Wolverine Worldwide Announces Fourth Quarter And Full-Year 2012 Results, With Record Full-Year Revenue And Earnings In Excess Of Guidance

ROCKFORD, Mich., Feb. 19, 2013 /PRNewswire/ -- 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.

SOURCE Wolverine Worldwide

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