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Note 19 - Financial Information for the Company and its Subsidiaries

9 Months Ended

Nov. 02, 2019

Financial Information For Company and Its Subsidiaries [Text Block]

Note 19

Financial Information for the Company and its Subsidiaries

The Company 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 the Company's revolving credit facility ("Credit Agreement"). The following tables present the condensed consolidating financial information for each of Caleres, 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. Guarantors are 100% owned by the Parent. On October 31, 2018, Vionic was joined to the Credit Agreement as a guarantor. After giving effect to the joinder, the Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds and Vionic are each co-borrowers and guarantors under the Credit Agreement.

The condensed 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

November 2, 2019

Non-

($ thousands)

Parent

Guarantors

Eliminations

Total

Assets

Current assets

Cash and cash equivalents

2,487

20,040

29,975

—

52,502

Receivables, net

108,118

30,427

17,708

—

156,253

Inventories, net

133,258

476,687

34,701

—

644,646

Prepaid expenses and other current assets

28,534

14,494

5,217

—

48,245

Intercompany receivable – current

144

10,611

(10,851

)

—

Total current assets

272,541

541,744

98,212

(10,851

)

901,646

Other assets

79,868

11,131

1,215

—

92,214

Goodwill and intangible assets, net

107,217

328,562

107,066

—

542,845

Lease right-of-use assets

123,490

548,639

32,115

—

704,244

Property and equipment, net

76,550

143,402

10,309

—

230,261

Investment in subsidiaries

1,560,733

—

(25,950

)

(1,534,783

)

—

Intercompany receivable – noncurrent

602,934

640,835

800,327

(2,044,096

)

—

Total assets

2,823,333

2,214,313

1,023,294

(3,589,730

)

2,471,210

Liabilities and Equity

Current liabilities

Borrowings under revolving credit agreement

295,000

—

295,000

Trade accounts payable

115,407

128,490

31,802

—

275,699

Lease obligations

11,450

126,438

6,613

—

144,501

Other accrued expenses

65,810

91,013

22,207

—

179,030

Intercompany payable – current

5,343

—

5,508

(10,851

)

—

Total current liabilities

493,010

345,941

66,130

(10,851

)

894,230

Other liabilities

Noncurrent lease obligations

126,347

472,579

30,805

—

629,731

Long-term debt

198,276

—

198,276

Other liabilities

92,293

2,399

931

—

95,623

Intercompany payable – noncurrent

1,262,567

114,458

667,071

(2,044,096

)

—

Total other liabilities

1,679,483

589,436

698,807

(2,044,096

)

923,630

Equity

Caleres, Inc. shareholders’ equity

650,840

1,278,936

255,847

(1,534,783

)

650,840

Noncontrolling interests

—

2,510

—

2,510

Total equity

650,840

1,278,936

258,357

(1,534,783

)

653,350

Total liabilities and equity

2,823,333

2,214,313

1,023,294

(3,589,730

)

2,471,210

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

FOR THE thirteen weeks ended November 2, 2019

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations			Total
Net sales	$	223,640		$	563,398		$	59,062		$	(53,725	)	$	792,375
Cost of goods sold		148,245			340,009			30,127			(45,776	)		472,605
Gross profit		75,395			223,389			28,935			(7,949	)		319,770
Selling and administrative expenses		61,728			204,612			16,939			(7,949	)		275,330
Restructuring and other special charges, net		969			-			-			-			969
Operating (loss) earnings		12,698			18,777			11,996			-			43,471
Interest (expense) income		(10,564	)		(25	)		30			-			(10,559	)
Other income (expense)		2,653			-			(20	)		-			2,633
Intercompany interest income (expense)		2,660			(2,709	)		49			-			-
(Loss) earnings before income taxes		7,447			16,043			12,055			-			35,545
Income tax benefit (provision)		(2,776	)		(3,651	)		(1,357	)		-			(7,784	)
Equity in earnings (loss) of subsidiaries, net of tax		23,316			-			(488	)		(22,828	)		-
Net earnings		27,987			12,392			10,210			(22,828	)		27,761
Less: Net loss attributable to noncontrolling interests		-			-			(226	)		-			(226	)
Net earnings attributable to Caleres, Inc.	$	27,987		$	12,392		$	10,436		$	(22,828	)	$	27,987

Comprehensive income	$	29,074		$	12,445		$	10,718		$	(23,402	)	$	28,835
Less: Comprehensive loss attributable to noncontrolling interests		-			-			(239	)		-			(239	)
Comprehensive income attributable to Caleres, Inc.	$	29,074		$	12,445		$	10,957		$	(23,402	)	$	29,074

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

FOR THE thirty-nine weeks ended November 2, 2019

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations			Total
Net sales	$	623,292		$	1,584,601		$	194,233		$	(179,512	)	$	2,222,614
Cost of goods sold		426,872			940,140			101,464			(151,412	)		1,317,064
Gross profit		196,420			644,461			92,769			(28,100	)		905,550
Selling and administrative expenses		181,662			600,020			51,390			(28,100	)		804,972
Restructuring and other special charges, net		2,434			—			—			—			2,434
Operating earnings		12,324			44,441			41,379			—			98,144
Interest (expense) income		(25,294	)		(77	)		83			—			(25,288	)
Other income (expense)		7,960			—			(58	)		—			7,902
Intercompany interest income (expense)		8,231			(8,292	)		61			—			-
Earnings before income taxes		3,221			36,072			41,465			—			80,758
Income tax provision		(3,159	)		(9,393	)		(6,133	)		—			(18,685	)
Equity in earnings (loss) of subsidiaries, net of tax		62,349			—			(1,111	)		(61,238	)		-
Net earnings		62,411			26,679			34,221			(61,238	)		62,073
Less: Net loss attributable to noncontrolling interests		—			—			(338	)		—			(338	)
Net earnings attributable to Caleres, Inc.	$	62,411		$	26,679		$	34,559		$	(61,238	)	$	62,411

Comprehensive income	$	63,694		$	26,641		$	33,772		$	(60,785	)	$	63,322
Less: Comprehensive loss attributable to noncontrolling interests		—			—			(372	)		—			(372	)
Comprehensive income attributable to Caleres, Inc.	$	63,694		$	26,641		$	34,144		$	(60,785	)	$	63,694

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE thirty-nine weeks ended November 2, 2019

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations		Total
Net cash provided by operating activities	$	15,776		$	79,884		$	50,077		$	—	$	145,737

Investing activities
Purchases of property and equipment		(20,965	)		(14,365	)		(2,024	)		—		(37,354	)
Disposals of property and equipment		636			—			—			—		636
Capitalized software		(4,696	)		(197	)		—			—		(4,893	)
Intercompany investing		(337	)		337			—			—		—
Net cash used for investing activities		(25,362	)		(14,225	)		(2,024	)		—		(41,611	)

Financing activities
Borrowings under revolving credit agreement		237,000			—			—			—		237,000
Repayments under revolving credit agreement		(277,000	)		—			—			—		(277,000	)
Dividends paid		(8,631	)		—			—			—		(8,631	)
Acquisition of treasury stock		(31,168	)		—			—			—		(31,168	)
Issuance of common stock under share-based plans, net		(2,605	)		—			—			—		(2,605	)
Contributions by noncontrolling interests								1,500					1,500
Other		(84	)		(938	)		—			—		(1,022	)
Intercompany financing		94,559			(53,829	)		(40,730	)		—		—
Net cash used for financing activities		12,071			(54,767	)		(39,230	)		—		(81,926	)
Effect of exchange rate changes on cash and cash equivalents		—			—			102			—		102
Increase in cash and cash equivalents		2,485			10,892			8,925			—		22,302
Cash and cash equivalents at beginning of period		2			9,148			21,050			—		30,200
Cash and cash equivalents at end of period	$	2,487		$	20,040		$	29,975		$	—	$	52,502

UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET

November 3, 2018

					Non-
($ thousands)	Parent		Guarantors		Guarantors			Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	4,012	$	11,817	$	74,662		$	—		$	90,491
Receivables, net		145,363		30,040		16,843			—			192,246
Inventories, net		154,706		513,448		30,111			—			698,265
Prepaid expenses and other current assets		34,621		33,869		6,020			(11,344	)		63,166
Intercompany receivable – current		291		137		8,038			(8,466	)		—
Total current assets		338,993		589,311		135,674			(19,810	)		1,044,168
Other assets		78,640		12,330		1,309			—			92,279
Goodwill and intangible assets, net		109,441		335,419		208,992			—			653,852
Property and equipment, net		43,761		163,019		11,323			—			218,103
Investment in subsidiaries		1,576,825		—		(24,821	)		(1,552,004	)		—
Intercompany receivable – noncurrent		583,048		560,563		745,589			(1,889,200	)		—
Total assets	$	2,730,708	$	1,660,642	$	1,078,066		$	(3,461,014	)	$	2,008,402

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	350,000	$	—	$	—		$	—		$	350,000
Trade accounts payable		141,012		151,127		25,360			—			317,499
Other accrued expenses		85,253		111,490		24,080			(11,344	)		209,479
Intercompany payable – current		3,363		—		5,103			(8,466	)		—
Total current liabilities		579,628		262,617		54,543			(19,810	)		876,978
Other liabilities
Long-term debt		197,817		—		—			—			197,817
Other liabilities		119,291		42,185		5,046			—			166,522
Intercompany payable – noncurrent		1,068,219		95,440		725,541			(1,889,200	)		—
Total other liabilities		1,385,327		137,625		730,587			(1,889,200	)		364,339
Equity
Caleres, Inc. shareholders’ equity		765,753		1,260,400		291,604			(1,552,004	)		765,753
Noncontrolling interests		—		—		1,332			—			1,332
Total equity		765,753		1,260,400		292,936			(1,552,004	)		767,085
Total liabilities and equity	$	2,730,708	$	1,660,642	$	1,078,066		$	(3,461,014	)	$	2,008,402

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

FOR THE thirteen weeks ended November 3, 2018

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations			Total
Net sales	$	240,295		$	540,379		$	62,672		$	(67,517	)	$	775,829
Cost of goods sold		163,609			325,966			32,262			(56,618	)		465,219
Gross profit		76,686			214,413			30,410			(10,899	)		310,610
Selling and administrative expenses		64,766			195,318			16,337			(10,899	)		265,522
Restructuring and other special charges, net		4,831			509			—			—			5,340
Operating earnings		7,089			18,586			14,073			—			39,748
Interest (expense) income		(4,484	)		—			274			—			(4,210	)
Other income (expense)		3,101			—			(16	)		—			3,085
Intercompany interest income (expense)		2,976			(2,951	)		(25	)		—			—
Earnings before income taxes		8,682			15,635			14,306			—			38,623
Income tax provision		(3,012	)		(4,122	)		(2,334	)		—			(9,468	)
Equity in earnings (loss) of subsidiaries, net of tax		23,483			—			(662	)		(22,821	)		—
Net earnings		29,153			11,513			11,310			(22,821	)		29,155
Less: Net earnings attributable to noncontrolling interests		—			—			2			—			2
Net earnings attributable to Caleres, Inc.	$	29,153		$	11,513		$	11,308		$	(22,821	)	$	29,153

Comprehensive income	$	29,309		$	11,451		$	11,362		$	(22,822	)	$	29,300
Less: Comprehensive loss attributable to noncontrolling interests		—			—			(9	)		—			(9	)
Comprehensive income attributable to Caleres, Inc.	$	29,309		$	11,451		$	11,371		$	(22,822	)	$	29,309

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

FOR THE thirty-nine weeks ended November 3, 2018

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations			Total
Net sales	$	651,807		$	1,487,877		$	164,829		$	(189,930	)	$	2,114,583
Cost of goods sold		448,832			862,345			83,538			(158,765	)		1,235,950
Gross profit		202,975			625,532			81,291			(31,165	)		878,633
Selling and administrative expenses		204,696			558,714			42,310			(31,165	)		774,555
Restructuring and other special charges, net		5,679			3,561			—			—			9,240
Operating (loss) earnings		(7,400	)		63,257			38,981			—			94,838
Interest (expense) income		(12,108	)		(25	)		638			—			(11,495	)
Other income (expense)		9,305			—			(51	)		—			9,254
Intercompany interest income (expense)		8,617			(8,650	)		33			—			—
(Loss) earnings before income taxes		(1,586	)		54,582			39,601			—			92,597
Income tax provision		(2,065	)		(14,257	)		(6,329	)		—			(22,651	)
Equity in earnings (loss) of subsidiaries, net of tax		73,662			—			(1,256	)		(72,406	)		—
Net earnings		70,011			40,325			32,016			(72,406	)		69,946
Less: Net loss attributable to noncontrolling interests		—			—			(65	)		—			(65	)
Net earnings attributable to Caleres, Inc.	$	70,011		$	40,325		$	32,081		$	(72,406	)	$	70,011

Comprehensive income	$	68,633		$	40,235		$	31,824		$	(72,200	)	$	68,492
Less: Comprehensive loss attributable to noncontrolling interests		—			—			(141	)		—			(141	)
Comprehensive income attributable to Caleres, Inc.	$	68,633		$	40,235		$	31,965		$	(72,200	)	$	68,633

UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE thirty-nine weeks ended November 3, 2018

							Non-
($ thousands)	Parent			Guarantors			Guarantors			Eliminations		Total
Net cash provided by operating activities	$	2,739		$	76,601		$	15,070		$	—	$	94,410

Investing activities
Purchases of property and equipment		(14,094	)		(19,571	)		(1,579	)		—		(35,244	)
Capitalized software		(3,077	)		(428	)		—			—		(3,505	)
Acquisition of Blowfish Malibu, net of cash received		(17,284	)		—			—			—		(17,284	)
Acquisition of Vionic, net of cash received		(344,942	)		—			—			—		(344,942	)
Intercompany investing		2			(2	)		—			—		—
Net cash used for investing activities		(379,395	)		(20,001	)		(1,579	)		—		(400,975	)

Financing activities
Borrowings under revolving credit agreement		360,000			—			—			—		360,000
Repayments under revolving credit agreement		(10,000	)		—			—			—		(10,000	)
Repayments under capital lease obligations		—			(114	)		—			—		(114	)
Dividends paid		(9,059	)		—			—			—		(9,059	)
Acquisition of treasury stock		(3,288	)		—			—			—		(3,288	)
Issuance of common stock under share-based plans, net		(4,318	)		—			—			—		(4,318	)
Intercompany financing		21,244			(44,669	)		23,425			—		—
Net cash provided by (used for) financing activities		354,579			(44,783	)		23,425			—		333,221
Effect of exchange rate changes on cash and cash equivalents		—			—			(212	)		—		(212	)
(Decrease) increase in cash and cash equivalents		(22,077	)		11,817			36,704			—		26,444
Cash and cash equivalents at beginning of period		26,089			—			37,958			—		64,047
Cash and cash equivalents at end of period	$	4,012		$	11,817		$	74,662		$	—	$	90,491

CONDENSED CONSOLIDATING BALANCE SHEET

February 2, 2019

					Non-
($ thousands)	Parent		Guarantors		Guarantors			Eliminations			Total
Assets
Current assets
Cash and cash equivalents	$	2	$	9,148	$	21,050		$	—		$	30,200
Receivables, net		130,684		32,319		28,719			—			191,722
Inventories, net		175,697		470,610		36,864			—			683,171
Prepaid expenses and other current assets		31,195		32,556		7,603			—			71,354
Intercompany receivable – current		190		42		15,279			(15,511	)		—
Total current assets		337,768		544,675		109,515			(15,511	)		976,447
Other assets		68,707		11,824		909			—			81,440
Goodwill and intangible assets, net		108,884		331,810		109,203			—			549,897
Property and equipment, net		62,608		157,270		10,906			—			230,784
Investment in subsidiaries		1,499,209		—		(24,838	)		(1,474,371	)		—
Intercompany receivable – noncurrent		597,515		578,821		762,281			(1,938,617	)		—
Total assets	$	2,674,691	$	1,624,400	$	967,976		$	(3,428,499	)	$	1,838,568

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	335,000	$	—	$	—		$	—		$	335,000
Trade accounts payable		146,400		130,670		39,228			—			316,298
Other accrued expenses		95,498		86,015		20,525			—			202,038
Intercompany payable – current		10,781		—		4,730			(15,511	)		—
Total current liabilities		587,679		216,685		64,483			(15,511	)		853,336
Other liabilities
Long-term debt		197,932		—		—			—			197,932
Other liabilities		105,689		41,149		5,027			—			151,865
Intercompany payable – noncurrent		1,149,338		115,114		674,165			(1,938,617	)		—
Total other liabilities		1,452,959		156,263		679,192			(1,938,617	)		349,797
Equity
Caleres, Inc. shareholders’ equity		634,053		1,251,452		222,919			(1,474,371	)		634,053
Noncontrolling interests		—		—		1,382			—			1,382
Total equity		634,053		1,251,452		224,301			(1,474,371	)		635,435
Total liabilities and equity	$	2,674,691	$	1,624,400	$	967,976		$	(3,428,499	)	$	1,838,568