted. granted Total intrinsic value of SARs 2.0 0.6 0.1 exercised Granted, weighted average $ 19 $ 17 $ 8 $ 5 $ 8 $ 8 $ 5 $ 19 $ 20 $ 11 exercise price Nonvested shares granted 672,000 865,000 4,860,000 [1] 5,513,000 8,000 145,000 124,000 1,000 1,000 671,000 25,000 8,000 6,000 133,000 Phantom nonvested share value compared to cash value 1 of common stock shares Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate Total fair value of shares 10.8 9.6 2.3 vested Amount of unrecognized compensation expense related $ 6.7 to nonvested awards Weighted average period in which unrecognized compensation expense related 0.8 to nonvested awards will be recognized, in years [1] The 4,860 thousand stock-settled SARs outstanding at the end of the period could be settled for a maximum of 3,127 thousand shares based upon the maximum appreciation cap in place at the time of grant. Included in the stock-settled SARs outstanding at the end of the period are 133 thousand performance shares that will be forfeited due to the 2011 performance criteria not being met.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes 12 Months Ended (Reconciliation Between Statutory Federal Income Tax Rate And Effective Jan. 28, Jan. 29, Jan. 30, Income Tax Rate) (Details) 2012 2011 2010 (USD $) In Millions, unless otherwise specified Income Taxes [Abstract] Statutory federal income tax rate, Percentage 35.00% 35.00% 35.00% Statutory federal income tax rate, Value $ (23.0) $ 49.0 $ 34.2 State and local income taxes, net of federal tax benefit, Percentage 7.80% 0.90% 0.50% State and local income taxes, net of federal tax benefit, Value (5.2) 1.3 0.4 Federal domestic valuation allowance, Percentage (162.30%) Federal domestic valuation allowance, Value 106.8 State valuation allowance, Percentage (42.00%) State valuation allowance, Value 27.7 Rate differential on foreign earnings, net of valuation allowance, 18.00% (17.80%) (20.20%) Percentage Rate differential on foreign earnings, net of valuation allowance, Value (11.8) (24.9) (19.7) Decrease in tax reserves, Percentage 10.60% (3.80%) (5.40%) Decrease in tax reserves, Value (7.0) (5.3) (5.3) Federal employment tax credits, Percentage 3.20% (1.10%) (1.60%) Federal employment tax credits, Value (2.1) (1.6) (1.5) Other, net, Percentage 2.00% (0.80%) 1.30% Other, net, Value (1.4) (1.1) 1.3 Effective income tax rate, Percentage (127.70%) 12.40% 9.60% Total provision $ 84.0 $ 17.4 $ 9.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months Ended (Assumptions On Fair Value Of Stock-Settled SARs Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 Granted) (Details) Share-Based Compensation [Abstract] Risk-free interest rate 1.50% 1.90% 1.70% Expected dividend yield Expected appreciation vehicle life (in years) 4 4 4 Weighted-average expected volatility 62.00% 60.00% 58.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes 12 Months Ended (Reconciliation Of Beginning And Ending Balances Of Gross Unrecognized Tax Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 Benefits) (Details) (USD $) In Millions, unless otherwise specified Income Taxes [Abstract] Gross unrecognized tax benefits at beginning of year $ 52.1 $ 58.3 $ 55.0 Increases in tax positions for prior years 0.4 1.4 0.2 Decreases in tax positions for prior years Increases in tax positions for current year 0.4 0.6 7.9 Settlements (0.2) (6.5) (3.4) Lapse in statute of limitations (20.9) (1.7) (1.4) Gross unrecognized tax benefits at end of year $ 31.8 $ 52.1 $ 58.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months (Summary Of Stock Options Ended Activity) (Details) (USD $) In Thousands, except Per Jan. 28, 2012 Share data, unless otherwise years specified Share-Based Compensation [Abstract] Outstanding at beginning of period, Options 1,461 Granted, Options Exercised, Options (81) Forfeited or expired, Options (220) Outstanding at end of period, Options 1,160 Vested and expected to vest at end of period, Options 1,160 Exercisable at end of period, Options 1,160 Outstanding at beginning of period, Weighted Average Exercise Price $ 19 Granted, Weighted Average Exercise Price Exercised, Weighted Average Exercise Price $ 17 Forfeited or expired, Weighted Average Exercise Price $ 20 Outstanding at end of period, Weighted Average Exercise Price $ 19 Vested and expected to vest at end of period, Weighted Average Exercise Price $ 19 Exercisable at end of period, Weighted Average Exercise Price $ 19 Outstanding at end of period, Weighted Average Remaining Contractual Life (in years) 1 Vested and expected to vest at end of period, Weighted Average Remaining Contractual Life 1 (in years) Exercisable at end of period, Weighted Average Remaining Contractual Life (in years) 1 Outstanding at end of period, Aggregate Intrinsic Value Vested and expected to vest at end of period, Aggregate Intrinsic Value Exercisable at end of period, Aggregate Intrinsic Value

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Components 12 Months Ended Of Net Periodic Benefit Costs) (Details) (Net Periodic Jan. 28, Jan. 29, Jan. 31, Jan. 28, 2012 Jan. 29, 2011 Jan. 30, 2010 Benefit Cost [Member], USD 2012 2011 2009 Payless Plan Payless Plan Payless Plan $) PLG Plan PLG Plan PLG Plan [Member] [Member] [Member] In Millions, unless otherwise [Member] [Member] [Member] specified Defined Benefit Plan Disclosure [Line Items] Service cost $ 0.8 $ 0.8 $ 0.6 Interest cost 1.8 1.8 2.5 4.8 4.6 4.5 Expected return on assets (5.4) (5.0) (3.6) Amortization of prior service 1.6 1.6 1.6 cost Amortization of actuarial loss 1.5 1.3 0.5 1.1 1.3 1.8 Amount recognized due to 2.2 settlement Total $ 5.7 $ 7.7 $ 5.2 $ 0.5 $ 0.9 $ 2.7 Discount rate 4.50% 5.00% 6.50% 5.75% 5.90% 6.25% Expected long-term return on 8.00% 8.25% 8.25% plan assets Salary increases 4.00% 4.00% 4.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments And 12 Months Ended Contingencies Jan. 28, 2012 Commitments And Contingencies [Abstract] Commitments And Contingencies Note 17 — Commitments and Contingencies As of January 28, 2012, the Company has $80.9 million of royalty obligations consisting of minimum royalty payments for the purchase of branded merchandise, $84.4 million of future estimated pension obligations related to the Company's pension plans, $19.2 million of service agreement obligations relating to minimum payments for services that the Company cannot avoid without penalty and $21.2 million of employment agreement obligations related to minimum payments to certain of the Company's executives.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant Accounting Policies (Components Of Property And Equipment) (Details) Jan. 28, 2012Jan. 29, 2011 (USD $) In Millions, unless otherwise specified Summary of Significant Accounting Policies [Line Items] Property and equipment, net $ 369.4 $ 432.3 Accumulated depreciation and amortization (1,048.0) (1,019.0) Buildings And Leasehold Improvements [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, net 671.3 711.6 Furniture, Fixtures And Equipment [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, net 680.3 677.6 Projects In Progress [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, net 59.9 55.4 Land [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, net $ 5.9 $ 6.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes (Tables) Jan. 28, 2012 Income Taxes [Abstract] Earnings (Loss) Before Income Taxes And 2011 2010 2009 Noncontrolling Interest (dollars in millions) Domestic $(172.1) $26.2 $2.1 Foreign 106.3 113.8 95.5 Total $(65.8 ) $140.0 $97.6

Provision For Income Taxes 2011 2010 2009 (dollars in millions) Federal $(11.8) $0.6 $1.2 State and local 0.9 1.6 0.3 Foreign 13.9 11.0 4.1 Current tax provision 3.0 13.2 5.6 Federal 58.8 3.8 3.3 State and local 21.6 (0.3 ) 0.1 Foreign 0.6 0.7 0.4 Deferred tax provision 81.0 4.2 3.8 Total provision $84.0 $17.4 $9.4

Reconciliation Between Statutory Federal Income 2011 2010 2009 Tax Rate And Effective Income Tax Rate (dollars in millions) Statutory federal income tax rate 35.0 % $(23.0 ) 35.0 % $49.0 35.0 % $34.2 State and local income taxes, net of federal tax benefit 7.8 (5.2 ) 0.9 1.3 0.5 0.4 Federal domestic valuation allowance (162.3) 106.8 — — — — State valuation allowance (42.0 ) 27.7 — — — — Rate differential on foreign earnings, net of valuation allowance 18.0 (11.8 ) (17.8) (24.9) (20.2) (19.7) Decrease in tax reserves 10.6 (7.0 ) (3.8 ) (5.3 ) (5.4 ) (5.3 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Federal employment tax credits 3.2 (2.1 ) (1.1 ) (1.6 ) (1.6 ) (1.5 ) Other, net 2.0 (1.4 ) (0.8 ) (1.1 ) 1.3 1.3 Effective income tax rate (127.7)% 84.0 12.4 % $17.4 9.6 % $9.4

Reconciliation Of Beginning And Ending Balances 2011 2010 2009 Of Gross Unrecognized Tax Benefits (dollars in millions) Gross unrecognized tax benefits at beginning of year 52.1 58.3 55.0 Increases in tax positions for prior years 0.4 1.4 0.2 Decreases in tax positions for prior years — — — Increases in tax positions for current year 0.4 0.6 7.9 Settlements (0.2 ) (6.5 ) (3.4 ) Lapse in statute of limitations (20.9) (1.7 ) (1.4 ) Gross unrecognized tax benefits at end of year $31.8 $52.1 $58.3

Major Components Of Deferred Tax Assets 2011 2010 (Liabilities) (dollars in millions) Deferred Tax Assets: Accrued expenses and reserves $103.4 $93.9 Tax net operating losses and tax credits 111.2 69.0 Other 8.9 11.1 Gross deferred tax assets 223.5 174.0 Less: valuation allowance (155.0) (15.4 ) Deferred tax assets $68.5 $158.6 Deferred Tax Liabilities: Short term assets basis differences $— $(5.5 ) Depreciation/amortization and basis differences (152.5) (164.5) Other (21.4 ) (13.2 ) Deferred Tax Liabilities (173.9) (183.2) Net deferred tax liability $(105.4) $(24.6 )

Deferred Tax Assets And (Liabilities) Included On 2011 2010 Consolidated Balance Sheets (dollars in millions) Current deferred income tax assets $7.2 $30.7 Current deferred income tax liability (0.9 ) — Deferred income tax assets (noncurrent) 10.7 10.1 Deferred income tax liability (noncurrent) (122.4) (65.4) $(105.4) $(24.6) Summary Of Net Operating Loss Carryforwards

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation Expiration Amount Allowance (dollars in millions) Federal net operating losses 2031 $30.2 $ (30.2 ) State net operating losses 2012-2016 0.7 (0.7 ) State net operating losses 2017-2021 1.8 (1.8 ) State net operating losses 2022-2026 3.2 (3.2 ) State net operating losses 2027-2031 3.3 (3.3 ) Foreign net operating losses Indefinite 5.0 (4.8 ) Foreign net operating losses 2020 0.2 — Foreign net operating losses 2029-2031 4.4 — Total $48.8 $ (44.0 )

Summary Of Tax Credit Carryforwards Valuation Expiration Amount Allowance (dollars in millions) Federal foreign tax credit carryforwards 2018-2021 $29.5 $ (29.5 ) Federal general business credit carryforwards 2028-2031 11.6 (11.6 ) State income tax credit carryforwards 2012-2016 2.1 (2.1 ) State income tax credit carryforwards 2017-2021 3.5 (3.5 ) State income tax credit carryforwards 2012-2028 4.1 (4.1 ) State income tax credit carryforwards Indefinite 6.5 (6.5 ) Puerto Rico alternative minimum tax credit carryforward Indefinite 2.1 (0.9 ) Total $59.4 $ (58.2 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Defined Contribution Plans 12 Months Ended (Details) (USD $) Jan. 28, Jan. 29, Jan. 30, In Millions, unless otherwise 2012 2011 2010 specified Payless Plan [Member] Defined Contribution Plans [Line Items] Number of qualified profit sharing plans 2 Total profit sharing contributions $ 0.9 $ 3.6 $ 2.6 Percentage of profit sharing plans 2.50% PLG Plan [Member] Defined Contribution Plans [Line Items] Minimum length of employment for coverage under profit sharing 6 plans Profit sharing plans for associates, age 21 Total profit sharing contributions $ 2.1 $ 1.9 $ 2.6 Percentage of matching contribution for first plan 100.00% Percentage of salary deferred under first plan 3.00% Percentage of matching contribution for second plan 50.00% Percentage of salary deferred under second plan 3.00% Maximum [Member] | Payless Plan [Member] Defined Contribution Plans [Line Items] Percentage of associate contributions 5.00% Full-Time Associates [Member] | Payless Plan [Member] Defined Contribution Plans [Line Items] Minimum length of employment for coverage under profit sharing 60 plans Profit sharing plans for associates, age 21 Matching contribution for associates, days 180 Part-Time Associates [Member] | Payless Plan [Member] Defined Contribution Plans [Line Items] Minimum length of employment for coverage under profit sharing 1 plans Profit sharing plans for associates, age 21

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Common Stock Repurchases 12 Months Ended (Details) (USD $) In Millions, except Share Jan. 28, Jan. 29, Jan. 30, data in Thousands, unless 2012 2011 2010 otherwise specified Equity, Class of Treasury Stock [Line Items] Common stock repurchases, Value $ 18.7 $ 63.9 $ 7.6 Common stock repurchases, Shares 1,205 3,834 389 Remaining common stock repurchase authorization, amount 124 Stock Repurchase Program [Member] Equity, Class of Treasury Stock [Line Items] Common stock repurchases, Value 14.9 59.8 6.0 Common stock repurchases, Shares 993 3,626 274 Employee Stock Purchase, Deferred Compensation And Stock Incentive Plans [Member] Equity, Class of Treasury Stock [Line Items] Common stock repurchases, Value $ 3.8 $ 4.1 $ 1.6 Common stock repurchases, Shares 212 208 115

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-Term Debt (Tables) Jan. 28, 2012 Long-Term Debt [Abstract] Long-Term Debt And Capital- 2011 2010 Lease Obligations (dollars in millions) Term Loan Facility(1) $484.4 $489.4 Senior Subordinated Notes(2) 124.6 174.1 Revolving Loan Facility(3) — — Capital-lease obligations 0.9 1.0 Total debt 609.9 664.5 Less: current maturities of long-term debt 5.1 5.1 Long-term debt $604.8 $659.4 (1) As of January 28, 2012 and January 29, 2011, the fair value of the Company's Term Loan was $479.5 million, and $489.4 million, respectively, based on market conditions and perceived risks as of those dates. (2) As of January 28, 2012 and January 29, 2011, the fair value of the Company's senior subordinated notes was $125.6 million and $177.8 million, respectively, based on trading activity as of those dates. (3) As of January 28, 2012, the Company's borrowing base on its revolving loan facility was $300.0 million less $28.6 million in outstanding letters of credit, or $271.4 million. The variable interest rate, including the applicable variable margin at January 28, 2012, was 2.30%. Schedule Of Future Debt Senior Capital- Maturities Subordinated Term Loan lease Notes Facility obligations Total (dollars in millions) 2012 $ — $ 5.0 $ 0.1 $5.1 2013 125.0 5.0 0.1 130.1 2014 — 474.4 0.1 474.5 2015 — — 0.1 0.1 2016 — — 0.1 0.1 Thereafter — — 0.4 0.4 Total $ 125.0 $ 484.4 $ 0.9 $610.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Quarterly Results (Schedule 3 Months Ended 12 Months Ended Of Quarterly Financial Information) (Details) (USD Apr. May Jan. $) Jan. 28, Oct. 29, Jul. 30, Jan. 29, Oct. 30, Jul. 31, Jan. 28, Jan. 29, 30, 01, 30, In Millions, except Per Share 2012 2011 2011 2011 2010 2010 2012 2011 2011 2010 2010 data, unless otherwise specified Component of Operating Other Cost and Expense [Line Items] Net sales $ [1] $ $ $ $ $ $ $ $ $ $ 815.9 894.4 882.4 869.0 773.8 881.8 841.3 878.8 3,461.7 3,375.7 3,307.9 Gross margin 227.3 [1] 283.8 208.5 309.9 246.2 329.2 289.1 336.7 1,029.5 1,201.2 1,141.0 Net earnings (loss) (33.0) [1] (111.7) (33.3) 28.2 (5.6) 50.2 22.0 56.0 (149.8) 122.6 88.3 Net earnings attributable to (4.3) [1] (2.6) (1.7) (1.8) (4.5) (2.6) (0.9) (1.8) (10.4) (9.8) (5.6) noncontrolling interests Net (loss) earnings attributable (37.3) [1] (114.3) (35.0) 26.4 (10.1) 47.6 21.1 54.2 (160.2) 112.8 82.7 to Collective Brands, Inc. Basic earnings (loss) per share attributable to Collective $ $ $ $ $ $ $ $ $ [1],[2] [2] [2] [2] [2] [2] [2] [2] [2] $ 1.77 [2] $ 1.29 Brands, Inc. common (0.62) (1.91) (0.58) 0.43 (0.16) 0.75 0.33 0.84 (2.66) shareholders Diluted earnings (loss) per share attributable to Collective $ $ $ $ $ $ $ $ $ [1],[2] [2] [2] [2] [2] [2] [2] [2] [2] $ 1.75 [2] $ 1.28 Brands, Inc. common (0.62) (1.91) (0.58) 0.42 (0.16) 0.75 0.32 0.83 (2.66) shareholders Selling, General And Administrative Expenses [Member] Component of Operating Other Cost and Expense [Line Items] Lease termination costs 7.4 Severance related to store 2.4 closings Strategic review expenses $ 1.7 [1]In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses. [2]Earnings (loss) per share were computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Narrative) 12 Months Ended (Details) (USD $) Jan. 28, Jan. 29, In Millions, unless otherwise 2012 2011 specified Defined Benefit Plan Disclosure [Line Items] Contribution to pension plans $ 4.0 $ 0.4 Payless Plan [Member] Defined Benefit Plan Disclosure [Line Items] Expected to be recognized, unrecognized pre-tax loss included in AOCI 2.1 Expected to be recognized, unrecognized pre-tax prior service cost included in 1.6 AOCI Total benefit obligation recognized as a liability 44.8 Payless Plan [Member] | Other Liabilities [Member] Defined Benefit Plan Disclosure [Line Items] Total benefit obligation recognized as a liability 40.7 Payless Plan [Member] | Accrued Expenses [Member] Defined Benefit Plan Disclosure [Line Items] Total benefit obligation recognized as a liability 4.1 PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] Expected to be recognized, unrecognized pre-tax loss included in AOCI 2.6 Total benefit obligation recognized as a liability 32.0 16.1 Basis point changes in the discount rate 100 Increase in annual pension expense 1.0 Basis point changes in the expected long-term return on assets 100 Calculation of pension expense change in the expected long-term return on assets 0.7 Accumulated and projected benefit obligations 100.4 85.5 Contribution to pension plans 0.4 1.6 PLG Plan [Member] | Minimum [Member] Defined Benefit Plan Disclosure [Line Items] Long term annualized time-weighted rate of return 1.00% Asia Plan [Member] Defined Benefit Plan Disclosure [Line Items] Total benefit obligation recognized as a liability 5.0 5.2 Asia Plan [Member] | Other Liabilities [Member] Defined Benefit Plan Disclosure [Line Items] Total benefit obligation recognized as a liability 4.9 5.1 Asia Plan [Member] | Accrued Expenses [Member] Defined Benefit Plan Disclosure [Line Items] Total benefit obligation recognized as a liability $ 0.1 $ 0.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-Term Debt (Long- Term Debt And Capital- Lease Obligations) (Details) Jan. 28, 2012 Jan. 29, 2011 (USD $) In Millions, unless otherwise specified Debt Instrument [Line Items] Total debt $ 609.9 $ 664.5 Less: current maturities of long-term debt 5.1 5.1 Long-term debt 604.8 659.4 Term Loan Facility [Member] Debt Instrument [Line Items] Total debt 484.4 [1] 489.4 [1] Fair value debt 479.5 489.4 Senior Subordinated Notes [Member] Debt Instrument [Line Items] Total debt 124.6 [2] 174.1 [2] Fair value debt 125.6 177.8 Revolving Loan Facility [Member] Debt Instrument [Line Items] Total debt [3] [3] Revolving loan facility, gross 300.0 Revolving loan facility less outstanding letters of credit 28.6 Revolving loan facility, net 271.4 Variable interest rate, including variable margin 2.30% Capital-Lease Obligations [Member] Debt Instrument [Line Items] Total debt $ 0.9 $ 1.0 [1]As of January 28, 2012 and January 29, 2011, the fair value of the Company's Term Loan was $479.5 million, and $489.4 million, respectively, based on market conditions and perceived risks as of those dates. [2]As of January 28, 2012 and January 29, 2011, the fair value of the Company's senior subordinated notes was $125.6 million and $177.8 million, respectively, based on trading activity as of those dates. [3]As of January 28, 2012, the Company's borrowing base on its revolving loan facility was $300.0 million less $28.6 million in outstanding letters of credit, or $271.4 million. The variable interest rate, including the applicable variable margin at January 28, 2012, was 2.30%.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Segment Reporting (Tables) Jan. 28, 2012 Segment Reporting [Abstract] Information On Reporting Segments Payless Payless PLG PLG Domestic International Wholesale Retail Consolidated (dollars in millions) Fiscal year ended January 28, 2012: Net sales $1,972.9 $ 469.6 $ 778.6 $240.6 $ 3,461.7 Operating (loss) profit (96.0 ) 32.6 43.9 (7.3 ) (26.8 ) Interest expense 38.9 — — — 38.9 Interest income (0.2 ) (0.2 ) — — (0.4 ) Loss on early extinguishment of debt 0.5 — — — 0.5 Net (loss) earnings before taxes $(135.2 ) $ 32.8 $ 43.9 $(7.3 ) $ (65.8 ) Depreciation and amortization $94.1 $ 15.9 $ 16.1 $5.6 $ 131.7 Total assets $834.6 $ 232.3 $ 912.0 $68.3 $ 2,047.2 Additions to long- lived assets $66.4 $ 15.0 $ 2.4 $15.1 $ 98.9 Fiscal year ended January 29, 2011: Net sales $2,059.3 $ 460.3 $ 628.4 $227.7 $ 3,375.7 Operating profit (loss) 75.2 55.6 61.7 (2.8 ) 189.7 Interest expense 48.6 0.1 — — 48.7 Interest income (0.5 ) (0.2 ) — — (0.7 ) Loss on early extinguishment of debt 1.7 — — — 1.7 Net earnings (loss) before taxes $25.4 $ 55.7 $ 61.7 $(2.8 ) $ 140.0 Depreciation and amortization $97.9 $ 16.8 $ 17.1 $6.4 $ 138.2 Total assets $1,039.3 $ 258.4 $ 905.3 $65.5 $ 2,268.5 Additions to long- lived assets $73.3 $ 11.7 $ 6.6 $6.0 $ 97.6 Fiscal year ended January 30, 2010: Net sales $2,153.2 $ 422.4 $ 513.9 $218.4 $ 3,307.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operating profit (loss) from continuing operations 98.1 34.1 30.0 (3.7 ) 158.5 Interest expense 60.7 0.1 — — 60.8 Interest income (1.0 ) (0.1 ) — — (1.1 ) Loss on early extinguishment of debt 1.2 — — — 1.2 Net earnings (loss) from continuing operations before taxes $37.2 $ 34.1 $ 30.0 $(3.7 ) $ 97.6 Depreciation and amortization $98.4 $ 17.4 $ 21.7 $5.7 $ 143.2 Total assets $1,151.1 $ 201.5 $ 866.3 $65.4 $ 2,284.3 Additions to long- lived assets $66.6 $ 17.5 $ 4.1 $3.6 $ 91.8 Schedule Of Net Sales And Long-Lived Assets By Geographical Area The following is a summary of net sales by geographical area:

2011 2010 2009 (dollars in millions) Domestic $2,836.1 $2,785.9 $2,781.8 International 625.6 589.8 526.1

The following is a summary of long-lived assets by geographical area:

2011 2010 2009 (dollars in millions) Domestic $302.3 $363.4 $396.7 International 67.1 68.9 67.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant 12 Months Ended Accounting Policies Jan. 28, 2012 Summary Of Significant Accounting Policies [Abstract] Summary Of Significant Accounting Policies Note 1 — Summary of Significant Accounting Policies Description of Business and Basis of Presentation Collective Brands, Inc. consists of three lines of business: Payless ShoeSource ("Payless"), Collective Brands Performance + Lifestyle Group ("PLG"), and Collective Licensing. Payless is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value. PLG markets the leading brand of high-quality children's shoes in the United States under the Stride Rite brand. PLG also markets products for children and adults under well-known brand names, including Sperry Top-Sider, Saucony, and Keds. Collective Licensing is a youth lifestyle marketing and global licensing business within the Payless Domestic segment.

Fiscal Year The Company's fiscal year ends on the Saturday closest to January 31. Fiscal years 2011, 2010 and 2009 ended on January 28, 2012, January 29, 2011, and January 30, 2010, respectively. Fiscal years 2011, 2010, and 2009 contain 52 weeks of results. References to years in these financial statements and notes relate to fiscal years rather than calendar years.

Use of Estimates Management makes estimates and assumptions that affect the amounts reported within the Consolidated Financial Statements. Actual results could differ from these estimates.

Net Sales Net sales ("sales") for transactions at the Company's retail stores are recognized at the time the sale is made to the customer. Sales for wholesale and e-commerce transactions are recognized when title passes and the risks or rewards of ownership have transferred to the customer based on the shipping terms, the price is fixed and determinable, and collectibility is reasonably assured. All sales are net of estimated returns, promotional discounts and exclude sales tax.

The Company has established an allowance for merchandise returns and markdowns based on historical experience, product sell-through performance by product and customer, current and historical trends in the footwear industry and changes in demand for its products. The returns allowance is recorded as a reduction to revenues for the estimated sales value of the projected merchandise returns and as a reduction in cost of sales for the corresponding cost amount.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Allowances for markdowns are recorded as a reduction of revenue based on historical experience. From time to time actual results will vary from the estimates that were previously established.

Shipping and Handling Products are sold Free On Board ("FOB") shipping point for wholesale customers. Any shipping charges that the Company pays are recorded as cost of sales and any reimbursement is recorded as revenue.

Cost of Sales Cost of sales includes the cost of merchandise sold and the Company's buying, occupancy, warehousing, product development and product movement costs, as well as depreciation of stores and the distribution centers, net litigation charges related to intellectual property, store impairment charges and trademark impairments.

Rent Expense Certain of the Company's lease agreements provide for scheduled rent increases during the lease term, as well as provisions for renewal options. Rent expense is recognized on a straight- line basis over the term of the lease from the time at which the Company takes possession of the property. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of straight-line rent expense includes renewal option periods. Also, landlord-provided tenant improvement allowances are recorded in other liabilities and amortized as a credit to rent expense over the term of the lease. Substantially all rental expense is recorded in cost of sales on the Consolidated Statement of (Loss) Earnings.

Pre-Opening Expenses Costs associated with the opening of new stores are expensed as incurred and are recorded in cost of sales.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document customers receive reimbursement under this program if they meet established advertising guidelines and trademark requirements. Costs are accrued on the basis of sales to qualifying customers and accounted for as an operating expense if the Company receives, or will receive, an identifiable benefit in exchange for the consideration and the Company can reasonably estimate the fair value of the benefit identified.

Share-Based Compensation Expense Compensation expense associated with share-based awards is recognized over the requisite service period, which is the period between the grant date and the award's stated vesting date. Share-based awards are expensed under the straight-line attribution method, with the exception of market or performance-based awards that are expensed under the tranche specific attribution method. With the exception of market-based awards, the actual expense recognized over the vesting period will be based on only those shares that vest. The amount of share-based compensation recognized during a period is based on the value of the portion of the awards that are expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. This analysis is evaluated quarterly and the forfeiture rate is adjusted as necessary.

The Company's estimate of uncertainty in income taxes is based on the framework established in the accounting for income taxes guidance. This guidance addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company includes its reserve for unrecognized tax benefits, as well as related accrued penalties and interest, in other long term liabilities on its Consolidated Balance Sheets and in the provision for income taxes in its Consolidated Statements of (Loss) Earnings.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the settlement of credit card transactions are included in cash and cash equivalents as of January 28, 2012, and January 29, 2011, respectively, as they are generally collected within three business days. Cash equivalents are stated at cost, which approximates fair value.

Reserve for Uncollectible Accounts Receivable The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains a reserve for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the reserve, the Company considers its historical level of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. These evaluations include, but are not limited to, analyzing its customer's financial statements, maintaining a credit watch list to monitor accounts receivable exposure and reviewing the customer's prior payment history.

Inventories Merchandise inventories in the Company's stores are valued by the retail method and are stated at the lower of cost, determined using the first-in, first-out ("FIFO") basis, or market. The retail method is widely used in the retail industry due to its practicality. Under the retail method, cost is determined by applying a calculated cost-to-retail ratio across groupings of similar items, known as departments. As a result, the retail method results in an averaging of inventory costs across similar items within a department. The cost-to-retail ratio is applied to ending inventory at its current owned retail valuation to determine the cost of ending inventory on a department basis. Current owned retail represents the retail price for which merchandise is offered for sale on a regular basis, reduced for any permanent or clearance markdowns. As a result, the retail method normally results in an inventory valuation that approximates a traditional FIFO cost basis.

Wholesale inventories are valued at the lower of cost or market using the FIFO method. The Company makes ongoing estimates relating to the net realizable value of inventories, based upon its assumptions about future demand and market conditions. If the Company's estimate of the net realizable value of its inventory is less than the cost of the inventory recorded on its books, a reduction to the estimated net realizable value is recorded. If changes in market conditions result in an increase in the estimated net realizable value of the Company's inventory above its previous estimate, such recoveries would be recognized as the related goods are sold.

Substantially all of the Company's inventories are finished goods.

Leasehold improvements the lesser of 10 years or the remaining expected lease term that is reasonably assured (which may exceed the current non-cancelable term)

Furniture, fixtures and equipment 2to 10 years

Property under capital lease 10to 30 years

The following is a summary of the components of property and equipment:

Depreciation expense for 2011, 2010 and 2009 was $116.0 million, $119.5 million and $121.5 million, respectively.

The Company evaluates its store assets on a quarterly basis to determine if its assets are recoverable by analyzing historical results, trends, stores identified for closure and other qualitative considerations. If an indicator of impairment exists, the Company models estimated future cash flows on a store-by-store basis and compares the undiscounted future cash flows to the carrying amount of the store's assets. If the carrying value exceeds the undiscounted cash flows, the Company compares the present value, using an appropriate discount rate, of these cash flows to the carrying amount of the assets to calculate the impairment charge. The underlying estimates of cash flows include estimates of future revenues, gross margin rates and store expenses as well as any potential for changes related to occupancy costs, store closures and transfer sales. These assumptions are based upon the stores' past and expected future performance.

For the 52 weeks ended January 28, 2012, the impairment testing indicated that $56.0 million of the Company's assets had a fair value of $13.8 million and, as such, the Company recorded a $42.2 million impairment charge in cost of sales on the Consolidated Statement of (Loss) Earnings. The following table summarizes the asset impairment charges by reporting segment:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Insurance Programs The Company retains its normal expected losses related primarily to workers' compensation, physical loss to property and business interruption resulting from such loss and comprehensive general, product, and vehicle liability. The Company purchases third-party coverage for losses in excess of the normal expected levels. Provisions for losses expected under these programs are recorded based upon estimates of the aggregate liability for claims incurred utilizing actuarial calculations based on historical results.

Asset Retirement Obligations The Company records a liability equal to the fair value of the estimated future cost to retire an asset; if the liability's fair value can be reasonably estimated. The Company's asset retirement obligation ("ARO") liabilities are primarily associated with the disposal of personal property and trade fixtures which, at the end of a lease, the Company is contractually obligated to remove in order to restore the facility back to a condition specified in the lease agreement. The Company estimates the fair value of these liabilities based on current store closing costs and discounts the costs back as if they were to be performed at the inception of the lease. At the inception of such a lease, the Company records the ARO as a liability and also records a related asset in an amount equal to the estimated fair value of the liability. The capitalized asset is then depreciated on a straight-line basis over the useful life of the asset. Upon retirement of the asset, any difference between the actual retirement costs incurred and the previously recorded estimated ARO liability is recognized as a gain or loss in the Consolidated Statements of (Loss) Earnings.

Franchise Arrangements

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company grants franchisees the right to develop and operate stores within a defined geographic area in exchange for royalty payments. Royalties are recognized when they are earned and become receivable from the franchisee. The Company did not have a significant amount of royalty revenue for the 52 weeks ended January 28, 2012, January 29, 2011 or January 28, 2010.

Company-Owned Life Insurance The Company owns various life insurance policies for certain associates. These Company- Owned Life Insurance ("COLI") policies are recorded at their net cash surrender values as of each balance sheet date. Premiums and changes in the net cash surrender value during the period are recorded in selling, general and administrative expenses. The Company does not record deferred tax balances related to cash surrender value gains or losses as it has the intent to hold these policies until maturity. The total amounts related to the Company's investments in COLI policies, included in other assets in the Consolidated Balance Sheet as of January 28, 2012 and January 29, 2011, were $21.8 million and $21.6 million, respectively.

The estimated useful life for each class of intangible assets is as follows:

Customer relationships 8 years

Each period the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each intangible asset or its remaining book value. If the Company were to determine that events and circumstances warrant a change to the estimate of an intangible asset's remaining useful life, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. If the Company were to determine that the fair value of trademarks with a finite life was lower than its book value, then it would record an impairment charge.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Long-Term Debt (Schedule Of Future Debt Maturities) (Details) (USD $) Jan. 28, 2012Aug. 17, 2007 In Millions, unless otherwise specified Debt Instrument [Line Items] 2012 $ 5.1 2013 130.1 2014 474.5 2015 0.1 2016 0.1 Thereafter 0.4 Total 610.3 Term Loan Facility [Member] Debt Instrument [Line Items] 2012 5.0 2013 5.0 2014 474.4 Total 484.4 725.0 Capital-Lease Obligations [Member] Debt Instrument [Line Items] 2012 0.1 2013 0.1 2014 0.1 2015 0.1 2016 0.1 Thereafter 0.4 Total 0.9 Senior Subordinated Notes [Member] Debt Instrument [Line Items] 2013 125.0 Total $ 125.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Earnings Per Share (Tables) Jan. 28, 2012 Earnings Per Share [Abstract] Schedule Of Earnings Per 52 Weeks Ended Share January 28, January 29, January 30, 2012 2011 2010 (dollars in millions, except per share amounts; shares in thousands) Net (loss) earnings attributable to Collective Brands, Inc. from continuing operations $(160.2 ) $112.8 $82.6 Less: net earnings allocated to participating securities(1) — 1.8 1.1 Net (loss) earnings available to common shareholders from continuing operations $(160.2 ) $111.0 $81.5 Weighted average shares outstanding — basic 60,230 62,579 63,127 Net effect of dilutive stock options — 154 139 Net effect of dilutive SARs — 606 227 Weighted average shares outstanding — diluted 60,230 63,339 63,493 Basic (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.77 $1.29 Diluted (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.75 $1.28 (1) Net earnings allocated to participating securities is calculated based upon a weighted average percentage of participating securities in relation to total shares outstanding. Net losses are not allocated to participating securities.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shareholder Protection 12 Months Ended Rights Plan Jan. 28, 2012 Shareholder Protection Rights Plan [Abstract] Shareholder Protection Rights Plan Note 21 — Shareholder Protection Rights Plan In the third quarter of 2011, the Company adopted a short duration Rights Plan to protect shareholder rights. Under the Rights Plan, the Shareholder Rights ("the Rights") will become exercisable if a person or group acquires 15% or more of Collective Brands, Inc. outstanding common stock. The Record Date for the issuance of the Rights was September 6, 2011 and the Rights will expire on August 15, 2012 unless earlier redeemed or terminated.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Related Party Transactions Jan. 28, 2012 Related Party Transactions [Abstract] Related Party Transactions Note 20 — Related Party Transactions The Company maintains banking relationships with certain financial institutions that are affiliated with some of the Company's Latin America joint venture partners. Total deposits in these financial institutions at the end of 2011 and 2010 were $10.7 million and $12.7 million, respectively. There were no borrowings from the Company's Latin American partners as of the end of 2011 and 2010.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting 12 Months Ended (Schedule Of Net Sales And Long-Lived Assets By Geographical Area) (Details) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 (USD $) In Millions, unless otherwise specified Domestic [Member] Segment Reporting Information [Line Items] Net sales $ 2,836.1 $ 2,785.9 $ 2,781.8 Long-lived assets 302.3 363.4 396.7 Foreign [Member] Segment Reporting Information [Line Items] Net sales 625.6 589.8 526.1 Long-lived assets $ 67.1 $ 68.9 $ 67.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And Goodwill (Summary Of The Company's Intangible Jan. 28, 2012Jan. 29, 2011 Assets) (Details) (USD $) In Millions, unless otherwise specified Impaired Intangible Assets [Line Items] Carrying amount $ 50.3 $ 62.9 Indefinite-lived tradenames 334.4 365.5 Total intangible assets 384.7 428.4 Favorable Lease Rights [Member] Impaired Intangible Assets [Line Items] Gross carrying amount 20.5 24.8 Less: accumulated amortization (17.6) (19.8) Carrying amount 2.9 5.0 Customer Relationships [Member] Impaired Intangible Assets [Line Items] Gross carrying amount 74.2 74.2 Less: accumulated amortization (53.7) (45.2) Carrying amount 20.5 29.0 Trademarks And Other Intangible Assets [Member] Impaired Intangible Assets [Line Items] Gross carrying amount 39.9 38.5 Less: accumulated amortization (13.0) (9.6) Carrying amount $ 26.9 $ 28.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accrued Expenses And 12 Months Ended Other Liabilities (Tables) Jan. 28, 2012 Accrued Expenses And Other Liabilities [Abstract] Components Of Accrued Expenses 2011 2010 (dollars in millions) Profit sharing, bonus and salaries $47.3 $76.0 Sales, use and other taxes 27.3 30.3 Accrued construction in process 9.0 8.4 Worker's compensation and general liability insurance reserves 8.3 9.8 Accrued interest 6.8 10.8 Accrued occupancy 6.3 6.9 Accrued excess property 5.8 0.1 Straight-line rent 5.6 5.8 Accrued income taxes 4.6 5.1 Current portion of pension plan 4.2 4.9 Accrued advertising 4.0 4.4 Accrued royalty 3.4 4.0 Other accrued expenses 14.4 17.9 Total $147.0 $184.4

Components Of Other Liabilities 2011 2010 (dollars in millions) Pension plans $77.6 $58.9 Straight-line rent 29.0 30.1 Worker's compensation and general liability insurance reserves 20.9 19.0 Noncurrent income taxes 20.0 44.7 Deferred tenant improvement allowances, net 18.9 23.5 Deferred compensation 15.6 15.8 Asset retirement obligation 7.1 7.9 Long-term compensation 7.4 5.1 Other liabilities 6.3 7.4 Total $202.8 $212.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of 12 Months Ended Senior Notes - Consolidating Jan. 28, 2012 Financial Information Subsidiary Guarantors Of Senior Notes - Consolidating Financial Information [Abstract] Subsidiary Guarantors Of Senior Notes - Consolidating Note 22 — Subsidiary Guarantors of Senior Notes — Consolidating Financial Information Financial Information The Company has issued Notes guaranteed by certain of its subsidiaries (the "Guarantor Subsidiaries"). The Guarantor Subsidiaries are direct or indirect 100% owned domestic subsidiaries of the Company. The guarantees are full and unconditional and joint and several.

The following supplemental financial information sets forth, on a consolidating basis, the Condensed Statements of (Loss) Earnings for the Company (the "Parent Company"), for the Guarantor Subsidiaries and for the Company's non-guarantor subsidiaries (the "Non-guarantor Subsidiaries") and total consolidated Collective Brands, Inc. and subsidiaries for the 52 week periods ended January 28, 2012, January 29, 2011, and January 30, 2010, Condensed Balance Sheets as of January 28, 2012, and January 29, 2011 and the Condensed Statements of Cash Flows for the 52 week periods ended January 28, 2012, January 29, 2011, and January 30, 2010. With the exception of operations in the Central and South American Regions in which the Company has a 60% ownership interest, the Non-guarantor Subsidiaries are direct or indirect wholly-owned subsidiaries of the Guarantor Subsidiaries. The equity investment for each subsidiary is recorded by its parent in Other Assets.

The Non-guarantor Subsidiaries are made up of the Company's operations in the Central and South American Regions, Canada, Mexico, Germany, the Netherlands, the United Kingdom, Ireland, Australia, Bermuda, Saipan and Puerto Rico and the Company's sourcing organization in Hong Kong, Taiwan, China, Vietnam, Indonesia and Brazil. The operations in the Central and South American Regions use a December 31 year-end. Operations in the Central and South American Regions are included in the Company's results on a one-month lag relative to results from other regions. The effect of this one-month lag on the Company's financial position and results of operations is not significant.

Under the indenture governing the Notes, the Company's subsidiaries in Singapore are designated as unrestricted subsidiaries. The effect of these subsidiaries on the Company's financial position and results of operations and cash flows is not significant. The Company's subsidiaries in Singapore are included in the Non-guarantor Subsidiaries.

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 28, 2012 Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $— $2,907.1 $1,522.4 $ (967.8 ) $ 3,461.7 Cost of sales — 2,123.2 1,244.6 (935.6 ) 2,432.2 Gross margin — 783.9 277.8 (32.2 ) 1,029.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Selling, general and administrative expenses 4.0 902.3 172.2 (32.2 ) 1,046.3 Impairment of goodwill — 10.0 — — 10.0 Operating (loss) profit (4.0 ) (128.4 ) 105.6 — (26.8 ) Interest expense 49.9 25.5 0.5 (37.0 ) 38.9 Interest income — (36.2 ) (1.2 ) 37.0 (0.4 ) Loss on early extinguishment of debt 0.5 — — — 0.5 Equity in earnings of subsidiaries 105.8 (81.4 ) — (24.4 ) — (Loss) earnings before income taxes (160.2 ) (36.3 ) 106.3 24.4 (65.8 ) Provision for income taxes — 69.5 14.5 — 84.0 Net (loss) earnings (160.2 ) (105.8 ) 91.8 24.4 (149.8 ) Net earnings attributable to noncontrolling interests — — (10.4 ) — (10.4 ) Net (loss) earnings attributable to Collective Brands, Inc. $(160.2 ) $(105.8 ) $81.4 $ 24.4 $ (160.2 )

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 29, 2011 Non- Parent Guarantor guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $— $2,950.8 $1,440.6 $(1,015.7 ) $ 3,375.7 Cost of sales — 2,015.6 1,073.7 (914.8 ) 2,174.5 Gross margin — 935.2 366.9 (100.9 ) 1,201.2 Selling, general and administrative expenses 4.1 855.8 252.5 (100.9 ) 1,011.5 Restructuring charges — — — — — Operating (loss) profit (4.1 ) 79.4 114.4 — 189.7 Interest expense 45.3 33.4 0.1 (30.1 ) 48.7 Interest income — (30.7 ) (0.1 ) 30.1 (0.7 ) Loss on early extinguishment of debt — 1.7 — — 1.7 Equity in earnings of subsidiaries (144.7 ) (92.6 ) — 237.3 — Earnings before income taxes 95.3 167.6 114.4 (237.3 ) 140.0 (Benefit) provision for income taxes (17.5 ) 22.9 12.0 — 17.4 Net earnings 112.8 144.7 102.4 (237.3 ) 122.6 Net earnings attributable to noncontrolling interests — — (9.8 ) — (9.8 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net earnings attributable to Collective Brands, Inc. $112.8 $144.7 $92.6 $(237.3 ) $ 112.8

CONDENSED CONSOLIDATING STATEMENTS OF (LOSS) EARNINGS

52 Weeks Ended January 30, 2010 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Net sales $— $2,917.0 $ 1,212.5 $ (821.6 ) $ 3,307.9 Cost of sales — 2,022.8 864.4 (720.3 ) 2,166.9 Gross margin — 894.2 348.1 (101.3 ) 1,141.0 Selling, general and administrative expenses 2.1 832.0 249.6 (101.3 ) 982.4 Restructuring charges — 0.1 — — 0.1 Operating (loss) profit from continuing operations (2.1 ) 62.1 98.5 — 158.5 Interest expense 24.4 43.4 0.1 (7.1 ) 60.8 Interest income — (8.1 ) (0.1 ) 7.1 (1.1 ) Loss on early extinguishment of debt 1.0 0.2 — — 1.2 Equity in earnings of subsidiaries (100.1 ) (88.4 ) — 188.5 — Earnings from continuing operations before income taxes 72.6 115.0 98.5 (188.5 ) 97.6 (Benefit) provision for income taxes (10.1 ) 15.0 4.5 — 9.4 Net earnings from continuing operations 82.7 100.0 94.0 (188.5 ) 88.2 Loss from discontinued operations, net of income taxes — 0.1 — — 0.1 Net earnings 82.7 100.1 94.0 (188.5 ) 88.3 Net earnings attributable to noncontrolling interests — — (5.6 ) — (5.6 ) Net earnings attributable to Collective Brands, Inc. $82.7 $100.1 $ 88.4 $ (188.5 ) $ 82.7

As of January 28, 2012 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

ASSETS Current Assets: Cash and cash equivalents $— $46.3 $ 135.0 $— $ 181.3 Accounts receivable, net — 127.9 36.7 (18.6 ) 146.0 Inventories — 434.0 124.1 5.3 563.4 Current deferred income taxes — — 7.2 — 7.2 Prepaid expenses 35.6 16.3 9.6 — 61.5 Other current assets — 356.0 160.3 (494.5 ) 21.8 Total current assets 35.6 980.5 472.9 (507.8 ) 981.2 Property and equipment, net — 302.3 67.1 — 369.4 Intangible assets, net — 358.7 26.0 — 384.7 Goodwill — 133.5 136.3 — 269.8 Deferred income taxes — — 10.7 — 10.7 Other assets 1,409.9 979.5 25.7 (2,383.7 ) 31.4 Total Assets $1,445.5 $2,754.5 $ 738.7 $(2,891.5 ) $ 2,047.2

CONDENSED CONSOLIDATING BALANCE SHEET

As of January 29, 2011 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total equity 822.9 1,518.4 428.2 (1,915.1 ) 854.4 Total Liabilities and Equity $1,567.0 $2,780.1 $ 783.9 $(2,862.5 ) $ 2,268.5

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 28, 2012 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net (loss) earnings $(160.2 ) $ (105.8 ) $ 91.8 $ 24.4 $ (149.8 ) Adjustments for non-cash items included in net earnings 1.0 288.5 25.5 — 315.0 Changes in working capital 98.7 (105.9 ) (87.6 ) (7.5 ) (102.3 ) Other, net 127.4 (129.5 ) 1.8 (16.9 ) (17.2 ) Cash flow provided by (used in) operating activities 66.9 (52.7 ) 31.5 — 45.7 Investing Activities: Capital expenditures — (74.8 ) (24.1 ) — (98.9 ) Intangible asset additions — (0.9 ) (0.5 ) — (1.4 ) Cash flow used in investing activities — (75.7 ) (24.6 ) — (100.3 ) Financing Activities: Net repayment of debt or notes payable (50.0 ) 54.1 (59.2 ) — (55.1 ) Payment of deferred financing costs — (1.8 ) — — (1.8 ) Net purchases of common stock (16.9 ) — — — (16.9 ) Net distributions to noncontrolling interests — — (13.2 ) — (13.2 ) Cash flow (used in) provided by financing activities (66.9 ) 52.3 (72.4 ) — (87.0 ) Effect of exchange rate changes on cash — — (1.2 ) — (1.2 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Decrease in cash and cash equivalents — (76.1 ) (66.7 ) — (142.8 ) Cash and cash equivalents, beginning of year — 122.4 201.7 — 324.1 Cash and cash equivalents, end of year $— $ 46.3 $ 135.0 $ — $ 181.3

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 29, 2011 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net earnings $112.8 $ 144.7 $ 102.4 $ (237.3 ) $ 122.6 Adjustments for non-cash items included in net earnings 0.3 156.5 18.1 — 174.9 Changes in working capital 72.6 (159.3 ) 68.0 1.9 (16.8 ) Other, net (132.5 ) (33.0 ) (79.1 ) 235.4 (9.2 ) Cash flow provided by operating activities 53.2 108.9 109.4 — 271.5 Investing Activities: Capital expenditures — (82.2 ) (15.4 ) — (97.6 ) Cash flow used in investing activities — (82.2 ) (15.4 ) — (97.6 ) Financing Activities: Net repayment of debt or notes payable — (184.1 ) (1.1 ) — (185.2 ) Net purchases of common stock (53.2 ) — — — (53.2 ) Net distributions to noncontrolling interests — — (7.7 ) — (7.7 ) Cash flow used in financing activities (53.2 ) (184.1 ) (8.8 ) — (246.1 ) Effect of exchange rate changes on cash — — 2.8 — 2.8 Increase in cash and cash equivalents — (157.4 ) 88.0 — (69.4 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash and cash equivalents, beginning of year — 279.8 113.7 — 393.5 Cash and cash equivalents, end of year $— $ 122.4 $ 201.7 $ — $ 324.1

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

52 Weeks Ended January 30, 2010 Parent Guarantor Non-guarantor Company Subsidiaries Subsidiaries Eliminations Consolidated (dollars in millions) Operating Activities: Net earnings $ 82.7 $ 100.1 $ 94.0 $ (188.5 ) $ 88.3 Loss from discontinued operations, net of income taxes — (0.1 ) — — (0.1 ) Adjustments for non-cash items included in net earnings 1.1 159.3 18.8 — 179.2 Changes in working capital 34.9 102.8 (43.0 ) (30.1 ) 64.6 Other, net (95.8 ) (95.5 ) (11.0 ) 177.9 (24.4 ) Cash flow provided by operating activities 22.9 266.6 58.8 (40.7 ) 307.6 Investing Activities: Capital expenditures — (66.3 ) (17.7 ) — (84.0 ) Proceeds from sale of property and equipment — 2.8 — — 2.8 Dividends received — related party — — 1.6 (1.6 ) — Issuance of intercompany debt — (19.0 ) — 19.0 — Other, net — (1.8 ) (17.2 ) — (19.0 ) Cash flow used in investing activities — (84.3 ) (33.3 ) 17.4 (100.2 ) Financing Activities: Net repayment of debt or notes payable, including (23.5 ) (42.6 ) (9.8 ) 11.0 (64.9 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document deferred financing costs Net issuances of common stock 0.6 — — — 0.6 Net distributions to noncontrolling interests — — (0.7 ) — (0.7 ) Net distributions to parent — (1.6 ) (10.7 ) 12.3 — Cash flow used in financing activities (22.9 ) (44.2 ) (21.2 ) 23.3 (65.0 ) Effect of exchange rate changes on cash — — 1.8 — 1.8 Increase (decrease) in cash and cash equivalents — 138.1 6.1 — 144.2 Cash and cash equivalents, beginning of year — 141.7 107.6 — 249.3 Cash and cash equivalents, end of year $ — $ 279.8 $ 113.7 $ — $ 393.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Valuation And Qualifying 12 Months Ended Accounts Jan. 28, 2012 Valuation And Qualifying Accounts [Abstract] Valuation And Qualifying Accounts SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

Balance at Charged to Balance at beginning of period costs and expenses Deductions(1) end of period (dollars in millions) Year ended January 28, 2012 Allowance for doubtful accounts $ 4.0 $ 1.7 $ (1.6 ) $ 4.1 Deferred tax valuation allowance 15.4 139.6 — 155.0 Sales return reserve 3.6 51.5 (51.6 ) 3.5 Year ended January 29, 2011 Allowance for doubtful accounts $ 4.2 $ 2.0 $ (2.2 ) $ 4.0 Deferred tax valuation allowance 11.4 4.0 — 15.4 Sales return reserve 3.3 49.2 (48.9 ) 3.6 Year ended January 30, 2010 Allowance for doubtful accounts $ 3.8 $ 2.9 $ (2.5 ) $ 4.2 Deferred tax valuation allowance 8.1 3.3 — 11.4 Sales return reserve 3.0 45.1 (44.8 ) 3.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) With regard to allowances for doubtful accounts, deductions relate to uncollectible receivables (both accounts and other receivables) that have been written off, net of recoveries. For the deferred tax valuation allowance, deductions relate to deferred tax assets that have been written off. For sales returns, deductions related to actual returns.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements Of 12 Months Ended Cash Flows (USD $) In Millions, unless otherwise Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 specified Operating Activities: Net (loss) earnings $ (149.8) $ 122.6 $ 88.3 Earnings from discontinued operations, net of income taxes (0.1) Adjustments for non-cash items included in net (loss) earnings: Loss on impairment and disposal of assets 46.3 12.2 11.8 Impairment of goodwill and indefinite-lived tradenames 41.1 Depreciation and amortization 131.7 138.2 143.2 Provision for losses on accounts receivable 1.7 2.0 2.9 Share-based compensation expense 12.7 16.6 16.4 Deferred income taxes 81.0 4.2 3.8 Loss on extinguishment of debt 0.5 1.7 1.2 Other, net (0.1) Changes in working capital: Accounts receivable (34.2) (20.7) 0.6 Inventories (31.1) (86.7) 53.2 Prepaid expenses and other current assets (8.6) (7.5) 15.2 Accounts payable 5.4 92.2 20.2 Accrued expenses (33.8) 5.9 (24.6) Changes in other assets and liabilities, net (16.8) (7.6) (15.2) Contributions to pension plans (0.4) (1.6) (9.5) Net cash provided by discontinued operations 0.3 Cash flow provided by operating activities 45.7 271.5 307.6 Investing Activities: Capital expenditures (98.9) (97.6) (84.0) Proceeds from sale of property and equipment 2.8 Intangible asset additions (1.4) (19.0) Cash flow used in investing activities (100.3) (97.6) (100.2) Financing Activities: Proceeds from notes payable 0.9 Repayment of notes payable (0.9) Proceeds from issuance of debt 1.2 Repayment of debt (55.1) (185.2) (66.1) Payment of deferred financing costs (1.8) Issuances of common stock 1.8 10.7 8.2 Purchases of common stock (18.7) (63.9) (7.6) Contributions by noncontrolling interests 3.1 5.5 Distribution to noncontrolling interests (13.2) (10.8) (6.2) Cash flow used in financing activities (87.0) (246.1) (65.0) Effect of exchange rate changes on cash (1.2) 2.8 1.8 (Decrease) increase in cash and cash equivalents (142.8) (69.4) 144.2

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash and cash equivalents, beginning of year 324.1 393.5 249.3 Cash and cash equivalents, end of year 181.3 324.1 393.5 Supplemental cash flow information: Interest paid 40.4 47.6 60.1 Income taxes paid 29.0 15.7 14.3 Non-cash investing and financing activities: Accrued capital additions $ 13.4 $ 12.4 $ 13.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant 12 Months Ended Accounting Policies (Policy) Jan. 28, 2012 Summary Of Significant Accounting Policies [Abstract] Description Of Business And Description of Business and Basis of Presentation Basis Of Presentation Collective Brands, Inc. consists of three lines of business: Payless ShoeSource ("Payless"), Collective Brands Performance + Lifestyle Group ("PLG"), and Collective Licensing. Payless is dedicated to democratizing fashion and design in footwear and accessories and inspiring fun, fashion possibilities for the family at a great value. PLG markets the leading brand of high-quality children's shoes in the United States under the Stride Rite brand. PLG also markets products for children and adults under well-known brand names, including Sperry Top-Sider, Saucony, and Keds. Collective Licensing is a youth lifestyle marketing and global licensing business within the Payless Domestic segment.

The Consolidated Financial Statements include the accounts of the Company, all wholly- owned subsidiaries and all subsidiaries and joint ventures in which the Company owns a controlling interest. The Company's Central American and South American Regions use a December 31 year-end, primarily to match the local countries' statutory reporting requirements. The effect of this one-month lag on the Company's financial position and results of operations is not significant. All intercompany amounts have been eliminated. Fiscal Year Fiscal Year The Company's fiscal year ends on the Saturday closest to January 31. Fiscal years 2011, 2010 and 2009 ended on January 28, 2012, January 29, 2011, and January 30, 2010, respectively. Fiscal years 2011, 2010, and 2009 contain 52 weeks of results. References to years in these financial statements and notes relate to fiscal years rather than calendar years. Use Of Estimates Use of Estimates Management makes estimates and assumptions that affect the amounts reported within the Consolidated Financial Statements. Actual results could differ from these estimates. Net Sales Net Sales Net sales ("sales") for transactions at the Company's retail stores are recognized at the time the sale is made to the customer. Sales for wholesale and e-commerce transactions are recognized when title passes and the risks or rewards of ownership have transferred to the customer based on the shipping terms, the price is fixed and determinable, and collectibility is reasonably assured. All sales are net of estimated returns, promotional discounts and exclude sales tax.

The Company has established an allowance for merchandise returns and markdowns based on historical experience, product sell-through performance by product and customer, current and historical trends in the footwear industry and changes in demand for its products. The returns allowance is recorded as a reduction to revenues for the estimated sales value of the projected merchandise returns and as a reduction in cost of sales for the corresponding cost amount. Allowances for markdowns are recorded as a reduction of revenue based on historical experience. From time to time actual results will vary from the estimates that were previously established.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Shipping And Handling Shipping and Handling Products are sold Free On Board ("FOB") shipping point for wholesale customers. Any shipping charges that the Company pays are recorded as cost of sales and any reimbursement is recorded as revenue.

Gift Cards Gift Cards The Company records a liability in the period in which a gift card is issued and proceeds are received. As gift cards are redeemed, this liability is reduced and revenue is recognized as a sale. The estimated value of gift cards expected to go unused is recognized ratably in proportion to actual redemptions as gift cards are redeemed. Cost Of Sales Cost of Sales Cost of sales includes the cost of merchandise sold and the Company's buying, occupancy, warehousing, product development and product movement costs, as well as depreciation of stores and the distribution centers, net litigation charges related to intellectual property, store impairment charges and trademark impairments.

Rent Expense Rent Expense Certain of the Company's lease agreements provide for scheduled rent increases during the lease term, as well as provisions for renewal options. Rent expense is recognized on a straight- line basis over the term of the lease from the time at which the Company takes possession of the property. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of straight-line rent expense includes renewal option periods. Also, landlord-provided tenant improvement allowances are recorded in other liabilities and amortized as a credit to rent expense over the term of the lease. Substantially all rental expense is recorded in cost of sales on the Consolidated Statement of (Loss) Earnings. Pre-Opening Expenses Pre-Opening Expenses Costs associated with the opening of new stores are expensed as incurred and are recorded in cost of sales. Advertising Costs Advertising Costs Advertising costs and sales promotion costs are expensed at the time the advertising takes place. Selling, general and administrative expenses include advertising and sales promotion costs of $176.9 million, $159.2 million and $145.5 million in 2011, 2010 and 2009, respectively. Co-Operative Advertising Co-operative Advertising The Company engages in co-op advertising programs with some of its wholesale customers. Co-op advertising funds are available to all wholesale customers in good standing. Wholesale customers receive reimbursement under this program if they meet established advertising guidelines and trademark requirements. Costs are accrued on the basis of sales to qualifying customers and accounted for as an operating expense if the Company receives, or will receive, an identifiable benefit in exchange for the consideration and the Company can reasonably estimate the fair value of the benefit identified.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation Expense Share-Based Compensation Expense Compensation expense associated with share-based awards is recognized over the requisite service period, which is the period between the grant date and the award's stated vesting date. Share-based awards are expensed under the straight-line attribution method, with the exception of market or performance-based awards that are expensed under the tranche specific attribution method. With the exception of market-based awards, the actual expense recognized over the vesting period will be based on only those shares that vest. The amount of share-based compensation recognized during a period is based on the value of the portion of the awards that are expected to vest. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. This analysis is evaluated quarterly and the forfeiture rate is adjusted as necessary. Income Taxes Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records valuation allowances against its deferred tax assets, when necessary, in accordance with the framework established in the income taxes accounting guidance. Realization of deferred tax assets (such as net operating loss carryforwards) is dependent on future taxable earnings and is therefore uncertain. The Company assesses the likelihood that its deferred tax assets in each of the jurisdictions in which it operates will be recovered from future taxable income. Deferred tax assets are reduced by a valuation allowance to recognize the extent to which, more likely than not, the future tax benefits will not be realized. Cash And Cash Equivalents Cash and Cash Equivalents Cash equivalents consist of liquid investments with an original maturity of three months or less. Amounts due from banks and credit card companies of $14.0 million and $13.5 million for the settlement of credit card transactions are included in cash and cash equivalents as of January 28, 2012, and January 29, 2011, respectively, as they are generally collected within three business days. Cash equivalents are stated at cost, which approximates fair value. Reserve For Uncollectible Accounts Receivable Reserve for Uncollectible Accounts Receivable

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company makes ongoing estimates relating to the collectability of its accounts receivable and maintains a reserve for estimated losses resulting from the inability of its customers to make required payments. In determining the amount of the reserve, the Company considers its historical level of credit losses and makes judgments about the creditworthiness of significant customers based on ongoing credit evaluations. These evaluations include, but are not limited to, analyzing its customer's financial statements, maintaining a credit watch list to monitor accounts receivable exposure and reviewing the customer's prior payment history. Inventories Inventories Merchandise inventories in the Company's stores are valued by the retail method and are stated at the lower of cost, determined using the first-in, first-out ("FIFO") basis, or market. The retail method is widely used in the retail industry due to its practicality. Under the retail method, cost is determined by applying a calculated cost-to-retail ratio across groupings of similar items, known as departments. As a result, the retail method results in an averaging of inventory costs across similar items within a department. The cost-to-retail ratio is applied to ending inventory at its current owned retail valuation to determine the cost of ending inventory on a department basis. Current owned retail represents the retail price for which merchandise is offered for sale on a regular basis, reduced for any permanent or clearance markdowns. As a result, the retail method normally results in an inventory valuation that approximates a traditional FIFO cost basis.

Wholesale inventories are valued at the lower of cost or market using the FIFO method. The Company makes ongoing estimates relating to the net realizable value of inventories, based upon its assumptions about future demand and market conditions. If the Company's estimate of the net realizable value of its inventory is less than the cost of the inventory recorded on its books, a reduction to the estimated net realizable value is recorded. If changes in market conditions result in an increase in the estimated net realizable value of the Company's inventory above its previous estimate, such recoveries would be recognized as the related goods are sold.

Substantially all of the Company's inventories are finished goods. Property And Equipment Property and Equipment Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives. The costs of repairs and maintenance are expensed when incurred, while expenditures for store remodels, refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Projects in progress are stated at cost, which includes the cost of construction and other direct costs attributable to the project. No provision for depreciation is made on projects in progress until such time as the relevant assets are completed and put to use. The estimated useful life for each major class of property and equipment is as follows:

Buildings 10to 30 years

Leasehold improvements the lesser of 10 years or the remaining expected lease term that is reasonably assured (which may exceed the current non-cancelable term)

Property under capital lease 10to 30 years

The following is a summary of the components of property and equipment:

Depreciation expense for 2011, 2010 and 2009 was $116.0 million, $119.5 million and $121.5 million, respectively.

The Company evaluates its store assets on a quarterly basis to determine if its assets are recoverable by analyzing historical results, trends, stores identified for closure and other qualitative considerations. If an indicator of impairment exists, the Company models estimated future cash flows on a store-by-store basis and compares the undiscounted future cash flows to the carrying amount of the store's assets. If the carrying value exceeds the undiscounted cash flows, the Company compares the present value, using an appropriate discount rate, of these cash flows to the carrying amount of the assets to calculate the impairment charge. The underlying estimates of cash flows include estimates of future revenues, gross margin rates and store expenses as well as any potential for changes related to occupancy costs, store closures and transfer sales. These assumptions are based upon the stores' past and expected future performance.

52 Weeks Ended January 28, January 29, January 30, (dollars in millions) 2012 2011 2010 Payless Domestic $ 32.9 $ 6.3 $ 4.8 Payless International 5.2 1.1 0.2 PLG Wholesale 0.7 — — PLG Retail 3.4 1.4 1.0 Total $ 42.2 $ 8.8 $ 6.0 Insurance Programs Insurance Programs The Company retains its normal expected losses related primarily to workers' compensation, physical loss to property and business interruption resulting from such loss and comprehensive general, product, and vehicle liability. The Company purchases third-party coverage for losses in

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document excess of the normal expected levels. Provisions for losses expected under these programs are recorded based upon estimates of the aggregate liability for claims incurred utilizing actuarial calculations based on historical results. Foreign Currency Translation Foreign Currency Translation Local currencies are the functional currencies for most foreign subsidiaries. Accordingly, assets and liabilities of these subsidiaries are translated at the rate of exchange at the balance sheet date. Adjustments from the translation process are accumulated as part of other comprehensive (loss) income and are included as a separate component of equity. The changes in foreign currency translation adjustments were not adjusted for income taxes since they relate to indefinite term investments in non-United States subsidiaries. Income and expense items of these subsidiaries are translated at average rates of exchange. As of fiscal year-end 2011, 2010 and 2009, cumulative translation adjustments included in accumulated other comprehensive (loss) income were $18.6 million, $19.7 million and $12.8 million, respectively. The Company has recorded foreign currency transaction gains (losses) of $3.4 million, ($0.3) million and $0.5 million in the Consolidated Statement of (Loss) Earnings in fiscal years 2011, 2010 and 2009, respectively.

For those foreign subsidiaries operating in a highly inflationary economy or having the U.S. Dollar as their functional currency, net non-monetary assets are translated at historical rates and net monetary assets are translated at current rates. Transaction adjustments are included in the determination of net (loss) earnings. Asset Retirement Obligations Asset Retirement Obligations The Company records a liability equal to the fair value of the estimated future cost to retire an asset; if the liability's fair value can be reasonably estimated. The Company's asset retirement obligation ("ARO") liabilities are primarily associated with the disposal of personal property and trade fixtures which, at the end of a lease, the Company is contractually obligated to remove in order to restore the facility back to a condition specified in the lease agreement. The Company estimates the fair value of these liabilities based on current store closing costs and discounts the costs back as if they were to be performed at the inception of the lease. At the inception of such a lease, the Company records the ARO as a liability and also records a related asset in an amount equal to the estimated fair value of the liability. The capitalized asset is then depreciated on a straight-line basis over the useful life of the asset. Upon retirement of the asset, any difference between the actual retirement costs incurred and the previously recorded estimated ARO liability is recognized as a gain or loss in the Consolidated Statements of (Loss) Earnings.

The Company's ARO liability as of January 28, 2012 and January 29, 2011 was $7.1 million and $8.1 million, respectively, and was recorded in other long-term liabilities on its Consolidated Balance Sheets. There were no significant liabilities incurred, liabilities settled, nor accretion expense as of January 28, 2012, January 29, 2011 and January 30, 2010. Franchise Arrangements Franchise Arrangements The Company grants franchisees the right to develop and operate stores within a defined geographic area in exchange for royalty payments. Royalties are recognized when they are earned and become receivable from the franchisee. The Company did not have a significant amount of royalty revenue for the 52 weeks ended January 28, 2012, January 29, 2011 or January 28, 2010. Company-Owned Life Insurance Company-Owned Life Insurance

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company owns various life insurance policies for certain associates. These Company- Owned Life Insurance ("COLI") policies are recorded at their net cash surrender values as of each balance sheet date. Premiums and changes in the net cash surrender value during the period are recorded in selling, general and administrative expenses. The Company does not record deferred tax balances related to cash surrender value gains or losses as it has the intent to hold these policies until maturity. The total amounts related to the Company's investments in COLI policies, included in other assets in the Consolidated Balance Sheet as of January 28, 2012 and January 29, 2011, were $21.8 million and $21.6 million, respectively. Goodwill Goodwill The Company assesses goodwill, which is not subject to amortization, for impairment on an annual basis and also at any other date when events or changes in circumstances indicate that the book value of these assets may exceed their fair value. This assessment is performed at a reporting unit level. A reporting unit is a component of a segment that constitutes a business, for which discrete financial information is available, and for which the operating results are regularly reviewed by management. The Company develops an estimate of the fair value of each reporting unit using both a market approach and an income approach. If potential for impairment exists, the fair value of the reporting unit is subsequently measured against the fair value of its underlying assets and liabilities, excluding goodwill, to estimate an implied fair value of the reporting unit's goodwill.

The estimate of fair value is highly subjective and requires significant judgment related to the estimate of the magnitude and timing of future reporting unit cash flows. If the Company determines that the estimated fair value of any reporting unit is less than the reporting unit's carrying value, then it will recognize an impairment charge. Intangible Assets Other Than Goodwill Intangible Assets other than Goodwill Indefinite-lived intangible assets are not amortized, but are tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. Favorable leases, certain trademarks and other intangible assets with finite lives are amortized over their useful lives using the straight-line method. Customer relationships are amortized using an economic patterning technique based on when the benefits of the asset are expected to be used.

The estimated useful life for each class of intangible assets is as follows:

Trademarks and other intangible assets 3to 20 years

Customer relationships 8 years

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Each period the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each intangible asset or its remaining book value. If the Company were to determine that events and circumstances warrant a change to the estimate of an intangible asset's remaining useful life, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. If the Company were to determine that the fair value of trademarks with a finite life was lower than its book value, then it would record an impairment charge.

The estimate of fair value is highly subjective and requires significant judgment. If the Company determines that the estimated fair value of any intangible asset is less than its carrying value, then it will recognize an impairment charge. Derivatives Derivatives The Company participates in interest rate related derivative instruments to manage its exposure on its debt instruments and forward contracts to hedge a portion of certain foreign currency purchases. The Company records all derivative instruments on the Consolidated Balance Sheet as either assets or liabilities measured at fair value in accordance with the framework established for derivatives and hedging and the framework established for fair value measurements and disclosures. For interest rate contracts, the Company uses a mark-to-market valuation technique based on an observable interest rate yield curve and adjusts for credit risk. For foreign currency contracts, the Company uses a mark-to-market technique based on observable foreign currency exchange rates and adjusts for credit risk. Changes in the fair value of these derivative instruments are recorded either through net (loss) earnings or as other comprehensive loss, depending on the type of hedge designation. Gains and losses on derivative instruments designated as cash flow hedges are reported in other comprehensive loss and reclassified into (loss) earnings in the periods in which earnings are impacted by the hedged item. Contingencies Contingencies The Company may be involved in legal proceedings that arise in the ordinary course of business. Except for income tax contingencies, it records accruals for contingencies to the extent that it concludes that their occurrence is probable and that the related liabilities are estimable and it records anticipated recoveries under existing insurance contracts when assured of recovery. The Company considers many factors in making these assessments, including the progress of the case, opinions or views of legal counsel, prior case law, the experience of the Company or other companies in similar cases, and its intent on how to respond. Because litigation and other contingencies are inherently unpredictable and excessive verdicts do occur, these assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Narrative) 3 Months Ended 12 Months Ended (Details) (USD $) Jan. 28, Oct. 29, Jan. 28, Jan. 29, Jan. 30, Jan. 31, In Millions, unless otherwise 2012 2011 2012 2011 2010 2009 specified Income Taxes [Line Items] Net unfavorable discrete events $ 75.8 Net favorable discrete events 7.8 7.9 Weighted average foreign effective tax rate 14.80% 9.20% 11.80% Portion of unrecognized tax benefits that would impact 19.1 19.1 22.2 34.6 the effective tax rate if recognized Interest and penalties related to unrecognized tax benefit 31.8 31.8 52.1 58.3 55.0 (expense) Accrued interest and penalties related to unrecognized 3.0 3.0 7.3 9.1 tax benefits Potential decrease in unrecognized tax benefits 2.3 2.3 Non-cash valuation allowance on domestic deferred tax 33.1 105.7 138.8 assets Valuation allowance of deferred tax assets 155.0 155.0 15.4 Deferred tax asset in shareowners' equity 23.1 Deferred income taxes 81.0 4.2 3.8 Provision for income taxes 84.0 17.4 9.4 Increase in deferred tax assets 0.3 Tax credit carryforwards 59.4 59.4 Valuation allowance of tax credit carryforward 58.2 58.2 Deferred tax assets for state and foreign net operating 48.8 48.8 loss carryforwards Federal capital loss carryforward 1.7 1.7 Charitable contribution carryforward 1.3 1.3 Alternative minimum tax credits carried forward 244 244 indefinitely Prior Year [Member] Income Taxes [Line Items] Non-cash valuation allowance on domestic deferred tax 80.8 assets Valuation allowance of deferred tax assets 44.0 44.0 Current Year [Member] Income Taxes [Line Items] Cumulative pre-tax loss period in domestic jurisdiction, 3 years Non-cash valuation allowance on domestic deferred tax 58.0 assets Maximum [Member] Income Taxes [Line Items] Favorable impact in the period of recognition, maximum 1.5 1.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Foreign [Member] Income Taxes [Line Items] Valuation allowance of deferred tax assets 6.0 6.0 State [Member] Income Taxes [Line Items] Valuation allowance of deferred tax assets 149.0 149.0 Interest And Penalties [Member] Income Taxes [Line Items] Interest and penalties related to unrecognized tax benefit $ 4.3 $ 4.3 $ 1.8 $ (1.1) (expense)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Pension Plans (Tables) Jan. 28, 2012 Payless Plan [Member] Defined Benefit Plan Disclosure [Line Items] Schedule Of Pre-Tax Amounts That Have Not Yet Been Unrecognized Unrecognized Recognized In Net Periodic Benefit Cost Prior Service Losses/ Total Cost (Gains) AOCI (dollars in millions) Amount at January 29, 2011 $ 7.0 $ 12.7 $19.7 Amortization recognized (1.6 ) (1.5 ) (3.1 ) New amounts recognized — 4.4 4.4 Amount at January 28, 2012 $ 5.4 $ 15.6 $21.0

Summary Of The Funded Status Of The Plan 2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at beginning of year $42.5 $46.6 Service cost 0.8 0.8 Interest cost 1.8 1.8 Actuarial loss 4.4 3.0 Settlement distribution — (7.2 ) Benefits paid (4.7 ) (2.5 ) Obligation at end of year $44.8 $42.5 Assumptions: Discount rate 3.25 % 4.50 % Salary increases 4.0 % 4.0 % Components Of Net Periodic Benefit Costs 2011 2010 2009 (dollars in millions) Components of pension expense: Service cost $0.8 $0.8 $0.6 Interest cost 1.8 1.8 2.5 Amortization of prior service cost 1.6 1.6 1.6 Amortization of actuarial loss 1.5 1.3 0.5 Amount recognized due to settlement — 2.2 — Total $5.7 $7.7 $5.2 Assumptions:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Discount rate 4.50% 5.00% 6.50% Salary increases 4.0 % 4.0 % 4.0 % Schedule Of Estimated Future Benefit Payments (dollars in millions) 2012 $ 4.1 2013 4.1 2014 4.2 2015 4.3 2016 4.3 2017-2021 17.7 PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] Schedule Of Pre-Tax Amounts That Have Not Yet Been (dollars in millions) Recognized In Net Periodic Benefit Cost Amount at January 31, 2010 $ 20.6 Amortization recognized (1.1 ) New amounts recognized 16.9 Amount at January 29, 2011 $ 36.4

Summary Of The Funded Status Of The Plan 2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at prior measurement date $85.5 $78.4 Interest cost 4.8 4.6 Actuarial loss 13.4 5.5 Benefits paid (3.3 ) (3.0 ) Obligation at end of year $100.4 $85.5

Assumptions: Discount rate 4.70 % 5.75% Salary increases n/a n/a Summarizes The Change In Plan Assets 2011 2010 (dollars in millions) Fair value of plan assets at prior measurement date $69.4 $61.9 Actual return on plan assets 1.9 8.9 Employer contributions 0.4 1.6 Benefits paid (3.3 ) (3.0 ) Fair value of plan assets at end of year $68.4 $69.4

Underfunded status at end of year $(32.0) $(16.1)

Components Of Net Periodic Benefit Costs 2011 2010 2009 (dollars in millions) Interest cost $4.8 $4.6 $4.5 Expected return on assets (5.4 ) (5.0 ) (3.6 ) Amortization of actuarial loss 1.1 1.3 1.8 Net periodic benefit cost $0.5 $0.9 $2.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Assumptions: Discount rate 5.75% 5.90% 6.25% Expected long-term return on plan assets 8.00% 8.25% 8.25% Salary increases n/a n/a n/a Schedule Of Estimated Future Benefit Payments (dollars in millions) 2012 $ 3.6 2013 3.7 2014 3.9 2015 4.2 2016 4.4 2017-2021 25.8 Schedule Of Allocation Of Plan Assets Target Allocation 2011 2010 Domestic equity securities 48% - 58% 52 % 54 % International equity securities 10% - 14% 11 % 12 % Domestic fixed income securities 32% - 38% 35 % 32 % Cash 0% - 5% 2 % 2 % 100% 100%

Schedule Of Defined Benefit Pension Plan Estimated Estimated Fair Value Measurements Fair Value Measurements Quoted Significant Prices in Observable Significant Active Other Unobservable Total Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value (dollars in millions) As of January 28, 2012: Domestic equity securities $ 3.6 $ 32.1 $ — $35.7 International equity securities 7.7 — — 7.7 Domestic fixed income securities 23.7 — — 23.7 Cash 1.3 — — 1.3 Total $ 36.3 $ 32.1 $ — $68.4 As of January 29, 2011: Domestic equity securities $ 3.5 $ 34.2 $ — $37.7 International equity securities — 8.0 — 8.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Domestic fixed income securities 22.2 — — 22.2 Cash 1.5 — — 1.5 Total $ 27.2 $ 42.2 $ — $69.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exit Costs (Narrative) 12 Months Ended (Details) (USD $) In Millions, unless otherwise Jan. 28, 2012 specified Restructuring Cost and Reserve [Line Items] Number of stores expected to close in next three years 475 Estimated exit costs $ 13.0 Lease termination costs 13.0 Minimum [Member] Restructuring Cost and Reserve [Line Items] Estimated exit costs 20.0 Maximum [Member] Restructuring Cost and Reserve [Line Items] Estimated exit costs 25.0 Lease Termination Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 10.6 Employee Severance Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 2.4 Scenario, Forecast [Member] Restructuring Cost and Reserve [Line Items] Number of stores closed 352 Scenario, Forecast [Member] | Payless Stores [Member] Restructuring Cost and Reserve [Line Items] Number of stores closed 298 Scenario, Forecast [Member] | Stride Rite Children's Locations [Member] Restructuring Cost and Reserve [Line Items] Number of stores closed 54 Payless Domestic [Member] | Lease Termination Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 9.3 Payless Domestic [Member] | Employee Severance Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 2.0 Payless International [Member] | Lease Termination Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 0.5 Payless International [Member] | Employee Severance Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 0.3 PLG Retail Reporting [Member] | Lease Termination Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs 0.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document PLG Retail Reporting [Member] | Employee Severance Costs [Member] Restructuring Cost and Reserve [Line Items] Lease termination costs $ 0.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Schedule Of 12 Months Ended Allocation Of Plan Assets) (Details) (PLG Plan Jan. 28, 2012 Jan. 29, 2011 [Member]) Defined Benefit Plan Disclosure [Line Items] Total 100.00% 100.00% Domestic Equity Securities [Member] Defined Benefit Plan Disclosure [Line Items] Equity securities 52.00% 54.00% Equity securities, Target Allocation, minimum 48.00% Equity securities, Target Allocation, maximum 58.00% International Equity Securities [Member] Defined Benefit Plan Disclosure [Line Items] Equity securities 11.00% 12.00% Equity securities, Target Allocation, minimum 10.00% Equity securities, Target Allocation, maximum 14.00% Domestic Fixed Income Securities [Member] Defined Benefit Plan Disclosure [Line Items] Fixed income securities 35.00% 32.00% Fixed income securities, Target Allocation, minimum 32.00% Fixed income securities, Target Allocation, maximum 38.00% Cash [Member] Defined Benefit Plan Disclosure [Line Items] Cash 2.00% 2.00% Cash, Target Allocation, minimum 0.00% Cash, Target Allocation, maximum 5.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements Of 3 Months Ended 12 Months Ended (Loss) Earnings (USD $) Apr. May Jan. In Millions, except Per Share Jan. 28, Oct. 29, Jul. 30, Jan. 29, Oct. 30, Jul. 31, Jan. 28, Jan. 29, 30, 01, 30, data, unless otherwise 2012 2011 2011 2011 2010 2010 2012 2011 2011 2010 2010 specified Consolidated Statements Of (Loss) Earnings [Abstract] Net sales $ [1] $ $ $ $ $ $ $ $ $ $ 815.9 894.4 882.4 869.0 773.8 881.8 841.3 878.8 3,461.7 3,375.7 3,307.9 Cost of sales 2,432.2 2,174.5 2,166.9 Gross margin 227.3 [1] 283.8 208.5 309.9 246.2 329.2 289.1 336.7 1,029.5 1,201.2 1,141.0 Selling, general and 1,046.3 1,011.5 982.4 administrative expenses Impairment of goodwill 10.0 Restructuring charges 0.1 Operating (loss) profit from (26.8) 189.7 158.5 continuing operations Interest expense 38.9 48.7 60.8 Interest income (0.4) (0.7) (1.1) Loss on early extinguishment 0.5 1.7 1.2 of debt Net (loss) earnings from continuing operations before (65.8) 140.0 97.6 income taxes Provision for income taxes 84.0 17.4 9.4 Net (loss) earnings from (149.8) 122.6 88.2 continuing operations Earnings from discontinued 0.1 operations, net of income taxes Net (loss) earnings (33.0) [1] (111.7) (33.3) 28.2 (5.6) 50.2 22.0 56.0 (149.8) 122.6 88.3 Net earnings attributable to (4.3) [1] (2.6) (1.7) (1.8) (4.5) (2.6) (0.9) (1.8) (10.4) (9.8) (5.6) noncontrolling interests Net (loss) earnings attributable $ $ $ $ $ $ $ $ $ [1] $ 112.8 $ 82.7 to Collective Brands, Inc. (37.3) (114.3) (35.0) 26.4 (10.1) 47.6 21.1 54.2 (160.2) Basic (loss) earnings per share attributable to Collective $ $ $ $ $ $ $ $ $ [1],[2] [2] [2] [2] [2] [2] [2] [2] [2] $ 1.77 [2] $ 1.29 Brands, Inc. common (0.62) (1.91) (0.58) 0.43 (0.16) 0.75 0.33 0.84 (2.66) shareholders Diluted (loss) earnings per share attributable to Collective $ $ $ $ $ $ $ $ $ [1],[2] [2] [2] [2] [2] [2] [2] [2] [2] $ 1.75 [2] $ 1.28 Brands, Inc. common (0.62) (1.91) (0.58) 0.42 (0.16) 0.75 0.32 0.83 (2.66) shareholders [1]In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses. [2]Earnings (loss) per share were computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Lease Obligations (Tables) Jan. 28, 2012 Lease Obligations [Abstract] Rental Expense For Operating Leases 2011 2010 2009 (dollars in millions) Minimum rentals $327.9 $314.4 $313.5 Contingent rentals based on sales 8.7 7.8 7.4 Real property rentals 336.6 322.2 320.9 Equipment rentals 0.1 4.4 4.7 Total $336.7 $326.6 $325.6

Future Minimum Lease Payments And Non- Capital Operating Cancelable Operating Lease Obligations Leases Leases Total (dollars in millions) 2012 $ 0.1 $252.1 $252.2 2013 0.1 206.9 207.0 2014 0.1 157.7 157.8 2015 0.1 115.3 115.4 2016 0.1 89.4 89.5 2017 and thereafter 0.9 196.7 197.5 Minimum lease payments $ 1.4 $1,018.1 $1,019.4 Less: imputed interest component 0.5 Present value of net minimum lease payments of which $0.1 million is included in current liabilities $ 0.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Lease Obligations (Future Minimum Lease Payments And Non-Cancelable Operating Lease Jan. 28, Obligations) (Details) (USD 2012 $) In Millions, unless otherwise specified Lease Obligations [Abstract] Capital Leases, 2012 $ 0.1 Capital Leases, 2013 0.1 Capital Leases, 2014 0.1 Capital Leases, 2015 0.1 Capital Leases, 2016 0.1 Capital Leases, 2017 and thereafter 0.9 Capital Leases, Minimum lease payments 1.4 Less: imputed interest component 0.5 Present value of net minimum lease payments of which $0.1 million is included in current 0.9 liabilities Operating Leases, 2012 252.1 Operating Leases, 2013 206.9 Operating Leases, 2014 157.7 Operating Leases, 2015 115.3 Operating Leases, 2016 89.4 Operating Leases, 2017 and thereafter 196.7 Operating Leases, Minimum Lease Payments 1,018.1 Capital and Operating Leases, 2012 252.2 Capital and Operating Leases, 2013 207.0 Capital and Operating Leases, 2014 157.8 Capital and Operating Leases, 2015 115.4 Capital and Operating Leases, 2016 89.5 Capital and Operating Leases, 2017 and thereafter 197.5 Capital and Operating Leases, Minimum lease payments 1,019.4 Present value of minimum lease payments included in current liabilities 0.1 Minimum future rentals receivable under non-cancelable subleases $ 1.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements Of 12 Months Ended Equity And Comprehensive (Loss) Income Jan. 28, Jan. 29, Jan. 30, (Parenthetical) (USD $) 2012 2011 2010 In Millions, unless otherwise specified Consolidated Statements Of Equity And Comprehensive (Loss) Income [Abstract] Net change in fair value of derivatives, tax effect $ 0.1 $ 2.7 $ 2.2 Changes in unrecognized amounts of pension benefits, tax effect $ (0.4) $ 0.7 $ 0.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accrued Expenses And Other Liabilities (Components Of Other Jan. 28, 2012Jan. 29, 2011 Liabilities) (Details) (USD $) In Millions, unless otherwise specified Accrued Expenses And Other Liabilities [Abstract] Pension plans $ 77.6 $ 58.9 Straight-line rent 29.0 30.1 Worker's compensation and general liability insurance reserves 20.9 19.0 Noncurrent income taxes 20.0 44.7 Deferred tenant improvement allowances, net 18.9 23.5 Deferred compensation 15.6 15.8 Asset retirement obligation 7.1 7.9 Long-term compensation 7.4 5.1 Other liabilities 6.3 7.4 Total $ 202.8 $ 212.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill (Summary Of Carrying Amount Of Goodwill, By Reporting Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 Segment) (Details) (USD $) In Millions, unless otherwise specified Impaired Intangible Assets [Line Items] Balance $ 269.8 $ 279.8 $ 279.8 Goodwill Adjustments Goodwill Impairment (10.0) Payless Domestic [Member] Impaired Intangible Assets [Line Items] Balance 30.2 40.2 40.2 Goodwill Adjustments Goodwill Impairment (10.0) PLG Wholesale [Member] Impaired Intangible Assets [Line Items] Balance 239.6 239.6 239.6 Goodwill Adjustments

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting 3 Months Ended 12 Months Ended (Information On Reporting Oct. Jul. Apr. Jan. Oct. Jul. May Jan. Jan. Jan. Segments) (Details) (USD $) Jan. 28, 29, 30, 30, 29, 30, 31, 01, 28, 29, 30, In Millions, unless otherwise 2012 2011 2011 2011 2011 2010 2010 2010 2012 2011 2010 specified Segment Reporting Information [Line Items] Net sales $ $ $ $ $ $ $ $ $ $ 815.9 [1] $ 773.8 894.4 882.4 869.0 881.8 841.3 878.8 3,461.73,375.73,307.9 Operating (loss) profit (26.8) 189.7 158.5 Interest expense 38.9 48.7 60.8 Interest income (0.4) (0.7) (1.1) Loss on early extinguishment 0.5 1.7 1.2 of debt Net (loss) earnings from continuing operations before (65.8) 140.0 97.6 income taxes Depreciation and amortization 131.7 138.2 143.2 Total assets 2,047.2 2,268.5 2,047.22,268.52,284.3 Additions to long-lived assets 98.9 97.6 91.8 Payless Domestic [Member] Segment Reporting Information [Line Items] Net sales 1,972.92,059.32,153.2 Operating (loss) profit (96.0) 75.2 98.1 Interest expense 38.9 48.6 60.7 Interest income (0.2) (0.5) (1.0) Loss on early extinguishment 0.5 1.7 1.2 of debt Net (loss) earnings from continuing operations before (135.2) 25.4 37.2 income taxes Depreciation and amortization 94.1 97.9 98.4 Total assets 834.6 1,039.3 834.6 1,039.31,151.1 Additions to long-lived assets 66.4 73.3 66.6 Payless International [Member] Segment Reporting Information [Line Items] Net sales 469.6 460.3 422.4 Operating (loss) profit 32.6 55.6 34.1 Interest expense 0.1 0.1 Interest income (0.2) (0.2) (0.1)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Net (loss) earnings from continuing operations before 32.8 55.7 34.1 income taxes Depreciation and amortization 15.9 16.8 17.4 Total assets 232.3 258.4 232.3 258.4 201.5 Additions to long-lived assets 15.0 11.7 17.5 PLG Wholesale [Member] Segment Reporting Information [Line Items] Net sales 778.6 628.4 513.9 Operating (loss) profit 43.9 61.7 30.0 Net (loss) earnings from continuing operations before 43.9 61.7 30.0 income taxes Depreciation and amortization 16.1 17.1 21.7 Total assets 912.0 905.3 912.0 905.3 866.3 Additions to long-lived assets 2.4 6.6 4.1 PLG Retail [Member] Segment Reporting Information [Line Items] Net sales 240.6 227.7 218.4 Operating (loss) profit (7.3) (2.8) (3.7) Net (loss) earnings from continuing operations before (7.3) (2.8) (3.7) income taxes Depreciation and amortization 5.6 6.4 5.7 Total assets 68.3 65.5 68.3 65.5 65.4 Additions to long-lived assets $ 15.1 $ 6.0 $ 3.6 [1]In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Exit Costs (Tables) Jan. 28, 2012 Exit Costs [Abstract] Components Of The Exit Costs Accrual Balance as of Charges Cash Accrual Balance as of January 29, 2011 to Date Payments January 28, 2012 (dollars in millions) Lease termination costs $ — $ 10.6 $ (9.0 ) $ 1.6 Employee severance costs — 2.4 (0.7 ) 1.7 Total $ — $ 13.0 $ (9.7 ) $ 3.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives (Impact Of 12 Months Ended Derivative Instruments On Condensed Consolidated Financial Statements) Jan. 28, 2012Jan. 29, 2011 (Details) (USD $) In Millions, unless otherwise specified Interest Rate Contract [Member] Derivative Instruments, Gain (Loss) [Line Items] Gain (Loss) Recognized/Reclassified from AOCI into Derivative/Earnings $ 1.0 $ (2.2) Interest Expense [Member] Derivative Instruments, Gain (Loss) [Line Items] Gain (Loss) Recognized/Reclassified from AOCI into Derivative/Earnings $ (7.5) $ (7.5)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Lease Obligations Jan. 28, 2012 Lease Obligations [Abstract] Lease Obligations Note 14 — Lease Obligations Rental expense for the Company's operating leases consisted of:

Most store lease agreements contain renewal options and include escalating rents over the lease terms. Certain leases provide for contingent rentals based upon gross sales. Cumulative expense recognized on the straight-line basis in excess of cumulative payments is included in accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets. Certain lease agreements provide for scheduled rent increases during the lease term, as well as provisions for renewal options. Rent expense is recognized on a straight-line basis over the term of the lease from the time at which the Company takes possession of the property. In instances where failure to exercise renewal options would result in an economic penalty, the calculation of straight-line rent expense includes renewal option periods. Also, landlord-provided tenant improvement allowances are recorded as a liability and amortized as a credit to rent expense.

Future minimum lease payments under capital leases and non-cancelable operating lease obligations as of January 28, 2012, were as follows:

At January 28, 2012, the total amount of minimum rentals to be received in the future under non- cancelable subleases was $1.5 million.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill (Tables) Jan. 28, 2012 Intangible Assets And Goodwill [Abstract] Summary Of The Company's Intangible Assets January 28, January 29, 2012 2011 (dollars in millions) Intangible assets subject to amortization: Favorable lease rights: Gross carrying amount $ 20.5 $ 24.8 Less: accumulated amortization (17.6 ) (19.8 ) Carrying amount, end of period 2.9 5.0 Customer relationships: Gross carrying amount 74.2 74.2 Less: accumulated amortization (53.7 ) (45.2 ) Carrying amount, end of period 20.5 29.0 Trademarks and other intangible assets: Gross carrying amount 39.9 38.5 Less: accumulated amortization (13.0 ) (9.6 ) Carrying amount, end of period 26.9 28.9 Total carrying amount of intangible assets subject to amortization 50.3 62.9 Indefinite-lived tradenames 334.4 365.5 Total intangible assets $ 384.7 $ 428.4

Amortization Expense On Intangible Assets 52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Amortization expense on intangible assets $ 12.8 $ 16.2 $ 19.5 Expected Amortization Expense For The Next Five Year Amount Years 2012 $ 11.3 2013 9.7 2014 8.3 2015 6.0 2016 2.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Carrying Amount Of Goodwill, By Payless PLG Reporting Segment Domestic Wholesale Consolidated (dollars in millions) Balance as of January 30, 2010 $40.2 $ 239.6 $ 279.8 Goodwill Adjustments — — — Balance as of January 29, 2011 $40.2 $ 239.6 $ 279.8 Goodwill Impairment (10.0 ) — (10.0 ) Balance as of January 28, 2012 $30.2 $ 239.6 $ 269.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Segment Reporting 12 Months Ended (Narrative) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise Jan. 29, 2011Jan. 30, 2010 segments specified Segment Reporting [Abstract] Number of reporting segments 4 Ownership interest in joint ventures 60.00% Certain management costs and royalty fees $ 37.4 $ 39.3 $ 36.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Segment Reporting Jan. 28, 2012 Segment Reporting [Abstract] Segment Reporting Note 16 — Segment Reporting The Company has four reporting segments: (i) Payless Domestic, (ii) Payless International, (iii) PLG Wholesale and (iv) PLG Retail. The Company has defined its reporting segments as follows: (i) The Payless Domestic reporting segment is comprised primarily of domestic retail stores under the Payless ShoeSource name, the Company's sourcing unit and Collective Licensing. (ii) The Payless International reporting segment is comprised of international retail stores under the Payless ShoeSource name in Canada, the South American Region, the Central American Region, Puerto Rico, and the U.S. Virgin Islands as well as franchising arrangements under the Payless ShoeSource name. (iii) The PLG Wholesale reporting segment consists of PLG's global wholesale operations. (iv) The PLG Retail reporting segment consists of PLG's owned Stride Rite children's stores, PLG's Outlet stores, store-in-stores at select Macy's Department Stores and Sperry Top- Sider stores.

Payless International's operations in the Central American and South American Regions are operated as joint ventures in which the Company maintains a 60% ownership interest. Noncontrolling interest represents the Company's joint venture partners' share of net earnings or losses on applicable international operations. Certain management costs for services performed by Payless Domestic and certain royalty fees and sourcing fees charged by Payless Domestic are allocated to the Payless International segment. The total costs and fees amounted to $37.4 million, $39.3 million and $36.0 million during 2011, 2010 and 2009, respectively.

The reporting period for operations in the Central and South American Regions use a December 31 year-end. The effect of this one-month lag on the Company's financial position and results of operations is not significant. Information on the segments is as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Depreciation and amortization $94.1 $ 15.9 $ 16.1 $5.6 $ 131.7 Total assets $834.6 $ 232.3 $ 912.0 $68.3 $ 2,047.2 Additions to long-lived assets $66.4 $ 15.0 $ 2.4 $15.1 $ 98.9 Fiscal year ended January 29, 2011: Net sales $2,059.3 $ 460.3 $ 628.4 $227.7 $ 3,375.7 Operating profit (loss) 75.2 55.6 61.7 (2.8 ) 189.7 Interest expense 48.6 0.1 — — 48.7 Interest income (0.5 ) (0.2 ) — — (0.7 ) Loss on early extinguishment of debt 1.7 — — — 1.7 Net earnings (loss) before taxes $25.4 $ 55.7 $ 61.7 $(2.8 ) $ 140.0 Depreciation and amortization $97.9 $ 16.8 $ 17.1 $6.4 $ 138.2 Total assets $1,039.3 $ 258.4 $ 905.3 $65.5 $ 2,268.5 Additions to long-lived assets $73.3 $ 11.7 $ 6.6 $6.0 $ 97.6 Fiscal year ended January 30, 2010: Net sales $2,153.2 $ 422.4 $ 513.9 $218.4 $ 3,307.9 Operating profit (loss) from continuing operations 98.1 34.1 30.0 (3.7 ) 158.5 Interest expense 60.7 0.1 — — 60.8 Interest income (1.0 ) (0.1 ) — — (1.1 ) Loss on early extinguishment of debt 1.2 — — — 1.2 Net earnings (loss) from continuing operations before taxes $37.2 $ 34.1 $ 30.0 $(3.7 ) $ 97.6 Depreciation and amortization $98.4 $ 17.4 $ 21.7 $5.7 $ 143.2 Total assets $1,151.1 $ 201.5 $ 866.3 $65.4 $ 2,284.3 Additions to long-lived assets $66.6 $ 17.5 $ 4.1 $3.6 $ 91.8

The following is a summary of net sales by geographical area:

2011 2010 2009 (dollars in millions) Domestic $2,836.1 $2,785.9 $2,781.8 International 625.6 589.8 526.1

The following is a summary of long-lived assets by geographical area:

2011 2010 2009 (dollars in millions) Domestic $302.3 $363.4 $396.7 International 67.1 68.9 67.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Jan. 28, Jan. 29, Pension Plans (Schedule Of 2012 2011 Jan. 28, 2012 Jan. 29, 2011 Pre-Tax Amounts That Have Jan. 28, Jan. 29, New Jan. 29, Jan. 30, New AmortizationAmortization Not Yet Been Recognized In 2012 2011 Amounts 2011 2010 Amounts Recognized Recognized Net Periodic Benefit Cost) Payless Payless Recognized PLG Plan PLG Plan Recognized [Member] [Member] (Details) (USD $) Plan Plan [Member] [Member][Member] [Member] Payless Plan PLG Plan In Millions, unless otherwise [Member][Member] Payless PLG Plan [Member] [Member] specified Plan [Member] [Member] Defined Benefit Plan Disclosure [Line Items] Unrecognized Prior Service $ 5.4 $ 7.0 $ (1.6) Cost Unrecognized Losses/(Gains) 15.6 12.7 4.4 (1.5) Total AOCI $ 21.0 $ 19.7 $ 36.4 $ 20.6 $ 4.4 $ 16.9 $ (3.1) $ (1.1)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of 12 Months Ended Senior Notes - Consolidating Financial Information (Condensed Consolidating Jan. 28, Jan. 29, Jan. 30, Statement Of Cash Flows) 2012 2011 2010 (Details) (USD $) In Millions, unless otherwise specified Net earnings (loss) $ (149.8) $ 122.6 $ 88.3 Loss from discontinued operations, net of income taxes (0.1) Adjustments for non-cash items included in net earnings 315.0 174.9 179.2 Changes in working capital (102.3) (16.8) 64.6 Other, net (17.2) (9.2) (24.4) Cash flow provided by operating activities 45.7 271.5 307.6 Capital expenditures (98.9) (97.6) (84.0) Intangible asset additions (1.4) (19.0) Proceeds from sale of property and equipment 2.8 Other, net (19.0) Cash flow used in investing activities (100.3) (97.6) (100.2) Net repayment of debt or notes payable (55.1) (185.2) (66.1) Payment of deferred financing costs (1.8) Net repayment of debt or notes payable, including deferred financing (64.9) costs Net purchases (issuances) of common stock (16.9) (53.2) 0.6 Net distributions to noncontrolling interests (13.2) (7.7) (0.7) Cash flow used in financing activities (87.0) (246.1) (65.0) Effect of exchange rate changes on cash (1.2) 2.8 1.8 (Decrease) increase in cash and cash equivalents (142.8) (69.4) 144.2 Cash and cash equivalents, beginning of year 324.1 393.5 249.3 Cash and cash equivalents, end of year 181.3 324.1 393.5 Parent Company [Member] Net earnings (loss) (160.2) 112.8 82.7 Adjustments for non-cash items included in net earnings 1.0 0.3 1.1 Changes in working capital 98.7 72.6 34.9 Other, net 127.4 (132.5) (95.8) Cash flow provided by operating activities 66.9 53.2 22.9 Net repayment of debt or notes payable (50.0) Net repayment of debt or notes payable, including deferred financing (23.5) costs Net purchases (issuances) of common stock (16.9) (53.2) 0.6 Cash flow used in financing activities (66.9) (53.2) (22.9) Guarantor Subsidiaries [Member] Net earnings (loss) (105.8) 144.7 100.1 Loss from discontinued operations, net of income taxes (0.1)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Adjustments for non-cash items included in net earnings 288.5 156.5 159.3 Changes in working capital (105.9) (159.3) 102.8 Other, net (129.5) (33.0) (95.5) Cash flow provided by operating activities (52.7) 108.9 266.6 Capital expenditures (74.8) (82.2) (66.3) Intangible asset additions (0.9) Proceeds from sale of property and equipment 2.8 Issuance of intercompany debt (19.0) Other, net (1.8) Cash flow used in investing activities (75.7) (82.2) (84.3) Net repayment of debt or notes payable 54.1 (184.1) Payment of deferred financing costs (1.8) Net repayment of debt or notes payable, including deferred financing (42.6) costs Net distributions to parent (1.6) Cash flow used in financing activities 52.3 (184.1) (44.2) (Decrease) increase in cash and cash equivalents (76.1) (157.4) 138.1 Cash and cash equivalents, beginning of year 122.4 279.8 141.7 Cash and cash equivalents, end of year 46.3 122.4 279.8 Non-Guarantor Subsidiaries [Member] Net earnings (loss) 91.8 102.4 94.0 Adjustments for non-cash items included in net earnings 25.5 18.1 18.8 Changes in working capital (87.6) 68.0 (43.0) Other, net 1.8 (79.1) (11.0) Cash flow provided by operating activities 31.5 109.4 58.8 Capital expenditures (24.1) (15.4) (17.7) Intangible asset additions (0.5) Dividends received-related party 1.6 Other, net (17.2) Cash flow used in investing activities (24.6) (15.4) (33.3) Net repayment of debt or notes payable (59.2) (1.1) Net repayment of debt or notes payable, including deferred financing (9.8) costs Net distributions to noncontrolling interests (13.2) (7.7) (0.7) Net distributions to parent (10.7) Cash flow used in financing activities (72.4) (8.8) (21.2) Effect of exchange rate changes on cash (1.2) 2.8 1.8 (Decrease) increase in cash and cash equivalents (66.7) 88.0 6.1 Cash and cash equivalents, beginning of year 201.7 113.7 107.6 Cash and cash equivalents, end of year 135.0 201.7 113.7 Eliminations [Member] Net earnings (loss) 24.4 (237.3) (188.5) Changes in working capital (7.5) 1.9 (30.1) Other, net (16.9) 235.4 177.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Cash flow provided by operating activities (40.7) Dividends received-related party (1.6) Issuance of intercompany debt 19.0 Cash flow used in investing activities 17.4 Net repayment of debt or notes payable, including deferred financing 11.0 costs Net distributions to parent 12.3 Cash flow used in financing activities $ 23.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Treasury Share Activity 12 Months Ended (USD $) In Millions, except Share Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 data in Thousands, unless otherwise specified Treasury stock, value $ 0.1 $ 0.1 $ 0.2 Issuances of common stock: Purchases of common stock 1,205 3,834 389 Treasury Stock [Member] Beginning Balance Shares 13,534 23,975 24,406 Issuances of common stock: Stock options, employee stock purchases and stock appreciation rights (212) (625) (507) Deferred compensation plan (8) (5) Net restricted stock grants (96) (519) (308) Issuances of common stock, Total (316) (1,144) (820) Purchases of common stock 1,205 3,834 389 Retirement of Treasury Stock (13,131) Ending Balance Shares 14,423 13,534 23,975

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheets Jan. (USD $) Jan. 28, 29, In Millions, unless otherwise 2012 2011 specified Current Assets: Cash and cash equivalents $ 181.3 $ 324.1 Accounts receivable, net of allowance for doubtful accounts and returns reserve as of January 146.0 114.4 28, 2012 and January 29, 2011 of $6.3 and $6.0, respectively Inventories, net 563.4 531.7 Current deferred income taxes 7.2 30.7 Prepaid expenses 61.5 55.1 Other current assets 21.8 22.2 Total current assets 981.2 1,078.2 Property and equipment, net 369.4 432.3 Intangible assets, net 384.7 428.4 Goodwill 269.8 279.8 Deferred income taxes 10.7 10.1 Other assets 31.4 39.7 Total Assets 2,047.2 2,268.5 Current Liabilities: Current maturities of long-term debt 5.1 5.1 Accounts payable 291.6 287.4 Accrued expenses 147.0 184.4 Total current liabilities 443.7 476.9 Long-term debt 604.8 659.4 Deferred income taxes 122.4 65.4 Other liabilities 202.8 212.4 Commitments and contingencies (Note 17) Equity: Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued Common stock, $.01 par value; 240,000,000 shares authorized; 75,000,000 issued; 60,577,077 0.7 0.7 and 61,466,038 shares outstanding in 2011 and 2010, respectively Treasury stock, $.01 par value; 14,422,923 and 13,533,962 shares in 2011 and 2010, (0.1) (0.1) respectively Additional paid-in-capital (2.5) Retained earnings 665.8 834.9 Accumulated other comprehensive loss, net of income taxes (21.6) (10.1) Collective Brands, Inc. shareowners' equity 644.8 822.9 Noncontrolling interests 28.7 31.5 Total equity 673.5 854.4 Total Liabilities and Equity $ $ 2,047.2 2,268.5

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Defined Contribution Plans Jan. 28, 2012 Defined Contribution Plans [Abstract] Defined Contribution Plans Note 9 — Defined Contribution Plans The Company has two qualified profit sharing plans offered by Payless ShoeSource ("Payless Profit Sharing Plans") that cover full-time associates who have worked for the Company for 60 days and have attained age 21 or part-time associates who have completed one full year of employment and have attained age 21. The Payless Profit Sharing Plans are defined contribution plans that provide for Company contributions at the discretion of the Board of Directors. Full-time associates are eligible for a Company matching contribution upon completion of 180 days of employment. Part-time associates must complete one full year of employment to be eligible for the Company match. The Payless Profit Sharing Plans provide that the Company has discretion to contribute up to 2.5% of its pre-tax earnings from continuing operations as defined by the Payless Profit Sharing Plans. Associate contributions up to 5% of their pay are eligible for the match. Associates may voluntarily contribute to the Payless Profit Sharing Plans on both a pre-tax and after-tax basis. Total profit sharing contributions made for the Plans for the 2011, 2010 and 2009 plan years were $0.9 million, $3.6 million and $2.6 million, respectively.

PLG also provides a qualified safe harbor defined contribution plan ("401(k) Plan") for its associates. This qualified defined contribution plan enables eligible associates to defer a portion of their salary to be held by the trustees of the plan and invested as self-directed by associates. Associates are eligible to join the 401(k) Plan on the first of the month following the completion of six months of employment and the attainment of age 21. The matching contribution is 100% on the first 3% of salary deferred and 50% on the next 3% of salary deferred. Matching contributions are made on a regular basis as salary is deferred and are not subject to a true-up at the end of the year. Total profit sharing contributions for this plan for 2011, 2010 and 2009 plan years were $2.1 million, $1.9 million and $2.6 million, respectively.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Related Party Transactions (Details) (USD $) Jan. 28, 2012Jan. 29, 2011 In Millions, unless otherwise specified Related Party Transactions [Abstract] Total deposits in financial institutions $ 10.7 $ 12.7

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accrued Expenses And Other Liabilities (Components Of Accrued Jan. 28, 2012Jan. 29, 2011 Expenses) (Details) (USD $) In Millions, unless otherwise specified Accrued Expenses And Other Liabilities [Abstract] Profit sharing, bonus and salaries $ 47.3 $ 76.0 Sales, use and other taxes 27.3 30.3 Accrued construction in process 9.0 8.4 Worker's compensation and general liability insurance reserves 8.3 9.8 Accrued interest 6.8 10.8 Accrued occupancy 6.3 6.9 Accrued excess property 5.8 0.1 Straight-line rent 5.6 5.8 Accrued income taxes 4.6 5.1 Current portion of pension plan 4.2 4.9 Accrued advertising 4.0 4.4 Accrued royalty 3.4 4.0 Other accrued expenses 14.4 17.9 Total $ 147.0 $ 184.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Summary Of 12 Months Ended Tax Credit Carryforwards) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Income Taxes [Line Items] Tax credit carryforwards 59.4 Valuation allowance of tax credit carryforward (58.2) Minimum [Member] | Tax Credit Carryforwards Expiring By 2018 - 2021 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2018 Minimum [Member] | Tax Credit Carryforwards Expiring By 2028 - 2031 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2028 Minimum [Member] | Tax Credit Carryforwards Expiring By 2012 - 2016 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2012 Minimum [Member] | Tax Credit Carryforwards Expiring By 2017 - 2021 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2017 Minimum [Member] | Tax Credit Carryforwards Expiring By 2012 - 2028 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2012 Maximum [Member] | Tax Credit Carryforwards Expiring By 2018 - 2021 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2021 Maximum [Member] | Tax Credit Carryforwards Expiring By 2028 - 2031 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2031 Maximum [Member] | Tax Credit Carryforwards Expiring By 2012 - 2016 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2016 Maximum [Member] | Tax Credit Carryforwards Expiring By 2017 - 2021 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2021 Maximum [Member] | Tax Credit Carryforwards Expiring By 2012 - 2028 [Member] Income Taxes [Line Items] Expiry period of tax credit carryforwards 2028 General Business [Member] | Tax Credit Carryforwards Expiring By 2028 - 2031 [Member] Income Taxes [Line Items] Tax credit carryforwards 11.6 Valuation allowance of tax credit carryforward (11.6) Foreign [Member] | Tax Credit Carryforwards Expiring By 2018 - 2021 [Member] Income Taxes [Line Items]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Tax credit carryforwards 29.5 Valuation allowance of tax credit carryforward (29.5) State [Member] | Tax Credit Carryforwards Expiring By 2012 - 2016 [Member] Income Taxes [Line Items] Tax credit carryforwards 2.1 Valuation allowance of tax credit carryforward (2.1) State [Member] | Tax Credit Carryforwards Expiring By 2017 - 2021 [Member] Income Taxes [Line Items] Tax credit carryforwards 3.5 Valuation allowance of tax credit carryforward (3.5) State [Member] | Tax Credit Carryforwards Expiring By 2012 - 2028 [Member] Income Taxes [Line Items] Tax credit carryforwards 4.1 Valuation allowance of tax credit carryforward (4.1) State [Member] | Tax Credit Carryforwards Indefinite[Member] Income Taxes [Line Items] Tax credit carryforwards 6.5 Valuation allowance of tax credit carryforward (6.5) Puerto Rico Alternative [Member] | Tax Credit Carryforwards Indefinite[Member] Income Taxes [Line Items] Tax credit carryforwards 2.1 Valuation allowance of tax credit carryforward (0.9)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Document And Entity 12 Months Ended Information (USD $) In Millions, except Share Jan. 28, 2012 Mar. 14, 2012Jul. 29, 2011 data, unless otherwise specified Document And Entity Information [Abstract] Entity Registrant Name COLLECTIVE BRANDS, INC. Entity Central Index Key 0001060232 Document Type 10-K Document Period End Date Jan. 28, 2012 Amendment Flag false Document Fiscal Year Focus 2011 Document Fiscal Period Focus FY Current Fiscal Year End Date --01-28 Entity Filer Category Large Accelerated Filer Entity Common Stock, Shares Outstanding 60,624,604 Entity Well-known Seasoned Issuer Yes Entity Voluntary Filers No Entity Current Reporting Status Yes Entity Public Float $ 713.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Share-Based Compensation Jan. 28, 2012 Share-Based Compensation [Abstract] Share-Based Compensation Note 10 — Share-Based Compensation Under its equity incentive plans, the Company currently grants share appreciation vehicles consisting of stock options, stock-settled stock appreciation rights ("stock-settled SARs") and cash-settled stock appreciation rights ("cash-settled SARs"), as well as full value vehicles consisting of nonvested shares and phantom stock units. Appreciation vehicles granted under the 1996 and 2006 Stock Incentive Plans are granted at the fair market value on the date of grant and may be exercised only after stated vesting dates or other vesting criteria, as applicable, have been achieved. Generally, vesting of appreciation vehicles is conditioned upon continued employment with the Company, although appreciation vehicles may be exercised during certain periods following retirement, termination, disability or death. Historically, the Company has used treasury shares for settlement of share-based compensation

Under the 1996 Stock Incentive Plan, which expired in April 2006, the Company was authorized to grant a maximum of 15,600,000 shares, of which no more than 1,200,000 could be issued pursuant to non-vested share grants. Appreciation vehicles granted under the plan had a maximum term of 10 years and could vest on a graded schedule or a cliff basis. The exercise prices of appreciation vehicles equaled the average of the high and low trading prices of the Company's stock on the grant date. Non-vested shares granted under the plan could be granted with or without performance restrictions. Restrictions, including performance restrictions, lapse over periods of up to ten years, as determined at the date of grant. Associates who received nonvested shares paid no monetary consideration.

On May 25, 2006, the Company's shareowners approved the 2006 Stock Incentive Plan. On May 21, 2009, the 2006 Stock Incentive Plan was amended to allow the Company to grant a maximum of 4,987,000 shares. Appreciation vehicles to be granted under the plan have a maximum term of seven years and can vest on a graded schedule, a cliff basis or based on performance. The exercise price of an appreciation vehicle may not be less than the fair market value of the Company's stock on the grant date. Associates who receive full value vehicles pay no monetary consideration. Awards under the 2006 Stock Incentive Plan can be granted with or without performance restrictions. Restrictions, including performance restrictions, lapse over periods of up to seven years, as determined at the date of grant.

On May 25, 2006, the Company's shareowners approved amendments to and restatement of the Stock Plan for Non-Management Directors (the "Director Plan"). Under the Company's amended and restated Director Plan, each Director who is not an officer of the Company is eligible to receive share-based compensation in the form of non-qualified stock options and/or stock awards, including, but not limited to, restricted and unrestricted stock awards. All shares of common stock issued under the Director Plan are subject to restrictions on transferability and to forfeiture during a specified restricted period. The Director Plan provides for the issuance of not more than 350,000 shares of common stock, subject to adjustment for changes in the Company's capital structure. The Company may not, without stockholder approval, amend the Director Plan in a manner that would increase the number of shares of common stock available for awards, decrease

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the exercise price of any award, or otherwise materially increase benefits or modify eligibility requirements.

Under the Company's Amended Stock Purchase Plan, a maximum of 6,000,000 shares of the Company's common stock may be purchased by employees at a 5% discount. The current terms of the Stock Purchase Plan are such that the plan is non-compensatory. As a result, the purchase of shares by employees does not give rise to compensation cost.

52 Weeks Ended January 28, 2012 As of January 28, 2012 Weighted Weighted Average Average Aggregate Exercise Remaining Intrinsic Options Price Contractual Life Value (units in thousands) (in years) (in millions) Outstanding at beginning of period 1,461 $ 19 Granted — — Exercised (81 ) 17 Forfeited or expired (220 ) 20 Outstanding at end of period 1,160 19 1 $ — Vested and expected to vest at end of period 1,160 19 1 $ — Exercisable at end of period 1,160 19 1 $ —

The total intrinsic value of options exercised during 2011, 2010 and 2009 was $0.4 million, $3.0 million and $2.3 million, respectively. The cash received from option exercises for 2011, 2010 and 2009 was $1.3 million, $10.1 million and $7.2 million, respectively, and excludes the cash received from the Company's employee stock purchase and deferred compensation plans. There was not a significant tax benefit realized for the deductions from options exercised during 2011, 2010 or 2009. The Company did not grant any stock options in 2011, 2010 or 2009.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Stock-settled SARs During 2011, the Company granted 226 thousand maximum share equivalents in the form of 407 thousand stock-settled SARs under the 2006 Stock Incentive Plan. Of this amount, 213 thousand stock-settled SARs are subject to a three-year graded vesting schedule, 54 thousand stock-settled SARs are subject to a three-year cliff vesting schedule and 140 thousand stock-settled SARs are subject to a performance condition and a three-year graded vesting schedule. For the stock-settled SARS that are subject to performance condition and a three-year graded vesting schedule, the performance grants vest only if the performance condition is met. As of January 28, 2012, the Company has assessed the likelihood that the performance condition will be met and has recorded the related expense based on the estimated outcome.

Upon exercise of a stock-settled SAR, employees will receive a number of shares of common stock equal in value to the appreciation in the fair market value of the underlying common stock from the grant date to the exercise date of the stock-settled SAR. All of the stock-settled SARs issued by the Company since 2010 contain an appreciation cap, which limits the appreciation for which shares of common stock will be granted to 125% of the fair market value of the underlying common stock on the grant date of the stock-settled SAR. As a result of the appreciation cap, a maximum of 5/9 of a share of common stock may be issued for each stock-settled SAR granted. Prior to 2010, the appreciation cap was 200%, a maximum of 2/3 of a share of common stock for each stock-settled SAR granted.

Transactions for stock–settled SARs for fiscal year 2011 and information about stock- settled SARs outstanding, stock-settled SARs vested or expected to vest and stock-settled SARs exercisable at January 28, 2012 were as follows:

As of January 28, 2012 Stock- Weighted Average Settled Weighted Average Remaining Aggregate SARs Exercise Price Contractual Life Intrinsic Value (units in thousands) (in years) (in millions) Outstanding at beginning of period 5,513 $ 18 Granted 408 17 Exercised (628 ) 12 Forfeited or expired (433 ) 22 Outstanding at end of period1 4,860 19 3 $ 6.4 Vested and expected to vest at end of period 4,821 19 3 $ 6.3 Exercisable at end of period 3,580 20 3 $ 3.6 1 The 4,860 thousand stock-settled SARs outstanding at the end of the period could be settled for a maximum of 3,127 thousand shares based upon the maximum appreciation cap in place at the time of grant. Included in the stock-settled SARs outstanding at the end of the period are 133 thousand performance shares that will be forfeited due to the 2011 performance criteria not being met.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The aggregate intrinsic value was calculated using the difference between the current market price and the grant price for only those awards that have a grant price that is less than the current market price.

Nonvested Shares and Share Units During 2011, the Company granted 404 thousand nonvested shares under the 2006 Stock Incentive Plan. The Company granted 171 thousand shares subject to a three-year cliff vesting schedule, 133 thousand nonvested shares that are subject to a performance condition and a three- year graded vesting schedule, 100 thousand nonvested shares that are subject to a performance condition and a three-year cliff vesting schedule. For the nonvested shares that are subject to performance condition, the performance grant vests only if the performance condition is met. As of January 28, 2012, the Company has assessed the likelihood that the performance condition will be met and has recorded the related expense based on the estimated outcome.

During 2011, the Company granted 63 thousand nonvested shares under the Director Plan. Pursuant to the provisions of the Director Plan, certain Directors elected to defer this compensation into 38 thousand share units that will be issued as common stock subsequent to the Directors' resignation from the Board. The nonvested shares and share units granted under the Director Plan will vest on May 26, 2012. Deferral does not affect vesting. Deferred share units are excluded from the summary table of nonvested shares.

Excluding deferred shares under the Director Plan, transactions for nonvested shares and share units for the fiscal year 2011 were as follows:

52 Weeks Ended January 28, 2012 Nonvested Shares Weighted Average and Share Units Grant Date Fair Value (shares in thousands) Nonvested at beginning of period 865 $ 17

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Granted 437 19 Vested (467 ) 16 Forfeited or expired (163 ) 19 Nonvested at end of period 672 19

Cash-settled SARs During 2011, the Company did not issue cash-settled SARs.

Transactions for cash-settled SARs for the fiscal year 2011 were as follows:

52 Weeks Ended January 28, 2012 Cash-Settled Weighted Average SARs Grant Price (shares in thousands) Outstanding at beginning of period 145 $ 21 Granted — — Vested (1 ) 12 Forfeited or expired (20 ) 16 Outstanding at end of period 124 21 Exercisable or convertible at end of period 107 22

The fair value of stock-settled SARs granted was calculated using the following assumptions:

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 Risk-free interest rate 1.5 % 1.9 % 1.7 % Expected dividend yield — % — % — % Expected appreciation vehicle life (in years) 4 4 4

Risk-free interest rate — The rate is based on zero-coupon U.S. Treasury yields in effect at the date of grant, utilizing separate rates for each whole year up to the contractual term of the appreciation vehicle and interpolating for time periods between those not listed. Expected dividend yield — the Company has not historically paid dividends and has no immediate plans to do so; as a result, the dividend yield is assumed to be zero. Expected appreciation vehicle life — The expected life is derived from the output of the binomial lattice model and represents the period of time that the appreciation vehicles are expected to be outstanding. This model incorporates time-based early exercise assumptions based on an analysis of historical exercise patterns. Expected Volatility — The rate used in the binomial model is based on an analysis of historical prices of the Company's stock. The Company currently believes that historical volatility is a good indicator of future volatility.

The total fair value of shares granted during 2011, 2010 and 2009 was $10.8 million, $9.6 million and $2.3 million, respectively.

Compensation Expense Total share-based compensation expense is summarized as follows:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months Ended (Transactions For Cash- Settled SARs) (Details) (Cash-Settled SARs Jan. 28, Jan. 29, Jan. 30, [Member], USD $) 2012 2011 2010 In Thousands, except Per Share data, unless otherwise specified Cash-Settled SARs [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Outstanding at beginning of period, Shares 145 Vested, Shares (1) Forfeited or expired, Shares (20) Outstanding at end of period, Shares 124 145 Exercisable or convertible at end of period, Shares 107 Outstanding at beginning of period, Weighted Average Exercise Price $ 21 Granted, Weighted Average Grant Price $ 8 $ 5 Vested, Weighted Average Grant Price $ 12 Forfeited or expired, Weighted Average Grant Price $ 16 Outstanding at end of period, Weighted Average Exercise Price $ 21 $ 21 Exercisable or convertible at end of period, Weighted Average Grant Price $ 22

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Summary Of 12 Months Net Operating Loss Ended Carryforwards) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Operating Loss Carryforwards [Line Items] Net operating loss carryforwards $ 48.8 Valuation Allowance (44.0) Federal [Member] | Expiring By 2031 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 30.2 Valuation Allowance (30.2) Expiration of operating loss carryforwards 2031 State [Member] | Expiration Between 2012-2016 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 0.7 Valuation Allowance (0.7) State [Member] | Expiration Between 2017-2021 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 1.8 Valuation Allowance (1.8) State [Member] | Expiration Between 2022-2026 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 3.2 Valuation Allowance (3.2) State [Member] | Expiration Between 2027-2031 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 3.3 Valuation Allowance (3.3) Foreign [Member] | Operating Losses Related To Recorded Assets Carried Forward Indefinitely [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 5.0 Valuation Allowance (4.8) Foreign [Member] | Expiring By 2020 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards 0.2 Expiration of operating loss carryforwards 2020 Foreign [Member] | Expiration Between 2029-2031 [Member] Operating Loss Carryforwards [Line Items] Net operating loss carryforwards $ 4.4 Minimum [Member] | Expiration Between 2012-2016 [Member] Operating Loss Carryforwards [Line Items]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Expiration of operating loss carryforwards 2012 Minimum [Member] | Expiration Between 2017-2021 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2017 Minimum [Member] | Expiration Between 2022-2026 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2022 Minimum [Member] | Expiration Between 2027-2031 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2027 Minimum [Member] | Expiration Between 2029-2031 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2029 Maximum [Member] | Expiration Between 2012-2016 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2016 Maximum [Member] | Expiration Between 2017-2021 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2021 Maximum [Member] | Expiration Between 2022-2026 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2026 Maximum [Member] | Expiration Between 2027-2031 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2031 Maximum [Member] | Expiration Between 2029-2031 [Member] Operating Loss Carryforwards [Line Items] Expiration of operating loss carryforwards 2031

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share Jan. 28, 2012Jan. 29, 2011 data, unless otherwise specified Consolidated Balance Sheets [Abstract] Allowance for doubtful accounts and returns reserve $ 6.3 $ 6.0 Preferred stock, par value $ 0.01 $ 0.01 Preferred stock, shares authorized 25,000,000 25,000,000 Preferred stock, shares issued 0 0 Common stock, par value $ 0.01 $ 0.01 Common stock, shares authorized 240,000,000 240,000,000 Common stock, shares issued 75,000,000 75,000,000 Common stock, shares outstanding 60,577,077 61,466,038 Treasury stock, par value $ 0.01 $ 0.01 Treasury stock, shares 14,422,923 13,533,962

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill Jan. 28, 2012 Intangible Assets And Goodwill [Abstract] Intangible Assets And Note 4 — Intangible Assets and Goodwill Goodwill The following is a summary of the Company's intangible assets:

The Company recorded $31.1 million of impairment charges related to its indefinite-lived trademarks and acquired $1.4 million of other intangible assets during 2011.

Amortization expense on intangible assets is as follows:

52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Amortization expense on intangible assets $ 12.8 $ 16.2 $ 19.5

The Company expects amortization expense for the next five years to be as follows (in millions):

Year Amount 2012 $ 11.3 2013 9.7 2014 8.3 2015 6.0

The following is a summary of the carrying amount of goodwill, by reporting segment:

Payless PLG Domestic Wholesale Consolidated (dollars in millions) Balance as of January 30, 2010 $40.2 $ 239.6 $ 279.8 Goodwill Adjustments — — — Balance as of January 29, 2011 $40.2 $ 239.6 $ 279.8 Goodwill Impairment (10.0 ) — (10.0 ) Balance as of January 28, 2012 $30.2 $ 239.6 $ 269.8

The Company's accumulated goodwill impairment as of January 28, 2012 was $52.0 million, $42.0 million of which relates to the PLG Retail reporting segment and $10.0 million of which relates to the Payless Domestic reporting segment.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Exit Costs Jan. 28, 2012 Exit Costs [Abstract] Exit Costs Note 3 — Exit Costs In 2011, the Company announced that, as part of its efforts to optimize the performance of its Payless and Stride Rite store fleet, it would close approximately 475 under-performing and low- volume, non-strategic stores in the next three years. During 2011, the Company closed 352 stores, of which 298 of the stores are Payless locations in the U.S., Canada and Puerto Rico and 54 are Stride Rite Children's locations.

In accordance with Accounting Standards Codification ("ASC") 420, "Exit or Disposal Cost Obligations," costs associated with this plan, which consist of lease termination costs, employee termination costs, and other exit costs, are recorded at fair value. The Company estimates that these costs will total $20 million to $25 million of which $13.0 million was recorded in 2011; however, the ultimate financial impact of this plan is dependent upon the actual exit transactions. The lease termination costs will be recorded on the earlier of the date that the store is closed or lease buyouts are negotiated with the landlords. Employee severance costs, which consist of severance payments made to certain terminated associates, are recorded ratably over the associate's required service period from the date the termination has been communicated to the associate.

The significant components of the exit costs incurred as of January 28, 2012 are summarized as follows:

Accrual Balance as of Charges Cash Accrual Balance as of January 29, 2011 to Date Payments January 28, 2012 (dollars in millions) Lease termination costs $ — $ 10.6 $ (9.0 ) $ 1.6 Employee severance costs — 2.4 (0.7 ) 1.7 Total $ — $ 13.0 $ (9.7 ) $ 3.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Common Stock Repurchases Jan. 28, 2012 Common Stock Repurchases [Abstract] Common Stock Repurchases Note 15 — Common Stock Repurchases The Company has repurchased the following:

As of January 28, 2012, the Company had approximately $124 million of remaining common stock repurchase authorization from its Board of Directors. Under the terms of the Company's Senior Subordinated Notes, Term Loan Facility and Revolving Loan Facility, the Company is restricted on the amount of common stock it may repurchase. This limit may increase or decrease on a quarterly basis based upon the Company's net earnings.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Income Taxes Jan. 28, 2012 Income Taxes [Abstract] Income Taxes Note 11 — Income Taxes Earnings (loss) before income taxes and noncontrolling interest include the following components:

2011 2010 2009 (dollars in millions) Domestic $(172.1) $26.2 $2.1 Foreign 106.3 113.8 95.5 Total $(65.8 ) $140.0 $97.6

The provision for income taxes consisted of the following:

The reconciliation between the statutory federal income tax rate and the effective income tax rate as applied to continuing operations was as follows:

2011 2010 2009 (dollars in millions) Statutory federal income tax rate 35.0 % $(23.0 ) 35.0 % $49.0 35.0 % $34.2 State and local income taxes, net of federal tax benefit 7.8 (5.2 ) 0.9 1.3 0.5 0.4 Federal domestic valuation allowance (162.3) 106.8 — — — — State valuation allowance (42.0 ) 27.7 — — — — Rate differential on foreign earnings, net of valuation allowance 18.0 (11.8 ) (17.8) (24.9) (20.2) (19.7) Decrease in tax reserves 10.6 (7.0 ) (3.8 ) (5.3 ) (5.4 ) (5.3 ) Federal employment tax credits 3.2 (2.1 ) (1.1 ) (1.6 ) (1.6 ) (1.5 ) Other, net 2.0 (1.4 ) (0.8 ) (1.1 ) 1.3 1.3 Effective income tax rate (127.7)% 84.0 12.4 % $17.4 9.6 % $9.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company's effective tax rates have differed from the U.S. statutory rate principally due to the impact of its operations conducted in jurisdictions with rates lower than the U.S. statutory rate, the benefit of jurisdictional and employment tax credits, and either favorable or unfavorable discrete events. The Company has recorded net unfavorable discrete events of $75.8 million in 2011, and net favorable discrete events of $7.8 million and $7.9 million in 2010 and 2009, respectively. The discrete events in 2009 and 2010 relate primarily to the resolution of outstanding tax audits, and the unfavorable discrete events in 2011 relate primarily to the establishment of a valuation allowance against domestic deferred tax assets.

The rate differential on foreign earnings, net of valuation allowance, arises primarily from the Company's offshore entities in Asia (China, Hong Kong, Taiwan, and Vietnam) which source the majority of the Company's product and are subject to substantially lower local country income taxes. The Company's weighted average foreign effective tax rate for fiscal years 2011, 2010 and 2009 was 14.8%, 9.2% and 11.8%, respectively. The weighted average foreign effective tax rate is higher for 2011 due to payment of an audit settlement in Asia for years 2002 to 2009. Similarly, the rate differential on foreign earnings is lower than prior years due to the Asian audit settlement as well as US deferred taxes provided on certain foreign earnings which are not permanently reinvested.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

2011 2010 2009 (dollars in millions) Gross unrecognized tax benefits at beginning of year 52.1 58.3 55.0 Increases in tax positions for prior years 0.4 1.4 0.2 Decreases in tax positions for prior years — — — Increases in tax positions for current year 0.4 0.6 7.9 Settlements (0.2 ) (6.5 ) (3.4 ) Lapse in statute of limitations (20.9) (1.7 ) (1.4 ) Gross unrecognized tax benefits at end of year $31.8 $52.1 $58.3

The net amount of interest and penalties related to unrecognized tax benefits included in the provision for income taxes in the Consolidated Statements of (Loss) Earnings was a benefit of $4.3 million and $1.8 million in 2011 and 2010, respectively and an expense of $1.1 million in 2009. Accrued interest and penalties as of January 28, 2012, January 29, 2011 and January 30, 2010 were $3.0 million, $7.3 million, and $9.1 million, respectively. The Company's U.S. federal income tax returns have been examined by the Internal Revenue Service through 2007. The Company has certain state and foreign income tax returns in the process of examination or administrative appeal.

2011 2010 (dollars in millions) Deferred Tax Assets: Accrued expenses and reserves $103.4 $93.9 Tax net operating losses and tax credits 111.2 69.0 Other 8.9 11.1 Gross deferred tax assets 223.5 174.0 Less: valuation allowance (155.0) (15.4 ) Deferred tax assets $68.5 $158.6 Deferred Tax Liabilities: Short term assets basis differences $— $(5.5 ) Depreciation/amortization and basis differences (152.5) (164.5) Other (21.4 ) (13.2 ) Deferred Tax Liabilities (173.9) (183.2) Net deferred tax liability $(105.4) $(24.6 )

The deferred tax assets and (liabilities) are included on the Consolidated Balance Sheets as follows:

2011 2010 (dollars in millions) Current deferred income tax assets $7.2 $30.7 Current deferred income tax liability (0.9 ) — Deferred income tax assets (noncurrent) 10.7 10.1 Deferred income tax liability (noncurrent) (122.4) (65.4) $(105.4) $(24.6)

The Company's current year results generated a three year cumulative pre-tax loss in its domestic jurisdiction. The cumulative loss resulted in the Company recording a non-cash valuation allowance on domestic deferred tax assets of $105.7 million during the third quarter, and $33.1 million in the fourth quarter, as realization of the deferred tax assets was not more likely than not. Of the $138.8 million increase in domestic valuation allowance during 2011, $80.8 million relates to assets established in a prior year, and $58.0 million relates to deferred tax assets established in the current year. The Company's total valuation allowance at January 28, 2012 is $155.0 million comprised of the domestic valuation allowance of $149.0 million and a foreign valuation allowance of $6.0 million relating primarily to net operating losses in countries where a pattern of profitability has not yet been established. The establishment of a valuation allowance does not have any impact on cash, nor does such an allowance preclude the Company from using its loss carryforwards or utilizing other deferred tax assets in the future. If the valuation allowance on deferred tax assets is reversed in the future, the benefit will likely be recorded in the Consolidated Statement of (Loss) Earnings, except for $23.1 million related to AOCI, which will be credited to Collective Brands, Inc. shareowners' equity.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During 2011, the Company recorded a deferred income tax provision of $81.0 million in the Consolidated Statements of (Loss) Earnings. The Company recorded an increase to deferred tax assets of $0.3 million related to items within AOCI. The remaining change in its net deferred tax liabilities relates to foreign currency translation.

Valuation Expiration Amount Allowance (dollars in millions) Federal net operating losses 2031 $30.2 $ (30.2 ) State net operating losses 2012-2016 0.7 (0.7 ) State net operating losses 2017-2021 1.8 (1.8 ) State net operating losses 2022-2026 3.2 (3.2 ) State net operating losses 2027-2031 3.3 (3.3 ) Foreign net operating losses Indefinite 5.0 (4.8 ) Foreign net operating losses 2020 0.2 — Foreign net operating losses 2029-2031 4.4 — Total $48.8 $ (44.0 )

At January 28, 2012, deferred tax assets for federal, state and foreign tax credits are $59.4 million, less a valuation allowance of $58.2 million. These credits will expire as follows:

As of January 28, 2012, the Company has not provided US tax on its cumulative undistributed earnings of foreign subsidiaries of approximately $244 million, because it is the Company's intention to reinvest these earnings indefinitely. The calculation of the unrecognized deferred tax liability related to these earnings is complex and the calculation is not practicable. If earnings were distributed, the Company would be subject to US taxes and withholding taxes payable to various foreign governments. Based on the facts and circumstances at that time, the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company would determine whether a credit for foreign taxes already paid would be available to reduce or offset the US tax liability.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Earnings 12 Months Ended (Loss) Before Income Taxes And Noncontrolling Interest) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 In Millions, unless otherwise specified Income Taxes [Abstract] Domestic $ (172.1) $ 26.2 $ 2.1 Foreign 106.3 113.8 95.5 Net (loss) earnings from continuing operations before income taxes $ (65.8) $ 140.0 $ 97.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Fair Value Measurements Jan. 28, 2012 Fair Value Measurements [Abstract] Fair Value Measurements Note 7 — Fair Value Measurements The Company's estimates of fair value for financial assets and financial liabilities are based on the framework established in the fair value accounting guidance. The framework is based on the inputs used in valuation, gives the highest priority to quoted prices in active markets, and requires that observable inputs be used in the valuations when available. The three levels of the hierarchy are as follows:

Level 1: observable inputs such as quoted prices in active markets

Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly

Level 3: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

The following table presents financial assets and financial liabilities that the Company measures at fair value on a recurring basis (not including the Company's pension plan assets). The Company has classified these financial assets and liabilities in accordance with the fair value hierarchy:

Estimated Fair Value Measurements Quoted Prices in Significant Significant Active Markets Observable Other Unobservable Inputs (Level 1) Inputs (Level 2) (Level 3) Total Fair Value (dollars in millions) As of January 28, 2012 Financial assets: Money market funds $ 69.2 $ — $ — $ 69.2 Financial liabilities: Interest rate contract(1) $ — $ 2.0 $ — $ 2.0 As of January 29, 2011 Financial assets: Money market funds $ 174.8 $ — $ — $ 174.8 Financial liabilities:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Interest rate contract(1) $ — $ 7.4 $ — $ 7.4 (1) The fair value of the interest rate contract is determined using a mark-to-market valuation technique based on an observable interest rate yield curve and adjusting for credit risk.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months 1 Months 12 Months Ended 12 Months Ended Ended Ended Aug. 16, Aug. 17, Jul. 31, 2003 2011 Jan. 28, Aug. 17, Jan. 28, Long-Term Debt (Narrative) 2007 8.25% Senior Jan. 28, Jan. 28, Jan. Amended 2012 2007 2012 (Details) (USD $) Jan. 28, Revolving Subordinated 2012 2012 30, Revolving Term Loan Term Loan Eurodollar 2012 Loan Notes Due Minimum Maximum 2010 Loan Facility Facility Rate Plus Facility 2013 [Member] [Member] Facility [Member] [Member] [Member] [Member] [Member] [Member] Line of Credit Facility [Line Items] Term loan amount $ $ $ 610,300,000 484,400,000725,000,000 Amended and restated loan 350,000,000300,000,000 and guaranty Percentage of capital stock of foreign subsidiaries owned by 66.00% borrower or guarantors Term loan maturity period Aug. 17, 2014 Debt instrument amortize 1.00% percentage Excess cash flow percentage 25.00% Leverage ratio 1.0 2.0 Variable interest rate, plus 1.75% 1.75% 2.25% 2.75% LIBOR Revolving loan facility August 16, maturity date 2016 Debt instrument, face amount 200,000,000 Debt instrument sold 900,000 196,700,000 Debt instrument interest rate 8.25% Debt instrument maturity year 2013 Debt instrument discount $ 3,300,000 amortized to interest expense Debt instrument redemption 100.00% price percentage

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Long-Term Debt Jan. 28, 2012 Long-Term Debt [Abstract] Long-Term Debt Note 5 — Long-term Debt On August 17, 2007, the Company entered into a $725 million term loan (the "Term Loan Facility") and a $350 million Amended and Restated Loan and Guaranty Agreement (the "Revolving Loan Facility"). The Term Loan Facility ranks pari passu in right of payment and have the lien priorities specified in an intercreditor agreement executed by the administrative agent to the Term Loan Facility. On August 16, 2011, the Company amended its $350 million Revolving Loan Facility with a $300 million Second Amended and Restated Loan and Guaranty Agreement ("Amended Revolving Loan Facility" and collectively with the Term Loan Facility, the "Loan Facilities"). The Loan Facilities are senior secured loans guaranteed by substantially all of the assets of the borrower and the guarantors, with the Amended Revolving Loan Facility having first priority in accounts receivable, inventory and certain related assets and the Term Loan Facility having first priority in substantially all of the borrower's and the guarantors' remaining assets, including intellectual property, the capital stock of each domestic subsidiary, any intercompany notes owned by the borrower and the guarantors, and 66% of the stock of non-U.S. subsidiaries directly owned by borrower or a guarantor.

The Term Loan Facility will mature on August 17, 2014. The Term Loan Facility will amortize quarterly in annual amounts of 1.0% of the original amount, reduced ratably by any prepayments, with the final installment payable on the maturity date. The Term Loan Agreement provides for customary mandatory prepayments, subject to certain exceptions and limitations and in certain instances, reinvestment rights, from (a) the net cash proceeds of certain asset sales, insurance recovery events and debt issuances, each as defined in the Term Loan Agreement, and (b) 25% of excess cash flow, as defined in the Term Loan Agreement, subject to reduction. The mandatory prepayment is not required if the total leverage ratio, as defined in the Term Loan Agreement, is less than 2.0 to 1.0 at fiscal year end. Based on our excess cash flow projections as of January 28, 2012, we are not required to make such a mandatory prepayment. Loans under the Term Loan Facility will bear interest at the Borrower's option, at either (a) the Base Rate as defined in the Term Loan Facility agreement plus 1.75% per annum or (b) the Eurodollar (London Inter-Bank Offer Rate ("LIBOR")-indexed) Rate plus 2.75% per annum, with such margin to be agreed for any incremental term loans.

In July 2003, the Company sold $200.0 million of 8.25% Senior Subordinated Notes (the "Notes") for $196.7 million, due 2013. The discount of $3.3 million is being amortized to interest expense over the life of the Notes. The Notes are guaranteed by all of the Company's domestic subsidiaries. Interest on the Notes is payable semi-annually. Under the terms of the note covenants the Company may, on any one or more occasions, redeem all or a part of the Notes at the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document redemption price of 100.0% of its face value, plus accrued and unpaid interest, if any, on the Notes redeemed.

The Loan Facilities and the Senior Subordinated Notes contain various covenants including those that may limit the Company's ability to pay dividends, repurchase stock, accelerate the retirement of debt or make certain investments. As of January 28, 2012, the Company was in compliance with all of its covenants.

Long-term debt and capital-lease obligations were:

2011 2010 (dollars in millions) Term Loan Facility(1) $484.4 $489.4 Senior Subordinated Notes(2) 124.6 174.1 Revolving Loan Facility(3) — — Capital-lease obligations 0.9 1.0 Total debt 609.9 664.5 Less: current maturities of long-term debt 5.1 5.1 Long-term debt $604.8 $659.4 (1) As of January 28, 2012 and January 29, 2011, the fair value of the Company's Term Loan was $479.5 million, and $489.4 million, respectively, based on market conditions and perceived risks as of those dates. (2) As of January 28, 2012 and January 29, 2011, the fair value of the Company's senior subordinated notes was $125.6 million and $177.8 million, respectively, based on trading activity as of those dates. (3) As of January 28, 2012, the Company's borrowing base on its revolving loan facility was $300.0 million less $28.6 million in outstanding letters of credit, or $271.4 million. The variable interest rate, including the applicable variable margin at January 28, 2012, was 2.30%.

Future debt maturities as of January 28, 2012 are as follows:

Senior Capital- Subordinated Term Loan lease Notes Facility obligations Total (dollars in millions) 2012 $ — $ 5.0 $ 0.1 $5.1 2013 125.0 5.0 0.1 130.1 2014 — 474.4 0.1 474.5 2015 — — 0.1 0.1 2016 — — 0.1 0.1 Thereafter — — 0.4 0.4 Total $ 125.0 $ 484.4 $ 0.9 $610.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Derivatives Jan. 28, 2012 Derivatives [Abstract] Derivatives Note 6 — Derivatives The Company has entered into an interest rate contract for an initial amount of $540 million to hedge a portion of its variable rate $725 million Term Loan Facility ("interest rate contract"). The interest rate contract provides for a fixed interest rate of approximately 7.75%, portions of which mature on a series of dates through May of 2012. As of January 28, 2012, the Company has hedged $90 million of its Term Loan Facility.

The Company has also entered into a series of forward contracts to hedge a portion of certain foreign currency purchases ("foreign currency contracts"). The foreign currency contracts provide for a fixed exchange rate and mature over a series of dates through October of 2012. As of January 28, 2012 the Company has hedged $23.9 million of its forecasted foreign currency purchases. The fair value, amounts classified in other comprehensive (loss) income ("OCI"), and the amounts reclassified from accumulated other comprehensive (loss) income ("AOCI") on the foreign currency contracts were not significant for any periods presented.

The interest rate contract is designated as a cash flow hedging instrument. The change in the fair value of the interest rate contract is recorded as a component of AOCI and reclassified into earnings in the periods in which earnings are impacted by the hedged item. The following table presents the fair value of the Company's hedging portfolio related to its interest rate contract:

Location on Fair Value Consolidated January 28, January 29, Balance Sheet 2012 2011 (dollars in millions) Interest rate contract Other liabilities $ — $ 1.3 Interest rate contract Accrued expenses $ 2.0 $ 6.1

It is the Company's policy to enter into derivative instruments with terms that match the underlying exposure being hedged. As such, the Company's derivative instruments are considered highly effective, and the net gain or loss from hedge ineffectiveness is not significant. Realized gains or losses on the hedging instruments occur when a portion of the hedge settles or if it is probable that the forecasted transaction will not occur. The impact of the derivative instruments on the Consolidated Financial Statements is as follows:

Gain (Loss) Recognized Gain (Loss) Reclassified from in AOCI on Derivative AOCI into Earnings

52 Weeks Ended Location on Consolidated 52 Weeks Ended January 28, January 29, Statement of Earnings January 28, January 29, 2012 2011 (Loss) 2012 2011 (dollars in millions) Interest rate contract $ 1.0 $ (2.2 ) Interest expense $ (7.5 ) $ (7.5 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Pension Plans Jan. 28, 2012 Pension Plans [Abstract] Pension Plans Note 8 — Pension Plans The Company has a pension plan that covers a select group of management employees ("Payless Plan"), a pension plan that covers certain PLG employees ("PLG Plan"), and a pension plan that covers certain employees in Asia ("Asia Plan"). To calculate pension expense, the Company uses assumptions to estimate the total benefits ultimately payable to each management employee and allocates this cost to service periods. The actuarial assumptions used to calculate pension expense are reviewed annually by management for reasonableness. The measurement date used for these plans for the 2011 actuarial valuation was January 28, 2012.

Payless Plan The Payless Plan is a nonqualified, supplementary account balance defined benefit plan for a select group of management employees. The plan is an unfunded, noncontributory plan.

Included in AOCI are the following pre-tax amounts that have not yet been recognized in net periodic benefit cost:

Unrecognized Unrecognized Prior Service Losses/ Total Cost (Gains) AOCI (dollars in millions) Amount at January 29, 2011 $ 7.0 $ 12.7 $19.7 Amortization recognized (1.6 ) (1.5 ) (3.1 ) New amounts recognized — 4.4 4.4 Amount at January 28, 2012 $ 5.4 $ 15.6 $21.0

The following information provides a summary of the funded status of the plan, amounts recognized in the Consolidated Balance Sheets, and major assumptions used to determine these amounts:

2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at beginning of year $42.5 $46.6 Service cost 0.8 0.8 Interest cost 1.8 1.8 Actuarial loss 4.4 3.0 Settlement distribution — (7.2 ) Benefits paid (4.7 ) (2.5 ) Obligation at end of year $44.8 $42.5 Assumptions:

The components of net periodic benefit costs for the plan were:

Estimated future benefit payments for the next five years and the aggregate amount for the following five years for this plan are:

(dollars in millions) 2012 $ 4.1 2013 4.1 2014 4.2 2015 4.3 2016 4.3 2017-2021 17.7

Included in AOCI are the following pre-tax amounts that have not yet been recognized in net periodic pension cost:

(dollars in millions) Amount at January 31, 2010 $ 20.6 Amortization recognized (1.1 ) New amounts recognized 16.9 Amount at January 29, 2011 $ 36.4

The following tables present information about benefit obligations, plan assets, annual expense, assumptions and other information about PLG's defined benefit pension plan:

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 2011 2010 (dollars in millions) Change in projected benefit obligation: Obligation at prior measurement date $85.5 $78.4 Interest cost 4.8 4.6 Actuarial loss 13.4 5.5 Benefits paid (3.3 ) (3.0 ) Obligation at end of year $100.4 $85.5

Assumptions: Discount rate 4.70 % 5.75% Salary increases n/a n/a

The following table summarizes the change in plan assets:

Underfunded status at end of year $(32.0) $(16.1)

The $32.0 million and $16.1 million liabilities recognized as of January 28, 2012 and January 29, 2011, respectively, are included in other long-term liabilities on the Consolidated Balance Sheet.

The components of net periodic benefit costs for the plan were:

2011 2010 2009 (dollars in millions) Interest cost $4.8 $4.6 $4.5 Expected return on assets (5.4 ) (5.0 ) (3.6 ) Amortization of actuarial loss 1.1 1.3 1.8 Net periodic benefit cost $0.5 $0.9 $2.7

Assumptions: Discount rate 5.75% 5.90% 6.25% Expected long-term return on plan assets 8.00% 8.25% 8.25% Salary increases n/a n/a n/a

Both the accumulated and projected benefit obligations as of January 28, 2012 and January 29, 2011 were $100.4 million and $85.5 million, respectively.

The Company expects $2.6 million of pre-tax net loss included in AOCI to be recognized in net periodic benefit cost during fiscal year 2012.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to be earned over the life of the plan. This basis is consistent with the prior year. The calculation of pension expense is dependent on the determination of the assumptions used. A 100 basis point change in the discount rate and a 100 basis point change in the expected long-term return on assets would increase the Company's annual pension expense by $1.0 million and $0.7 million, respectively. As the result of stopping the accrual of future benefits, a salary growth assumption is no longer applicable.

The Company's written investment policy for the PLG Plan establishes investment principles and guidelines and defines the procedures that will be used to control, evaluate and monitor the investment practices for the plan. An administrative committee designated by the Board of Directors provides investment oversight for the plan. Stated investment objectives are: Maintain a portfolio of secure assets of appropriate liquidity and diversification that will generate investment returns, combined with expected future contributions, that should be sufficient to maintain the plan's funded state or improve the funding level of the plan if it is in deficit. To control the long-term costs of the plan by maximizing return on the assets subject to meeting the objectives above.

The plan's target allocation per the investment policy and weighted average asset allocations by asset category are:

The PLG pension plan assets are valued at fair value. The Company's estimates of fair value for these pension plan assets are based on the framework established in the fair value accounting guidance. The three levels of the hierarchy are as follows: Level 1: observable inputs such as quoted prices in active markets Level 2: inputs other than the quoted prices in active markets that are observable either directly or indirectly Level 3: unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The following table presents the PLG pension plan assets that the Company measures at fair value on a recurring basis. The Company has classified these financial assets in accordance with the fair value hierarchy:

Estimated Fair Value Measurements Quoted Significant Prices in Observable Significant Active Other Unobservable Total Markets Inputs Inputs Fair (Level 1) (Level 2) (Level 3) Value (dollars in millions) As of January 28, 2012: Domestic equity securities $ 3.6 $ 32.1 $ — $35.7 International equity securities 7.7 — — 7.7 Domestic fixed income securities 23.7 — — 23.7 Cash 1.3 — — 1.3 Total $ 36.3 $ 32.1 $ — $68.4 As of January 29, 2011: Domestic equity securities $ 3.5 $ 34.2 $ — $37.7 International equity securities — 8.0 — 8.0 Domestic fixed income securities 22.2 — — 22.2 Cash 1.5 — — 1.5 Total $ 27.2 $ 42.2 $ — $69.4

The Company contributed $0.4 million to this pension plan during the 2011 fiscal year and plans to make $4.0 million of contributions during the 2012 fiscal year. The Company's future contributions will depend upon market conditions, interest rates and other factors and may vary significantly in future years based upon the plan's funded status as of the 2012 measurement date.

Estimated future benefit payments for the next five years and the aggregate amount for the following five years for this plan are:

(dollars in millions) 2012 $ 3.6 2013 3.7 2014 3.9 2015 4.2 2016 4.4 2017-2021 25.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Consolidated Balance Sheet. Of the $5.0 million liability recognized as of January 28, 2012, $0.1 million is recorded in accrued expenses and $4.9 million is recorded in other liabilities. Of the $5.2 million liability recognized as of January 29, 2011, $0.1 million was recorded in accrued expenses and $5.1 million was recorded in other liabilities. The components of the funded status, the components of net periodic benefit costs and the estimated future benefit payments for the next five years for the Asia Plan were not significant for 2010 or 2011.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives (Fair Value Of Company's Hedging Portfolio Related To Interest Rate Contract) (Details) Jan. 28, 2012Jan. 29, 2011 (Interest Rate Contract [Member], USD $) In Millions, unless otherwise specified Other Liabilities [Member] Derivatives, Fair Value [Line Items] Fair value of derivative liabilities $ 1.3 Accrued Expenses [Member] Derivatives, Fair Value [Line Items] Fair value of derivative liabilities $ 2.0 $ 6.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Provision For 12 Months Ended Income Taxes) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 In Millions, unless otherwise specified Income Taxes [Abstract] Federal $ (11.8) $ 0.6 $ 1.2 State and local 0.9 1.6 0.3 Foreign 13.9 11.0 4.1 Current tax provision 3.0 13.2 5.6 Federal 58.8 3.8 3.3 State and local 21.6 (0.3) 0.1 Foreign 0.6 0.7 0.4 Deferred tax provision 81.0 4.2 3.8 Total provision $ 84.0 $ 17.4 $ 9.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Fair Value Measurements (Financial Assets And Liabilities At Fair Value, Measured On A Recurring Jan. 28, Jan. 29, Basis) (Details) (Fair Value, 2012 2011 Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified Money Market Funds [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial assets $ 69.2 $ 174.8 Interest Rate Contract [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial liabilities 2.0 [1] 7.4 [1] Quoted Prices In Active Markets (Level 1) [Member] | Money Market Funds [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial assets 69.2 174.8 Significant Observable Other Inputs (Level 2) [Member] | Interest Rate Contract [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial liabilities 2.0 [1] 7.4 [1] Significant Unobservable Inputs (Level 3) [Member] | Money Market Funds [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial assets Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Contract [Member] Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] Financial liabilities [1] [1] [1]The fair value of the interest rate contract is determined using a mark-to-market valuation technique based on an observable interest rate yield curve and adjusting for credit risk.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Environmental Liability 12 Months Ended (Details) (USD $) In Millions, unless otherwise Jan. 28, 2012 specified Environmental Liability [Abstract] Total environmental liability $ 0.5 Environmental liability included as accrued expense 0.1 Environmental liability included in other long-term liabilities 0.4 Total estimated costs related to environmental liability 6.3 Environmental liability expense paid $ 5.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Derivatives (Narrative) Jan. 28, (Details) (USD $) 2012 Derivative [Line Items] Term loan facility, hedged $ 90,000,000 Fair value of the interest rate contract recorded in AOCI to be recognized in earnings during the 2,000,000 next 12 months Interest Rate Contract [Member] Derivative [Line Items] Term loan facility, hedged 540,000,000 Fixed interest rate 7.75% Foreign Currency Contracts [Member] Derivative [Line Items] Term loan facility, hedged 23,900,000 Term Loan Facility [Member] | Interest Rate Contract [Member] Derivative [Line Items] Face amount of variable rate term loan facility $ 725,000,000

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Earnings Per Share (Details) 12 Months Ended (USD $) In Millions, except Share Jan. 28, Jan. 29, 2011 Jan. 30, 2010 data, unless otherwise 2012 specified Earnings Per Share [Line Items] Net (loss) earnings attributable to Collective Brands, Inc. from $ (160.2) $ 112.8 $ 82.6 continuing operations Less: net earnings allocated to participating securities 1.8 [1] 1.1 [1] Net (loss) earnings available to common shareholders from continuing $ (160.2) $ 111.0 $ 81.5 operations Weighted average shares outstanding - basic 60,230,00062,579,000 63,127,000 Weighted average shares outstanding - diluted 60,230,00063,339,000 63,493,000 Basic (loss) earnings per share attributable to common shareholders $ (2.66) $ 1.77 $ 1.29 from continuing operations Diluted (loss) earnings per share attributable to common shareholders $ (2.66) $ 1.75 $ 1.28 from continuing operations Number of shares excluded from stock options and stock-settled SARs 3,800,000 4,800,000 for calculation of diluted earnings per share Stock Options [Member] Earnings Per Share [Line Items] Net effect of dilutive stock options and stock-settled SARs 154,000 139,000 Stock Appreciation Rights (SARs) [Member] Earnings Per Share [Line Items] Net effect of dilutive stock options and stock-settled SARs 606,000 227,000 [1]Net earnings allocated to participating securities is calculated based upon a weighted average percentage of participating securities in relation to total shares outstanding. Net losses are not allocated to participating securities.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Quarterly Results (Tables) Jan. 28, 2012 Quarterly Results [Abstract] Schedule Of Quarterly Financial Information 2011 Quarter First Second Third Fourth(2) Year (dollars in millions, except per share) Net sales $869.0 $882.4 $894.4 $815.9 $3,461.7 Gross margin 309.9 208.5 283.8 227.3 1,029.5 Net earnings (loss) 28.2 (33.3 ) (111.7) (33.0 ) (149.8 ) Net earnings attributable to noncontrolling interests (1.8 ) (1.7 ) (2.6 ) (4.3 ) (10.4 ) Net earnings (loss) attributable to Collective Brands, Inc. $26.4 $(35.0 ) $(114.3) $(37.3 ) $(160.2 ) Basic earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.43 $(0.58 ) $(1.91 ) $(0.62 ) $(2.66 ) Diluted earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.42 $(0.58 ) $(1.91 ) $(0.62 ) $(2.66 )

2010 Quarter First Second Third Fourth Year (dollars in millions, except per share) Net sales $878.8 $841.3 $881.8 $773.8 $3,375.7 Gross margin 336.7 289.1 329.2 246.2 1,201.2 Net earnings (loss) 56.0 22.0 50.2 (5.6 ) 122.6 Net earnings attributable to noncontrolling interests (1.8 ) (0.9 ) (2.6 ) (4.5 ) (9.8 ) Net earnings (loss) attributable to Collective Brands, Inc. $54.2 $21.1 $47.6 $(10.1 ) $112.8 Basic earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.84 $0.33 $0.75 $(0.16 ) $1.77 Diluted earnings (loss) per share attributable to Collective Brands, Inc. common shareholders:(1) $0.83 $0.32 $0.75 $(0.16 ) $1.75 (1) Earnings (loss) per share were computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding. (2) In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant 12 Months Ended Accounting Policies (Asset Impairment Charges By Reporting Segment) (Details) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 (USD $) In Millions, unless otherwise specified Summary of Significant Accounting Policies [Line Items] Total asset impairment charges $ 42.2 $ 8.8 $ 6.0 Payless Domestic [Member] Summary of Significant Accounting Policies [Line Items] Total asset impairment charges 32.9 6.3 4.8 Payless International [Member] Summary of Significant Accounting Policies [Line Items] Total asset impairment charges 5.2 1.1 0.2 PLG Wholesale [Member] Summary of Significant Accounting Policies [Line Items] Total asset impairment charges 0.7 PLG Retail [Member] Summary of Significant Accounting Policies [Line Items] Total asset impairment charges $ 3.4 $ 1.4 $ 1.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Accrued Expenses And 12 Months Ended Other Liabilities Jan. 28, 2012 Accrued Expenses And Other Liabilities [Abstract] Accrued Expenses And Other Liabilities Note 13 — Accrued Expenses and Other Liabilities Major components of accrued expenses included:

2011 2010 (dollars in millions) Profit sharing, bonus and salaries $47.3 $76.0 Sales, use and other taxes 27.3 30.3 Accrued construction in process 9.0 8.4 Worker's compensation and general liability insurance reserves 8.3 9.8 Accrued interest 6.8 10.8 Accrued occupancy 6.3 6.9 Accrued excess property 5.8 0.1 Straight-line rent 5.6 5.8 Accrued income taxes 4.6 5.1 Current portion of pension plan 4.2 4.9 Accrued advertising 4.0 4.4 Accrued royalty 3.4 4.0 Other accrued expenses 14.4 17.9 Total $147.0 $184.4

Major components of other liabilities included:

2011 2010 (dollars in millions) Pension plans $77.6 $58.9 Straight-line rent 29.0 30.1 Worker's compensation and general liability insurance reserves 20.9 19.0 Noncurrent income taxes 20.0 44.7 Deferred tenant improvement allowances, net 18.9 23.5 Deferred compensation 15.6 15.8 Asset retirement obligation 7.1 7.9 Long-term compensation 7.4 5.1 Other liabilities 6.3 7.4 Total $202.8 $212.4

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Environmental Liability Jan. 28, 2012 Environmental Liability [Abstract] Environmental Liability Note 18 — Environmental Liability The Company owns a property with a related environmental liability. The liability as of January 28, 2012 was $0.5 million, $0.1 million of which was included as an accrued expense and $0.4 million of which was included in other long-term liabilities in the accompanying Consolidated Balance Sheet. The assessment of the liability and the associated cost were based upon available information after consultation with environmental engineers, consultants and attorneys assisting the Company in addressing these environmental issues. The Company estimates the total cost related to this environmental liability to be $6.3 million, including $5.8 million of costs that have already been paid. Actual costs to address the environmental conditions may change based upon further investigations, the conclusions of regulatory authorities about information gathered in those investigations and due to the inherent uncertainties involved in estimating conditions in the environment and the costs of addressing such conditions.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Lease Obligations (Rental 12 Months Ended Expense For Operating Leases) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010 In Millions, unless otherwise specified Lease Obligations [Abstract] Minimum rentals $ 327.9 $ 314.4 $ 313.5 Contingent rentals based on sales 8.7 7.8 7.4 Real property rentals 336.6 322.2 320.9 Equipment rentals 0.1 4.4 4.7 Total $ 336.7 $ 326.6 $ 325.6

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary Of Significant 12 Months Ended Accounting Policies Jan. 28, 2012 Jan. 29, 2011 Jan. 30, 2010 (Narrative) (Details) (USD $) Summary of Significant Accounting Policies [Line Items] Number of business lines 3 Number of weeks in fiscal years 52 52 52 Selling, general and administrative expenses $ $ $ 982,400,000 1,046,300,0001,011,500,000 Depreciation expense 116,000,000 119,500,000 121,500,000 Assets, carrying value 2,047,200,0002,268,500,0002,284,300,000 Asset impairment charges 42,200,000 8,800,000 6,000,000 Cumulative translation adjustments included in accumulated other 18,600,000 19,700,000 12,800,000 comprehensive (loss) income Foreign currency transaction gain (losses), recorded 3,400,000 (300,000) 500,000 Advertising And Sales Promotion Costs [Member] Summary of Significant Accounting Policies [Line Items] Selling, general and administrative expenses 176,900,000 159,200,000 145,500,000 Cash And Cash Equivalents [Member] Summary of Significant Accounting Policies [Line Items] Amounts due from banks and credit card companies 14,000,000 13,500,000 Maximum [Member] Summary of Significant Accounting Policies [Line Items] Cash equivalents original maturity term, in months 3 Buildings [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, estimated useful life, minimum in years 10 Property and equipment, estimated useful life, maximum in years 30 Leasehold Improvements [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, estimated useful life, maximum in years 10 Furniture, Fixtures And Equipment [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, estimated useful life, minimum in years 2 Property and equipment, estimated useful life, maximum in years 10 Property Under Capital Lease [Member] Summary of Significant Accounting Policies [Line Items] Property and equipment, estimated useful life, minimum in years 10 Property and equipment, estimated useful life, maximum in years 30 Assets Under Impairment Review For 52 Weeks Ended January 28, 2012 [Member] Summary of Significant Accounting Policies [Line Items] Assets, carrying value 56,000,000 Assets, fair value 13,800,000 Other Long-Term Liabilities [Member]

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Summary of Significant Accounting Policies [Line Items] Asset retirement obligation liability 7,100,000 8,100,000 Other Assets [Member] Summary of Significant Accounting Policies [Line Items] Company's investments in COLI policies $ 21,800,000 $ 21,600,000 Favorable Lease Rights [Member] Summary of Significant Accounting Policies [Line Items] Intangible assets, weighted-average useful life, years 3 Trademarks And Other Intangible Assets [Member] Summary of Significant Accounting Policies [Line Items] Intangible assets, estimated useful life, minimum in years 3 Intangible assets, estimated useful life, maximum in years 20 Customer Relationships [Member] Summary of Significant Accounting Policies [Line Items] Intangible assets, estimated useful life, years 8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of 12 Months Ended Senior Notes - Consolidating Financial Information Jan. 28, 2012 (Narrative) (Details) Guarantor Subsidiaries [Member] Percentage of ownership in guarantor/non-guarantor subsidiaries 100.00% Non-Guarantor Subsidiaries [Member] Percentage of ownership in guarantor/non-guarantor subsidiaries 60.00%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months Ended (Tables) Jan. 28, 2012 Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Summary Of Stock Options Activity 52 Weeks Ended January 28, 2012 As of January 28, 2012 Weighted Weighted Average Average Aggregate Exercise Remaining Intrinsic Options Price Contractual Life Value (units in thousands) (in years) (in millions) Outstanding at beginning of period 1,461 $ 19 Granted — — Exercised (81 ) 17 Forfeited or expired (220 ) 20 Outstanding at end of period 1,160 19 1 $ — Vested and expected to vest at end of period 1,160 19 1 $ — Exercisable at end of period 1,160 19 1 $ — Transactions For Nonvested Shares And Share Units 52 Weeks Ended January 28, 2012 Nonvested Shares Weighted Average and Share Units Grant Date Fair Value (shares in thousands) Nonvested at beginning of period 865 $ 17 Granted 437 19 Vested (467 ) 16 Forfeited or expired (163 ) 19 Nonvested at end of period 672 19 Assumptions On Fair Value Of Stock-Settled SARs Granted 52 Weeks Ended

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document January 28, January 29, January 30, 2012 2011 2010 Risk-free interest rate 1.5 % 1.9 % 1.7 % Expected dividend yield — % — % — % Expected appreciation vehicle life (in years) 4 4 4 Weighted-average expected volatility 62 % 60 % 58 % Share-Based Compensation Expense 52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions) Cost of sales $ 3.2 $ 4.1 $ 4.1 Selling, general and administrative expenses 9.5 12.5 12.3 Share-based compensation expense before income taxes $ 12.7 $ 16.6 $ 16.4 Stock-Settled SARs [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Transactions For Stock-Settled/Cash-Settled SARs As of January 28, 2012 Stock- Weighted Average Settled Weighted Average Remaining Aggregate SARs Exercise Price Contractual Life Intrinsic Value (units in thousands) (in years) (in millions) Outstanding at beginning of period 5,513 $ 18 Granted 408 17 Exercised (628 ) 12 Forfeited or expired (433 ) 22 Outstanding at end of period1 4,860 19 3 $ 6.4 Vested and expected to vest at end of period 4,821 19 3 $ 6.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Exercisable at end of period 3,580 20 3 $ 3.6 Cash-Settled SARs [Member] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Transactions For Stock-Settled/Cash-Settled SARs 52 Weeks Ended January 28, 2012 Cash-Settled Weighted Average SARs Grant Price (shares in thousands) Outstanding at beginning of period 145 $ 21 Granted — — Vested (1 ) 12 Forfeited or expired (20 ) 16 Outstanding at end of period 124 21 Exercisable or convertible at end of period 107 22

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of Senior Notes - Consolidating Financial Information (Condensed Consolidating Jan. 28, 2012Jan. 29, 2011Jan. 30, 2010Jan. 31, 2009 Balance Sheet) (Details) (USD $) In Millions, unless otherwise specified Cash and cash equivalents $ 181.3 $ 324.1 $ 393.5 $ 249.3 Accounts receivable, net 146.0 114.4 Inventories 563.4 531.7 Current deferred income taxes 7.2 30.7 Prepaid expenses 61.5 55.1 Other current assets 21.8 22.2 Total current assets 981.2 1,078.2 Property and equipment, net 369.4 432.3 Intangible assets, net 384.7 428.4 Goodwill 269.8 279.8 279.8 Deferred income taxes 10.7 10.1 Other assets 31.4 39.7 Total Assets 2,047.2 2,268.5 2,284.3 Current maturities of long-term debt 5.1 5.1 Accounts payable 291.6 287.4 Accrued expenses 147.0 184.4 Total current liabilities 443.7 476.9 Long-term debt 604.8 659.4 Deferred income taxes 122.4 65.4 Other liabilities 202.8 212.4 Commitments and contingencies Collective Brands, Inc. shareowners' equity 644.8 822.9 Noncontrolling interests 28.7 31.5 Total equity 673.5 854.4 763.9 646.0 Total Liabilities and Equity 2,047.2 2,268.5 Parent Company [Member] Prepaid expenses 35.6 28.4 Total current assets 35.6 28.4 Other assets 1,409.9 1,538.6 Total Assets 1,445.5 1,567.0 Accrued expenses 209.7 103.8 Total current liabilities 209.7 103.8 Long-term debt 587.5 637.0 Other liabilities 3.5 3.3 Commitments and contingencies Collective Brands, Inc. shareowners' equity 644.8 822.9

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total equity 644.8 822.9 Total Liabilities and Equity 1,445.5 1,567.0 Guarantor Subsidiaries [Member] Cash and cash equivalents 46.3 122.4 279.8 141.7 Accounts receivable, net 127.9 103.4 Inventories 434.0 418.5 Current deferred income taxes 23.1 Prepaid expenses 16.3 15.8 Other current assets 356.0 276.9 Total current assets 980.5 960.1 Property and equipment, net 302.3 361.3 Intangible assets, net 358.7 399.4 Goodwill 133.5 142.9 Other assets 979.5 916.4 Total Assets 2,754.5 2,780.1 Current maturities of long-term debt 5.1 5.1 Accounts payable 147.8 140.0 Accrued expenses 384.4 376.4 Total current liabilities 537.3 521.5 Long-term debt 504.2 484.3 Deferred income taxes 121.3 64.0 Other liabilities 183.2 191.9 Commitments and contingencies Collective Brands, Inc. shareowners' equity 1,408.5 1,518.4 Total equity 1,408.5 1,518.4 Total Liabilities and Equity 2,754.5 2,780.1 Non-Guarantor Subsidiaries [Member] Cash and cash equivalents 135.0 201.7 113.7 107.6 Accounts receivable, net 36.7 21.2 Inventories 124.1 122.5 Current deferred income taxes 7.2 7.6 Prepaid expenses 9.6 10.9 Other current assets 160.3 150.9 Total current assets 472.9 514.8 Property and equipment, net 67.1 71.0 Intangible assets, net 26.0 29.0 Goodwill 136.3 136.9 Deferred income taxes 10.7 10.1 Other assets 25.7 22.1 Total Assets 738.7 783.9 Accounts payable 158.8 237.1 Accrued expenses 46.5 32.9 Total current liabilities 205.3 270.0 Long-term debt 7.9 67.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Deferred income taxes 1.1 1.4 Other liabilities 16.1 17.2 Commitments and contingencies Collective Brands, Inc. shareowners' equity 479.6 396.7 Noncontrolling interests 28.7 31.5 Total equity 508.3 428.2 Total Liabilities and Equity 738.7 783.9 Eliminations [Member] Accounts receivable, net (18.6) (10.2) Inventories 5.3 (9.3) Other current assets (494.5) (405.6) Total current assets (507.8) (425.1) Other assets (2,383.7) (2,437.4) Total Assets (2,891.5) (2,862.5) Accounts payable (15.0) (89.7) Accrued expenses (493.6) (328.7) Total current liabilities (508.6) (418.4) Long-term debt (494.8) (529.0) Commitments and contingencies Collective Brands, Inc. shareowners' equity (1,888.1) (1,915.1) Total equity (1,888.1) (1,915.1) Total Liabilities and Equity $ (2,891.5) $ (2,862.5)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Consolidated Statements Of OutstandingAdditional Accumulated Non- Equity And Comprehensive Retained Comprehensive Common Paid-In Other Controlling (Loss) Income (USD $) Earnings Income (Loss) Total Stock Capital Comprehensive Interests In Millions, except Share [Member] [Member] [Member] [Member] Loss [Member] [Member] data in Thousands Beginning Balance at Jan. 31, $ $ 0.7 $ 17.8 $ 639.4 $ (35.6) $ 23.7 2009 646.0 Beginning Balance Shares at 63,725 Jan. 31, 2009 Net earnings (loss) 82.7 5.6 88.3 88.3 Translation adjustments 8.0 0.1 8.1 8.1 Net change in fair value of 3.9 3.9 3.9 derivatives, net of taxes Changes in unrecognized amounts of pension benefits, 1.4 1.4 1.4 net of taxes Issuances of common stock 8.2 8.2 under stock plans Issuances of common stock 882 under stock plans, Shares Purchases of common stock (7.6) (7.6) Purchases of common stock, (389) (389) Shares Amortization of unearned 5.4 5.4 nonvested shares Stock option expense 10.9 10.9 Restricted stock cancellation, (62) Shares Contributions from 5.5 5.5 noncontrolling interests Distributions to noncontrolling (6.2) (6.2) interests Comprehensive (loss) income 101.7 Comprehensive income attributable to noncontrolling (5.7) interests Comprehensive (loss) income attributable to Collective 96.0 Brands, Inc. Ending Balance at Jan. 30, 0.7 34.7 722.1 (22.3) 28.7 763.9 2010 Ending Balance Shares at Jan. 64,156 30, 2010 Net earnings (loss) 112.8 9.8 122.6 122.6 Translation adjustments 6.2 0.7 6.9 6.9 Net change in fair value of 5.0 5.0 5.0 derivatives, net of taxes

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Changes in unrecognized amounts of pension benefits, 1.0 1.0 1.0 net of taxes Issuances of common stock 10.7 10.7 under stock plans Issuances of common stock 1,183 under stock plans, Shares Purchases of common stock (0.1) (63.8) (63.9) Purchases of common stock, (3,834) (3,834) Shares Amortization of unearned 7.9 7.9 nonvested shares Stock option expense 8.0 8.0 Restricted stock cancellation, (39) Shares Contributions from 3.1 3.1 noncontrolling interests Distributions to noncontrolling (10.8) (10.8) interests Comprehensive (loss) income 135.5 Comprehensive income attributable to noncontrolling (10.5) interests Comprehensive (loss) income attributable to Collective 125.0 Brands, Inc. Ending Balance at Jan. 29, 0.6 (2.5) 834.9 (10.1) 31.5 854.4 2011 Ending Balance Shares at Jan. 61,466 29, 2011 Net earnings (loss) (160.2) 10.4 (149.8) (149.8) Translation adjustments (1.1) (1.1) (1.1) Net change in fair value of 6.4 6.4 6.4 derivatives, net of taxes Changes in unrecognized amounts of pension benefits, (16.8) (16.8) (16.8) net of taxes Issuances of common stock 1.8 1.8 under stock plans Issuances of common stock 434 under stock plans, Shares Purchases of common stock (9.8) (8.9) (18.7) Purchases of common stock, (1,205) (1,205) Shares Amortization of unearned 6.3 6.3 nonvested shares Stock option expense 4.2 4.2 Restricted stock cancellation, (118) Shares

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Distributions to noncontrolling (13.2) (13.2) interests Comprehensive (loss) income (161.3) Comprehensive income attributable to noncontrolling (10.4) interests Comprehensive (loss) income attributable to Collective (171.7) Brands, Inc. Ending Balance at Jan. 28, $ $ 0.6 $ 665.8 $ (21.6) $ 28.7 2012 673.5 Ending Balance Shares at Jan. 60,577 28, 2012

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Income Taxes (Major Components Of Deferred Tax Assets (Liabilities)) Jan. 28, 2012Jan. 29, 2011 (Details) (USD $) In Millions, unless otherwise specified Income Taxes [Abstract] Accrued expenses and reserves $ 103.4 $ 93.9 Tax net operating losses and tax credits 111.2 69.0 Other 8.9 11.1 Gross deferred tax assets 223.5 174.0 Less: valuation allowance (155.0) (15.4) Deferred tax assets 68.5 158.6 Short term assets basis differences (5.5) Depreciation/amortization and basis differences(152.5) (164.5) Other (21.4) (13.2) Deferred Tax Liabilities (173.9) (183.2) Net deferred tax liability $ (105.4) $ (24.6)

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Quarterly Results Jan. 28, 2012 Quarterly Results [Abstract] Quarterly Results Note 2 — Quarterly Results (Unaudited) The tables below summarize quarterly results for the last two years. Quarterly results are determined in accordance with annual accounting policies and all adjustments (consisting only of normal recurring adjustments, except as noted below) necessary for a fair statement of the results for the interim periods have been included; however, certain items are based upon estimates for the entire year.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) Earnings (loss) per share were computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in average quarterly shares outstanding. (2) In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Intangible Assets And 12 Months Ended Goodwill (Expected Amortization Expense For The Next Five Years) Jan. 28, 2012 (Details) (USD $) In Millions, unless otherwise specified Intangible Assets And Goodwill [Abstract] 2012 $ 11.3 2013 9.7 2014 8.3 2015 6.0 2016 $ 2.0

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Share-Based Compensation 12 Months Ended (Share-Based Compensation Expense) (Details) (USD $) Jan. 28, Jan. 29, Jan. 30, In Millions, unless otherwise 2012 2011 2010 specified Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] Share-based compensation expense before income taxes $ 12.7 $ 16.6 $ 16.4 Cost Of Sales [Member] Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] Allocated share-based compensation expense 3.2 4.1 4.1 Selling, General And Administrative Expenses [Member] Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] Allocated share-based compensation expense $ 9.5 $ 12.5 $ 12.3

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Subsidiary Guarantors Of 3 Months Ended 12 Months Ended Senior Notes - Consolidating Financial Information (Condensed Consolidating Oct. Jul. Apr. Jan. Oct. Jul. May Jan. Jan. Jan. 28, Jan. 29, Statements Of (Loss) 29, 30, 30, 29, 30, 31, 01, 28, 30, 2012 2011 Earnings) (Details) (USD $) 2011 2011 2011 2011 2010 2010 2010 2012 2010 In Millions, unless otherwise specified Net sales $ [1] $ $ $ $ $ $ $ $ $ $ 815.9 894.4 882.4 869.0 773.8 881.8 841.3 878.8 3,461.73,375.7 3,307.9 Cost of sales 2,432.22,174.5 2,166.9 Gross margin 227.3 [1] 283.8 208.5 309.9 246.2 329.2 289.1 336.7 1,029.51,201.2 1,141.0 Selling, general and 1,046.31,011.5 982.4 administrative expenses Impairment of goodwill 10.0 Restructuring charges 0.1 Operating (loss) profit from (26.8) 189.7 158.5 continuing operations Interest expense 38.9 48.7 60.8 Interest income (0.4) (0.7) (1.1) Loss on early extinguishment 0.5 1.7 1.2 of debt Net (loss) earnings from continuing operations before (65.8) 140.0 97.6 income taxes (Benefit) provision for income 84.0 17.4 9.4 taxes Net (loss) earnings from (149.8) 122.6 88.2 continuing operations Loss from discontinued 0.1 operations, net of income taxes Net (loss) earnings (33.0) [1] (111.7) (33.3) 28.2 (5.6) 50.2 22.0 56.0 (149.8) 122.6 88.3 Net earnings attributable to (4.3) [1] (2.6) (1.7) (1.8) (4.5) (2.6) (0.9) (1.8) (10.4) (9.8) (5.6) noncontrolling interests Net (loss) earnings attributable (37.3) [1] (114.3)(35.0) 26.4 (10.1) 47.6 21.1 54.2 (160.2) 112.8 82.7 to Collective Brands, Inc. Parent Company [Member] Selling, general and 4.0 4.1 2.1 administrative expenses Operating (loss) profit from (4.0) (4.1) (2.1) continuing operations Interest expense 49.9 45.3 24.4 Loss on early extinguishment 0.5 1.0 of debt

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Equity in earnings of 105.8 (144.7) (100.1) subsidiaries Net (loss) earnings from continuing operations before (160.2) 95.3 72.6 income taxes (Benefit) provision for income (17.5) (10.1) taxes Net (loss) earnings from 82.7 continuing operations Net (loss) earnings (160.2) 112.8 82.7 Net (loss) earnings attributable (160.2) 112.8 82.7 to Collective Brands, Inc. Guarantor Subsidiaries [Member] Net sales 2,907.12,950.8 2,917.0 Cost of sales 2,123.22,015.6 2,022.8 Gross margin 783.9 935.2 894.2 Selling, general and 902.3 855.8 832.0 administrative expenses Impairment of goodwill 10.0 Restructuring charges 0.1 Operating (loss) profit from (128.4) 79.4 62.1 continuing operations Interest expense 25.5 33.4 43.4 Interest income (36.2) (30.7) (8.1) Loss on early extinguishment 1.7 0.2 of debt Equity in earnings of (81.4) (92.6) (88.4) subsidiaries Net (loss) earnings from continuing operations before (36.3) 167.6 115.0 income taxes (Benefit) provision for income 69.5 22.9 15.0 taxes Net (loss) earnings from 100.0 continuing operations Loss from discontinued 0.1 operations, net of income taxes Net (loss) earnings (105.8) 144.7 100.1 Net (loss) earnings attributable (105.8) 144.7 100.1 to Collective Brands, Inc. Non-Guarantor Subsidiaries [Member] Net sales 1,522.41,440.6 1,212.5 Cost of sales 1,244.61,073.7 864.4 Gross margin 277.8 366.9 348.1

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Selling, general and 172.2 252.5 249.6 administrative expenses Operating (loss) profit from 105.6 114.4 98.5 continuing operations Interest expense 0.5 0.1 0.1 Interest income (1.2) (0.1) (0.1) Net (loss) earnings from continuing operations before 106.3 114.4 98.5 income taxes (Benefit) provision for income 14.5 12.0 4.5 taxes Net (loss) earnings from 94.0 continuing operations Net (loss) earnings 91.8 102.4 94.0 Net earnings attributable to (10.4) (9.8) (5.6) noncontrolling interests Net (loss) earnings attributable 81.4 92.6 88.4 to Collective Brands, Inc. Eliminations [Member] Net sales (967.8) (1,015.7)(821.6) Cost of sales (935.6) (914.8) (720.3) Gross margin (32.2) (100.9) (101.3) Selling, general and (32.2) (100.9) (101.3) administrative expenses Interest expense (37.0) (30.1) (7.1) Interest income 37.0 30.1 7.1 Equity in earnings of (24.4) 237.3 188.5 subsidiaries Net (loss) earnings from continuing operations before 24.4 (237.3) (188.5) income taxes Net (loss) earnings from (188.5) continuing operations Net (loss) earnings 24.4 (237.3) (188.5) Net (loss) earnings attributable $ $ 24.4 $ (237.3) to Collective Brands, Inc. (188.5) [1]In the fourth quarter of 2011, the Company recorded $7.4 million of lease termination costs in cost of sales, $2.4 million of severance related to store closings and $1.7 million of strategic review expenses in selling, general and administrative expenses.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Summary Of 12 Months Ended The Funded Status Of The Plan) (Details) (USD $) Jan. 28, 2012Jan. 29, 2011 In Millions, unless otherwise specified Defined Benefit Plan Disclosure [Line Items] Obligation at end of year $ 19.2 Employer contributions 4.0 0.4 PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] Benefits paid (3.3) (3.0) Fair value of plan assets at prior measurement date 69.4 61.9 Actual return on plan assets 1.9 8.9 Employer contributions 0.4 1.6 Fair value of plan assets at end of year 68.4 69.4 Underfunded status at end of year (32.0) (16.1) Benefit Obligation [Member] | Payless Plan [Member] Defined Benefit Plan Disclosure [Line Items] Obligation at beginning of year 42.5 46.6 Service cost 0.8 0.8 Interest cost 1.8 1.8 Actuarial loss 4.4 3.0 Settlement distribution (7.2) Benefits paid (4.7) (2.5) Obligation at end of year 44.8 42.5 Discount rate 3.25% 4.50% Salary increases 4.00% 4.00% Benefit Obligation [Member] | PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] Obligation at beginning of year 85.5 78.4 Interest cost 4.8 4.6 Actuarial loss 13.4 5.5 Benefits paid (3.3) (3.0) Obligation at end of year $ 100.4 $ 85.5 Discount rate 4.70% 5.75%

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Impact Of Recently Issued 12 Months Ended Accounting Standards Jan. 28, 2012 Impact Of Recently Issued Accounting Standards [Abstract] Impact Of Recently Issued Accounting Standards Note 19 — Impact of Recently Issued Accounting Standards In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs" ("ASU 2011-04"), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The Company does not believe ASU 2011-04 will have a significant impact on its Consolidated Financial Statements.

In June 2011, the FASB issued ASU 2011-05, "Presentation of Comprehensive Income" ("ASU 2011-05"), which is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2011. The provisions of ASU 2011-05 require companies to display adjustments for items that are reclassified from other comprehensive income ("OCI") to net income in both net income and OCI in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company does not believe ASU 2011-05 will have a significant impact on its Consolidated Financial Statements.

In September 2011, the FASB issued ASU 2011-08, "Testing Goodwill for Impairment", which is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however, early adoption is permitted. Under the new guidance, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the entity determines that this threshold is not met, then performing the two-step impairment test is unnecessary. The Company does not believe ASU 2011-08 will have a significant impact on its Consolidated Financial Statements.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pension Plans (Schedule Of Estimated Future Benefit Payments) (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Payless Plan [Member] Defined Benefit Plan Disclosure [Line Items] 2012 $ 4.1 2013 4.1 2014 4.2 2015 4.3 2016 4.3 2017-2021 17.7 PLG Plan [Member] Defined Benefit Plan Disclosure [Line Items] 2012 3.6 2013 3.7 2014 3.9 2015 4.2 2016 4.4 2017-2021 $ 25.8

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Derivatives (Tables) Jan. 28, 2012 Derivatives [Abstract] Fair Value Of Company's Hedging Location on Fair Value Portfolio Related To Interest Rate Consolidated January 28, January 29, Contract Balance Sheet 2012 2011 (dollars in millions) Interest rate contract Other liabilities $ — $ 1.3 Interest rate contract Accrued expenses $ 2.0 $ 6.1 Impact Of Derivative Instruments On Gain (Loss) Recognized Gain (Loss) Reclassified from Condensed Consolidated Financial in AOCI on Derivative AOCI into Earnings Statements 52 Weeks Ended Location on Consolidated 52 Weeks Ended January 28, January 29, Statement of Earnings January 28, January 29, 2012 2011 (Loss) 2012 2011 (dollars in millions) Interest rate contract $ 1.0 $ (2.2 ) Interest expense $ (7.5 ) $ (7.5 )

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 Months Ended Earnings Per Share Jan. 28, 2012 Earnings Per Share [Abstract] Earnings Per Share Note 12 — Earnings Per Share The Company calculates earnings per share under earnings per share accounting guidance which states that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that would otherwise have been available to common shareholders.

Basic earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the effect of conversions of stock options and stock- settled stock appreciation rights. Earnings per share has been computed as follows: 52 Weeks Ended January 28, January 29, January 30, 2012 2011 2010 (dollars in millions, except per share amounts; shares in thousands) Net (loss) earnings attributable to Collective Brands, Inc. from continuing operations $(160.2 ) $112.8 $82.6 Less: net earnings allocated to participating securities(1) — 1.8 1.1 Net (loss) earnings available to common shareholders from continuing operations $(160.2 ) $111.0 $81.5 Weighted average shares outstanding — basic 60,230 62,579 63,127 Net effect of dilutive stock options — 154 139 Net effect of dilutive SARs — 606 227 Weighted average shares outstanding — diluted 60,230 63,339 63,493 Basic (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.77 $1.29 Diluted (loss) earnings per share attributable to common shareholders from continuing operations $(2.66 ) $1.75 $1.28 (1) Net earnings allocated to participating securities is calculated based upon a weighted average percentage of participating securities in relation to total shares outstanding. Net losses are not allocated to participating securities.

All of the Company's stock options and stock settled SARs outstanding were excluded from the calculation of diluted earnings per share for the 52 weeks ended January 28, 2012 as their effects were antidilutive. The Company excluded approximately 3.8 million and 4.8 million stock options and stock-settled SARs from the calculation of diluted earnings per share for the

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document fifty-two weeks ended January 29, 2011 and January 30, 2010, respectively, as their effects were antidilutive.

Copyright © 2013 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Commitments And Contingencies (Details) (USD $) Jan. 28, 2012 In Millions, unless otherwise specified Commitments And Contingencies [Abstract] Minimum royalty payments for purchase obligations $ 80.9 Future estimated pension obligations related to Company's pension plans 84.4 Minimum payments for service obligations 19.2 Employment agreement obligations related to minimum payments to certain executives $ 21.2