Company Quick10K Filing
Wolverine World Wide
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 90 $2,653
10-Q 2019-11-07 Quarter: 2019-09-28
10-Q 2019-08-07 Quarter: 2019-06-29
10-Q 2019-05-09 Quarter: 2019-03-30
10-K 2019-02-26 Annual: 2018-12-29
10-Q 2018-11-07 Quarter: 2018-09-29
10-Q 2018-08-08 Quarter: 2018-06-30
10-Q 2018-05-09 Quarter: 2018-03-31
10-K 2018-02-27 Annual: 2017-12-30
10-Q 2017-11-09 Quarter: 2017-09-30
10-Q 2017-08-09 Quarter: 2017-07-01
10-Q 2017-05-10 Quarter: 2017-04-01
10-K 2017-02-28 Annual: 2016-12-31
10-Q 2016-10-19 Quarter: 2016-09-10
10-Q 2016-07-27 Quarter: 2016-06-18
10-Q 2016-05-04 Quarter: 2016-03-26
10-K 2016-03-01 Annual: 2016-01-02
10-Q 2015-10-21 Quarter: 2015-09-12
10-Q 2015-07-29 Quarter: 2015-06-20
10-Q 2015-05-06 Quarter: 2015-03-28
10-K 2015-03-03 Annual: 2015-01-03
10-Q 2014-10-15 Quarter: 2014-09-06
10-Q 2014-07-22 Quarter: 2014-06-14
10-Q 2014-04-30 Quarter: 2014-03-22
10-K 2014-02-25 Annual: 2013-12-28
10-Q 2013-10-17 Quarter: 2013-09-07
10-Q 2013-07-22 Quarter: 2013-06-15
10-Q 2013-05-02 Quarter: 2013-03-23
10-K 2013-02-27 Annual: 2012-12-29
10-Q 2012-10-18 Quarter: 2012-09-08
10-Q 2012-07-26 Quarter: 2012-06-16
10-Q 2012-05-03 Quarter: 2012-03-24
10-Q 2011-10-20 Quarter: 2011-09-10
10-Q 2011-07-28 Quarter: 2011-06-18
10-Q 2011-05-03 Quarter: 2011-03-26
10-K 2011-03-02 Annual: 2011-01-01
10-Q 2010-10-21 Quarter: 2010-09-11
10-Q 2010-07-29 Quarter: 2010-06-19
10-Q 2010-05-06 Quarter: 2010-03-27
10-K 2010-03-03 Annual: 2010-01-02
8-K 2019-12-10 Regulation FD
8-K 2019-11-07 Earnings
8-K 2019-08-07 Earnings
8-K 2019-05-09 Earnings
8-K 2019-05-08 Officers, Amend Bylaw, Shareholder Vote
8-K 2019-03-13 Regulation FD, Exhibits
8-K 2019-02-20 Earnings, Exhibits
8-K 2019-02-12 Regulation FD, Exhibits
8-K 2018-12-06 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-08-08 Earnings, Exhibits
8-K 2018-05-09 Earnings, Exhibits
8-K 2018-05-03 Officers, Shareholder Vote
8-K 2018-02-21 Earnings, Exhibits
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-02-07 Officers, Exhibits
WWW 2019-09-28
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-31.1 a2019-q3exhibit311.htm
EX-31.2 a2019-q3exhibit312.htm
EX-32 a2019-q3exhibit32.htm

Wolverine World Wide Earnings 2019-09-28

WWW 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
NKE 137,952 23,717 14,677 39,117 17,474 4,029 4,801 136,956 45% 28.5 17%
DECK 5,044 1,751 756 2,047 1,055 275 375 4,541 52% 12.1 16%
SKX 4,729 4,421 2,098 4,793 2,280 396 629 4,054 48% 6.4 9%
SHOO 2,830 1,282 454 1,725 650 141 212 2,618 38% 12.4 11%
WWW 2,653 2,443 1,599 2,230 910 179 233 3,366 41% 14.5 7%
CROX 1,344 714 602 1,132 566 64 108 1,448 50% 13.3 9%
RCKY 234 196 39 261 92 15 28 218 35% 7.8 8%
ICON 38 634 723 159 0 -26 40 616 0% 15.3 -4%
CAL 1 2,644 2,020 2,926 1,174 -12 44 156 40% 3.6 -0%

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 September 28, 2019
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 80,875,736 shares of common stock, $1 par value, outstanding as of October 25, 2019.

 
 
 

Table of Contents

Table of Contents
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1A.
Item 2.
Item 6.

2

Table of Contents

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:
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;
increases 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;
the potential 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
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 29, 2018 (the “2018 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.

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Table of Contents

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
 
Year-To-Date Ended
(In millions, except per share data)
September 28,
2019
 
September 29,
2018
 
September 28,
2019
 
September 29,
2018
Revenue
$
574.3

 
$
558.6

 
$
1,666.3

 
$
1,659.6

Cost of goods sold
331.0

 
326.5

 
972.4

 
965.4

Gross profit
243.3

 
232.1

 
693.9

 
694.2

Selling, general and administrative expenses
165.9

 
161.6

 
498.6

 
488.6

Environmental and other related costs
9.1

 
2.1

 
19.1

 
7.6

Operating profit
68.3

 
68.4

 
176.2

 
198.0

Other expenses:
 
 
 
 
 
 
 
Interest expense, net
8.2

 
5.8

 
21.8

 
18.7

Other income, net
(0.9
)
 
(1.3
)
 
(3.2
)
 
(7.2
)
Total other expenses
7.3

 
4.5

 
18.6

 
11.5

Earnings before income taxes
61.0

 
63.9

 
157.6

 
186.5

Income tax expense
12.4

 
5.0

 
28.2

 
25.5

Net earnings
48.6

 
58.9

 
129.4

 
161.0

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

 

 
0.2

Net earnings attributable to Wolverine World Wide, Inc.
$
48.7

 
$
58.8

 
$
129.4

 
$
160.8

 
 
 
 
 
 
 
 
Net earnings per share (see Note 3):
 
 
 
 
 
 
 
Basic
$
0.57

 
$
0.62

 
$
1.46

 
$
1.69

Diluted
$
0.57

 
$
0.60

 
$
1.44

 
$
1.65

 
 
 
 
 
 
 
 
Comprehensive income
$
45.6

 
$
60.8

 
$
128.8

 
$
163.3

Less: comprehensive income (loss) attributable to noncontrolling interests
(0.5
)
 
0.3

 
(0.3
)
 
0.4

Comprehensive income attributable to Wolverine World Wide, Inc.
$
46.1

 
$
60.5

 
$
129.1

 
$
162.9

 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.10

 
$
0.08

 
$
0.30

 
$
0.24

See accompanying notes to consolidated condensed financial statements.

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Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
(In millions, except share data)
September 28,
2019

December 29,
2018

September 29,
2018
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
125.2

 
$
143.1

 
$
228.1

Accounts receivable, less allowances:
 
 
 
 
 
September 28, 2019 – $24.0
 
 
 
 
 
December 29, 2018 – $26.6
 
 
 
 
 
September 29, 2018 – $29.7
357.3

 
361.2

 
364.0

Inventories:
 
 
 
 
 
Finished products, net
410.0

 
301.4

 
309.2

Raw materials and work-in-process, net
7.7

 
16.2

 
15.2

Total inventories
417.7

 
317.6

 
324.4

Prepaid expenses and other current assets
48.4

 
45.8

 
32.2

Total current assets
948.6

 
867.7

 
948.7

Property, plant and equipment:
 
 
 
 
 
Gross cost
399.1

 
381.8

 
393.7

Accumulated depreciation
(256.1
)
 
(250.9
)
 
(262.3
)
Property, plant and equipment, net
143.0

 
130.9

 
131.4

Lease right-of-use assets, net
163.9

 

 

Other assets:
 
 
 
 
 
Goodwill
437.0

 
424.4

 
427.5

Indefinite-lived intangibles
604.5

 
604.5

 
604.5

Amortizable intangibles, net
79.6

 
71.9

 
73.1

Deferred income taxes
3.2

 
3.1

 
4.0

Other
88.7

 
80.6

 
79.9

Total other assets
1,213.0

 
1,184.5

 
1,189.0

Total assets
$
2,468.5

 
$
2,183.1

 
$
2,269.1

See accompanying notes to consolidated condensed financial statements.

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Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets – continued
(Unaudited)
(In millions, except share data)
September 28,
2019
 
December 29,
2018
 
September 29,
2018
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
155.6

 
$
202.3

 
$
139.5

Accrued salaries and wages
25.5

 
31.9

 
32.2

Other accrued liabilities
116.0

 
106.4

 
124.4

Lease liabilities
33.5

 

 

Current maturities of long-term debt
10.0

 
7.5

 
60.0

Borrowings under revolving credit agreements and other short-term notes
493.3

 
125.0

 
1.5

Total current liabilities
833.9

 
473.1

 
357.6

Long-term debt, less current maturities
430.7

 
438.0

 
601.0

Accrued pension liabilities
92.3

 
92.0

 
81.2

Deferred income taxes
112.0

 
107.9

 
99.4

Lease liabilities, noncurrent
151.0

 

 

Other liabilities
54.7

 
80.5

 
67.6

Stockholders’ equity:
 
 
 
 
 
Wolverine World Wide, Inc. stockholders’ equity:
 
 
 
 
 
Common stock – par value $1, authorized 320,000,000 shares; shares issued (including shares in treasury):
 
 
 
 
 
September 28, 2019 – 108,058,005 shares
 
 
 
 
 
December 29, 2018 – 107,609,206 shares
 
 
 
 
 
September 29, 2018 – 107,587,377 shares
108.1

 
107.6

 
107.6

Additional paid-in capital
221.3

 
201.4

 
190.6

Retained earnings
1,273.2

 
1,169.7

 
1,138.3

Accumulated other comprehensive loss
(88.6
)
 
(88.3
)
 
(81.2
)
Cost of shares in treasury:
 
 
 
 
 
September 28, 2019 – 26,992,711 shares
 
 
 
 
 
December 29, 2018 – 15,905,681 shares
 
 
 
 
 
September 29, 2018 – 12,746,435 shares
(731.1
)
 
(404.4
)
 
(299.0
)
Total Wolverine World Wide, Inc. stockholders’ equity
782.9

 
986.0

 
1,056.3

Noncontrolling interest
11.0

 
5.6

 
6.0

Total stockholders’ equity
793.9

 
991.6

 
1,062.3

Total liabilities and stockholders’ equity
$
2,468.5

 
$
2,183.1

 
$
2,269.1

See accompanying notes to consolidated condensed financial statements.


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Table of Contents

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

Year-To-Date Ended
(In millions)
September 28,
2019
 
September 29,
2018
OPERATING ACTIVITIES
 
 
 
Net earnings
$
129.4

 
$
161.0

Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
23.3

 
22.6

Deferred income taxes
0.3

 
12.3

Stock-based compensation expense
17.3

 
21.2

Pension contribution

 
(60.7
)
Pension and SERP expense
4.2

 
4.0

Cash payments related to restructuring costs
(0.1
)
 
(4.8
)
Environmental and other related costs, net of cash payments
(3.7
)
 
(6.3
)
Net loss on sale of assets

 
0.3

Other
(9.4
)
 
6.5

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
0.3

 
(95.4
)
Inventories
(94.8
)
 
(49.2
)
Other operating assets
(1.2
)
 
(3.2
)
Accounts payable
(46.9
)
 
(21.8
)
Income taxes payable
9.3

 
8.2

Other operating liabilities
(12.0
)
 
(28.7
)
Net cash provided by (used in) operating activities
16.0

 
(34.0
)
INVESTING ACTIVITIES
 
 
 
Business acquisition, net of cash acquired
(15.1
)
 

Additions to property, plant and equipment
(28.7
)
 
(15.3
)
Proceeds from sale of assets
0.1

 
2.2

Investment in joint ventures
(8.5
)
 

Other
(1.2
)
 
(1.7
)
Net cash used in investing activities
(53.4
)
 
(14.8
)
FINANCING ACTIVITIES
 
 
 
Net borrowings under revolving credit agreements and other short-term notes
368.3

 
1.0

Payments on long-term debt
(5.0
)
 
(122.6
)
Payments of debt issuance costs
(0.3
)
 

Cash dividends paid
(25.4
)
 
(21.0
)
Purchases of common stock for treasury
(314.2
)
 
(69.9
)
Employee taxes paid under stock-based compensation plans
(16.7
)
 
(8.1
)
Proceeds from the exercise of stock options
7.0

 
23.2

Contributions from noncontrolling interests
5.7

 

Net cash provided by (used in) financing activities
19.4

 
(197.4
)
Effect of foreign exchange rate changes
0.1

 
(6.7
)
Decrease in cash and cash equivalents
(17.9
)
 
(252.9
)
Cash and cash equivalents at beginning of the year
143.1

 
481.0

Cash and cash equivalents at end of the quarter
$
125.2

 
$
228.1

See accompanying notes to consolidated condensed financial statements.

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Table of Contents

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 June 30, 2018
$
107.3

 
$
177.1

 
$
1,087.1

 
$
(82.9
)
 
$
(279.0
)
 
$
5.7

 
$
1,015.3

Net earnings
 
 
 
 
58.8

 
 
 
 
 
0.1

 
58.9

Other comprehensive income
 
 
 
 
 
 
1.7

 
 
 
0.2

 
1.9

Shares forfeited, net of shares issued under stock incentive plans (13,836 shares)

 
(0.1
)
 
 
 
 
 
 
 
 
 
(0.1
)
Shares issued for stock options exercised, net (321,546 shares)
0.3

 
6.5

 
 
 
 
 
 
 
 
 
6.8

Stock-based compensation expense
 
 
7.0

 
 
 
 
 
 
 
 
 
7.0

Cash dividends declared ($0.08 per share)
 
 
 
 
(7.6
)
 
 
 
 
 
 
 
(7.6
)
Issuance of treasury shares (3,005 shares)
 
 
0.1

 
 
 
 
 

 
 
 
0.1

Purchase of common stock for treasury (529,966 shares)
 
 
 
 
 
 
 
 
(20.0
)
 
 
 
(20.0
)
Balance at September 29, 2018
$
107.6

 
$
190.6

 
$
1,138.3

 
$
(81.2
)
 
$
(299.0
)
 
$
6.0

 
$
1,062.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 29, 2019
108.0

 
213.2

 
1,232.8

 
(86.0
)
 
(624.3
)
 
11.5

 
$
855.2

Net earnings (loss)
 
 
 
 
48.7

 
 
 
 
 
(0.1
)
 
48.6

Other comprehensive loss
 
 
 
 
 
 
(2.6
)
 
 
 
(0.4
)
 
(3.0
)
Shares forfeited, net of shares issued under stock incentive plans (1,917 shares)
0.1

 
(0.2
)
 
 
 
 
 
 
 
 
 
(0.1
)
Shares issued for stock options exercised, net (62,114 shares)

 
1.2

 
 
 
 
 
 
 
 
 
1.2

Stock-based compensation expense
 
 
7.1

 
 
 
 
 
 
 
 
 
7.1

Cash dividends declared ($0.10 per share)
 
 
 
 
(8.3
)
 
 
 
 
 
 
 
(8.3
)
Issuance of treasury shares (1,831 shares)
 
 

 
 
 
 
 
0.1

 
 
 
0.1

Purchase of common stock for treasury (4,250,070 shares)
 
 
 
 
 
 
 
 
(106.8
)
 
 
 
(106.8
)
Purchases of shares under employee stock plans (3,440 shares)
 
 
 
 
 
 
 
 
(0.1
)
 
 
 
(0.1
)
Balance at September 28, 2019
$
108.1

 
$
221.3

 
$
1,273.2

 
$
(88.6
)
 
$
(731.1
)
 
$
11.0

 
$
793.9

See accompanying notes to consolidated condensed financial statements.


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Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity – continued
(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 30, 2017
$
106.4


$
149.2


$
992.2


$
(75.2
)

$
(223.0
)

$
5.6

 
$
955.2

Net earnings
 
 
 
 
160.8

 
 
 
 
 
0.2

 
161.0

Other comprehensive income
 
 
 
 
 
 
2.1

 
 
 
0.2

 
2.3

Shares forfeited, net of shares issued under stock incentive plans (135,700 shares)
(0.1
)
 
(1.8
)
 
 
 
 
 
 
 
 
 
(1.9
)
Shares issued for stock options exercised, net (1,317,628 shares)
1.3

 
21.9

 
 
 
 
 
 
 
 
 
23.2

Stock-based compensation expense
 
 
21.2

 
 
 
 
 
 
 
 
 
21.2

Cash dividends declared ($0.24 per share)
 
 
 
 
(22.8
)
 
 
 
 
 
 
 
(22.8
)
Issuance of treasury shares (6,006 shares)
 
 
0.1

 
 
 
 
 
0.1

 
 
 
0.2

Purchase of common stock for treasury (2,207,909 shares)
 
 
 
 
 
 
 
 
(69.9
)
 
 
 
(69.9
)
Purchases of shares under employee stock plans (199,391 shares)
 
 
 
 
 
 
 
 
(6.2
)
 
 
 
(6.2
)
Change in accounting principle
 
 
 
 
8.1

 
(8.1
)
 
 
 
 
 

Balance at September 29, 2018
$
107.6

 
$
190.6

 
$
1,138.3

 
$
(81.2
)
 
$
(299.0
)
 
$
6.0

 
$
1,062.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 29, 2018
$
107.6

 
$
201.4

 
$
1,169.7

 
$
(88.3
)
 
$
(404.4
)
 
$
5.6

 
$
991.6

Net earnings
 
 
 
 
129.4

 
 
 
 
 

 
129.4

Other comprehensive loss
 
 
 
 
 
 
(0.3
)
 
 
 
(0.3
)
 
(0.6
)
Shares issued, net of shares forfeited under stock incentive plans (36,588 shares)
0.1

 
(4.1
)
 
 
 
 
 
 
 
 
 
(4.0
)
Shares issued for stock options exercised, net (412,211 shares)
0.4

 
6.6

 
 
 
 
 
 
 
 
 
7.0

Stock-based compensation expense
 
 
17.3

 
 
 
 
 
 
 
 
 
17.3

Cash dividends declared ($0.30 per share)
 
 
 
 
(25.9
)
 
 
 
 
 
 
 
(25.9
)
Issuance of treasury shares (5,831 shares)
 
 
0.1

 
 
 
 
 
0.2

 
 
 
0.3

Purchase of common stock for treasury (10,730,962 shares)
 
 
 
 
 
 
 
 
(314.2
)
 
 
 
(314.2
)
Purchases of shares under employee stock plans (361,899 shares)
 
 
 
 
 
 
 
 
(12.7
)
 
 
 
(12.7
)
Capital contribution from noncontrolling interest
 
 
 
 
 
 
 
 
 
 
5.7

 
5.7

Balance at September 28, 2019
$
108.1

 
$
221.3

 
$
1,273.2

 
$
(88.6
)
 
$
(731.1
)
 
$
11.0

 
$
793.9

See accompanying notes to consolidated condensed financial statements.


9

Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
Quarters Ended September 28, 2019 and September 29, 2018
(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; children’s 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 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 2018 Form 10-K.
As described in Note 2, the Company adopted ASU 2016-02, Leases, at the beginning of the first quarter of fiscal 2019. Under the modified retrospective method, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As described in Note 16, the Company realigned certain brands into a new operating segment during the first quarter of fiscal 2019. All prior period disclosures have been restated to reflect the new reportable operating segments.
Fiscal Year
The Company’s fiscal year is the 52 or 53-week period that ends on the Saturday nearest to December 31. Fiscal years 2019 and 2018 both have 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.

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Table of Contents

2.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standards Updates (“ASU”) that the Company has adopted during fiscal 2019. 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 2016-02, Leases (as amended by ASUs 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01)
 
The core principle is that a lessee shall recognize a lease liability in its statement of financial position for the present value of all future lease payments. A lessee would also recognize a right-of-use asset representing its right to use the underlying asset for the lease term. Under a new transition method, a reporting entity will apply the new lease requirements as of the effective date and continue to report comparative periods presented in the financial statements under GAAP in effect during the comparable periods.
 
The Company adopted ASU 2016-02 at the beginning of the first quarter using the modified retrospective approach and elected the package of practical expedients for its existing leases. The Company recognized a lease liability of $178.1 million, which was equal to the present value of the future lease payments for its portfolio of operating leases. The Company recognized a right-of-use asset of $157.3 million, which was equal to the lease liabilities adjusted for the balance of accrued rent and unamortized lease incentives as of the effective date. The adoption of ASU 2016-02 did not have a material impact on the Company’s results of operations or cash flows. See Note 8 for additional information on the adoption of this standard and disclosures regarding the Company’s leases.

The FASB has issued the following ASU that has not yet been adopted by the Company. The following is a summary of the planned adoption period and anticipated impact of adopting this new standard.
Standard
 
Description
 
Planned Period of Adoption
 
Effect on the Financial Statements or Other Significant Matters
ASU 2016-13, Measurement of Credit Losses on Financial Instruments (as amended by ASU 2018-19)
 
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.
 
Q1 2020
 
The Company is evaluating the impacts of the new standard on its existing financial instruments, including trade receivables.

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.

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Table of Contents

The following table sets forth the computation of basic and diluted earnings per share.
 
Quarter Ended
 
Year-To-Date Ended
(In millions, except per share data)
September 28,
2019
 
September 29,
2018
 
September 28,
2019
 
September 29,
2018
Numerator:
 
 
 
 
 
 
 
Net earnings attributable to Wolverine World Wide, Inc.
$
48.7

 
$
58.8

 
$
129.4

 
$
160.8

Adjustment for earnings allocated to non-vested restricted common stock
(1.0
)
 
(1.2
)
 
(2.6
)
 
(3.4
)
Net earnings used in calculating basic earnings per share
47.7

 
57.6

 
126.8

 
157.4

Adjustment for earnings reallocated from non-vested restricted common stock

 

 
0.1

 
0.1

Net earnings used in calculating diluted earnings per share
$
47.7

 
$
57.6

 
$
126.9

 
$
157.5

Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding
83.5

 
94.9

 
87.3

 
95.2

Adjustment for non-vested restricted common stock
(0.5)

 
(1.7)

 
(0.7)

 
(1.8)

Shares used in calculating basic earnings per share
83.0

 
93.2

 
86.6

 
93.4

Effect of dilutive stock options
0.9

 
2.1

 
1.4

 
2.0

Shares used in calculating diluted earnings per share
83.9

 
95.3

 
88.0

 
95.4

Net earnings per share:
 
 
 
 
 
 
 
Basic
$
0.57

 
$
0.62

 
$
1.46

 
$
1.69

Diluted
0.57

 
0.60

 
1.44

 
1.65


For the quarter and year-to-date ended September 28, 2019, 1,228,157 and 131,004 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive.
For the quarter and year-to-date ended September 29, 2018, 18,779 and 24,250 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:
 
Year-To-Date Ended
(In millions)
September 28,
2019
 
September 29,
2018
Goodwill balance at beginning of the year
$
424.4

 
$
429.8

Acquisition of a business (see Note 17)
12.3

 

Foreign currency translation effects
0.3

 
(2.3
)
Goodwill balance at end of the quarter
$
437.0

 
$
427.5


The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $604.5 million as of September 28, 2019, December 29, 2018 and September 29, 2018. The carrying value of the Company’s Sperry® trade name was $518.2 million as of September 28, 2019. If the operating results for Sperry® were to decline in future periods compared to current projections, the Company may need to record a non-cash impairment charge.
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 2019. 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 third quarter of 2018. For receivables

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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. During the third quarter of fiscal 2018, the Company discontinued selling accounts receivables under the agreement. The Company continued to service the outstanding receivables until they were collected.
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
 
Year-To-Date Ended
(In millions)
September 29, 2018
Accounts receivable sold
$
40.1

 
$
264.3

Fees charged
0.2

 
1.3


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. This program reduced the Company's accounts receivable by $7.5 million as of September 29, 2018.
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.
The Company holds agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company has $35.2 million of remaining fixed transaction price under its license agreements as of September 28, 2019, 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 operating 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 September 28, 2019
 
Quarter Ended September 29, 2018
(In millions)
Wholesale
 
Consumer-Direct
 
Total
 
Wholesale
 
Consumer-Direct
 
Total
Wolverine Michigan Group
$
279.5

 
$
39.3

 
$
318.8

 
$
291.1

 
$
36.6

 
$
327.7

Wolverine Boston Group
203.5

 
37.8

 
241.3

 
183.7

 
30.9

 
214.6

Other
12.9

 
1.3

 
14.2

 
14.4

 
1.9

 
16.3

Total
$
495.9

 
$
78.4

 
$
574.3

 
$
489.2

 
$
69.4

 
$
558.6

 
Year-To-Date Ended September 28, 2019
 
Year-To-Date Ended September 29, 2018
(In millions)
Wholesale
 
Consumer-Direct
 
Total
 
Wholesale
 
Consumer-Direct
 
Total
Wolverine Michigan Group
$
829.1

 
$
110.6

 
$
939.7

 
$
842.2

 
$
95.5

 
$
937.7

Wolverine Boston Group
570.7

 
106.1

 
676.8

 
577.3

 
87.4

 
664.7

Other
46.3

 
3.5

 
49.8