Note 17

Financial Information for the Company and its Subsidiaries

Brown Shoe Company, Inc. issued senior notes, which are fully and unconditionally and jointly and severally guaranteed by all of its existing and future subsidiaries that are guarantors under its existing agreement. The following table presents the consolidating financial information for each of Brown Shoe Company, Inc. (“Parent”), the Guarantors and subsidiaries of the Parent that are not Guarantors (the “Non-Guarantors”), together with consolidating eliminations, as of and for the periods indicated. The Guarantors are 100% owned by the Parent. On May 14, 2013, during the second quarter of 2013, ASG was sold and ceased to be a borrower under the Credit Agreement. ASG is included as a “Guarantor” in the financial statements through the sale date. The proceeds from the sale were utilized to pay down the Company’s revolving credit facility. See Note 3 to the condensed consolidated financial statements for further information on the sale of ASG.

The consolidating financial statements have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Management believes that the information, presented in lieu of complete financial statements for each of the Guarantors, provides meaningful information to allow investors to determine the nature of the assets held by, and operations and cash flows of, each of the consolidated groups.




UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	32,793	$	20,344	$	–	$	53,137
Receivables, net		86,129		2,014		31,911		–		120,054
Inventories, net		128,503		477,659		9,754		–		615,916
Prepaid expenses and other current assets		54,017		(860)		(1,312)		–		51,845
Current assets – discontinued operations		1,638		–		23		–		1,661
Total current assets		270,287		511,606		60,720		–		842,613
Other assets		97,053		16,110		601		–		113,764
Goodwill and intangible assets, net		57,514		19,174		–		–		76,688
Property and equipment, net		26,637		118,878		2,440		–		147,955
Investment in subsidiaries		839,981		31,336		–		(871,317)		–
Total assets	$	1,291,472	$	697,104	$	63,761	$	(871,317)	$	1,181,020

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	23,000	$	–	$	–	$	–	$	23,000
Trade accounts payable		77,854		193,996		37,956		–		309,806
Other accrued expenses		65,241		73,883		4,611		–		143,735
Current liabilities – discontinued operations		3,488		–		48		–		3,536
Total current liabilities		169,583		267,879		42,615		–		480,077
Other liabilities
Long-term debt		198,917		–		–		–		198,917
Other liabilities		24,049		50,559		1,017		–		75,625
Intercompany payable (receivable)		473,205		(461,315)		(11,890)		–		–
Total other liabilities		696,171		(410,756)		(10,873)		–		274,542
Equity
Brown Shoe Company, Inc. shareholders’ equity		425,718		839,981		31,336		(871,317)		425,718
Noncontrolling interests		–		–		683		–		683
Total equity		425,718		839,981		32,019		(871,317)		426,401
Total liabilities and equity	$	1,291,472	$	697,104	$	63,761	$	(871,317)	$	1,181,020




UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	180,153	$	444,821	$	57,468	$	(60,736)	$	621,706
Cost of goods sold		138,906		241,656		47,254		(60,736)		367,080
Gross profit		41,247		203,165		10,214		–		254,626
Selling and administrative expenses		65,770		165,689		(388)		–		231,071
Restructuring and other special charges, net		167		576		–		–		743
Equity in (earnings) loss of subsidiaries		(36,429)		(12,043)		–		48,472		–
Operating earnings (loss)		11,739		48,943		10,602		(48,472)		22,812
Interest expense		(5,192)		–		–		–		(5,192)
Interest income		10		68		4		–		82
Intercompany interest income (expense)		3,475		(3,607)		132		–		–
Earnings (loss) before income taxes from continuing operations		10,032		45,404		10,738		(48,472)		17,702
Income tax benefit (provision)		4,259		(9,607)		1,267		–		(4,081)
Net earnings (loss) from continuing operations		14,291		35,797		12,005		(48,472)		13,621
Discontinued operations:
Earnings (loss) from discontinued operations, net of tax		1,066		(410)		(36)		–		620
Impairment of net assets/disposition of discontinued operations		–		1,042		–		–		1,042
Net Earnings (loss) from discontinued operations		1,066		632		(36)		–		1,662
Net earnings (loss)		15,357		36,429		11,969		(48,472)		15,283
Net loss attributable to noncontrolling interests		–		–		(74)		–		(74)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	15,357	$	36,429	$	12,043	$	(48,472)	$	15,357

Comprehensive income (loss)	$	15,105	$	35,969	$	11,969	$	(48,012)	$	15,031
Comprehensive loss attributable to noncontrolling interests		–		–		(61)		–		(61)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	15,105	$	35,969	$	12,030	$	(48,012)	$	15,092




UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	338,934	$	863,359	$	100,072	$	(92,003)	$	1,210,362
Cost of goods sold		255,236		471,612		80,875		(92,003)		715,720
Gross profit		83,698		391,747		19,197		–		494,642
Selling and administrative expenses		115,770		325,541		3,639		–		444,950
Restructuring and other special charges, net		686		576		–		–		1,262
Impairment of assets held for sale		–		–		4,660		–		4,660
Equity in (earnings) loss of subsidiaries		(39,474)		1,061		–		38,413		–
Operating earnings (loss)		6,716		64,569		10,898		(38,413)		43,770
Interest expense		(10,822)		(91)		–		–		(10,913)
Interest income		13		132		5		–		150
Intercompany interest income (expense)		6,929		(7,186)		257		–		–
Earnings (loss) before income taxes from continuing operations		2,836		57,424		11,160		(38,413)		33,007
Income tax benefit (provision)		7,641		(20,173)		505		–		(12,027)
Net earnings (loss) from continuing operations		10,477		37,251		11,665		(38,413)		20,980
Discontinued operations:
(Loss) earnings from discontinued operations, net of tax		(5,882)		1,181		(316)		–		(5,017)
Impairment of net assets/disposition of discontinued operations		–		1,042		(12,554)		–		(11,512)
Net (loss) earnings from discontinued operations		(5,882)		2,223		(12,870)		–		(16,529)
Net earnings (loss)	$	4,595	$	39,474	$	(1,205)	$	(38,413)	$	4,451
Net loss attributable to noncontrolling interests		–		–		(144)		–		(144)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	4,595	$	39,474	$	(1,061)	$	(38,413)	$	4,595

Comprehensive income (loss)	$	3,684	$	38,457	$	(1,205)	$	(37,396)	$	3,540
Comprehensive loss attributable to noncontrolling interests		–		–		(89)		–		(89)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	3,684	$	38,457	$	(1,116)	$	(37,396)	$	3,629


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash provided by operating activities	$	1,555	$	26,015	$	7,919	$	–	$	35,489

Investing activities
Purchases of property and equipment		(1,656)		(25,612)		(529)		–		(27,797)
Capitalized software		(2,383)		(248)		(7)		–		(2,638)
Proceeds from sale of subsidiaries, net of cash balance		–		69,347		–		–		69,347
Net cash (used for) provided by investing activities		(4,039)		43,487		(536)		–		38,912

Financing activities
Borrowings under revolving credit agreement		685,000		–		–		–		685,000
Repayments under revolving credit agreement		(767,000)		–		–		–		(767,000)
Dividends paid		(6,048)		–		–		–		(6,048)
Issuance of common stock under share-based plans, net		(2,780)		–		–		–		(2,780)
Tax benefit related to share-based plans		2,798		–		–		–		2,798
Intercompany financing		90,514		(67,312)		(23,202)		–		–
Net cash provided by (used for) financing activities		2,484		(67,312)		(23,202)		–		(88,030)
Effect of exchange rate changes on cash and cash equivalents		–		(1,457)		–		–		(1,457)
Increase (decrease) in cash and cash equivalents		–		733		(15,819)		–		(15,086)
Cash and cash equivalents at beginning of period		–		32,060		36,163		–		68,223
Cash and cash equivalents at end of period	$	–	$	32,793	$	20,344	$	–	$	53,137


UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF FEBRUARY 2, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	32,060	$	36,163	$	–	$	68,223
Receivables, net		67,571		6,593		37,228		–		111,392
Inventories, net		92,683		394,468		16,537		–		503,688
Prepaid expenses and other current assets		14,523		26,524		969		–		42,016
Current assets – discontinued operations		5,447		41,553		109		–		47,109
Total current assets		180,224		501,198		91,006		–		772,428
Other assets		99,527		19,320		848		–		119,695
Goodwill and intangible assets, net		37,270		19,901		22,532		–		79,703
Non current assets – discontinued operations		–		1,652		52,925		–		54,577
Property and equipment, net		27,931		108,224		8,701		–		144,856
Investment in subsidiaries		765,729		91,136		113,033		(969,898)		–
Total assets	$	1,110,681	$	741,431	$	289,045	$	(969,898)	$	1,171,259

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	105,000	$	–	$	–	$	–	$	105,000
Trade accounts payable		53,350		118,096		42,214		–		213,660
Other accrued expenses		51,751		78,293		7,146		–		137,190
Current liabilities – discontinued operations		3,754		9,396		109		–		13,259
Total current liabilities		213,855		205,785		49,469		–		469,109
Other liabilities
Long-term debt		198,823		–		–		–		198,823
Other liabilities		17,042		48,986		4,402		–		70,430
Non current liabilities – discontinued operations		(1,145)		(2,328)		10,469		–		6,996
Intercompany payable (receivable)		256,977		(389,774)		132,797		–		–
Total other liabilities		471,697		(343,116)		147,668		–		276,249
Equity
Brown Shoe Company, Inc. shareholders’ equity		425,129		878,762		91,136		(969,898)		425,129
Noncontrolling interests		–		–		772		–		772
Total equity		425,129		878,762		91,908		(969,898)		425,901
Total liabilities and equity	$	1,110,681	$	741,431	$	289,045	$	(969,898)	$	1,171,259



UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JULY 28, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	30,760	$	16,637	$	–	$	47,397
Receivables, net		77,006		7,156		23,372		–		107,534
Inventories, net		109,014		461,135		15,820		–		585,969
Prepaid expenses and other current assets		40,646		1,224		2,555		–		44,425
Current assets – discontinued operations		21,182		45,425		48		–		66,655
Total current assets		247,848		545,700		58,432		–		851,980
Other assets		116,254		18,688		848		–		135,790
Goodwill and intangible assets, net		39,402		15,600		22,727		–		77,729
Non current assets – discontinued operations		–		1,810		53,345		–		55,155
Property and equipment, net		23,470		101,042		9,008		–		133,520
Investment in subsidiaries		829,881		70,656		–		(900,537)		–
Total assets	$	1,256,855	$	753,496	$	144,360	$	(900,537)	$	1,254,174

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	116,000	$	–	$	–	$	–	$	116,000
Trade accounts payable		71,212		179,634		33,344		–		284,190
Other accrued expenses		59,806		73,339		9,070		–		142,215
Current liabilities – discontinued operations		10,288		6,348		52		–		16,688
Total current liabilities		257,306		259,321		42,466		–		559,093
Other liabilities
Long-term debt		198,726		–		–		–		198,726
Other liabilities		32,563		43,742		3,739		–		80,044
Intercompany payable (receivable)		362,584		(379,128)		16,544		–		–
Non current liabilities – discontinued operations		(1,225)		(320)		10,158		–		8,613
Total other liabilities		592,648		(335,706)		30,441		–		287,383
Equity
Brown Shoe Company, Inc. shareholders’ equity		406,901		829,881		70,656		(900,537)		406,901
Noncontrolling interests		–		–		797		–		797
Total equity		406,901		829,881		71,453		(900,537)		407,698
Total liabilities and equity	$	1,256,855	$	753,496	$	144,360	$	(900,537)	$	1,254,174


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED JULY 28, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	154,463	$	416,187	$	47,146	$	(52,899)	$	564,897
Cost of goods sold		121,376		230,633		38,133		(52,899)		337,243
Gross profit		33,087		185,554		9,013		–		227,654
Selling and administrative expenses		43,749		166,521		1,436		–		211,706
Restructuring and other special charges, net		4,612		2,714		–		–		7,326
Equity in (earnings) loss of subsidiaries		(13,900)		(6,601)		–		20,501		–
Operating (loss) earnings		(1,374)		22,920		7,577		(20,501)		8,622
Interest expense		(5,559)		(86)		–		–		(5,645)
Interest income		–		63		14		–		77
Intercompany interest income (expense)		3,120		(3,227)		107		–		–
(Loss) earnings before income taxes from continuing operations		(3,813)		19,670		7,698		(20,501)		3,054
Income tax benefit (provision)		4,701		(5,183)		(759)		–		(1,241)
Net earnings (loss) from continuing operations		888		14,487		6,939		(20,501)		1,813
Discontinued operations:
Loss from discontinued operations, net of tax		(3,423)		(587)		(517)		–		(4,527)
Net loss from discontinued operations		(3,423)		(587)		(517)		–		(4,527)
Net (loss) earnings		(2,535)		13,900		6,422		(20,501)		(2,714)
Net loss attributable to noncontrolling interests		–		–		(179)		–		(179)
Net (loss) earnings attributable to Brown Shoe Company, Inc.	$	(2,535)	$	13,900	$	6,601	$	(20,501)	$	(2,535)

Comprehensive (loss) income	$	(3,083)	$	12,969	$	6,427	$	(20,501)	$	(4,188)
Comprehensive loss attributable to noncontrolling interests		–		–		(185)		–		(185)
Comprehensive (loss) income attributable to Brown Shoe Company, Inc.	$	(3,083)	$	12,969	$	6,612	$	(20,501)	$	(4,003)



UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE TWENTY-SIX WEEKS ENDED JULY 28, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	336,307	$	834,596	$	90,968	$	(98,795)	$	1,163,076
Cost of goods sold		259,440		464,609		75,914		(98,795)		701,168
Gross profit		76,867		369,987		15,054		–		461,908
Selling and administrative expenses		82,959		329,553		10,669		–		423,181
Restructuring and other special charges, net		8,274		9,240		–		–		17,514
Equity in (earnings) loss of subsidiaries		(15,169)		(2,842)		–		18,011		–
Operating earnings (loss)		803		34,036		4,385		(18,011)		21,213
Interest expense		(11,499)		(182)		–		–		(11,681)
Interest income		–		124		36		–		160
Intercompany interest income (expense)		6,529		(6,742)		213		–		–
(Loss) earnings before income taxes from continuing operations		(4,167)		27,236		4,634		(18,011)		9,692
Income tax benefit (provision)		7,207		(9,901)		(1,163)		–		(3,857)
Net earnings (loss) from continuing operations		3,040		17,335		3,471		(18,011)		5,835
Discontinued operations:
Loss from discontinued operations, net of tax		(3,880)		(2,166)		(875)		–		(6,921)
Net loss from discontinued operations		(3,880)		(2,166)		(875)		–		(6,921)
Net (loss) earnings		(840)		15,169		2,596		(18,011)		(1,086)
Net loss attributable to noncontrolling interests		–		–		(246)		–		(246)
Net (loss) earnings attributable to Brown Shoe Company, Inc.	$	(840)	$	15,169	$	2,842	$	(18,011)	$	(840)

Comprehensive (loss) income	$	(1,420)		14,867		2,600		(18,011)		(1,964)
Comprehensive loss attributable to noncontrolling interests		–		–		(250)		–		(250)
Comprehensive (loss) income attributable to Brown Shoe Company, Inc.	$	(1,420)	$	14,867	$	2,850	$	(18,011)	$	(1,714)


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JULY 28, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash provided by operating activities	$	31,083	$	71,866	$	16,411	$	–	$	119,360

Investing activities
Purchases of property and equipment		(1,525)		(21,738)		(883)		–		(24,146)
Capitalized software		(2,953)		–		(3)		–		(2,956)
Net cash used for investing activities		(4,478)		(21,738)		(886)		–		(27,102)

Financing activities
Borrowings under revolving credit agreement		334,000		–		–		–		334,000
Repayments under revolving credit agreement		(419,000)		–		–		–		(419,000)
Dividends paid		(6,005)		–		–		–		(6,005)
Issuance of common stock under share-based plans, net		(2,058)		–		–		–		(2,058)
Tax benefit related to share-based plans		738		–		–		–		738
Intercompany financing		70,106		(53,482)		(16,624)		–		–
Net cash used for financing activities		(22,219)		(53,482)		(16,624)		–		(92,325)
Effect of exchange rate changes on cash and cash equivalents		–		(218)		–		–		(218)
Increase (decrease) in cash and cash equivalents		4,386		(3,572)		(1,099)		–		(285)
Cash and cash equivalents at beginning of period		(4,386)		34,332		17,736		–		47,682
Cash and cash equivalents at end of period	$	–	$	30,760	$	16,637	$	–	$	47,397