x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 38-1185150 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
9341 Courtland Drive N.E., Rockford, Michigan | 49351 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
• | changes in national, regional or global economic and market conditions; |
• | the impact of financial and credit markets on the Company, its suppliers and customers; |
• | changes in interest rates, tax laws, duties, tariffs, quotas or applicable assessments in countries of import and export; |
• | the impact of regulation, regulatory and legal proceedings and legal compliance risks; |
• | currency fluctuations; |
• | currency restrictions; |
• | changes in future pension funding requirements and pension expenses; |
• | the risk of impairment to goodwill and other acquired intangibles; |
• | 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; |
• | changes in consumer preferences, spending patterns, buying patterns, price sensitivity or demand for the Company’s products; |
• | risks related to the significant investment in, and performance of, the Company’s consumer-direct business; |
• | the impact of seasonality and unpredictable weather conditions; |
• | changes in relationships with, including the loss of, significant customers; |
• | the cancellation of orders for future delivery; |
• | the failure of the U.S. Department of Defense to exercise future purchase options or award new contracts, or the cancellation or modification of existing contracts by the Department of Defense or other military purchasers; |
• | matters relating to the Company’s 2012 acquisition of the Performance + Lifestyle Group business of Collective Brands, Inc. (“PLG” or “the PLG acquisition”), including the Company’s ability to continue to integrate and realize the benefits of the PLG acquisition or to do so on a timely basis; |
• | the cost, availability and management of raw materials, inventories, services and labor for owned and contract manufacturers; |
• | problems affecting the Company’s distribution system, including service interruptions at shipping and receiving ports; |
• | the potential breach of the Company’s databases, or those of its vendors, which contain certain personal information or payment card data; |
• | the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets; |
• | 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; and |
• | the success of the Company’s consumer-direct realignment initiatives. |
PART I. | FINANCIAL INFORMATION |
ITEM 1. | Financial Statements |
(In millions, except share data) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 232.4 | $ | 214.2 | $ | 171.0 | |||||
Accounts receivable, less allowances: | |||||||||||
June 14, 2014 – $35.7 | |||||||||||
December 28, 2013 – $37.8 | |||||||||||
June 15, 2013 – $31.6 | 434.3 | 398.1 | 397.9 | ||||||||
Inventories: | |||||||||||
Finished products, net | 439.6 | 406.0 | 454.3 | ||||||||
Raw materials and work-in-process, net | 20.2 | 22.2 | 30.4 | ||||||||
Total inventories | 459.8 | 428.2 | 484.7 | ||||||||
Deferred income taxes | 28.5 | 29.1 | 27.6 | ||||||||
Prepaid expenses and other current assets | 38.0 | 48.4 | 41.5 | ||||||||
Total current assets | 1,193.0 | 1,118.0 | 1,122.7 | ||||||||
Property, plant and equipment: | |||||||||||
Gross cost | 417.8 | 416.1 | 397.4 | ||||||||
Accumulated depreciation | (271.8 | ) | (264.2 | ) | (248.7 | ) | |||||
Property, plant and equipment, net | 146.0 | 151.9 | 148.7 | ||||||||
Other assets: | |||||||||||
Goodwill | 444.8 | 445.3 | 457.8 | ||||||||
Indefinite-lived intangibles | 690.5 | 690.5 | 679.8 | ||||||||
Amortizable intangibles, net | 120.2 | 126.7 | 143.4 | ||||||||
Deferred income taxes | 3.4 | 3.4 | 0.2 | ||||||||
Deferred financing costs, net | 20.0 | 22.0 | 35.8 | ||||||||
Other | 63.3 | 64.4 | 56.3 | ||||||||
Total other assets | 1,342.2 | 1,352.3 | 1,373.3 | ||||||||
Total assets | $ | 2,681.2 | $ | 2,622.2 | $ | 2,644.7 |
(In millions, except share data) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 165.9 | $ | 135.2 | $ | 192.1 | |||||
Accrued salaries and wages | 31.5 | 41.5 | 43.6 | ||||||||
Other accrued liabilities | 89.3 | 99.3 | 92.8 | ||||||||
Current maturities of long-term debt | 48.4 | 53.3 | 37.1 | ||||||||
Total current liabilities | 335.1 | 329.3 | 365.6 | ||||||||
Long-term debt, less current maturities | 1,082.9 | 1,096.7 | 1,147.6 | ||||||||
Accrued pension liabilities | 74.3 | 74.2 | 166.9 | ||||||||
Deferred income taxes | 254.9 | 253.9 | 240.1 | ||||||||
Other liabilities | 26.1 | 26.7 | 19.9 | ||||||||
Stockholders’ equity: | |||||||||||
Wolverine World Wide, Inc. stockholders’ equity: | |||||||||||
Common stock – par value $1, authorized 320,000,000 shares; shares issued (including shares in treasury): | |||||||||||
June 14, 2014 – 101,895,474 shares | |||||||||||
December 28, 2013 – 100,817,972 shares | |||||||||||
June 15, 2013 – 100,498,070 shares | 101.9 | 100.8 | 100.5 | ||||||||
Additional paid-in capital | 23.3 | 5.0 | — | ||||||||
Retained earnings | 796.0 | 743.1 | 687.0 | ||||||||
Accumulated other comprehensive loss | (6.3 | ) | (9.2 | ) | (82.4 | ) | |||||
Cost of shares in treasury: | |||||||||||
June 14, 2014 – 393,288 shares | |||||||||||
December 28, 2013 – 72,514 shares | |||||||||||
June 15, 2013 – 75,628 shares | (11.0 | ) | (2.1 | ) | (2.0 | ) | |||||
Total Wolverine World Wide, Inc. stockholders’ equity | 903.9 | 837.6 | 703.1 | ||||||||
Non-controlling interest | 4.0 | 3.8 | 1.5 | ||||||||
Total stockholders’ equity | 907.9 | 841.4 | 704.6 | ||||||||
Total liabilities and stockholders’ equity | $ | 2,681.2 | $ | 2,622.2 | $ | 2,644.7 |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||
(In millions, except per share data) | June 14, 2014 | June 15, 2013 | June 14, 2014 | June 15, 2013 | |||||||||||
Revenue | $ | 613.5 | $ | 587.8 | $ | 1,241.1 | $ | 1,233.7 | |||||||
Cost of goods sold | 367.7 | 346.7 | 739.1 | 730.6 | |||||||||||
Restructuring costs | 0.1 | — | 0.5 | — | |||||||||||
Gross profit | 245.7 | 241.1 | 501.5 | 503.1 | |||||||||||
Selling, general and administrative expenses | 190.8 | 196.2 | 381.3 | 392.0 | |||||||||||
Acquisition-related integration costs | 2.5 | 7.9 | 4.1 | 23.1 | |||||||||||
Restructuring costs | 3.4 | — | 3.4 | — | |||||||||||
Operating profit | 49.0 | 37.0 | 112.7 | 88.0 | |||||||||||
Other expenses: | |||||||||||||||
Interest expense, net | 10.5 | 12.5 | 21.4 | 25.4 | |||||||||||
Other expense, net | — | 0.6 | 0.8 | 1.0 | |||||||||||
Total other expenses | 10.5 | 13.1 | 22.2 | 26.4 | |||||||||||
Earnings before income taxes | 38.5 | 23.9 | 90.5 | 61.6 | |||||||||||
Income taxes | 10.9 | 5.8 | 25.7 | 13.7 | |||||||||||
Net earnings | 27.6 | 18.1 | 64.8 | 47.9 | |||||||||||
Less: net earnings attributable to non-controlling interest | 0.1 | 0.2 | 0.2 | 0.2 | |||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 27.5 | $ | 17.9 | $ | 64.6 | $ | 47.7 | |||||||
Net earnings per share (see Note 3): | |||||||||||||||
Basic | $ | 0.28 | $ | 0.18 | $ | 0.65 | $ | 0.48 | |||||||
Diluted | $ | 0.27 | $ | 0.18 | $ | 0.64 | $ | 0.48 | |||||||
Comprehensive income | $ | 33.4 | $ | 27.1 | $ | 67.7 | $ | 53.0 | |||||||
Less: comprehensive income attributable to non-controlling interest | 0.3 | 0.2 | 0.2 | 0.2 | |||||||||||
Comprehensive income attributable to Wolverine World Wide, Inc. | $ | 33.1 | $ | 26.9 | $ | 67.5 | $ | 52.8 | |||||||
Cash dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.12 | $ | 0.12 |
24 Weeks Ended | |||||||
(In millions) | June 14, 2014 | June 15, 2013 | |||||
OPERATING ACTIVITIES | |||||||
Net earnings | $ | 64.8 | $ | 47.9 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 25.0 | 25.6 | |||||
Deferred income taxes | 0.6 | (4.6 | ) | ||||
Stock-based compensation expense | 11.2 | 13.7 | |||||
Excess tax benefits from stock-based compensation | (3.7 | ) | (1.2 | ) | |||
Pension contribution | (1.5 | ) | (0.8 | ) | |||
Pension expense | 5.9 | 17.2 | |||||
Restructuring costs | 3.9 | — | |||||
Other | 2.0 | 1.6 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (37.8 | ) | (45.3 | ) | |||
Inventories | (32.9 | ) | (18.9 | ) | |||
Other operating assets | 9.5 | 14.6 | |||||
Accounts payable | 31.0 | 31.3 | |||||
Other operating liabilities | (12.4 | ) | 6.4 | ||||
Net cash provided by operating activities | 65.6 | 87.5 | |||||
INVESTING ACTIVITIES | |||||||
Additions to property, plant and equipment | (12.5 | ) | (14.7 | ) | |||
Proceeds from sale of property, plant and equipment | — | 2.8 | |||||
Investment in joint venture | (0.7 | ) | (1.6 | ) | |||
Other | (1.6 | ) | (1.2 | ) | |||
Net cash used in investing activities | (14.8 | ) | (14.7 | ) | |||
FINANCING ACTIVITIES | |||||||
Payments on long-term debt | (19.4 | ) | (65.3 | ) | |||
Cash dividends paid | (12.0 | ) | (11.8 | ) | |||
Purchases of shares under employee stock plans | (9.4 | ) | (0.3 | ) | |||
Proceeds from the exercise of stock options | 3.8 | 4.8 | |||||
Excess tax benefits from stock-based compensation | 3.7 | 1.2 | |||||
Net cash used in financing activities | (33.3 | ) | (71.4 | ) | |||
Effect of foreign exchange rate changes | 0.7 | (1.8 | ) | ||||
Increase (decrease) in cash and cash equivalents | 18.2 | (0.4 | ) | ||||
Cash and cash equivalents at beginning of the year | 214.2 | 171.4 | |||||
Cash and cash equivalents at end of the period | $ | 232.4 | $ | 171.0 |
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2. | NEW ACCOUNTING STANDARDS |
3. | EARNINGS PER SHARE |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||
(In millions, except share and per share data) | June 14, 2014 | June 15, 2013 | June 14, 2014 | June 15, 2013 | |||||||||||
Numerator: | |||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 27.5 | $ | 17.9 | $ | 64.6 | $ | 47.7 | |||||||
Adjustment for earnings allocated to non-vested restricted common stock | (0.5 | ) | (0.3 | ) | (1.2 | ) | (0.9 | ) | |||||||
Net earnings used in calculating basic earnings per share | 27.0 | 17.6 | 63.4 | 46.8 | |||||||||||
Adjustment for earnings reallocated from non-vested restricted common stock | 0.1 | — | 0.1 | — | |||||||||||
Net earnings used in calculating diluted earnings per share | $ | 27.1 | $ | 17.6 | $ | 63.5 | $ | 46.8 | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding | 101,435,465 | 100,327,444 | 101,198,265 | 99,894,398 | |||||||||||
Adjustment for non-vested restricted common stock | (3,284,621 | ) | (3,527,798 | ) | (3,213,033) | (3,224,326) | |||||||||
Shares used in calculating basic earnings per share | 98,150,844 | 96,799,646 | 97,985,232 | 96,670,072 | |||||||||||
Effect of dilutive stock options | 1,855,864 | 1,836,348 | 1,957,294 | 1,737,882 | |||||||||||
Shares used in calculating diluted earnings per share | 100,006,708 | 98,635,994 | 99,942,526 | 98,407,954 | |||||||||||
Net earnings per share: | |||||||||||||||
Basic | $ | 0.28 | $ | 0.18 | $ | 0.65 | $ | 0.48 | |||||||
Diluted | $ | 0.27 | $ | 0.18 | $ | 0.64 | $ | 0.48 |
4. | GOODWILL AND INDEFINITE-LIVED INTANGIBLES |
(In millions) | Goodwill | Indefinite-lived intangibles | Total | ||||||||
Balance at December 29, 2012 | $ | 459.9 | $ | 679.8 | $ | 1,139.7 | |||||
Acquisition adjustments | (0.7 | ) | — | (0.7 | ) | ||||||
Foreign currency translation effects | (1.4 | ) | — | (1.4 | ) | ||||||
Balance at June 15, 2013 | $ | 457.8 | $ | 679.8 | $ | 1,137.6 | |||||
Balance at December 28, 2013 | $ | 445.3 | $ | 690.5 | $ | 1,135.8 | |||||
Foreign currency translation effects | (0.5 | ) | — | (0.5 | ) | ||||||
Balance at June 14, 2014 | $ | 444.8 | $ | 690.5 | $ | 1,135.3 |
5. | INDEBTEDNESS |
(In millions) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
Term Loan A, due October 10, 2018 | $ | 755.6 | $ | 775.0 | $ | 536.3 | |||||
Term Loan B, due October 9, 2019 | — | — | 273.4 | ||||||||
Public Bonds, 6.125% interest, due October 15, 2020 | 375.0 | 375.0 | 375.0 | ||||||||
Capital lease obligation | 0.7 | — | — | ||||||||
Total interest-bearing debt | 1,131.3 | 1,150.0 | 1,184.7 | ||||||||
Less: current maturities of long-term debt | 48.4 | 53.3 | 37.1 | ||||||||
Long-term debt, less current maturities | $ | 1,082.9 | $ | 1,096.7 | $ | 1,147.6 |
6. | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
(In millions) | Foreign currency translation adjustments | Foreign exchange contracts | Interest rate swap | Pension adjustments | Total | ||||||||||||||
Balance of accumulated other comprehensive income (loss) as of March 23, 2013 | $ | (3.7 | ) | $ | (0.9 | ) | $ | (0.7 | ) | $ | (86.1 | ) | $ | (91.4 | ) | ||||
Other comprehensive income (loss) before reclassifications | 4.9 | (1.6 | ) | 0.7 | — | 4.0 | |||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 0.8 | (1) | — | 7.0 | (2) | 7.8 | ||||||||||||
Income tax expense (benefit) | — | (0.3 | ) | — | (2.5 | ) | (2.8 | ) | |||||||||||
Net reclassifications | — | 0.5 | — | 4.5 | 5.0 | ||||||||||||||
Net current-period other comprehensive income (loss) | 4.9 | (1.1 | ) | 0.7 | 4.5 | 9.0 | |||||||||||||
Balance of accumulated other comprehensive income (loss) as of June 15, 2013 | $ | 1.2 | $ | (2.0 | ) | $ | — | $ | (81.6 | ) | $ | (82.4 | ) | ||||||
Balance of accumulated other comprehensive income (loss) as of March 22, 2014 | $ | (5.3 | ) | $ | 0.9 | $ | 0.7 | $ | (8.4 | ) | $ | (12.1 | ) | ||||||
Other comprehensive income (loss) before reclassifications | 5.6 | (0.5 | ) | (0.5 | ) | — | 4.6 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 0.2 | (1) | — | 1.8 | (2) | 2.0 | ||||||||||||
Income tax expense (benefit) | — | (0.1 | ) | — | (0.7 | ) | (0.8 | ) | |||||||||||
Net reclassifications | — | 0.1 | — | 1.1 | 1.2 | ||||||||||||||
Net current-period other comprehensive income (loss) | 5.6 | (0.4 | ) | (0.5 | ) | 1.1 | 5.8 | ||||||||||||
Balance of accumulated other comprehensive income (loss) as of June 14, 2014 | $ | 0.3 | $ | 0.5 | $ | 0.2 | $ | (7.3 | ) | $ | (6.3 | ) |
(1) | Amounts reclassified are included in cost of goods sold. |
(2) | Amounts reclassified are included in the computation of net pension expense. |
(In millions) | Foreign currency translation adjustments | Foreign exchange contracts | Interest rate swap | Pension adjustments | Total | ||||||||||||||
Balance of accumulated other comprehensive income (loss) as of December 29, 2012 | $ | 5.9 | $ | (1.7 | ) | $ | (1.0 | ) | $ | (90.7 | ) | $ | (87.5 | ) | |||||
Other comprehensive income (loss) before reclassifications | (4.7 | ) | (0.9 | ) | 1.0 | — | (4.6 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 0.9 | (1) | — | 14.0 | (2) | 14.9 | ||||||||||||
Income tax expense (benefit) | — | (0.3 | ) | — | (4.9 | ) | (5.2 | ) | |||||||||||
Net reclassifications | — | 0.6 | — | 9.1 | 9.7 | ||||||||||||||
Net current-period other comprehensive income (loss) | (4.7 | ) | (0.3 | ) | 1.0 | 9.1 | 5.1 | ||||||||||||
Balance of accumulated other comprehensive income (loss) as of June 15, 2013 | $ | 1.2 | $ | (2.0 | ) | $ | — | $ | (81.6 | ) | $ | (82.4 | ) | ||||||
Balance of accumulated other comprehensive income (loss) as of December 28, 2013 | $ | 0.5 | $ | (0.8 | ) | $ | 0.6 | $ | (9.5 | ) | $ | (9.2 | ) | ||||||
Other comprehensive income (loss) before reclassifications | (0.2 | ) | 0.8 | (0.4 | ) | — | 0.2 | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 0.8 | (1) | — | 3.5 | (2) | 4.3 | ||||||||||||
Income tax expense (benefit) | — | (0.3 | ) | — | (1.3 | ) | (1.6 | ) | |||||||||||
Net reclassifications | — | 0.5 | — | 2.2 | 2.7 | ||||||||||||||
Net current-period other comprehensive income (loss) | (0.2 | ) | 1.3 | (0.4 | ) | 2.2 | 2.9 | ||||||||||||
Balance of accumulated other comprehensive income (loss) as of June 14, 2014 | $ | 0.3 | $ | 0.5 | $ | 0.2 | $ | (7.3 | ) | $ | (6.3 | ) |
(1) | Amounts reclassified are included in cost of goods sold. |
(2) | Amounts reclassified are included in the computation of net pension expense. |
7. | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
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. |
(In millions) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
Carrying value | $ | 1,130.6 | $ | 1,150.0 | $ | 1,184.7 | |||||
Fair value | 1,167.2 | 1,183.8 | 1,228.6 |
June 14, 2014 | December 28, 2013 | June 15, 2013 | |||||||||
Foreign exchange contracts: | |||||||||||
Notional amount (in millions) | $ | 162.2 | $ | 129.1 | $ | 106.9 | |||||
Maturities (in days) | 336 | 364 | 336 | ||||||||
Interest rate swap: | |||||||||||
Notional amount (in millions) | $ | 430.9 | $ | 455.5 | $ | 462.2 |
Fair Value Measurements | |||||||||||
Quoted Prices With Other Observable Inputs (Level 2) | |||||||||||
(In millions) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
Financial assets: | |||||||||||
Foreign exchange contracts asset | $ | 0.9 | $ | 1.7 | $ | — | |||||
Interest rate swap asset | 0.4 | 0.9 | — | ||||||||
Financial liabilities: | |||||||||||
Foreign exchange contracts liability | 0.3 | 2.3 | 2.0 | ||||||||
Interest rate swap liability | — | — | 0.1 |
8. | STOCK-BASED COMPENSATION |
24 Weeks Ended | |||||
June 14, 2014 | June 15, 2013 | ||||
Expected market price volatility (1) | 29.6 | % | 33.3 | % | |
Risk-free interest rate (2) | 1.2 | % | 0.6 | % | |
Dividend yield (3) | 0.9 | % | 1.2 | % | |
Expected term (4) | 4 years | 4 years |
(1) | Based on historical volatility of the Company’s common stock. The expected volatility is based on the daily percentage change in the price of the stock over the four years prior to the grant. |
(2) | Represents the U.S. Treasury yield curve in effect for the expected term of the option at the time of grant. |
(3) | Represents the Company’s cash dividend yield for the expected term. |
(4) | Represents the period of time that options granted are expected to be outstanding. As part of the determination of the expected term, the Company concluded that all employee groups exhibit similar exercise and post-vesting termination behavior. |
9. | RETIREMENT PLANS |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||
June 14, 2014 | June 15, 2013 | June 14, 2014 | June 15, 2013 | ||||||||||||
Service cost pertaining to benefits earned during the period | $ | 1.6 | $ | 2.1 | $ | 3.3 | $ | 4.2 | |||||||
Interest cost on projected benefit obligations | 4.6 | 4.3 | 9.3 | 8.7 | |||||||||||
Expected return on pension assets | (5.1 | ) | (4.8 | ) | (10.2 | ) | (9.7 | ) | |||||||
Net amortization loss | 1.8 | 7.0 | 3.5 | 14.0 | |||||||||||
Net pension expense | $ | 2.9 | $ | 8.6 | $ | 5.9 | $ | 17.2 |
10. | INCOME TAXES |
11. | LITIGATION AND CONTINGENCIES |
(In millions) | 2014 | 2015 | 2016 | 2017 | 2018 | Thereafter | |||||||||||||||||
Minimum royalties | $ | 0.6 | $ | 1.9 | $ | — | $ | — | $ | — | $ | — | |||||||||||
Minimum advertising | 4.1 | 8.7 | 2.7 | 2.8 | 2.9 | 6.1 |
12. | BUSINESS SEGMENTS |
• | Lifestyle Group, consisting of Sperry Top-Sider® footwear and apparel, Stride Rite® footwear and apparel, Hush Puppies® footwear and apparel, Keds® footwear and apparel and Soft Style® footwear; |
• | Performance Group, consisting of Merrell® footwear and apparel, Saucony® footwear and apparel, Chaco® footwear, Patagonia® footwear and Cushe® footwear; and |
• | Heritage Group, consisting of Wolverine® footwear and apparel, Cat® footwear, Bates® uniform footwear, Sebago® footwear and apparel, Harley-Davidson® footwear and HyTest® safety footwear. |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||
(In millions) | June 14, 2014 | June 15, 2013 | June 14, 2014 | June 15, 2013 | |||||||||||
Revenue: | |||||||||||||||
Lifestyle Group | $ | 264.1 | $ | 255.2 | $ | 502.1 | $ | 525.5 | |||||||
Performance Group | 211.2 | 199.7 | 460.0 | 440.2 | |||||||||||
Heritage Group | 113.5 | 110.6 | 234.2 | 229.1 | |||||||||||
Other | 24.7 | 22.3 | 44.8 | 38.9 | |||||||||||
Total | $ | 613.5 | $ | 587.8 | $ | 1,241.1 | $ | 1,233.7 | |||||||
Operating profit (loss): | |||||||||||||||
Lifestyle Group | $ | 39.1 | $ | 45.8 | $ | 64.1 | $ | 91.9 | |||||||
Performance Group | 37.6 | 30.5 | 95.6 | 81.4 | |||||||||||
Heritage Group | 14.5 | 16.1 | 32.2 | 31.5 | |||||||||||
Other | 0.1 | 0.6 | (1.3 | ) | (0.4 | ) | |||||||||
Corporate | (42.3 | ) | (56.0 | ) | (77.9 | ) | (116.4 | ) | |||||||
Total | $ | 49.0 | $ | 37.0 | $ | 112.7 | $ | 88.0 |
(In millions) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
Total assets: | |||||||||||
Lifestyle Group | $ | 1,475.4 | $ | 1,431.1 | $ | 1,458.5 | |||||
Performance Group | 503.3 | 476.4 | 514.5 | ||||||||
Heritage Group | 214.6 | 247.2 | 243.8 | ||||||||
Other | 62.1 | 56.9 | 77.1 | ||||||||
Corporate | 425.8 | 410.6 | 350.8 | ||||||||
Total | $ | 2,681.2 | $ | 2,622.2 | $ | 2,644.7 | |||||
Goodwill: | |||||||||||
Lifestyle Group | $ | 327.9 | $ | 329.0 | $ | 347.3 | |||||
Performance Group | 92.8 | 92.8 | 87.0 | ||||||||
Heritage Group | 24.1 | 23.5 | 23.5 | ||||||||
Total | $ | 444.8 | $ | 445.3 | $ | 457.8 |
13. | BUSINESS ACQUISITIONS |
(In millions) | |||
Cash | $ | 23.6 | |
Accounts receivable | 151.2 | ||
Inventories | 203.5 | ||
Deferred income taxes | 13.6 | ||
Other current assets | 13.2 | ||
Property, plant and equipment | 77.1 | ||
Goodwill | 408.8 | ||
Intangible assets | 821.8 | ||
Other | 11.2 | ||
Total assets acquired | 1,724.0 | ||
Accounts payable | 97.4 | ||
Other accrued liabilities | 42.2 | ||
Deferred income taxes | 287.2 | ||
Accrued pension liabilities | 37.7 | ||
Other liabilities | 10.0 | ||
Total liabilities assumed | 474.5 | ||
Net assets acquired | $ | 1,249.5 |
(In millions) | |||
Performance Group | $ | 82.5 | |
Lifestyle Group | 326.3 | ||
Total | $ | 408.8 |
(In millions) | Intangible asset | Useful life | |||
Trade names and trademarks | $ | 671.8 | Indefinite | ||
Customer lists | 100.5 | 3-20 years | |||
Licensing agreements | 28.8 | 4-5 years | |||
Developed product technology | 14.9 | 3-5 years | |||
Backlog | 5.2 | 6 months | |||
Net favorable leases | 0.6 | 10 years | |||
Total intangible assets acquired | $ | 821.8 |
14. | RESTRUCTURING ACTIVITIES |
(In millions) | Severance and employee related | Costs associated with exit or disposal activities | Total | ||||||||
Balance at December 28, 2013 | $ | — | $ | 0.5 | $ | 0.5 | |||||
Restructuring costs | 0.1 | 0.4 | 0.5 | ||||||||
Amounts paid | (0.1 | ) | (0.4 | ) | (0.5 | ) | |||||
Charges against assets | — | (0.2 | ) | (0.2 | ) | ||||||
Balance at June 14, 2014 | $ | — | $ | 0.3 | $ | 0.3 |
15. | SUBSEQUENT EVENT |
Estimated Range | |||||||
(In millions) | Low | High | |||||
Non-cash charges related to impairment of property and equipment | $ | 6.1 | $ | 8.2 | |||
Facility exit costs | 11.3 | 12.4 | |||||
Severance and employee-related costs | 8.6 | 10.0 | |||||
Charges against assets | 0.6 | 1.4 | |||||
Total | $ | 26.6 | $ | 32.0 |
16. | SUBSIDIARY GUARANTORS OF THE PUBLIC BONDS |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Revenue | $ | 110.2 | $ | 1,035.2 | $ | 170.3 | $ | (702.2 | ) | $ | 613.5 | ||||||||
Cost of goods sold | 77.3 | 884.5 | 89.9 | (684.0 | ) | 367.7 | |||||||||||||
Restructuring costs | — | — | 0.1 | — | 0.1 | ||||||||||||||
Gross profit | 32.9 | 150.7 | 80.3 | (18.2 | ) | 245.7 | |||||||||||||
Selling, general and administrative expenses | 43.2 | 105.3 | 60.8 | (18.5 | ) | 190.8 | |||||||||||||
Acquisition-related integration costs | 1.9 | 0.6 | — | — | 2.5 | ||||||||||||||
Restructuring costs | 1.5 | — | 1.9 | — | 3.4 | ||||||||||||||
Operating profit (loss) | (13.7 | ) | 44.8 | 17.6 | 0.3 | 49.0 | |||||||||||||
Other expenses: | |||||||||||||||||||
Interest expense (income), net | 10.5 | 0.1 | (0.1 | ) | — | 10.5 | |||||||||||||
Other expense (income), net | 0.1 | (0.9 | ) | 0.8 | — | — | |||||||||||||
Total other expenses (income) | 10.6 | (0.8 | ) | 0.7 | — | 10.5 | |||||||||||||
Earnings (loss) before income taxes | (24.3 | ) | 45.6 | 16.9 | 0.3 | 38.5 | |||||||||||||
Income tax expense (benefit) | (9.1 | ) | 17.1 | 2.9 | — | 10.9 | |||||||||||||
Earnings (loss) before equity in earnings (loss) of consolidated subsidiaries | (15.2 | ) | 28.5 | 14.0 | 0.3 | 27.6 | |||||||||||||
Equity in earnings (loss) of consolidated subsidiaries | 42.7 | (10.8 | ) | 2.2 | (34.1 | ) | — | ||||||||||||
Net earnings | 27.5 | 17.7 | 16.2 | (33.8 | ) | 27.6 | |||||||||||||
Less: net earnings attributable to non-controlling interest | — | — | 0.1 | — | 0.1 | ||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 27.5 | $ | 17.7 | $ | 16.1 | $ | (33.8 | ) | $ | 27.5 | ||||||||
Comprehensive income | $ | 33.3 | $ | 17.6 | $ | 21.3 | $ | (38.8 | ) | $ | 33.4 | ||||||||
Less: comprehensive income attributable to non-controlling interest | 0.2 | — | 0.1 | — | 0.3 | ||||||||||||||
Comprehensive income attributable to Wolverine World Wide, Inc. | $ | 33.1 | $ | 17.6 | $ | 21.2 | $ | (38.8 | ) | $ | 33.1 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Revenue | $ | 107.4 | $ | 929.6 | $ | 153.2 | $ | (602.4 | ) | $ | 587.8 | ||||||||
Cost of goods sold | 75.6 | 776.3 | 81.3 | (586.5 | ) | 346.7 | |||||||||||||
Gross profit | 31.8 | 153.3 | 71.9 | (15.9 | ) | 241.1 | |||||||||||||
Selling, general and administrative expenses | 47.9 | 97.1 | 66.8 | (15.6 | ) | 196.2 | |||||||||||||
Acquisition-related integration costs | 3.3 | 1.7 | 2.9 | — | 7.9 | ||||||||||||||
Operating profit (loss) | (19.4 | ) | 54.5 | 2.2 | (0.3 | ) | 37.0 | ||||||||||||
Other expenses: | |||||||||||||||||||
Interest expense, net | 12.3 | — | 0.2 | — | 12.5 | ||||||||||||||
Other expense (income), net | (0.2 | ) | — | 0.6 | 0.2 | 0.6 | |||||||||||||
Total other expenses | 12.1 | — | 0.8 | 0.2 | 13.1 | ||||||||||||||
Earnings (loss) before income taxes | (31.5 | ) | 54.5 | 1.4 | (0.5 | ) | 23.9 | ||||||||||||
Income tax expense (benefit) | (12.3 | ) | 21.2 | (3.1 | ) | — | 5.8 | ||||||||||||
Earnings (loss) before equity in earnings of consolidated subsidiaries | (19.2 | ) | 33.3 | 4.5 | (0.5 | ) | 18.1 | ||||||||||||
Equity in earnings of consolidated subsidiaries | 37.1 | 82.8 | 7.5 | (127.4 | ) | — | |||||||||||||
Net earnings | 17.9 | 116.1 | 12.0 | (127.9 | ) | 18.1 | |||||||||||||
Less: net earnings attributable to non-controlling interest | — | — | 0.2 | — | 0.2 | ||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 17.9 | $ | 116.1 | $ | 11.8 | $ | (127.9 | ) | $ | 17.9 | ||||||||
Comprehensive income | $ | 26.9 | $ | 116.1 | $ | 15.9 | $ | (131.8 | ) | $ | 27.1 | ||||||||
Less: comprehensive income attributable to non-controlling interest | — | — | 0.2 | — | 0.2 | ||||||||||||||
Comprehensive income attributable to Wolverine World Wide, Inc. | $ | 26.9 | $ | 116.1 | $ | 15.7 | $ | (131.8 | ) | $ | 26.9 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Revenue | $ | 224.7 | $ | 1,974.9 | $ | 370.1 | $ | (1,328.6 | ) | $ | 1,241.1 | ||||||||
Cost of goods sold | 154.3 | 1,682.7 | 199.2 | (1,297.1 | ) | 739.1 | |||||||||||||
Restructuring costs | — | — | 0.5 | — | 0.5 | ||||||||||||||
Gross profit | 70.4 | 292.2 | 170.4 | (31.5 | ) | 501.5 | |||||||||||||
Selling, general and administrative expenses | 81.6 | 210.2 | 121.4 | (31.9 | ) | 381.3 | |||||||||||||
Acquisition-related integration costs | 2.9 | 1.2 | — | — | 4.1 | ||||||||||||||
Restructuring costs | 1.5 | — | 1.9 | — | 3.4 | ||||||||||||||
Operating profit (loss) | (15.6 | ) | 80.8 | 47.1 | 0.4 | 112.7 | |||||||||||||
Other expenses: | |||||||||||||||||||
Interest expense (income), net | 21.3 | 0.2 | (0.1 | ) | — | 21.4 | |||||||||||||
Other expense (income), net | (0.3 | ) | (0.9 | ) | 2.0 | — | 0.8 | ||||||||||||
Total other expenses (income) | 21.0 | (0.7 | ) | 1.9 | — | 22.2 | |||||||||||||
Earnings (loss) before income taxes | (36.6 | ) | 81.5 | 45.2 | 0.4 | 90.5 | |||||||||||||
Income tax expense (benefit) | (13.7 | ) | 30.6 | 8.8 | — | 25.7 | |||||||||||||
Earnings (loss) before equity in earnings of consolidated subsidiaries | (22.9 | ) | 50.9 | 36.4 | 0.4 | 64.8 | |||||||||||||
Equity in earnings of consolidated subsidiaries | 87.5 | 48.8 | 35.8 | (172.1 | ) | — | |||||||||||||
Net earnings | 64.6 | 99.7 | 72.2 | (171.7 | ) | 64.8 | |||||||||||||
Less: net earnings attributable to non-controlling interests | — | — | 0.2 | — | 0.2 | ||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 64.6 | $ | 99.7 | $ | 72.0 | $ | (171.7 | ) | $ | 64.6 | ||||||||
Comprehensive income | $ | 67.5 | $ | 99.4 | $ | 73.2 | $ | (172.4 | ) | $ | 67.7 | ||||||||
Less: comprehensive income attributable to non-controlling interest | — | — | 0.2 | — | 0.2 | ||||||||||||||
Comprehensive income attributable to Wolverine World Wide, Inc. | $ | 67.5 | $ | 99.4 | $ | 73.0 | $ | (172.4 | ) | $ | 67.5 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Revenue | $ | 221.6 | $ | 1,862.7 | $ | 334.5 | $ | (1,185.1 | ) | $ | 1,233.7 | ||||||||
Cost of goods sold | 158.7 | 1,548.3 | 177.1 | (1,153.5 | ) | 730.6 | |||||||||||||
Gross profit | 62.9 | 314.4 | 157.4 | (31.6 | ) | 503.1 | |||||||||||||
Selling, general and administrative expenses | 88.2 | 210.7 | 123.7 | (30.6 | ) | 392.0 | |||||||||||||
Acquisition-related integration costs | 8.4 | 11.6 | 3.1 | — | 23.1 | ||||||||||||||
Operating profit (loss) | (33.7 | ) | 92.1 | 30.6 | (1.0 | ) | 88.0 | ||||||||||||
Other expenses: | |||||||||||||||||||
Interest expense (income), net | 25.4 | 0.1 | (0.1 | ) | — | 25.4 | |||||||||||||
Other expense, net | — | — | 0.8 | 0.2 | 1.0 | ||||||||||||||
Total other expenses | 25.4 | 0.1 | 0.7 | 0.2 | 26.4 | ||||||||||||||
Earnings (loss) before income taxes | (59.1 | ) | 92.0 | 29.9 | (1.2 | ) | 61.6 | ||||||||||||
Income tax expense (benefit) | (23.0 | ) | 35.8 | 0.9 | — | 13.7 | |||||||||||||
Earnings (loss) before equity in earnings of consolidated subsidiaries | (36.1 | ) | 56.2 | 29.0 | (1.2 | ) | 47.9 | ||||||||||||
Equity in earnings of consolidated subsidiaries | 83.8 | 183.4 | 50.6 | (317.8 | ) | — | |||||||||||||
Net earnings | 47.7 | 239.6 | 79.6 | (319.0 | ) | 47.9 | |||||||||||||
Less: net earnings attributable to non-controlling interests | — | — | 0.2 | — | 0.2 | ||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 47.7 | $ | 239.6 | $ | 79.4 | $ | (319.0 | ) | $ | 47.7 | ||||||||
Comprehensive income | $ | 52.8 | $ | 239.6 | $ | 75.1 | $ | (314.5 | ) | $ | 53.0 | ||||||||
Less: comprehensive income attributable to non-controlling interest | — | — | 0.2 | — | 0.2 | ||||||||||||||
Comprehensive income attributable to Wolverine World Wide, Inc. | $ | 52.8 | $ | 239.6 | $ | 74.9 | $ | (314.5 | ) | $ | 52.8 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 29.0 | $ | 4.2 | $ | 199.2 | $ | — | $ | 232.4 | |||||||||
Accounts receivable, net | 19.4 | 286.1 | 128.8 | — | 434.3 | ||||||||||||||
Inventories: | |||||||||||||||||||
Finished products, net | 61.9 | 301.5 | 76.5 | (0.3 | ) | 439.6 | |||||||||||||
Raw materials and work-in-process, net | 1.4 | 1.3 | 17.5 | — | 20.2 | ||||||||||||||
Total inventories | 63.3 | 302.8 | 94.0 | (0.3 | ) | 459.8 | |||||||||||||
Deferred income taxes | 15.3 | 12.6 | 0.6 | — | 28.5 | ||||||||||||||
Prepaid expenses and other current assets | 45.0 | (17.5 | ) | 10.5 | — | 38.0 | |||||||||||||
Total current assets | 172.0 | 588.2 | 433.1 | (0.3 | ) | 1,193.0 | |||||||||||||
Property, plant and equipment: | |||||||||||||||||||
Gross cost | 226.4 | 150.7 | 40.7 | — | 417.8 | ||||||||||||||
Accumulated depreciation | (177.4 | ) | (67.8 | ) | (26.6 | ) | — | (271.8 | ) | ||||||||||
Property, plant and equipment, net | 49.0 | 82.9 | 14.1 | — | 146.0 | ||||||||||||||
Other assets: | |||||||||||||||||||
Goodwill | 7.8 | 353.0 | 84.0 | — | 444.8 | ||||||||||||||
Indefinite-lived intangibles | 4.3 | 674.9 | 11.3 | — | 690.5 | ||||||||||||||
Amortizable intangibles, net | 0.4 | 119.7 | 0.1 | — | 120.2 | ||||||||||||||
Deferred income taxes | — | — | 3.4 | — | 3.4 | ||||||||||||||
Deferred financing costs, net | 20.0 | — | — | — | 20.0 | ||||||||||||||
Other | 48.8 | 11.5 | 2.7 | 0.3 | 63.3 | ||||||||||||||
Intercompany accounts receivable | — | 1,736.4 | 484.3 | (2,220.7 | ) | — | |||||||||||||
Investment in affiliates | 3,148.5 | 635.4 | 403.5 | (4,187.4 | ) | — | |||||||||||||
Total other assets | 3,229.8 | 3,530.9 | 989.3 | (6,407.8 | ) | 1,342.2 | |||||||||||||
Total assets | $ | 3,450.8 | $ | 4,202.0 | $ | 1,436.5 | $ | (6,408.1 | ) | $ | 2,681.2 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 37.1 | $ | 81.7 | $ | 47.1 | $ | — | $ | 165.9 | |||||||||
Accrued salaries and wages | 14.5 | 8.2 | 8.8 | — | 31.5 | ||||||||||||||
Other accrued liabilities | 31.8 | 28.8 | 28.7 | — | 89.3 | ||||||||||||||
Current maturities of long-term debt | 48.4 | — | — | — | 48.4 | ||||||||||||||
Total current liabilities | 131.8 | 118.7 | 84.6 | — | 335.1 | ||||||||||||||
Long-term debt, less current maturities | 1,082.2 | 0.7 | — | — | 1,082.9 | ||||||||||||||
Accrued pension liabilities | 63.1 | 11.2 | — | — | 74.3 | ||||||||||||||
Deferred income taxes | (37.0 | ) | 287.6 | 4.3 | — | 254.9 | |||||||||||||
Other liabilities | 13.4 | 10.3 | 2.4 | — | 26.1 | ||||||||||||||
Intercompany accounts payable | 1,293.4 | 412.6 | 514.7 | (2,220.7 | ) | — | |||||||||||||
Stockholders’ equity: | |||||||||||||||||||
Wolverine World Wide, Inc. stockholders’ equity | 903.9 | 3,360.9 | 826.5 | (4,187.4 | ) | 903.9 | |||||||||||||
Non-controlling interest | — | — | 4.0 | — | 4.0 | ||||||||||||||
Total stockholders’ equity | 903.9 | 3,360.9 | 830.5 | (4,187.4 | ) | 907.9 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 3,450.8 | $ | 4,202.0 | $ | 1,436.5 | $ | (6,408.1 | ) | $ | 2,681.2 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 18.8 | $ | 15.0 | $ | 180.4 | $ | — | $ | 214.2 | |||||||||
Accounts receivable, net | 63.9 | 213.2 | 121.0 | — | 398.1 | ||||||||||||||
Inventories: | |||||||||||||||||||
Finished products, net | 55.0 | 270.8 | 81.0 | (0.8 | ) | 406.0 | |||||||||||||
Raw materials and work-in-process, net | (0.1 | ) | 0.9 | 21.4 | — | 22.2 | |||||||||||||
Total inventories | 54.9 | 271.7 | 102.4 | (0.8 | ) | 428.2 | |||||||||||||
Deferred income taxes | 15.3 | 12.6 | 1.2 | — | 29.1 | ||||||||||||||
Prepaid expenses and other current assets | 26.9 | 11.1 | 10.4 | — | 48.4 | ||||||||||||||
Total current assets | 179.8 | 523.6 | 415.4 | (0.8 | ) | 1,118.0 | |||||||||||||
Property, plant and equipment: | |||||||||||||||||||
Gross cost | 223.7 | 143.2 | 49.2 | — | 416.1 | ||||||||||||||
Accumulated depreciation | (174.4 | ) | (57.4 | ) | (32.4 | ) | — | (264.2 | ) | ||||||||||
Property, plant and equipment, net | 49.3 | 85.8 | 16.8 | — | 151.9 | ||||||||||||||
Other assets: | |||||||||||||||||||
Goodwill | 7.7 | 354.3 | 83.3 | — | 445.3 | ||||||||||||||
Indefinite-lived intangibles | 4.4 | 674.7 | 11.4 | — | 690.5 | ||||||||||||||
Amortizable intangibles, net | 0.2 | 126.4 | 0.1 | — | 126.7 | ||||||||||||||
Deferred income taxes | — | — | 3.4 | — | 3.4 | ||||||||||||||
Deferred financing costs, net | 22.0 | — | — | — | 22.0 | ||||||||||||||
Other | 46.0 | 12.3 | 5.3 | 0.8 | 64.4 | ||||||||||||||
Intercompany accounts receivable | — | 1,445.4 | 347.5 | (1,792.9 | ) | — | |||||||||||||
Investment in affiliates | 3,033.2 | 555.6 | 393.5 | (3,982.3 | ) | — | |||||||||||||
Total other assets | 3,113.5 | 3,168.7 | 844.5 | (5,774.4 | ) | 1,352.3 | |||||||||||||
Total assets | $ | 3,342.6 | $ | 3,778.1 | $ | 1,276.7 | $ | (5,775.2 | ) | $ | 2,622.2 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 31.6 | $ | 61.7 | $ | 41.9 | $ | — | $ | 135.2 | |||||||||
Accrued salaries and wages | 27.0 | 8.6 | 5.9 | — | 41.5 | ||||||||||||||
Other accrued liabilities | 40.8 | 22.1 | 36.4 | — | 99.3 | ||||||||||||||
Current maturities of long-term debt | 53.3 | — | — | — | 53.3 | ||||||||||||||
Total current liabilities | 152.7 | 92.4 | 84.2 | — | 329.3 | ||||||||||||||
Long-term debt, less current maturities | 1,096.7 | — | — | — | 1,096.7 | ||||||||||||||
Accrued pension liabilities | 60.9 | 13.3 | — | — | 74.2 | ||||||||||||||
Deferred income taxes | (38.2 | ) | 287.7 | 4.4 | — | 253.9 | |||||||||||||
Other liabilities | 12.4 | 11.5 | 2.8 | — | 26.7 | ||||||||||||||
Intercompany accounts payable | 1,220.5 | 153.7 | 418.7 | (1,792.9 | ) | — | |||||||||||||
Stockholders’ equity: | |||||||||||||||||||
Wolverine World Wide, Inc. stockholders’ equity | 837.6 | 3,219.5 | 762.8 | (3,982.3 | ) | 837.6 | |||||||||||||
Non-controlling interest | — | — | 3.8 | — | 3.8 | ||||||||||||||
Total stockholders’ equity | 837.6 | 3,219.5 | 766.6 | (3,982.3 | ) | 841.4 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 3,342.6 | $ | 3,778.1 | $ | 1,276.7 | $ | (5,775.2 | ) | $ | 2,622.2 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
ASSETS | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 22.7 | $ | 15.9 | $ | 132.4 | $ | — | $ | 171.0 | |||||||||
Accounts receivable, net | 89.2 | 195.0 | 113.7 | — | 397.9 | ||||||||||||||
Inventories: | |||||||||||||||||||
Finished products, net | 58.4 | 311.1 | 86.7 | (1.9 | ) | 454.3 | |||||||||||||
Raw materials and work-in-process, net | 0.9 | 1.0 | 28.5 | — | 30.4 | ||||||||||||||
Total inventories | 59.3 | 312.1 | 115.2 | (1.9 | ) | 484.7 | |||||||||||||
Deferred income taxes | 9.4 | 17.0 | 1.2 | — | 27.6 | ||||||||||||||
Prepaid expenses and other current assets | 22.4 | 6.3 | 12.3 | 0.5 | 41.5 | ||||||||||||||
Total current assets | 203.0 | 546.3 | 374.8 | (1.4 | ) | 1,122.7 | |||||||||||||
Property, plant and equipment: | |||||||||||||||||||
Gross cost | 217.4 | 125.4 | 54.6 | — | 397.4 | ||||||||||||||
Accumulated depreciation | (168.2 | ) | (44.4 | ) | (36.1 | ) | — | (248.7 | ) | ||||||||||
Property, plant and equipment, net | 49.2 | 81.0 | 18.5 | — | 148.7 | ||||||||||||||
Other assets: | |||||||||||||||||||
Goodwill | 7.5 | 365.1 | 85.2 | — | 457.8 | ||||||||||||||
Indefinite-lived intangibles | 4.1 | 664.4 | 11.3 | — | 679.8 | ||||||||||||||
Amortizable intangibles, net | 0.4 | 142.8 | 0.2 | — | 143.4 | ||||||||||||||
Deferred income taxes | 0.2 | — | — | — | 0.2 | ||||||||||||||
Deferred financing costs, net | 35.8 | — | — | — | 35.8 | ||||||||||||||
Other | 43.9 | 9.8 | 1.0 | 1.6 | 56.3 | ||||||||||||||
Intercompany accounts receivable | — | 1,182.0 | 105.3 | (1,287.3 | ) | — | |||||||||||||
Investment in affiliates | 2,655.8 | 401.6 | 397.0 | (3,454.4 | ) | — | |||||||||||||
Total other assets | 2,747.7 | 2,765.7 | 600.0 | (4,740.1 | ) | 1,373.3 | |||||||||||||
Total assets | $ | 2,999.9 | $ | 3,393.0 | $ | 993.3 | $ | (4,741.5 | ) | $ | 2,644.7 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 25.8 | $ | 130.0 | $ | 36.3 | $ | — | $ | 192.1 | |||||||||
Accrued salaries and wages | 16.6 | 19.7 | 7.3 | — | 43.6 | ||||||||||||||
Other accrued liabilities | 44.9 | 15.2 | 32.5 | 0.2 | 92.8 | ||||||||||||||
Current maturities of long-term debt | 37.1 | — | — | — | 37.1 | ||||||||||||||
Total current liabilities | 124.4 | 164.9 | 76.1 | 0.2 | 365.6 | ||||||||||||||
Long-term debt, less current maturities | 1,147.6 | — | — | — | 1,147.6 | ||||||||||||||
Accrued pension liabilities | 130.6 | 36.3 | — | — | 166.9 | ||||||||||||||
Deferred income taxes | (52.1 | ) | 290.7 | 1.5 | — | 240.1 | |||||||||||||
Other liabilities | 8.2 | 8.8 | 2.9 | — | 19.9 | ||||||||||||||
Intercompany accounts payable | 938.1 | 29.3 | 319.9 | (1,287.3 | ) | — | |||||||||||||
Stockholders’ equity: | |||||||||||||||||||
Wolverine World Wide, Inc. stockholders’ equity | 703.1 | 2,863.0 | 591.4 | (3,454.4 | ) | 703.1 | |||||||||||||
Non-controlling interest | — | — | 1.5 | — | 1.5 | ||||||||||||||
Total stockholders’ equity | 703.1 | 2,863.0 | 592.9 | (3,454.4 | ) | 704.6 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 2,999.9 | $ | 3,393.0 | $ | 993.3 | $ | (4,741.5 | ) | $ | 2,644.7 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 47.8 | $ | (2.1 | ) | $ | 19.9 | $ | — | $ | 65.6 | ||||||||
Investing activities | |||||||||||||||||||
Additions to property, plant and equipment | (3.5 | ) | (7.9 | ) | (1.1 | ) | — | (12.5 | ) | ||||||||||
Investment in joint venture | — | — | (0.7 | ) | — | (0.7 | ) | ||||||||||||
Other | (0.8 | ) | (0.8 | ) | — | — | (1.6 | ) | |||||||||||
Net cash used in investing activities | (4.3 | ) | (8.7 | ) | (1.8 | ) | — | (14.8 | ) | ||||||||||
Financing activities | |||||||||||||||||||
Payments on long-term debt | (19.4 | ) | — | — | — | (19.4 | ) | ||||||||||||
Cash dividends paid | (12.0 | ) | — | — | — | (12.0 | ) | ||||||||||||
Purchases of shares under employee stock plans | (9.4 | ) | — | — | — | (9.4 | ) | ||||||||||||
Proceeds from the exercise of stock options | 3.8 | — | — | — | 3.8 | ||||||||||||||
Excess tax benefits from stock-based compensation | 3.7 | — | — | — | 3.7 | ||||||||||||||
Net cash used in financing activities | (33.3 | ) | — | — | — | (33.3 | ) | ||||||||||||
Effect of foreign exchange rate changes | — | — | 0.7 | — | 0.7 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | 10.2 | (10.8 | ) | 18.8 | — | 18.2 | |||||||||||||
Cash and cash equivalents at beginning of the year | 18.8 | 15.0 | 180.4 | — | 214.2 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 29.0 | $ | 4.2 | $ | 199.2 | $ | — | $ | 232.4 |
(In millions) | Parent | Subsidiary Guarantors | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 80.3 | $ | (25.1 | ) | $ | 32.3 | $ | — | $ | 87.5 | ||||||||
Investing activities | |||||||||||||||||||
Additions to property, plant and equipment | (7.4 | ) | (7.3 | ) | — | — | (14.7 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | — | — | 2.8 | — | 2.8 | ||||||||||||||
Investment in joint venture | — | — | (1.6 | ) | — | (1.6 | ) | ||||||||||||
Other | (0.1 | ) | (0.2 | ) | (0.9 | ) | — | (1.2 | ) | ||||||||||
Net cash (used in) provided by investing activities | (7.5 | ) | (7.5 | ) | 0.3 | — | (14.7 | ) | |||||||||||
Financing activities | |||||||||||||||||||
Payments on long-term debt | (65.3 | ) | — | — | — | (65.3 | ) | ||||||||||||
Cash dividends paid | (11.8 | ) | — | — | — | (11.8 | ) | ||||||||||||
Purchases of shares under employee stock plans | (0.3 | ) | — | — | — | (0.3 | ) | ||||||||||||
Proceeds from the exercise of stock options | 4.8 | — | — | — | 4.8 | ||||||||||||||
Excess tax benefits from stock-based compensation | 1.2 | — | — | — | 1.2 | ||||||||||||||
Net cash used in financing activities | (71.4 | ) | — | — | — | (71.4 | ) | ||||||||||||
Effect of foreign exchange rate changes | — | — | (1.8 | ) | — | (1.8 | ) | ||||||||||||
Increase (decrease) in cash and cash equivalents | 1.4 | (32.6 | ) | 30.8 | — | (0.4 | ) | ||||||||||||
Cash and cash equivalents at beginning of the year | 21.3 | 48.5 | 101.6 | — | 171.4 | ||||||||||||||
Cash and cash equivalents at end of the period | $ | 22.7 | $ | 15.9 | $ | 132.4 | $ | — | $ | 171.0 |
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Revenue for the second quarter of fiscal 2014 was $613.5 million, an increase of 4.4% compared to the second quarter of fiscal 2013. Each of the Company’s three operating groups contributed to the quarter’s solid revenue performance. |
• | Gross margin for the second quarter of fiscal 2014 was 40.1%, a decrease of 90 basis points from the second quarter of fiscal 2013. |
• | Operating expenses as a percentage of revenue decreased to 32.1% for the second quarter of fiscal 2014 compared to 34.7% for the second quarter of fiscal 2013. The year-over-year decrease was due primarily to lower acquisition-related integration costs, pension expense and incentive compensation expense. |
• | The effective tax rate in the second quarter of fiscal 2014 was 28.2% compared to 24.2% in the second quarter of fiscal 2013. |
• | Diluted earnings per share for the second quarter of fiscal 2014 were $0.27 compared to $0.18 per share for the second quarter of fiscal 2013. |
• | The Company declared cash dividends of $0.06 per share in both the second quarter of fiscal 2014 and the second quarter of fiscal 2013. |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||||||||
(In millions, except per share data) | June 14, 2014 | June 15, 2013 | Percent Change | June 14, 2014 | June 15, 2013 | Percent Change | |||||||||||||||
Revenue | $ | 613.5 | $ | 587.8 | 4.4 | % | $ | 1,241.1 | $ | 1,233.7 | 0.6 | % | |||||||||
Cost of goods sold | 367.7 | 346.7 | 6.1 | 739.1 | 730.6 | 1.2 | |||||||||||||||
Restructuring costs | 0.1 | — | — | 0.5 | — | — | |||||||||||||||
Gross profit | 245.7 | 241.1 | 1.9 | 501.5 | 503.1 | (0.3 | ) | ||||||||||||||
Selling, general and administrative expenses | 190.8 | 196.2 | (2.8 | ) | 381.3 | 392.0 | (2.7 | ) | |||||||||||||
Acquisition-related integration costs | 2.5 | 7.9 | (68.4 | ) | 4.1 | 23.1 | (82.3 | ) | |||||||||||||
Restructuring costs | 3.4 | — | — | 3.4 | — | — | |||||||||||||||
Operating profit | 49.0 | 37.0 | 32.4 | 112.7 | 88.0 | 28.1 | |||||||||||||||
Interest expense, net | 10.5 | 12.5 | (16.0 | ) | 21.4 | 25.4 | (15.7 | ) | |||||||||||||
Other expense, net | — | 0.6 | (100.0 | ) | 0.8 | 1.0 | (20.0 | ) | |||||||||||||
Earnings before income taxes | 38.5 | 23.9 | 61.1 | 90.5 | 61.6 | 46.9 | |||||||||||||||
Income taxes | 10.9 | 5.8 | 87.9 | 25.7 | 13.7 | 87.6 | |||||||||||||||
Net earnings | 27.6 | 18.1 | 52.5 | 64.8 | 47.9 | 35.3 | |||||||||||||||
Less: net earnings attributable to non-controlling interest | 0.1 | 0.2 | (50.0 | ) | 0.2 | 0.2 | — | ||||||||||||||
Net earnings attributable to Wolverine World Wide, Inc. | $ | 27.5 | $ | 17.9 | 53.6 | % | $ | 64.6 | $ | 47.7 | 35.4 | % | |||||||||
Diluted earnings per share | $ | 0.27 | $ | 0.18 | 50.0 | % | $ | 0.64 | $ | 0.48 | 33.3 | % |
• | Lifestyle Group, consisting of Sperry Top-Sider® footwear and apparel, Stride Rite® footwear and apparel, Hush Puppies® footwear and apparel, Keds® footwear and apparel and Soft Style® footwear; |
• | Performance Group, consisting of Merrell® footwear and apparel, Saucony® footwear and apparel, Chaco® footwear, Patagonia® footwear and Cushe® footwear; and |
• | Heritage Group, consisting of Wolverine® footwear and apparel, Cat® footwear, Bates® uniform footwear, Sebago® footwear and apparel, Harley-Davidson® footwear and HyTest® safety footwear. |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||||||||||||||||
(In millions) | June 14, 2014 | June 15, 2013 | Change | Percent Change | June 14, 2014 | June 15, 2013 | Change | Percent Change | |||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||
Lifestyle Group | $ | 264.1 | $ | 255.2 | $ | 8.9 | 3.5 | % | $ | 502.1 | $ | 525.5 | $ | (23.4 | ) | (4.5 | )% | ||||||||||||
Performance Group | 211.2 | 199.7 | 11.5 | 5.8 | 460.0 | 440.2 | 19.8 | 4.5 | |||||||||||||||||||||
Heritage Group | 113.5 | 110.6 | 2.9 | 2.6 | 234.2 | 229.1 | 5.1 | 2.2 | |||||||||||||||||||||
Other | 24.7 | 22.3 | 2.4 | 10.8 | 44.8 | 38.9 | 5.9 | 15.2 | |||||||||||||||||||||
Total | $ | 613.5 | $ | 587.8 | $ | 25.7 | 4.4 | % | $ | 1,241.1 | $ | 1,233.7 | $ | 7.4 | 0.6 | % |
12 Weeks Ended | 24 Weeks Ended | ||||||||||||||||||||||||||||
(In millions) | June 14, 2014 | June 15, 2013 | Change | Percent Change | June 14, 2014 | June 15, 2013 | Change | Percent Change | |||||||||||||||||||||
Operating profit (loss): | |||||||||||||||||||||||||||||
Lifestyle Group | $ | 39.1 | $ | 45.8 | $ | (6.7 | ) | (14.6 | )% | $ | 64.1 | $ | 91.9 | $ | (27.8 | ) | (30.3 | )% | |||||||||||
Performance Group | 37.6 | 30.5 | 7.1 | 23.3 | 95.6 | 81.4 | 14.2 | 17.4 | |||||||||||||||||||||
Heritage Group | 14.5 | 16.1 | (1.6 | ) | (9.9 | ) | 32.2 | 31.5 | 0.7 | 2.2 | |||||||||||||||||||
Other | 0.1 | 0.6 | (0.5 | ) | (83.3 | ) | (1.3 | ) | (0.4 | ) | (0.9 | ) | (225.0 | ) | |||||||||||||||
Corporate | (42.3 | ) | (56.0 | ) | 13.7 | 24.5 | (77.9 | ) | (116.4 | ) | 38.5 | 33.1 | |||||||||||||||||
Total | $ | 49.0 | $ | 37.0 | $ | 12.0 | 32.4 | % | $ | 112.7 | $ | 88.0 | $ | 24.7 | 28.1 | % |
(In millions) | June 14, 2014 | December 28, 2013 | June 15, 2013 | ||||||||
Cash and cash equivalents | $ | 232.4 | $ | 214.2 | $ | 171.0 | |||||
Interest-bearing debt | 1,131.3 | 1,150.0 | 1,184.7 | ||||||||
Available revolving credit facility (1) | 196.7 | 196.5 | 198.1 |
(1) | Amounts shown are net of outstanding letters of credit, which reduce availability under the Revolving Credit Facility. |
24 Weeks Ended | |||||||
(In millions) | June 14, 2014 | June 15, 2013 | |||||
Net cash provided by operating activities | $ | 65.6 | $ | 87.5 | |||
Net cash used in investing activities | (14.8 | ) | (14.7 | ) | |||
Net cash used in financing activities | (33.3 | ) | (71.4 | ) | |||
Additions to property, plant and equipment | 12.5 | 14.7 | |||||
Depreciation and amortization | 25.0 | 25.6 |
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 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs | |||||||||
Period 1 (March 23, 2014 to April 19, 2014) | |||||||||||||
Common Stock Repurchase Program(1) | — | — | — | $ | 200,000,000 | ||||||||
Employee Transactions(2) | 1,447 | $ | 28.10 | — | |||||||||
Period 2 (April 20, 2014 to May 17, 2014) | |||||||||||||
Common Stock Repurchase Program(1) | — | — | — | $ | 200,000,000 | ||||||||
Employee Transactions(2) | 17,356 | $ | 25.96 | — | |||||||||
Period 3 (May 18, 2014 to June 14, 2014) | |||||||||||||
Common Stock Repurchase Program(1) | — | — | — | $ | 200,000,000 | ||||||||
Employee Transactions(2) | 1,565 | $ | 25.87 | — | |||||||||
Total for Quarter ended June 14, 2014 | |||||||||||||
Common Stock Repurchase Program(1) | — | — | — | $ | 200,000,000 | ||||||||
Employee Transactions(2) | 20,368 | $ | 26.10 | — |
(1) | On February 12, 2014, the Company’s Board of Directors approved a common stock repurchase program that authorizes the repurchase of up to $200 million in common stock over a four-year period. There were no shares repurchased during the period covered by this Quarterly Report on Form 10-Q, other than repurchases pursuant to the “Employee Transactions” set forth above. |
(2) | Employee transactions include: (1) shares delivered or attested in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options who exercised options, and (2) restricted shares withheld to offset statutory minimum tax withholding that occurs upon vesting of restricted shares. The Company’s employee stock compensation plans provide that the shares delivered or attested to, or withheld, shall be valued at the closing price of the Company’s common stock on the date the relevant transaction occurs. |
ITEM 6. | Exhibits |
WOLVERINE WORLD WIDE, INC. | ||
July 22, 2014 | /s/ Blake W. Krueger | |
Date | Blake W. Krueger Chairman, Chief Executive Officer and President (Principal Executive Officer and Duly Authorized Signatory for Registrant) | |
July 22, 2014 | /s/ Donald T. Grimes | |
Date | Donald T. Grimes Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer and Duly Authorized Signatory for Registrant) |
Exhibit Number | Document | |
3.1 | Amended and Restated Certificate of Incorporation. Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 24, 2014. Here incorporated by reference. | |
3.2 | Amended and Restated Bylaws. Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 11, 2013. Here incorporated by reference. | |
10.1 | Amended and Restated Form of Performance Share Award Agreement (2012 - 2014 performance period).* | |
10.2 | Amended and Restated Form of Performance Share Award Agreement (2013 - 2015 performance period).* | |
10.3 | Amended and Restated Form of Performance Share Award Agreement (2014 - 2016 performance period).* | |
31.1 | Certification of Chairman, Chief Executive Officer and President under Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Senior Vice President, Chief Financial Officer and Treasurer under Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification pursuant to 18 U.S.C. §1350. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Management contract or compensatory plan or arrangement. |
Performance Share Agreement # |
Applicable Earnings | The Earnings amount used to calculate the Performance Share Award for the Award Recipient. |
Award Cap | The maximum percentage of the Incentive Award that the Award Recipient may receive for the Performance Period upon achievement of “stretch” goal, used to calculate the Performance Share Award for the Award Recipient. |
Award Recipient | An employee of the Company to whom the Compensation Committee of the Board of Directors or the Board of Directors grants a Performance Share Award, for such portion of the Performance Period as the Committee determines. |
BVA | An economic value added measurement that equals the operating income for a Fiscal Year reduced by (i) a provision for income taxes equal to the operating income multiplied by the Company’s total effective tax rate for the same Fiscal Year; and (ii) a capital charge equal to a 14-point average of “net operating assets” at the beginning and end of a Fiscal Year (with “net operating assets” defined as the net of trade receivables (net of reserves), inventory (net of reserves), other current assets, property, plant and equipment, trade payables and accrued liabilities) multiplied by 10%. |
Cumulative BVA | The sum of the BVA for each of the Fiscal Years in the Performance Period. |
Cumulative EPS | The sum of the EPS for each of the Fiscal Years in the Performance Period. |
Earnings | An Award Recipient’s base salary as of the end of the Performance Period. |
EPS | The total after-tax profits for a Fiscal Year divided by the fully-diluted weighted average shares outstanding during the Fiscal Year. |
Fiscal Year | The fiscal year of the Company for financial reporting purposes as the Company may adopt from time to time. |
Incentive Award Percentage | The Incentive Award Percentage used to calculate the Performance Share Award for the Award Recipient. |
Market Price | The closing market price of shares of Common Stock reported on the New York Stock Exchange (or any successor exchange that is the primary stock exchange for trading of Common Stock) on the date the award is granted by the Compensation Committee. |
Stock Restrictions | Restrictions on the common stock covered by the Performance Share Award, as set forth in the Plan and the Performance Share Award Agreement. |
Performance Period | The three year period beginning on the first day of the Company’s 2012 Fiscal Year and ending on the last day of the Company’s 2014 Fiscal Year. |
BVA Factor | As set by the Compensation Committee. |
Threshold BVA | As set by the Compensation Committee. |
Target BVA | As set by the Compensation Committee. |
Goal BVA | As set by the Compensation Committee. |
Stretch BVA | As set by the Compensation Committee. |
EPS Factor | As set by the Compensation Committee. |
Threshold EPS | As set by the Compensation Committee. |
Target EPS | As set by the Compensation Committee. |
Goal EPS | As set by the Compensation Committee. |
Stretch EPS | As set by the Compensation Committee. |
Performance Share Agreement # |
Applicable Earnings | The Earnings amount used to calculate the Performance Share Award for the Award Recipient. |
Award Cap | The maximum percentage of the Incentive Award that the Award Recipient may receive for the Performance Period upon achievement of “stretch” goal, used to calculate the Performance Share Award for the Award Recipient. |
Award Recipient | An employee of the Company to whom the Compensation Committee of the Board of Directors or the Board of Directors grants a Performance Share Award, for such portion of the Performance Period as the Committee determines. |
BVA | An economic value added measurement that equals the operating income for a Fiscal Year reduced by (i) a provision for income taxes equal to the operating income multiplied by the Company’s total effective tax rate for the same Fiscal Year; and (ii) a capital charge equal to a 14-point average of “net operating assets” at the beginning and end of a Fiscal Year (with “net operating assets” defined as the net of trade receivables (net of reserves), inventory (net of reserves), other current assets, property, plant and equipment, trade payables and accrued liabilities) multiplied by 10%. |
Cumulative BVA | The sum of the BVA for each of the Fiscal Years in the Performance Period. |
Cumulative EPS | The sum of the EPS for each of the Fiscal Years in the Performance Period. |
Earnings | An Award Recipient’s base salary as of the end of the Performance Period. |
EPS | The total after-tax profits for a Fiscal Year divided by the fully-diluted weighted average shares outstanding during the Fiscal Year. |
Fiscal Year | The fiscal year of the Company for financial reporting purposes as the Company may adopt from time to time. |
Incentive Award Percentage | The Incentive Award Percentage used to calculate the Performance Share Award for the Award Recipient. |
Market Price | The closing market price of shares of Common Stock reported on the New York Stock Exchange (or any successor exchange that is the primary stock exchange for trading of Common Stock) on the date the award is granted by the Compensation Committee. |
Stock Restrictions | Restrictions on the common stock covered by the Performance Share Award, as set forth in the Plan and the Performance Share Award Agreement. |
Performance Period | The three year period beginning on the first day of the Company’s 2013 Fiscal Year and ending on the last day of the Company’s 2015 Fiscal Year. |
BVA Factor | As set by the Compensation Committee. |
Threshold BVA | As set by the Compensation Committee. |
Target BVA | As set by the Compensation Committee. |
Goal BVA | As set by the Compensation Committee. |
Stretch BVA | As set by the Compensation Committee. |
EPS Factor | As set by the Compensation Committee. |
Threshold EPS | As set by the Compensation Committee. |
Target EPS | As set by the Compensation Committee. |
Goal EPS | As set by the Compensation Committee. |
Stretch EPS | As set by the Compensation Committee. |
Performance Share Agreement # |
Applicable Earnings | The Earnings amount used to calculate the Performance Share Award for the Award Recipient. |
Award Cap | The maximum percentage of the Incentive Award that the Award Recipient may receive for the Performance Period upon achievement of “stretch” goal, used to calculate the Performance Share Award for the Award Recipient. |
Award Recipient | An employee of the Company to whom the Compensation Committee of the Board of Directors or the Board of Directors grants a Performance Share Award, for such portion of the Performance Period as the Committee determines. |
BVA | An economic value added measurement that equals the operating income for a Fiscal Year reduced by (i) a provision for income taxes equal to the operating income multiplied by the Company’s total effective tax rate for the same Fiscal Year; and (ii) a capital charge equal to a 14-point average of “net operating assets” at the beginning and end of a Fiscal Year (with “net operating assets” defined as the net of trade receivables (net of reserves), inventory (net of reserves), other current assets, property, plant and equipment, trade payables and accrued liabilities) multiplied by 10%. |
Cumulative BVA | The sum of the BVA for each of the Fiscal Years in the Performance Period. |
Cumulative EPS | The sum of the EPS for each of the Fiscal Years in the Performance Period. |
Earnings | An Award Recipient’s base salary as of the end of the Performance Period. |
EPS | The total after-tax profits for a Fiscal Year divided by the fully-diluted weighted average shares outstanding during the Fiscal Year. |
Fiscal Year | The fiscal year of the Company for financial reporting purposes as the Company may adopt from time to time. |
Incentive Award Percentage | The Incentive Award Percentage used to calculate the Performance Share Award for the Award Recipient. |
Market Price | The closing market price of shares of Common Stock reported on the New York Stock Exchange (or any successor exchange that is the primary stock exchange for trading of Common Stock) on the date the award is granted by the Compensation Committee. |
Stock Restrictions | Restrictions on the common stock covered by the Performance Share Award, as set forth in the Plan and the Performance Share Award Agreement. |
Performance Period | The three year period beginning on the first day of the Company’s 2014 Fiscal Year and ending on the last day of the Company’s 2016 Fiscal Year. |
BVA Factor | As set by the Compensation Committee. |
Threshold BVA | As set by the Compensation Committee. |
Target BVA | As set by the Compensation Committee. |
Goal BVA | As set by the Compensation Committee. |
Stretch BVA | As set by the Compensation Committee. |
EPS Factor | As set by the Compensation Committee. |
Threshold EPS | As set by the Compensation Committee. |
Target EPS | As set by the Compensation Committee. |
Goal EPS | As set by the Compensation Committee. |
Stretch EPS | As set by the Compensation Committee. |
1. | I have reviewed this quarterly report on Form 10-Q of Wolverine World Wide, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Blake W. Krueger |
Blake W. Krueger |
Chairman, Chief Executive Officer and President |
Wolverine World Wide, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q of Wolverine World Wide, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Donald T. Grimes |
Donald T. Grimes |
Senior Vice President, Chief Financial Officer and Treasurer |
Wolverine World Wide, Inc. |
Date: | July 22, 2014 | /s/ Blake W. Krueger |
Blake W. Krueger | ||
Chairman, Chief Executive Officer and President | ||
/s/ Donald T. Grimes | ||
Donald T. Grimes | ||
Senior Vice President, Chief Financial Officer and Treasurer |
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In Millions, except Share data, unless otherwise specified3 Months Ended
6 Months Ended
Numerator:
Net earnings attributable to Wolverine World Wide, Inc.
$ 27.5
$ 17.9
$ 64.6
$ 47.7
Adjustment for earnings allocated to non-vested restricted common stock
(0.5)
(0.3)
(1.2)
(0.9)
Net earnings used in calculating basic earnings per share
27.0
17.6
63.4
46.8
Adjustment for earnings reallocated from non-vested restricted common stock
0.1
0
0.1
0
Net earnings used in calculating diluted earnings per share
$ 27.1
$ 17.6
$ 63.5
$ 46.8
Denominator:
Weighted average shares outstanding
101,435,465
100,327,444
101,198,265
99,894,398
Adjustment for non-vested restricted common stock
(3,284,621)
(3,527,798)
(3,213,033)
(3,224,326)
Shares used in calculating basic earnings per share
98,150,844
96,799,646
97,985,232
96,670,072
Effect of dilutive stock options
1,855,864
1,836,348
1,957,294
1,737,882
Shares used in calculating diluted earnings per share
100,006,708
98,635,994
99,942,526
98,407,954
Net earnings per share:
Basic
$ 0.28
$ 0.18
$ 0.65
$ 0.48
Diluted
$ 0.27
$ 0.18
$ 0.64
$ 0.48
In Millions, unless otherwise specified3 Months Ended
6 Months Ended
Long-term Purchase Commitment [Line Items]
Royalty expense, licensing agreements
$ 0.5
$ 0.4
$ 1.1
$ 0.8
Advertising expense, licensing agreements
$ 1.1
$ 1.0
$ 2.2
$ 2.1
In Millions, unless otherwise specified
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreign exchange contracts asset
$ 0.9
$ 1.7
$ 0
Interest rate swap asset
0.4
0.9
0
Foreign exchange contracts liability
0.3
2.3
2.0
Interest rate swap liability
$ 0
$ 0
$ 0.1
Q/35[]A@ZFV9D.,S^>:5
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