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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2021
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: 001-06024
 __________________________________________________________ 
WOLVERINE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)
 __________________________________________________________ 
Delaware38-1185150
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
9341 Courtland Drive N.E.,Rockford,Michigan49351
(Address of principal executive offices)(Zip Code)
(616) 866-5500
(Registrant’s telephone number, including area code)
________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading symbolName of each exchange on which registered
Common Stock, $1 Par ValueWWWNew York Stock Exchange
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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
There were 82,369,343 shares of common stock, $1 par value, outstanding as of October 18, 2021.

Table of Contents
Table of Contents
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1A.
Item 2.
Item 6.
2

Table of Contents
FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements,” which are statements relating to future, not past, events, including statements regarding the Company’s planned eCommerce investments and priorities. In this context, forward-looking statements also often address management’s current beliefs, assumptions, expectations, estimates and projections about future business and financial performance, national, regional or global political, economic and market conditions, and the Company itself. Such statements often contain words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “is likely,” “plans,” “predicts,” “projects,” “should,” “will,” variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Uncertainties that could cause the Company’s performance to differ materially from what is expressed in forward-looking statements include, but are not limited to, the following:
the potential effects of the COVID-19 pandemic on the Company’s business, operations, financial results and liquidity;
changes in general economic conditions, employment rates, business conditions, interest rates, tax policies and other factors affecting consumer spending in the markets and regions in which the Company’s products are sold;
the inability for any reason to effectively compete in global footwear, apparel and consumer-direct markets;
the inability to maintain positive brand images and anticipate, understand and respond to changing footwear and apparel trends and consumer preferences;
the inability to effectively manage inventory levels;
increases or changes in duties, tariffs, quotas or applicable assessments in countries of import and export;
foreign currency exchange rate fluctuations;
currency restrictions;
supply chain and capacity constraints, production disruptions, including reduction in operating hours, labor shortages, and facility closures resulting in production delays at the Company’s manufacturers due to disruption from the effects of the COVID-19 pandemic, quality issues, price increases or other risks associated with foreign sourcing;
the cost and availability of raw materials, inventories, services and labor for contract manufacturers;
labor disruptions;
changes in relationships with, including the loss of, significant wholesale customers;
risks related to the significant investment in, and performance of, the Company’s consumer-direct operations;
risks related to expansion into new markets and complementary product categories as well as consumer-direct operations;
the impact of seasonality and unpredictable weather conditions;
the impact of changes in general economic conditions and/or the credit markets on the Company’s manufacturers, distributors, suppliers, joint venture partners and wholesale customers;
changes in the Company’s effective tax rates;
failure of licensees or distributors to meet planned annual sales goals or to make timely payments to the Company;
the risks of doing business in developing countries and politically or economically volatile areas;
the ability to secure and protect owned intellectual property or use licensed intellectual property;
the impact of regulation, regulatory and legal proceedings and legal compliance risks, including compliance with federal, state and local laws and regulations relating to the protection of the environment, environmental remediation and other related costs, and litigation or other legal proceedings relating to the protection of the environment or environmental effects on human health;
risks of breach of the Company’s databases or other systems, or those of its vendors, which contain certain personal information, payment card data or proprietary information, due to cyberattack or other similar events;
problems affecting the Company’s supply chain and distribution system, including service interruptions at shipping and receiving ports;
strategic actions, including new initiatives and ventures, acquisitions and dispositions, and the Company’s success in integrating acquired businesses and implementing new initiatives and ventures, including the Company’s acquisition of the Sweaty Betty® brand;
the risk of impairment to goodwill and other intangibles;
the success of the Company’s restructuring and realignment initiatives undertaken from time to time; and
changes in future pension funding requirements and pension expenses.
These or other uncertainties could cause a material difference between an actual outcome and a forward-looking statement. The uncertainties included here are not exhaustive and are described in more detail in Part I, Item 1A: “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2021 (the “2020 Form 10-K”). Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company does not undertake an obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
3

Table of Contents
PART I.     FINANCIAL INFORMATION
ITEM 1.    Financial Statements

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations and Comprehensive Income
(Unaudited)
 Quarter EndedYear-To-Date Ended
(In millions, except per share data)October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Revenue
$636.7 $493.1 $1,779.3 $1,281.5 
Cost of goods sold
361.9 291.1 1,011.8 750.5 
Gross profit
274.8 202.0 767.5 531.0 
Selling, general and administrative expenses
215.0 157.5 591.2 457.2 
Environmental and other related costs, net of recoveries17.3 1.9 11.9 6.8 
Operating profit
42.5 42.6 164.4 67.0 
Other expenses:
Interest expense, net
9.6 12.8 28.9 31.1 
Debt extinguishment and other costs34.0  34.0 0.2 
Other expense (income), net(0.4)(0.6)2.5 (2.9)
Total other expenses
43.2 12.2 65.4 28.4 
Earnings (loss) before income taxes(0.7)30.4 99.0 38.6 
Income tax expense0.1 8.7 17.0 6.0 
Net earnings (loss)$(0.8)$21.7 $82.0 $32.6 
Less: net loss attributable to noncontrolling interests(0.8)(0.7)(1.2)(1.2)
Net earnings attributable to Wolverine World Wide, Inc.$ $22.4 $83.2 $33.8 
Net earnings per share (see Note 3):
Basic
$0.00 $0.27 $0.99 $0.41 
Diluted
$0.00 $0.27 $0.98 $0.41 
Comprehensive income (loss)$(10.2)$25.2 $84.2 $25.6 
Less: comprehensive loss attributable to noncontrolling interests(0.7)(0.5)(1.2)(2.1)
Comprehensive income (loss) attributable to Wolverine World Wide, Inc.$(9.5)$25.7 $85.4 $27.7 
Cash dividends declared per share
$0.10 $0.10 $0.30 $0.30 
See accompanying notes to consolidated condensed financial statements.
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WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(Unaudited)
(In millions, except share data)October 2,
2021
January 2,
2021
September 26,
2020
ASSETS
Current assets:
Cash and cash equivalents$183.6 $347.4 $342.0 
Accounts receivable, less allowances of $27.4, $33.5 and $33.4
362.6 268.3 332.1 
Finished products, net400.2 237.9 318.1 
Raw materials and work-in-process, net11.8 5.2 7.6 
Total inventories412.0 243.1 325.7 
Prepaid expenses and other current assets44.4 45.4 42.2 
Total current assets1,002.6 904.2 1,042.0 
Property, plant and equipment, net of accumulated depreciation of $212.2, $197.2 and $200.3
127.3 124.6 126.3 
Lease right-of-use assets, net134.7 142.5 148.3 
Goodwill555.5 442.4 437.8 
Indefinite-lived intangibles718.3 382.3 604.5 
Amortizable intangibles, net76.8 73.0 74.0 
Deferred income taxes1.9 3.2 1.8 
Other assets64.3 65.2 66.4 
Total assets$2,681.4 $2,137.4 $2,501.1 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$265.1 $185.0 $191.8 
Accrued salaries and wages39.1 27.0 22.4 
Other accrued liabilities193.5 150.0 148.7 
Lease liabilities34.4 34.0 34.6 
Current maturities of long-term debt10.0 10.0 162.5 
Borrowings under revolving credit agreements310.0   
Total current liabilities852.1 406.0 560.0 
Long-term debt, less current maturities704.4 712.5 714.1 
Accrued pension liabilities145.3 147.0 109.2 
Deferred income taxes121.2 35.5 85.0 
Lease liabilities, noncurrent117.9 130.3 135.0 
Other liabilities98.6 133.1 132.3 
Stockholders’ equity:
Common stock – par value $1, authorized 320,000,000 shares; 111,538,349, 110,426,769, and 110,117,417 shares issued
111.5 110.4 110.1 
Additional paid-in capital289.8 252.6 239.8 
Retained earnings1,151.2 1,093.3 1,272.4 
Accumulated other comprehensive loss(128.4)(130.6)(108.2)
Cost of shares in treasury; 29,170,142, 28,285,274, and 28,148,131 shares
(797.4)(764.3)(760.0)
Total Wolverine World Wide, Inc. stockholders’ equity626.7 561.4 754.1 
Noncontrolling interest15.2 11.6 11.4 
Total stockholders’ equity641.9 573.0 765.5 
Total liabilities and stockholders’ equity$2,681.4 $2,137.4 $2,501.1 
See accompanying notes to consolidated condensed financial statements.
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WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Year-To-Date Ended
(In millions)October 2,
2021
September 26,
2020
OPERATING ACTIVITIES
Net earnings$82.0 $32.6 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
23.1 23.8 
Deferred income taxes
(3.9)(12.8)
Stock-based compensation expense
30.0 21.5 
Pension and SERP expense
10.5 6.4 
Debt extinguishment and other costs5.6 0.2 
Environmental and other related costs, net of cash payments and recoveries received
(8.5)25.2 
Other
(3.5)(0.6)
Changes in operating assets and liabilities:
Accounts receivable
(90.3)(1.7)
Inventories
(124.6)21.6 
Other operating assets
7.7 9.9 
Accounts payable
68.4 (9.2)
Income taxes payable
5.7 15.1 
Other operating liabilities
14.8 3.5 
Net cash provided by operating activities17.0 135.5 
INVESTING ACTIVITIES
Business acquisition, net of cash acquired
(417.8)(5.5)
Additions to property, plant and equipment
(10.0)(6.0)
Investment in joint ventures
 (3.5)
Proceeds from company-owned life insurance policy liquidations 25.6 
Other
(1.9)(1.0)
Net cash provided by (used in) investing activities(429.7)9.6 
FINANCING ACTIVITIES
Payments under revolving credit agreements(40.0)(898.0)
Borrowings under revolving credit agreements350.0 538.0 
Borrowings of long-term debt
550.0 471.0 
Payments on long-term debt
(557.5)(28.5)
Payments of debt issuance and debt extinguishment costs(7.4)(6.4)
Cash dividends paid
(25.2)(25.4)
Purchases of common stock for treasury
(26.9)(21.0)
Employee taxes paid under stock-based compensation plans(13.7)(20.1)
Proceeds from the exercise of stock options
15.6 4.0 
Contributions from noncontrolling interests
4.8 1.8 
Net cash provided by financing activities249.7 15.4 
Effect of foreign exchange rate changes
(0.8)0.9 
Increase (decrease) in cash and cash equivalents(163.8)161.4 
Cash and cash equivalents at beginning of the year
347.4 180.6 
Cash and cash equivalents at end of the quarter
$183.6 $342.0 
See accompanying notes to consolidated condensed financial statements.
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WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity
(Unaudited)
Wolverine World Wide, Inc. Stockholders' Equity
(In millions, except share and per share data)Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-controlling InterestTotal
Balance at June 27, 2020$110.0 $227.1 $1,258.3 $(111.5)$(759.9)$11.9 $735.9 
Net earnings (loss)22.4 (0.7)21.7 
Other comprehensive income3.3 0.2 3.5 
Shares issued, net of shares forfeited under stock incentive plans (11,519 shares)
 (0.2)(0.2)
Shares issued for stock options exercised, net (99,381 shares)
0.1 1.6 1.7 
Stock-based compensation expense11.3 11.3 
Cash dividends declared ($0.10 per share)
(8.3)(8.3)
Purchases of shares under stock-based compensation plans (3,056) shares)
(0.1)(0.1)
Balance at September 26, 2020$110.1 $239.8 $1,272.4 $(108.2)$(760.0)$11.4 $765.5 
Balance at July 3, 2021$111.4 $278.4 $1,159.6 $(118.9)$(797.3)$15.9 $649.1 
Net earnings (loss) (0.8)(0.8)
Other comprehensive income (loss)(9.5)0.1 (9.4)
Shares issued, net of shares forfeited under stock incentive plans (18,229 shares)
 (0.4)(0.4)
Shares issued for stock options exercised, net (137,527 shares)
0.1 3.4 3.5 
Stock-based compensation expense8.4 8.4 
Cash dividends declared ($0.10 per share)
(8.4)(8.4)
Purchases of shares under stock-based compensation plans (4,743 shares)
(0.1)(0.1)
Balance at October 2, 2021$111.5 $289.8 $1,151.2 $(128.4)$(797.4)$15.2 $641.9 

See accompanying notes to consolidated condensed financial statements.




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WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity
(Unaudited)
Wolverine World Wide, Inc. Stockholders' Equity
(In millions, except share and per share data)Common StockAdditional Paid-In CapitalRetained EarningsAccumulated
Other
Comprehensive
Loss
Treasury StockNon-controlling InterestTotal
Balance at December 28, 2019$108.3 $233.4 $1,263.3 $(102.1)$(736.2)$11.7 $778.4 
Net earnings (loss)33.8 (1.2)32.6 
Other comprehensive loss(6.1)(0.9)(7.0)
Shares issues, net of shares forfeited under stock incentive plans (1,497,072 shares)
1.5 (18.7)(17.2)
Shares issued for stock options exercised, net (291,095 shares)
0.3 3.6 3.9 
Stock-based compensation expense21.5 21.5 
Cash dividends declared ($0.30 per share)
(24.7)(24.7)
Issuance of treasury shares (4,230 shares)
 0.1 0.1 
Purchase of common stock for treasury (877,624 shares)
(21.0)(21.0)
Purchases of shares under stock-based compensation plans (93,225 shares)
(2.9)(2.9)
Capital contribution from noncontrolling interest1.8 1.8 
Balance at September 26, 2020$110.1 $239.8 $1,272.4 $(108.2)$(760.0)$11.4 $765.5 
Balance at January 2, 2021$110.4 $252.6 $1,093.3 $(130.6)$(764.3)$11.6 $573.0 
Net earnings (loss)83.2 (1.2)82.0 
Other comprehensive income2.2  2.2 
Shares issued, net of shares forfeited under stock incentive plans (414,851 shares)
0.4 (7.8)(7.4)
Shares issued for stock options exercised, net (696,729 shares)
0.7 15.0 15.7 
Stock-based compensation expense30.0 30.0 
Cash dividends declared ($0.30 per share)
(25.3)(25.3)
Issuance of treasury shares (2,991 shares)
 0.1 0.1 
Purchase of common stock for treasury (716,027 shares)
(26.9)(26.9)
Purchases of shares under stock-based compensation plans (171,832 shares)
(6.3)(6.3)
Capital contribution from noncontrolling interest4.8 4.8 
Balance at October 2, 2021$111.5 $289.8 $1,151.2 $(128.4)$(797.4)$15.2 $641.9 

See accompanying notes to consolidated condensed financial statements.
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WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
 
1.BASIS OF PRESENTATION
Nature of Operations
Wolverine World Wide, Inc. (the “Company”) is a leading designer, marketer and licensor of a broad range of quality casual footwear and apparel; performance outdoor and athletic footwear and apparel; kids’ footwear; industrial work shoes, boots and apparel; and uniform shoes and boots. The Company’s portfolio of owned and licensed brands includes: Bates®, Cat®, Chaco®, Harley-Davidson®, Hush Puppies®, Hytest®, Keds®, Merrell®, Saucony®, Sperry®, Stride Rite®, Sweaty Betty® and Wolverine®. The Company’s products are marketed worldwide through owned operations, through licensing and distribution arrangements with third parties, and joint ventures. The Company also operates retail stores and eCommerce sites to market both its own brands and branded footwear and apparel from other manufacturers, as well as a leathers division that markets Wolverine Performance Leathers™.
On August 2, 2021, the Company completed the acquisition of Lady Leisure InvestCo Limited (the “Acquired Company”) for $417.8 million, which is net of acquired cash of $7.4 million. The Acquired Company owns the Sweaty Betty® brand and activewear business, a premium women’s activewear brand. See Note 17 for further discussion.
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for a complete presentation of the financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included in the accompanying financial statements. For further information, refer to the consolidated financial statements and notes included in the Company’s 2020 Form 10-K.
The COVID-19 pandemic, the duration and severity of which is subject to uncertainty, has had and continues to have, a significant impact on the Company's business. Management's estimates and assumptions used in the preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP contemplated both current and expected potential future impacts of COVID-19 on the Company’s business based on available information. Actual results may differ materially from management’s estimates.
Fiscal Year
The Company’s fiscal year is the 52 or 53-week period that ends on the Saturday nearest to December 31. Fiscal year 2021 has 52 weeks and fiscal year 2020 contained 53 weeks. The Company reports its quarterly results of operations on the basis of 13-week quarters for each of the first three fiscal quarters and a 13 or 14-week period for the fiscal fourth quarter. References to particular years or quarters refer to the Company’s fiscal years ended on the Saturday nearest to December 31 or the fiscal quarters within those years.
Seasonality
The Company’s business is subject to seasonal influences that could cause significant differences in revenue, earnings and cash flows from quarter to quarter. The COVID-19 pandemic resulted in changes in consumer behavior and preferences that changed this seasonal cadence. The Company expects the seasonal cadence that the Company experienced historically may continue to be affected as a result of these changes in consumer behavior and preferences resulting from the COVID-19 pandemic.



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2.NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (“FASB”) has issued the following Accounting Standards Update (“ASU”) that the Company has not yet adopted. The following is a summary of the new standard.
StandardDescriptionEffect on the Financial Statements or Other Significant Matters
ASU 2020-04, Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting (as amended by ASU 2021-01)
Provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for the Company’s borrowing instruments under the amended senior credit facility, which use LIBOR as a reference rate, and is available for adoption effective immediately but is only available through December 31, 2022.
The Company is evaluating the impact of the new standard on its consolidated financial statements.
3.EARNINGS PER SHARE
The Company calculates earnings per share in accordance with FASB Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC 260”). ASC 260 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. Under the guidance in ASC 260, the Company’s unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and must be included in the computation of earnings per share pursuant to the two-class method.
The following table sets forth the computation of basic and diluted earnings per share.
Quarter EndedYear-To-Date Ended
(In millions, except per share data)October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Numerator:
Net earnings attributable to Wolverine World Wide, Inc.$ $22.4 $83.2 $33.8 
Adjustment for earnings allocated to non-vested restricted common stock
(0.2)(0.6)(1.4)(0.8)
Net earnings (loss) used in calculating basic and diluted earnings per share$(0.2)$21.8 $81.8 $33.0 
Denominator:
Weighted average shares outstanding
82.381.982.581.7
Adjustment for non-vested restricted common stock
(0.9)(0.1)(0.7)
Shares used in calculating basic earnings per share
82.381.082.481.0
Effect of dilutive stock options
0.51.00.5
Shares used in calculating diluted earnings per share
82.381.583.481.5
Net earnings per share:
Basic$0.00 $0.27 $0.99 $0.41 
Diluted$0.00 $0.27 $0.98 $0.41 
For the quarter and year-to-date ended October 2, 2021, 494,447 and 576,081 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive.
For the quarter and year-to-date ended September 26, 2020, 1,185,864 and 1,184,559 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive.

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4.GOODWILL AND INDEFINITE-LIVED INTANGIBLES
The changes in the carrying amount of goodwill are as follows:
Year-To-Date Ended
(In millions)October 2,
2021
September 26,
2020
Goodwill balance at beginning of the year
$442.4 $438.9 
Acquisition of a business (see Note 17)117.4  
Foreign currency translation effects(4.3)(1.1)
Goodwill balance at end of the quarter
$555.5 $437.8 
The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $718.3 million, $382.3 million, and $604.5 million as of October 2, 2021, January 2, 2021, and September 26, 2020, respectively. In the fourth quarter of 2020, the Company recognized a $222.2 million impairment charge for the decline in the value of the Sperry® trade name. The carrying value of the Company’s Sperry® and trade name was $296.0 million as of October 2, 2021. Based on the interim impairment assessment as of October 2, 2021, it was determined there were no triggering events of impairment for goodwill and indefinite-lived intangible assets. If the operating results for Sperry® decline in future periods compared to current projections, there are changes in the assumptions and estimates the Company uses to value the Sperry® trade name that adversely affect such value, such as an increase in the discount rate or in the assumed tax rate, or macroeconomic conditions deteriorate further due to the COVID-19 pandemic and adversely affect the value of the Company’s Sperry® trade name balance, the Company may need to record a non-cash impairment charge.
5.ACCOUNTS RECEIVABLE
The Company has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis that expires in the fourth quarter of fiscal 2021, subject to renewal. Under the agreement, up to $75.0 million of accounts receivable may be sold to the financial institution and remain outstanding at any point in time. After the sale, the Company does not retain any interests in the accounts receivable and removes them from its consolidated condensed balance sheet, but continues to service and collect the outstanding accounts receivable on behalf of the financial institution. The Company recognizes a servicing asset or servicing liability, initially measured at fair value, each time it undertakes an obligation to service the accounts receivable under the agreement. For receivables sold under the agreement, 90% of the stated amount is paid in cash to the Company at the time of sale, with the remainder paid to the Company at the completion of the collection process.
The following is a summary of the stated amount of accounts receivable that was sold as well as fees charged by the financial institution.
Quarter EndedYear-To-Date Ended
(In millions)October 2, 2021September 26, 2020October 2, 2021September 26, 2020
Accounts receivable sold
$ $ $ $14.1 
Fees charged
$ $ $ $0.1 
The fees are recorded in the other expense (income), net line item on the consolidated statements of operations. Net proceeds of this program are classified in operating activities in the consolidated condensed statements of cash flows. There were no amounts outstanding under this program as of October 2, 2021 and September 26, 2020, respectively.
6.REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition and Performance Obligations
The Company has agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company is due $19.9 million of remaining fixed transaction price under its license agreements as of October 2, 2021, which it expects to recognize per the terms of its contracts over the course of time through December 2025. The Company has elected to omit the remaining variable consideration under its license agreements given the Company recognizes revenue equal to what it has the right to invoice and that amount corresponds directly with the value to the customer of the Company’s performance to date.
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The Company provides disaggregated revenue by sales channel, including the wholesale and consumer-direct sales channels, reconciled to the Company’s reportable segments. The wholesale channel includes royalty revenues due to the similarity in the Company’s oversight and management, customer base, the performance obligation (footwear and apparel goods) and point in time completion of the performance obligation.
 Quarter Ended October 2, 2021Quarter Ended September 26, 2020
(In millions)WholesaleConsumer-DirectTotalWholesaleConsumer-DirectTotal
Wolverine Michigan Group$263.2 $61.6 $324.8 $227.6 $59.7 $287.3 
Wolverine Boston Group202.7 56.1 258.8 150.7 43.1 193.8 
Other17.9 35.2 53.1 10.6 1.4 12.0 
Total$483.8 $152.9 $636.7 $388.9 $104.2 $493.1 
Year-To-Date Ended October 2, 2021Year-To-Date Ended September 26, 2020
(In millions)WholesaleConsumer-DirectTotalWholesaleConsumer-DirectTotal
Wolverine Michigan Group$779.6 $197.3 $976.9 $590.9 $161.6 $752.5 
Wolverine Boston Group548.0 169.7 717.7 374.3 124.1 498.4 
Other47.3 37.4 84.7 28.1 2.5 30.6 
Total$1,374.9 $404.4 $1,779.3 $993.3 $288.2 $1,281.5 
Reserves for Variable Consideration
Revenue is recorded at the net sales price (“transaction price”), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, customer markdowns, customer rebates and other sales incentives relating to the sale of the Company’s products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales. These estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Revenue recognized during the fiscal periods presented related to the Company’s contract liabilities was nominal.
The Company’s contract balances are as follows:
(In millions)October 2,
2021
January 2,
2021
September 26,
2020
Product returns reserve$14.5 $15.6 $9.3 
Customer markdowns reserve2.9 3.7 4.0 
Other sales incentives reserve4.5 6.0 4.3 
Customer rebates liability16.6 13.4 13.9 
Customer advances liability5.2 8.2 2.0 
The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from initial estimates. If actual results in the future vary from initial estimates, the Company subsequently adjusts these estimates, which affects net revenue and earnings in the period such variances become known.
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7.DEBT
Total debt consists of the following obligations:
(In millions)October 2,
2021
January 2,
2021
September 26,
2020
Term Loan A, due December 6, 2023$172.5 $180.0 $185.0 
Incremental Term Loan  150.0 
Senior Notes, 5.000% interest, due September 1, 2026 250.0 250.0 
Senior Notes, 6.375% interest, due May 15, 2025 300.0 300.0 
Senior Notes, 4.000% interest, due August 15, 2029550.0   
Borrowings under revolving credit agreements310.0   
Unamortized deferred financing costs(8.1)(7.5)(8.4)
Total debt$1,024.4 $722.5 $876.6 
On May 5, 2020, the Company entered into a Second Amendment (the “Amendment”) which amended its senior credit facility, which had previously been amended and restated as of December 6, 2018 (as so amended by the Amendment, the “Amended Senior Credit Facility”). In connection with the Amendment, the Company borrowed $171.0 million in aggregate principal amount of an incremental term loan. The incremental term loan was fully repaid by the end of fiscal 2020. On October 20, 2021, the Company entered into a Replacement Amendment and Reaffirmation Agreement to the Amended Senior Credit Facility, refer to Note 18 for additional information.
The Amended Senior Credit Facility also included a $200.0 million term loan facility (“Term Loan A”) and an $800.0 million Revolving Credit Facility, both with maturity dates of December 6, 2023, that remained unchanged as a result of the Amendment. The Amended Senior Credit Facility’s debt capacity is limited to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $1,750.0 million, unless certain specified conditions set forth in the Amended Senior Credit Facility are met. Term Loan A requires quarterly principal payments with a balloon payment due on December 6, 2023. As of October 2, 2021, the scheduled principal payments due under Term Loan A over the next 12 months total $10.0 million and are recorded as current maturities of long-term debt on the consolidated condensed balance sheets.
The Revolving Credit Facility allows the Company to borrow up to an aggregate amount of $800.0 million, which includes a $200.0 million foreign currency subfacility under which borrowings may be made, subject to certain conditions, in Canadian dollars, British pounds, euros, Hong Kong dollars, Swedish kronor, Swiss francs and such additional currencies as are determined in accordance with the Amended Senior Credit Facility. The Revolving Credit Facility also includes a $50.0 million swingline subfacility and a $50.0 million letter of credit subfacility. The Company had outstanding letters of credit under the Revolving Credit Facility of $5.9 million, $6.1 million and $6.0 million as of October 2, 2021, January 2, 2021 and September 26, 2020, respectively. These outstanding letters of credit reduce the borrowing capacity under the Revolving Credit Facility.
The interest rates applicable to amounts outstanding under Term Loan A and to U.S. dollar denominated amounts outstanding under the Revolving Credit Facility are, at the Company’s option, either (1) the Alternate Base Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 0.125% to 1.000%, or (2) the Eurocurrency Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 1.125% to 2.000% (all capitalized terms used in this sentence are as defined in the Amended Senior Credit Facility). At October 2, 2021, Term Loan A and the Revolving Credit Facility had a weighted-average interest rate of 1.88%.
The obligations of the Company pursuant to the Amended Senior Credit Facility are guaranteed by substantially all of the Company’s material domestic subsidiaries and secured by substantially all of the personal and real property of the Company and its material domestic subsidiaries, subject to certain exceptions.
The Amended Senior Credit Facility also contains certain affirmative and negative covenants, including covenants that limit the ability of the Company and its Restricted Subsidiaries to, among other things: incur or guarantee indebtedness; incur liens; pay dividends or repurchase stock; enter into transactions with affiliates; consummate asset sales, acquisitions or mergers; prepay certain other indebtedness; or make investments, as well as covenants restricting the activities of certain foreign subsidiaries of the Company that hold intellectual property related assets. Further, the Amended Senior Credit Facility requires compliance with the following financial covenants: a maximum Consolidated Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (all capitalized terms used in this paragraph are as defined in the Amended Senior Credit Facility). As of October 2, 2021, the Company was in compliance with all covenants and performance ratios under the Amended Senior Credit Facility.
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Table of Contents
On August 26, 2021, the Company issued $550.0 million aggregate principal debt amount of 4.000% senior notes due on August 15, 2029. Related interest payments are due semi-annually beginning February 15, 2022. The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries. The proceeds from the senior notes were used to extinguish the Company’s $250.0 million senior notes due on September 1, 2026 and $300.0 million senior notes due on May 15, 2025. The Company incurred $34.0 million of debt extinguishment and other costs in connection with the senior notes extinguished, of which $28.4 million is related to redemption premiums and $5.6 million is related to write-off of capitalized financing fees.
The Company has a foreign revolving credit facility with aggregate available borrowings of $4.0 million that are uncommitted and, therefore, each borrowing against the facility is subject to approval by the lender. There were no borrowings against this facility as of October 2, 2021, January 2, 2021 and September 26, 2020.
The Company included in interest expense the amortization of deferred financing costs of $0.6 million and $1.9 million for the quarter and year-to-date ended October 2, 2021, respectively. The Company included in interest expense the amortization of deferred financing costs of $0.9 million and $2.0 million for the quarter and year-to-date ended September 26, 2020, respectively.
8. LEASES
The Company’s leases consist primarily of corporate offices, retail stores, distribution centers, showrooms, vehicles and office equipment. The Company leases assets in the normal course of business to meet its current and future needs while providing flexibility to its operations. The Company enters into contracts with third parties to lease specifically identified assets. Most of the Company’s leases have contractually specified renewal periods. Most retail store leases have early termination clauses that the Company can elect if stipulated sales amounts are not achieved. The Company determines the lease term for each lease based on the terms of each contract and factors in renewal and early termination options if such options are reasonably certain to be exercised.
The following is a summary of the Company’s lease cost.
Quarter EndedYear-To-Date Ended
(In millions)October 2,
2021
September 26,
2020
October 2,
2021
September 26,
2020
Operating lease cost$9.0 $7.9 $25.1 $24.2 
Variable lease cost3.3 3.0 9.4