[X]
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended April 28, 2012
|
[ ]
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _____________ to _____________
|
BROWN SHOE COMPANY, INC.
(Exact name of registrant as specified in its charter)
|
|
New York
(State or other jurisdiction
of incorporation or organization)
|
43-0197190
(IRS Employer Identification Number)
|
8300 Maryland Avenue
St. Louis, Missouri
(Address of principal executive offices)
|
63105
(Zip Code)
|
(314) 854-4000
(Registrant's telephone number, including area code)
|
|
Large accelerated filer £
|
Accelerated filer R
|
Non-accelerated filer £
|
Smaller reporting company £
|
(Do not check if a smaller reporting company)
|
PART I
|
FINANCIAL INFORMATION
|
ITEM 1
|
FINANCIAL STATEMENTS
|
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|||||||||
($ thousands)
|
April 28, 2012
|
April 30, 2011
|
January 28, 2012
|
||||||
Assets
|
|||||||||
Current assets
|
|||||||||
Cash and cash equivalents
|
$
|
39,792
|
$
|
54,229
|
$
|
47,682
|
|||
Receivables
|
139,488
|
144,484
|
154,022
|
||||||
Inventories
|
512,819
|
534,725
|
561,797
|
||||||
Prepaid expenses and other current assets
|
46,051
|
57,468
|
51,637
|
||||||
Total current assets
|
738,150
|
790,906
|
815,138
|
||||||
Other assets
|
138,178
|
135,103
|
140,277
|
||||||
Goodwill and intangible assets, net
|
138,697
|
173,162
|
140,590
|
||||||
Property and equipment
|
430,098
|
430,274
|
436,683
|
||||||
Allowance for depreciation
|
(304,301
|
)
|
(288,876
|
)
|
(305,212
|
)
|
|||
Net property and equipment
|
125,797
|
141,398
|
131,471
|
||||||
Total assets
|
$
|
1,140,822
|
$
|
1,240,569
|
$
|
1,227,476
|
|||
Liabilities and Equity
|
|||||||||
Current liabilities
|
|||||||||
Borrowings under revolving credit agreement
|
$
|
124,000
|
$
|
288,000
|
$
|
201,000
|
|||
Trade accounts payable
|
182,380
|
171,386
|
190,611
|
||||||
Other accrued expenses
|
135,484
|
132,806
|
132,969
|
||||||
Total current liabilities
|
441,864
|
592,192
|
524,580
|
||||||
Other liabilities
|
|||||||||
Long-term debt
|
198,680
|
150,000
|
198,633
|
||||||
Deferred rent
|
29,746
|
34,127
|
32,361
|
||||||
Other liabilities
|
57,538
|
44,438
|
58,186
|
||||||
Total other liabilities
|
285,964
|
228,565
|
289,180
|
||||||
Equity
|
|||||||||
Common stock
|
428
|
443
|
420
|
||||||
Additional paid-in capital
|
115,912
|
135,568
|
115,869
|
||||||
Accumulated other comprehensive income
|
10,233
|
8,197
|
9,637
|
||||||
Retained earnings
|
285,439
|
274,814
|
286,743
|
||||||
Total Brown Shoe Company, Inc. shareholders’ equity
|
412,012
|
419,022
|
412,669
|
||||||
Noncontrolling interests
|
982
|
790
|
1,047
|
||||||
Total equity
|
412,994
|
419,812
|
413,716
|
||||||
Total liabilities and equity
|
$
|
1,140,822
|
$
|
1,240,569
|
$
|
1,227,476
|
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
|
(Unaudited)
|
|||||||
Thirteen Weeks Ended
|
|||||||
($ thousands, except per share amounts)
|
April 28,
2012
|
April 30,
2011
|
|||||
Net sales
|
$
|
626,441
|
$
|
619,555
|
|||
Cost of goods sold
|
387,377
|
371,591
|
|||||
Gross profit
|
239,064
|
247,964
|
|||||
Selling and administrative expenses
|
218,914
|
234,140
|
|||||
Restructuring and other special charges, net
|
11,455
|
1,744
|
|||||
Operating earnings
|
8,695
|
12,080
|
|||||
Interest expense
|
(6,157
|
)
|
(6,698
|
)
|
|||
Interest income
|
83
|
85
|
|||||
Earnings before income taxes from continuing operations
|
2,621
|
5,467
|
|||||
Income tax provision
|
(993
|
)
|
(2,119
|
)
|
|||
Net earnings from continuing operations
|
1,628
|
3,348
|
|||||
Discontinued operations:
|
|||||||
Earnings from operations of subsidiary, net of tax of $0 and $215, respectively
|
–
|
293
|
|||||
Net earnings from discontinued operations
|
–
|
293
|
|||||
Net earnings
|
1,628
|
3,641
|
|||||
Net loss attributable to noncontrolling interests
|
(67
|
)
|
(47
|
)
|
|||
Net earnings attributable to Brown Shoe Company, Inc.
|
$
|
1,695
|
$
|
3,688
|
|||
Basic earnings per common share:
|
|||||||
From continuing operations
|
$
|
0.04
|
$
|
0.08
|
|||
From discontinued operations
|
–
|
–
|
|||||
Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
$
|
0.04
|
$
|
0.08
|
|||
Diluted earnings per common share:
|
|||||||
From continuing operations
|
$
|
0.04
|
$
|
0.08
|
|||
From discontinued operations
|
–
|
–
|
|||||
Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
$
|
0.04
|
$
|
0.08
|
|||
Dividends per common share
|
$
|
0.07
|
$
|
0.07
|
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(Unaudited)
|
|||||||
Thirteen Weeks Ended
|
|||||||
($ thousands, except per share amounts)
|
April 28,
2012
|
April 30,
2011
|
|||||
Net earnings
|
$
|
1,628
|
$
|
3,641
|
|||
Other comprehensive income, net of tax:
|
|||||||
Foreign currency translation adjustment
|
988
|
2,259
|
|||||
Unrealized losses on derivative financial instruments, net of tax of $136 and $51, respectively
|
(383
|
)
|
(209
|
)
|
|||
Net (income) loss from derivatives reclassified into earnings, net of tax of $9 and $5, respectively
|
(9
|
)
|
14
|
||||
Other comprehensive income, net of tax
|
596
|
2,064
|
|||||
Comprehensive income
|
2,224
|
5,705
|
|||||
Comprehensive loss attributable to noncontrolling interests
|
(65
|
)
|
(39
|
)
|
|||
Comprehensive income attributable to Brown Shoe Company, Inc.
|
$
|
2,289
|
$
|
5,744
|
BROWN SHOE COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
||||||
Thirteen Weeks Ended
|
||||||
($ thousands)
|
April 28,
2012
|
April 30,
2011
|
||||
Operating Activities
|
||||||
Net earnings
|
$
|
1,628
|
$
|
3,641
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
||||||
Depreciation
|
8,104
|
8,921
|
||||
Amortization of capitalized software
|
3,283
|
3,327
|
||||
Amortization of intangibles
|
1,893
|
2,066
|
||||
Amortization of debt issuance costs
|
629
|
599
|
||||
Share-based compensation expense
|
1,444
|
1,663
|
||||
Tax (benefit) deficiency related to share-based plans
|
(753
|
)
|
431
|
|||
Loss on disposal of facilities and equipment
|
456
|
308
|
||||
Impairment charges for facilities and equipment
|
2,756
|
543
|
||||
Deferred rent
|
(2,615
|
)
|
(551
|
)
|
||
Provision for doubtful accounts
|
950
|
335
|
||||
Changes in operating assets and liabilities, net of acquired business:
|
||||||
Receivables
|
13,587
|
(9,628
|
)
|
|||
Inventories
|
49,251
|
39,362
|
||||
Prepaid expenses and other current and noncurrent assets
|
6,377
|
268
|
||||
Trade accounts payable
|
(8,268
|
)
|
(9,155
|
)
|
||
Accrued expenses and other liabilities
|
1,900
|
(37,348
|
)
|
|||
Other, net
|
(724
|
)
|
(1,125
|
)
|
||
Net cash provided by operating activities
|
79,898
|
3,657
|
||||
Investing Activities
|
||||||
Purchases of property and equipment
|
(5,622
|
)
|
(7,067
|
)
|
||
Capitalized software
|
(1,386
|
)
|
(2,640
|
)
|
||
Acquisition cost
|
–
|
(156,636
|
)
|
|||
Cash recognized on initial consolidation
|
–
|
3,121
|
||||
Net cash used for investing activities
|
(7,008
|
)
|
(163,222
|
)
|
||
Financing Activities
|
||||||
Borrowings under revolving credit agreement
|
165,000
|
759,500
|
||||
Repayments under revolving credit agreement
|
(242,000
|
)
|
(669,500
|
)
|
||
Dividends paid
|
(2,999
|
)
|
(3,104
|
)
|
||
Debt issuance costs
|
–
|
(1,234
|
)
|
|||
Issuance of common stock under share-based plans
|
(2,148
|
)
|
484
|
|||
Tax benefit (deficiency) related to share-based plans
|
753
|
(431
|
)
|
|||
Net cash (used for) provided by financing activities
|
(81,394
|
)
|
85,715
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
614
|
1,531
|
||||
Decrease in cash and cash equivalents
|
(7,890
|
)
|
(72,319
|
)
|
||
Cash and cash equivalents at beginning of period
|
47,682
|
126,548
|
||||
Cash and cash equivalents at end of period
|
$
|
39,792
|
$
|
54,229
|
BROWN SHOE COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
Note 1
|
Basis of Presentation
|
Note 2
|
Impact of New and Prospective Accounting Pronouncements
|
Note 3
|
Acquisitions and Divestitures
|
Thirteen Weeks
Ended
|
|||
($ thousands, except per share amounts)
|
April 30, 2011 | ||
Net sales
|
$ |
626,312
|
|
Net earnings attributable to Brown Shoe Company, Inc.
|
6,609
|
||
Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
0.15
|
||
Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
0.15
|
Note 4
|
Earnings Per Share
|
Thirteen Weeks Ended | |||||||
(in thousands, except per share amounts)
|
April 28,
2012
|
April 30,
2011
|
|||||
NUMERATOR
|
|||||||
Net earnings from continuing operations
|
$ |
1,628
|
$
|
3,348
|
|||
Net loss attributable to noncontrolling interests
|
67
|
47
|
|||||
Net earnings allocated to participating securities
|
(155
|
)
|
(138
|
)
|
|||
Net earnings from continuing operations
|
1,540
|
3,257
|
|||||
Net earnings from discontinued operations
|
–
|
293
|
|||||
Net earnings allocated to participating securities
|
–
|
(11
|
)
|
||||
Net earnings from discontinued operations
|
–
|
282
|
|||||
Net earnings attributable to Brown Shoe Company, Inc. after allocation of earnings to participating securities
|
$ |
1,540
|
$
|
3,539
|
|||
DENOMINATOR
|
|||||||
Denominator for basic continuing and discontinued earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
40,422
|
42,475
|
|||||
Dilutive effect of share-based awards
|
322
|
531
|
|||||
Denominator for diluted continuing and discontinued earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
40,744
|
43,006
|
|||||
Basic earnings per common share:
|
|||||||
From continuing operations
|
$ |
0.04
|
$
|
0.08
|
|||
From discontinued operations
|
–
|
–
|
|||||
Basic earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
$ |
0.04
|
$
|
0.08
|
|||
Diluted earnings per common share:
|
|||||||
From continuing operations
|
$ |
0.04
|
$
|
0.08
|
|||
From discontinued operations
|
–
|
–
|
|||||
Diluted earnings per common share attributable to Brown Shoe Company, Inc. shareholders
|
$ |
0.04
|
$
|
0.08
|
Note 5
|
Restructuring and Other Special Charges, Net
|
($ millions)
|
Employee
|
Markdowns
and Royalty
Shortfalls
|
Facility
|
Other
|
Total
|
||||||||||
Original charges and reserve balance
|
$
|
8.9
|
$
|
6.1
|
$
|
1.4
|
$
|
2.8
|
$
|
19.2
|
|||||
Amounts settled in 2011
|
(3.1
|
)
|
(4.5
|
)
|
(0.1
|
)
|
(1.5
|
)
|
(9.2
|
)
|
|||||
Reserve balance at January 28, 2012
|
$
|
5.8
|
$
|
1.6
|
$
|
1.3
|
$
|
1.3
|
$
|
10.0
|
|||||
Additional charges in first quarter 2012
|
3.4
|
1.4
|
6.0
|
1.3
|
12.1
|
||||||||||
Amounts settled in first quarter 2012
|
(3.5
|
)
|
(2.2
|
)
|
(2.4
|
)
|
(1.0
|
)
|
(9.1
|
)
|
|||||
Reserve balance at April 28, 2012
|
$
|
5.7
|
$
|
0.8
|
$
|
4.9
|
$
|
1.6
|
$
|
13.0
|
Note 6
|
Business Segment Information
|
($ thousands)
|
Famous
Footwear
|
Wholesale
Operations
|
Specialty
Retail
|
Other
|
Total
|
||||||||||
Thirteen Weeks Ended April 28, 2012
|
|||||||||||||||
External sales
|
$
|
347,107
|
$
|
223,203
|
$
|
56,131
|
$
|
–
|
$
|
626,441
|
|||||
Intersegment sales
|
559
|
51,576
|
–
|
–
|
52,135
|
||||||||||
Operating earnings (loss)
|
18,301
|
1,979
|
(3,527
|
)
|
(8,058
|
)
|
8,695
|
||||||||
Operating segment assets
|
431,820
|
508,710
|
56,702
|
143,590
|
1,140,822
|
||||||||||
Thirteen Weeks Ended April 30, 2011
|
|||||||||||||||
External sales
|
$
|
342,727
|
$
|
217,064
|
$
|
59,764
|
$
|
–
|
$
|
619,555
|
|||||
Intersegment sales
|
401
|
41,145
|
–
|
–
|
41,546
|
||||||||||
Operating earnings (loss)
|
18,782
|
6,019
|
(3,744
|
)
|
(8,977
|
)
|
12,080
|
||||||||
Operating segment assets
|
478,255
|
557,272
|
63,547
|
141,495
|
1,240,569
|
Thirteen Weeks Ended
|
|||||||
($ thousands)
|
April 28,
2012
|
April 30,
2011
|
|||||
Operating earnings
|
$
|
8,695
|
$
|
12,080
|
|||
Interest expense
|
(6,157
|
)
|
(6,698
|
)
|
|||
Interest income
|
83
|
85
|
|||||
Earnings before income taxes from continuing operations
|
$
|
2,621
|
$
|
5,467
|
Note 7
|
Goodwill and Intangible Assets
|
($ thousands)
|
April 28,
2012
|
April 30,
2011
|
January 28,
2012
|
|||||||
Intangible Assets
|
||||||||||
Famous Footwear
|
$
|
2,800
|
$
|
2,800
|
$
|
2,800
|
||||
Wholesale Operations
|
155,003
|
163,008
|
155,003
|
|||||||
Specialty Retail
|
200
|
200
|
200
|
|||||||
Total intangible assets
|
158,003
|
166,008
|
158,003
|
|||||||
Accumulated amortization
|
(58,910
|
)
|
(50,782
|
)
|
(57,017
|
)
|
||||
Total intangible assets, net
|
99,093
|
115,226
|
100,986
|
|||||||
Goodwill
|
||||||||||
Wholesale Operations
|
39,604
|
57,936
|
39,604
|
|||||||
Total goodwill
|
39,604
|
57,936
|
39,604
|
|||||||
Goodwill and intangible assets, net
|
$
|
138,697
|
$
|
173,162
|
$
|
140,590
|
Note 8
|
Shareholders’ Equity
|
($ thousands)
|
Brown Shoe
Company, Inc.
Shareholders’ Equity
|
Noncontrolling
Interests
|
Total Equity
|
||||||
Equity at January 28, 2012
|
$
|
412,669
|
$
|
1,047
|
$
|
413,716
|
|||
Net earnings (loss)
|
1,695
|
(67
|
)
|
1,628
|
|||||
Other comprehensive income
|
596
|
2
|
598
|
||||||
Dividends paid
|
(2,999
|
)
|
–
|
(2,999
|
)
|
||||
Stock issued under share-based plans
|
(2,148
|
)
|
–
|
(2,148
|
)
|
||||
Tax benefit related to share-based plans
|
753
|
–
|
753
|
||||||
Share-based compensation expense
|
1,444
|
–
|
1,444
|
||||||
Other
|
2
|
–
|
2
|
||||||
Equity at April 28, 2012
|
$
|
412,012
|
$
|
982
|
$
|
412,994
|
Note 9
|
Retirement and Other Benefit Plans
|
Pension Benefits
|
Other Postretirement Benefits
|
|||||||||||
Thirteen Weeks Ended
|
Thirteen Weeks Ended
|
|||||||||||
($ thousands)
|
April 28,
2012
|
April 30,
2011
|
April 28,
2012
|
April 30,
2011
|
||||||||
Service cost
|
$
|
2,986
|
$
|
2,060
|
$
|
–
|
$
|
–
|
||||
Interest cost
|
3,184
|
3,092
|
40
|
44
|
||||||||
Expected return on assets
|
(6,279
|
)
|
(5,173
|
)
|
–
|
–
|
||||||
Amortization of:
|
||||||||||||
Actuarial loss (gain)
|
80
|
99
|
(13
|
)
|
(25
|
)
|
||||||
Net transition asset
|
(11
|
)
|
(11
|
)
|
–
|
–
|
||||||
Total net periodic benefit (income) cost
|
$
|
(40
|
)
|
$
|
67
|
$
|
27
|
$
|
19
|
Note 10
|
Long-Term and Short-Term Financing Arrangements
|
Year
|
Percentage
|
2014
|
105.344%
|
2015
|
103.563%
|
2016
|
101.781%
|
2017 and thereafter
|
100.000%
|
Note 11
|
Risk Management and Derivatives
|
Contract Amount
|
|||||||||||
(U.S. $ equivalent in thousands)
|
April 28, 2012
|
April 30, 2011
|
January 28, 2012
|
||||||||
Financial Instruments
|
|||||||||||
U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars)
|
$
|
21,924
|
$
|
19,149
|
$
|
19,002
|
|||||
Chinese yuan
|
18,831
|
15,446
|
43,407
|
||||||||
Euro
|
12,260
|
5,491
|
7,293
|
||||||||
Japanese yen
|
1,332
|
1,341
|
1,365
|
||||||||
New Taiwanese dollars
|
859
|
1,043
|
830
|
||||||||
Great Britain pounds sterling
|
202
|
223
|
2,947
|
||||||||
Other currencies
|
1,340
|
902
|
1,107
|
||||||||
Total financial instruments |
$
|
56,748
|
$
|
43,595
|
$
|
75,951
|
Asset Derivatives
|
Liability Derivatives
|
|||||||||
($ in thousands)
|
Balance Sheet Location
|
Fair Value
|
Balance Sheet Location
|
Fair Value
|
||||||
Foreign exchange forward contracts:
|
||||||||||
April 28, 2012
|
Prepaid expenses and other current assets
|
$
|
304
|
Other accrued expenses
|
$
|
958
|
||||
April 30, 2011
|
Prepaid expenses and other current assets
|
$
|
577
|
Other accrued expenses
|
$
|
1,174
|
||||
January 28, 2012
|
Prepaid expenses and other current assets
|
$
|
839
|
Other accrued expenses
|
$
|
633
|
||||
($ in thousands)
|
Thirteen Weeks Ended
April 28, 2012
|
Thirteen Weeks Ended
April 30, 2011
|
||||||||||
Foreign exchange forward contracts:
Income Statement Classification
Gains (Losses) - Realized
|
Gain (Loss)
Recognized in
OCI on
Derivatives
|
Gain (Loss)
Reclassified from
Accumulated OCI
into Earnings
|
Gain (Loss)
Recognized in
OCI on
Derivatives
|
Gain (Loss)
Reclassified from
Accumulated OCI
into Earnings
|
||||||||
Net sales
|
$
|
56
|
$
|
–
|
$
|
(55
|
)
|
$
|
42
|
|||
Cost of goods sold
|
(345
|
)
|
(8
|
)
|
(401
|
)
|
26
|
|||||
Selling and administrative expenses
|
(220
|
)
|
(10
|
)
|
206
|
(49
|
)
|
|||||
Interest expense
|
(10
|
)
|
–
|
(10
|
)
|
–
|
($ in thousands)
|
Fiscal Year Ended 2011
|
|||||
Foreign exchange forward contracts:
Income Statement Classification
Gains (Losses) - Realized
|
Gain (Loss)
Recognized in OCI on
Derivatives
|
Gain (Loss) Reclassified
from Accumulated OCI
into Earnings
|
||||
Net sales
|
$
|
(99
|
)
|
$
|
145
|
|
Cost of goods sold
|
335
|
90
|
||||
Selling and administrative expenses
|
232
|
(169
|
)
|
|||
Interest expense
|
14
|
–
|
Note 12
|
Fair Value Measurements
|
·
|
Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
|
·
|
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;
|
·
|
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
|
Fair Value Measurements
|
||||||||||||
($ thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Asset (Liability)
|
||||||||||||
As of April 28, 2012:
|
||||||||||||
Cash equivalents – money market funds
|
$
|
29,696
|
$
|
29,696
|
$
|
–
|
$
|
–
|
||||
Non-qualified deferred compensation plan assets
|
1,177
|
1,177
|
–
|
–
|
||||||||
Non-qualified deferred compensation plan liabilities
|
(1,177
|
)
|
(1,177
|
)
|
–
|
–
|
||||||
Deferred compensation plan liabilities for non-employee directors
|
(610
|
)
|
(610
|
)
|
–
|
–
|
||||||
Derivative financial instruments, net
|
(654
|
)
|
–
|
(654
|
)
|
–
|
||||||
As of April 30, 2011:
|
||||||||||||
Cash equivalents – money market funds
|
$
|
12,997
|
$
|
12,997
|
$
|
–
|
$
|
–
|
||||
Non-qualified deferred compensation plan assets
|
1,890
|
1,890
|
–
|
–
|
||||||||
Non-qualified deferred compensation plan liabilities
|
(1,890
|
)
|
(1,890
|
)
|
–
|
–
|
||||||
Deferred compensation plan liabilities for non-employee directors
|
(791
|
)
|
(791
|
)
|
–
|
–
|
||||||
Derivative financial instruments, net
|
(597
|
)
|
–
|
(597
|
)
|
–
|
||||||
As of January 28, 2012: | ||||||||||||
Cash equivalents – money market funds
|
$
|
5,063
|
$
|
5,063
|
$
|
–
|
$
|
–
|
||||
Non-qualified deferred compensation plan assets
|
1,081
|
1,081
|
–
|
–
|
||||||||
Non-qualified deferred compensation plan liabilities
|
(1,081
|
)
|
(1081
|
)
|
–
|
–
|
||||||
Deferred compensation plan liabilities for non-employee directors
|
(620
|
)
|
(620
|
)
|
–
|
–
|
||||||
Derivative financial instruments, net
|
206
|
–
|
206
|
–
|
April 28, 2012
|
April 30, 2011
|
January 28, 2012
|
||||||||||||||
($ thousands)
|
Carrying
Amount
|
Fair
Value
|
Carrying Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
||||||||||
Senior Notes
|
$198,680
|
$194,000
|
$150,000
|
$150,000
|
$198,633
|
$190,000
|
Note 13
|
Income Taxes
|
Note 14
|
Related Party Transactions
|
Note 15
|
Commitments and Contingencies
|
Note 16
|
Financial Information for the Company and its Subsidiaries
|
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF APRIL 28, 2012
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Assets
|
|||||||||||||||
Current assets
|
|||||||||||||||
Cash and cash equivalents
|
$
|
–
|
$
|
27,450
|
$
|
12,342
|
$
|
–
|
$
|
39,792
|
|||||
Receivables
|
92,244
|
22,262
|
24,982
|
–
|
139,488
|
||||||||||
Inventories
|
76,672
|
422,771
|
13,376
|
–
|
512,819
|
||||||||||
Prepaid expenses and other current assets
|
39,124
|
5,594
|
1,333
|
–
|
46,051
|
||||||||||
Total current assets
|
208,040
|
478,077
|
52,033
|
–
|
738,150
|
||||||||||
Other assets
|
117,615
|
19,698
|
865
|
–
|
138,178
|
||||||||||
Goodwill and intangible assets, net
|
46,448
|
15,880
|
76,369
|
–
|
138,697
|
||||||||||
Property and equipment, net
|
23,463
|
92,806
|
9,528
|
–
|
125,797
|
||||||||||
Investment in subsidiaries
|
817,259
|
63,885
|
–
|
(881,144
|
)
|
–
|
|||||||||
Total assets
|
$
|
1,212,825
|
$
|
670,346
|
$
|
138,795
|
$
|
(881,144
|
)
|
$
|
1,140,822
|
||||
Liabilities and Equity
|
|||||||||||||||
Current liabilities
|
|||||||||||||||
Borrowings under revolving credit agreement
|
$
|
124,000
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
124,000
|
|||||
Trade accounts payable
|
25,577
|
122,760
|
34,043
|
–
|
182,380
|
||||||||||
Other accrued expenses
|
54,569
|
70,745
|
10,170
|
–
|
135,484
|
||||||||||
Total current liabilities
|
204,146
|
193,505
|
44,213
|
–
|
441,864
|
||||||||||
Other liabilities
|
|||||||||||||||
Long-term debt
|
198,680
|
–
|
–
|
–
|
198,680
|
||||||||||
Other liabilities
|
29,352
|
44,006
|
13,926
|
–
|
87,284
|
||||||||||
Intercompany payable (receivable)
|
368,635
|
(384,424
|
)
|
15,789
|
–
|
–
|
|||||||||
Total other liabilities
|
596,667
|
(340,418
|
)
|
29,715
|
–
|
285,964
|
|||||||||
Equity
|
|||||||||||||||
Brown Shoe Company, Inc. shareholders’ equity
|
412,012
|
817,259
|
63,885
|
(881,144
|
)
|
412,012
|
|||||||||
Noncontrolling interests
|
–
|
–
|
982
|
–
|
982
|
||||||||||
Total equity
|
412,012
|
817,259
|
64,867
|
(881,144
|
)
|
412,994
|
|||||||||
Total liabilities and equity
|
$
|
1,212,825
|
$
|
670,346
|
$
|
138,795
|
$
|
(881,144
|
)
|
$
|
1,140,822
|
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED APRIL 28, 2012
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net sales
|
$
|
190,755
|
$
|
437,760
|
$
|
43,822
|
$
|
(45,896
|
)
|
$
|
626,441
|
||||
Cost of goods sold
|
145,898
|
249,594
|
37,781
|
(45,896
|
)
|
387,377
|
|||||||||
Gross profit
|
44,857
|
188,166
|
6,041
|
–
|
239,064
|
||||||||||
Selling and administrative expenses
|
40,967
|
168,269
|
9,678
|
–
|
218,914
|
||||||||||
Restructuring and other special charges, net
|
3,662
|
7,793
|
–
|
–
|
11,455
|
||||||||||
Equity in (earnings) loss of subsidiaries
|
(1,269
|
)
|
3,759
|
–
|
(2,490
|
)
|
–
|
||||||||
Operating earnings (loss)
|
1,497
|
8,345
|
(3,637
|
)
|
2,490
|
8,695
|
|||||||||
Interest expense
|
(6,156
|
)
|
(1
|
)
|
–
|
–
|
(6,157
|
)
|
|||||||
Interest income
|
–
|
61
|
22
|
–
|
83
|
||||||||||
Intercompany interest income (expense)
|
3,409
|
(3,515
|
)
|
106
|
–
|
–
|
|||||||||
(Loss) earnings before income taxes
|
(1,250
|
)
|
4,890
|
(3,509
|
)
|
2,490
|
2,621
|
||||||||
Income tax benefit (provision)
|
2,945
|
(3,621
|
)
|
(317
|
)
|
–
|
(993
|
)
|
|||||||
Net earnings (loss)
|
|
1,695
|
|
1,269
|
|
(3,826
|
)
|
|
2,490
|
|
1,628
|
||||
Net loss attributable to noncontrolling interests
|
–
|
–
|
(67
|
)
|
–
|
(67
|
)
|
||||||||
Net earnings (loss) attributable to Brown Shoe Company, Inc.
|
$
|
1,695
|
$
|
1,269
|
$
|
(3,759
|
)
|
$
|
2,490
|
$
|
1,695
|
||||
Comprehensive income (loss)
|
$
|
1,663
|
$
|
1,898
|
$
|
(3,827
|
)
|
$
|
2,490
|
$
|
2,224
|
||||
Comprehensive loss attributable to noncontrolling interests
|
–
|
–
|
(65
|
)
|
–
|
(65
|
)
|
||||||||
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.
|
$
|
1,663
|
$
|
1,898
|
$
|
(3,762
|
)
|
$
|
2,490
|
$
|
2,289
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 28, 2012
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net cash provided by operating activities
|
$
|
11,044
|
$
|
56,717
|
$
|
12,137
|
$
|
–
|
$
|
79,898
|
|||||
Investing activities
|
|||||||||||||||
Purchases of property and equipment
|
(433
|
)
|
(5,038
|
)
|
(151
|
)
|
–
|
(5,622
|
)
|
||||||
Capitalized software
|
(1,386
|
)
|
–
|
–
|
–
|
(1,386
|
)
|
||||||||
Net cash used for investing activities
|
(1,819
|
)
|
(5,038
|
)
|
(151
|
)
|
–
|
(7,008
|
)
|
||||||
Financing activities
|
|||||||||||||||
Borrowings under revolving credit agreement
|
165,000
|
–
|
–
|
–
|
165,000
|
||||||||||
Repayments under revolving credit agreement
|
(242,000
|
)
|
–
|
–
|
–
|
(242,000
|
)
|
||||||||
Dividends paid
|
(2,999
|
)
|
–
|
–
|
–
|
(2,999
|
)
|
||||||||
Issuance of common stock under share-based plans
|
(2,148
|
)
|
–
|
–
|
–
|
(2,148
|
)
|
||||||||
Tax benefit related to share-based plans
|
753
|
–
|
–
|
–
|
753
|
||||||||||
Intercompany financing
|
76,555
|
(59,175
|
)
|
(17,380
|
)
|
–
|
–
|
||||||||
Net cash used for financing activities
|
(4,839
|
)
|
(59,175
|
)
|
(17,380
|
)
|
–
|
(81,394
|
)
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
–
|
614
|
–
|
–
|
614
|
||||||||||
Increase (decrease) in cash and cash equivalents
|
4,386
|
(6,882
|
)
|
(5,394
|
)
|
–
|
(7,890
|
)
|
|||||||
Cash and cash equivalents at beginning of period
|
(4,386
|
)
|
34,332
|
17,736
|
–
|
47,682
|
|||||||||
Cash and cash equivalents at end of period
|
$
|
–
|
$
|
27,450
|
$
|
12,342
|
$
|
–
|
$
|
39,792
|
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 28, 2012
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Assets
|
|||||||||||||||
Current assets:
|
|||||||||||||||
Cash and cash equivalents
|
$
|
(4,386
|
)
|
$
|
34,332
|
$
|
17,736
|
$
|
–
|
$
|
47,682
|
||||
Receivables
|
78,129
|
24,082
|
51,811
|
–
|
154,022
|
||||||||||
Inventories
|
129,776
|
418,264
|
13,757
|
–
|
561,797
|
||||||||||
Prepaid expenses and other current assets
|
35,625
|
14,685
|
1,327
|
–
|
51,637
|
||||||||||
Total current assets
|
239,144
|
491,363
|
84,631
|
–
|
815,138
|
||||||||||
Other assets
|
115,515
|
23,844
|
918
|
–
|
140,277
|
||||||||||
Goodwill and intangible assets, net
|
47,765
|
16,160
|
76,665
|
–
|
140,590
|
||||||||||
Property and equipment, net
|
23,621
|
97,887
|
9,963
|
–
|
131,471
|
||||||||||
Investment in subsidiaries
|
813,602
|
68,057
|
–
|
(881,659
|
)
|
–
|
|||||||||
Total assets
|
$
|
1,239,647
|
$
|
697,311
|
$
|
172,177
|
$
|
(881,659
|
)
|
$
|
1,227,476
|
||||
Liabilities and Equity
|
|||||||||||||||
Current liabilities:
|
|||||||||||||||
Borrowings under revolving credit agreement
|
$
|
201,000
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
201,000
|
|||||
Trade accounts payable
|
49,238
|
92,431
|
48,942
|
–
|
190,611
|
||||||||||
Other accrued expenses
|
60,079
|
65,676
|
7,214
|
–
|
132,969
|
||||||||||
Total current liabilities
|
310,317
|
158,107
|
56,156
|
–
|
524,580
|
||||||||||
Other liabilities:
|
|||||||||||||||
Long-term debt
|
198,633
|
–
|
–
|
–
|
198,633
|
||||||||||
Other liabilities
|
29,702
|
46,717
|
14,128
|
–
|
90,547
|
||||||||||
Intercompany payable (receivable)
|
288,326
|
(321,115
|
)
|
32,789
|
–
|
–
|
|||||||||
Total other liabilities
|
516,661
|
(274,398
|
)
|
46,917
|
–
|
289,180
|
|||||||||
Equity:
|
|||||||||||||||
Brown Shoe Company, Inc. shareholders’ equity
|
412,669
|
813,602
|
68,057
|
(881,659
|
)
|
412,669
|
|||||||||
Noncontrolling interests
|
–
|
–
|
1,047
|
–
|
1,047
|
||||||||||
Total equity
|
412,669
|
813,602
|
69,104
|
(881,659
|
)
|
413,716
|
|||||||||
Total liabilities and equity
|
$
|
1,239,647
|
$
|
697,311
|
$
|
172,177
|
$
|
(881,659
|
)
|
$
|
1,227,476
|
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF APRIL 30, 2011
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Assets
|
|||||||||||||||
Current assets
|
|||||||||||||||
Cash and cash equivalents
|
$
|
–
|
$
|
26,845
|
$
|
27,384
|
$
|
–
|
$
|
54,229
|
|||||
Receivables
|
86,434
|
33,374
|
24,676
|
–
|
144,484
|
||||||||||
Inventories
|
81,525
|
440,402
|
12,798
|
–
|
534,725
|
||||||||||
Prepaid expenses and other current assets
|
31,697
|
23,805
|
1,966
|
–
|
57,468
|
||||||||||
Total current assets
|
199,656
|
524,426
|
66,824
|
–
|
790,906
|
||||||||||
Other assets
|
108,765
|
25,672
|
666
|
–
|
135,103
|
||||||||||
Goodwill and intangible assets, net
|
51,901
|
17,000
|
104,261
|
–
|
173,162
|
||||||||||
Property and equipment, net
|
24,921
|
107,013
|
9,464
|
–
|
141,398
|
||||||||||
Investment in subsidiaries
|
609,375
|
83,801
|
–
|
(693,176
|
)
|
–
|
|||||||||
Total assets
|
$
|
994,618
|
$
|
757,912
|
$
|
181,215
|
$
|
(693,176
|
)
|
$
|
1,240,569
|
||||
Liabilities and Equity
|
|||||||||||||||
Current liabilities
|
|||||||||||||||
Borrowings under revolving credit agreement
|
$
|
288,000
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
288,000
|
|||||
Trade accounts payable
|
26,016
|
115,051
|
30,319
|
–
|
171,386
|
||||||||||
Other accrued expenses
|
56,969
|
67,723
|
8,114
|
–
|
132,806
|
||||||||||
Total current liabilities
|
370,985
|
182,774
|
38,433
|
–
|
592,192
|
||||||||||
Other liabilities
|
|||||||||||||||
Long-term debt
|
150,000
|
–
|
–
|
–
|
150,000
|
||||||||||
Other liabilities
|
17,434
|
42,662
|
18,469
|
–
|
78,565
|
||||||||||
Intercompany payable (receivable)
|
37,177
|
(76,899
|
)
|
39,722
|
–
|
–
|
|||||||||
Total other liabilities
|
204,611
|
(34,237
|
)
|
58,191
|
–
|
228,565
|
|||||||||
Equity
|
|||||||||||||||
Brown Shoe Company, Inc. shareholders’ equity
|
419,022
|
609,375
|
83,801
|
(693,176
|
)
|
419,022
|
|||||||||
Noncontrolling interests
|
–
|
–
|
790
|
–
|
790
|
||||||||||
Total equity
|
419,022
|
609,375
|
84,591
|
(693,176
|
)
|
419,812
|
|||||||||
Total liabilities and equity
|
$
|
994,618
|
$
|
757,912
|
$
|
181,215
|
$
|
(693,176
|
)
|
$
|
1,240,569
|
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED APRIL 30, 2011
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net sales
|
$
|
169,200
|
$
|
434,612
|
$
|
49,069
|
$
|
(33,326
|
)
|
$
|
619,555
|
||||
Cost of goods sold
|
125,043
|
238,624
|
41,250
|
(33,326
|
)
|
371,591
|
|||||||||
Gross profit
|
44,157
|
195,988
|
7,819
|
–
|
247,964
|
||||||||||
Selling and administrative expenses
|
43,682
|
180,172
|
10,286
|
–
|
234,140
|
||||||||||
Restructuring and other special charges, net
|
1,744
|
–
|
–
|
–
|
1,744
|
||||||||||
Equity in (earnings) loss of subsidiaries
|
(5,805
|
)
|
1,788
|
–
|
4,017
|
–
|
|||||||||
Operating earnings (loss)
|
4,536
|
14,028
|
(2,467
|
)
|
(4,017
|
)
|
12,080
|
||||||||
Interest expense
|
(6,688
|
)
|
(2
|
)
|
(8
|
)
|
–
|
(6,698
|
)
|
||||||
Interest income
|
–
|
55
|
30
|
–
|
85
|
||||||||||
Intercompany interest income (expense)
|
4,220
|
(4,384
|
)
|
164
|
–
|
–
|
|||||||||
Earnings (loss) before income taxes from continuing operations
|
2,068
|
9,697
|
(2,281
|
)
|
(4,017
|
)
|
5,467
|
||||||||
Income tax benefit (provision)
|
1,620
|
(4,185
|
)
|
446
|
–
|
(2,119
|
)
|
||||||||
Net earnings (loss) from continuing operations
|
|
3,688
|
|
5,512
|
|
(1,835
|
)
|
|
(4,017
|
)
|
|
3,348
|
|||
Discontinued operations:
|
|||||||||||||||
Earnings from operations of subsidiary, net of tax
|
–
|
293
|
–
|
–
|
293
|
||||||||||
Net earnings from discontinued operations
|
–
|
293
|
–
|
–
|
293
|
||||||||||
Net earnings (loss)
|
3,688
|
5,805
|
(1,835
|
)
|
(4,017
|
)
|
3,641
|
||||||||
Net loss attributable to noncontrolling interests
|
–
|
–
|
(47
|
)
|
–
|
(47
|
)
|
||||||||
Net earnings (loss) attributable to Brown Shoe Company, Inc.
|
$
|
3,688
|
$
|
5,805
|
$
|
(1,788
|
)
|
$
|
(4,017
|
)
|
$
|
3,688
|
|||
Comprehensive income (loss)
|
$
|
3,993
|
$
|
9,851
|
$
|
(4,122
|
)
|
$
|
(4,017
|
)
|
$
|
5,705
|
|||
Comprehensive loss attributable to noncontrolling interests
|
–
|
–
|
(39
|
)
|
–
|
(39
|
)
|
||||||||
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.
|
$
|
3,993
|
$
|
9,851
|
$
|
(4,083
|
)
|
$
|
(4,017
|
)
|
$
|
5,744
|
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 30, 2011
|
($ thousands)
|
Parent
|
Guarantors
|
Non-Guarantors
|
Eliminations
|
Total
|
||||||||||
Net cash (used for) provided by operating activities
|
$
|
(34,552
|
)
|
$
|
26,118
|
$
|
12,091
|
$
|
–
|
$
|
3,657
|
||||
Investing activities
|
|||||||||||||||
Purchases of property and equipment
|
(551
|
)
|
(6,184
|
)
|
(332
|
)
|
–
|
(7,067
|
)
|
||||||
Capitalized software
|
(2,554
|
)
|
(86
|
)
|
–
|
–
|
(2,640
|
)
|
|||||||
Acquisition cost
|
–
|
–
|
(156,636
|
)
|
–
|
(156,636
|
)
|
||||||||
Cash recognized on initial consolidation
|
–
|
3,121
|
–
|
–
|
3,121
|
||||||||||
Net cash used for investing activities
|
(3,105
|
)
|
(3,149
|
)
|
(156,968
|
)
|
–
|
(163,222
|
)
|
||||||
Financing activities
|
|||||||||||||||
Borrowings under revolving credit agreement
|
759,500
|
–
|
–
|
–
|
759,500
|
||||||||||
Repayments under revolving credit agreement
|
(669,500
|
)
|
–
|
–
|
–
|
(669,500
|
)
|
||||||||
Dividends paid
|
(3,104
|
)
|
–
|
–
|
–
|
(3,104
|
)
|
||||||||
Debt issuance costs
|
(1,234
|
)
|
–
|
–
|
–
|
(1,234
|
)
|
||||||||
Issuance of common stock under share-based plans
|
484
|
–
|
–
|
–
|
484
|
||||||||||
Tax deficiency related to share-based plans
|
(431
|
)
|
–
|
–
|
–
|
(431
|
)
|
||||||||
Intercompany financing
|
(48,058
|
)
|
(24,750
|
)
|
72,808
|
–
|
–
|
||||||||
Net cash provided by (used for) financing activities
|
37,657
|
(24,750
|
)
|
72,808
|
–
|
85,715
|
|||||||||
Effect of exchange rate changes on cash and cash equivalents
|
–
|
1,531
|
–
|
–
|
1,531
|
||||||||||
Decrease in cash and cash equivalents
|
–
|
(250
|
)
|
(72,069
|
)
|
–
|
(72,319
|
)
|
|||||||
Cash and cash equivalents at beginning of period
|
–
|
27,095
|
99,453
|
–
|
126,548
|
||||||||||
Cash and cash equivalents at end of period
|
$
|
–
|
$
|
26,845
|
$
|
27,384
|
$
|
–
|
$
|
54,229
|
ITEM 2
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
OVERVIEW
|
·
|
Consolidated net sales increased $6.8 million, or 1.1%, to $626.4 million for the first quarter of 2012, compared to $619.6 million for the first quarter of last year. Net sales of our Wholesale Operations and Famous Footwear segments increased by $6.1 million and $4.4 million, respectively, while our Specialty Retail segment decreased by $3.7 million.
|
·
|
Consolidated operating earnings were $8.7 million in the first quarter of 2012, compared to $12.1 million for the first quarter of last year.
|
·
|
Consolidated net earnings attributable to Brown Shoe Company, Inc. were $1.7 million, or $0.04 per diluted share, in the first quarter of 2012, compared to $3.7 million, or $0.08 per diluted share, in the first quarter of last year.
|
·
|
Portfolio realignment – We incurred costs of $12.1 million ($7.9 million after-tax, or $0.18 per diluted share) related to our portfolio realignment efforts during the first quarter of 2012, with no corresponding costs in the same period of 2011. Our portfolio realignment efforts were designed to position us to be somewhat smaller but stronger and more profitable in the future. The first phase of the portfolio realignment includes selling The Basketball Marketing Company, Inc. (“TBMC”) (markets and sells footwear bearing the AND 1 brand name, which was acquired with American Sporting Goods Corporation (“ASG”)); exiting certain women’s specialty and private label brands; exiting the
children’s wholesale business; closing two U.S. distribution centers and a factory in China; closing or relocating numerous underperforming or poorly aligned retail stores and other infrastructure changes. These efforts began in 2011 and will continue through 2012. See Note 5 to the condensed consolidated financial statements for additional information related to these efforts.
|
·
|
Acquisition and integration-related costs – We incurred $0.7 million ($0.4 million after-tax, or $0.01 per diluted share) in costs during the first quarter of 2012 related to the integration of ASG, which was acquired during the first quarter of 2011. These costs were recorded in the Wholesale Operations segment as restructuring and other special charges, net. We incurred costs of $1.7 million (on both a pre-tax and after-tax basis, or $0.04 per diluted share) during the first quarter of 2011, related to the acquisition of ASG. These costs were recorded in the Other segment as restructuring and other special charges, net. See Note 3 and Note 5 to the condensed consolidated financial statements for additional information
related to these costs.
|
·
|
Acquisition-related cost of goods sold adjustment – We incurred costs of $2.7 million ($1.6 million after-tax, or $0.04 per diluted share) during the first quarter of 2011, associated with the non-cash cost of goods sold impact related to the inventory fair value adjustment in connection with the acquisition of ASG, with no corresponding costs in the first quarter of 2012. These costs were recorded in the Wholesale Operations segment. See Note 3 to the condensed consolidated financial statements for additional information related to these costs.
|
CONSOLIDATED RESULTS
|
Thirteen Weeks Ended
|
||||||||||
April 28, 2012
|
April 30, 2011
|
|||||||||
($ millions)
|
% of
Net
Sales
|
% of
Net
Sales
|
||||||||
Net sales
|
$
|
626.4
|
100.0%
|
$
|
619.6
|
100.0%
|
||||
Cost of goods sold
|
387.3
|
61.8%
|
371.6
|
60.0%
|
||||||
Gross profit
|
239.1
|
38.2%
|
248.0
|
40.0%
|
||||||
Selling and administrative expenses
|
218.9
|
35.0%
|
234.2
|
37.8%
|
||||||
Restructuring and other special charges, net
|
11.5
|
1.8%
|
1.7
|
0.3%
|
||||||
Operating earnings
|
8.7
|
1.4%
|
12.1
|
1.9%
|
||||||
Interest expense
|
(6.2
|
)
|
(1.0)%
|
(6.7
|
)
|
(1.1)%
|
||||
Interest income
|
0.1
|
0.0%
|
0.1
|
0.1%
|
||||||
Earnings before income taxes from continuing operations
|
2.6
|
0.4%
|
5.5
|
0.9%
|
||||||
Income tax provision
|
(1.0
|
)
|
(0.1)%
|
(2.2
|
)
|
(0.4)%
|
||||
Net earnings from continuing operations
|
|
1.6
|
0.3%
|
|
3.3
|
0.5%
|
||||
Discontinued operations:
|
||||||||||
Earnings from operations of subsidiary, net of tax
|
–
|
–
|
0.3
|
0.1%
|
||||||
Net earnings from discontinued operations
|
–
|
–
|
0.3
|
0.1%
|
||||||
Net earnings
|
1.6
|
0.3%
|
3.6
|
0.6%
|
||||||
Net loss attributable to noncontrolling interests
|
(0.1
|
)
|
0.0%
|
(0.1
|
)
|
0.0%
|
||||
Net earnings attributable to Brown Shoe Company, Inc.
|
$
|
1.7
|
0.3%
|
$
|
3.7
|
0.6%
|
FAMOUS FOOTWEAR
|
Thirteen Weeks Ended
|
||||||||||
April 28, 2012
|
April 30, 2011
|
|||||||||
($ millions, except sales per square foot)
|
% of
Net
Sales
|
% of
Net
Sales
|
||||||||
Operating Results
|
||||||||||
Net sales
|
$
|
347.1
|
100.0%
|
$
|
342.7
|
100.0%
|
||||
Cost of goods sold
|
192.0
|
55.3%
|
186.1
|
54.3%
|
||||||
Gross profit
|
155.1
|
44.7%
|
156.6
|
45.7%
|
||||||
Selling and administrative expenses
|
129.8
|
37.4%
|
137.8
|
40.2%
|
||||||
Restructuring and other special charges, net
|
7.0
|
2.0%
|
–
|
–
|
||||||
Operating earnings
|
$
|
18.3
|
5.3%
|
$
|
18.8
|
5.5%
|
||||
Key Metrics
|
||||||||||
Same-store sales % change
|
2.5%
|
(3.9)%
|
||||||||
Same-store sales $ change
|
$
|
8.3
|
$
|
(13.6
|
)
|
|||||
Sales change from new and closed stores, net
|
$
|
(3.9
|
)
|
$
|
(5.9
|
)
|
||||
Sales per square foot, excluding e-commerce (thirteen weeks ended)
|
$
|
46
|
$
|
44
|
||||||
Sales per square foot, excluding e-commerce (trailing twelve-months)
|
$
|
188
|
$
|
185
|
||||||
Square footage (thousand sq. ft.)
|
7,318
|
7,663
|
||||||||
Stores opened
|
11
|
14
|
||||||||
Stores closed
|
34
|
12
|
||||||||
Ending stores
|
1,066
|
1,112
|
WHOLESALE OPERATIONS
|
Thirteen Weeks Ended
|
||||||||||
April 28, 2012
|
April 30, 2011
|
|||||||||
($ millions)
|
% of
Net
Sales
|
% of
Net
Sales
|
||||||||
Operating Results
|
||||||||||
Net sales
|
$
|
223.2
|
100.0%
|
$
|
217.1
|
100.0%
|
||||
Cost of goods sold
|
162.4
|
72.8%
|
151.1
|
69.6%
|
||||||
Gross profit
|
60.8
|
27.2%
|
66.0
|
30.4%
|
||||||
Selling and administrative expenses
|
55.6
|
24.9%
|
60.0
|
27.6%
|
||||||
Restructuring and other special charges, net
|
3.2
|
1.4%
|
–
|
–
|
||||||
Operating earnings
|
$
|
2.0
|
0.9%
|
$
|
6.0
|
2.8%
|
||||
Key Metrics
|
||||||||||
Unfilled order position at end of period
|
$
|
354.8
|
$
|
434.3
|
SPECIALTY RETAIL
|
Thirteen Weeks Ended
|
||||||||||
April 28, 2012
|
April 30, 2011
|
|||||||||
($ millions, except sales per square foot)
|
% of
Net
Sales
|
% of
Net
Sales
|
||||||||
Operating Results
|
||||||||||
Net sales
|
$
|
56.1
|
100.0%
|
$
|
59.8
|
100.0%
|
||||
Cost of goods sold
|
32.9
|
58.7%
|
34.4
|
57.5%
|
||||||
Gross profit
|
23.2
|
41.3%
|
25.4
|
42.5%
|
||||||
Selling and administrative expenses
|
25.9
|
46.2%
|
29.1
|
48.8%
|
||||||
Restructuring and other special charges, net
|
0.8
|
1.4%
|
–
|
–
|
||||||
Operating loss
|
$
|
(3.5
|
)
|
(6.3)%
|
$
|
(3.7
|
)
|
(6.3)%
|
||
Key Metrics
|
||||||||||
Same-store sales % change |
2.6%
|
(1.0)%
|
||||||||
Same-store sales $ change
|
$
|
0.9
|
$
|
(0.4
|
)
|
|||||
Sales change from new and closed stores, net
|
$
|
(3.4
|
)
|
$
|
(2.0
|
)
|
||||
Impact of changes in Canadian exchange rate on sales
|
$
|
(0.4
|
)
|
$
|
0.9
|
|||||
Sales change for Shoes.com
|
$
|
(0.8
|
)
|
$
|
0.5
|
|||||
Sales per square foot, excluding e-commerce (thirteen weeks ended)
|
$
|
89
|
$
|
90
|
||||||
Sales per square foot, excluding e-commerce (trailing twelve-months) | $ | 397 | $ | 384 | ||||||
Square footage (thousand sq. ft.)
|
358
|
407
|
||||||||
Stores opened
|
6
|
3
|
||||||||
Stores closed | 13 | 10 | ||||||||
Ending stores
|
227
|
252
|
OTHER SEGMENT
|
·
|
Acquisition-related costs – We incurred costs of $1.7 million during the first quarter of 2011, related to the acquisition of ASG, with no corresponding costs in the Other segment during the first quarter of 2012.
|
·
|
Portfolio realignment costs – We incurred costs of $0.5 million during the first quarter of 2012, related to our portfolio realignment efforts, with no corresponding costs in the first quarter of 2011.
|
LIQUIDITY AND CAPITAL RESOURCES
|
($ millions)
|
April 28,
2012
|
April 30,
2011
|
January 28,
2012
|
||||||
Borrowings under revolving credit agreement
|
$
|
124.0
|
$
|
288.0
|
$
|
201.0
|
|||
Senior notes
|
198.7
|
150.0
|
198.6
|
||||||
Total debt
|
$
|
322.7
|
$
|
438.0
|
$
|
399.6
|
Year
|
Percentage
|
2014
|
105.344%
|
2015
|
103.563%
|
2016
|
101.781%
|
2017 and thereafter
|
100.000%
|
Thirteen Weeks Ended
|
|||||||||
($ millions)
|
April 28, 2012
|
April 30, 2011
|
Increase/
(Decrease)
|
||||||
Net cash provided by operating activities
|
$
|
79.9
|
$
|
3.7
|
$
|
76.2
|
|||
Net cash used for investing activities
|
(7.0
|
)
|
(163.2
|
)
|
156.2
|
||||
Net cash (used for) provided by financing activities
|
(81.4
|
)
|
85.7
|
(167.1
|
)
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
0.6
|
1.5
|
(0.9
|
)
|
|||||
Decrease in cash and cash equivalents
|
$
|
(7.9
|
)
|
$
|
(72.3
|
)
|
$
|
64.4
|
·
|
An increase in accrued expenses and other liabilities in the first quarter of 2012 as compared to a large decrease in the first quarter of last year, due in part to no incentive plan payouts in 2012 related to our 2011 incentive plans as compared to payouts in 2011 related to our 2010 incentive plans as well as higher liabilities in 2012 related to our restructuring and other special charges;
|
·
|
A decrease in accounts receivable in the first quarter of 2012 as compared to an increase in the first quarter of last year, due to fluctuations in sales and the timing of payments; and
|
·
|
A larger decrease in inventory in the first quarter of 2012 compared to last year.
|
April 28, 2012
|
April 30, 2011
|
January 28, 2012
|
||||
Working capital ($ millions) (1)
|
$ 296.3
|
$ 198.7
|
$ 290.6
|
|||
Current ratio (2)
|
1.67:1
|
1.34:1
|
1.55:1
|
|||
Debt-to-capital ratio (3)
|
43.9%
|
51.1%
|
49.1%
|
|||
(1)
|
Working capital has been computed as total current assets less total current liabilities.
|
|||||
(2)
|
The current ratio has been computed by dividing total current assets by total current liabilities.
|
|||||
(3)
|
The debt-to-capital ratio has been computed by dividing total debt by total capitalization. Total debt is defined as long-term debt and borrowings under the revolving credit agreement. Total capitalization is defined as total debt and total equity.
|
OFF BALANCE SHEET ARRANGEMENTS
|
CONTRACTUAL OBLIGATIONS
|
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
|
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|
FORWARD-LOOKING STATEMENTS
|
ITEM 3
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4
|
CONTROLS AND PROCEDURES
|
PART II
|
OTHER INFORMATION
|
ITEM 1
|
LEGAL PROCEEDINGS
|
ITEM 1A
|
RISK FACTORS
|
ITEM 2
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Fiscal Period
|
Total Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number
of Shares Purchased
as Part of Publicly
Announced Program (1)
|
Maximum Number
of Shares that
May Yet Be
Purchased Under
the Program
(1)
|
||||||||||
January 29, 2012 – February 25, 2012
|
4,421
|
(2)
|
$
|
10.66
|
(2)
|
–
|
2,500,000
|
|||||||
February 26, 2012 – March 31, 2012
|
253,035
|
(2)
|
9.59
|
(2)
|
–
|
2,500,000
|
||||||||
April 1, 2012 – April 28, 2012
|
–
|
–
|
–
|
2,500,000
|
||||||||||
Total
|
257,456
|
(2)
|
$
|
9.61
|
(2)
|
–
|
2,500,000
|
(1)
|
On August 25, 2011, the Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.5 million shares of our outstanding common stock. We can utilize the repurchase program to repurchase shares on the open market or in private transactions from time to time, depending on market conditions. The repurchase program does not have an expiration date. Under this plan, no shares were repurchased through the end of the first quarter of 2012; therefore, there were 2.5 million shares authorized to be purchased under the program as of April 28, 2012. Our repurchases of common stock are limited under our debt agreements.
|
(2)
|
Reflects shares that were tendered by employees related to certain share-based awards. These shares were tendered in satisfaction of the exercise price of stock options and/or to satisfy minimum tax withholding amounts for non-qualified stock options, restricted stock and stock performance awards. Accordingly, these share purchases are not considered a part of our publicly announced stock repurchase program.
|
ITEM 3
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4
|
MINE SAFETY DISCLOSURES
|
ITEM 5
|
OTHER INFORMATION
|
ITEM 6
|
EXHIBITS
|
Exhibit
No.
|
||
3.1
|
Restated Certificate of Incorporation of Brown Shoe Company, Inc. (the “Company”) incorporated herein by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended May 5, 2007, and filed June 5, 2007.
|
|
3.2
|
Bylaws of the Company as amended through October 6, 2011, incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K dated and filed October 11, 2011.
|
|
10.1
|
Severance Agreement, effective June 11, 2012, between the Company and Russell C. Hammer, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K dated and filed May 29, 2012.
|
|
31.1
|
†
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
†
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
†
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
†^
|
XBRL Instance Document
|
101.SCH
101.CAL
101.LAB
101.PRE
|
†^
†^
†^
†^
|
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Presentation Linkbase Document
|
SIGNATURES
|
BROWN SHOE COMPANY, INC.
|
||
Date: June 5, 2012
|
/s/ Mark E. Hood
|
|
Mark E. Hood
Senior Vice President and Chief Financial Officer
on behalf of the Registrant and as the
Principal Financial Officer and Principal Accounting Officer
|
CERTIFICATIONS
|
|
1.
|
I have reviewed this report on Form 10-Q of Brown Shoe Company, Inc. (the “registrant”);
|
|
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 registrant's other certifying officer 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 control over financial reporting, or caused such internal control 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting.
|
Date: June 5, 2012
|
/s/ Diane M. Sullivan
|
|
Diane M. Sullivan,
|
||
President and Chief Executive Officer
|
CERTIFICATIONS
|
|
1.
|
I have reviewed this report on Form 10-Q of Brown Shoe Company, Inc. (the “registrant”);
|
|
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 registrant's other certifying officer 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 control over financial reporting, or caused such internal control 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 registrant's 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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's 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 registrant's 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 registrant's internal control over financial reporting.
|
Date: June 5, 2012
|
/s/ Mark E. Hood
|
|
Mark E. Hood
|
||
Senior Vice President and Chief Financial Officer
|
(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 Registrant.
|
/s/ Diane M. Sullivan
|
|
Diane M. Sullivan
|
|
President and Chief Executive Officer
|
|
Brown Shoe Company, Inc.
|
|
June 5, 2012
|
|
/s/ Mark E. Hood
|
|
Mark E. Hood
|
|
Senior Vice President and Chief Financial Officer
|
|
Brown Shoe Company, Inc.
|
|
June 5, 2012
|
Impact Of New And Prospective Accounting Pronouncements
|
3 Months Ended | ||
---|---|---|---|
Apr. 28, 2012
|
|||
Impact Of New And Prospective Accounting Pronouncements [Abstract] | |||
Impact Of New And Prospective Accounting Pronouncements |
In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-04, Fair Value Measurement, which amends current fair value guidance. This accounting update requires additional disclosures related to fair value measurements. The Company adopted the standard on January 29, 2012 and it did not have an impact on the Company's condensed consolidated financial statements, although changes in related disclosures were required.
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (ASC Topic 220) Presentation of Comprehensive Income, which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income that contains two sections, net earnings and other comprehensive income, or in two separate but consecutive statements. The Company adopted the standard on January 29, 2012 and it did not have an impact on the Company's condensed consolidated balance sheets, results of operations or cash flows as it only requires a change in the format of the current presentation and related disclosures.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles-Goodwill and Other (ASC Topic 350) Testing Goodwill for Impairment, which amends current goodwill impairment testing guidance. This accounting update will allow companies the option to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If, after considering the totality of events and circumstances, an entity determines it is more likely than not that the fair value of a reporting unit is more than its carrying amount, performing the two-step impairment test is unnecessary. The Company adopted the standard on January 29, 2012 and it did not have an impact on the Company's condensed consolidated financial statements. |