Famous Footwear 2014 Annual Report Download - page 33

32 2014 BROWN SHOE COMPANY, INC. FORM 10-K
Loss on Early Extinguishment of Debt
During 2014, we incurred a loss of $0.4 million on the early extinguishment of the revolving credit agreement prior to maturity.
Working Capital and Cash Flow
January 31, 2015 February 1, 2014 Decrease
Working capital ($ millions) (1) . . . . . . . . . . . . . . . . . . . $393.8 $405.7 $(11.9)
Debt-to-capital ratio (2) . . . . . . . . . . . . . . . . . . . . . . . 26.9% 30.1% (3.2)%
Current ratio (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.99:1 2.05:1
(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
2014 2013 Cash Equivalents
Net cash provided by operating activities . . . . . . . . . . . . . . $ 118.8 $ 104.0 $ 14.8
Net cash (used for) provided by investing activities . . . . . . . . (112.0) 20.1 (132.1)
Net cash used for financing activities. . . . . . . . . . . . . . . . . (20.5) (105.8) 85.3
Eect of exchange rate changes on cash and cash equivalents . . (1.4) (4.0) 2.6
(Decrease) increase in cash and cash equivalents. . . . . . . . . . $ (15.1) $ 14.3 $ (29.4)
Working capital at January 31, 2015, was $393.8 million, which was $11.9 million lower than at February 1, 2014. Our current
ratio decreased to 1.99 to 1 at January 31, 2015, from 2.05 to 1 at February 1, 2014. The decrease in working capital is driven
by several factors, including a lower cash balance, an increase in the current deferred income tax liability and an increase
in employee compensation and benefits, partially oset by an increase in prepaid expenses and other current assets, lower
accounts payable and lower borrowings under our revolving credit agreement. Our lower balance for the revolving credit
agreement is primarily due to our operating cash flows in 2014. Our ratio of debt-to-capital decreased to 26.9% as of
January 31, 2015, compared to 30.1% at February 1, 2014, reflecting higher shareholders’ equity due to our 2014 net earnings
and a $6.8 million decrease in total debt obligations. At January 31, 2015, we had $67.4 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 provided by operating activities was $14.8 million higher in 2014 than last year, reflecting the following factors:
• A smaller increase in inventories in 2014 compared to 2013 reecting our continued focus on inventory management;
• A larger increase in accrued expenses and other liabilities in 2014 compared to 2013 primarily due to an increase in
incentive accruals under our cash incentive plans; partially oset by
• An increase in prepaid expenses and other current and noncurrent assets in 2014 as compared to a decrease in 2013
primarily due to an increase in prepaid rent in 2014 as a result of the timing of payments compared to last year.
• A decrease in trade accounts payable in 2014 as compared to an increase in 2013 due to the timing of purchases and
payments to vendors.
Cash used for investing activities was $132.1 million higher in 2014 than last year, primarily due to the $65.1 million
acquisition of the Franco Sarto trademarks in the first quarter of 2014, the $7.0 million minority investment in Jack Erwin,
Inc. in August 2014, and the $69.3 million of net proceeds from the sale of American Sporting Goods Corporation in 2013,
partially oset by the net proceeds from the sale of Shoes.com in 2014. In 2015, we expect purchases of property and
equipment and capitalized software of approximately $75 million, with approximately $22 million allocated for expansion
and modernization of our distribution centers.
Cash used for financing activities was $85.3 million lower in 2014 than last year, primarily due to a $91.0 million decrease
in net repayments of borrowings under our Former Credit Agreement and Credit Agreement, partially oset by debt
issuance costs incurred in 2014 associated with the Credit Agreement and a decrease in the tax benefit related to the
share-based plans.
We paid dividends of $0.28 per share in each of 2014, 2013 and 2012. The 2014 dividends marked the 92nd year of
consecutive quarterly dividends. On March 12, 2015, the Board of Directors declared a quarterly dividend of $0.07 per
share, payable April 1, 2015, to shareholders of record on March 23, 2015, marking the 369th 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.