Famous Footwear 2013 Annual Report Download - page 36

34 2013 BROWN SHOE COMPANY, INC. FORM 10-K
$200 Million Senior Notes Due 2019
On May 11, 2011, we closed on an oering (the “Oering”) of $200.0 million aggregate principal amount of 7.125% Senior
Notes due 2019 (the “2019 Senior Notes”). We used a portion of the net proceeds to call and redeem our outstanding
8.75% senior notes due in 2012 (the “2012 Senior Notes”). We used the remaining net proceeds for general corporate
purposes, including repaying amounts outstanding under the Credit Agreement.
The 2019 Senior Notes are guaranteed on a senior unsecured basis by each of our subsidiaries that is an obligor under
the Credit Agreement. Interest on the 2019 Senior Notes is payable on May 15 and November 15 of each year beginning
on November 15, 2011. The 2019 Senior Notes mature on May 15, 2019. Prior to May 15, 2014, we may redeem some or all
of the 2019 Senior Notes at a redemption price equal to the sum of the principal amount of the 2019 Senior Notes to be
redeemed, plus accrued and unpaid interest, plus a “make whole” premium. After May 15, 2014, we may redeem all or
a part of the 2019 Senior Notes at the redemption prices (expressed as a percentage of principal) set forth below plus
accrued and unpaid interest, if redeemed during the 12-month period beginning on May 15 of the years indicated below:
Year Percentage
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.344%
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.563%
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.781%
2017 and thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
In addition, prior to May 15, 2014, we may redeem up to 35% of the 2019 Senior Notes with the proceeds from certain equity
oerings at a redemption price of 107.125% of the principal amount of the 2019 Senior Notes to be redeemed, plus accrued
and unpaid interest thereon, if any, to the redemption date.
The 2019 Senior Notes also contain certain other covenants and restrictions that limit certain activities including, among
other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments,
common stock repurchases, mergers and acquisitions, and sales of assets. Proceeds from the sale of TBMC in 2011 and
the sale of the Avia and Nevados brands in 2013 were reinvested into our business as allowed by the 2019 Senior Notes.
As of February 1, 2014, we were in compliance with all covenants and restrictions relating to the 2019 Senior Notes.
Loss on Early Extinguishment of Debt
During 2011, we completed a cash tender oer for the 2012 Senior Notes and called for redemption and repaid the remaining
notes that were not tendered. We incurred a loss on the early extinguishment of the 2012 Senior Notes prior to maturity
totaling $1.0 million, of which approximately $0.6 million was non-cash.
Working Capital and Cash Flow
February 1, 2014 February 2, 2013 Increase (Decrease)
Working capital ($ millions) (1) . . . . . . . . . . . . . . . . . $ 405.7 $303.3 $ 102.4
Debt-to-capital ratio (2) . . . . . . . . . . . . . . . . . . . . . 30.1% 41.6% (11.5%)
Current ratio (3) . . . . . . . . . . . . . . . . . . . . . . . . . 2.05:1 1.64:1
(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.
(Decrease)
Increase in Cash and
2013 2012 Cash Equivalents
Net cash provided by operating activities . . . . . . . . . . . . . . $ 104.0 $ 197.9 $ (93.9)
Net cash provided by (used for) investing activities . . . . . . . . 20.1 (68.7) 88.8
Net cash used for financing activities. . . . . . . . . . . . . . . . . (105.8) (108.8) 3.0
Eect of exchange rate changes on cash and cash equivalents . . (4.0) 0.1 (4.1)
Increase in cash and cash equivalents . . . . . . . . . . . . . . . . $ 14.3 $ 20.5 $ (6.2)
Working capital at February 1, 2014, was $405.7 million, which was $102.4 million higher than at February 2, 2013. Our
current ratio increased to 2.05 to 1 at February 1, 2014, from 1.64 to 1 at February 2, 2013. The increase in working capital is
primarily attributable to lower borrowings under our revolving credit agreement, higher inventory levels, and an increase in
our cash balance and receivables, partially oset by a decrease in current assets – discontinued operations, lower prepaid
expenses and other current assets, higher accounts payable, and a decrease in current liabilities –discontinued operations.
Our lower balance for the revolving credit agreement is primarily due to our operating cash flows in 2013 and the net
proceeds received from the sale of the Avia and Nevados brands in early 2013. Our ratio of debt-to-capital decreased to
30.1% as of February 1, 2014, compared to 41.6% at February 2, 2013, reflecting our $97.8 million decrease in total debt
obligations driven by our strong cash provided by operating activities and the sale of the Avia and Nevados brands during
2013. At February 1, 2014, we had $82.5 million of cash and cash equivalents, most of which represented cash and cash
equivalents of our foreign subsidiaries.