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 NOVEMBER 2, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	29,722	$	12,684	$	–	$	42,406
Receivables, net		93,097		1,275		18,119		–		112,491
Inventories, net		98,548		439,807		6,234		–		544,589
Prepaid expenses and other current assets		37,418		11,423		3,393		–		52,234
Current assets – discontinued operations		158		–		23		–		181
Total current assets		229,221		482,227		40,453		–		751,901
Other assets		95,221		15,812		614		–		111,647
Goodwill and intangible assets, net		56,369		18,812		–		–		75,181
Property and equipment, net		26,908		118,976		2,298		–		148,182
Investment in subsidiaries		851,906		152,992		–		(1,004,898)		–
Intercompany receivable		431,576		483,654		233,841		(1,149,071)		–
Total assets	$	1,691,201	$	1,272,473	$	277,206	$	(2,153,969)	$	1,086,911

Liabilities and Equity
Current liabilities
Trade accounts payable	$	44,889	$	136,669	$	19,148	$	–	$	200,706
Other accrued expenses		58,289		83,483		9,370		–		151,142
Current liabilities – discontinued operations		2,065		–		45		–		2,110
Total current liabilities		105,243		220,152		28,563		–		353,958
Other liabilities
Long-term debt		198,963		–		–		–		198,963
Other liabilities		29,395		51,192		1,444		–		82,031
Intercompany payable		906,299		149,223		93,549		(1,149,071)		–
Total other liabilities		1,134,657		200,415		94,993		(1,149,071)		280,994
Equity
Brown Shoe Company, Inc. shareholders’ equity		451,301		851,906		152,992		(1,004,898)		451,301
Noncontrolling interests		–		–		658		–		658
Total equity		451,301		851,906		153,650		(1,004,898)		451,959
Total liabilities and equity	$	1,691,201	$	1,272,473	$	277,206	$	(2,153,969)	$	1,086,911



UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED NOVEMBER 2, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	213,028	$	498,383	$	36,753	$	(45,376)	$	702,788
Cost of goods sold		157,500		282,617		29,807		(45,376)		424,548
Gross profit		55,528		215,766		6,946		–		278,240
Selling and administrative expenses		53,327		178,810		1,435		–		233,572
Equity in (earnings) loss of subsidiaries		(31,516)		2,728		–		28,788		–
Operating earnings (loss)		33,717		34,228		5,511		(28,788)		44,668
Interest expense		(5,254)		–		–		–		(5,254)
Interest income		4		69		59		–		132
Intercompany interest income (expense)		3,558		(3,693)		135		–		–
Intercompany dividend		–		7,778		(7,778)		–		–
Earnings (loss) before income taxes from continuing operations		32,025		38,382		(2,073)		(28,788)		39,546
Income tax provision		(5,011)		(6,822)		(662)		–		(12,495)
Net earnings (loss) from continuing operations		27,014		31,560		(2,735)		(28,788)		27,051
Discontinued operations:
Earnings (loss) from discontinued operations, net of tax		300		(44)		(23)		–		233
Net earnings (loss) from discontinued operations		300		(44)		(23)		–		233
Net earnings (loss)		27,314		31,516		(2,758)		(28,788)		27,284
Net loss attributable to noncontrolling interests		–		–		(30)		–		(30)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	27,314	$	31,516	$	(2,728)	$	(28,788)	$	27,314

Comprehensive income (loss)	$	27,320	$	31,313	$	(2,758)	$	(28,585)	$	27,290
Comprehensive loss attributable to noncontrolling interests		–		–		(25)		–		(25)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	27,320	$	31,313	$	(2,733)	$	(28,585)	$	27,315



UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 2, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	551,962	$	1,361,742	$	136,825	$	(137,379)	$	1,913,150
Cost of goods sold		412,736		754,229		110,682		(137,379)		1,140,268
Gross profit		139,226		607,513		26,143		–		772,882
Selling and administrative expenses		169,097		504,351		5,074		–		678,522
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		(70,990)		3,789		–		67,201		–
Operating earnings (loss)		40,433		98,797		16,409		(67,201)		88,438
Interest expense		(16,076)		(91)		–		–		(16,167)
Interest income		17		201		64		–		282
Intercompany interest income (expense)		10,487		(10,879)		392		–		–
Intercompany dividend		–		7,778		(7,778)		–		–
Earnings (loss) before income taxes from continuing operations		34,861		95,806		9,087		(67,201)		72,553
Income tax benefit (provision)		2,630		(26,995)		(157)		–		(24,522)
Net earnings (loss) from continuing operations		37,491		68,811		8,930		(67,201)		48,031
Discontinued operations:
(Loss) earnings from discontinued operations, net of tax		(5,582)		1,137		(339)		–		(4,784)
Impairment of net assets/disposition of discontinued operations		–		1,042		(12,554)		–		(11,512)
Net (loss) earnings from discontinued operations		(5,582)		2,179		(12,893)		–		(16,296)
Net earnings (loss)	$	31,909	$	70,990	$	(3,963)	$	(67,201)	$	31,735
Net loss attributable to noncontrolling interests		–		–		(174)		–		(174)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	31,909	$	70,990	$	(3,789)	$	(67,201)	$	31,909

Comprehensive income (loss)	$	31,005	$	69,771	$	(3,964)	$	(65,982)	$	30,830
Comprehensive loss attributable to noncontrolling interests		–		–		(114)		–		(114)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	31,005	$	69,771	$	(3,850)	$	(65,982)	$	30,944


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 2, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash provided by (used for) operating activities	$	27,271	$	60,573	$	(25,859)	$	–	$	61,985

Investing activities
Purchases of property and equipment		(3,389)		(33,737)		(762)		–		(37,888)
Capitalized software		(3,591)		(117)		(7)		–		(3,715)
Intercompany investing		(1,024)		1,024		–		–		–
Proceeds from sale of subsidiaries, net of cash balance		–		69,347		–		–		69,347
Net cash (used for) provided by investing activities		(8,004)		36,517		(769)		–		27,744

Financing activities
Borrowings under revolving credit agreement		966,000		–		–		–		966,000
Repayments under revolving credit agreement		(1,071,000)		–		–		–		(1,071,000)
Dividends paid		(9,073)		–		–		–		(9,073)
Issuance of common stock under share-based plans, net		(2,406)		–		–		–		(2,406)
Tax benefit related to share-based plans		2,581		–		–		–		2,581
Intercompany financing		94,631		(97,780)		3,149		–		–
Net cash (used for) provided by financing activities		(19,267)		(97,780)		3,149		–		(113,898)
Effect of exchange rate changes on cash and cash equivalents		–		(1,648)		–		–		(1,648)
Decrease in cash and cash equivalents		–		(2,338)		(23,479)		–		(25,817)
Cash and cash equivalents at beginning of period		–		32,060		36,163		–		68,223
Cash and cash equivalents at end of period	$	–	$	29,722	$	12,684	$	–	$	42,406


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
Noncurrent assets – discontinued operations		1,145		3,980		52,925		(3,473)		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)		–
Intercompany receivable		341,221		527,863		183,372		(1,052,456)		–
Total assets	$	1,453,047	$	1,271,622	$	472,417	$	(2,025,827)	$	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		–		–		10,469		(3,473)		6,996
Intercompany payable		598,198		138,089		316,169		(1,052,456)		–
Total other liabilities		814,063		187,075		331,040		(1,055,929)		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	$	1,453,047	$	1,271,622	$	472,417	$	(2,025,827)	$	1,171,259


UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 27, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	29,113	$	11,771	$	–	$	40,884
Receivables, net		89,342		5,863		18,314		–		113,519
Inventories, net		73,175		421,458		17,573		–		512,206
Prepaid expenses and other current assets		22,219		3,412		4,880		–		30,511
Current assets – discontinued operations		16,868		39,465		32		–		56,365
Total current assets		201,604		499,311		52,570		–		753,485
Other assets		115,445		18,409		810		–		134,664
Goodwill and intangible assets, net		38,337		20,265		22,617		–		81,219
Noncurrent assets – discontinued operations		1,185		1,595		53,159		(1,185)		54,754
Property and equipment, net		24,578		106,269		9,135		–		139,982
Investment in subsidiaries		862,308		234,014		–		(1,096,322)		–
Intercompany receivable		215,585		384,523		174,894		(775,002)		–
Total assets	$	1,459,042	$	1,264,386	$	313,185	$	(1,872,509)	$	1,164,104

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	110,000	$	–	$	–	$	–	$	110,000
Trade accounts payable		32,579		118,756		22,521		–		173,856
Other accrued expenses		41,432		89,006		15,249		–		145,687
Current liabilities – discontinued operations		6,746		7,149		40		–		13,935
Total current liabilities		190,757		214,911		37,810		–		443,478
Other liabilities
Long-term debt		198,773		–		–		–		198,773
Other liabilities		34,398		42,601		5,714		–		82,713
Intercompany payable		603,976		144,566		26,460		(775,002)		–
Noncurrent liabilities – discontinued operations		–		–		8,388		(1,185)		7,203
Total other liabilities		837,147		187,167		40,562		(776,187)		288,689
Equity
Brown Shoe Company, Inc. shareholders’ equity		431,138		862,308		234,014		(1,096,322)		431,138
Noncontrolling interests		–		–		799		–		799
Total equity		431,138		862,308		234,813		(1,096,322)		431,937
Total liabilities and equity	$	1,459,042	$	1,264,386	$	313,185	$	(1,872,509)	$	1,164,104


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED OCTOBER 27, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	192,767	$	512,952	$	42,437	$	(52,171)	$	695,985
Cost of goods sold		144,270		291,940		32,611		(52,171)		416,650
Gross profit		48,497		221,012		9,826		–		279,335
Selling and administrative expenses		55,773		182,963		(2,540)		–		236,196
Restructuring and other special charges, net		1,522		624		–		–		2,146
Equity in (earnings) loss of subsidiaries		(31,317)		(10,031)		–		41,348		–
Operating earnings (loss)		22,519		47,456		12,366		(41,348)		40,993
Interest expense		(5,301)		(97)		–		–		(5,398)
Interest income		–		61		15		–		76
Intercompany interest income (expense)		3,040		(3,147)		107		–		–
Earnings (loss) before income taxes from continuing operations		20,258		44,273		12,488		(41,348)		35,671
Income tax benefit (provision)		3,101		(12,402)		(2,117)		–		(11,418)
Net earnings (loss) from continuing operations		23,359		31,871		10,371		(41,348)		24,253
Discontinued operations:
Earnings (loss) from discontinued operations, net of tax		927		(548)		(345)		–		34
Net earnings (loss) from discontinued operations		927		(548)		(345)		–		34
Net earnings (loss)		24,286		31,323		10,026		(41,348)		24,287
Net loss attributable to noncontrolling interests		–		–		(5)		–		(5)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	24,286	$	31,323	$	10,031	$	(41,348)	$	24,292

Comprehensive income (loss)	$	24,842	$	31,872	$	10,018	$	(41,348)	$	25,384
Comprehensive loss attributable to noncontrolling interests		–		–		2		–		2
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	24,842	$	31,872	$	10,016	$	(41,348)	$	25,382


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 27, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	529,074	$	1,347,547	$	133,406	$	(150,966)	$	1,859,061
Cost of goods sold		403,710		756,547		108,527		(150,966)		1,117,818
Gross profit		125,364		591,000		24,879		–		741,243
Selling and administrative expenses		138,732		512,516		8,129		–		659,377
Restructuring and other special charges, net		9,796		9,864		–		–		19,660
Equity in (earnings) loss of subsidiaries		(46,486)		(13,087)		–		59,573		–
Operating earnings (loss)		23,322		81,707		16,750		(59,573)		62,206
Interest expense		(16,800)		(279)		–		–		(17,079)
Interest income		–		185		51		–		236
Intercompany interest income (expense)		9,569		(9,889)		320		–		–
Earnings (loss) before income taxes from continuing operations		16,091		71,724		17,121		(59,573)		45,363
Income tax benefit (provision)		10,308		(22,303)		(3,280)		–		(15,275)
Net earnings (loss) from continuing operations		26,399		49,421		13,841		(59,573)		30,088
Discontinued operations:
Loss from discontinued operations, net of tax		(2,953)		(2,714)		(1,220)		–		(6,887)
Net loss from discontinued operations		(2,953)		(2,714)		(1,220)		–		(6,887)
Net earnings (loss)		23,446		46,707		12,621		(59,573)		23,201
Net loss attributable to noncontrolling interests		–		–		(251)		–		(251)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	23,446	$	46,707	$	12,872	$	(59,573)	$	23,452

Comprehensive income (loss)	$	23,422		46,954		12,617		(59,573)		23,420
Comprehensive loss attributable to noncontrolling interests		–		–		(248)		–		(248)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	23,422	$	46,954	$	12,865	$	(59,573)	$	23,668


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 27, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash provided by (used for) operating activities	$	19,306	$	(53,096)	$	177,313	$	–	$	143,523

Investing activities
Purchases of property and equipment		(3,809)		(33,602)		(1,670)		–		(39,081)
Capitalized software		(5,433)		–		(3)		–		(5,436)
Acquisition cost		–		(5,000)		–		–		(5,000)
Net cash used for investing activities		(9,242)		(38,602)		(1,673)		–		(49,517)

Financing activities
Borrowings under revolving credit agreement		582,000		–		–		–		582,000
Repayments under revolving credit agreement		(673,000)		–		–		–		(673,000)
Dividends paid		(9,007)		–		–		–		(9,007)
Issuance of common stock under share-based plans, net		(1,860)		–		–		–		(1,860)
Tax benefit related to share-based plans		889		–		–		–		889
Intercompany financing		95,300		86,305		(181,605)		–		–
Net cash (used for) provided by financing activities		(5,678)		86,305		(181,605)		–		(100,978)
Effect of exchange rate changes on cash and cash equivalents		–		174		–		–		174
Increase (decrease) in cash and cash equivalents		4,386		(5,219)		(5,965)		–		(6,798)
Cash and cash equivalents at beginning of period		(4,386)		34,332		17,736		–		47,682
Cash and cash equivalents at end of period	$	–	$	29,113	$	11,771	$	–	$	40,884