Note 16

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 Credit Agreement. See Note 10 to the condensed consolidated financial statements for additional information related to our long-term and short-term financing arrangements. The following table presents the condensed 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 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
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		101,466		18,775		18,321		–		138,562
Inventories, net		77,237		444,534		17,588		–		539,359
Prepaid expenses and other current assets		38,521		(4,562)		721		–		34,680
Total current assets		217,224		487,860		48,401		–		753,485
Other assets		115,445		18,939		810		–		135,194
Goodwill and intangible assets, net		38,337		20,264		75,776		–		134,377
Property and equipment, net		24,578		107,335		9,135		–		141,048
Investment in subsidiaries		862,308		234,014		–		(1,096,322)		–
Total assets	$	1,257,892	$	868,412	$	134,122	$	(1,096,322)	$	1,164,104

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	110,000	$	–	$	–	$	–	$	110,000
Trade accounts payable		35,565		125,296		22,561		–		183,422
Other accrued expenses		60,812		78,164		11,080		–		150,056
Total current liabilities		206,377		203,460		33,641		–		443,478
Other liabilities
Long-term debt		198,773		–		–		–		198,773
Other liabilities		33,213		42,601		14,102		–		89,916
Intercompany payable (receivable)		388,391		(239,957)		(148,434)		–		–
Total other liabilities		620,377		(197,356)		(134,332)		–		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	$	1,257,892	$	868,412	$	134,122	$	(1,096,322)	$	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	$	209,513	$	532,390	$	42,437	$	(52,171)	$	732,169
Cost of goods sold		158,438		307,509		32,611		(52,171)		446,387
Gross profit		51,075		224,881		9,826		–		285,782
Selling and administrative expenses		56,589		187,826		(2,098)		–		242,317
Restructuring and other special charges, net		1,686		656		–		–		2,342
Equity in (earnings) loss of subsidiaries		(31,317)		(10,031)		–		41,348		–
Operating earnings (loss)		24,117		46,430		11,924		(41,348)		41,123
Interest expense		(5,513)		–		–		–		(5,513)
Interest income		–		61		15		–		76
Intercompany interest income (expense)		3,040		(3,147)		107		–		–
Earnings (loss) before income taxes		21,644		43,344		12,046		(41,348)		35,686
Income tax benefit (provision)		2,642		(12,021)		(2,020)		–		(11,399)
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 income 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	$	566,681	$	1,408,768	$	133,406	$	(150,966)	$	1,957,889
Cost of goods sold		436,652		805,016		108,527		(150,966)		1,199,229
Gross profit		130,029		603,752		24,879		–		758,660
Selling and administrative expenses		144,055		526,818		9,619		–		680,492
Restructuring and other special charges, net		8,098		13,190		–		–		21,288
Impairment of intangible assets		5,777		–		–		–		5,777
Equity in (earnings) loss of subsidiaries		(46,701)		(12,872)		–		59,573		–
Operating earnings (loss)		18,800		76,616		15,260		(59,573)		51,103
Interest expense		(17,428)		–		–		–		(17,428)
Interest income		-		185		51		–		236
Intercompany interest income (expense)		9,568		(9,888)		320		–		–
Earnings (loss) before income taxes		10,940		66,913		15,631		(59,573)		33,911
Income tax benefit (provision)		12,506		(20,206)		(3,010)		–		(10,710)
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




CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JANUARY 28, 2012
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	(4,386)	$	34,332	$	17,736	$	–	$	47,682
Receivables, net		78,129		24,082		51,811		–		154,022
Inventories, net		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




UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 29, 2011
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	(1,209)	$	26,552	$	16,608	$	–	$	41,951
Receivables, net		107,959		21,391		26,404		–		155,754
Inventories, net		107,532		462,178		10,444		–		580,154
Prepaid expenses and other current assets		18,228		11,270		3,450		–		32,948
Total current assets		232,510		521,391		56,906		–		810,807
Other assets		112,099		24,592		899		–		137,590
Goodwill and intangible assets, net		49,143		16,440		76,961		–		142,544
Property and equipment, net		24,267		102,725		9,825		–		136,817
Investment in subsidiaries		646,443		66,317		–		(712,760)		–
Total assets	$	1,064,462	$	731,465	$	144,591	$	(712,760)	$	1,227,758

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	222,000	$	–	$	–	$	–	$	222,000
Trade accounts payable		36,591		116,548		24,382		–		177,521
Other accrued expenses		50,396		75,414		12,264		–		138,074
Total current liabilities		308,987		191,962		36,646		–		537,595
Other liabilities
Long-term debt		198,586		–		–		–		198,586
Other liabilities		16,668		41,168		14,148		–		71,984
Intercompany payable (receivable)		121,621		(148,108)		26,487		–		–
Total other liabilities		336,875		(106,940)		40,635		–		270,570
Equity
Brown Shoe Company, Inc. shareholders’ equity		418,600		646,443		66,317		(712,760)		418,600
Noncontrolling interests		–		–		993		–		993
Total equity		418,600		646,443		67,310		(712,760)		419,593
Total liabilities and equity	$	1,064,462	$	731,465	$	144,591	$	(712,760)	$	1,227,758




UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTEEN WEEKS ENDED OCTOBER 29, 2011
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	206,628	$	517,443	$	42,107	$	(52,390)	$	713,788
Cost of goods sold		157,993		298,120		33,567		(52,390)		437,290
Gross profit		48,635		219,323		8,540		–		276,498
Selling and administrative expenses		40,435		167,977		31,010		–		239,422
Restructuring and other special charges, net		4,715		–		–		–		4,715
Equity in (earnings) loss of subsidiaries		(32,516)		22,895		–		9,621		–
Operating earnings (loss)		36,001		28,451		(22,470)		(9,621)		32,361
Interest expense		(6,681)		(8)		4		–		(6,685)
Interest income		–		89		9		–		98
Intercompany interest income (expense)		3,753		(3,859)		106		–		–
Earnings (loss) before income taxes from continuing operations		33,073		24,673		(22,351)		(9,621)		25,774
Income tax benefit (provision)		659		(8,256)		(583)		–		(8,180)
Net earnings (loss) from continuing operations		33,732		16,417		(22,934)		(9,621)		17,594
Discontinued operations:
Earnings from operations of subsidiary, net of tax		–		725		–		–		725
Gain on sale of subsidiary, net of tax		–		15,374		–		–		15,374
Net earnings from discontinued operations		–		16,099		–		–		16,099
Net earnings (loss)		33,732		32,516		(22,934)		(9,621)		33,693
Net loss attributable to noncontrolling interests		–		–		(39)		–		(39)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	33,732	$	32,516	$	(22,895)	$	(9,621)	$	33,732

Comprehensive income (loss)	$	33,732	$	30,431	$	(22,265)	$	(9,621)	$	32,277
Comprehensive loss attributable to noncontrolling interests		–		–		(30)		–		(30)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	33,732	$	30,431	$	(22,235)	$	(9,621)	$	32,307




UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 29, 2011
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	538,093	$	1,400,822	$	153,353	$	(138,335)	$	1,953,933
Cost of goods sold		411,314		795,161		127,726		(138,335)		1,195,866
Gross profit		126,779		605,661		25,627		–		758,067
Selling and administrative expenses		128,312		532,958		46,206		–		707,476
Restructuring and other special charges, net		7,148		–		–		–		7,148
Equity in (earnings) loss of subsidiaries		(44,245)		19,907		–		24,338		–
Operating earnings (loss)		35,564		52,796		(20,579)		(24,338)		43,443
Interest expense		(19,886)		(20)		3		–		(19,903)
Loss on early extinguishment of debt		(1,003)		–		–		–		(1,003)
Interest income		–		187		61		–		248
Intercompany interest income (expense)		12,007		(12,380)		373		–		–
Earnings (loss) before income taxes from continuing operations		26,682		40,583		(20,142)		(24,338)		22,785
Income tax benefit (provision)		6,129		(13,413)		(10)		–		(7,294)
Net earnings (loss) from continuing operations		32,811		27,170		(20,152)		(24,338)		15,491
Discontinued operations:
Earnings from operations of subsidiary, net of tax		–		1,701		–		–		1,701
Gain on sale of subsidiary, net of tax		–		15,374		–		–		15,374
Net earnings from discontinued operations		–		17,075		–		–		17,075
Net earnings (loss)		32,811		44,245		(20,152)		(24,338)		32,566
Net loss attributable to noncontrolling interests		–		–		(245)		–		(245)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	32,811	$	44,245	$	(19,907)	$	(24,338)	$	32,811

Comprehensive income (loss)	$	32,773	$	46,079	$	(21,675)	$	(24,338)	$	32,839
Comprehensive loss attributable to noncontrolling interests		–		–		(214)		–		(214)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	32,773	$	46,079	$	(21,461)	$	(24,338)	$	33,053




UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 29, 2011
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash (used for) provided by operating activities	$	(59,675)	$	56,020	$	16,218	$	55	$	12,618

Investing activities
Purchases of property and equipment		(2,211)		(18,064)		(2,000)		–		(22,275)
Capitalized software		(8,419)		(288)		–		–		(8,707)
Acquisition cost		–		–		(156,636)		–		(156,636)
Cash recognized on initial consolidation		–		3,121		–		–		3,121
Net proceeds from sale of subsidiary		–		55,350		–		–		55,350
Net cash (used for) provided by investing activities		(10,630)		40,119		(158,636)		–		(129,147)

Financing activities
Borrowings under revolving credit agreement		1,410,500		–		–		–		1,410,500
Repayments under revolving credit agreement		(1,386,500)		–		–		–		(1,386,500)
Proceeds from issuance of 2019 Senior Notes		198,586		–		–		–		198,586
Redemption of 2012 Senior Notes		(150,000)		–		–		–		(150,000)
Dividends paid		(9,135)		–		–		–		(9,135)
Debt issuance costs		(6,428)		–		–		–		(6,428)
Acquisition of treasury stock		(25,484)		–		–		–		(25,484)
Proceeds from stock options exercised		734		–		–		–		734
Tax deficiency related to share-based plans		(371)		–		–		–		(371)
Intercompany financing		37,194		(96,712)		59,573		(55)		–
Net cash provided by (used for) financing activities		69,096		(96,712)		59,573		(55)		31,902
Effect of exchange rate changes on cash and cash equivalents		–		30		–		–		30
Decrease in cash and cash equivalents		(1,209)		(543)		(82,845)		–		(84,597)
Cash and cash equivalents at beginning of period		–		27,095		99,453		–		126,548
Cash and cash equivalents at end of period	$	(1,209)	$	26,552	$	16,608	$	–	$	41,951