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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the third twelve week accounting period ended September 7, 2002

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: 1-6024

WOLVERINE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)


Delaware


 

38-1185150


(State or Other Jurisdiction of Incorporation or Organization)

 

(IRS Employer Identification No.)

 

 

 

 

 

 

9341 Courtland Drive, Rockford, Michigan


 

49351


(Address of Principal Executive Offices)

 

(Zip Code)


 

(616) 866-5500


 

 

(Registrant's Telephone Number, Including Area Code)

 



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    X          No       

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

There were 45,797,911 shares of Common Stock, $1 par value, outstanding as of October 10, 2002, of which 5,295,292 shares are held as Treasury Stock.





FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the footwear business, worldwide economics and the Company itself including, without limitation, statements in Part 1, Item 2 regarding the Company's financial condition, liquidity and capital resources and statements in Part 1, Item 3 regarding market risk. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "should," "will," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forwar d-looking statements.

Risk Factors include, but are not limited to, uncertainties relating to changes in demand for the Company's products; changes in consumer preferences or spending patterns; the cost and availability of inventories, services, labor and equipment furnished to the Company; the cost and availability of contract manufacturers; the cost and availability of raw materials, including leather; the impact of competition and pricing by the Company's competitors; changes in government and regulatory policies; foreign currency fluctuations; changes in trading policies or import and export regulations; changes in interest rates, tax laws, duties, tariffs, quotas or applicable assessments; technological developments; changes in local, domestic or international economic and market conditions including the severity of the continued weakness in the U.S. economy; the size and growth of footwear markets; service interruptions at shipping and receiving ports including the current interruptions at West Coast Ports in the U.S.; c hanges in the amount or severity of inclement weather; changes due to the growth of Internet commerce; popularity of particular designs and categories of footwear; the ability of the Company to manage and forecast its growth and inventories; the ability to secure and protect trademarks, patents and other intellectual property; integration of operations of newly acquired businesses; changes in business strategy or development plans; the ability to attract and retain qualified personnel; the ability to retain rights to brands licensed by the Company; loss of significant customers; dependence on international distributors and licensees; the Company's ability to meet at-once orders; the risk of doing business in developing countries and economically volatile areas; and domestic and international terrorism and war. Additionally, the terrorist attacks on September 11, 2001, the continuing war on terrorism and subsequent events have created significant global economic and political uncertanties that may have materi al and adverse effects on consumer demand, foreign sourcing of footwear, shipping and transportation, product imports and exports and the sale of products in foreign markets. These Risk Factors could have a material adverse impact on the Company's financial condition and results of operations as well as the footwear and retail industries generally. These matters are representative of the Risk Factors that could cause a difference between an ultimate actual outcome and a forward-looking statement. Historical operating results are not necessarily indicative of the results that may be expected in the future. The Risk Factors included here are not exhaustive. Other Risk Factors exist, and new Risk Factors emerge from time-to-time, that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.










2


PART I. FINANCIAL INFORMATION

ITEM 1.     Financial Statements

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Thousands of dollars)


 

September 7,
2002
(Unaudited)


 

December 29,
2001
(Audited)


 

September 8,
2001
(Unaudited)


ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

     Cash and cash equivalents

$

10,634

 

$

35,820

 

$

2,934

     Accounts receivable, less allowances

 

 

 

 

 

 

 

 

          September 7, 2002 - $10,607

 

 

 

 

 

 

 

 

          December 29, 2001 - $7,382

 

 

 

 

 

 

 

 

          September 8, 2001 - $6,739

 

190,962

 

 

152,330

 

 

184,640

     Inventories:

 

 

 

 

 

 

 

 

          Finished products

 

169,237

 

 

151,612

 

 

155,262

          Raw materials and work in process

 


19,600


 

 


25,429


 

 


30,203


 

 

188,837

 

 

177,041

 

 

185,465

 

 

 

 

 

 

 

 

 

     Other current assets

 


9,506


 

 


9,611


 

 


10,574


 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

399,939

 

 

374,802

 

 

383,613

 

 

 

 

 

 

 

 

 

PROPERTY, PLANT & EQUIPMENT

 

 

 

 

 

 

 

 

     Gross cost

 

222,720

 

 

213,549

 

 

211,457

     Less accumulated depreciation

 


125,828


 

 


114,555


 

 


113,137


 

 

96,892

 

 

98,994

 

 

98,320

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

 

     Goodwill

 

28,737

 

 

12,685

 

 

12,358

     Other

 


57,713


 

 


56,960


 

 


56,659


 

 


86,450


 

 


69,645


 

 


69,017


 

 

 

 

 

 

 

 

 

TOTAL ASSETS

$


583,281


 

$


543,441


 

$


550,950




See notes to consolidated condensed financial statements




3


WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS - Continued

(Thousands of dollars, except share data)

 

September 7,
2002
(Unaudited)


 

December 29,
2001
(Audited)


 

September 8,
2001
(Unaudited)


 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

     Notes payable

$

-

 

$

90

 

$

2,340

 

     Accounts payable and other accrued liabilities

 

79,523

 

 

59,401

 

 

54,037

 

     Current maturities of long-term debt

 


15,030


 

 


15,030


 

 


4,316


 

TOTAL CURRENT LIABILITIES

 

94,553

 

 

74,521

 

 

60,693

 

 

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT (less current maturities)

 

87,537

 

 

75,818

 

 

115,574

 

 

 

 

 

 

 

 

 

 

 

OTHER NONCURRENT LIABILITIES

 

16,796

 

 

19,187

 

 

15,753

 

 

 

 

 

 

 

 

 

 

 

MINORITY INTEREST

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

     Common Stock - par value $1, authorized

 

 

 

 

 

 

 

 

 

          80,000,000 shares; shares issued

 

 

 

 

 

 

 

 

 

          (including shares in treasury):

 

 

 

 

 

 

 

 

 

               September 7, 2002 - 45,788,370 shares

 

 

 

 

 

 

 

 

 

               December 29, 2001 - 45,413,788 shares

 

 

 

 

 

 

 

 

 

               September 8, 2001 - 45,397,804 shares

 

45,788

 

 

45,414

 

 

45,398

 

     Additional paid-in capital

 

90,492

 

 

86,534

 

 

84,761

 

     Retained earnings

 

324,165

 

 

298,755

 

 

284,376

 

     Accumulated other comprehensive loss

 

(951

)

 

(4,109

)

 

(3,253

)

     Unearned compensation

 

(4,379

)

 

(4,649

)

 

(5,716

)

     Cost of shares in treasury:

 

 

 

 

 

 

 

 

 

          September 7, 2002 - 5,299,598 shares

 

 

 

 

 

 

 

 

 

          December 29, 2001 - 3,857,988 shares

 

 

 

 

 

 

 

 

 

          September 8, 2001 - 3,757,003 shares

 


(70,780


)

 


(48,030


)

 


(46,636


)

 

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY

 


384,335


 

 


373,915


 

 


358,930


 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND

 

 

 

 

 

 

 

 

 

     STOCKHOLDERS' EQUITY

$


583,281


 

$


543,441


 

$


550,950


 






(  ) - Denotes deduction.
See notes to consolidated condensed financial statements




4


WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS

(Thousands of dollars, except shares and per share data)
(Unaudited)


 

12 Weeks Ended


 

36 Weeks Ended


 

 

September 7,
2002


 

September 8,
2001


 

September 7,
2002


 

September 8,
2001


 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES AND OTHER

 

 

 

 

 

 

 

 

 

 

 

 

     OPERATING INCOME

$

219,197

 

$

186,175

 

$

565,750

 

$

496,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of products sold

 


141,179


 

 


118,377


 

 


364,009


 

 


319,704


 

GROSS MARGIN

 

78,018

 

 

67,798

 

 

201,741

 

 

176,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 


53,428


 

 


44,129


 

 


150,816


 

 


127,091


 

OPERATING INCOME

 

24,590

 

 

23,669

 

 

50,925

 

 

49,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSES (INCOME):

 

 

 

 

 

 

 

 

 

 

 

 

     Interest expense

 

1,641

 

 

1,831

 

 

4,820

 

 

5,121

 

     Interest income

 

(89

)

 

(34

)

 

(154

)

 

(207

)

     Other - net

 


75


 

 


106


 

 


163


 

 


140


 

 

 


1,627


 

 


1,903


 

 


4,829


 

 


5,054


 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES

 

 

 

 

 

 

 

 

 

 

 

 

     AND MINORITY INTEREST

 

22,963

 

 

21,766

 

 

46,096

 

 

44,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 


7,561


 

 


7,402


 

 


15,192


 

 


15,046


 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS BEFORE MINORITY

 

 

 

 

 

 

 

 

 

 

 

 

     INTEREST

 

15,402

 

 

14,364

 

 

30,904

 

 

29,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 


(60


)

 


-


 

 


(60


)

 


-


 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS

$


15,342


 

$


14,364


 

$


30,844


 

$


29,202


 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

     Basic

$


.38


 

$


.35


 

$


.76


 

$


.72


 

     Diluted

$


.37


 

$


.34


 

$


.73


 

$


.69


 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH DIVIDENDS PER SHARE

$


.045


 

$


.040


 

$


.135


 

$


.120


 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHARES USED FOR NET EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

     PER SHARE COMPUTATION:

 

 

 

 

 

 

 

 

 

 

 

 

          Basic

 

40,084,219

 

 

40,750,889

 

 

40,575,077

 

 

40,734,582

 

          Diluted

 

41,454,530

 

 

42,657,456

 

 

42,157,450

 

 

42,561,694

 


See notes to consolidated condensed financial statements




5


WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS
OF STOCKHOLDERS' EQUITY

(Thousands of dollars, except share data)
(Unaudited)


 



Common
Stock


 


Additional
Paid-In
Capital


 



Retained
Earnings


 

Accumulated
Other
Comprehensive
Gain (Loss)


 



Unearned
Compensation


 

Cost of
Shares
in
Treasury


 




Total


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 29,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   2001

$

45,414

 

$

86,534

 

$

298,755

 

$

(4,109

)

$

(4,649

)

$

(48,030

)

$

373,915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net earnings

 

 

 

 

 

 

 

30,844

 

 

 

 

 

 

 

 

 

 

 

30,844

 

   Dividends

 

 

 

 

 

 

 

(5,434

)

 

 

 

 

 

 

 

 

 

 

(5,434

)

   Purchase of 1,575,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      shares of common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      stock for treasury

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,442

)

 

(24,442

)

   Issuance of 134,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      shares of treasury

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      stock held in trust

 

 

 

 

384

 

 

 

 

 

 

 

 

 

 

 

1,692

 

 

2,076

 

   Issuance of common

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      stock under stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      incentive plans

 

374

 

 

3,721

 

 

 

 

 

 

 

 

(1,987

)

 

 

 

 

2,108

 

   Net change in notes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      receivable

 

 

 

 

(147

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(147

)

   Amortization of unearned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

2,257

 

 

 

 

 

2,257

 

   Foreign currency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      translation adjustments

 


 


 

 


 


 

 


 


 

 


3,158


 

 


 


 

 


 


 

 


3,158


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 7,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   2002

$


45,788


 

$


90,492


 

$


324,165


 

$


(951


)

$


(4,379


)

$


(70,780


)

$


384,335


 














See notes to consolidated condensed financial statements



6


WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Thousands of dollars)
(Unaudited)


 

36 Weeks Ended


 

 

September 7,
2002


 

September 8,
2001


 

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

     Net earnings

$

30,844

 

$

29,202

 

     Adjustments necessary to reconcile net earnings to net cash
        provided by operating activities:

 

 

 

 

 

 

     Depreciation

 

11,956

 

 

11,780

 

     Amortization

 

443

 

 

1,100

 

     Other

 

2,454

 

 

(3,404

)

     Changes in operating assets and liabilities:

 

 

 

 

 

 

          Accounts receivable

 

(40,498

)

 

(22,683

)

          Inventories

 

3,160

 

 

(41,273

)

          Other assets

 

470

 

 

1,846

 

          Accounts payable and other accrued liabilities

 


15,765


 

 


5,245


 

 

 

 

 

 

 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   

 

25,984

 

 

(18,187

)

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

     Business acquisitions, net of cash acquired

 

(26,626

)

 

-

 

     Additions to property, plant and equipment

 

(8,476

)

 

(7,665

)

     Other

 


218


 

 


230


 

 

 

 

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES   

 

(34,884

)

 

(7,435

)

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

     Proceeds from long-term debt

 

73,550

 

 

105,000

 

     Payments of long-term debt

 

(61,831

)

 

(77,304

)

     Net change in short-term debt

 

(90

)

 

1,444

 

     Cash dividends

 

(5,434

)

 

(4,984

)

     Purchase of common stock for treasury

 

(24,442

)

 

(7,751

)

     Proceeds from shares issued under stock incentive plans

 


1,961


 

 


3,717


 

 

 

 

 

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   

 


(16,286


)

 


20,122


 

 

 

 

 

 

 

 

DECREASE IN CASH AND CASH EQUIVALENTS

 

(25,186

)

 

(5,500

)

Cash and cash equivalents at beginning of the period

 


35,820


 

 


8,434


 

 

 

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