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.) |
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9341 Courtland Drive, Rockford, Michigan |
|
49351 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
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(616) 866-5500 |
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|
|
(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.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of dollars)
|
September 7, |
|
December 29, |
|
September 8, |
|||
|
ASSETS |
|
|
|
|
|
|
|
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CURRENT ASSETS |
|
|
|
|
|
|
|
|
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Cash and cash equivalents |
$ |
10,634 |
|
$ |
35,820 |
|
$ |
2,934 |
|
Accounts receivable, less allowances |
|
|
|
|
|
|
|
|
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September 7, 2002 - $10,607 |
|
|
|
|
|
|
|
|
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December 29, 2001 - $7,382 |
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|
|
|
|
|
|
|
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September 8, 2001 - $6,739 |
|
190,962 |
|
|
152,330 |
|
|
184,640 |
|
Inventories: |
|
|
|
|
|
|
|
|
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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 |
|
|
|
|
|
|
|
|
|
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Other current assets |
|
9,506 |
|
|
9,611 |
|
|
10,574 |
|
|
|
|
|
|
|
|
|
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TOTAL CURRENT ASSETS |
|
399,939 |
|
|
374,802 |
|
|
383,613 |
|
|
|
|
|
|
|
|
|
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PROPERTY, PLANT & EQUIPMENT |
|
|
|
|
|
|
|
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Gross cost |
|
222,720 |
|
|
213,549 |
|
|
211,457 |
|
Less accumulated depreciation |
|
125,828 |
|
|
114,555 |
|
|
113,137 |
|
|
96,892 |
|
|
98,994 |
|
|
98,320 |
|
|
|
|
|
|
|
|
|
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OTHER ASSETS |
|
|
|
|
|
|
|
|
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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
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - Continued
(Thousands of dollars, except share data)
|
September 7, |
|
December 29, |
|
September 8, |
|
|||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
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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 |
|
|
|
|
|
|
|
|
|
|
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LONG-TERM DEBT (less current maturities) |
|
87,537 |
|
|
75,818 |
|
|
115,574 |
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT LIABILITIES |
|
16,796 |
|
|
19,187 |
|
|
15,753 |
|
|
|
|
|
|
|
|
|
|
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MINORITY INTEREST |
|
60 |
|
|
|
|
|
|
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|
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STOCKHOLDERS' EQUITY |
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Common Stock - par value $1, authorized |
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80,000,000 shares; shares issued |
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(including shares in treasury): |
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|
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September 7, 2002 - 45,788,370 shares |
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|
|
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|
|
|
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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
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, |
|
September 8, |
|
September 7, |
|
September 8, |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS
OF STOCKHOLDERS' EQUITY
(Thousands of dollars, except share data)
(Unaudited)
|
|
|
|
|
|
|
Accumulated |
|
|
|
Cost of |
|
|
|
|||||||
|
|
|
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|
|
|
|
|
|
|
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|
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|
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|
|
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|
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|
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
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
|
36 Weeks Ended |
|
||||
|
September 7, |
|
September 8, |
|
||
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net earnings |
$ |
30,844 |
|
$ |
29,202 |
|
|
Adjustments necessary to reconcile net earnings to net cash |
|
|
|
|
|
|
|
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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