Brown Shoe Company, Inc. (NYSE: BWS) (www.brownshoe.com)
and American Sporting Goods Corporation ("ASG") today announced that
Brown Shoe has acquired ASG, a leading designer, manufacturer and
marketer of athletic footwear, for $145 million in cash plus assumed net
debt. This acquisition broadens Brown Shoe's reach with consumers
seeking healthier lifestyles by complementing its fitness and comfort
offerings with global performance athletic brands recognized for
delivering a strong value proposition through innovative footwear,
including Avia(R), ryka(R) and AND1(R).
"Acquiring ASG adds the critical element of performance athletic
footwear to our comfort and fitness offerings, better positioning Brown
Shoe to meet consumer demand for products that support active and
healthy lifestyles. We also gain talent with capabilities that can be
applied across our enterprise - designers skilled in creating technical
athletic footwear as well as sales and leadership teams experienced in
reaching retail partners and consumers within the healthy living trend.
Moreover, with the backing of Brown Shoe's strong balance sheet,
sourcing organization, technology platform and other resources, the
entire ASG family of brands will have additional opportunities for
growth and increased market share," said Brown Shoe President and Chief
Operating Officer Diane Sullivan.
For its most recently completed fiscal year, ASG achieved net sales of
$232 million, the majority of which was attributed to its Avia, ryka and
AND1 brands, with estimated earnings before interest, taxes,
depreciation, and amortization ("EBITDA") of $29.6 million*. Brown Shoe
expects accretion of $0.10 - $0.12 per diluted share in 2011, excluding
the impact of certain purchase accounting adjustments as well as
transaction and integration costs.
The transaction will be funded at closing entirely through borrowings
under Brown Shoe's revolving credit agreement, which has been upsized by
$150 million to $530 million by exercising the designated event
accordion, while still providing for access to an additional $150
million accordion.
The ASG team will remain in its Aliso Viejo, California offices and
report to Mark Lardie, Brown Shoe Division President - Wholesale. ASG
Chief Executive Officer Jerry Turner will remain with Brown Shoe as a
consultant for one year to assist Lardie with the transition and
integration of the two companies.
"Through this acquisition, we gain valuable insight from a strong
management team and a company with a heritage of connecting footwear
brands with customers, which we expect will lead to the continued
success and expansion of the ASG family of brands that we have built
over decades. Brown Shoe is recognized for its ability to develop, grow
and market footwear brands in a consumer-focused way, and this was at
the core of our decision to make American Sporting Goods part of the
Brown Shoe family," said Turner.
ASG company sales ranked seventh in the U.S. performance athletic
footwear market for the calendar year 2010, according to the NPD's POS
Tracking Service. Its key brands include Avia athletic shoes for men,
women and children, ryka women's fitness footwear and AND1 basketball
shoes for men and boys. Avia has a more than 30-year history of offering
technical running, walking and fitness footwear featuring innovative
technology at a value. Its offerings appeal to hard-core runners and
casual walkers alike. ryka is a women's fitness and lifestyle brand
created to accommodate the unique needs of a woman's physiology. The
brand embraces healthy lifestyles and celebrating women by maintaining
alliances throughout the women's fitness community, and counts daytime
television's Kelly Ripa as a partner. AND1 is a men's performance
basketball and lifestyle brand that caters to basketball participants
and enthusiasts. The brand's global appeal is driven by its authentic
heritage in the sport and advanced technology features to enhance
players' game.
*ASG financial results for its most recently completed fiscal year,
ended December 31, 2010, are preliminary and unaudited.
Conference Call
Brown Shoe will hold a conference call to discuss this acquisition
tomorrow morning February 18 at 9:00 Eastern Time. While participation
in the question-and-answer session of the call will be limited to
institutional analysts and investors, retail brokers and individual
investors are invited to attend via a live webcast at www.brownshoe.com/investor
or www.earnings.com
(at the website, type in the BWS ticker symbol to locate the broadcast)
or to dial in using the following numbers: US/Canada (866) 308-5110 or
International (706) 758-4541, passcode 44698192.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995:
This press release contains certain forward-looking statements,
including without limitation, the statements regarding American Sporting
Goods Corporation's (ASG) business and financial outlook and the
benefits to Brown Shoe of the acquisition of ASG. Such statements are
subject to various risks and uncertainties that could cause actual
results to differ materially. These risks include (i) changing consumer
demands, which may be influenced by consumers' disposable income, which
in turn can be influenced by general economic conditions; (ii) potential
disruption to Brown Shoe's business and operations as it integrates ASG
into its business; (iii) potential disruption to Brown Shoe's business
and operations as it implements its information technology initiatives;
(iv) Brown Shoe's ability to utilize its new information technology
system to successfully execute its strategies, including integrating
ASG's business; (v) intense competition within the footwear industry;
(vi) rapidly changing fashion trends and purchasing patterns; (vii)
customer concentration and increased consolidation in the retail
industry; (viii) political and economic conditions or other threats to
the continued and uninterrupted flow of inventory from China, where ASG
has manufacturing facilities and both ASG and Brown Shoe rely heavily on
third-party manufacturing facilities for a significant amount of their
inventory; (ix) the ability to recruit and retain senior management and
other key associates; (x) the ability to attract and retain licensors
and protect intellectual property rights; (xi) the ability to
secure/exit leases on favorable terms; (xii) the ability to maintain
relationships with current suppliers; (xiii) compliance with applicable
laws and standards with respect to lead content in paint and other
product safety issues; (xiv) the ability to source product at a pace
consistent with increased demand for footwear; and (xv) the impact of
rising prices in a potentially inflationary global environment. Brown
Shoe's reports to the Securities and Exchange Commission contain
detailed information relating to such factors, including, without
limitation, the information under the caption "Risk Factors" in Item 1A
of Brown Shoe's Annual Report on Form 10-K for the year ended January
30, 2010, which information is incorporated by reference herein and
updated by Brown Shoe's Quarterly Reports on Form 10-Q. Brown Shoe does
not undertake any obligation or plan to update these forward-looking
statements, even though its situation may change.
About Brown Shoe Company, Inc.
Brown Shoe is a $2.5 billion global footwear company. Brown Shoe's
Retail division operates Famous Footwear, a leading family branded
footwear destination with over 1,100 stores nationwide and e-commerce
site FamousFootwear.com,
approximately 260 specialty retail stores in the U.S., Canada, and China
primarily under the Naturalizer brand name, and footwear e-tailer shoes.com.
Through its wholesale divisions, Brown Shoe designs and markets leading
footwear brands including Naturalizer, Dr. Scholl's, Franco Sarto,
LifeStride, Etienne Aigner, Sam Edelman, Via Spiga, Vera Wang Lavender
and Buster Brown. Brown Shoe press releases are available on the
Company's website at www.brownshoe.com.
