Famous Footwear 2012 Annual Report Download - page 39

2012 BROWN SHOE COMPANY, INC. FORM 10-K 37
Working Capital and Cash Flow
February 2, 2013 January 28, 2012 Increase (Decrease)
Working capital ($ millions) (1) . . . . . . . . . . . . . . . . . $ 303.3 $290.6 $ 12.7
Debt-to-capital ratio (2) . . . . . . . . . . . . . . . . . . . . . 41.6% 49.1% (7.5%)
Current ratio (3) . . . . . . . . . . . . . . . . . . . . . . . . . 1.65:1 1.55:1
(1) Working capital has been computed as total current assets less total current liabilities.
(2) Debt-to-capital has been computed by dividing total debt by total capitalization. Total debt is defined as long-term debt
and borrowings under the Credit Agreement. Total capitalization is defined as total debt and total equity.
(3) The current ratio has been computed by dividing total current assets by total current liabilities.
Increase (Decrease)
in Cash and
2012 2011 Cash Equivalents
Net cash provided by operating activities . . . . . . . . . . . . . . $ 197.9 $ 48.1 $ 149.8
Net cash used for investing activities. . . . . . . . . . . . . . . . . (68.7) (136.7) 68.0
Net cash (used for) provided by financing activities . . . . . . . . (108.8) 9.9 (118.7)
Eect of exchange rate changes on cash and cash equivalents . . 0.1 (0.2) 0.3
Increase (decrease) in cash and cash equivalents. . . . . . . . . . $ 20.5 $ (78.9) $ 99.4
Working capital at February 2, 2013, was $303.3 million, which was $12.7 million higher than at January 28, 2012. Our
current ratio increased to 1.65 to 1 at February 2, 2013, from 1.55 to 1 at January 28, 2012. The increase in working capital
is primarily attributable to lower borrowings under our revolving credit agreement, an increase in our cash balance and
higher prepaid expenses and other current assets, partially oset by a decrease in accounts receivables, lower inventory
levels and higher accounts payable. Our ratio of debt-to-capital decreased to 41.6% as of February 2, 2013, compared to
49.1% at January 28, 2012, reflecting our $96.0 million decrease in total debt obligations driven by our strong cash provided
by operating activities. At February 2, 2013, we had $68.2 million of cash and cash equivalents, most of which represented
cash and cash equivalents of our foreign subsidiaries.
Reasons for the major variances in cash provided (used) in the table above are as follows:
Cash flow from operating activities was $149.8 million higher in 2012 as compared to 2011, reflecting several factors:
• A decrease in accounts receivable in 2012 as compared to an increase in 2011 due to improved customer collections;
• An increase in accrued expenses and other liabilities in 2012 as compared to a decrease in 2011. Accrued expenses
increased in 2012 primarily due to incentive accruals under our cash based incentive plans, partially oset by a
decrease in reserves related to our portfolio realignment initiatives. In 2011, accrued expenses declined as a result of
payments under our incentive plans;
• A larger decrease in inventories during 2012 compared to a smaller decrease in 2011 primarily due to our Wholesale
Operations segment with better inventory management and brands that we are exiting in conjunction with our
portfolio realignment initiatives; and,
• A larger increase in trade accounts payable in 2012 compared to a smaller increase in 2011 due to the timing and
amount of purchases and payments to vendors.
Cash used for investing activities was lower by $68.0 million, reflecting the purchase of ASG, and subsequent sale of TBMC
both of which occurred in 2011. In addition, our purchases of property and equipment were $27.9 million higher in 2012
as compared to the prior year due to investments in new and remodeled retail stores. In 2013, we expect purchases of
property and equipment and capitalized software of approximately $50 million to $55 million, primarily related to new and
remodeled retail stores and information technology infrastructure.
Cash used for financing activities was $118.7 million lower than last year, primarily due to lower borrowings, net of
repayments, under our Credit Agreement in 2012 as compared to the prior year as well as $25.5 million of common stock
repurchases in 2011.
We paid dividends of $0.28 per share in each of 2012, 2011 and 2010. The 2012 dividends marked the 90th year of
consecutive quarterly dividends. On March 14, 2013, the Board of Directors declared a quarterly dividend of $0.07 per share,
payable April 1, 2013, to shareholders of record on March 25, 2013, marking the 361st consecutive quarterly dividend to be
paid by the Company. The declaration and payment of any future dividend is at the discretion of the Board of Directors and
will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our
Board of Directors; however, we presently expect that dividends will continue to be paid.