Company Quick10K Filing
Wolverine World Wide
Price27.67 EPS2
Shares88 P/E14
MCap2,435 P/FCF152
Net Debt828 EBIT197
TEV3,263 TEV/EBIT17
TTM 2019-09-28, in MM, except price, ratios
10-Q 2020-03-28 Filed 2020-04-29
10-K 2019-12-28 Filed 2020-02-26
10-Q 2019-09-28 Filed 2019-11-07
10-Q 2019-06-29 Filed 2019-08-07
10-Q 2019-03-30 Filed 2019-05-09
10-K 2018-12-29 Filed 2019-02-26
10-Q 2018-09-29 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-30 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-07-01 Filed 2017-08-09
10-Q 2017-04-01 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-10 Filed 2016-10-19
10-Q 2016-06-18 Filed 2016-07-27
10-Q 2016-03-26 Filed 2016-05-04
10-K 2016-01-02 Filed 2016-03-01
10-Q 2015-09-12 Filed 2015-10-21
10-Q 2015-06-20 Filed 2015-07-29
10-Q 2015-03-28 Filed 2015-05-06
10-K 2015-01-03 Filed 2015-03-03
10-Q 2014-09-06 Filed 2014-10-15
10-Q 2014-06-14 Filed 2014-07-22
10-Q 2014-03-22 Filed 2014-04-30
10-K 2013-12-28 Filed 2014-02-25
10-Q 2013-09-07 Filed 2013-10-17
10-Q 2013-06-15 Filed 2013-07-22
10-Q 2013-03-23 Filed 2013-05-02
10-K 2012-12-29 Filed 2013-02-27
10-Q 2012-09-08 Filed 2012-10-18
10-Q 2012-06-16 Filed 2012-07-26
10-Q 2012-03-24 Filed 2012-05-03
10-Q 2011-09-10 Filed 2011-10-20
10-Q 2011-06-18 Filed 2011-07-28
10-Q 2011-03-26 Filed 2011-05-03
10-K 2011-01-01 Filed 2011-03-02
10-Q 2010-09-11 Filed 2010-10-21
10-Q 2010-06-19 Filed 2010-07-29
10-Q 2010-03-27 Filed 2010-05-06
10-K 2010-01-02 Filed 2010-03-03
8-K 2020-06-03
8-K 2020-05-11
8-K 2020-05-06
8-K 2020-05-05
8-K 2020-04-30
8-K 2020-04-22
8-K 2020-04-21
8-K 2020-04-10
8-K 2020-03-26
8-K 2020-03-19
8-K 2020-02-25
8-K 2020-02-19
8-K 2020-02-03
8-K 2019-12-10
8-K 2019-11-07
8-K 2019-08-07
8-K 2019-05-09
8-K 2019-05-08
8-K 2019-03-13
8-K 2019-02-20
8-K 2019-02-12
8-K 2018-12-06
8-K 2018-11-07
8-K 2018-08-08
8-K 2018-05-09
8-K 2018-05-03
8-K 2018-02-21
8-K 2018-02-08
8-K 2018-02-07

WWW 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-10.1 a2020-q1exhibit101rsua.htm
EX-10.2 a2020-q1exhibit102psua.htm
EX-10.3 a2020-q1exhibit103spal.htm
EX-31.1 a2020-q1exhibit311.htm
EX-31.2 a2020-q1exhibit312.htm
EX-32 a2020-q1exhibit32.htm

Wolverine World Wide Earnings 2020-03-28

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
1.61.30.90.60.2-0.12012201420172020
Rev, G Profit, Net Income
1.20.70.2-0.3-0.8-1.32012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-06024
 __________________________________________________________ 
WOLVERINE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)
 __________________________________________________________ 
Delaware
 
38-1185150
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
9341 Courtland Drive N.E.
,
Rockford
,
Michigan
 
49351
(Address of principal executive offices)
 
(Zip Code)
(616) 866-5500
(Registrant’s telephone number, including area code)
________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading symbol
Name of each exchange on which registered
Common Stock, $1 Par Value
WWW
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
There were 81,187,759 shares of common stock, $1 par value, outstanding as of April 23, 2020.

 
 
 



Table of Contents

2



FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements,” which are statements relating to future, not past, events. In this context, forward-looking statements often address management’s current beliefs, assumptions, expectations, estimates and projections about future business and financial performance, national, regional or global political, economic and market conditions, and the Company itself. Such statements often contain words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “should,” “will,” variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Uncertainties that could cause the Company’s performance to differ materially from what is expressed in forward-looking statements include, but are not limited to, the following:
the effects of the COVID-19 pandemic on the Company’s business, operations, financial results and liquidity, including the duration and magnitude of such effects, which will depend on numerous evolving factors that the Company cannot currently fully predict or assess, the duration and scope of the pandemic; the negative impact on global and regional markets, economies and economic activity, including the duration and magnitude of its impact on unemployment rates, consumer discretionary spending and levels of consumer confidence; actions governments, businesses and individuals may take in response to the pandemic; the effects of the pandemic, including all of the foregoing, on the Company's distributors, suppliers, joint venture partners and other counterparties. The timing of recovery after the pandemic is also uncertain;
changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending in the markets and regions in which the Company’s products are sold;
the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets;
the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences;
the inability to effectively manage inventory levels;
increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export;
foreign currency exchange rate fluctuations;
currency restrictions;
capacity constraints, production disruptions, quality issues, price increases or other risks associated with foreign sourcing;
the cost and availability of raw materials, inventories, services and labor for contract manufacturers;
labor disruptions;
changes in relationships with, including the loss of, significant wholesale customers;
risks related to the significant investment in, and performance of, the Company’s consumer-direct operations;
risks related to expansion into new markets and complementary product categories as well as consumer-direct operations;
the impact of seasonality and unpredictable weather conditions;
changes in general economic conditions and/or the credit markets on the Company’s distributors, suppliers and retailers;
changes in the Company’s effective tax rates;
failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company;
the risks of doing business in developing countries and politically or economically volatile areas;
the ability to secure and protect owned intellectual property or use licensed intellectual property;
the impact of regulation, regulatory and legal proceedings and legal compliance risks, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health;
risks of breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar event;
problems affecting the Company’s distribution system, including service interruptions at shipping and receiving ports;
strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company’s success in integrating acquired businesses, and implementing new initiatives and ventures;
the risk of impairment to goodwill and other intangibles;
the success of the Company’s restructuring and realignment initiatives undertaken from time to time; and

3



changes in future pension funding requirements and pension expenses.
These or other uncertainties could cause a material difference between an actual outcome and a forward-looking statement. The uncertainties included here are not exhaustive and are described in more detail in Part I, Item 1A: “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “2019 Form 10-K”). Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company does not undertake an obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

4



PART I.
FINANCIAL INFORMATION
ITEM 1.
Financial Statements

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations and Comprehensive Income
(Unaudited)
 
Quarter Ended
(In millions, except per share data)
March 28,
2020
 
March 30,
2019
Revenue
$
439.3

 
$
523.4

Cost of goods sold
257.5

 
303.2

Gross profit
181.8

 
220.2

Selling, general and administrative expenses
156.1

 
164.0

Environmental and other related costs
8.8

 
3.8

Operating profit
16.9

 
52.4

Other expenses:
 
 
 
Interest expense, net
7.8

 
6.9

Other income, net
(0.6
)
 
(1.3
)
Total other expenses
7.2

 
5.6

Earnings before income taxes
9.7

 
46.8

Income tax expense (benefit)
(3.1
)
 
6.2

Net earnings
$
12.8

 
$
40.6

Less: net earnings (loss) attributable to noncontrolling interests
(0.2
)
 
0.1

Net earnings attributable to Wolverine World Wide, Inc.
$
13.0

 
$
40.5

 
 
 
 
Net earnings per share (see Note 3):
 
 
 
Basic
$
0.16

 
$
0.44

Diluted
$
0.16

 
$
0.43

 
 
 
 
Comprehensive income
$
2.2

 
$
43.4

Less: comprehensive income (loss) attributable to noncontrolling interests
(1.4
)
 
0.3

Comprehensive income attributable to Wolverine World Wide, Inc.
$
3.6

 
$
43.1

 
 
 
 
Cash dividends declared per share
$
0.10

 
$
0.10

See accompanying notes to consolidated condensed financial statements.

5



WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
(In millions, except share data)
March 28,
2020

December 28,
2019

March 30,
2019
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
472.6

 
$
180.6

 
$
80.6

Accounts receivable, less allowances of $28.3, $26.7 and $25.7
323.4

 
331.2

 
375.5

Inventories:
 
 
 
 
 
Finished products, net
396.2

 
342.0

 
359.2

Raw materials and work-in-process, net
9.1

 
6.2

 
14.8

Total inventories
405.3

 
348.2

 
374.0

Prepaid expenses and other current assets
50.4

 
107.1

 
45.4

Total current assets
1,251.7

 
967.1

 
875.5

Property, plant and equipment:
 
 
 
 
 
Gross cost
325.6

 
325.0

 
385.6

Accumulated depreciation
(187.3
)
 
(184.0
)
 
(252.6
)
Property, plant and equipment, net
138.3

 
141.0

 
133.0

Lease right-of-use assets, net
158.3

 
160.8

 
157.2

Other assets:
 
 
 
 
 
Goodwill
434.7

 
438.9

 
425.9

Indefinite-lived intangibles
604.5

 
604.5

 
604.5

Amortizable intangibles, net
76.2

 
77.8

 
70.7

Deferred income taxes
2.4

 
2.9

 
3.4

Other
87.6

 
87.0

 
81.1

Total other assets
1,205.4

 
1,211.1

 
1,185.6

Total assets
$
2,753.7

 
$
2,480.0

 
$
2,351.3

See accompanying notes to consolidated condensed financial statements.

6



WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets – continued
(Unaudited)
(In millions, except share data)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
137.6

 
$
202.1

 
$
112.6

Accrued salaries and wages
15.3

 
20.8

 
16.9

Other accrued liabilities
129.4

 
157.9

 
98.0

Lease liabilities
34.9

 
34.1

 
28.6

Current maturities of long-term debt
12.5

 
12.5

 
10.0

Borrowings under revolving credit agreements
790.0

 
360.0

 
326.0

Total current liabilities
1,119.7

 
787.4

 
592.1

Long-term debt, less current maturities
423.6

 
425.9

 
435.3

Accrued pension liabilities
109.5

 
109.7

 
92.1

Deferred income taxes
86.5

 
99.0

 
108.6

Lease liabilities, noncurrent
145.0

 
147.2

 
147.3

Other liabilities
133.5

 
132.4

 
58.6

Stockholders’ equity:
 
 
 
 
 
Wolverine World Wide, Inc. stockholders’ equity:
 
 
 
 
 
Common stock – par value $1, authorized 320,000,000 shares; 109,208,832, 108,329,250 and 107,881,756 shares issued
109.2

 
108.3

 
107.9

Additional paid-in capital
219.8

 
233.4

 
208.0

Retained earnings
1,268.1

 
1,263.3

 
1,201.2

Accumulated other comprehensive loss
(111.5
)
 
(102.1
)
 
(85.7
)
Cost of shares in treasury; 28,146,763, 27,181,512 and 19,152,384 shares
(760.0
)
 
(736.2
)
 
(520.0
)
Total Wolverine World Wide, Inc. stockholders’ equity
725.6

 
766.7

 
911.4

Noncontrolling interest
10.3

 
11.7

 
5.9

Total stockholders’ equity
735.9

 
778.4

 
917.3

Total liabilities and stockholders’ equity
$
2,753.7

 
$
2,480.0

 
$
2,351.3

See accompanying notes to consolidated condensed financial statements.


7



WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)

Quarter Ended
(In millions)
March 28,
2020
 
March 30,
2019
OPERATING ACTIVITIES
 
 
 
Net earnings
$
12.8

 
$
40.6

Adjustments to reconcile net earnings to net cash used in operating activities:
 
 
 
Depreciation and amortization
7.8

 
7.2

Deferred income taxes
(12.6
)
 
(0.4
)
Stock-based compensation expense
2.7

 
6.6

Pension and SERP expense
2.1

 
1.4

Environmental and other related costs, net of cash payments and recoveries received
49.6

 
(1.0
)
Other
5.8

 
(6.0
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
4.1

 
(13.6
)
Inventories
(61.0
)
 
(56.3
)
Other operating assets
1.4

 
0.5

Accounts payable
(64.0
)
 
(89.6
)
Income taxes payable
2.7

 
(0.5
)
Other operating liabilities
(28.0
)
 
(21.3
)
Net cash used in operating activities
(76.6
)
 
(132.4
)
INVESTING ACTIVITIES
 
 
 
Business acquisition, net of cash acquired
(5.5
)
 

Additions to property, plant and equipment
(3.6
)
 
(7.8
)
Other
(0.2
)
 
(0.1
)
Net cash used in investing activities
(9.3
)
 
(7.9
)
FINANCING ACTIVITIES
 
 
 
Net borrowings under revolving credit agreements
430.0

 
201.0

Payments on long-term debt
(2.5
)
 

Payments of debt issuance costs

 
(0.3
)
Cash dividends paid
(9.0
)
 
(7.9
)
Purchases of common stock for treasury
(21.0
)
 
(103.1
)
Employee taxes paid under stock-based compensation plans
(19.7
)
 
(16.3
)
Proceeds from the exercise of stock options
1.5

 
4.1

Net cash provided by financing activities
379.3

 
77.5

Effect of foreign exchange rate changes
(1.4
)
 
0.3

Increase (decrease) in cash and cash equivalents
292.0

 
(62.5
)
Cash and cash equivalents at beginning of the year
180.6

 
143.1

Cash and cash equivalents at end of the quarter
$
472.6

 
$
80.6

See accompanying notes to consolidated condensed financial statements.

8



WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity
(Unaudited)
 
Wolverine World Wide, Inc. Stockholders' Equity
 
 
 
 
(In millions, except share and per share data)
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Treasury Stock
 
Non-controlling Interest
 
Total
Balance at December 29, 2018
$
107.6

 
$
201.4

 
$
1,169.7

 
$
(88.3
)
 
$
(404.4
)
 
$
5.6

 
$
991.6

Net earnings
 
 
 
 
40.5

 
 
 
 
 
0.1

 
40.6

Other comprehensive income
 
 
 
 
 
 
2.6

 
 
 
0.2

 
2.8

Shares forfeited, net of shares issued under stock incentive plans (9,243 shares)

 
(3.8
)
 
 
 
 
 
 
 
 
 
(3.8
)
Shares issued for stock options exercised, net (263,307 shares)
0.3

 
3.8

 
 
 
 
 
 
 
 
 
4.1

Stock-based compensation expense
 
 
6.6

 
 
 
 
 
 
 
 
 
6.6

Cash dividends declared ($0.10 per share)
 
 
 
 
(9.0
)
 
 
 
 
 
 
 
(9.0
)
Purchase of common stock for treasury (2,891,761 shares)
 
 
 
 
 
 
 
 
(103.1
)
 
 
 
(103.1
)
Purchases of shares under employee stock plans (356,880 shares)
 
 
 
 
 
 
 
 
(12.5
)
 
 
 
(12.5
)
Balance at March 30, 2019
$
107.9

 
$
208.0

 
$
1,201.2

 
$
(85.7
)
 
$
(520.0
)
 
$
5.9

 
$
917.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 28, 2019
108.3

 
233.4

 
1,263.3

 
(102.1
)
 
(736.2
)
 
11.7

 
$
778.4

Net earnings (loss)
 
 
 
 
13.0

 
 
 
 
 
(0.2
)
 
12.8

Other comprehensive loss
 
 
 
 
 
 
(9.4
)
 
 
 
(1.2
)
 
(10.6
)
Shares issued, net of shares forfeited under stock incentive plans (727,936 shares)
0.7

 
(17.6
)
 
 
 
 
 
 
 
 
 
(16.9
)
Shares issued for stock options exercised, net (151,646 shares)
0.2

 
1.3

 
 
 
 
 
 
 
 
 
1.5

Stock-based compensation expense
 
 
2.7

 
 
 
 
 
 
 
 
 
2.7

Cash dividends declared ($0.10 per share)
 
 
 
 
(8.2
)
 
 
 
 
 
 
 
(8.2
)
Purchase of common stock for treasury (877,624 shares)
 
 
 
 
 
 
 
 
(21.0
)
 
 
 
(21.0
)
Purchases of shares under employee stock plans (88,694 shares)
 
 
 
 
 
 
 
 
(2.8
)
 
 
 
(2.8
)
Balance at March 28, 2020
$
109.2

 
$
219.8

 
$
1,268.1

 
$
(111.5
)
 
$
(760.0
)
 
$
10.3

 
$
735.9

See accompanying notes to consolidated condensed financial statements.




9



WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
Quarters Ended March 28, 2020 and March 30, 2019
(Unaudited)
 
1.
BASIS OF PRESENTATION
Nature of Operations
Wolverine World Wide, Inc. (the “Company”) is a leading designer, marketer and licensor of a broad range of quality casual footwear and apparel; performance outdoor and athletic footwear and apparel; kids’ footwear; industrial work shoes, boots and apparel; and uniform shoes and boots. The Company’s portfolio of owned and licensed brands includes: Bates®, Cat®, Chaco®, Harley-Davidson®, Hush Puppies®, Hytest®, Keds®, Merrell®, Saucony®, Sperry®, Stride Rite® and Wolverine®. The Company’s products are marketed worldwide through owned operations and through licensing and distribution arrangements with third parties. The Company’s products are marketed worldwide through owned operations, through licensing and distribution arrangements with third parties, and joint ventures. The Company also operates retail stores and eCommerce sites to market both its own brands and branded footwear and apparel from other manufacturers, as well as a leathers division that markets Wolverine Performance Leathers™.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for a complete presentation of the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included in the accompanying financial statements. For further information, refer to the consolidated financial statements and footnotes included in the Company’s 2019 Form 10-K.
Fiscal Year
The Company’s fiscal year is the 52 or 53-week period that ends on the Saturday nearest to December 31. Fiscal year 2020 has 53 weeks and fiscal year 2019 contained 52 weeks. The Company reports its quarterly results of operations on the basis of 13-week quarters for each of the first three fiscal quarters and a 13 or 14-week period for the fiscal fourth quarter. References to particular years or quarters refer to the Company’s fiscal years ended on the Saturday nearest to December 31 or the fiscal quarters within those years.
Seasonality
The Company’s business is subject to seasonal influences that can cause significant differences in revenue, earnings and cash flows from quarter to quarter; however, the differences have followed a consistent pattern in recent years.

10



2.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standards Updates (“ASU”) that the Company adopted during fiscal year 2020. The following is a summary of the effect of adoption of this new standard.
Standard
 
Description
 
Effect on the Financial Statements or Other Significant Matters
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
 
Seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.
 
The Company adopted ASU 2016-13 at the beginning of the first quarter on a prospective basis. The Company adjusted its business policies and processes relating to the measurement of allowances for credit losses to consider reasonable and supportable information to determine expected credit losses on accounts receivable. The adoptions of the ASU did not have a material effect on the consolidated financial statements.
ASU 2017-04, Intangibles Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
 
Eliminates step two of the goodwill impairment test under legacy US GAAP. Annual and interim goodwill impairment tests are performed by comparing the fair value of a reporting unit with its carrying amount and the amount by which the carrying amount exceeds the reporting unit’s fair value will be recognized as an impairment charge.

 
The Company adopted the ASU at the beginning of the first quarter on a prospective basis. The adoption of this guidance did not have a significant impact on the Company’s financial statements and all prospective impairment tests will be completed under this standard.


3.
EARNINGS PER SHARE
The Company calculates earnings per share in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC 260”). ASC 260 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. Under the guidance in ASC 260, the Company’s unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and must be included in the computation of earnings per share pursuant to the two-class method.
The following table sets forth the computation of basic and diluted earnings per share.
 
Quarter Ended
(In millions, except per share data)
March 28,
2020
 
March 30,
2019
Numerator:
 
 
 
Net earnings attributable to Wolverine World Wide, Inc.
$
13.0

 
$
40.5

Adjustment for earnings allocated to non-vested restricted common stock
(0.2
)
 
(0.8
)
Net earnings used in calculating basic and diluted earnings per share
$
12.8

 
$
39.7

Denominator:
 
 
 
Weighted average shares outstanding
81.4

 
91.0

Adjustment for non-vested restricted common stock
(0.3)

 
(1.0)

Shares used in calculating basic earnings per share
81.1

 
90.0

Effect of dilutive stock options
0.9

 
1.8

Shares used in calculating diluted earnings per share
82.0

 
91.8

Net earnings per share:
 
 
 
Basic
$
0.16

 
$
0.44

Diluted
0.16

 
0.43



11



For the quarters ended March 28, 2020 and March 30, 2019, 167,298 and 33,614 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive.
4.
GOODWILL AND INDEFINITE-LIVED INTANGIBLES
The changes in the carrying amount of goodwill are as follows:
 
Quarter Ended
(In millions)
March 28,
2020
 
March 30,
2019
Goodwill balance at beginning of the year
$
438.9

 
$
424.4

Foreign currency translation effects
(4.2
)
 
1.5

Goodwill balance at end of the quarter
$
434.7

 
$
425.9


The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $604.5 million as of March 28, 2020, December 28, 2019 and March 30, 2019. The carrying value of the Company’s Sperry® trade name was $518.2 million as of March 28, 2020. Based on the interim impairment assessment as of March 28, 2020, it was determined there were no triggering events of impairment for goodwill and indefinite-lived intangible assets. If the operating results for Sperry® were to decline in future periods compared to current projections, or if further deterioration of macroeconomic conditions due to the COVID-19 pandemic adversely affect the value of the Company’s Sperry® trade name and goodwill balances, the Company may need to record a non-cash impairment charge. We continue to monitor the significant global economic uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the impact on our business and financial performance.
5.
ACCOUNTS RECEIVABLE
The Company has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis that expires in the fourth quarter of fiscal 2020. Under the agreement, up to $150.0 million of accounts receivable may be sold to the financial institution and remain outstanding at any point in time. After the sale, the Company does not retain any interests in the accounts receivable and removes them from its consolidated condensed balance sheet, but continues to service and collect the outstanding accounts receivable on behalf of the financial institution. The Company recognizes a servicing asset or servicing liability, initially measured at fair value, each time it undertakes an obligation to service the accounts receivable under the agreement. The fair value of this obligation resulted in a nominal servicing liability as of the end of the first quarter of 2020. For receivables sold under the agreement, 90% of the stated amount is paid in cash to the Company at the time of sale, with the remainder paid to the Company at the completion of the collection process.
The following is a summary of the stated amount of accounts receivable that was sold as well as fees charged by the financial institution.
 
Quarter Ended
(In millions)
March 28,
2020
 
March 30,
2019
Accounts receivable sold
$
14.1

 
$

Fees charged
0.1

 


The fees charged are recorded in other expense. Net proceeds of this program are classified in operating activities in the consolidated condensed statements of cash flows. The amount outstanding under this program was $3.2 million and $0 as of March 28, 2020 and March 30, 2019, respectively.
6.
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition and Performance Obligations
The Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers. Revenue is recognized upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration to be received in exchange for those goods or services. The Company identifies the performance obligation in the contract, determines the transaction price, allocates the transaction price to the performance obligations and recognizes revenue upon completion of the performance obligation. Revenue is recognized net of variable consideration and any taxes collected from customers, which are subsequently remitted to governmental authorities.

12



The Company has agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company is due $29.3 million of remaining fixed transaction price under its license agreements as of March 28, 2020, which it expects to recognize per the terms of its contracts over the course of time through December 2024. The Company has elected to omit the remaining variable consideration under its license agreements given the Company recognizes revenue equal to what it has the right to invoice and that amount corresponds directly with the value to the customer of the Company’s performance to date.
The Company provides disaggregated revenue by sales channel, including the wholesale and consumer-direct sales channels, reconciled to the Company’s reportable segments. The wholesale channel includes royalty revenues due to the similarity in the Company’s oversight and management, customer base, the performance obligation (footwear and apparel goods) and point in time completion of the performance obligation.
 
Quarter Ended March 28, 2020
 
Quarter Ended March 30, 2019
(In millions)
Wholesale
 
Consumer-Direct
 
Total
 
Wholesale
 
Consumer-Direct
 
Total
Wolverine Michigan Group
$
214.3

 
$
33.5

 
$
247.8

 
$
272.3

 
$
30.4

 
$
302.7

Wolverine Boston Group
149.1

 
33.0

 
182.1

 
175.5

 
29.3

 
204.8

Other
8.7

 
0.7

 
9.4

 
15.0

 
0.9

 
15.9

Total
$
372.1

 
$
67.2

 
$
439.3

 
$
462.8

 
$
60.6

 
$
523.4


Reserves for Variable Consideration
Revenue is recorded at the net sales price (“transaction price”), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, customer markdowns, customer rebates and other sales incentives relating to the sale of the Company’s products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales. These estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Revenue recognized during the fiscal periods presented related to the Company’s contract liabilities was nominal.
The Company’s contract balances are as follows:
(In millions)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
Product returns reserve
$
10.3

 
$
11.4

 
$
10.9

Customer markdowns reserve
5.4

 
4.4

 
4.8

Other sales incentives reserve
2.3

 
2.3

 
2.5

Customer rebates liability
10.2

 
12.0

 
11.3

Customer advances liability
3.4

 
7.2

 
3.5


The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from initial estimates. If actual results in the future vary from initial estimates, the Company subsequently adjusts these estimates, which affects net revenue and earnings in the period such variances become known.

13



7.
DEBT
Total debt consists of the following obligations:
(In millions)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
Term Loan A, due December 6, 2023
$
190.0

 
$
192.5

 
$
200.0

Senior Notes, 5.00% interest, due September 1, 2026
250.0

 
250.0

 
250.0

Borrowings under revolving credit agreements
790.0

 
360.0

 
326.0

Unamortized deferred financing costs
(3.9
)
 
(4.1
)
 
(4.7
)
Total debt
$
1,226.1

 
$
798.4

 
$
771.3


On December 6, 2018, the Company amended its credit agreement (as amended, the "Credit Agreement"). The Credit Agreement includes a $200.0 million term loan facility (“Term Loan A”) and an $800.0 million Revolving Credit Facility, both with maturity dates of December 6, 2023. The Credit Agreement’s debt capacity is limited to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $1,750.0 million, unless certain specified conditions set forth in the Credit Agreement are met. Term Loan A requires quarterly principal payments with a balloon payment due on December 6, 2023. The scheduled principal payments due over the next 12 months total $12.5 million as of March 28, 2020 and are recorded as current maturities of long-term debt on the consolidated condensed balance sheets.
The Revolving Credit Facility allows the Company to borrow up to an aggregate amount of $800.0 million, which includes a $200.0 million foreign currency subfacility under which borrowings may be made, subject to certain conditions, in Canadian dollars, British pounds, euros, Hong Kong dollars, Swedish kronor, Swiss francs and such additional currencies as are determined in accordance with the Credit Agreement. The Revolving Credit Facility also includes a $50.0 million swingline subfacility and a $50.0 million letter of credit subfacility. The Company had outstanding letters of credit under the Revolving Credit Facility of $5.7 million, $5.7 million and $2.3 million as of March 28, 2020, December 28, 2019 and March 30, 2019, respectively. These outstanding letters of credit reduce the borrowing capacity under the Revolving Credit Facility.
The interest rates applicable to amounts outstanding under Term Loan A and to U.S. dollar denominated amounts outstanding under the Revolving Credit Facility will be, at the Company’s option, either (1) the Alternate Base Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 0.125% to 0.750%, or (2) the Eurocurrency Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 1.125% to 1.750% (all capitalized terms used in this sentence are as defined in the Credit Agreement). The Company has two interest rate swap arrangements that reduce the Company’s exposure to fluctuations in interest rates on its variable rate debt. At March 28, 2020, Term Loan A and the Revolving Credit Facility had weighted-average interest rates of 2.79% and 2.39%, respectively.
The obligations of the Company pursuant to the Credit Agreement are guaranteed by substantially all of the Company’s material domestic subsidiaries and secured by substantially all of the personal and real property of the Company and its material domestic subsidiaries, subject to certain exceptions.
The Credit Agreement also contains certain affirmative and negative covenants, including covenants that limit the ability of the Company and its Restricted Subsidiaries to, among other things: incur or guarantee indebtedness; incur liens; pay dividends or repurchase stock; enter into transactions with affiliates; consummate asset sales, acquisitions or mergers; prepay certain other indebtedness; or make investments, as well as covenants restricting the activities of certain foreign subsidiaries of the Company that hold intellectual property related assets. Further, the Credit Agreement requires compliance with the following financial covenants: a maximum Consolidated Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (all capitalized terms used in this paragraph are as defined in the Credit Agreement). As of March 28, 2020, the Company was in compliance with all covenants and performance ratios under the Credit Agreement.
The Company has $250.0 million of senior notes outstanding that are due on September 1, 2026 (the “Senior Notes”). The Senior Notes bear interest at 5.00% with the related interest payments due semi-annually. The Senior Notes are guaranteed by substantially all of the Company’s domestic subsidiaries.
The Company has a foreign revolving credit facility with aggregate available borrowings of $4.0 million that are uncommitted and, therefore, each borrowing against the facility is subject to approval by the lender. There were no borrowings against this facility as of March 28, 2020, December 28, 2019 and March 30, 2019.
The Company included in interest expense the amortization of deferred financing costs of $0.4 million and $0.4 million for the quarters ended March 28, 2020 and March 30, 2019, respectively.

14



8. LEASES
The Company’s leases consist primarily of corporate offices, retail stores, distribution centers, showrooms, vehicles and office equipment. The Company leases assets in the normal course of business to meet its current and future needs while providing flexibility to its operations. The Company enters into contracts with third parties to lease specifically identified assets. Most of the Company’s leases have contractually specified renewal periods. Most retail store leases have early termination clauses that the Company can elect if stipulated sales amounts are not achieved. The Company determines the lease term for each lease based on the terms of each contract and factors in renewal and early termination options if such options are reasonably certain to be exercised.
The following is a summary of the Company’s lease cost.
 
Quarter Ended
(In millions)
March 28,
2020
 
March 30,
2019
Operating lease cost
$
8.2

 
$
8.0

Variable lease cost
3.4

 
3.5

Short-term lease cost
0.3

 
0.2

Sublease income
(1.2
)
 
(1.0
)
Total lease cost
$
10.7

 
$
10.7


Future undiscounted cash flows for operating leases for the fiscal periods subsequent to March 28, 2020 are as follows:
(In millions)
Operating Leases
Remainder of 2020
$
27.0

2021
30.7

2022
28.0

2023
20.8

2024
18.0

Thereafter
107.5

Total future payments
232.0

Less: imputed interest
52.1

Recognized lease liability
$
179.9


9.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company follows FASB ASC Topic 815, Derivatives and Hedging ("ASC 815"), which requires that all derivative instruments be recorded on the consolidated condensed balance sheets at fair value by establishing criteria for designation and effectiveness of hedging relationships. The Company does not hold or issue financial instruments for trading purposes.
The Company utilizes foreign currency forward exchange contracts designated as cash flow hedges to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business. These foreign currency forward exchange hedge contracts extended out to a maximum of 503 days, 545 days and 531 days, as of March 28, 2020, December 28, 2019 and March 30, 2019, respectively. If, in the future, the foreign exchange contracts are determined not to be highly effective or are terminated before their contractual termination dates, the Company would remove the hedge designation from those contracts and reclassify into earnings the unrealized gains or losses that would otherwise be included in accumulated other comprehensive income (loss) (“AOCI”) within stockholders’ equity. The Company did not have any reclassifications during the quarters ended March 28, 2020 and March 30, 2019.
The Company also utilizes foreign currency forward exchange contracts that are not designated as hedging instruments to manage foreign currency transaction exposure. Foreign currency derivatives not designated as hedging instruments are offset by foreign exchange gains or losses resulting from the underlying exposures of foreign currency denominated assets and liabilities.
The Company has two interest rate swap arrangements, which unless otherwise terminated, will mature on July 13, 2020 and December 6, 2023, respectively. These agreements, which exchange floating rate for fixed rate interest payments over the life of the agreements without the exchange of the underlying notional amounts, have been designated as cash flow hedges of the underlying debt. The notional amounts of the interest rate swap arrangements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap arrangements is recognized

15



as interest expense. In accordance with ASC 815, the Company has formally documented the relationship between the interest rate swaps and the variable rate borrowing, as well as its risk management objective and strategy for undertaking the hedge transactions. This process included linking the derivative to the specific liability or asset on the balance sheet. The Company also assessed at the inception of each hedge, and continues to assess on an ongoing basis, whether the derivatives used in the hedging transactions are highly effective in offsetting changes in the cash flows of the hedged item.
The Company has a cross currency swap to minimize the impact of exchange rate fluctuations. The hedging instrument, which, unless otherwise terminated, will mature on September 1, 2021, has been designated as a hedge of a net investment in a foreign operation. The Company will pay 2.75% on the euro-denominated notional amount and receive 5.00% on the U.S. dollar notional amount, with an exchange of principal at maturity. Changes in fair value related to movements in the foreign currency exchange spot rate are recorded in AOCI, offsetting the currency translation adjustment related to the underlying net investment that is also recorded in AOCI. All other changes in fair value are recorded in interest expense. In accordance with ASC 815, the Company has formally documented the relationship between the cross-currency swap and the Company’s investment in its euro-denominated subsidiary, as well as its risk management objective and strategy for undertaking the hedge transaction. This process included linking the derivative to its net investment on the balance sheet. The Company also assessed at the hedge’s inception, and continues to assess on an ongoing basis, whether the derivative used in the hedging transaction is highly effective in offsetting changes in expected cash flows of the hedged item.
The notional amounts of the Company’s derivative instruments are as follows:
(Dollars in millions)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
Foreign exchange contracts:
 
 
 
 
 
     Hedge contracts
$
202.1

 
$
246.3

 
$
235.3

          Non-hedge contracts

 
7.3

 

Interest rate swaps
335.2

 
355.8

 
162.5

Cross currency swap
79.8

 
79.8

 
79.8

The recorded fair values of the Company’s derivative instruments are as follows:
(In millions)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
Financial assets:
 
 
 
 
 
Foreign exchange contracts - hedge
$
6.6

 
$
2.3

 
$
7.0

Interest rate swaps

 

 
0.9

Financial liabilities:
 
 
 
 
 
Foreign exchange contracts - hedge
$

 
$
(1.8
)
 
$
(1.0
)
Interest rate swaps
(9.7
)
 
(1.8
)
 

Cross currency swap
(1.9
)
 
(3.0
)
 
(5.1
)

10.
STOCK-BASED COMPENSATION
The Company recognized compensation expense of $2.7 million and $6.6 million, and related income tax benefits of $0.5 million and $1.3 million, for grants under its stock-based compensation plans for the quarters ended March 28, 2020 and March 30, 2019, respectively.
The Company grants restricted stock or units (“restricted awards”), performance-based restricted stock or units (“performance awards”) and stock options under its stock-based compensation plans.
During the quarter ended March 28, 2020, the Company issued 493,420 restricted awards at a weighted average grant date fair value of $32.84 per award. During the quarter ended March 30, 2019, the Company issued 482,893 restricted awards at a weighted average grant date fair value of $34.81 per award.
During the quarter ended March 28, 2020, the Company issued 336,181 performance awards at a weighted average grant date fair value of $35.45 per award. During the quarter ended March 30, 2019, the Company issued 329,089 performance awards at a weighted average grant date fair value of $37.65 per award.

16



11.
RETIREMENT PLANS
The following is a summary of net pension and Supplemental Executive Retirement Plan (“SERP”) expense recognized by the Company.
 
Quarter Ended
(In millions)
March 28,
2020
 
March 30,
2019
Service cost pertaining to benefits earned during the period
$
1.6

 
$
1.4

Interest cost on projected benefit obligations
3.5

 
3.8

Expected return on pension assets
(4.6
)
 
(4.4
)
Net amortization loss
1.6

 
0.6

Net pension expense
$
2.1

 
$
1.4


The non-service cost components of net pension expense is recorded in the Other income, net line item on the consolidated condensed statements of operations and comprehensive income.
12.
INCOME TAXES
The Company maintains management and operational activities in overseas subsidiaries, and its foreign earnings are taxed at rates that are different than the U.S. federal statutory income tax rate. A significant amount of the Company’s earnings are generated by its Canadian, European and Asian subsidiaries and, to a lesser extent, in jurisdictions that are not subject to income tax.
The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has, therefore not established a deferred tax liability on that amount of foreign unremitted earnings. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation.
The Company’s effective tax rates for the quarters ended March 28, 2020 and March 30, 2019 were (32.3)% and 13.2%, respectively. The decrease in the current year effective tax rate is driven by favorable discrete benefits related to stock compensation and a favorable settlement of an audit in a foreign jurisdiction. The effect of the discrete items on the current year effective tax rate was increased due to the reduction in pretax book income in the first quarter of 2020 compared to the first quarter of 2019.
The Company is subject to periodic audits by U.S. federal, state, local and non-U.S. tax authorities. Currently, the Company is undergoing routine periodic audits in both U.S. federal, state, local and non-U.S. tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits; however, any payment of tax is not expected to be significant to the consolidated condensed financial statements. The Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2015 in the majority of tax jurisdictions.
13.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
AOCI represents net earnings and any revenue, expenses, gains and losses that, under U.S. GAAP, are excluded from net earnings and recognized directly as a component of stockholders’ equity.

17



The change in AOCI during the quarters ended March 28, 2020 and March 30, 2019 is as follows:
(In millions)
Foreign
currency
translation
adjustments
 
Derivatives
 
Pension
adjustments
 
Total
Balance of AOCI as of December 29, 2018
$
(53.0
)
 
$
0.9

 
$
(36.2
)
 
$
(88.3
)
Other comprehensive income (loss) before reclassifications (1)
2.4

 
1.3

 

 
3.7

Amounts reclassified from AOCI

 
(1.8
)
(2) 
0.6

(3) 
(1.2
)
Income tax expense (benefit)

 
0.2

 
(0.1
)
 
0.1

Net reclassifications

 
(1.6
)
 
0.5

 
(1.1
)
Net current-period other comprehensive income (loss) (1)
2.4

 
(0.3
)
 
0.5

 
2.6

Balance of AOCI as of March 30, 2019
$
(50.6
)
 
$
0.6

 
$
(35.7
)
 
$
(85.7
)
 
 
 
 
 
 
 
 
Balance of AOCI as of December 28, 2019
$
(47.6
)
 
$
(5.8
)
 
$
(48.7
)
 
$
(102.1
)
Other comprehensive income (loss) before reclassifications (1)
(10.9
)
 
1.1

 

 
(9.8
)
Amounts reclassified from AOCI

 
(1.2
)
(2) 
1.6

(3) 
0.4

Income tax expense (benefit)

 
0.3

 
(0.3
)
 

Net reclassifications

 
(0.9
)
 
1.3

 
0.4

Net current-period other comprehensive income (loss) (1)
(10.9
)
 
0.2

 
1.3

 
(9.4
)
Balance of AOCI as of March 28, 2020
$
(58.5
)
 
$
(5.6
)
 
$
(47.4
)
 
$
(111.5
)
(1) 
Other comprehensive income (loss) is reported net of taxes and noncontrolling interest.
(2) 
Amounts related to foreign currency derivatives are included in cost of goods sold. Amounts related to interest rate swaps and the cross-currency swap are included in interest expense.
(3) 
Amounts reclassified are included in the computation of net pension expense.
14.
FAIR VALUE MEASUREMENTS
The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which provides a consistent definition of fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-tier hierarchy for fair value measurements. ASC 820 requires fair value measurements to be classified and disclosed in one of the following three categories:
Level 1:
 
Fair value is measured using quoted prices (unadjusted) in active markets for identical assets and liabilities.
 
 
 
Level 2:
  
Fair value is measured using either direct or indirect inputs, other than quoted prices included within Level 1, which are observable for similar assets or liabilities.
 
 
 
Level 3:
 
Fair value is measured using valuation techniques in which one or more significant inputs are unobservable.

Recurring Fair Value Measurements
The following table sets forth financial assets and liabilities measured at fair value in the consolidated condensed balance sheets and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy.
 
Fair Value Measurements
 
Quoted Prices With Other Observable Inputs (Level 2)
(In millions)
March 28,
2020
 
December 28,
2019
 
March 30,
2019
Financial assets:
 
 
 
 
 
Derivatives
$
6.6

 
$
2.3

 
$
7.9

Financial liabilities:
 
 
 
 
 
Derivatives
$
(11.6
)
 
$
(6.6
)
 
$
(6.1