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 the Company's revolving credit facility ("Credit Agreement"). The following tables present the condensed consolidating financial information for each of Caleres, Inc. (“Parent”), the Guarantors, and subsidiaries of the Parent that are not Guarantors (the “Non-Guarantors”), together with consolidating eliminations, as of and for the periods indicated. Guarantors are 100% owned by the Parent. On October 31, 2018 , Vionic was joined to the Credit Agreement as a guarantor. After giving effect to the joinder, the Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds and Vionic are each co-borrowers and guarantors under the Credit Agreement. The condensed consolidating financial statements have been prepared using the equity method of accounting in accordance with the requirements for presentation of such information. Management believes that the information, presented in lieu of complete financial statements for each of the Guarantors, provides meaningful information to allow investors to determine the nature of the assets held by, and operations and cash flows of, each of the consolidated groups. UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET NOVEMBER 3, 2018 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Assets Current assets Cash and cash equivalents $ 4,012 $ 11,817 $ 74,662 $ — $ 90,491 Receivables, net 145,363 30,040 16,843 — 192,246 Inventories, net 154,706 513,448 30,111 — 698,265 Prepaid expenses and other current assets 34,621 33,869 6,020 (11,344 ) 63,166 Intercompany receivable – current 291 137 8,038 (8,466 ) — Total current assets 338,993 589,311 135,674 (19,810 ) 1,044,168 Other assets 78,640 12,330 1,309 — 92,279 Goodwill and intangible assets, net 109,441 335,419 208,992 — 653,852 Property and equipment, net 43,761 163,019 11,323 — 218,103 Investment in subsidiaries 1,576,825 — (24,821 ) (1,552,004 ) — Intercompany receivable – noncurrent 583,048 560,563 745,589 (1,889,200 ) — Total assets $ 2,730,708 $ 1,660,642 $ 1,078,066 $ (3,461,014 ) $ 2,008,402 Liabilities and Equity Current liabilities Borrowings under revolving credit agreement $ 350,000 $ — $ — $ — $ 350,000 Trade accounts payable 141,012 151,127 25,360 — 317,499 Other accrued expenses 85,253 111,490 24,080 (11,344 ) 209,479 Intercompany payable – current 3,363 — 5,103 (8,466 ) — Total current liabilities 579,628 262,617 54,543 (19,810 ) 876,978 Other liabilities Long-term debt 197,817 — — — 197,817 Other liabilities 119,291 42,185 5,046 — 166,522 Intercompany payable – noncurrent 1,068,219 95,440 725,541 (1,889,200 ) — Total other liabilities 1,385,327 137,625 730,587 (1,889,200 ) 364,339 Equity Caleres, Inc. shareholders’ equity 765,753 1,260,400 291,604 (1,552,004 ) 765,753 Noncontrolling interests — — 1,332 — 1,332 Total equity 765,753 1,260,400 292,936 (1,552,004 ) 767,085 Total liabilities and equity $ 2,730,708 $ 1,660,642 $ 1,078,066 $ (3,461,014 ) $ 2,008,402 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTEEN WEEKS ENDED NOVEMBER 3, 2018 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 240,295 $ 540,379 $ 62,672 $ (67,517 ) $ 775,829 Cost of goods sold 163,609 325,966 32,262 (56,618 ) 465,219 Gross profit 76,686 214,413 30,410 (10,899 ) 310,610 Selling and administrative expenses 64,766 195,318 16,337 (10,899 ) 265,522 Restructuring and other special charges, net 4,831 509 — — 5,340 Operating earnings 7,089 18,586 14,073 — 39,748 Interest (expense) income (4,484 ) — 274 — (4,210 ) Other income (expense) 3,101 — (16 ) — 3,085 Intercompany interest income (expense) 2,976 (2,951 ) (25 ) — — Earnings before income taxes 8,682 15,635 14,306 — 38,623 Income tax provision (3,012 ) (4,122 ) (2,334 ) — (9,468 ) Equity in earnings (loss) of subsidiaries, net of tax 23,483 — (662 ) (22,821 ) — Net earnings 29,153 11,513 11,310 (22,821 ) 29,155 Less: Net earnings attributable to noncontrolling interests — — 2 — 2 Net earnings attributable to Caleres, Inc. $ 29,153 $ 11,513 $ 11,308 $ (22,821 ) $ 29,153 Comprehensive income $ 29,309 $ 11,451 $ 11,362 $ (22,822 ) $ 29,300 Less: Comprehensive loss attributable to noncontrolling interests — — (9 ) — (9 ) Comprehensive income attributable to Caleres, Inc. $ 29,309 $ 11,451 $ 11,371 $ (22,822 ) $ 29,309 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 3, 2018 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net sales $ 651,807 $ 1,487,877 $ 164,829 $ (189,930 ) $ 2,114,583 Cost of goods sold 448,832 862,345 83,538 (158,765 ) 1,235,950 Gross profit 202,975 625,532 81,291 (31,165 ) 878,633 Selling and administrative expenses 204,696 558,714 42,310 (31,165 ) 774,555 Restructuring and other special charges, net 5,679 3,561 — — 9,240 Operating (loss) earnings (7,400 ) 63,257 38,981 — 94,838 Interest (expense) income (12,108 ) (25 ) 638 — (11,495 ) Other income (expense) 9,305 — (51 ) — 9,254 Intercompany interest income (expense) 8,617 (8,650 ) 33 — — (Loss) earnings before income taxes (1,586 ) 54,582 39,601 — 92,597 Income tax provision (2,065 ) (14,257 ) (6,329 ) — (22,651 ) Equity in earnings (loss) of subsidiaries, net of tax 73,662 — (1,256 ) (72,406 ) — Net earnings 70,011 40,325 32,016 (72,406 ) 69,946 Less: Net loss attributable to noncontrolling interests — — (65 ) — (65 ) Net earnings attributable to Caleres, Inc. $ 70,011 $ 40,325 $ 32,081 $ (72,406 ) $ 70,011 Comprehensive income $ 68,633 $ 40,235 $ 31,824 $ (72,200 ) $ 68,492 Less: Comprehensive loss attributable to noncontrolling interests — — (141 ) — (141 ) Comprehensive income attributable to Caleres, Inc. $ 68,633 $ 40,235 $ 31,965 $ (72,200 ) $ 68,633 UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE THIRTY-NINE WEEKS ENDED NOVEMBER 3, 2018 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Net cash provided by operating activities $ 2,739 $ 76,601 $ 15,070 $ — $ 94,410 Investing activities Purchases of property and equipment (14,094 ) (19,571 ) (1,579 ) — (35,244 ) Capitalized software (3,077 ) (428 ) — — (3,505 ) Acquisition of Blowfish Malibu, net of cash received (17,284 ) — — — (17,284 ) Acquisition of Vionic, net of cash received (344,942 ) — — — (344,942 ) Intercompany investing 2 (2 ) — — — Net cash used for investing activities (379,395 ) (20,001 ) (1,579 ) — (400,975 ) Financing activities Borrowings under revolving credit agreement 360,000 — — — 360,000 Repayments under revolving credit agreement (10,000 ) — — — (10,000 ) Repayments of capital lease obligation — (114 ) — — (114 ) Dividends paid (9,059 ) — — — (9,059 ) Acquisition of treasury stock (3,288 ) — — — (3,288 ) Issuance of common stock under share-based plans, net (4,318 ) — — — (4,318 ) Intercompany financing 21,244 (44,669 ) 23,425 — — Net cash provided by (used for) financing activities 354,579 (44,783 ) 23,425 — 333,221 Effect of exchange rate changes on cash and cash equivalents — — (212 ) — (212 ) (Decrease) increase in cash and cash equivalents (22,077 ) 11,817 36,704 — 26,444 Cash and cash equivalents at beginning of period 26,089 — 37,958 — 64,047 Cash and cash equivalents at end of period $ 4,012 $ 11,817 $ 74,662 $ — $ 90,491 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 61,827 197,481 15,394 (8,195 ) 266,507 Operating earnings 11,478 29,880 9,020 — 50,378 Interest (expense) income (4,093 ) (1 ) 48 — (4,046 ) Other income (expense) 2,492 — — — 2,492 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 179,720 570,272 45,254 (26,058 ) 769,188 Restructuring and other special charges, net 3,769 37 167 — 3,973 Operating earnings 8,051 64,902 29,140 — 102,093 Interest (expense) income (13,589 ) (13 ) 372 — (13,230 ) Other income (expense) 7,598 — — — 7,598 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 CONDENSED CONSOLIDATING BALANCE SHEET FEBRUARY 3, 2018 Non- ($ thousands) Parent Guarantors Guarantors Eliminations Total Assets Current assets Cash and cash equivalents $ 26,089 $ — $ 37,958 $ — $ 64,047 Receivables, net 124,957 3,663 23,993 — 152,613 Inventories, net 146,068 394,438 28,873 — 569,379 Prepaid expenses and other current assets 26,284 30,456 8,394 (4,384 ) 60,750 Intercompany receivable – current 521 74 9,250 (9,845 ) — Total current assets 323,919 428,631 108,468 (14,229 ) 846,789 Other assets 76,317 13,610 732 — 90,659 Goodwill and intangible assets, net 111,108 40,937 187,123 — 339,168 Property and equipment, net 35,474 165,227 12,098 — 212,799 Investment in subsidiaries 1,329,428 — (23,565 ) (1,305,863 ) — Intercompany receivable – noncurrent 774,588 520,362 704,810 (1,999,760 ) — Total assets $ 2,650,834 $ 1,168,767 $ 989,666 $ (3,319,852 ) $ 1,489,415 Liabilities and Equity Current liabilities Trade accounts payable $ 136,797 $ 102,420 $ 33,745 $ — $ 272,962 Other accrued expenses 65,817 74,006 21,758 (4,384 ) 157,197 Intercompany payable – current 5,524 — 4,321 (9,845 ) — Total current liabilities 208,138 176,426 59,824 (14,229 ) 430,159 Other liabilities Long-term debt 197,472 — — — 197,472 Other liabilities 101,784 35,574 5,464 — 142,822 Intercompany payable – noncurrent 1,425,951 98,610 475,199 (1,999,760 ) — Total other liabilities 1,725,207 134,184 480,663 (1,999,760 ) 340,294 Equity Caleres, Inc. shareholders’ equity 717,489 858,157 447,706 (1,305,863 ) 717,489 Noncontrolling interests — — 1,473 — 1,473 Total equity 717,489 858,157 449,179 (1,305,863 ) 718,962 Total liabilities and equity $ 2,650,834 $ 1,168,767 $ 989,666 $ (3,319,852 ) $ 1,489,415 |