The pro forma adjustments are based upon available information and certain assumptions that we consider reasonable. The pro forma adjustments have been made solely for purposes of developing the pro forma financial information for illustrative purposes necessary to comply with the requirements of the SEC.  The actual results reported in periods following the Transaction may differ significantly from those reflected in the unaudited pro forma condensed consolidated financial data for a number of reasons, including but not limited to, differences between the assumptions used to prepare these unaudited pro forma financial statements and actual amounts, potential cost savings from operating efficiencies, potential synergies, and the impact of any incremental costs incurred to integrate ASG. The pro forma results of operations are not necessarily indicative of the results of operations that would have been achieved had the Transaction reflected therein been consummated on the date indicated or that will be achieved in the future. The unaudited pro forma condensed consolidated financial data are based on preliminary estimates and assumptions set forth in the accompanying notes. Pro forma adjustments are necessary to reflect the estimated purchase price and to adjust amounts related to ASG’s assets and liabilities to a preliminary estimate of their fair values.  

 

 

			Historical Brown Shoe			Historical ASG(a)			Pro Forma Adjustments					Brown Shoe Pro Forma Condensed Consolidated
Assets
Current assets:
	Cash and cash equivalents		$	126,548		$	5,889		$	–		(b)		$	132,437
	Receivables			113,937			29,582			(1,432	)	(c)			142,087
	Inventories			524,250			50,371			4,663		(d)			579,284
	Deferred income taxes			4,503			2,535			(1,905	)	(h)			5,133
	Income taxes			10,195			1,380			1,398		(e)			12,973
	Prepaid expenses and other current assets			28,848			4,079			–					32,927
Total current assets				808,281			93,836			2,724					904,841
Other assets				133,538			1,131			–					134,669
Deferred income taxes				–			3,334			–					3,334
Goodwill and intangible assets, net				70,592			5,350			88,631		(f)			164,573
Property and equipment, net				135,632			9,118			–					144,750
Total assets			$	1,148,043		$	112,769		$	91,355				$	1,352,167
Liabilities and Shareholders’ Equity
Current liabilities:
	Borrowings under revolving credit agreement		$	198,000		$	11,539		$	150,707		(g)		$	360,246
	Trade accounts payable			167,190			20,034			(1,432	)	(c)			185,792
	Other accrued expenses			146,715			8,981			–					155,696
	Income taxes			–			251			–					251
Total current liabilities				511,905			40,805			149,275					701,985
Other liabilities:
	Long-term debt			150,000			–			–					150,000
	Deferred rent			34,678			–			–					34,678
	Deferred income taxes			11,534			–			18,423		(h)			29,957
	Other liabilities			24,017			–			–					24,017
Total other liabilities				220,229			–			18,423					238,652
Total Brown Shoe Company, Inc./American Sporting Goods Corporation shareholders’ equity				415,080			71,821			(76,200	)	(i)			410,701
Noncontrolling interests				829			143			(143	)	(i)			829
Total equity				415,909			71,964			(76,343	)				411,530
Total liabilities and shareholders’ equity			$	1,148,043		$	112,769		$	91,355				$	1,352,167

(a)	Certain data reflected in the “Historical ASG” column has been reclassified to conform to Brown Shoe’s current presentation.

(b)	Cash and cash equivalents

Source of cash:
Additional borrowings under Brown Shoe’s revolving credit facility to fund the Transaction	$	162,246
Uses of cash:
Purchase price of ASG (1)	$	156,469
Estimated fees and expenses associated with the Transaction, net of fees already paid in 2010 of $1.3 million		5,777
	$	162,246
	$	–

 

(c)	Receivables/Trade accounts payable

Elimination of ASG receivables from Brown Shoe and Brown Shoe trade accounts payable to ASG as of January 29, 2011

$

(1,432

)

(d)	Inventories

Estimated fair value adjustment to inventory acquired

$

4,663

(e)	Income taxes

Estimated tax impact for fees and expenses associated with the Transaction

$

1,398

(f)	Goodwill and intangible assets, net

Intangible assets acquired (1)	$	48,100
Goodwill (2)		45,881
Elimination of ASG intangible assets		(5,350	)
	$	88,631

 

(h)	Deferred income taxes

Estimated deferred income tax liability (non-cash) generated as a result of basis differences of acquired tangible and intangible assets for book and tax purposes.

$

20,328

(i)	Total shareholders’ equity

Total Brown Shoe Company, Inc./American Sporting Goods Corporation shareholders’ equity
Elimination of historical ASG shareholders’ equity for combined presentation	$	(71,821	)
Expenses recorded for fees and expenses associated with the Transaction, net of tax of $1.4 million as shown in (e) above		(4,379	)
	$	(76,200	)
Noncontrolling interests
Elimination of ASG historical noncontrolling interests for combined presentation		(143	)
	$	(76,343	)

		Historical Brown Shoe			Historical ASG(a)			Pro Forma Adjustments					Brown Shoe Pro Forma Condensed Consolidated
Net sales		$	2,504,091		$	225,368		$	(10,814	)	(b)		$	2,718,645
Cost of goods sold			1,500,537			144,172			(5,205	)	(c)			1,639,504
Gross profit			1,003,554			81,196			(5,609	)				1,079,141
Selling and administrative expenses			922,976			55,621			2,005		(d)			980,602
Restructuring and other special charges, net			7,914			138			(1,257	)	(e)			6,795
Operating earnings			72,664			25,437			(6,357	)				91,744
Interest expense			(19,647	)		(743	)		(5,211	)	(f)			(25,601	)
Interest income			203			71			–					274
Earnings before income taxes			53,220			24,765			(11,568	)				66,417
Income tax provision			(16,160	)		(9,815	)		4,500		(g)			(21,475	)
Net earnings		$	37,060		$	14,950		$	(7,068	)			$	44,942
Less: Net loss attributable to noncontrolling interests			(173	)		(255	)		–					(428	)
Net earnings attributable to Brown Shoe Company, Inc./American Sporting Goods Corporation		$	37,233		$	15,205		$	(7,068	)			$	45,370
Basic earnings per common share		$	0.85										$	1.04
Diluted earnings per common share		$	0.85										$	1.03
Basic number of shares			42,156											42,156
Diluted number of shares			42,487											42,487

(a)	Certain data reflected in the “Historical ASG” column has been reclassified to conform to Brown Shoe’s current presentation.

(b)

Net Sales

Reflects the elimination of ASG net sales to Brown Shoe

$

(10,814

)

(c)	Cost of goods sold

Non-cash cost of goods sold impact to reflect the sell-through of higher cost product due to fair value adjustment to acquired inventory	$	4,663
Reflects the elimination of ASG cost of goods sold to Brown Shoe and profit in Brown Shoe’s ending inventory		(9,868	)
	$	(5,205	)

(d)	Selling and administrative expenses

Estimated amortization of acquired intangibles

$

2,005

(e)	Restructuring and other special charges, net

Reflects the elimination of fees and expenses recorded in 2010 associated with the Transaction (1)

$

(1,257

)

(1)

Total fees and expenses incurred in connection with the Transaction were approximately $7.0 million, including approximately $1.3 million recorded in 2010 and approximately $5.7 million recorded in 2011. These fees and expenses are not reflected in the unaudited pro forma condensed consolidated statement of earnings above.

(f)	Interest expense

Elimination of ASG’s interest expense, reflecting repayment of debt upon acquisition	$	743
Amortization of debt issuance costs incurred to amend the revolving credit agreement in connection with the Transaction		(462	)
Estimated interest expense on additional borrowings under Brown Shoe's revolving credit agreement to fund the Transaction		(5,492	)
	$	(5,211	)

(g)	Income tax benefit

Tax effect of pro forma adjustments

$

4,500