SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the second twelve week accounting period ended June 14, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number 1-6024
WOLVERINE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 38-1185150
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
9341 COURTLAND DRIVE, ROCKFORD, MICHIGAN 49351
(Address of Principal Executive Offices) (Zip Code)
(616) 866-5500
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X___ No _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
There were 42,804,785 shares of Common Stock, $1 par value,
outstanding as of July 25, 1997, of which 584,038 shares are held
as Treasury Stock. The shares outstanding, excluding shares held
in treasury, have been adjusted for the 3-for-2 stock split paid
on May 23, 1997, on shares outstanding at the close of business
on May 2, 1997.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
JUNE 14, DECEMBER 28, JUNE 15,
1997 1996 1996
(UNAUDITED) (AUDITED) (UNAUDITED)
----------- ------------ -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,979 $ 8,534 $ 8,444
Accounts receivable, less allowances
June 14, 1997 - $6,277
December 28, 1996 - $5,634
June 15, 1996 - $4,648 108,516 125,999 81,204
Inventories:
Finished products 125,598 71,346 85,699
Raw materials and work in process 50,147 46,081 43,081
--------- -------- ---------
175,745 117,427 128,780
Other current assets 11,176 12,668 9,372
--------- -------- ---------
TOTAL CURRENT ASSETS 299,416 264,628 227,800
PROPERTY, PLANT & EQUIPMENT
Gross cost 140,994 130,779 117,706
Less accumulated depreciation 70,270 67,776 65,473
--------- -------- ---------
70,724 63,003 52,233
OTHER ASSETS 37,326 33,967 28,450
--------- -------- ---------
TOTAL ASSETS $ 407,466 $361,598 $ 308,483
========= ======== =========
See notes to consolidated condensed financial statements.
-2-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - CONTINUED
(THOUSANDS OF DOLLARS)
JUNE 14, DECEMBER 28, JUNE 15,
1997 1996 1996
(UNAUDITED) (AUDITED) (UNAUDITED)
----------- ------------ -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 3,566 $ 1,026 $ 2,969
Accounts payable and other accrued
liabilities 57,606 68,708 39,034
Current maturities of long-term debt 54 76 73
--------- --------- ---------
TOTAL CURRENT LIABILITIES 61,226 69,810 42,076
LONG-TERM DEBT (less current maturities) 84,235 41,233 42,555
OTHER NONCURRENT LIABILITIES 10,129 11,263 10,370
STOCKHOLDERS' EQUITY
Common Stock - par value $1, authorized
80,000,000 shares; shares issued
(including shares in treasury):
June 14, 1997 - 42,739,721 shares
December 28, 1996 - 42,256,145 shares
June 15, 1996 - 42,532,450 42,739 42,256 42,532
Additional paid-in capital 58,457 53,404 50,587
Retained earnings 163,711 153,475 130,945
Accumulated translation adjustments (333) 79 (351)
Unearned compensation (5,353) (2,908) (3,504)
Cost of shares in treasury:
June 14, 1997 - 583,838 shares
December 28, 1996 - 557,323 shares
June 15, 1996 - 547,591 shares (7,345) (7,014) (6,727)
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 251,876 239,292 213,482
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 407,466 $ 361,598 $ 308,483
========= ========= =========
( ) - Denotes deduction.
See notes to consolidated condensed financial statements.
-3-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
(UNAUDITED)
12 WEEKS ENDED 24 WEEKS ENDED
--------------------- ----------------------
JUNE 14, JUNE 15, JUNE 14, JUNE 15,
1997 1996 1997 1996
-------- -------- -------- --------
NET SALES AND OTHER
OPERATING INCOME $ 127,789 $ 94,153 $ 257,090 $ 177,995
Cost of products sold 86,972 62,836 177,884 121,355
---------- ---------- ---------- ----------
GROSS MARGIN 40,817 31,317 79,206 56,640
Selling and administrative expenses 28,681 23,162 59,339 43,651
---------- ---------- ---------- ----------
OPERATING INCOME 12,136 8,155 19,867 12,989
OTHER EXPENSES (INCOME):
Interest expense 1,286 833 2,263 1,459
Interest income (123) (149) (291) (556)
Other - net 145 (382) 159 (705)
---------- ---------- ---------- ----------
1,308 302 2,131 198
---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 10,828 7,853 17,736 12,791
Income taxes 3,460 2,420 5,675 3,965
---------- ---------- ---------- ----------
NET EARNINGS $ 7,368 $ 5,433 $ 12,061 $ 8,826
========== ========== ========== ==========
EARNINGS PER SHARE:
Primary $ .17 $ .13 $ .28 $ .21
========== ========== ========== ==========
Fully diluted $ .17 $ .13 $ .28 $ .21
========== ========== ========== ==========
CASH DIVIDENDS PER SHARE $ .0217 $ .0178 $ .0434 $ .0356
========== ========== ========== ==========
SHARES USED FOR NET
EARNINGS PER SHARE COMPUTATION:
Primary 43,542,526 42,667,869 43,436,539 42,496,710
========== ========== ========== ==========
Fully diluted 43,619,613 42,784,623 43,568,068 42,677,578
========== ========== ========== ==========
See notes to consolidated condensed financial statements.
-4-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
24 WEEKS ENDED
------------------------
JUNE 14, JUNE 15,
1997 1996
-------- --------
OPERATING ACTIVITIES
Net earnings $ 12,061 $ 8,826
Depreciation, amortization and other non-cash items 1,327 (161)
Unearned compensation 575 356
Changes in operating assets and liabilities:
Accounts receivable 17,483 12,676
Inventories (58,318) (31,275)
Other current assets 1,492 1,275
Accounts payable and other accrued liabilities (11,102) 2,074
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (36,482) (6,229)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 54,003 12,000
Payments of long-term borrowings (11,023) (50)
Proceeds from short-term borrowings 2,540 630
Cash dividends (1,825) (1,474)
Proceeds from shares issued under employee stock plams 2,185 1,587
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 45,880 12,693
INVESTING ACTIVITIES
Purchase of business product line (22,750)
Additions to property, plant and equipment (11,858) (5,841)
Net (increase) decrease in notes receivable (382) 3,796
Other (1,713) (313)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (13,953) (25,108)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (4,555) (18,644)
Cash and cash equivalents at beginning of year 8,534 27,088
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
SECOND ACCOUNTING PERIOD $ 3,979 $ 8,444
=========== ===========
( ) - Denotes reduction in cash and cash equivalents.
See notes to consolidated condensed financial statements.
-5-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 14, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the informa-
tion and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting solely of normal recurring accruals) considered necessary for fair
presentation have been included. For further information, refer to the consoli-
dated financial statements and footnotes included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 28, 1996. Certain
amounts in 1996 have been reclassified to conform with the presentation used in
1997.
NOTE B - FLUCTUATIONS
The Company's sales are seasonal, particularly in its major divisions, The
Hush Puppies Company, the Wolverine Footwear Group, the Caterpillar
Footwear Group, the Wolverine Slipper Group and the Wolverine Leather Division.
Seasonal sales patterns and the fact that the fourth quarter has sixteen or
seventeen weeks as compared to twelve weeks in each of the first three quarters
cause significant differences in sales and earnings from quarter to quarter.
These differences, however, follow a consistent pattern each year.
NOTE C - COMMON STOCK
On April 17, 1997 and July 11, 1996, the Company announced 3-for-2 stock
splits on shares outstanding on May 2, 1997 and July 26, 1996 and paid May 23,
1997 and August 16, 1996, respectively. All share and per share data have
been retroactively adjusted for the increased shares resulting from the
stock splits.
In February 1997, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 129, "Disclosure of Information about
Capital Structure" ("FAS No. 129"). FAS No. 129 consolidates existing
guidance relating to disclosure about a company's capital structure and will
be effective for the Company's fiscal year ending January 3, 1998. The
effect of adopting FAS No. 129 is not expected to have a material effect on
previously reported amounts.
NOTE D - EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average shares
of common stock outstanding during each period assuming that the stock splits
described in Note C had been completed at the beginning of the earliest
-6-
period presented. Common stock equivalents (stock options) are included in
the computation of primary and fully diluted earnings per share.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS No.
128"). FAS No. 128 changes the method for computing and presenting earnings
per share and will be effective for the Company's fiscal year ending January
3, 1998. The effect of adopting FAS No. 128 is not expected to have a
material effect on previously reported earnings per share amounts.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - COMPARISONS OF SECOND QUARTER AND YEAR-TO-DATE 1997
TO SECOND QUARTER AND YEAR-TO-DATE 1996
Second quarter net sales and other operating income of $127.8 million for
1997 exceeded the 1996 level by $33.6 million (a 35.7% increase), and 1997
year-to-date net sales of $257.1 million compares to $178.0 million
recorded for the comparable period of 1996 (a 44.4% increase). All
divisions recorded an increase in net sales and other operating income for
the second quarter of 1997. The Wolverine Footwear Group accounted for $7.0
million (19.2%) of the increase in quarterly net sales and other operating
income and $21.1 million (31.6%) of the year-to-date increase. The
Caterpillar Footwear Group continued its strong growth rate showing a $5.7
million (88.6%) increase over the 1996 second quarter net sales and other
operating income and a $10.7 million (77.6%) increase for year-to-date 1997
over year-to-date 1996. The Hush Puppies Company, excluding Hush Puppies UK,
Ltd., recorded a net sales and other operating income increase of $2.6
million (7.1%) for second quarter 1997 and a $12.8 million (18.4%) increase
for year-to-date 1997. Hush Puppies UK Ltd. reported $11.7 million in net
sales for the second quarter of 1997. The Hush Puppies UK Ltd. results of
operations were first included in the fourth quarter of 1996. The Wolverine
Leather Division recognized a $5.3 million (87.7%) increase in net sales and
other operating income for the second quarter of 1997 and a $9.9 million
(93.3%) improvement for the year-to-date 1997. The Hush Puppies Retail
Division net sales and other operating income was up $1.3 million or 19.4%
for the second quarter and $2.3 million or 19.6% for the year-to-date 1997.
The Wolverine Slipper Group showed improvement with increased net sales and
other operating income of $2.2 million for the quarter and recorded a
decrease in net sales and other operating income for the year-to-date 1997
of $1.3 million.
Year-to-date net sales and other operating income for The Hush Puppies
Wholesale Division increased $8.9 million or 18.1% over the 1996 level. The
Hush Puppies Wholesale Division growth continues to be fueled by expanded
distribution to major U.S. retailers. Net sales and other operating income
for the Hush Puppies International Division increased $0.6 million or 11.8%
year-to-date 1997 over the respective period of 1996. Despite the sluggish
-7-
retail market, the Hush Puppies Retail Division's net sales and other
operating income increased $2.3 million (19.6%) year-to-date as strong
product offerings helped boost sales. Hush Puppies UK Ltd. performed in
line with expectations reporting $26.4 million in net sales for year-to-date
1997. The Hush Puppies UK Ltd. operations were first included in the fourth
quarter of 1996.
The Wolverine Footwear Group reported a 1997 year-to-date increase in net
sales and other operating income of $21.1 million or 31.6% over the
respective period of 1996. The DuraShocks SR product continued to
be strong, helping Wolverine Brand Division report a $10.0 million (21.1%)
increase in net sales and other operating income. Hy-Test reported a $0.3
million increase in net sales and other operating income for the second
quarter of 1997. Bates Division net sales increased $1.5 million or 12.8%
year-to-date 1997 as compared to year-to-date 1996 reflecting penetration
into military and export markets.
The Caterpillar Footwear Group recognized a $10.7 million or 77.6% increase
for year-to-date 1997 as compared to year-to-date 1996. Continued
establishment of the domestic wholesale business and exceptional brand appeal
around the world continue to drive this business.
The Wolverine Slipper Group is showing improvement with an increase in net
sales and other operating income of $2.2 million over the second quarter
1996 and a decrease of $1.3 million year-to-date 1997 as compared to the same
period of 1996. The branded slipper initiatives continue to perform
consistent with the Company's plan as retail sell through has been good.
The Wolverine Leathers Division boasted a $9.8 million (91.7%) net sales
and other operating income increase over year-to-date 1996 with licensee
and domestic accounts both contributing to the increase. Strong demand for
performance leather and sueded products continue to drive the volume
increases.
Gross margin as a percentage of net sales and other operating income for
the second quarter of 1997 was 31.9% compared to 33.3% for the second quarter
of 1996. Year-to-date gross margin of 30.8% for 1997 compared to 31.8% for
the same period in 1996. The decline in gross margin was primarily a result
of a planned change in business mix. The addition of Hush Puppies UK Ltd.,
and significant growth of the Wolverine Leathers Division ($1.9 million gross
margin increase), both of which operate at lower gross margin levels, had a
dilutive impact on the Company's gross margin. Improved margins of 5.5
percentage points were recognized in the Hush Puppies Wholesale Division
through improved initial pricing margins, increased licensing revenues and
manufacturing and sourcing efficiencies. The Hush Puppies Retail Division
reported a 2.4 percentage point increase in gross margin. The Wolverine
Footwear Group's gross margin remained relatively flat. The Wolverine
Leather Division gross margin level remains in line with recent history which
approximates 20.0%.
-8-
Selling and administrative expenses of $28.7 million for the second quarter
of 1997 increased $5.5 million over the 1996 second quarter level of $23.2
million and as a percentage of net sales and other operating income decreased
to 22.4% in the second quarter of 1997 from 24.6% in the second quarter of
1996. Year-to-date selling and administrative expenses for 1997 of $59.3
million increased $15.6 million over the $43.7 million year-to-date level for
1996 and as a percentage of net sales and other operating income decreased to
23.1% for the year-to-date 1997 from 24.5% in 1996. Investments in branded
marketing initiatives, information system upgrades and costs associated with
fringe benefit and retirement programs all contributed to the increase. If
the acquisitions of Hy-Test, Inc. and Hush Puppies UK Ltd. are eliminated,
selling and administrative expenses as a percentage of net sales and other
operating income would have been 23.7% for the second quarter of 1997 and
24.5% year-to-date.
Interest expense for the second quarter of 1997 was $1.3 million, compared
to $0.8 million for the same period of 1996. Year-to-date interest expense
for 1997 and 1996 was $2.3 million and $1.5 million, respectively. The
increase in interest expense for the second quarter and year-to-date 1997 as
compared to 1996 reflects an increase in borrowings over the 1996 level
resulting from the 1996 acquisitions and working capital requirements.
The 1997 effective income tax rate of 32.0% increased from 31.0% in 1996.
The effective tax rate increased as the non-taxable net earnings of foreign
subsidiaries became a smaller percentage of total consolidated earnings in
1997 as compared to 1996.
Net earnings of $7.4 million for the twelve weeks ended June 14, 1997
compared favorably to earnings of $5.4 million for the respective period of
1996 (a 35.6% increase). Year-to-date net earnings of $21.1 million in
1997 compared with earnings of $8.8 million for the same period of 1996 (a
36.7% increase). Earnings per share of $0.17 post split for the second
quarter 1997 compares to $0.13 post split for the same period of 1996.
Year-to-date earnings per share of $0.28 post split compare to $0.21 post
split for the same period of 1996. Increased earnings are primarily a result
of the items noted above.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities was $36.5 million in 1997 compared to
$6.2 million in 1996. Cash of $50.4 million for 1997 and $15.3 million for
1996 was used to fund working capital requirements. Accounts receivable of
$108.5 million at June 14, 1997 reflect an increase of $27.3 million
(33.6%) over the balance at June 15, 1996 and decreased $17.5 million
(13.9%) from the December 28, 1996 balance. Inventories of $175.7 million
at June 14, 1997 reflect increases of $47.0 million (36.5%) and $58.3
million (49.7%) over the balances at June 15, 1996 and December 28, 1996,
respectively. A portion of the increase in accounts receivable and
inventories was due to the 1996 acquisitions of the assets of Hy-Test, Inc.
-9-
from The Florsheim Shoe Company and Hush Puppies UK Ltd., which on a
combined basis contributed 33.2% and 37.0% of the respective accounts
receivable and inventory increases from June 15, 1996. On a comparable
basis, accounts receivable and inventories at June 14, 1997 increased 35.7%
and 29.6%, respectively, over the amounts at December 28, 1996, which
compares to a year-to-date increase of 23.6% in net sales and other operating
income. Order backlog was approximately 29% higher at June 14, 1997, when
compared to the previous years' second quarter, supporting the need for
increased inventories to meet anticipated future demand in both wholesale and
manufacturing operations. Accounts payable of $57.6 million at June 14,
1997 reflect a $18.6 million (47.6%) increase over the $39.0 million
balance at June 15, 1996 and a $11.1 million (16.2%) decrease over the
$68.7 million balance at December 28, 1996.
Other current assets of $11.2 million at June 14, 1997 compares to $9.4
million at June 15, 1996. The change in deferred taxes accounts for $.8
million of this difference.
Additions to property, plant and equipment of $11.9 million in the second
quarter of 1997 compares to $5.8 million reported during the same period in
1996. The majority of these expenditures are related to the construction
of a new corporate business center, modernization of existing corporate
buildings, expansion of warehouse facilities and purchases of manufacturing
equipment necessary to continue to upgrade the Company's footwear and
leather manufacturing facilities. Depreciation and amortization of $4.7
million in the first half of 1997 compares to $2.9 million in the first
half of 1996. This increase was a result of the capital investments noted
above and the amortization of goodwill related to the two 1996
acquisitions.
The Company maintains short-term borrowing and commercial letter-of-credit
facilities of $84.7 million, of which $38.5 million, $28.5 million and $13.9
million were outstanding at June 14, 1997, December 28, 1996 and June 15,
1996, respectively. Long-term debt, excluding current maturities, of $84.2
million at June 14, 1997 compares to $42.6 million and $41.2 million at
June 15, 1996 and December 28, 1996, respectively. The increase since
December 28, 1996 was a result of the seasonal working capital requirements
of the Company.
It is expected that continued growth of the Company will require increases
in capital funding over the next several years. In the fourth quarter of
1996, the Company renegotiated its long-term revolving debt agreement and
increased the amount available under its credit facilities. The combination
of cash flows from operations and available credit facilities are expected
to be sufficient to meet future capital needs.
The 1997 second quarter dividend declared of $.0217 per share (post split)
of common stock represents approximately a 21.9% increase over the $.0178
per share (post split) declared for the second quarter of 1996. The
-10-
second quarter 1997 dividend is payable August 1, 1997 to stockholders of
record on July 1, 1997. Additionally, shares issued under stock incentive
plans provided cash of $2.2 million in 1997 compared to $1.6 million in 1996.
During 1996, the Company completed two acquisitions. The Company purchased
the work, safety and occupational footwear business of Hy-Test, Inc. from
The Florsheim Shoe Company and the rights to and certain assets of the Hush
Puppies wholesale shoe business in the United Kingdom and Ireland from
British Shoe Corporation, a subsidiary of Sears Plc. The combined purchase
price of these acquisitions was $31.5 million, of which $29.2 million was
paid in cash in 1996. The Company has an active program to evaluate
strategic business acquisitions on a global basis and may, from time to
time, make additional acquisitions.
The current ratio at June 14, 1997 was 4.9 to 1.0 in 1997 compared with 5.4
to 1.0 in 1996. The Company's total debt to total capital ratio increased
to .26 to 1.0 in 1997 from .18 to 1.0 in 1996.
-11-
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
On April 16, 1997, the Company held its 1997 Annual Meeting of
Stockholders. At the meeting, the stockholders voted to approve an
amendment to the Company's Certificate of Incorporation to increase the
Company's authorized capital from 40,000,000 shares of Common Stock, $1.00
par value per share ("Common Stock"), to 80,000,000 shares of Common Stock.
All of the additional shares resulting from the increase in the Company's
authorized Common Stock are of the same class, with the same dividend,
voting and liquidation rights, as shares of Common Stock previously
outstanding. The Company's authorized capital also includes 2,000,000
shares of preferred stock, none of which is currently outstanding.
The newly authorized shares of Common Stock are unreserved and available
for issuance. No further stockholder authorization is required prior to
the issuance of such shares by the Company. Stockholders have no
preemptive rights to acquire shares issued by the Company under its
Certificate of Incorporation, and stockholders did not acquire any such
rights with respect to such additional shares of Common Stock under the
amendment to the Company's Certificate of Incorporation. Under some
circumstances, the issuance of additional shares of Common Stock could
dilute the voting rights, equity and earnings per share of existing
stockholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On April 16, 1997, the Company held its 1997 Annual Meeting of
Stockholders. The purposes of the meeting were: to elect four directors
for three-year terms expiring in 2000; to consider and approve an amendment
to the Company's Certificate of Incorporation to increase the amount of
authorized capital from 40,000,000 shares of Common Stock to 80,000,000
shares of Common Stock; to consider and approve the 1997 Stock Incentive
Plan; to consider and approve the Executive Short-Term Incentive Plan
(Annual Bonus Plan); to consider and approve the Executive Long-Term
Incentive Plan (3-Year Bonus Plan); and to consider and ratify the
appointment of Ernst & Young LLP as the Company's independent auditors for
the current fiscal year.
Four candidates nominated by management were elected by the stockholders to
serve as Directors of the Company at the meeting. The following sets forth
the results of the voting with respect to each candidate:
-12-
NAME OF CANDIDATE SHARES VOTED
----------------- ------------
Alberto L. Grimoldi For 24,134,053
Authority Withheld 98,695
Broker Non-Votes 0
Joseph A. Parini For 24,131,025
Authority Withheld 101,723
Broker Non-Votes 0
Joan Parker For 24,133,542
Authority Withheld 99,206
Broker Non-Votes 0
Elizabeth A. Sanders For 24,134,740
Authority Withheld 98,008
Broker Non-Votes 0
The following persons remained as directors of the Company with terms
expiring in 1998: Geoffrey B. Bloom, David T. Kollat, David P. Mehney and
Timothy J. O'Donovan. The following persons remained as directors of the
Company with terms expiring in 1999: Daniel T. Carroll and Phillip D.
Matthews.
The stockholders also voted to approve the amendment to the Certificate of
Incorporation to increase the amount of authorized capital stock as
described in Item 2 of Part II of this Report on Form 10-Q. The following
sets forth the results of the voting with respect to that matter:
SHARES VOTED
------------
For 22,776,814
Against 1,429,804
Abstentions 26,131
Broker Non-votes 0
The stockholders also voted to approve the 1997 Stock Incentive Plan. The
following sets forth the results of the voting with respect to that matter:
-13-
SHARES VOTED
------------
For 19,729,726
Against 4,461,796
Abstentions 41,226
Broker Non-Votes 0
The stockholders also voted to approve the Executive Short-Term Incentive
Plan (Annual Bonus Plan). The following sets forth the results of the
voting with respect to that matter:
SHARES VOTED
------------
For 23,842,358
Against 343,256
Abstentions 47,134
Broker Non-Votes 0
The stockholders also voted to approve the Executive Long-Term Incentive
Plan (3-Year Bonus Plan). The following sets forth the results of the
voting with respect to that matter:
SHARES VOTED
------------
For 23,849,191
Against 336,565
Abstentions 46,992
Broker Non-Votes 0
The stockholders also voted to ratify the appointment of Ernst & Young LLP
by the Board of Directors as independent auditors of the Company for the
current fiscal year. The following sets forth the results of the voting
with respect to that matter:
-14-
SHARES VOTED
------------
For 24,173,899
Against 20,833
Abstentions 38,016
Broker Non-votes 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The following documents are filed as exhibits to this
Report on Form 10-Q:
EXHIBIT
NUMBER DOCUMENT
3.1 Certificate of Incorporation, as amended.
3.2 Amended and Restated Bylaws. Previously filed as Exhibit
3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
4.1 Certificate of Incorporation, as amended. See Exhibit 3.1
above.
4.2 Rights Agreement dated as of April 17, 1997. Previously
filed with the Company's Form 8-A filed April 12, 1997.
Here incorporated by reference.
4.3 Credit Agreement dated as of October 11, 1996 with NBD Bank,
NA as Agent. Previously filed as Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996. Here incorporated by reference.
4.4 Note Agreement dated as of August 1, 1994 relating to 7.81%
Senior Notes. Previously filed as Exhibit 4(d) to the
Company's Quarterly Report on Form 10-Q for the period ended
September 10, 1994. Here incorporated by reference.
4.5 The Registrant has several classes of long-term debt
instruments outstanding in addition to that described in
Exhibits 4.3 and 4.4 above. The amount of none of these
classes of debt outstanding on June 14, 1997 exceeded 10% of
the Company's total consolidated assets. The Company agrees
-15-
to furnish copies of any agreement defining the rights of
holders of any such long-term indebtedness to the Securities
and Exchange Commission upon request.
10.1 1997 Stock Incentive Plan. Previously filed as Appendix A
to the Company's Definitive Proxy Statement with respect to
the Company's Annual Meeting of Stockholders held on April
16, 1997. Here incorporated by reference.
10.2 Executive Short-Term Incentive Plan (Annual Bonus Plan).
Previously filed as Appendix B to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
10.3 Executive Long-Term Incentive Plan (3-Year Bonus Plan).
Previously filed as Appendix C to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K. The Company filed a report on Form 8-K on
April 22, 1997 to report under Item 5, "Other Events," that on April 16,
1997, the Board of Directors of the Company declared a dividend of one and
one-half (1.5) Rights for each outstanding share of the Company's common
stock (the "Common Stock") outstanding on May 8, 1997. After the payment
of the Company's 3 for 2 stock split paid on May 23, 1997, one Right is
associated with each outstanding share of Common Stock. Each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share of Series B Junior Participating Preferred Stock, $1.00 par value
per share, at a price of $120 per Unit, subject to adjustment upon the
occurrence of certain events specified in the Rights Agreement filed as
Exhibit 4.2 to this report on Form 10-Q.
-16-
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 thereunto duly authorized.
WOLVERINE WORLD WIDE, INC.
AND SUBSIDIARIES
JULY 29, 1997 /S/STEPHEN L. GULIS, JR.
Date Stephen L. Gulis, Jr.
Executive Vice President, Chief Financial
Officer and Treasurer (Duly Authorized
Signatory for Registrant and Principal Financial
Officer and Duly Authorized Signatory for
Registrant)
-17-
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3.1 Certificate of Incorporation, as amended.
3.2 Amended and Restated Bylaws. Previously filed as Exhibit
3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
4.1 Certificate of Incorporation, as amended. See Exhibit 3.1
above.
4.2 Rights Agreement dated as of April 17, 1997. Previously
filed with the Company's Form 8-A filed April 12, 1997.
Here incorporated by reference.
4.3 Credit Agreement dated as of October 11, 1996 with NBD Bank,
NA as Agent. Previously filed as Exhibit 4.3 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996. Here incorporated by reference.
4.4 Note Agreement dated as of August 1, 1994 relating to 7.81%
Senior Notes. Previously filed as Exhibit 4(d) to the
Company's Quarterly Report on Form 10-Q for the period ended
September 10, 1994. Here incorporated by reference.
4.5 The Registrant has several classes of long-term debt
instruments outstanding in addition to that described in
Exhibits 4.3 and 4.4 above. The amount of none of these
classes of debt outstanding on June 14, 1997 exceeded 10% of
the Company's total consolidated assets. The Company agrees
to furnish copies of any agreement defining the rights of
holders of any such long-term indebtedness to the Securities
and Exchange Commission upon request.
10.1 1997 Stock Incentive Plan. Previously filed as Appendix A
to the Company's Definitive Proxy Statement with respect to
the Company's Annual Meeting of Stockholders held on April
16, 1997. Here incorporated by reference.
10.2 Executive Short-Term Incentive Plan (Annual Bonus Plan).
Previously filed as Appendix B to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
10.3 Executive Long-Term Incentive Plan (3-Year Bonus Plan).
Previously filed as Appendix C to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
27 Financial Data Schedule.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
WOLVERINE WORLD WIDE, INC.
FIRST. The name of the corporation is
WOLVERINE WORLD WIDE, INC.
SECOND. The address of its registered office in the State of Delaware
is No. 100 West Tenth Street, in the City of Wilimington, County of New
Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted by the corporation is to engage in any lawful act or activity for
which the corporations may be organized under the General Corporation Law
of the State of Delaware, as amended from time to time.
FOURTH. The total number of shares which the corporation shall have
authority to issue and have outstanding is Eighty-Two Million (82,000,000)
shares, of which Two Million (2,000,000) shares shall be Preferred Stock,
par value One Dollar ($1) per share, and Eighty Million (80,000,000) shares
shall be Common Stock, par value One Dollar ($1) per share.
The Board of Directors is authorized to cause Preferred Stock, $1
par value, to be issued from time to time in one or more series, with such
voting powers, full or limited, or no voting powers, and such designations,
provisions, and relative, participating, preferential or other special
rights and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions providing for the
issue of such stock adopted by the Board of Directors. The Board of
Directors is expressly authorized to adopt such resolution or resolutions
and issue such stock from time to time as may seem desirable.
The authorized shares of Common Stock of the par value of $1 per
share are all of one class with equal voting powers, and each such share
shall be equal to every other such share.
FIFTH. The name and mailing address of the Incorporator are as
follows:
Name Mailing Address
B. J. Consono 100 West Tenth Street
Wilmington, Delaware
SIXTH. The name and mailing address of each person who is to serve as
a director until the first annual meeting of the stockholders or until a
successor is elected and qualified, are as follows:
Name Mailing Address
Ray R. Eppert 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
E. Vincent Erickson 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
C. Robert Evenson 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Gordon C. Krause 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Jack A. Krause 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Richard H. Krause 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Louis J. Schaefer 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Dr. Alfred L. Seelye 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
J. Austen Wood 9341 Courtland Drive, N.E.
Rockford, Michigan 49341
Subsequent elections of directors need not be by ballot unless
the By-Laws of the corporation shall so provide.
SEVENTH. The corporation is to have perpetual existence.
-2-
EIGHTH. The Board of Directors shall have the power, at any regular
or special meeting at which a quorum is present, by the affirmative vote of
a majority of the whole Board:
To make, alter or repeal the By-Laws of the corporation.
To authorize and cause to be executed mortgages and liens
upon the real and personal property of the corporation.
To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which it
was created.
To designate one or more committees, each committee to
consist of two or more of the directors of the corporation,
which, to the extent provided in the resolution or in the By-Laws
of the corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation
to be affixed to all papers which may require it. Such committee
or committees shall have such name or names as may be stated in
the By-Laws of the corporation or as may be determined from time
to time by resolution adopted by the Board of Directors.
NINTH. (a) Any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, may be indemnified by the
corporation against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
-3-
(b) Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise may be indemnified by the
corporation against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation
and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought
shall determine upon application, that despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery of the State of Delaware or such other court shall deem
proper.
(c) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of this section. Such determination shall
be made (1) by the Board of Directors by a majority of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel (who may
be the regular counsel of the corporation) in a written opinion, or (3) by
the stockholders.
(d) To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors in the manner provided in subsection (c) upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this
section.
-4-
(f) The indemnification provided by this section shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
director or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of
such a person.
(g) The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
section.
TENTH. No director of the corporation shall be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty by such director as a director; provided however, that this
Article TENTH shall not eliminate or limit the liability of a director to
the extent provided by applicable law (i) for any breach of the director's
duty of loyalty to the corporation or its stockholder, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment to
or repeal of this Article TENTH shall apply to or have any effect on the
liability or alleged liability of any director of the corporation for or
with respect to any acts or omissions of such director occurring prior to
such amendment or repeal.
-5-
5
1,000
OTHER
JAN-03-1998
DEC-29-1996
JUN-14-1997
3,979
0
108,516
6,277
175,745
299,416
140,994
70,270
407,466
61,226
84,235
42,739
0
0
209,137
407,466
257,090
257,090
177,884
177,884
0
0
2,263
17,736
5,675
12,061
0
0
0
12,061
.28
.28