UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2013
Wolverine World Wide, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware |
001-06024 |
38-1185150 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 9341 Courtland Drive Rockford, Michigan |
49351 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (616) 866-5500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On February 19, 2013, Wolverine World Wide, Inc. (the “Company”) issued a press release announcing its financial results for the Company’s fourth quarter of 2012 and the fiscal year ended December 29, 2012, attached as Exhibit 99.1 to this Form 8-K (the “8-K”), which is here incorporated by reference. This 8-K and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) Exhibits: | ||||
| 99.1 | Press Release dated February 19, 2013. This Exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. | |||
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: February 19, 2013 | WOLVERINE WORLD WIDE, INC. (Registrant) | |||||
| /s/ Donald T. Grimes | ||||||
|
| ||||||
| Donald T. Grimes Senior Vice President, Chief Financial Officer and Treasurer | ||||||
-3-
EXHIBIT INDEX
| Exhibit Number |
Document | |
| 99.1 | Wolverine World Wide, Inc. Press Release dated February 19, 2013. | |
Exhibit 99.1
|
9341 Courtland Drive, Rockford, MI 49351 | |
| Phone (616) 866-5500; Fax (616) 866-0257 | ||
| FOR IMMEDIATE RELEASE | ||
| CONTACT: Don Grimes | ||
| (616) 863-4404 | ||
WOLVERINE WORLDWIDE ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2012 RESULTS, WITH RECORD FULL-YEAR REVENUE AND EARNINGS IN EXCESS OF GUIDANCE
Rockford, Michigan, February 19, 2013 — Wolverine Worldwide (NYSE: WWW) today reported financial results for both the fourth quarter and full year ended December 29, 2012. During the fourth quarter, the Company completed the $1.25 billion acquisition of the Performance+Lifestyle Group (“PLG”) from Collective Brands, Inc., adding four world-class lifestyle brands — Sperry Top-Sider, Saucony, Stride Rite, and Keds — to the Company’s impressive portfolio of brands.
Highlights include:
| • | Consolidated full-year revenue increased 16.4% to $1.641 billion, including a contribution of $219.4 million from the PLG brands in the stub period since the date of acquisition. Consolidated fourth fiscal quarter revenue was $652.2 million, growth of 60.5% versus the prior year. |
| • | Fourth fiscal quarter revenue for the legacy WWW business grew to a record $432.8 million, growth of 6.5% versus the prior year. Foreign exchange had minimal impact on the quarter’s reported revenue. Full-year revenue for the legacy WWW business grew to a record $1.421 billion, an increase of 0.9%. Foreign exchange negatively impacted full-year reported revenue for the legacy business by $10.6 million. |
| • | Full-year operating expenses for the legacy WWW business increased only 2.1%, as the Company demonstrated excellent operating discipline in a challenging global business environment. Reported operating expenses, including both PLG and recurring and non-recurring transaction and integration costs, increased 33.1%. |
| • | The effective tax rate for the full fiscal year was 14.2%, reflecting both non-recurring tax benefits realized in the first half of the year and acquisition-related expense deductions in high statutory tax rate jurisdictions in the second half of the year. |
| • | Excluding non-recurring transaction and integration expenses, full-year fully diluted earnings per share were $2.29, compared to the Company’s prior guidance of $1.96 to $2.06 per share. In the fourth quarter, excluding non-recurring transaction and integration expenses, earnings per share were $0.48 – comprised of $0.53 per share from the legacy WWW business and $0.05 of dilution from the PLG acquisition – compared to the Company’s prior guidance of $0.12 to $0.22 per share. These excellent results were due to better than forecasted operating performance from both the legacy and PLG businesses and lower than anticipated costs related to the acquisition. Reported earnings per share were $1.63 for the full fiscal year and ($0.08) in the fourth fiscal quarter. |
| • | The Company generated strong cash flow from operating activities in 2012 and ended the year with $171.4 million of cash and cash equivalents and net debt of $1.080 billion. The net debt reflects a voluntary prepayment of $25.0 million of principal during the fourth fiscal quarter. |
“Fiscal 2012 was a milestone year – the third consecutive year of record revenue and the completion of the transformational acquisition of the four PLG brands,” said Blake W. Krueger, Chairman and Chief Executive Officer. “With continued successful execution of global growth initiatives and expansion of our direct-to-consumer platform, we delivered solid performance in a challenging global environment. The U.S. market proved to be an important contributor to our consolidated performance in 2012, with many brands growing at a double-digit pace in the Company’s most significant market, helping offset the yearlong headwinds in Europe and, to a lesser extent, Canada.
“With the addition of Sperry Top-Sider, Saucony, Stride Rite, and Keds, our portfolio of global brands has never been stronger. We are diversified across most consumer groups, distribution channels and geographic regions, and have multiple brands in the portfolio that are delivering accelerated growth. We are focused on delivering excellent growth, strong profitability and impressive returns to our shareholders, and we look forward to building on our brands’ momentum in 2013 and beyond.”
Don Grimes, Senior Vice President and Chief Financial Officer, commented: “The Company is very well-positioned for accelerated growth in revenue, profitability and cash flow. We expect to complete the full integration of the PLG brands in fiscal 2013, after which we should begin to realize incremental operating efficiencies. Our priorities for the use of our growing cash flow are clear – invest for organic growth, return cash to our shareholders in the form of a stable dividend, and pay down the debt we incurred in connection with the PLG acquisition.”
Although the Company expects strong performance in the U.S., Latin America and Asia Pacific markets in fiscal 2013, it also expects continued challenging trading conditions in Europe. In light of those expectations, the Company is offering the following guidance for fiscal 2013, excluding non-recurring transaction and integration expenses:
| • | Full-year consolidated revenue in the range of $2.7 to $2.8 billion, representing growth in the range of 64.5% to 70.6% versus reported fiscal 2012 revenue of $1.641 billion and growth in the range of 6.0% to 9.9% vs. pro forma combined fiscal 2012 revenue of $2.548 billion for PLG and the legacy WWW business. |
| • | Moderate full-year gross margin expansion. |
| • | Full-year SG&A expenses as a percentage of revenue to modestly increase due to: |
| • | Incremental purchase price amortization of approximately $17 million; |
| • | Incremental non-cash pension expense of approximately $10 million; |
| • | Normalized incentive compensation expense compared to an unusually low level in 2012; and |
| • | Importantly, brand investments to fuel future growth, especially in support of Sperry Top-Sider, Keds and Merrell. |
| • | Full-year interest expense in the range of $55 million to $60 million, including the amortization of deferred financing costs of approximately $6.7 million. |
| • | Full-year effective tax rate in the range of 24% to 26%. On a reported basis, including the tax benefit of non-recurring charges, we expect a tax rate in the range of 21% to 23%. |
| • | Fully diluted weighted average shares outstanding of approximately 50 million. |
| • | Fully diluted earnings per share, adjusted to exclude non-recurring transaction and integration expenses, in the range of $2.50 to $2.65, representing growth of 9.2% to 15.7% versus the prior year’s adjusted earnings per share. Year-over-year earnings growth will be positively impacted by the full-year inclusion of the acquired brands, but will be suppressed by the absence of the $0.19 per share of non-recurring tax benefits recorded in the first half of 2012 and the incremental SG&A discussed above. Reported fully diluted earnings per share are expected in the range of $2.10 to $2.25. |
| • | Full-year adjusted EBITDA in the range of $330 million to $345 million versus prior year adjusted EBITDA of $220.8 million |
The Company will host a conference call at 8:30 a.m. EST today to discuss these results and current business trends. To listen to the call at the Company’s website, go to www.wolverineworldwide.com, click on “Investor Relations” in the navigation bar, and then click on “Webcasts & Presentations” from the side navigation bar of the “Investor Relations” page. To listen to the webcast, your computer must have a streaming 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 Company’s website through April 12, 2013.
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world’s leading marketers of branded casual, active lifestyle, work, outdoor sport, athletic, children’s and uniform footwear and apparel. The Company’s portfolio of highly recognized brands includes: Merrell®, Sperry Top-Sider®, Hush Puppies®, Saucony®, Wolverine®, Keds®, Stride Rite®, Sebago®, Cushe®, Chaco®, Bates®, HYTEST®, and Soft Style®. The Company also is the global footwear licensee of popular brands including Cat®, Harley-Davidson® and Patagonia®. The Company’s products are carried by leading retailers in the U.S. and globally in approximately 200 countries and territories. For additional information, please visit our website, www.wolverineworldwide.com.
This press release contains forward-looking statements. In addition, words such as “estimates,” “anticipates,” “believes,” “forecasts,” “plans,” “predicts,” “projects,” “is likely,” “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. Risk Factors include, among others: the Company’s ability to realize the benefits of the PLG acquisition on a timely basis or at all; the Company’s ability to combine its legacy businesses and PLG successfully or in a timely and cost-efficient manner; the degree of business disruption relating to the PLG acquisition; the Company’s ability to successfully develop its brands and businesses; changes in interest rates, tax laws, duty structures, tariffs, quotas or applicable assessments in countries of import and export including anti-dumping measures and trade defense actions; changes in consumer preferences, spending patterns, buying patterns or price sensitivity; changes in future pension funding requirements and pension expenses; the ability to secure and protect owned intellectual property or use licensed intellectual property; cancellation of orders for future delivery, or the failure of the Department of Defense to exercise future purchase options, award new contracts or the cancellation of existing contracts by the Department of Defense or other military purchasers; changes in planned customer demand, re-orders or at-once orders; changes in relationships with, including the loss of, significant customers; the availability and pricing of footwear manufacturing capacity; reliance on foreign sourcing; failure of international licensees and distributors to meet sales goals or to make timely payments on amounts owed; disruption of technology systems; regulatory or other changes affecting the supply or price of materials used in manufacturing; the impact of regulatory or legal proceedings and legal compliance risks; the availability of power, labor and resources in key foreign sourcing countries, including China; the cost, availability and management of raw materials, inventories, services and labor for owned and contract manufacturers; the impact of competition and pricing; the impact of changes in the value of foreign currencies; the development of new initiatives; the risks of doing business in developing countries, and politically or economically volatile areas; retail buying patterns; consolidation in the retail sector; changes in economic and market conditions; acts and effects of war and terrorism; seasonality and weather; problems affecting the Company’s distribution system, including service interruptions at shipping and receiving ports; the failure to maintain the security of personally identifiable and other information of customers, stockholders and employees; and additional factors discussed in the Company’s 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)
| 4th Quarter Ended | Fiscal Year Ended | |||||||||||||||
| December 29, | December 31, | December 29, | December 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenue |
$ | 652,245 | $ | 406,466 | $ | 1,640,838 | $ | 1,409,068 | ||||||||
| Cost of products sold |
408,420 | 256,313 | 1,008,197 | 852,316 | ||||||||||||
| Non-recurring transaction and integration costs |
4,481 | — | 4,481 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross Profit |
239,344 | 150,153 | 628,160 | 556,752 | ||||||||||||
| Gross margin |
36.7 | % | 36.9 | % | 38.3 | % | 39.5 | % | ||||||||
| Selling, general and administrative expenses |
207,152 | 119,210 | 481,899 | 386,534 | ||||||||||||
| Non-recurring transaction and integration costs |
24,608 | — | 32,537 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating Expenses |
231,760 | 119,210 | 514,436 | 386,534 | ||||||||||||
| Operating expenses as a % of revenue |
35.5 | % | 29.3 | % | 31.4 | % | 27.4 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Operating Profit |
7,584 | 30,943 | 113,724 | 170,218 | ||||||||||||
| Operating margin |
1.2 | % | 7.6 | % | 6.9 | % | 12.1 | % | ||||||||
| Interest expense, net |
13,001 | 378 | 14,032 | 1,025 | ||||||||||||
| Non-recurring acquisition related interest expense |
3,754 | — | 5,197 | — | ||||||||||||
| Other (income) expense, net |
(978 | ) | 147 | 317 | 283 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 15,777 | 525 | 19,546 | 1,308 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Earnings (loss) before income taxes |
(8,193 | ) | 30,418 | 94,178 | 168,910 | |||||||||||
| Income taxes |
(4,694 | ) | 7,407 | 13,414 | 45,623 | |||||||||||
| Effective tax rate |
57.3 | % | 24.4 | % | 14.2 | % | 27.0 | % | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net earnings (loss) |
(3,499 | ) | 23,011 | 80,764 | 123,287 | |||||||||||
| Net earnings attributable to noncontrolling interests |
223 | — | 78 | — | ||||||||||||
|
|
|
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|
|
|
|
|
|||||||||
| Net earnings (loss) attributable to Wolverine Worldwide |
$ | (3,722 | ) | $ | 23,011 | $ | 80,686 | $ | 123,287 | |||||||
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|
|||||||||
| Diluted earnings per share |
$ | (0.08 | ) | $ | 0.47 | $ | 1.63 | $ | 2.48 | |||||||
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|
|||||||||
| Supplemental information: |
||||||||||||||||
| Net earnings (loss) used to calculate diluted earnings per share |
$ | (3,722 | ) | $ | 22,314 | $ | 79,074 | $ | 120,990 | |||||||
| Shares used to calculate diluted earnings per share |
47,804 | 47,957 | 48,514 | 48,728 | ||||||||||||
| Weighted average shares outstanding |
49,152 | 48,209 | 48,816 | 48,911 | ||||||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
($000s)
| December 29, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS: |
||||||||
| Cash & cash equivalents |
$ | 171,411 | $ | 140,012 | ||||
| Receivables |
353,615 | 219,963 | ||||||
| Inventories |
466,230 | 231,738 | ||||||
| Other current assets |
83,669 | 42,783 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,074,925 | 634,496 | ||||||
| Property, plant & equipment, net |
149,728 | 78,489 | ||||||
| Goodwill and other non-amortizable intangibles |
1,139,725 | 56,269 | ||||||
| Other assets |
250,056 | 82,398 | ||||||
|
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|
|||||
| Total Assets |
$ | 2,614,434 | $ | 851,652 | ||||
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|||||
| LIABILITIES & EQUITY: |
||||||||
| Current maturities on long-term debt |
$ | 30,750 | $ | 515 | ||||
| Accounts payable and other accrued liabilities |
288,584 | 148,163 | ||||||
|
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|
|
|
|||||
| Total current liabilities |
319,334 | 148,678 | ||||||
| Long-term debt |
1,219,250 | — | ||||||
| Other non-current liabilities |
432,153 | 124,324 | ||||||
| Stockholders’ equity |
643,697 | 578,650 | ||||||
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|
|||||
| Total Liabilities & Equity |
$ | 2,614,434 | $ | 851,652 | ||||
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|||||
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($000s)
| Fiscal Year Ended | ||||||||
| December 29, | December 31, | |||||||
| 2012 | 2011 | |||||||
| OPERATING ACTIVITIES: |
||||||||
| Net earnings |
$ | 80,764 | $ | 123,287 | ||||
| Adjustments necessary to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
27,651 | 15,907 | ||||||
| Deferred income taxes |
(4,248 | ) | 7,676 | |||||
| Stock-based compensation expense, net of tax benefits |
5,060 | 10,819 | ||||||
| Pension expense |
27,902 | 17,502 | ||||||
| Pension contribution |
(26,657 | ) | (31,800 | ) | ||||
| Other |
4,802 | 5,564 | ||||||
| Changes in operating assets and liabilities |
(23,634 | ) | (70,141 | ) | ||||
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|
|
|
|||||
| Net cash provided by operating activities |
91,640 | 78,814 | ||||||
| INVESTING ACTIVITIES: |
||||||||
| Business acquisition, net of cash acquired |
(1,225,880 | ) | — | |||||
| Investment in JVs |
(2,942 | ) | — | |||||
| Additions to property, plant and equipment |
(14,942 | ) | (19,397 | ) | ||||
| Other |
(2,342 | ) | (3,186 | ) | ||||
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|
|||||
| Net cash used in investing activities |
(1,246,106 | ) | (22,583 | ) | ||||
| FINANCING ACTIVITIES: |
||||||||
| Net (payments) borrowings under revolver |
(11,000 | ) | 11,000 | |||||
| Payments of long term debt |
(25,515 | ) | (530 | ) | ||||
| Proceeds from issuance of long term debt |
1,275,000 | — | ||||||
| Debt issuance costs |
(40,121 | ) | — | |||||
| Cash dividends paid |
(23,648 | ) | (22,737 | ) | ||||
| Purchase of common stock for treasury |
(14,122 | ) | (67,388 | ) | ||||
| Other |
22,795 | 17,338 | ||||||
|
|
|
|
|
|||||
| Net cash provided by (used in) financing activities |
1,183,389 | (62,317 | ) | |||||
| Effect of foreign exchange rate changes |
2,476 | (4,302 | ) | |||||
|
|
|
|
|
|||||
| Increase (decrease) in cash and cash equivalents |
31,399 | (10,388 | ) | |||||
| Cash and cash equivalents at beginning of year |
140,012 | 150,400 | ||||||
|
|
|
|
|
|||||
| Cash and cash equivalents at end of year |
$ | 171,411 | $ | 140,012 | ||||
|
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|
|
|
|||||
WOLVERINE WORLD WIDE, INC.
REVENUE BY OPERATING GROUP
(Unaudited)
($000s)
| 4th Quarter Ended | ||||||||||||||||||||||||
| December 29, 2012 | December 31, 2011 | Change | ||||||||||||||||||||||
| Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
| Outdoor Group |
$ | 143,511 | 22.0 | % | $ | 141,084 | 34.7 | % | $ | 2,427 | 1.7 | % | ||||||||||||
| Heritage Group |
170,812 | 26.2 | % | 158,365 | 39.0 | % | 12,447 | 7.9 | % | |||||||||||||||
| Lifestyle Group |
58,913 | 9.0 | % | 57,286 | 14.1 | % | 1,627 | 2.8 | % | |||||||||||||||
| Performance + Lifestyle Group |
150,238 | 23.0 | % | — | — | 150,238 | — | |||||||||||||||||
| Other |
7,470 | 1.2 | % | 5,044 | 1.2 | % | 2,426 | 48.1 | % | |||||||||||||||
|
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|||||||||||||
| Total branded footwear, apparel and licensing revenue |
530,944 | 81.4 | % | 361,779 | 89.0 | % | 169,165 | 46.8 | % | |||||||||||||||
| Retail* |
109,672 | 16.8 | % | 37,133 | 9.1 | % | 72,539 | 195.3 | % | |||||||||||||||
| Other business units |
11,629 | 1.8 | % | 7,554 | 1.9 | % | 4,075 | 53.9 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Revenue |
$ | 652,245 | 100.0 | % | $ | 406,466 | 100.0 | % | $ | 245,779 | 60.5 | % | ||||||||||||
|
|
|
|
|
|
|
|
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|
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|
|||||||||||||
| Fiscal Year Ended | ||||||||||||||||||||||||
| December 29, 2012 | December 31, 2011 | Change | ||||||||||||||||||||||
| Revenue | % of Total | Revenue | % of Total | $ | % | |||||||||||||||||||
| Outdoor Group |
$ | 545,259 | 33.2 | % | $ | 551,789 | 39.2 | % | $ | (6,530 | ) | -1.2 | % | |||||||||||
| Heritage Group |
502,738 | 30.6 | % | 500,283 | 35.5 | % | 2,455 | 0.5 | % | |||||||||||||||
| Lifestyle Group |
203,457 | 12.4 | % | 206,276 | 14.6 | % | (2,819 | ) | -1.4 | % | ||||||||||||||
| Performance + Lifestyle Group |
150,238 | 9.2 | % | — | — | 150,238 | — | |||||||||||||||||
| Other |
17,372 | 1.1 | % | 15,720 | 1.1 | % | 1,652 | 10.5 | % | |||||||||||||||
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|
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|
|||||||||||||
| Total branded footwear, apparel and licensing revenue |
1,419,064 | 86.5 | % | 1,274,068 | 90.4 | % | 144,996 | 11.4 | % | |||||||||||||||
| Retail* |
183,926 | 11.2 | % | 101,960 | 7.2 | % | 81,966 | 80.4 | % | |||||||||||||||
| Other business units |
37,848 | 2.3 | % | 33,040 | 2.3 | % | 4,808 | 14.6 | % | |||||||||||||||
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|
|
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|
|
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|
|
|
|||||||||||||
| Total Revenue |
$ | 1,640,838 | 100.0 | % | $ | 1,409,068 | 100.0 | % | $ | 231,770 | 16.4 | % | ||||||||||||
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| * | Includes revenue from PLG’s direct to consumer business. |
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 FISCAL 2012 Q4 AND FULL-YEAR REVENUE AS REPORTED TO REVENUE
ADJUSTED TO EXCLUDE PLG*
(Unaudited)
($ millions)
| GAAP Basis | PLG Revenue for the | Legacy WWW | ||||||||||
| 16 Weeks Ended | “Stub Period” Ended | 16 Weeks Ended | ||||||||||
| December 29, 2012 | December 29, 2012 | December 29, 2012 | ||||||||||
| Revenue |
$ | 652.2 | $ | (219.4 | ) | $ | 432.8 | |||||
| PLG Revenue for the | ||||||||||||
| GAAP Basis | “Stub Period” Ended | Legacy WWW | ||||||||||
| Full-Year 2012 | December 29, 2012 | Full-Year 2012 | ||||||||||
| Revenue |
$ | 1,640.8 | $ | (219.4 | ) | $ | 1,421.4 | |||||
RECONCILIATION OF FISCAL 2012 FULL-YEAR OPERATING EXPENSES AS REPORTED TO
OPERATING EXPENSES ADJUSTED TO EXCLUDE BOTH RECURRING AND NON-RECURRING
ACQUISITION RELATED COSTS AND PLG OPERATING EXPENSES*
(Unaudited)
($ millions)
| Recurring & Non-recurring | PLG Operating Expenses | |||||||||||||||
| GAAP Basis | Acquisition | for the “Stub Period” Ended | As Adjusted | |||||||||||||
| Full-Year 2012 | Related Costs | December 29, 2012 (a) | Full-Year 2012 | |||||||||||||
| Operating expenses |
$ | 514.4 | $ | (33.7 | ) | $ | (86.0 | ) | $ | 394.7 | ||||||
| Percentage change from prior year | 33.1 | % | 2.1 | % | ||||||||||||
RECONCILIATION OF FISCAL 2012 Q4 AND FULL-YEAR EPS AS REPORTED TO EPS ADJUSTED
TO EXCLUDE NON-RECURRING ACQUISITION RELATED COSTS*
(Unaudited)
| GAAP Basis | Non-recurring | As Adjusted | ||||||||||
| 16 Weeks Ended | Acquisition | 16 Weeks Ended | ||||||||||
| December 29, 2012 | Related Costs | December 29, 2012 | ||||||||||
| Diluted earnings per share |
$ | (0.08 | ) | $ | 0.56 | $ | 0.48 | |||||
| Non-recurring | ||||||||||||
| GAAP Basis | Acquisition | As Adjusted | ||||||||||
| Full-Year 2012 | Related Costs | Full-Year 2012 | ||||||||||
| Diluted earnings per share |
$ | 1.63 | $ | 0.66 | $ | 2.29 | ||||||
RECONCILIATION OF FISCAL 2012 FULL-YEAR REVENUE AS REPORTED TO REVENUE
ADJUSTED TO INCLUDE PLG FULL-YEAR 2012 REVENUE*
(Unaudited)
($ millions)
| GAAP Basis | PLG Pre “Stub Period” | As Adjusted | ||||||||||
| Full-Year 2012 | Revenue (b) | Full-Year 2012 | ||||||||||
| Revenue |
$ | 1,640.8 | $ | 907.4 | $ | 2,548.2 | ||||||
RECONCILIATION OF FISCAL 2013 FULL-YEAR EPS AND TAX GUIDANCE ADJUSTED TO EXCLUDE
NON-RECURRING ACQUISITION RELATED COSTS*
(Unaudited)
| GAAP Basis | Non-recurring | As Adjusted | ||||||
| Full-Year 2013 | Acquisition | Full-Year 2013 | ||||||
| Guidance | Related Costs | Guidance | ||||||
| Diluted earnings per share |
$2.10 — 2.25 | $ | 0.40 | $2.50 — 2.65 | ||||
| Percentage change from prior year |
28.8% — 38.0% | 9.2% — 15.7% | ||||||
| Effective tax rate |
21.0% — 23.0% | 36.5 | % (c) | 24.0% — 26.0% | ||||
RECONCILIATION OF FISCAL 2012 FULL-YEAR NET EARNINGS AS REPORTED AND FISCAL 2013 FULL-YEAR EARNINGS GUIDANCE TO EBITDA AND ADJUSTED EBITDA*
(Unaudited)
($ millions)
| 2012 | 2013 EBITDA | 2013 EBITDA | ||||||||||
| Adjusted EBITDA | Guidance (Low) | Guidance (High) | ||||||||||
| Reported net earnings |
$ | 80.7 | $ | 107.0 | $ | 114.5 | ||||||
| Non-recurring transaction and integration costs |
37.0 | 31.5 | 31.5 | |||||||||
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| Adjusted net earnings |
$ | 117.7 | $ | 138.5 | $ | 146.0 | ||||||
| Add back: |
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| Income tax expense |
13.4 | 30.5 | 32.5 | |||||||||
| Interest expense |
19.2 | 57.5 | 57.5 | |||||||||
| Depreciation & amortization |
27.7 | 50.0 | 53.0 | |||||||||
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| EBITDA (d) |
$ | 178.0 | $ | 276.5 | $ | 289.0 | ||||||
| Stock based compensation expense |
15.0 | 15.5 | 18.0 | |||||||||
| Pension expense |
27.9 | 38.0 | 38.0 | |||||||||
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| Adjusted EBITDA (d) |
$ | 220.9 | $ | 330.0 | $ | 345.0 | ||||||
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| (a) | PLG operating expenses for the “stub period” include $7.0 million of purchase price amortization. |
| (b) | This adjustment presents the Company’s revenue as if PLG was acquired on January 1, 2012. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. |
| (c) | Represents the effective tax rate for non-recurring acquisition related costs incurred in the U.S. |
| (d) | EBITDA, a measure used by management to evaluate operating performance, is defined as net earnings plus (i) income tax expense, (ii) net interest expense, and (iii) depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted to exclude noncash items, unusual items and other items. EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net earnings as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Management presents EBITDA and Adjusted EBITDA because management believes these are useful supplemental measures in evaluating the performance of its operating business and provides greater transparency with respect to results of operations. |
| * | 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 acquisition related revenues, costs and earnings. 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 and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis. 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. |