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 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 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 AUGUST 2, 2014
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	28,399	$	18,477	$	–	$	46,876
Receivables, net		85,285		2,491		37,708		–		125,484
Inventories, net		160,581		487,786		9,289		–		657,656
Prepaid expenses and other current assets		35,382		345		3,440		–		39,167
Intercompany receivable – current		1,958		502		18,663		(21,123)		–
Total current assets		283,206		519,523		87,577		(21,123)		869,183
Other assets		119,473		14,680		626		–		134,779
Goodwill and intangible assets, net		119,041		17,721		–		–		136,762
Property and equipment, net		26,934		119,626		1,798		–		148,358
Investment in subsidiaries		907,866		185,612		–		(1,093,478)		–
Intercompany receivable – noncurrent		450,516		518,996		245,863		(1,215,375)		–
Total assets	$	1,907,036	$	1,376,158	$	335,864	$	(2,329,976)	$	1,289,082

Liabilities and Equity
Current liabilities
Trade accounts payable	$	104,054	$	196,671	$	40,969	$	–	$	341,694
Other accrued expenses		73,399		76,691		9,062		–		159,152
Intercompany payable – current		6,143		312		14,668		(21,123)		–
Total current liabilities		183,596		273,674		64,699		(21,123)		500,846
Other liabilities
Long-term debt		199,104		–		–		–		199,104
Other liabilities		34,860		43,550		1,470		–		79,880
Intercompany payable – noncurrent		980,894		151,068		83,413		(1,215,375)		–
Total other liabilities		1,214,858		194,618		84,883		(1,215,375)		278,984
Equity
Brown Shoe Company, Inc. shareholders’ equity		508,582		907,866		185,612		(1,093,478)		508,582
Noncontrolling interests		–		–		670		–		670
Total equity		508,582		907,866		186,282		(1,093,478)		509,252
Total liabilities and equity	$	1,907,036	$	1,376,158	$	335,864	$	(2,329,976)	$	1,289,082



UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE THIRTEEN WEEKS ENDED AUGUST 2, 2014
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	183,598	$	445,199	$	56,496	$	(49,416)	$	635,877
Cost of goods sold		136,433		243,627		45,591		(49,416)		376,235
Gross profit		47,165		201,572		10,905		–		259,642
Selling and administrative expenses		57,149		177,231		(6,040)		–		228,340
Operating (loss) earnings		(9,984)		24,341		16,945		–		31,302
Interest expense		(5,125)		–		–		–		(5,125)
Interest income		12		66		31		–		109
Intercompany interest income (expense)		3,828		(4,535)		707		–		–
(Loss) earnings before income taxes		(11,269)		19,872		17,683		–		26,286
Income tax benefit (provision)		1,684		(7,962)		(1,969)		–		(8,247)
Equity in earnings of subsidiaries, net of tax		27,649		15,739		–		(43,388)		–
Net earnings		18,064		27,649		15,714		(43,388)		18,039
Less: Net loss attributable to noncontrolling interests		–		–		(25)		–		(25)
Net earnings attributable to Brown Shoe Company, Inc.	$	18,064	$	27,649	$	15,739	$	(43,388)	$	18,064

Comprehensive income	$	17,555	$	27,640	$	15,745	$	(43,413)	$	17,527
Less: Comprehensive loss attributable to noncontrolling interests		–		–		(28)		–		(28)
Comprehensive income attributable to Brown Shoe Company, Inc.	$	17,555	$	27,640	$	15,773	$	(43,413)	$	17,555



UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 2, 2014
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	362,758	$	846,779	$	93,120	$	(75,618)	$	1,227,039
Cost of goods sold		263,899		461,993		74,782		(75,618)		725,056
Gross profit		98,859		384,786		18,338		–		501,983
Selling and administrative expenses		106,346		337,198		(1,589)		–		441,955
Operating (loss) earnings		(7,487)		47,588		19,927		–		60,028
Interest expense		(10,430)		(1)		–		–		(10,431)
Interest income		13		125		47		–		185
Intercompany interest income (expense)		7,802		(8,614)		812		–		–
(Loss) earnings before income taxes		(10,102)		39,098		20,786		–		49,782
Income tax benefit (provision)		2,148		(15,916)		(2,499)		–		(16,267)
Equity in earnings of subsidiaries, net of tax		41,447		18,265		–		(59,712)		–
Net earnings		33,493		41,447		18,287		(59,712)		33,515
Less: Net earnings attributable to noncontrolling interests		–		–		22		–		22
Net earnings attributable to Brown Shoe Company, Inc.	$	33,493	$	41,447	$	18,265	$	(59,712)	$	33,493

Comprehensive income	$	33,473	$	41,996	$	18,266	$	(60,255)	$	33,480
Less: Comprehensive income attributable to noncontrolling interests		–		–		7		–		7
Comprehensive income attributable to Brown Shoe Company, Inc.	$	33,473	$	41,996	$	18,259	$	(60,255)	$	33,473


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 2, 2014
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net cash (used for) provided by operating activities	$	(14,049)	$	54,088	$	26,452	$	–	$	66,491

Investing activities
Purchases of property and equipment		(2,810)		(20,496)		(205)		–		(23,511)
Capitalized software		(2,642)		(43)		(29)		–		(2,714)
Acquisition of trademarks		(65,065)		–		–		–		(65,065)
Intercompany investing		(624)		624		–		–		–
Net cash used for investing activities		(71,141)		(19,915)		(234)		–		(91,290)

Financing activities
Borrowings under revolving credit agreement		456,000		–		–		–		456,000
Repayments under revolving credit agreement		(463,000)		–		–		–		(463,000)
Dividends paid		(6,110)		–		–		–		(6,110)
Issuance of common stock under share-based plans, net		(523)		–		–		–		(523)
Tax benefit related to share-based plans		2,097		–		–		–		2,097
Intercompany financing		96,726		(36,441)		(60,285)		–		–
Net cash provided by (used for) financing activities		85,190		(36,441)		(60,285)		–		(11,536)
Effect of exchange rate changes on cash and cash equivalents		–		665		–		–		665
Decrease in cash and cash equivalents		–		(1,603)		(34,067)		–		(35,670)
Cash and cash equivalents at beginning of period		–		30,002		52,544		–		82,546
Cash and cash equivalents at end of period	$	–	$	28,399	$	18,477	$	–	$	46,876



CONDENSED CONSOLIDATING BALANCE SHEET
AS OF FEBRUARY 1, 2014
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	30,002	$	52,544	$	–	$	82,546
Receivables, net		84,428		2,349		42,440		–		129,217
Inventories, net		119,131		421,101		7,299		–		547,531
Prepaid expenses and other current assets		38,069		16,024		3,984		(24,941)		33,136
Current assets – discontinued operations		119		–		–		–		119
Intercompany receivable – current		602		191		8,860		(9,653)		–
Total current assets		242,349		469,667		115,127		(34,594)		792,549
Other assets		123,066		15,864		691		–		139,621
Goodwill and intangible assets, net		55,225		18,448		–		–		73,673
Property and equipment, net		27,201		114,359		2,000		–		143,560
Investment in subsidiaries		865,700		165,970		–		(1,031,670)		–
Intercompany receivable – noncurrent		457,507		482,180		230,572		(1,170,259)		–
Total assets	$	1,771,048	$	1,266,488	$	348,390	$	(2,236,523)	$	1,149,403

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	7,000	$	–	$	–	$	–	$	7,000
Trade accounts payable		72,349		116,604		37,649		–		226,602
Other accrued expenses		81,902		87,045		8,539		(24,941)		152,545
Current liabilities – discontinued operations		708		–		–		–		708
Intercompany payable – current		4,689		766		4,198		(9,653)		–
Total current liabilities		166,648		204,415		50,386		(34,594)		386,855
Other liabilities
Long-term debt		199,010		–		–		–		199,010
Other liabilities		38,657		46,055		1,464		–		86,176
Intercompany payable – noncurrent		890,034		150,318		129,907		(1,170,259)		–
Total other liabilities		1,127,701		196,373		131,371		(1,170,259)		285,186
Equity
Brown Shoe Company, Inc. shareholders’ equity		476,699		865,700		165,970		(1,031,670)		476,699
Noncontrolling interests		–		–		663		–		663
Total equity		476,699		865,700		166,633		(1,031,670)		477,362
Total liabilities and equity	$	1,771,048	$	1,266,488	$	348,390	$	(2,236,523)	$	1,149,403


UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
AS OF AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Assets
Current assets
Cash and cash equivalents	$	–	$	32,793	$	20,344	$	–	$	53,137
Receivables, net		86,129		2,014		31,911		–		120,054
Inventories, net		128,503		477,659		9,754		–		615,916
Prepaid expenses and other current assets		54,017		(860)		(1,312)		–		51,845
Current assets – discontinued operations		1,638		–		23		–		1,661
Intercompany receivable – current		1,657		366		4,572		(6,595)		–
Total current assets		271,944		511,972		65,292		(6,595)		842,613
Other assets		97,053		16,110		601		–		113,764
Goodwill and intangible assets, net		57,514		19,174		–		–		76,688
Property and equipment, net		26,637		118,878		2,440		–		147,955
Investment in subsidiaries		839,981		31,336		–		(871,317)		–
Intercompany receivable – noncurrent		348,967		600,401		174,877		(1,124,245)		–
Total assets	$	1,642,096	$	1,297,871	$	243,210	$	(2,002,157)	$	1,181,020

Liabilities and Equity
Current liabilities
Borrowings under revolving credit agreement	$	23,000	$	–	$	–	$	–	$	23,000
Trade accounts payable		77,854		193,996		37,956		–		309,806
Other accrued expenses		65,241		73,883		4,611		–		143,735
Current liabilities – discontinued operations		3,488		–		48		–		3,536
Intercompany payable – current		4,390		389		1,816		(6,595)		–
Total current liabilities		173,973		268,268		44,431		(6,595)		480,077
Other liabilities
Long-term debt		198,917		–		–		–		198,917
Other liabilities		24,049		50,559		1,017		–		75,625
Intercompany payable – noncurrent		819,439		139,063		165,743		(1,124,245)		–
Total other liabilities		1,042,405		189,622		166,760		(1,124,245)		274,542
Equity
Brown Shoe Company, Inc. shareholders’ equity		425,718		839,981		31,336		(871,317)		425,718
Noncontrolling interests		–		–		683		–		683
Total equity		425,718		839,981		32,019		(871,317)		426,401
Total liabilities and equity	$	1,642,096	$	1,297,871	$	243,210	$	(2,002,157)	$	1,181,020


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE THIRTEEN WEEKS ENDED AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	180,153	$	444,821	$	57,468	$	(60,736)	$	621,706
Cost of goods sold		138,906		241,656		47,254		(60,736)		367,080
Gross profit		41,247		203,165		10,214		–		254,626
Selling and administrative expenses		65,770		165,689		(388)		–		231,071
Restructuring and other special charges, net		167		576		–		–		743
Operating (loss) earnings		(24,690)		36,900		10,602		–		22,812
Interest expense		(5,192)		–		–		–		(5,192)
Interest income		10		68		4		–		82
Intercompany interest income (expense)		3,475		(3,607)		132		–		–
(Loss) earnings before income taxes from continuing operations		(26,397)		33,361		10,738		–		17,702
Income tax benefit (provision)		4,259		(9,607)		1,267		–		(4,081)
Equity in earnings from continuing operations of subsidiaries, net of tax		35,833		12,079		–		(47,912)		–
Net earnings from continuing operations		13,695		35,833		12,005		(47,912)		13,621
Discontinued operations:
Earnings (loss) from discontinued operations, net of tax		1,066		(410)		(36)		–		620
Disposition/impairment of discontinued operations, net of tax		–		1,042		–		–		1,042
Equity in earnings (loss) from discontinued operations of subsidiaries, net of tax		596		(36)		–		(560)		–
Net earnings (loss) from discontinued operations		1,662		596		(36)		(560)		1,662
Net earnings		15,357		36,429		11,969		(48,472)		15,283
Less: Net loss attributable to noncontrolling interests		–		–		(74)		–		(74)
Net earnings attributable to Brown Shoe Company, Inc.	$	15,357	$	36,429	$	12,043	$	(48,472)	$	15,357

Comprehensive income	$	15,092	$	35,956	$	8,393	$	(44,410)	$	15,031
Less: Comprehensive loss attributable to noncontrolling interests		–		–		(61)		–		(61)
Comprehensive income attributable to Brown Shoe Company, Inc.	$	15,092	$	35,956	$	8,454	$	(44,410)	$	15,092


UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 2013
						Non-
($ thousands)		Parent		Guarantors		Guarantors		Eliminations		Total
Net sales	$	338,934	$	863,359	$	100,072	$	(92,003)	$	1,210,362
Cost of goods sold		255,236		471,612		80,875		(92,003)		715,720
Gross profit		83,698		391,747		19,197		–		494,642
Selling and administrative expenses		115,770		325,541		3,639		–		444,950
Restructuring and other special charges, net		686		576		–		–		1,262
Impairment of assets held for sale		–		–		4,660		–		4,660
Operating (loss) earnings		(32,758)		65,630		10,898		–		43,770
Interest expense		(10,822)		(91)		–		–		(10,913)
Interest income		13		132		5		–		150
Intercompany interest income (expense)		6,929		(7,186)		257		–		–
(Loss) earnings before income taxes from continuing operations		(36,638)		58,485		11,160		–		33,007
Income tax benefit (provision)		7,641		(20,173)		505		–		(12,027)
Equity in earnings from continuing operations of subsidiaries, net of tax		50,121		11,809		–		(61,930)		–
Net earnings from continuing operations		21,124		50,121		11,665		(61,930)		20,980
Discontinued operations:
(Loss) earnings from discontinued operations, net of tax		(5,882)		1,181		(316)		–		(5,017)
Disposition/impairment of discontinued operations, net of tax		–		1,042		(12,554)		–		(11,512)
Equity in loss from discontinued operations of subsidiaries, net of tax		(10,647)		(12,870)		–		23,517		–
Net loss from discontinued operations		(16,529)		(10,647)		(12,870)		23,517		(16,529)
Net earnings (loss)		4,595		39,474		(1,205)		(38,413)		4,451
Less: Net loss attributable to noncontrolling interests		–		–		(144)		–		(144)
Net earnings (loss) attributable to Brown Shoe Company, Inc.	$	4,595	$	39,474	$	(1,061)	$	(38,413)	$	4,595

Comprehensive income (loss)	$	3,629	$	38,401	$	(4,527)	$	(33,963)	$	3,540
Less: Comprehensive loss attributable to noncontrolling interests		–		–		(89)		–		(89)
Comprehensive income (loss) attributable to Brown Shoe Company, Inc.	$	3,629	$	38,401	$	(4,438)	$	(33,963)	$	3,629


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

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

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