Financial Information For The Company And Its Subsidiaries | Note 17 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 our 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 December 13, 2016 , Allen Edmonds 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 and Allen Edmonds 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 OCTOBER 28, 2017 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Assets Current assets Cash and cash equivalents $ 8,155 $ 7,947 $ 15,277 $ — $ 31,379 Receivables, net 116,974 3,987 11,981 — 132,942 Inventories, net 127,142 441,683 29,540 — 598,365 Prepaid expenses and other current assets 20,642 17,872 7,263 (4,795 ) 40,982 Intercompany receivable – current 1,597 123 20,677 (22,397 ) — Total current assets 274,510 471,612 84,738 (27,192 ) 803,668 Other assets 50,565 16,877 874 — 68,316 Goodwill and intangible assets, net 111,665 40,937 187,580 — 340,182 Property and equipment, net 32,684 169,604 12,694 — 214,982 Investment in subsidiaries 1,288,128 — (23,180 ) (1,264,948 ) — Intercompany receivable – noncurrent 744,127 527,670 677,419 (1,949,216 ) — Total assets $ 2,501,679 $ 1,226,700 $ 940,125 $ (3,241,356 ) $ 1,427,148 Liabilities and Equity Current liabilities Borrowings under revolving credit agreement $ 20,000 $ — $ — $ — $ 20,000 Trade accounts payable 65,604 139,219 19,009 — 223,832 Other accrued expenses 64,525 95,817 17,940 (4,795 ) 173,487 Intercompany payable – current 12,833 — 9,564 (22,397 ) — Total current liabilities 162,962 235,036 46,513 (27,192 ) 417,319 Other liabilities Long-term debt 197,348 — — — 197,348 Other liabilities 93,029 39,150 5,215 — 137,394 Intercompany payable – noncurrent 1,374,695 121,683 452,838 (1,949,216 ) — Total other liabilities 1,665,072 160,833 458,053 (1,949,216 ) 334,742 Equity Caleres, Inc. shareholders’ equity 673,645 830,831 434,117 (1,264,948 ) 673,645 Noncontrolling interests — — 1,442 — 1,442 Total equity 673,645 830,831 435,559 (1,264,948 ) 675,087 Total liabilities and equity $ 2,501,679 $ 1,226,700 $ 940,125 $ (3,241,356 ) $ 1,427,148 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTEEN WEEKS ENDED OCTOBER 28, 2017 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 226,019 $ 541,007 $ 47,765 $ (40,135 ) $ 774,656 Cost of goods sold 152,714 313,646 23,351 (31,940 ) 457,771 Gross profit 73,305 227,361 24,414 (8,195 ) 316,885 Selling and administrative expenses 59,335 197,481 15,394 (8,195 ) 264,015 Operating earnings 13,970 29,880 9,020 — 52,870 Interest expense (4,140 ) (1 ) — — (4,141 ) Interest income 47 — 48 — 95 Intercompany interest income (expense) 1,981 (2,003 ) 22 — — Earnings before income taxes 11,858 27,876 9,090 — 48,824 Income tax provision (3,963 ) (9,479 ) (1,009 ) — (14,451 ) Equity in earnings (loss) of subsidiaries, net of tax 26,492 — (457 ) (26,035 ) — Net earnings 34,387 18,397 7,624 (26,035 ) 34,373 Less: Net loss attributable to noncontrolling interests — — (14 ) — (14 ) Net earnings attributable to Caleres, Inc. $ 34,387 $ 18,397 $ 7,638 $ (26,035 ) $ 34,387 Comprehensive income $ 34,305 $ 18,397 $ 7,457 $ (25,857 ) $ 34,302 Less: Comprehensive loss attributable to noncontrolling interests — — (3 ) — (3 ) Comprehensive income attributable to Caleres, Inc. $ 34,305 $ 18,397 $ 7,460 $ (25,857 ) $ 34,305 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 28, 2017 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 614,764 $ 1,451,191 $ 148,985 $ (131,821 ) $ 2,083,119 Cost of goods sold 423,224 815,980 74,424 (105,763 ) 1,207,865 Gross profit 191,540 635,211 74,561 (26,058 ) 875,254 Selling and administrative expenses 172,122 570,272 45,254 (26,058 ) 761,590 Restructuring and other special charges, net 3,769 37 167 — 3,973 Operating earnings 15,649 64,902 29,140 — 109,691 Interest expense (13,809 ) (13 ) — — (13,822 ) Interest income 220 — 372 — 592 Intercompany interest income (expense) 6,085 (6,516 ) 431 — — Earnings before income taxes 8,145 58,373 29,943 — 96,461 Income tax provision (2,124 ) (21,407 ) (5,999 ) — (29,530 ) Equity in earnings (loss) of subsidiaries, net of tax 60,863 — (1,234 ) (59,629 ) — Net earnings 66,884 36,966 22,710 (59,629 ) 66,931 Less: Net earnings attributable to noncontrolling interests — — 47 — 47 Net earnings attributable to Caleres, Inc. $ 66,884 $ 36,966 $ 22,663 $ (59,629 ) $ 66,884 Comprehensive income $ 69,170 $ 36,966 $ 23,212 $ (60,105 ) $ 69,243 Less: Comprehensive income attributable to noncontrolling interests — — 73 — 73 Comprehensive income attributable to Caleres, Inc. $ 69,170 $ 36,966 $ 23,139 $ (60,105 ) $ 69,170 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 28, 2017 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net cash (used for) provided by operating activities $ (13,179 ) $ 97,443 $ 37,997 $ — $ 122,261 Investing activities Purchases of property and equipment (5,340 ) (25,377 ) (3,647 ) — (34,364 ) Capitalized software (4,079 ) (452 ) — — (4,531 ) Intercompany investing (20,058 ) 197,763 (177,705 ) — — Net cash (used for) provided by investing activities (29,477 ) 171,934 (181,352 ) — (38,895 ) Financing activities Borrowings under revolving credit agreement 450,000 — — — 450,000 Repayments under revolving credit agreement (540,000 ) — — — (540,000 ) Dividends paid (9,033 ) — — — (9,033 ) Acquisition of treasury stock (5,993 ) — — — (5,993 ) Issuance of common stock under share-based plans, net (2,477 ) — — — (2,477 ) Intercompany financing 134,315 (270,459 ) 136,144 — — Net cash provided by (used for) financing activities 26,812 (270,459 ) 136,144 — (107,503 ) Effect of exchange rate changes on cash and cash equivalents — — 184 — 184 Decrease in cash and cash equivalents (15,844 ) (1,082 ) (7,027 ) — (23,953 ) Cash and cash equivalents at beginning of period 23,999 9,029 22,304 — 55,332 Cash and cash equivalents at end of period $ 8,155 $ 7,947 $ 15,277 $ — $ 31,379 UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET OCTOBER 29, 2016 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Assets Current assets Cash and cash equivalents $ 50,463 $ 5,897 $ 117,075 $ — $ 173,435 Receivables, net 123,345 856 15,274 — 139,475 Inventories, net 114,180 387,688 22,955 — 524,823 Prepaid expenses and other current assets 12,766 13,649 5,301 — 31,716 Intercompany receivable – current 823 327 15,766 (16,916 ) — Total current assets 301,577 408,417 176,371 (16,916 ) 869,449 Other assets 92,895 14,106 7,850 — 114,851 Goodwill and intangible assets, net 113,889 2,800 11,452 — 128,141 Property and equipment, net 30,902 149,680 11,172 — 191,754 Investment in subsidiaries 1,076,592 — (21,068 ) (1,055,524 ) — Intercompany receivable – noncurrent 485,403 384,452 573,308 (1,443,163 ) — Total assets $ 2,101,258 $ 959,455 $ 759,085 $ (2,515,603 ) $ 1,304,195 Liabilities and Equity Current liabilities Trade accounts payable $ 70,501 $ 123,003 $ 18,584 $ — $ 212,088 Other accrued expenses 48,614 75,797 17,475 — 141,886 Intercompany payable – current 5,145 — 11,771 (16,916 ) — Total current liabilities 124,260 198,800 47,830 (16,916 ) 353,974 Other liabilities Long-term debt 196,888 — — — 196,888 Other liabilities 34,463 68,146 3,661 — 106,270 Intercompany payable – noncurrent 1,099,537 41,933 301,693 (1,443,163 ) — Total other liabilities 1,330,888 110,079 305,354 (1,443,163 ) 303,158 Equity Caleres, Inc. shareholders’ equity 646,110 650,576 404,948 (1,055,524 ) 646,110 Noncontrolling interests — — 953 — 953 Total equity 646,110 650,576 405,901 (1,055,524 ) 647,063 Total liabilities and equity $ 2,101,258 $ 959,455 $ 759,085 $ (2,515,603 ) $ 1,304,195 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTEEN WEEKS ENDED OCTOBER 29, 2016 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 235,094 $ 487,558 $ 48,055 $ (38,477 ) $ 732,230 Cost of goods sold 162,629 281,926 25,669 (31,765 ) 438,459 Gross profit 72,465 205,632 22,386 (6,712 ) 293,771 Selling and administrative expenses 53,225 177,466 14,340 (6,712 ) 238,319 Operating earnings 19,240 28,166 8,046 — 55,452 Interest expense (3,472 ) (3 ) — — (3,475 ) Interest income 200 — 150 — 350 Intercompany interest income (expense) 2,083 (2,107 ) 24 — — Earnings before income taxes 18,051 26,056 8,220 — 52,327 Income tax provision (6,193 ) (9,743 ) (1,665 ) — (17,601 ) Equity in earnings (loss) of subsidiaries, net of tax 22,872 — (499 ) (22,373 ) — Net earnings 34,730 16,313 6,056 (22,373 ) 34,726 Less: Net loss attributable to noncontrolling interests — — (4 ) — (4 ) Net earnings attributable to Caleres, Inc. $ 34,730 $ 16,313 $ 6,060 $ (22,373 ) $ 34,730 Comprehensive income $ 33,816 $ 16,313 $ 5,661 $ (21,999 ) $ 33,791 Less: Comprehensive loss attributable to noncontrolling interests — — (25 ) — (25 ) Comprehensive income attributable to Caleres, Inc. $ 33,816 $ 16,313 $ 5,686 $ (21,999 ) $ 33,816 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 29, 2016 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 617,177 $ 1,279,080 $ 156,649 $ (113,006 ) $ 1,939,900 Cost of goods sold 434,833 707,584 87,688 (91,324 ) 1,138,781 Gross profit 182,344 571,496 68,961 (21,682 ) 801,119 Selling and administrative expenses 155,608 505,032 45,708 (21,682 ) 684,666 Operating earnings 26,736 66,464 23,253 — 116,453 Interest expense (10,561 ) (3 ) — — (10,564 ) Interest income 531 — 376 — 907 Intercompany interest income (expense) 6,590 (6,685 ) 95 — — Earnings before income taxes 23,296 59,776 23,724 — 106,796 Income tax provision (7,369 ) (22,483 ) (4,662 ) — (34,514 ) Equity in earnings (loss) of subsidiaries, net of tax 56,353 — (1,545 ) (54,808 ) — Net earnings 72,280 37,293 17,517 (54,808 ) 72,282 Less: Net earnings attributable to noncontrolling interests — — 2 — 2 Net earnings attributable to Caleres, Inc. $ 72,280 $ 37,293 $ 17,515 $ (54,808 ) $ 72,280 Comprehensive income $ 71,871 $ 37,293 $ 17,692 $ (55,020 ) $ 71,836 Less: Comprehensive loss attributable to noncontrolling interests — — (35 ) — (35 ) Comprehensive income attributable to Caleres, Inc. $ 71,871 $ 37,293 $ 17,727 $ (55,020 ) $ 71,871 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THIRTY-NINE WEEKS ENDED OCTOBER 29, 2016 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net cash provided by operating activities $ 23,770 $ 83,584 $ 29,649 $ — $ 137,003 Investing activities Purchases of property and equipment (2,748 ) (37,154 ) (3,117 ) — (43,019 ) Capitalized software (3,859 ) (1,783 ) (30 ) — (5,672 ) Intercompany investing (3,129 ) 3,129 — — — Net cash used for investing activities (9,736 ) (35,808 ) (3,147 ) — (48,691 ) Financing activities Borrowings under revolving credit agreement 103,000 — — — 103,000 Repayments under revolving credit agreement (103,000 ) — — — (103,000 ) Dividends paid (9,094 ) — — — (9,094 ) Acquisition of treasury stock (23,139 ) — — — (23,139 ) Issuance of common stock under share-based plans, net (4,205 ) — — — (4,205 ) Excess tax benefit related to share-based plans 3,264 — — — 3,264 Intercompany financing 38,603 (41,879 ) 3,276 — — Net cash provided by (used for) financing activities 5,429 (41,879 ) 3,276 — (33,174 ) Effect of exchange rate changes on cash and cash equivalents — — 146 — 146 Increase in cash and cash equivalents 19,463 5,897 29,924 — 55,284 Cash and cash equivalents at beginning of period 31,000 — 87,151 — 118,151 Cash and cash equivalents at end of period $ 50,463 $ 5,897 $ 117,075 $ — $ 173,435 CONDENSED CONSOLIDATING BALANCE SHEET JANUARY 28, 2017 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Assets Current assets Cash and cash equivalents $ 23,999 $ 9,029 $ 22,304 $ — $ 55,332 Receivables, net 118,746 5,414 28,961 — 153,121 Inventories, net 150,098 410,867 24,799 — 585,764 Prepaid expenses and other current assets 24,293 23,040 8,058 (5,863 ) 49,528 Intercompany receivable – current 695 263 22,091 (23,049 ) — Total current assets 317,831 448,613 106,213 (28,912 ) 843,745 Other assets 51,181 16,567 826 — 68,574 Goodwill and intangible assets, net 113,333 219,337 11,088 — 343,758 Property and equipment, net 31,424 176,358 11,414 — 219,196 Investment in subsidiaries 1,343,954 — (21,946 ) (1,322,008 ) — Intercompany receivable – noncurrent 568,541 366,902 581,624 (1,517,067 ) — Total assets $ 2,426,264 $ 1,227,777 $ 689,219 $ (2,867,987 ) $ 1,475,273 Liabilities and Equity Current liabilities Borrowings under revolving credit agreement $ 110,000 $ — $ — $ — $ 110,000 Trade accounts payable 116,783 112,434 37,153 — 266,370 Other accrued expenses 74,941 65,228 16,919 (5,863 ) 151,225 Intercompany payable – current 12,794 — 10,255 (23,049 ) — Total current liabilities 314,518 177,662 64,327 (28,912 ) 527,595 Other liabilities Long-term debt 197,003 — — — 197,003 Other liabilities 91,683 40,507 3,999 — 136,189 Intercompany payable – noncurrent 1,209,943 98,982 208,142 (1,517,067 ) — Total other liabilities 1,498,629 139,489 212,141 (1,517,067 ) 333,192 Equity Caleres, Inc. shareholders’ equity 613,117 910,626 411,382 (1,322,008 ) 613,117 Noncontrolling interests — — 1,369 — 1,369 Total equity 613,117 910,626 412,751 (1,322,008 ) 614,486 Total liabilities and equity $ 2,426,264 $ 1,227,777 $ 689,219 $ (2,867,987 ) $ 1,475,273 |