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8-K - FORM 8-K - WOLVERINE WORLD WIDE INC /DE/ | c11695e8vk.htm |
Exhibit 99.1
WOLVERINE WORLD WIDE, INC. 9341 Courtland Drive, Rockford, MI 49351 Phone (616) 866-5500; FAX (616) 866-0257 |
FOR IMMEDIATE RELEASE
CONTACT: Don Grimes
(616) 863-4404
CONTACT: Don Grimes
(616) 863-4404
WOLVERINE WORLD WIDE, INC. ANNOUNCES RECORD PERFORMANCE FOR FOURTH QUARTER AND FULL YEAR;
GUIDES TO RECORD REVENUE AND EARNINGS IN FISCAL 2011
Rockford, Michigan, February 1, 2011 Wolverine World Wide, Inc. (NYSE: WWW) today
reported record revenue and earnings per share for both the fourth quarter and full fiscal year
ended January 1, 2011. This excellent financial performance underscores the broad strength and
consumer appeal of the Companys portfolio of lifestyle brands.
Reported revenue for the full year was a record $1.249 billion, an increase of 13.4% versus
prior year revenue of $1.101 billion. Adjusted earnings per fully diluted share were $2.17, a
22.6% increase compared to 2009 adjusted earnings of $1.77 per share. Both years adjusted
earnings exclude the impact of restructuring charges and other expenses related to the Companys
strategic restructuring plan that was completed in the second quarter of 2010. Reported fully
diluted earnings for the year were $2.11 per share compared to $1.24 per share in 2009.
Reported revenue for the fourth quarter was a record $385.0 million, a 23.2% increase versus
the prior year. Fully diluted earnings in the quarter were a record $0.52 per share, an increase
of 15.6% compared to fourth quarter 2009 adjusted diluted earnings of $0.45. The prior years
adjusted earnings exclude the impact of restructuring charges and other expenses related to the
Companys strategic restructuring plan. Reported earnings for the fourth quarter of 2009 were
$0.33 per share.
We are extremely pleased with the Companys exceptional financial performance in 2010,
highlighted by record revenue and record earnings per share, said Blake W. Krueger, the Companys
Chairman and Chief Executive Officer. All four branded operating groups contributed to the years
record results, and all geographic regions delivered double-digit revenue growth. The Companys
fourth quarter performance was also exceptional, and this momentum, coupled with a strong
double-digit order backlog and enthusiastic responses to our 2011 product offerings, positions the
Company for an excellent 2011.
more
Q4 and Full Year 2010 | page 2 |
Don Grimes, the Companys Senior Vice President and Chief Financial Officer, commented, The
Companys record financial performance in 2010 is a clear indication of the strength of our
portfolio and the discipline with which we manage the business. We remain mindful of the need to
deliver superior financial results while still making appropriate investments for the future.
Highlights for the year:
| Gross margin for the full year was 39.6%, after adjusting for non-recurring
restructuring and related charges included in cost of sales, compared to prior-year
adjusted gross margin of 39.7%. Reported gross margin for the full year was 39.5%
compared to 2009 reported gross margin of 39.2%. |
| As a percentage of revenue, adjusted operating expenses were 27.8% of revenue, a
decrease of 90 basis points compared to the prior year. Full-year operating
expenses increased 9.8%, to $347.5 million, after adjusting for non-recurring
restructuring and related charges in both years. Reported operating expenses for
the full year were $350.3 million compared to 2009 reported operating expenses of
$346.1 million. |
| Consolidated inventory at the end of the year was $208.7 million, an increase of
32.0% compared to the prior year. The Companys inventory level reflects both the
excellent outlook for the first half of 2011 and strategic purchases ahead of
announced price increases from third-party suppliers. |
| The full-year effective tax rate was 27.1%, reflecting the net benefit from
non-recurring adjustments, the settlement of a foreign tax audit and the
reinstatement of the research and development tax credit. |
| The Company repurchased 1,795,147 shares during 2010 for an aggregate cost of
$51.2 million, or $28.52 per share. The Company continues to maintain a strong
balance sheet, with no significant debt and $150.4 million of cash and cash
equivalents at the end of the year. |
The Company anticipates continued excellent growth across its portfolio of brands. Based on
the very positive momentum in the business, the Company currently anticipates:
| Fiscal 2011 revenue in the range of $1.350 billion to $1.390 billion,
representing growth of 8.1% to 11.3% versus the prior year; |
||
| Full-year gross margin in line with the prior-years adjusted gross margin, as
higher product costs are expected to be offset by strategic price increases and
anticipated favorable mix; |
more
Q4 and Full Year 2010 | page 3 |
| Modest operating expense leverage; |
| A full-year effective tax rate of 29.0%; |
| Fully diluted weighted average shares outstanding of 49.0 million; and |
| Fully diluted earnings per share in the range of $2.35 to $2.45, representing
growth of approximately 8% to 13% versus prior-year adjusted diluted earnings per
share (growth of approximately 11% to 16% versus reported earnings per share). |
Krueger concluded, The state of the business has never been better. We have momentum, and
opportunities exist for accelerated growth across our entire brand portfolio and all geographic
regions. Our Company is known for its fanatical focus on product, and we are very excited about
the upcoming launch of the Merrell Barefoot Collection and our brands ability to continue
capitalizing on the Boot and Vintage Americana trends that are currently dominating footwear. All
of these things, and more, put the Company in an enviable position as we look forward to another
strong year in 2011.
The Company will host a conference call at 8:30 a.m. ET today to discuss these results and
current business trends. To listen to the call at the Companys website, go to
www.wolverineworldwide.com, click on Investors in the navigation bar, and then click on
Webcast from the top navigation bar of the Investors page. To listen to the webcast, your
computer must have Windows Media Player, which can be downloaded for free at
www.wolverineworldwide.com. In addition, the conference call can be heard at www.streetevents.com.
A replay of the call will be available at the Companys website through February 15, 2011.
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the
worlds leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform
footwear and apparel. The Companys portfolio of highly recognized brands includes:
Bates®, Chaco®, Cushe, Hush Puppies®,
HYTEST®, Merrell®, Sebago® Soft Style® and
Wolverine®. The Company also is the exclusive footwear licensee of popular brands
including CAT®, Harley-Davidson® and Patagonia®. The
Companys products are carried by leading retailers in the U.S. and globally in more than 190
countries and territories. For additional information, please visit our website,
www.wolverineworldwide.com.
more
Q4 and Full Year 2010 | page 4 |
This press release contains forward-looking statements. In addition, words such as
estimates, anticipates, expects, intends, should, will, variations of such words and
similar expressions are intended to identify 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 forward-looking statements. Uncertainty in global economic conditions makes
it particularly difficult to predict product demand and other related matters and makes it more
likely that the Companys actual results could differ materially from expectations. Risk Factors
include, among others: the Companys ability to successfully develop brands and businesses;
changes in duty structures in countries of import and export; trade defense actions by countries;
changes in consumer preferences or spending patterns; cancellation of orders for future delivery;
changes in planned customer demand, re-orders or at-once orders; the availability and pricing of
foreign footwear factory capacity; reliance on foreign sourcing; regulatory or other changes
affecting the supply of materials used in manufacturing; the availability of power, labor and
resources in key foreign sourcing countries, including China; the impact of competition and
pricing; the impact of changes in the value of foreign currencies and the relative value to the
U.S. Dollar; the development of new initiatives; the development of apparel; retail buying
patterns; consolidation in the retail sector; changes in economic and market conditions; acts and
effects of international conflict and terrorism; weather; and additional factors discussed in the
Companys reports filed with the Securities and Exchange Commission and exhibits thereto. 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.
# # #
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($000s, except per share data)
(Unaudited)
($000s, except per share data)
4th Quarter Ended | Fiscal Year Ended | |||||||||||||||
January 1, | January 2, | January 1, | January 2, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | 385,025 | $ | 312,530 | $ | 1,248,517 | $ | 1,101,056 | ||||||||
Cost of products sold |
242,291 | 188,523 | 754,537 | 663,461 | ||||||||||||
Restructuring and related costs |
| 1,234 | 1,406 | 5,873 | ||||||||||||
Gross profit |
142,734 | 122,773 | 492,574 | 431,722 | ||||||||||||
Gross margin |
37.1 | % | 39.3 | % | 39.5 | % | 39.2 | % | ||||||||
Selling, general and administrative expenses |
111,568 | 94,197 | 347,499 | 316,378 | ||||||||||||
Restructuring and related costs |
| 6,897 | 2,828 | 29,723 | ||||||||||||
Operating expenses |
111,568 | 101,094 | 350,327 | 346,101 | ||||||||||||
Operating profit |
31,166 | 21,679 | 142,247 | 85,621 | ||||||||||||
Operating margin |
8.1 | % | 6.9 | % | 11.4 | % | 7.8 | % | ||||||||
Interest (income) expense, net |
247 | (112 | ) | 387 | 111 | |||||||||||
Other (income), net |
(1,288 | ) | (261 | ) | (1,366 | ) | (182 | ) | ||||||||
(1,041 | ) | (373 | ) | (979 | ) | (71 | ) | |||||||||
Earnings before income taxes |
32,207 | 22,052 | 143,226 | 85,692 | ||||||||||||
Income taxes |
6,560 | 5,314 | 38,756 | 23,780 | ||||||||||||
Net earnings |
$ | 25,647 | $ | 16,738 | $ | 104,470 | $ | 61,912 | ||||||||
Diluted earnings per share |
$ | 0.52 | $ | 0.33 | $ | 2.11 | $ | 1.24 | ||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
($000s)
(Unaudited)
($000s)
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
ASSETS: |
||||||||
Cash & cash equivalents |
$ | 150,400 | $ | 160,439 | ||||
Receivables |
196,457 | 163,755 | ||||||
Inventories |
208,655 | 158,065 | ||||||
Other current assets |
20,871 | 21,279 | ||||||
Total current assets |
576,383 | 503,538 | ||||||
Property, plant & equipment, net |
74,397 | 73,952 | ||||||
Other assets |
132,044 | 130,443 | ||||||
Total Assets |
$ | 782,824 | $ | 707,933 | ||||
LIABILITIES & EQUITY: |
||||||||
Current maturities on long-term debt |
$ | 517 | $ | 538 | ||||
Accounts payable and other accrued liabilities |
147,628 | 132,313 | ||||||
Total current liabilities |
148,145 | 132,851 | ||||||
Long-term debt |
517 | 1,077 | ||||||
Other non-current liabilities |
90,265 | 91,972 | ||||||
Stockholders equity |
543,897 | 482,033 | ||||||
Total Liabilities & Equity |
$ | 782,824 | $ | 707,933 | ||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($000s)
(Unaudited)
($000s)
Fiscal Year Ended | ||||||||
January 1, | January 2, | |||||||
2011 | 2010 | |||||||
OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | 104,470 | $ | 61,912 | ||||
Adjustments necessary to reconcile
net earnings to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
16,201 | 17,621 | ||||||
Deferred income taxes |
(1,195 | ) | (7,845 | ) | ||||
Stock-based compensation expense |
10,181 | 8,473 | ||||||
Pension |
17,615 | 15,891 | ||||||
Restructuring and other transition costs |
4,234 | 35,596 | ||||||
Cash payments related to restructuring |
(7,516 | ) | (20,653 | ) | ||||
Other |
1,179 | (7,921 | ) | |||||
Changes in operating assets and liabilities |
(78,922 | ) | 65,535 | |||||
Net cash provided by operating activities |
66,247 | 168,609 | ||||||
INVESTING ACTIVITIES: |
||||||||
Business acquisitions |
| (7,954 | ) | |||||
Additions to property, plant and equipment |
(16,370 | ) | (11,670 | ) | ||||
Other |
(668 | ) | (2,679 | ) | ||||
Net cash used in investing activities |
(17,038 | ) | (22,303 | ) | ||||
FINANCING ACTIVITIES: |
||||||||
Net borrowings under revolver |
| (59,500 | ) | |||||
Cash dividends paid |
(21,415 | ) | (21,502 | ) | ||||
Purchase of common stock for treasury |
(52,190 | ) | (6,566 | ) | ||||
Other |
16,075 | 8,324 | ||||||
Net cash used in financing activities |
(57,530 | ) | (79,244 | ) | ||||
Effect of foreign exchange rate changes |
(1,718 | ) | 3,875 | |||||
Increase (decrease) in cash and cash equivalents |
(10,039 | ) | 70,937 | |||||
Cash and cash equivalents at beginning of year |
160,439 | 89,502 | ||||||
Cash and cash equivalents at end of year |
$ | 150,400 | $ | 160,439 | ||||
REVENUE BY OPERATING GROUP
(Unaudited)
($000s)
(Unaudited)
($000s)
4th Quarter Ended | ||||||||||||||||||||||||
January 1, 2011 | January 2, 2010 | Change | ||||||||||||||||||||||
Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
Outdoor Group |
$ | 134,947 | 35.1 | % | $ | 110,369 | 35.3 | % | $ | 24,578 | 22.3 | % | ||||||||||||
Wolverine Footwear Group |
97,945 | 25.4 | % | 76,759 | 24.6 | % | 21,186 | 27.6 | % | |||||||||||||||
Heritage Brands Group |
65,101 | 16.9 | % | 51,740 | 16.6 | % | 13,361 | 25.8 | % | |||||||||||||||
Hush Puppies Group |
38,884 | 10.1 | % | 33,396 | 10.7 | % | 5,488 | 16.4 | % | |||||||||||||||
Other |
4,079 | 1.1 | % | 2,878 | 0.8 | % | 1,201 | 41.7 | % | |||||||||||||||
Total branded footwear, apparel
and licensing revenue |
340,956 | 88.6 | % | 275,142 | 88.0 | % | 65,814 | 23.9 | % | |||||||||||||||
Other business units |
44,069 | 11.4 | % | 37,388 | 12.0 | % | 6,681 | 17.9 | % | |||||||||||||||
Total Revenue |
$ | 385,025 | 100.0 | % | $ | 312,530 | 100.0 | % | $ | 72,495 | 23.2 | % | ||||||||||||
Fiscal Year Ended | ||||||||||||||||||||||||
January 1, 2011 | January 2, 2010 | Change | ||||||||||||||||||||||
Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
Outdoor Group |
$ | 467,612 | 37.5 | % | $ | 416,165 | 37.8 | % | $ | 51,447 | 12.4 | % | ||||||||||||
Wolverine Footwear Group |
274,899 | 22.0 | % | 233,246 | 21.2 | % | 41,653 | 17.9 | % | |||||||||||||||
Heritage Brands Group |
222,277 | 17.8 | % | 198,289 | 18.0 | % | 23,988 | 12.1 | % | |||||||||||||||
Hush Puppies Group |
140,279 | 11.2 | % | 131,602 | 11.9 | % | 8,677 | 6.6 | % | |||||||||||||||
Other |
12,577 | 1.0 | % | 11,865 | 1.1 | % | 712 | 6.0 | % | |||||||||||||||
Total branded footwear, apparel
and licensing revenue |
1,117,644 | 89.5 | % | 991,167 | 90.0 | % | 126,477 | 12.8 | % | |||||||||||||||
Other business units |
130,873 | 10.5 | % | 109,889 | 10.0 | % | 20,984 | 19.1 | % | |||||||||||||||
Total Revenue |
$ | 1,248,517 | 100.0 | % | $ | 1,101,056 | 100.0 | % | $ | 147,461 | 13.4 | % | ||||||||||||
As required by the Securities and Exchange Commission Regulation G, the following tables
contain information regarding the non-GAAP adjustments used by the Company in the presentation of
its financial results:
WOLVERINE WORLD WIDE, INC.
RECONCILIATION OF REPORTED FINANCIAL RESULTS TO ADJUSTED FINANCIAL
RESULTS, EXCLUDING RESTRUCTURING AND RELATED COSTS*
(Unaudited)
($000s, except per share data)
RESULTS, EXCLUDING RESTRUCTURING AND RELATED COSTS*
(Unaudited)
($000s, except per share data)
As Reported | As Adjusted | |||||||||||
4th Quarter Ended | Restructuring and | 4th Quarter Ended | ||||||||||
January 2, 2010 | Related Costs (a) | January 2, 2010 | ||||||||||
Diluted earnings per share |
$ | 0.33 | $ | 0.12 | $ | 0.45 | ||||||
As Reported | As Adjusted | |||||||||||
Fiscal Year Ended | Restructuring and | Fiscal Year Ended | ||||||||||
January 1, 2011 | Related Costs (a) | January 1, 2011 | ||||||||||
Gross profit |
$ | 492,574 | $ | 1,406 | $ | 493,980 | ||||||
Gross margin |
39.5 | % | 39.6 | % | ||||||||
Operating expenses |
$ | 350,327 | $ | (2,828 | ) | $ | 347,499 | |||||
% change from prior year |
1.2 | % | 9.8 | % | ||||||||
% of revenue |
28.1 | % | 27.8 | % | ||||||||
Diluted earnings per share |
$ | 2.11 | $ | 0.06 | $ | 2.17 | ||||||
As Reported | As Adjusted | |||||||||||
Fiscal Year Ended | Restructuring and | Fiscal Year Ended | ||||||||||
January 2, 2010 | Related Costs (a) | January 2, 2010 | ||||||||||
Gross profit |
$ | 431,722 | $ | 5,873 | $ | 437,595 | ||||||
Gross margin |
39.2 | % | 39.7 | % | ||||||||
Operating expenses |
$ | 346,101 | $ | (29,723 | ) | $ | 316,378 | |||||
% of revenue |
31.4 | % | 28.7 | % | ||||||||
Diluted earnings per share |
$ | 1.24 | $ | 0.53 | $ | 1.77 |
(a) | These adjustments present the Companys results of operations on a continuing basis without
the effects of fluctuations in restructuring and related costs. The adjusted financial
results are used by management to, and allow investors to, evaluate the operating performance
of the Company on a comparable basis. |
|
* | To supplement the consolidated financial statements presented in accordance with Generally
Accepted Accounting Principles (GAAP), the Company describes what certain financial measures
would have been in the absence of restructuring and related costs. The Company believes these
non-GAAP measures provide useful information to both management and investors to increase
comparability to the prior period by adjusting for certain items that may not be indicative of
core operating measures. Management does not, nor should investors, consider such non-GAAP
financial measures in isolation from, or as a substitution for, financial information prepared
in accordance with GAAP. A reconciliation of all non-GAAP measures included in this press
release, to the most directly comparable GAAP measures, are found in the financial tables
above. |