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 ~~June 27, 2020~~July 3, 2021


☐			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)

__________________________________________________________

Delaware

38-1185150

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9341 Courtland Drive N.E.

Rockford

Michigan

49351

(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 class

Trading symbol

Name of each exchange on which registered

Common Stock, $1 Par Value

WWW

New 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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 ~~81,877,131~~82,214,453 shares of common stock, $1 par value, outstanding as of July ~~27, 2020.~~19, 2021.

Table of Contents


PART I	Financial Information	54
Item 1.	Financial Statements	54
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2723
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3431
Item 4.	Controls and Procedures	3431
PART II	Other Information	3432
Item 1A.	Risk Factors	3532
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3632
Item 6.	Exhibits	3733
Signatures			3834

Table of Contents

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements,” which are statements relating to future, not past, ~~events. Such forward-looking~~events, including statements ~~include, for example, statements about~~regarding the ~~future impact of the COVID-19 pandemic on the Company.~~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, including the duration and magnitude of such effects, which will depend on numerous evolving factors that the Company cannot currently fully predict or assess, including: the duration and scope of the pandemic, the negative impact on global and regional markets, economies and economic activity, including the duration and magnitude of its impact on unemployment rates, consumer discretionary spending and levels of consumer confidence; actions that governments, businesses and individuals may take in response to the pandemic; and the effects of the pandemic, including all of the foregoing, on the Company's manufacturers, distributors, suppliers, joint venture partners, wholesale customers, and other counterparties. The timing and scope of recovery after the pandemic is also uncertain;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 ~~retailers;~~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 ~~event;~~events;

•problems affecting the Company’s supply chain and distribution system, including service interruptions at shipping and receiving ports;

~~Table of Contents~~

•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;~~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 ~~December 28, 2019~~January 2, 2021 (the ~~“2019~~“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.

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 Ended						Year-To-Date Ended							Quarter Ended				Year-To-Date Ended
(In millions, except per share data)	(In millions, except per share data)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		(In millions, except per share data)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Revenue	Revenue	$	349.1	$	568.6	$	788.4	$	1,092.0	Revenue	$	631.9	$	349.1	$	1,142.6	$	788.4
Cost of goods sold	Cost of goods sold	201.9		338.2		459.4		641.4		Cost of goods sold	361.5		201.9		649.9		459.4

Gross profit	Gross profit	147.2		230.4		329.0		450.6		Gross profit	270.4		147.2		492.7		329.0
Selling, general and administrative expenses	Selling, general and administrative expenses	143.6		168.7		299.7		332.7		Selling, general and administrative expenses	201.8		143.6		376.2		299.7

Environmental and other related costs, net of recoveries	Environmental and other related costs, net of recoveries	(3.9)		6.2		4.9		10.0		Environmental and other related costs, net of recoveries	4.8		(3.9)		(5.4)		4.9
Operating profit	Operating profit	7.5		55.5		24.4		107.9		Operating profit	63.8		7.5		121.9		24.4
Other expenses:	Other expenses:									Other expenses:
Interest expense, net	Interest expense, net	10.5		6.7		18.3		13.6		Interest expense, net	9.7		10.5		19.3		18.3
Debt extinguishment and other costs	Debt extinguishment and other costs	0.2		—		0.2		—		Debt extinguishment and other costs	0		0.2		0		0.2
Other income, net		(1.7)		(1.0)		(2.3)		(2.3)
Other expense (income), net										Other expense (income), net	0.1		(1.7)		2.9		(2.3)
Total other expenses	Total other expenses	9.0		5.7		16.2		11.3		Total other expenses	9.8		9.0		22.2		16.2
Earnings (loss) before income taxes	Earnings (loss) before income taxes	(1.5)		49.8		8.2		96.6		Earnings (loss) before income taxes	54.0		(1.5)		99.7		8.2
Income tax expense (benefit)	Income tax expense (benefit)	0.4		9.6		(2.7)		15.8		Income tax expense (benefit)	9.6		0.4		16.9		(2.7)
Net earnings (loss)	Net earnings (loss)	$	(1.9)	$	40.2	10.9		80.8		Net earnings (loss)	$	44.4	$	(1.9)	$	82.8	$	10.9
Less: net earnings (loss) attributable to noncontrolling interests		(0.3)		—		(0.5)		0.1
Less: net loss attributable to noncontrolling interests										Less: net loss attributable to noncontrolling interests	(0.3)		(0.3)		(0.4)		(0.5)
Net earnings (loss) attributable to Wolverine World Wide, Inc.	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	(1.6)	$	40.2	$	11.4	$	80.7	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	44.7	$	(1.6)	$	83.2	$	11.4

Net earnings (loss) per share (see Note 3):	Net earnings (loss) per share (see Note 3):									Net earnings (loss) per share (see Note 3):
Basic	Basic	$	(0.02)	$	0.45	$	0.14	$	0.89	Basic	$	0.53	$	(0.02)	$	0.99	$	0.14
Diluted	Diluted	$	(0.02)	$	0.45	$	0.14	$	0.88	Diluted	$	0.53	$	(0.02)	$	0.98	$	0.14

Comprehensive income (loss)	Comprehensive income (loss)	$	(1.8)	$	39.8	$	0.4	$	83.2	Comprehensive income (loss)	$	49.8	$	(1.8)	$	94.4	$	0.4
Less: comprehensive income (loss) attributable to noncontrolling interests		(0.2)		(0.1)		(1.6)		0.2
Less: comprehensive loss attributable to noncontrolling interests										Less: comprehensive loss attributable to noncontrolling interests	(0.1)		(0.2)		(0.5)		(1.6)
Comprehensive income (loss) attributable to Wolverine World Wide, Inc.	Comprehensive income (loss) attributable to Wolverine World Wide, Inc.	$	(1.6)	$	39.9	$	2.0	$	83.0	Comprehensive income (loss) attributable to Wolverine World Wide, Inc.	$	49.9	$	(1.6)	$	94.9	$	2.0

Cash dividends declared per share	Cash dividends declared per share	$	0.10	$	0.10	$	0.20	$	0.20	Cash dividends declared per share	$	0.10	$	0.10	$	0.20	$	0.20

See accompanying notes to consolidated condensed financial statements.

Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

(Unaudited)


(In millions, except share data)	July 3, 2021		January 2, 2021		June 27, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	345.8	$	347.4	$	422.6
Accounts receivable, less allowances of $26.3, $33.5 and $38.2	372.0		268.3		263.8
Finished products, net	323.6		237.9		376.5
Raw materials and work-in-process, net	8.1		5.2		10.0
Total inventories	331.7		243.1		386.5
Prepaid expenses and other current assets	36.9		45.4		45.7

Total current assets	1,086.4		904.2		1,118.6
Property, plant and equipment, net of accumulated depreciation of $207.2, $197.2 and $192.8	120.2		124.6		134.9
Lease right-of-use assets, net	134.6		142.5		152.4
Goodwill	443.6		442.4		435.6
Indefinite-lived intangibles	382.3		382.3		604.5
Amortizable intangibles, net	70.6		73.0		75.1
Deferred income taxes	2.0		3.2		2.4
Other assets	63.9		65.2		65.9
Total assets	$	2,303.6	$	2,137.4	$	2,589.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	279.2	$	185.0	$	154.9
Accrued salaries and wages	33.7		27.0		11.6
Other accrued liabilities	167.3		150.0		163.9

Lease liabilities	32.7		34.0		37.5
Current maturities of long-term debt	10.0		10.0		183.5
Borrowings under revolving credit agreements	0		0		125.0
Total current liabilities	522.9		406.0		676.4
Long-term debt, less current maturities	708.4		712.5		715.9
Accrued pension liabilities	145.9		147.0		109.4
Deferred income taxes	37.6		35.5		86.0
Lease liabilities, noncurrent	119.3		130.3		139.2
Other liabilities	120.4		133.1		126.6
Stockholders’ equity:

Common stock – par value $1, authorized 320,000,000 shares; 111,382,593, 110,426,769, and 110,006,517 shares issued	111.4		110.4		110.0
Additional paid-in capital	278.4		252.6		227.1
Retained earnings	1,159.6		1,093.3		1,258.3
Accumulated other comprehensive loss	(118.9)		(130.6)		(111.5)
Cost of shares in treasury; 29,166,422, 28,285,274, and 28,146,537 shares	(797.3)		(764.3)		(759.9)
Total Wolverine World Wide, Inc. stockholders’ equity	633.2		561.4		724.0
Noncontrolling interest	15.9		11.6		11.9
Total stockholders’ equity	649.1		573.0		735.9
Total liabilities and stockholders’ equity	$	2,303.6	$	2,137.4	$	2,589.4

See accompanying notes to consolidated condensed financial statements.

Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

Consolidated Condensed ~~Balance Sheets~~Statements of Cash Flows

(Unaudited)

(In millions, except share data) June 27,
2020 December 28,
2019 June 29,
2019
ASSETS
Current assets:
Cash and cash equivalents $ 422.6 $ 180.6 $ 116.5
Accounts receivable, less allowances of $38.2, $26.7 and $25.6 263.8 331.2 363.7
Inventories:
Finished products, net 376.5 342.0 397.0
Raw materials and work-in-process, net 10.0 6.2 9.5
Total inventories 386.5 348.2 406.5
Prepaid expenses and other current assets 45.7 107.1 42.6
Total current assets 1,118.6 967.1 929.3
Property, plant and equipment:
Gross cost 327.7 325.0 392.2
Accumulated depreciation (192.8) (184.0) (254.0)
Property, plant and equipment, net 134.9 141.0 138.2
Lease right-of-use assets, net 152.4 160.8 157.8
Other assets:
Goodwill 435.6 438.9 438.5
Indefinite-lived intangibles 604.5 604.5 604.5
Amortizable intangibles, net 75.1 77.8 82.0
Deferred income taxes 2.4 2.9 3.2
Other 65.9 87.0 89.4
Total other assets 1,183.5 1,211.1 1,217.6
Total assets $ 2,589.4 $ 2,480.0 $ 2,442.9


	Year-To-Date Ended
(In millions)	July 3, 2021		June 27, 2020
OPERATING ACTIVITIES
Net earnings	$	82.8	$	10.9
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	14.4		15.4
Deferred income taxes	1.2		(13.4)
Stock-based compensation expense	21.6		10.2

Pension and SERP expense	7.0		4.3
Debt extinguishment and other costs	0		0.2



Environmental and other related costs, net of cash payments and recoveries received	(9.4)		34.2

Other	(1.6)		4.3
Changes in operating assets and liabilities:
Accounts receivable	(103.9)		64.5
Inventories	(89.1)		(41.0)
Other operating assets	10.3		6.3
Accounts payable	94.8		(45.9)
Income taxes payable	1.7		3.5
Other operating liabilities	21.9		(14.5)
Net cash provided by operating activities	51.7		39.0
INVESTING ACTIVITIES
Business acquisition, net of cash acquired	0		(5.5)
Additions to property, plant and equipment	(6.7)		(6.6)

Investment in joint ventures	0		(3.5)
Proceeds from company-owned life insurance policy liquidations	0		25.6
Other	(1.4)		(0.8)
Net cash provided by (used in) investing activities	(8.1)		9.2
FINANCING ACTIVITIES
Payments under revolving credit agreements	0		(773.0)
Borrowings under revolving credit agreements	0		538.0
Proceeds from company-owned life insurance policies	0		24.5
Borrowings of long-term debt	0		471.0
Payments on long-term debt	(5.0)		(5.0)
Payments of debt issuance and debt extinguishment costs	0		(6.4)
Cash dividends paid	(16.9)		(17.0)
Purchases of common stock for treasury	(26.9)		(21.0)
Employee taxes paid under stock-based compensation plans	(13.1)		(19.9)
Proceeds from the exercise of stock options	12.0		2.1
Contributions from noncontrolling interests	4.8		1.8

Net cash provided by (used in) financing activities	(45.1)		195.1
Effect of foreign exchange rate changes	(0.1)		(1.3)
Increase (decrease) in cash and cash equivalents	(1.6)		242.0
Cash and cash equivalents at beginning of the year	347.4		180.6
Cash and cash equivalents at end of the quarter	$	345.8	$	422.6

See accompanying notes to consolidated condensed financial statements.

~~Table of Contents~~

~~WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES~~

~~Consolidated Condensed Balance Sheets – continued~~

~~(Unaudited)~~

(In millions, except share data) June 27,
2020 December 28,
2019 June 29,
2019
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 154.9 $ 202.1 $ 212.7
Accrued salaries and wages 11.6 20.8 18.1
Other accrued liabilities 163.9 157.9 105.3
Lease liabilities 37.5 34.1 30.8
Current maturities of long-term debt 183.5 12.5 10.0
Borrowings under revolving credit agreements 125.0 360.0 368.0
Total current liabilities 676.4 787.4 744.9
Long-term debt, less current maturities 715.9 425.9 433.0
Accrued pension liabilities 109.4 109.7 92.2
Deferred income taxes 86.0 99.0 111.2
Lease liabilities, noncurrent 139.2 147.2 146.0
Other liabilities 126.6 132.4 60.4
Stockholders’ equity:
Wolverine World Wide, Inc. stockholders’ equity:
Common stock – par value $1, authorized 320,000,000 shares; 110,006,517, 108,329,250 and 107,997,808 shares issued 110.0 108.3 108.0
Additional paid-in capital 227.1 233.4 213.2
Retained earnings 1,258.3 1,263.3 1,232.8
Accumulated other comprehensive loss (111.5) (102.1) (86.0)
Cost of shares in treasury; 28,146,537, 27,181,512 and 22,741,032 shares (759.9) (736.2) (624.3)
Total Wolverine World Wide, Inc. stockholders’ equity 724.0 766.7 843.7
Noncontrolling interest 11.9 11.7 11.5
Total stockholders’ equity 735.9 778.4 855.2
Total liabilities and stockholders’ equity $ 2,589.4 $ 2,480.0 $ 2,442.9

~~See accompanying notes to consolidated condensed financial statements.~~

Table of Contents

WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES

Consolidated Condensed Statements of ~~Cash Flows~~Stockholders' Equity

(Unaudited)

Year-To-Date Ended
(In millions) June 27,
2020 June 29,
2019
OPERATING ACTIVITIES
Net earnings $ 10.9 $ 80.8
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 15.4 15.0
Deferred income taxes (13.4) (1.2)
Stock-based compensation expense 10.2 10.2
Pension and SERP expense 4.3 2.8
Debt extinguishment costs 0.2 —
Environmental and other related costs, net of cash payments and recoveries received 34.2 (3.5)
Other 4.3 (9.4)
Changes in operating assets and liabilities:
Accounts receivable 64.5 (3.9)
Inventories (41.0) (81.1)
Other operating assets 6.3 3.6
Accounts payable (45.9) 10.2
Income taxes payable 3.5 (0.3)
Other operating liabilities (14.5) (19.3)
Net cash provided by operating activities 39.0 3.9
INVESTING ACTIVITIES
Business acquisition, net of cash acquired (5.5) (15.1)
Additions to property, plant and equipment (6.6) (18.3)
Investment in joint ventures (3.5) (8.5)
Proceeds from company-owned life insurance policy liquidations 25.6 —
Other (0.8) (0.5)
Net cash provided by (used in) investing activities 9.2 (42.4)
FINANCING ACTIVITIES
Payments under revolving credit agreements (773.0) (142.0)
Borrowings under revolving credit agreements 538.0 385.0
Proceeds from company-owned life insurance policies 24.5 —
Borrowings of long-term debt 471.0 —
Payments on long-term debt (5.0) (2.5)
Payments of debt issuance costs (6.4) (0.3)
Cash dividends paid (17.0) (16.8)
Purchases of common stock for treasury (21.0) (207.4)
Employee taxes paid under stock-based compensation plans (19.9) (16.5)
Proceeds from the exercise of stock options 2.1 5.8
Contributions from noncontrolling interests 1.8 5.7
Net cash provided by financing activities 195.1 11.0
Effect of foreign exchange rate changes (1.3) 0.9
Increase (decrease) in cash and cash equivalents 242.0 (26.6)
Cash and cash equivalents at beginning of the year 180.6 143.1
Cash and cash equivalents at end of the quarter $ 422.6 $ 116.5


	Wolverine World Wide, Inc. Stockholders' Equity
(In millions, except share and per share data)	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Non-controlling Interest		Total
Balance at March 28, 2020	$	109.2	$	219.8	$	1,268.1	$	(111.5)	$	(760.0)	$	10.3	$	735.9
Net loss					(1.6)						(0.3)		(1.9)
Other comprehensive income							0				0.1		0.1
Shares issued, net of shares forfeited under stock incentive plans (757,617 shares)	0.8		(0.9)										(0.1)
Shares issued for stock options exercised, net (40,068 shares)	0		0.7										0.7
Stock-based compensation expense			7.5										7.5
Cash dividends declared ($0.10 per share)					(8.2)								(8.2)
Issuance of treasury shares (1,701 shares)			0						0.1				0.1


Capital contribution from noncontrolling interest											1.8		1.8

Balance at June 27, 2020	$	110.0	$	227.1	$	1,258.3	$	(111.5)	$	(759.9)	$	11.9	$	735.9

Balance at April 3, 2021	$	111.2	$	265.7	$	1,123.1	$	(124.1)	$	(766.8)	$	16.0	$	625.1
Net earnings (loss)					44.7						(0.3)		44.4
Other comprehensive income							5.2				0.2		5.4
Shares issued, net of shares forfeited under stock incentive plans (59,839 shares)	0.1		(0.4)										(0.3)
Shares issued for stock options exercised, net (78,910 shares)	0.1		1.5										1.6
Stock-based compensation expense			11.6										11.6
Cash dividends declared ($0.10 per share)					(8.2)								(8.2)
Issuance of treasury shares (803 shares)			0						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 (91,399 shares)									(3.7)				(3.7)


Balance at July 3, 2021	$	111.4	$	278.4	$	1,159.6	$	(118.9)	$	(797.3)	$	15.9	$	649.1

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 Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Non-controlling Interest		Total
Balance at December 28, 2019	$	108.3	$	233.4	$	1,263.3	$	(102.1)	$	(736.2)	$	11.7	$	778.4
Net earnings (loss)					11.4						(0.5)		10.9
Other comprehensive loss							(9.4)				(1.1)		(10.5)
Shares issues, net of shares forfeited under stock incentive plans (1,485,553 shares)	1.5		(18.5)										(17.0)
Shares issued for stock options exercised, net (191,714 shares)	0.2		2.0										2.2
Stock-based compensation expense			10.2										10.2
Cash dividends declared ($0.20 per share)					(16.4)								(16.4)
Issuance of treasury shares (2,768 shares)			0						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 (90,169 shares)									(2.8)				(2.8)
Capital contribution from noncontrolling interest											1.8		1.8

Balance at June 27, 2020	$	110.0	$	227.1	$	1,258.3	$	(111.5)	$	(759.9)	$	11.9	$	735.9

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						(0.4)		82.8
Other comprehensive income (loss)							11.7				(0.1)		11.6
Shares issued, net of shares forfeited under stock incentive plans (396,622 shares)	0.4		(7.4)										(7.0)
Shares issued for stock options exercised, net (559,202 shares)	0.6		11.6										12.2
Stock-based compensation expense			21.6										21.6
Cash dividends declared ($0.20 per share)					(16.9)								(16.9)
Issuance of treasury shares (1,968 shares)			0						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 (167,089 shares)									(6.2)				(6.2)
Capital contribution from noncontrolling interest											4.8		4.8

Balance at July 3, 2021	$	111.4	$	278.4	$	1,159.6	$	(118.9)	$	(797.3)	$	15.9	$	649.1

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 Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive
Loss Treasury Stock Non-controlling Interest Total
Balance at March 30, 2019 $ 107.9 $ 208.0 $ 1,201.2 $ (85.7) $ (520.0) $ 5.9 $ 917.3
Net earnings 40.2 — 40.2
Other comprehensive loss (0.3) (0.1) (0.4)
Shares forfeited, net of shares issued under stock incentive plans (29,962 shares) — (0.1) (0.1)
Shares issued for stock options exercised, net (86,790 shares) 0.1 1.6 1.7
Stock-based compensation expense 3.6 3.6
Cash dividends declared ($0.10 per share) (8.6) (8.6)
Issuance of treasury shares (2,062 shares) 0.1 0.1 0.2
Purchase of common stock for treasury (3,589,131 shares) (104.3) (104.3)
Purchases of shares under employee stock plans (1,579 shares) (0.1) (0.1)
Capital contribution from noncontrolling interest 5.7 5.7
Balance at June 29, 2019 $ 108.0 $ 213.2 $ 1,232.8 $ (86.0) $ (624.3) $ 11.5 $ 855.2
Balance at March 28, 2020 $ 109.2 $ 219.8 $ 1,268.1 $ (111.5) $ (760.0) $ 10.3 $ 735.9
Net loss (1.6) (0.3) (1.9)
Other comprehensive income — 0.1 0.1
Shares issued, net of shares forfeited under stock incentive plans (757,617 shares) 0.8 (0.9) (0.1)
Shares issued for stock options exercised, net (40,068 shares) — 0.7 0.7
Stock-based compensation expense 7.5 7.5
Cash dividends declared ($0.10 per share) (8.2) (8.2)
Issuance of treasury shares (1,701 shares) — 0.1 0.1
Capital contribution from noncontrolling interest 1.8 1.8
Balance at June 27, 2020 $ 110.0 $ 227.1 $ 1,258.3 $ (111.5) $ (759.9) $ 11.9 $ 735.9

~~See accompanying notes to consolidated condensed financial statements.~~

~~Table of Contents~~

~~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 Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Non-controlling Interest Total
Balance at December 29, 2018 $ 107.6 $ 201.4 $ 1,169.7 $ (88.3) $ (404.4) $ 5.6 $ 991.6
Net earnings 80.7 0.1 80.8
Other comprehensive income 2.3 0.1 2.4
Shares issues, net of shares forfeited under stock incentive plans (38,505 shares) — (3.9) (3.9)
Shares issued for stock options exercised, net (350,097 shares) 0.4 5.4 5.8
Stock-based compensation expense 10.2 10.2
Cash dividends declared ($0.20 per share) (17.6) (17.6)
Issuance of treasury shares (4,000 shares) 0.1 0.1 0.2
Purchase of common stock for treasury (6,480,892 shares) (207.4) (207.4)
Purchases of shares under stock-based compensation plans (358,459 shares) (12.6) (12.6)
Capital contribution from noncontrolling interest 5.7 5.7
Balance at June 29, 2019 $ 108.0 $ 213.2 $ 1,232.8 $ (86.0) $ (624.3) $ 11.5 $ 855.2
Balance at December 28, 2019 $ 108.3 $ 233.4 $ 1,263.3 $ (102.1) $ (736.2) $ 11.7 $ 778.4
Net earnings (loss) 11.4 (0.5) 10.9
Other comprehensive loss (9.4) (1.1) (10.5)
Shares issued, net of shares forfeited under stock incentive plans (1,485,553 shares) 1.5 (18.5) (17.0)
Shares issued for stock options exercised, net (191,714 shares) 0.2 2.0 2.2
Stock-based compensation expense 10.2 10.2
Cash dividends declared ($0.20 per share) (16.4) (16.4)
Issuance of treasury shares (2,768 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 (90,169 shares) (2.8) (2.8)
Capital contribution from noncontrolling interest 1.8 1.8
Balance at June 27, 2020 $ 110.0 $ 227.1 $ 1,258.3 $ (111.5) $ (759.9) $ 11.9 $ 735.9

~~See accompanying notes to consolidated condensed financial statements.~~

~~Table of Contents~~

~~WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES~~

Notes to Consolidated Condensed Financial Statements

Quarters Ended July 3, 2021 and June 27, 2020 ~~and June 29, 2019~~

(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^® 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™.

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 footnotes 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 footnotes included in the Company’s ~~2019~~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 ~~2020~~2021 has 5352 weeks and fiscal year ~~2019~~2020 contained 5253 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 ~~can~~could cause significant differences in revenue, earnings and cash flows from quarter to ~~quarter; however,~~quarter. The COVID-19 pandemic resulted in changes in consumer behavior and preferences that changed this seasonal cadence. The Company expects the ~~differences have followed~~seasonal cadence that the Company experienced historically may continue to be affected as a ~~consistent pattern~~result of these changes in ~~recent years.~~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 ~~Updates~~Update (“ASU”) that the Company ~~adopted during fiscal year 2020.~~has not yet adopted. The following is a summary of the ~~effect of adoption of this~~ new standard.

Standard

Description

Effect on the Financial Statements or Other Significant Matters

ASU ~~2016-13, Financial Instruments - Credit Losses~~2020-04, Reference Rate Reform (Topic ~~326): Measurement~~848); Facilitation of ~~Credit Losses~~the Effects of Reference Rate Reform on Financial ~~Instruments~~Reporting (as amended by ASU 2021-01)

~~Seeks~~Provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to ~~provide financial statement users with more decision-useful information about~~be discontinued. This guidance is applicable for the ~~expected~~Company’s borrowing instruments under the amended senior credit ~~losses on financial instruments~~facility, which use LIBOR as a reference rate, and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.is available for adoption effective immediately but is only available through December 31, 2022.

The Company ~~adopted ASU 2016-13 at~~is evaluating the ~~beginning~~impact of the ~~first quarter~~new standard on ~~a prospective basis. The Company adjusted~~ its business policies and processes relating to the measurement of allowances for credit losses to consider reasonable and supportable information to determine expected credit losses on accounts receivable. The adoption of the ASU did not have a material effect on the consolidated financial statements.

~~ASU 2017-04, Intangibles Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~

Eliminates step two of the goodwill impairment test under legacy US GAAP. Annual and interim goodwill impairment tests are performed by comparing the fair value of a reporting unit with its carrying amount and the amount by which the carrying amount exceeds the reporting unit’s fair value will be recognized as an impairment charge.

The Company adopted the ASU at the beginning of the first quarter on a prospective basis. The adoption of the ASU did not have a significant impact on the Company’s financial statements and all prospective impairment tests will be completed under this standard.

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.

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The following table sets forth the computation of basic and diluted earnings per share.


		Quarter Ended						Year-To-Date Ended							Quarter Ended				Year-To-Date Ended
(In millions, except per share data)	(In millions, except per share data)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		(In millions, except per share data)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Numerator:	Numerator:									Numerator:
Net earnings (loss) attributable to Wolverine World Wide, Inc.	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	(1.6)	$	40.2	$	11.4	$	80.7	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	44.7	$	(1.6)	$	83.2	$	11.4
Adjustment for earnings allocated to non-vested restricted common stock	Adjustment for earnings allocated to non-vested restricted common stock	(0.2)		(0.8)		(0.4)		(1.6)		Adjustment for earnings allocated to non-vested restricted common stock	(0.7)		(0.2)		(1.4)		(0.4)
Net earnings (loss) used in calculating basic earnings per share		(1.8)		39.4		11.0		79.1
Adjustment for earnings reallocated from non-vested restricted common stock		—		—		—		0.1

Net earnings (loss) used in calculating basic and diluted earnings per share	Net earnings (loss) used in calculating basic and diluted earnings per share	$	(1.8)	$	39.4	$	11.0	$	79.2	Net earnings (loss) used in calculating basic and diluted earnings per share	$	44.0	$	(1.8)	$	81.8	$	11.0
Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	81.7		87.4		81.6		89.2		Weighted average shares outstanding	82.6		81.7		82.5		81.6
Adjustment for non-vested restricted common stock	Adjustment for non-vested restricted common stock	(0.8)		(0.5)		(0.6)		(0.8)		Adjustment for non-vested restricted common stock	(0.1)		(0.8)		(0.2)		(0.6)
Shares used in calculating basic earnings per share	Shares used in calculating basic earnings per share	80.9		86.9		81.0		88.4		Shares used in calculating basic earnings per share	82.5		80.9		82.3		81.0
Effect of dilutive stock options	Effect of dilutive stock options	—		1.4		0.5		1.7		Effect of dilutive stock options	1.1		0		1.1		0.5
Shares used in calculating diluted earnings per share	Shares used in calculating diluted earnings per share	80.9		88.3		81.5		90.1		Shares used in calculating diluted earnings per share	83.6		80.9		83.4		81.5
Net earnings (loss) per share:	Net earnings (loss) per share:									Net earnings (loss) per share:
Basic	Basic	$	(0.02)	$	0.45	$	0.14	$	0.89	Basic	$	0.53	$	(0.02)	$	0.99	$	0.14
Diluted	Diluted	$	(0.02)	$	0.45	$	0.14	$	0.88	Diluted	$	0.53	$	(0.02)	$	0.98	$	0.14

For the quarter and year-to-date ended July 3, 2021, 426,920 and 345,247 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 June 27, 2020, 1,955,425 and 1,183,907 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 June 29, 2019, 134,549 and 38,932 outstanding stock options, respectively, have not been included in the denominator for the computation~~

Table of ~~diluted earnings per share because they were anti-dilutive.~~Contents

4.GOODWILL AND INDEFINITE-LIVED INTANGIBLES

The changes in the carrying amount of goodwill are as follows:


		Year-To-Date Ended							Year-To-Date Ended
(In millions)	(In millions)	June 27, 2020		June 29, 2019		(In millions)	July 3, 2021		June 27, 2020
Goodwill balance at beginning of the year	Goodwill balance at beginning of the year	$	438.9	$	424.4	Goodwill balance at beginning of the year	$	442.4	$	438.9

Acquisition of a business (see Note 17)		—		12.0

Foreign currency translation effects	Foreign currency translation effects	(3.3)		2.1		Foreign currency translation effects	1.2		(3.3)
Goodwill balance at end of the quarter	Goodwill balance at end of the quarter	$	435.6	$	438.5	Goodwill balance at end of the quarter	$	443.6	$	435.6

The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $382.3 million as of July 3, 2021 and January 2, 2021, and $604.5 million as of June 27, 2020. In the fourth quarter of 2020, ~~December 28, 2019 and June 29, 2019.~~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^® trade name was ~~$518.2~~$296.0 million as of ~~June 27, 2020.~~July 3, 2021. Based on the interim impairment assessment as of ~~June 27, 2020,~~July 3, 2021, it was determined there were no triggering events of impairment for goodwill and indefinite-lived intangible assets. If the operating results for Sperry^® ~~were to~~ 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 ~~if further deterioration of~~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 ~~and goodwill balances,~~balance, the Company may need to record a non-cash impairment charge. We continue to monitor the effects of the COVID-19 pandemic, and actions taken by governments, businesses and individuals in response to the pandemic, on the global economy to assess the outlook for demand for our products and the impact on our business and financial performance.

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 ~~2020.~~2021, subject to renewal. Under the agreement, up to ~~$150.0~~$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

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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 Ended~~

~~Year-To-Date Ended~~

~~(In millions)~~

~~June 27, 2020~~

~~Accounts receivable sold~~

—

~~14.1~~

~~Fees charged~~

—

~~0.1~~



	Quarter Ended				Year-To-Date Ended
(In millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020

Accounts receivable sold	$	0	$	0	$	0	$	14.1
Fees charged	$	0	$	0	$	0	$	0.1

The fees ~~charged~~ are recorded in the other ~~expense.~~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 July 3, 2021 and June 27, 2020, ~~and June 29, 2019,~~ respectively.

6.REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition and Performance Obligations

~~The Company recognizes revenue in accordance with FASB ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~. Revenue is recognized upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration to be received in exchange for those goods or services. The Company identifies the performance obligation in the contract, determines the transaction price, allocates the transaction price to the performance obligations and recognizes revenue upon completion of the performance obligation. Revenue is recognized net of variable consideration and any taxes collected from customers, which are subsequently remitted to governmental authorities.

The Company has agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company is due ~~$27.9~~$20.9 million of remaining fixed transaction price under its license agreements as of ~~June 27, 2020,~~July 3, 2021, which it expects to recognize per the terms of its contracts over the course of time through December 2024. 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 June 27, 2020										Quarter Ended June 29, 2019											Quarter Ended July 3, 2021				Quarter Ended June 27, 2020
(In millions)	(In millions)	Wholesale		Consumer-Direct		Total		Wholesale		Consumer-Direct		Total		(In millions)	Wholesale		Consumer-Direct		Total		Wholesale		Consumer-Direct		Total
Wolverine Michigan Group	Wolverine Michigan Group	$	149.0	$	68.4	$	217.4	$	277.3	$	40.9	$	318.2	Wolverine Michigan Group	$	282.0	$	72.4	$	354.4	$	149.0	$	68.4	$	217.4
Wolverine Boston Group	Wolverine Boston Group	74.5		48.0		122.5		191.7		39.0		230.7		Wolverine Boston Group	194.5		63.5		258.0		74.5		48.0		122.5
Other	Other	8.8		0.4		9.2		18.4		1.3		19.7		Other	18.2		1.3		19.5		8.8		0.4		9.2
Total	Total	$	232.3	$	116.8	$	349.1	$	487.4	$	81.2	$	568.6	Total	$	494.7	$	137.2	$	631.9	$	232.3	$	116.8	$	349.1

Year-To-Date Ended June 27, 2020 Year-To-Date Ended June 29, 2019
(In millions) Wholesale Consumer-Direct Total Wholesale Consumer-Direct Total
Wolverine Michigan Group $ 363.3 $ 101.9 $ 465.2 $ 549.6 $ 71.3 $ 620.9
Wolverine Boston Group 223.6 81.0 304.6 367.2 68.3 435.5
Other 17.5 1.1 18.6 33.4 2.2 35.6
Total $ 604.4 $ 184.0 $ 788.4 $ 950.2 $ 141.8 $ 1,092.0

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	Year-To-Date Ended July 3, 2021						Year-To-Date Ended June 27, 2020
(In millions)	Wholesale		Consumer-Direct		Total		Wholesale		Consumer-Direct		Total
Wolverine Michigan Group	$	516.4	$	135.7	$	652.1	$	363.3	$	101.9	$	465.2
Wolverine Boston Group	345.3		113.6		458.9		223.6		81.0		304.6
Other	29.4		2.2		31.6		17.5		1.1		18.6
Total	$	891.1	$	251.5	$	1,142.6	$	604.4	$	184.0	$	788.4

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)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Product returns reserve	Product returns reserve	$	11.8	$	11.4	$	10.5	Product returns reserve	$	10.7	$	15.6	$	11.8
Customer markdowns reserve	Customer markdowns reserve	5.7		4.4		4.8		Customer markdowns reserve	3.3		3.7		5.7
Other sales incentives reserve	Other sales incentives reserve	3.4		2.3		1.9		Other sales incentives reserve	4.4		6.0		3.4
Customer rebates liability	Customer rebates liability	11.0		12.0		10.2		Customer rebates liability	14.2		13.4		11.0
Customer advances liability	Customer advances liability	5.8		7.2		4.1		Customer advances liability	7.1		8.2		5.8

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)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Term Loan A, due December 6, 2023	Term Loan A, due December 6, 2023	$	187.5	$	192.5	$	197.5	Term Loan A, due December 6, 2023	$	175.0	$	180.0	$	187.5
Incremental Term Loan, due May 4, 2021		171.0		—		—
Incremental Term Loan								Incremental Term Loan	0		0		171.0
Senior Notes, 5.000% interest, due September 1, 2026	Senior Notes, 5.000% interest, due September 1, 2026	250.0		250.0		250.0		Senior Notes, 5.000% interest, due September 1, 2026	250.0		250.0		250.0
Senior Notes, 6.375% interest, due May 15, 2025	Senior Notes, 6.375% interest, due May 15, 2025	300.0		—		—		Senior Notes, 6.375% interest, due May 15, 2025	300.0		300.0		300.0
Borrowings under revolving credit agreements	Borrowings under revolving credit agreements	125.0		360.0		368.0		Borrowings under revolving credit agreements	0		0		125.0
Unamortized deferred financing costs	Unamortized deferred financing costs	(9.1)		(4.1)		(4.5)		Unamortized deferred financing costs	(6.6)		(7.5)		(9.1)
Total debt	Total debt	$	1,024.4	$	798.4	$	811.0	Total debt	$	718.4	$	722.5	$	1,024.4

On May 5, 2020, the Company entered into a Second Amendment (the “Amendment”) which amended its senior credit facility, ~~that was most recently~~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 ~~(the “Incremental Term Loan”). The Incremental Term Loan will mature on May 4, 2021 and bear interest at a rate equal either to (i)~~was fully repaid by the ~~applicable base rate plus 1.250% or (ii) LIBOR plus 2.250%.~~ end of fiscal 2020.

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 ~~remain~~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. ~~The~~As of July 3, 2021, the scheduled principal payments due under Term Loan A ~~and the Incremental Term Loan~~ over the next 12 months total ~~$183.5~~$10.0 million ~~as of June 27, 2020~~ 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

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swingline subfacility and a $50.0 million letter of credit subfacility. The Company had outstanding letters of credit under the Revolving Credit Facility of ~~$5.8~~$6.1 million, ~~$5.7~~$6.1 million and ~~$3.9~~$5.8 million as of July 3, 2021, January 2, 2021 and June 27, 2020, ~~December 28, 2019 and June 29, 2019,~~ 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 ~~will be,~~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). ~~The Company has two interest rate swap arrangements that reduce the Company’s exposure to fluctuations in interest rates on its variable rate debt.~~ At ~~June 27, 2020,~~July 3, 2021, Term Loan A ~~and the Incremental Term Loan~~ had a weighted-average interest rate of ~~3.27% and the Revolving Credit Facility had a weighted-average interest rate of 3.34%~~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 ~~June 27, 2020,~~July 3, 2021, the Company was in compliance with all covenants and performance ratios under the Amended Senior Credit Facility.

On May 11, 2020 the Company issued $300.0 million aggregate principal amount of 6.375% Senior Notes due on May 15, 2025. Related interest payments are due semi-annually beginning on November 15, 2020. These senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.

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The Company has $250.0 million of senior notes outstanding that are due on September 1, 2026. These senior notes bear interest at 5.00% with the related interest payments due semi-annually and are guaranteed by substantially all of the Company’s domestic subsidiaries.

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 July 3, 2021, January 2, 2021 and June 27, ~~2020, December 28, 2019~~2020.

The Company included in interest expense the amortization of deferred financing costs of $0.6 million and ~~June 29, 2019.~~

$1.3 million for the quarter and year-to-date ended July 3, 2021, respectively. The Company included in interest expense the amortization of deferred financing costs of $0.7 million and $1.1 million for the quarter and year-to-date ended June 27, 2020, ~~respectively. The Company included in interest expense the amortization of deferred financing costs of $0.4 million and $0.8 million for the quarter and year-to-date ended June 29, 2019,~~ 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.

~~Table of Contents~~

The following is a summary of the Company’s lease cost.


		Quarter Ended						Year-To-Date Ended							Quarter Ended				Year-To-Date Ended
(In millions)	(In millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		(In millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Operating lease cost	Operating lease cost	$	8.1	$	8.2	$	16.3	$	16.2	Operating lease cost	$	8.0	$	8.1	$	16.1	$	16.3
Variable lease cost	Variable lease cost	2.7		3.8		6.1		7.3		Variable lease cost	2.9		2.7		6.1		6.1
Short-term lease cost	Short-term lease cost	0.2		0.4		0.5		0.6		Short-term lease cost	0.2		0.2		0.5		0.5
Sublease income	Sublease income	(1.1)		(0.9)		(2.3)		(1.9)		Sublease income	(1.5)		(1.1)		(3.3)		(2.3)
Total lease cost	Total lease cost	$	9.9	$	11.5	$	20.6	$	22.2	Total lease cost	$	9.6	$	9.9	$	19.4	$	20.6

~~Future undiscounted~~The following is a summary of the Company’s supplemental cash ~~flows for operating~~flow information related to leases.


	Quarter Ended				Year-To-Date Ended
(In millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Cash paid for operating lease liabilities	$	9.0	$	4.6	$	18.1	$	12.1
Operating lease assets obtained in exchange for lease liabilities	3.2		0.1		3.4		5.2

The Company did not enter into any real estate leases ~~for the fiscal periods~~with commencement dates subsequent to ~~June 27, 2020 are as follows:~~

(In millions) Operating Leases
Remainder of 2020 $ 21.5
2021 30.8
2022 28.1
2023 21.0
2024 18.1
Thereafter 107.6
Total future payments 227.1
Less: imputed interest 50.4
Recognized lease liability $ 176.7
July 3, 2021.

9.DERIVATIVE FINANCIAL INSTRUMENTS

The Company follows FASB ASC Topic 815, Derivatives and Hedging ("ASC 815"), which requires that all derivative instruments be recorded on the consolidated condensed balance sheets at fair value by establishing criteria for designation and effectiveness of hedging relationships. The Company does not hold or issue financial instruments for trading purposes.

The Company utilizes foreign currency forward exchange contracts designated as cash flow hedges to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business. These foreign currency forward exchange hedge contracts extended out to a maximum of ~~412~~538 days, ~~545~~538 days, and ~~468~~412 days as of July 3, 2021, January 2, 2021 and June 27, 2020, ~~December 28, 2019 and June 29, 2019,~~ respectively. If, in the future, the foreign exchange contracts are determined not to be highly effective or are terminated before their contractual termination dates, the Company would remove the hedge designation from those contracts and reclassify into earnings the unrealized gains or losses that would otherwise be included in accumulated other comprehensive income (loss) ~~(“AOCI”)~~ within stockholders’ equity. During the quarter ended June 27, 2020, the Company reclassified $1.3 million to other income for foreign currency contracts that were no longer deemed highly effective.

The Company also utilizes foreign currency contracts that are not designated as hedging instruments to manage foreign currency transaction exposure. Foreign currency derivatives not designated as hedging instruments are offset by foreign exchange gains or losses resulting from the underlying exposures

Table of ~~foreign currency denominated assets and liabilities.~~Contents

The Company ~~has two~~had an interest rate swap ~~arrangements, which unless otherwise terminated, will mature on July 13, 2020 and December 6, 2023, respectively. These agreements, which exchange~~arrangement to mitigate interest volatility with regard to variable rate borrowings under the Amended Senior Credit Facility. The interest rate swap exchanged floating rate for fixed rate interest payments ~~over the life of the agreements~~ without the exchange of the underlying notional amounts, ~~have~~and had been designated as cash flow ~~hedges~~hedge of the underlying debt. The ~~notional amounts~~arrangement was terminated during the fourth quarter of the interest rate swap arrangements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap arrangements is recognized as interest expense. In accordance with ASC 815, the Company has formally documented the relationship between the interest rate swaps and the variable rate borrowing, as well as its risk management objective and strategy for undertaking the hedge transactions. This process included linking the derivative to the specific liability or asset on the balance sheet. The Company also assessed at the inception of each hedge, and continues to assess on an ongoing basis, whether the derivatives used in the hedging transactions are highly effective in offsetting changes in the cash flows of the hedged item.fiscal 2020.

The Company has a cross currency swap to minimize the impact of exchange rate fluctuations. The hedging instrument, which, unless otherwise terminated, will mature on September 1, 2021, has been designated as a hedge of a net investment in a foreign

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operation. The Company will pay 2.75% on the euro-denominated notional amount and receive 5.00% on the U.S. dollar notional amount, with an exchange of principal at maturity. Changes in fair value related to movements in the foreign currency exchange spot rate are recorded in ~~AOCI,~~accumulated other comprehensive income (loss), offsetting the currency translation adjustment related to the underlying net investment that is also recorded in ~~AOCI.~~accumulated other comprehensive income (loss). All other changes in fair value are recorded in interest expense. In accordance with ASC 815, the Company has formally documented the relationship between the cross-currency swap and the Company’s investment in its euro-denominated subsidiary, as well as its risk management objective and strategy for undertaking the hedge transaction. This process included linking the derivative to its net investment on the balance sheet. The Company also assessed at the hedge’s inception, and continues to assess on an ongoing basis, whether the derivative used in the hedging transaction is highly effective in offsetting changes in ~~expected cash flows~~the net investment of the ~~hedged item.~~foreign operations.

The notional amounts of the Company’s derivative instruments are as follows:

(Dollars in millions) June 27,
2020 December 28,
2019 June 29,
2019
Foreign exchange contracts:
Hedge contracts $ 161.1 $ 246.3 $ 238.1
Non-hedge contracts — 7.3 8.5
Interest rate swaps 314.6 355.8 141.9
Cross currency swap 79.8 79.8 79.8


(Dollars in millions)	July 3, 2021		January 2, 2021		June 27, 2020

Foreign exchange hedge contracts	$	293.9	$	250.7	$	161.1

Interest rate swap	0		0		314.6
Cross currency swap	79.8		79.8		79.8

The recorded fair values of the Company’s derivative instruments are as follows:


(In millions)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Financial assets:	Financial assets:							Financial assets:
Foreign exchange contracts - hedge		$	4.1	$	2.3	$	4.3
Foreign exchange hedge contracts								Foreign exchange hedge contracts	$	1.6	$	0	$	4.1

Financial liabilities:	Financial liabilities:							Financial liabilities:
Foreign exchange contracts - hedge		$	(0.1)	$	(1.8)	$	(0.1)
Foreign exchange hedge contracts								Foreign exchange hedge contracts	$	(4.1)	$	(8.8)	$	(0.1)

Interest rate swaps		(9.8)		(1.8)		(0.2)
Interest rate swap								Interest rate swap	0		0		(9.8)
Cross currency swap	Cross currency swap	(1.9)		(3.0)		(5.3)		Cross currency swap	(8.6)		(10.8)		(1.9)

10.STOCK-BASED COMPENSATION

The Company recognized compensation expense of $11.6 million and $21.6 million, and related income tax benefits of $2.2 million and $4.2 million, for grants under its stock-based compensation plans for the quarter and year-to-date ended July 3, 2021, respectively. The Company recognized compensation expense of $7.5 million and $10.2 million, and related income tax benefits of $1.5 million and $2.0 million, for grants under its stock-based compensation plans for the quarter and year-to-date ended June 27,2020, respectively. The Company recognized compensation expense of $3.6 million and $10.2 million, and related income tax benefits of $0.7 million and $2.0 million, for grants under its stock-based compensation plans for the quarter and year-to-date ended June 29, 2019,27, 2020, respectively.

The Company grants restricted stock or units (“restricted awards”), performance-based restricted stock or units (“performance awards”) and stock options under its stock-based compensation plans.

~~During the year-to-date ended June 27, 2020, the~~The Company ~~issued 1,325,475~~granted restricted awards at a weighted average grant date fair value of $22.28 per award. During the year-to-date ended June 29, 2019, the Company issued 531,383 restricted awards at a weighted average grant date fair value of $35.01 per award.

~~During the year-to-date ended June 27, 2020, the Company issued 346,584~~and performance awards at a weighted average grant date fair value of $35.02 per award. During the year-to-date ended June 29, 2019, the Company issued 329,089 performance awards at a weighted average grant date fair value of $37.65 per award.as follows:


	Year-To-Date Ended July 3, 2021			Year-To-Date Ended June 27, 2020
(In millions)	Company Shares Issued	Weighted-Average Grant Date Fair Value		Company Shares Issued	Weighted-Average Grant Date Fair Value
Restricted Awards	588,275	$	34.76	1,325,475	$	22.28
Performance Awards	622,875	$	35.73	346,584	$	35.02

1815

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11.RETIREMENT PLANS

The following is a summary of net pension and Supplemental Executive Retirement Plan (“SERP”) expense recognized by the Company.


		Quarter Ended						Year-To-Date Ended							Quarter Ended				Year-To-Date Ended
(In millions)	(In millions)	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019		(In millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Service cost pertaining to benefits earned during the period	Service cost pertaining to benefits earned during the period	$	1.6	$	1.4	$	3.2	$	2.8	Service cost pertaining to benefits earned during the period	$	1.7	$	1.6	$	3.5	$	3.2
Interest cost on projected benefit obligations	Interest cost on projected benefit obligations	3.6		3.8		7.1		7.6		Interest cost on projected benefit obligations	3.2		3.6		6.4		7.1
Expected return on pension assets	Expected return on pension assets	(4.7)		(4.5)		(9.3)		(8.9)		Expected return on pension assets	(4.9)		(4.7)		(9.8)		(9.3)
Net amortization loss	Net amortization loss	1.7		0.7		3.3		1.3		Net amortization loss	3.5		1.7		6.9		3.3
Net pension expense	Net pension expense	$	2.2	$	1.4	$	4.3	$	2.8	Net pension expense	$	3.5	$	2.2	$	7.0	$	4.3

The non-service cost components of net pension expense is recorded in the Other ~~income,~~expense (income), net line item on the consolidated condensed statements of operations and comprehensive income.

12.INCOME TAXES

The Company maintains management and operational activities in overseas subsidiaries, and its foreign earnings are taxed at rates that are different than the U.S. federal statutory income tax rate. A significant amount of the Company’s earnings are generated by its Canadian, European and Asian subsidiaries and, to a lesser extent, in jurisdictions that are not subject to income tax.

The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has, therefore not established a deferred tax liability on that amount of foreign unremitted earnings. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation.

The Company’s effective tax rates for the quarter and year-to-date ended ~~June 27, 2020~~July 3, 2021 were ~~(28.3)%~~17.7% and ~~(33.0)%~~16.9%, respectively. The Company’s effective tax rates for the quarter and year-to-date ended June ~~29, 2019~~27, 2020 were ~~19.4%~~(28.3)% and ~~16.4%~~(33.0)%, respectively. The ~~change in~~lower effective tax rate ~~is driven by a decrease of~~for the prior year reflected larger discrete benefits than the current year. In addition, because pretax ~~book~~ income in the ~~Company's material~~current year is higher than the prior year, discrete adjustments had a lesser impact on the income tax ~~jurisdictions as a result of~~rate than they had in the ~~global COVID-19 pandemic.~~prior year.

The Company is subject to periodic audits by U.S. federal, state, local and non-U.S. tax authorities. Currently, the Company is undergoing routine periodic audits in both U.S. federal, state, local and non-U.S. tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits; however, any payment of tax is not expected to be significant to the consolidated condensed financial statements. The Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before ~~2015~~2017 in the majority of tax jurisdictions.

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13.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

~~AOCI~~Accumulated other comprehensive income (loss) represents net earnings and any revenue, expenses, gains and losses that, under U.S. GAAP, are excluded from net earnings and recognized directly as a component of stockholders’ equity.

~~Table of Contents~~

The change in ~~AOCI~~accumulated other comprehensive income (loss) during the quarters ended July 3, 2021 and June 27, 2020 ~~and June 29, 2019~~ is as follows:


(In millions)	(In millions)	Foreign currency translation adjustments		Derivatives			Pension adjustments			Total		(In millions)	Foreign currency translation		Derivatives			Pension			Total
Balance of AOCI as of March 30, 2019		$	(50.6)	$	0.6		$	(35.7)		$	(85.7)
Balance at March 28, 2020												Balance at March 28, 2020	$	(58.5)	$	(5.6)		$	(47.4)		$	(111.5)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	Other comprehensive income (loss) before reclassifications ⁽¹⁾	2.6		(2.1)			—			0.5		Other comprehensive income (loss) before reclassifications (1)	2.6		(1.8)			0			0.8
Amounts reclassified from AOCI		—		(1.7)		⁽²⁾	0.7		⁽³⁾	(1.0)
Amounts reclassified from accumulated other comprehensive income (loss)												Amounts reclassified from accumulated other comprehensive income (loss)	0		(2.4)		(2)	1.7		(3)	(0.7)
Income tax expense (benefit)	Income tax expense (benefit)	—		0.4			(0.2)			0.2		Income tax expense (benefit)	0		0.3			(0.4)			(0.1)
Net reclassifications	Net reclassifications	—		(1.3)			0.5			(0.8)		Net reclassifications	0		(2.1)			1.3			(0.8)
Net current-period other comprehensive income (loss) ⁽¹⁾	Net current-period other comprehensive income (loss) ⁽¹⁾	2.6		(3.4)			0.5			(0.3)		Net current-period other comprehensive income (loss) (1)	2.6		(3.9)			1.3			0

Balance of AOCI as of June 29, 2019		$	(48.0)	$	(2.8)		$	(35.2)		$	(86.0)
Balance at June 27, 2020												Balance at June 27, 2020	$	(55.9)	$	(9.5)		$	(46.1)		$	(111.5)

Balance of AOCI as of March 28, 2020		$	(58.5)	$	(5.6)		$	(47.4)		$	(111.5)
Balance at April 3, 2021												Balance at April 3, 2021	$	(38.4)	$	(14.9)		$	(70.8)		$	(124.1)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	Other comprehensive income (loss) before reclassifications ⁽¹⁾	2.6		(1.8)			—			0.8		Other comprehensive income (loss) before reclassifications (1)	2.5		(1.8)			0			0.7
Amounts reclassified from AOCI		—		(2.4)		⁽²⁾	1.7		⁽³⁾	(0.7)
Amounts reclassified from accumulated other comprehensive income (loss)												Amounts reclassified from accumulated other comprehensive income (loss)	0		2.4		(2)	3.5		(3)	5.9
Income tax expense (benefit)	Income tax expense (benefit)	—		0.3			(0.4)			(0.1)		Income tax expense (benefit)	0		(0.6)			(0.8)			(1.4)
Net reclassifications	Net reclassifications	—		(2.1)			1.3			(0.8)		Net reclassifications	0		1.8			2.7			4.5
Net current-period other comprehensive income (loss) ⁽¹⁾	Net current-period other comprehensive income (loss) ⁽¹⁾	2.6		(3.9)			1.3			—		Net current-period other comprehensive income (loss) (1)	2.5		0			2.7			5.2
Balance of AOCI as of June 27, 2020		$	(55.9)	$	(9.5)		$	(46.1)		$	(111.5)
Balance at July 3, 2021												Balance at July 3, 2021	$	(35.9)	$	(14.9)		$	(68.1)		$	(118.9)

⁽¹⁾Other comprehensive income (loss) is reported net of taxes and noncontrolling interest.

⁽²⁾Amounts related to foreign currency derivatives are included in cost of goods sold. Amounts related to foreign currency derivatives that are no longer deemed to be highly effective are included in other income. Amounts related to the interest rate ~~swaps~~swap and the cross-currency swap are included in interest expense.

⁽³⁾Amounts reclassified are included in the computation of net pension expense.

The change in ~~AOCI~~accumulated other comprehensive income (loss) during the year-to-dates ended July 3, 2021 and June 27, 2020 ~~and June 29, 2019~~ is as follows:


(In millions)	(In millions)	Foreign currency translation adjustments		Derivatives			Pension adjustments			Total		(In millions)	Foreign currency translation		Derivatives			Pension			Total
Balance of AOCI as of December 29, 2018		$	(53.0)	$	0.9		$	(36.2)		$	(88.3)
Balance at December 28, 2019												Balance at December 28, 2019	$	(47.6)	$	(5.8)		$	(48.7)		$	(102.1)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	Other comprehensive income (loss) before reclassifications ⁽¹⁾	5.0		(0.8)			—			4.2		Other comprehensive income (loss) before reclassifications (1)	(8.3)		(0.7)			0			(9.0)
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		(3.5)		⁽²⁾	1.3		⁽³⁾	(2.2)		Amounts reclassified from accumulated other comprehensive income (loss)	0		(3.6)		(2)	3.3		(3)	(0.3)
Income tax expense (benefit)	Income tax expense (benefit)	—		0.6			(0.3)			0.3		Income tax expense (benefit)	0		0.6			(0.7)			(0.1)
Net reclassifications	Net reclassifications	—		(2.9)			1.0			(1.9)		Net reclassifications	0		(3.0)			2.6			(0.4)
Net current-period other comprehensive income (loss) ⁽¹⁾	Net current-period other comprehensive income (loss) ⁽¹⁾	5.0		(3.7)			1.0			2.3		Net current-period other comprehensive income (loss) (1)	(8.3)		(3.7)			2.6			(9.4)
Balance of AOCI as of June 29, 2019		$	(48.0)	$	(2.8)		$	(35.2)		$	(86.0)
Balance at June 27, 2020												Balance at June 27, 2020	$	(55.9)	$	(9.5)		$	(46.1)		$	(111.5)

Balance of AOCI as of December 28, 2019		$	(47.6)	$	(5.8)		$	(48.7)		$	(102.1)
Balance at January 2, 2021												Balance at January 2, 2021	$	(36.8)	$	(20.3)		$	(73.5)		$	(130.6)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	Other comprehensive income (loss) before reclassifications ⁽¹⁾	(8.3)		(0.7)			—			(9.0)		Other comprehensive income (loss) before reclassifications (1)	0.9		3.2			0			4.1
Amounts reclassified from accumulated other comprehensive income (loss)	Amounts reclassified from accumulated other comprehensive income (loss)	—		(3.6)		⁽²⁾	3.3		⁽³⁾	(0.3)		Amounts reclassified from accumulated other comprehensive income (loss)	0		3.0		(2)	6.9		(3)	9.9
Income tax expense (benefit)	Income tax expense (benefit)	—		0.6			(0.7)			(0.1)		Income tax expense (benefit)	0		(0.8)			(1.5)			(2.3)
Net reclassifications	Net reclassifications	—		(3.0)			2.6			(0.4)		Net reclassifications	0		2.2			5.4			7.6
Net current-period other comprehensive income (loss) ⁽¹⁾	Net current-period other comprehensive income (loss) ⁽¹⁾	(8.3)		(3.7)			2.6			(9.4)		Net current-period other comprehensive income (loss) (1)	0.9		5.4			5.4			11.7
Balance of AOCI as of June 27, 2020		$	(55.9)	$	(9.5)		$	(46.1)		$	(111.5)
Balance at July 3, 2021												Balance at July 3, 2021	$	(35.9)	$	(14.9)		$	(68.1)		$	(118.9)

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(1)Other comprehensive income (loss) is reported net of taxes and noncontrolling interest.

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⁽³⁾Amounts reclassified are included in the computation of net pension expense.

14.FAIR VALUE MEASUREMENTS

The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which provides a consistent definition of fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-tier hierarchy for fair value measurements. ASC 820 requires fair value measurements to be classified and disclosed in one of the following three categories:


Level 1:						Fair value is measured using quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2:						Fair value is measured using either direct or indirect inputs, other than quoted prices included within Level 1, which are observable for similar assets or liabilities.

Level 3:						Fair value is measured using valuation techniques in which one or more significant inputs are unobservable.

Recurring Fair Value Measurements

The following table sets forth financial assets and liabilities measured at fair value in the consolidated condensed balance sheets and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy.


		Fair Value Measurements											Fair Value Measurements
		Quoted Prices With Other Observable Inputs (Level 2)											Quoted Prices With Other Observable Inputs (Level 2)
(In millions)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Financial assets:	Financial assets:							Financial assets:
Derivatives	Derivatives	$	4.1	$	2.3	$	4.3	Derivatives	$	1.6	$	0	$	4.1
Financial liabilities:	Financial liabilities:							Financial liabilities:
Derivatives	Derivatives	$	(11.8)	$	(6.6)	$	(5.6)	Derivatives	$	(12.7)	$	(19.6)	$	(11.8)

The fair value of foreign currency forward exchange contracts represents the estimated receipts or payments necessary to terminate the contracts. The ~~two~~ interest rate ~~swaps are~~swap was valued based on the current forward rates of the future cash flows. The fair value of the cross-currency swap is determined using the current forward rates and changes in the spot rate.

Fair Value Disclosures

The Company’s financial instruments that are not recorded at fair value consist of cash and cash equivalents, accounts and notes receivable, accounts payable, borrowings under revolving credit agreements and other short-term and long-term debt. The carrying amount of these financial instruments is historical cost, which approximates fair value, except for the debt. The carrying value and the fair value of the Company’s debt ~~excluding capital leases,~~ are as follows:


(In millions)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Carrying value	Carrying value	$	1,024.4	$	798.4	$	811.0	Carrying value	$	718.4	$	722.5	$	1,024.4
Fair value	Fair value	1,062.4		817.6		828.9		Fair value	757.2		765.4		1,062.4

The fair value of the fixed rate debt was based on third-party quotes (Level 2). The fair value of the variable rate debt was calculated by discounting the future cash flows to its present value using a discount rate based on the risk-free rate of the same maturity (Level 3).

15.LITIGATION AND CONTINGENCIES

Litigation

The Company operated a leather tannery in Rockford, Michigan from the early 1900s through 2009 (the “Tannery”). The Company also owns a parcel on House Street in Plainfield Township that the Company used for the disposal of Tannery byproducts until about 1970 (the "House Street" site). Beginning in the late 1950s, the Company used 3M Company’s Scotchgard™ in its processing of certain leathers at the Tannery. Until 2002 when 3M Company changed its Scotchgard™

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formula, Tannery byproducts disposed of by the Company at the House Street site and other locations may have contained

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PFOA and/or PFOS, two chemicals in the family of compounds known as per- and polyfluoroalkyl substances (together, “PFAS”). PFOA and PFOS help provide non-stick, stain-resistant, and water-resistant qualities, and were used for many decades in commercial products like firefighting foams and metal plating, and in common consumer items like food wrappers, microwave popcorn bags, pizza boxes, Teflon™, carpets and Scotchgard™.

~~The United States Centers for Disease Control and Prevention has concluded that studies of the health effects of PFOA and PFOS are “inconsistent and inconclusive,” but in~~In May 2016, the Environmental Protection Agency (“EPA”) announced a lifetime health advisory level of 70 parts per trillion (“ppt”) combined for PFOA and PFOS. Lifetime health advisories, while not enforceable, serve as guidance and are benchmarks for determining if concentrations of chemicals in tap water from public utilities are safe for public consumption. In January 2018, the Michigan Department of Environmental Quality (“MDEQ”, now known as the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”)) enacted a drinking water criterion of 70 ppt combined for PFOA and PFOS, which set an official state standard for acceptable concentrations of these contaminants in groundwater used for drinking water purposes. On ~~April 22, 2019, the MDEQ was reorganized into the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”). On~~ August 3, 2020, Michigan changed the standards for PFOA and PFOS in drinking water to 8 and 16 ppt, respectively, and set standards ~~became effective~~ for ~~PFOA, PFOS, PFNA, PFHxA, PFHxS, PFBS, and HFPO-DA.~~

The Company has been served with two regulatory actions including a civil action filed by the EGLE under the federal Resource Conservation and Recovery Act of 1976 (“RCRA”), Part 201 of the Michigan Natural Resources and Environmental Protection Act (“NREPA”) and Part 31 of NREPA, and a Unilateral Administrative Order issued by the EPA under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) Section 106. The Company has also been served with individual lawsuits and three putative class action lawsuits. The three putative class action lawsuits were subsequently refiled as a single consolidated putative class action lawsuit.four other PFAS substances.

Civil and Regulatory Actions of EGLE and EPA

On January 10, 2018, EGLE filed a civil action against the Company in the ~~U.S~~U.S. District Court for the Western District of Michigan under ~~RCRA~~the federal Resource Conservation and Recovery Act of 1976 (“RCRA”) and Parts 201 and 31 of ~~NREPA~~the Michigan Natural Resources and Environmental Protection Act (“NREPA”) alleging that the Company’s past and present handling, storage, treatment, transportation and/or disposal of solid waste at the Company’s properties has ~~contributed to the disposal of solid wastes that was done in a way that~~ resulted in releases of PFAS at levels ~~that resulted in detections~~ exceeding applicable Michigan cleanup criteria for PFOA and PFOS (the "EGLE Action"). Plainfield and Algoma Townships intervened in the EGLE Action alleging claims under RCRA, ~~CERCLA, Part 201 of~~ NREPA, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and common law nuisance.

On February 3, 2020, the parties entered into a consent decree resolving the EGLE Action, which was approved by U.S. District Judge Janet T. Neff on February 19, 2020 (the “Consent Decree”). Under the Consent Decree, the Company agreed to pay for an extension of Plainfield Township’s municipal water system to more than 1,000 properties in Plainfield and Algoma Townships, subject to an aggregate cap of $69.5 million. The Company also agreed to continue maintaining water filters for certain homeowners, resample certain residential wells for PFAS, continue remediation at the Company’s Tannery property and House Street site, and conduct further investigations and monitoring to the assess the presence of PFAS in area groundwater. The Company’s activities under the Consent Decree are not materially impacted by the drinking water standards that became effective on August 3, 2020.

On December 19, 2018, the Company filed a third-party complaint against 3M Company seeking, among other things, recovery of the Company’s remediation and other costs incurred in defense of the EGLE Action ("the 3M Action"). On June 20, 2019, the 3M Company filed a counterclaim against the Company in response to the 3M Action, seeking, among other things, contractual and common law indemnity and contribution under CERCLA and Part 201 of NREPA. On February ~~3, 2020, the parties entered into a consent decree resolving the EGLE Action, which was approved by U.S. District Judge Janet T. Neff on February 19, 2020 (the “Consent Decree”). On February~~ 20, 2020, the Company and ~~the~~ 3M Company entered into a settlement agreement resolving the 3M Action, under which 3M Company paid the Company a lump sum amount of $55.0 million during the first quarter of 2020.

Under the Consent Decree, the Company will pay to extend Plainfield Township’s municipal water system to more than 1,000 properties in Plainfield and Algoma Townships, subject to an aggregate cap of $69.5 million. The Consent Decree also obligates the Company to continue maintaining water filters for certain homeowners, resample certain residential wells for PFAS, continue remediation at the Company’s Tannery property and House Street site, and conduct further investigations and monitoring to the assess the presence of PFAS in area groundwater. The Company’s activities under the Consent Decree are not materially impacted by the drinking water standards that became effective on August 3, 2020.

On January 10, 2018, the EPA entered a Unilateral Administrative Order (the “Order”) under Section 106(a) of CERCLA, 42 U.S.C. § 9606(a)~~. The~~ with an effective date of ~~the Order was~~ February 1, 2018. The Order pertained to specified removal actions at the Company's Tannery and House Street sites, ~~and directed the Company to conduct specified removal actions,~~ including certain time critical removal actions subsequently identified in an April 29, 2019 letter from the EPA, to abate the actual or threatened release of hazardous substances at or from the sites. On October 28, 2019, the EPA and the Company entered into an Administrative Settlement and Order on Consent (“AOC”) that supersedes the Order and addresses the agreed-upon removal actions outlined in the Order. The Company has completed almost all of ~~these~~the activities ~~related~~required by to the AOC, and ~~will complete~~anticipates completing the remaining activities in ~~2020~~2021 pursuant to approved work plans.

The Company discusses its reserve for remediation costs in the environmental liabilities section below.

Individual and Class Action Litigation

Individual lawsuits and three putative class action lawsuits have been filed against the Company that raise a variety of claims, including claims related to property, remediation, and human health effects. The three putative class action lawsuits were

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subsequently refiled in the U.S. District Court for the Western District of Michigan as a single consolidated putative class action lawsuit. 3M ~~Company, which sold Scotchgard containing PFAS to the~~ Company has been named as a co-defendant in the individual lawsuits and consolidated putative class action lawsuit. In addition, the current owner of a former landfill and gravel mining operation sued the Company seeking damages and cost recovery for property damage allegedly caused by the Company’s disposal of tannery waste containing PFAS (this suit collectively with the individual lawsuits and putative class action, the “Litigation Matters”).

Assessing potential liability with respect to the Litigation Matters at this time is difficult. The Litigation Matters are in various stages of discovery and related motions. In addition, there is minimal direct and relevant precedent for these types of claims related to PFAS, and the science regarding the human health effects of PFAS exposure in the environment remains inconclusive

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and inconsistent, thereby creating additional uncertainties. Due to these factors, combined with the complexities and uncertainties of litigation, the Company is unable to conclude that adverse verdicts resulting from the Litigation Matters are probable, and therefore no amounts are currently reserved for these claims. The Company intends to continue to vigorously defend itself against these claims.

In addition, in December 2018 the Company filed a lawsuit against certain of its historic liability insurers, seeking ~~their participation in~~a defense against the ~~Company's defense~~Litigation Matters and coverage for remediation ~~efforts.~~ ~~During the second quarter of 2020,~~efforts undertaken by the Company and indemnity provided by the Company. The Company recognized certain ~~$5.8 million in~~ recoveries from legacy insurance ~~policies. The~~policies in 2020 and 2021, and continues pursing additional recoveries ~~resulted from interim payment agreements reached with the insurers and are pending final resolution of the~~pursuant to its lawsuit.

Other Litigation

The Company is also involved in litigation incidental to its business and is a party to legal actions and claims, including, but not limited to, those related to employment, intellectual property, and ~~intellectual property.~~other environmental matters. Some of the legal proceedings include claims for compensatory as well as punitive damages. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available to the Company and reserves for liabilities that ~~have been~~the Company has recorded, along with applicable insurance, it is management’s opinion that the outcome of these items are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Environmental Liabilities

The following is a summary of the activity with respect to the environmental remediation reserve established by the Company:


		Year-To-Date Ended							Year-To-Date Ended
(In millions)	(In millions)	June 27, 2020		June 29, 2019		(In millions)	July 3, 2021		June 27, 2020
Remediation liability at beginning of the year	Remediation liability at beginning of the year	$	124.4	$	22.6	Remediation liability at beginning of the year	$	101.8	$	124.4
Changes in estimate	Changes in estimate	—		—		Changes in estimate	0		0
Amounts paid	Amounts paid	(17.7)		(5.3)		Amounts paid	(8.7)		(17.7)
Remediation liability at the end of the quarter	Remediation liability at the end of the quarter	$	106.7	$	17.3	Remediation liability at the end of the quarter	$	93.1	$	106.7

The reserve balance as of ~~June 27, 2020~~July 3, 2021 includes ~~$34.5~~$24.8 million that is expected to be paid within the next twelve months and is recorded as a current obligation in other accrued liabilities, with the remaining ~~$72.2~~$68.3 million expected to be paid over the course of up to 25 years, recorded in other liabilities.

The Company's remediation activity at the Tannery property, House Street site and other relevant disposal sites is ongoing. Although the ~~recent~~ Consent Decree has made near-term costs more clear, it is difficult to estimate the long-term cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods. Future developments may occur that could materially change the Company’s current cost estimates, including, but not limited to: (i) changes in the information available regarding the environmental impact of the Company’s operations and products; (ii) changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages; (iii) new and evolving analytical and remediation techniques; (iv) changes to the form of remediation; (v) success in allocating liability to other potentially responsible parties; and (vi) the financial viability of other potentially responsible parties and third-party indemnitors. For locations at which remediation activity is largely ongoing, the Company cannot estimate a possible loss or range of loss in excess of the associated established reserves for the reasons described above. The Company adjusts recorded liabilities as further information develops or circumstances change.

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Minimum Royalties and Advertising Commitments

The Company has future minimum royalty and advertising obligations due under the terms of certain licenses held by the Company. These minimum future obligations for the fiscal periods subsequent to ~~June 27, 2020~~July 3, 2021 are as follows:


(In millions)	(In millions)	2020		2021		2022		2023		2024		Thereafter		(In millions)	2021		2022		2023		2024		2025		Thereafter
Minimum royalties	Minimum royalties	$	0.5	$	1.7	$	1.8	$	—	$	—	$	—	Minimum royalties	$	0.6	$	1.8	$	0	$	0	$	0	$	0
Minimum advertising	Minimum advertising	2.2		3.3		3.4		3.5		3.6		—		Minimum advertising	$	0	$	3.4	$	3.5	$	3.6	$	0	$	0

Minimum royalties are based on both fixed obligations and assumptions regarding the Consumer Price Index. Royalty obligations in excess of minimum requirements are based upon future sales levels. In accordance with these agreements, the

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Company incurred royalty expense of ~~$0.4~~$0.7 million and ~~$0.8~~$1.1 million for the quarter and year-to-date ended ~~June 27, 2020,~~July 3, 2021, respectively. For the quarter and year-to-date ended June ~~29, 2019,~~27, 2020, the Company incurred royalty expense in accordance with these agreements of ~~$0.5~~$0.4 million and ~~$1.0~~$0.8 million, respectively.

The terms of certain license agreements also require the Company to make advertising expenditures based on the level of sales of the licensed products. In accordance with these agreements, the Company incurred advertising expense of ~~$0.4~~$1.7 million and ~~$1.0~~$2.7 million for the quarter and year-to-date ended ~~June 27, 2020,~~July 3, 2021, respectively. For the quarter and year-to-date ended June ~~29, 2019,~~27, 2020, the Company incurred advertising expense in accordance with these agreements of ~~$1.5~~$0.4 million and ~~$1.9~~$1.0 million, respectively.

16.BUSINESS SEGMENTS

The Company’s portfolio of brands is organized into the following two operating segments, which the Company has determined to be reportable segments.

•Wolverine Michigan Group, consisting of Merrell^® footwear and apparel, Cat^® footwear, Wolverine^® footwear and apparel, Chaco^® footwear, Hush Puppies^® footwear and apparel, Bates^® uniform footwear, Harley-Davidson^® footwear and Hytest^® safety footwear; and

•Wolverine Boston Group, consisting of Sperry^® footwear, ~~and apparel,~~ Saucony^® footwear and apparel, Keds^® footwear, ~~and apparel,~~ and the Kids’ footwear business, which includes the Stride Rite^® licensed business, as well as ~~kids'~~Kids' footwear offerings from Saucony^®, Sperry^®, Keds^®, Merrell^®, Hush Puppies^® and Cat^®.

The reportable segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue for the reportable segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; revenue from third-party licensees and distributors; and revenue from the Company’s consumer-direct businesses.

The Company also reports “Other” and “Corporate” categories. The Other category consists of the Company’s leather marketing operations, sourcing operations that include third-party commission revenues and multi-branded consumer-direct retail stores. The Corporate category consists of unallocated corporate expenses, such as ~~reorganization~~corporate employee costs, costs related to the COVID-19 pandemic and environmental and other related costs. The Company’s reportable segments are determined based on how the Company internally reports and evaluates financial information used to make operating decisions. ~~The reportable segment managers all report directly to the chief operating decision maker.~~

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Company management uses various financial measures to evaluate the performance of the reportable segments. The following is a summary of certain key financial measures for each reportable segment.

Quarter Ended Year-To-Date Ended
(In millions) June 27,
2020 June 29,
2019 June 27,
2020 June 29,
2019
Revenue:
Wolverine Michigan Group $ 217.4 $ 318.2 $ 465.2 $ 620.9
Wolverine Boston Group 122.5 230.7 304.6 435.5
Other 9.2 19.7 18.6 35.6
Total $ 349.1 $ 568.6 $ 788.4 $ 1,092.0
Operating profit (loss):
Wolverine Michigan Group $ 38.4 $ 59.3 $ 81.5 $ 117.8
Wolverine Boston Group 8.6 37.2 27.4 69.2
Other 0.4 1.5 0.3 2.3
Corporate (39.9) (42.5) (84.8) (81.4)
Total $ 7.5 $ 55.5 $ 24.4 $ 107.9

(In millions) June 27,
2020 December 28,
2019 June 29,
2019
Total assets:
Wolverine Michigan Group $ 714.4 $ 773.8 $ 774.9
Wolverine Boston Group 1,307.0 1,354.8 1,426.2
Other 37.0 38.4 43.6
Corporate 531.0 313.0 198.2
Total $ 2,589.4 $ 2,480.0 $ 2,442.9
Goodwill:
Wolverine Michigan Group $ 143.2 $ 144.4 $ 143.8
Wolverine Boston Group 292.4 294.5 294.7
Total $ 435.6 $ 438.9 $ 438.5

~~17.BUSINESS ACQUISITIONS~~

~~On April 30, 2019, the Company acquired assets and assumed liabilities from Sportlab S.R.L. (“Sportlab”), the distributor of~~ ~~Saucony~~^® footwear in Italy. Total purchase consideration of $25.2 million includes cash paid, extinguishment of Sportlab’s accounts payable balance that was due to the Company at the time of acquisition and contingent consideration. The contingent consideration was based on sales activity from the date of the acquisition through the end of fiscal 2019 and was paid in the first quarter of fiscal 2020. The detailed amounts of each component of the purchase consideration are as follows:


~~(In millions)~~	~~Purchase Consideration~~
~~Cash paid~~	$	~~15.1~~
~~Extinguishment of Sportlab’s accounts payable balance~~	~~4.6~~
~~Contingent consideration~~	~~5.5~~
~~Total purchase consideration~~	$	~~25.2~~

~~The Company accounted for the acquisition under the provisions of FASB ASC Topic 805,~~ ~~Business Combinations. The related assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The operating results for the acquired~~ ~~Saucony~~^® distribution business are included in the Company’s consolidated results of operations beginning April 30, 2019, and are included in the Wolverine Boston Group reporting group for segment reporting purposes.


	Quarter Ended				Year-to-Date Ended
(In millions)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Revenue:
Wolverine Michigan Group	$	354.4	$	217.4	$	652.1	$	465.2
Wolverine Boston Group	258.0		122.5		458.9		304.6
Other	19.5		9.2		31.6		18.6
Total	$	631.9	$	349.1	$	1,142.6	$	788.4
Operating profit (loss):
Wolverine Michigan Group	$	75.5	$	38.4	$	134.7	$	81.5
Wolverine Boston Group	47.0		8.6		81.1		27.4
Other	1.2		0.4		1.5		0.3
Corporate	(59.9)		(39.9)		(95.4)		(84.8)
Total	$	63.8	$	7.5	$	121.9	$	24.4

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~~The final allocation~~


(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Total assets:
Wolverine Michigan Group	$	702.4	$	626.9	$	714.4
Wolverine Boston Group	1,157.9		1,077.8		1,307.0
Other	43.4		31.4		37.0
Corporate	399.9		401.3		531.0
Total	$	2,303.6	$	2,137.4	$	2,589.4
Goodwill:
Wolverine Michigan Group	$	145.7	$	145.4	$	143.2
Wolverine Boston Group	297.9		297.0		292.4
Total	$	443.6	$	442.4	$	435.6

17.SUBSEQUENT EVENT

On July 31, 2021, the Company entered into a definitive agreement to acquire 100% of the ~~purchase price as~~outstanding shares of ~~December 28, 2019 was:~~

~~(In millions)~~

~~Initial Valuation~~

~~Accounts receivable~~

~~1.8~~

~~Inventories~~

~~6.2~~

~~Goodwill~~

~~12.0~~

~~Amortizable intangibles~~

~~12.9~~

~~Total assets acquired~~

~~32.9~~

~~Deferred income taxes~~

~~3.2~~

~~Other liabilities~~

~~4.5~~

~~Total liabilities assumed~~

~~7.7~~

~~Net assets acquired~~

~~25.2~~

Lady Leisure Investco Limited (the “Acquired Company”). The ~~excess of the purchase price over the fair value of the net assets acquired, amounting to $12.0 million,~~acquisition was recorded as goodwill in the consolidated balance sheet and was assigned to the Wolverine Boston Group reportable segment. The goodwill that was recognized is attributable to the efficiencies to be gained by integrating operations with the ~~Saucony~~^® ~~distribution business purchased from Sportlab. Other intangible assets acquired include order backlog, valued at $1.7 million, and customer relationship assets, valued at $11.2~~completed on August 2, 2021 for $415.8 million, which ~~had estimated useful lives at~~is net of acquired cash of $7.1 million. The Acquired Company owns the Sweaty Betty brand and activewear business, a premium women’s activewear brand. The acquisition ~~date of 7 months~~was funded with cash on hand and ~~14 years, respectively.~~borrowings under the Company’s revolving credit facility.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the Company’s results of operations and liquidity and capital resources. This section should be read in conjunction with the Company’s consolidated condensed financial statements and related notes included elsewhere in this Quarterly Report.

BUSINESS OVERVIEW

The Company is a leading global designer, marketer and licensor of branded footwear, apparel and accessories. The Company’s vision statement is “to build a family of the most admired performance and lifestyle brands on earth” and the Company seeks to fulfill this vision by offering innovative products and compelling brand propositions; complementing its footwear brands with strong apparel and accessories offerings; expanding its global consumer-direct footprint; and delivering supply chain excellence.

The Company’s brands are marketed in approximately 170 countries and territories at ~~June 27, 2020,~~July 3, 2021, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific. In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures. At ~~June 27, 2020,~~July 3, 2021, the Company operated 9297 retail stores in the U.S. and Canada and 3661 consumer-direct eCommerce sites.

~~COVID-19~~

~~In March 2020,~~On July 31, 2021, the ~~World Health Organization declared~~Company entered into a definitive agreement to acquire 100% of the ~~outbreak~~outstanding shares of ~~COVID-19~~Lady Leisure Investco Limited (the “Acquired Company”). The acquisition was completed on August 2, 2021 for $415.8 million, which is net of acquired cash of $7.1 million. The Acquired Company owns the Sweaty Betty brand and activewear business, a ~~pandemic. COVID-19 has had a negative effect~~premium women’s activewear brand. The acquisition was funded with cash on ~~the global economy~~hand and onborrowings under the Company’s ~~2020 operating and financial results to date.~~ revolving credit facility.

Known Trends Impacting Our Business

The ~~full financial effects~~global impact of the COVID-19 pandemic ~~cannot be reasonably estimated at this time due~~continues to ~~uncertainty as~~impact the Company’s business. Most importantly, the Company remains focused on the health and safety of our employees, customers and partners around the world.In accordance with regulatory guidance and protocols promulgated by health authorities and government officials, the Company continues to ~~its severity~~execute a number of enhanced business practices including temporary office closures, travel restrictions, enhanced cleaning procedures and ~~duration. The~~social distancing designed to protect all employees.

At the onset of the COVID-19 pandemic, the Company ~~has taken the following~~took proactive and precautionary measures to mitigate known areas of risk and better equip the Company to navigate the future ~~environment:~~

•~~To increase~~environment. These included additional debt borrowings, workforce changes, discretionary expense reductions and a number of other liquidity preservation measures. These efforts allowed the Company to maintain adequate financial liquidity and ~~flexibility of~~position the Company to shift resources towards future growth. Specifically, the Company prioritized brand investments in the Company’s ~~capital structure,~~owned eCommerce sites. The Company’s brands’ on-line growth accelerated due to the investments in this channel and consumer preference changes in favor of digital purchases. The Company continues to prioritize eCommerce investments including digital leadership, marketing investments in digital platforms, developing richer content and storytelling, and optimizing digital user experiences to increase conversion. The Company is offering incremental exclusive products through owned eCommerce sites and the Company borrowed $171 million in incremental 364-day term loan under its senior credit facility and sold $300 million of 6.375% Senior Notes (refer to Note 7, “Debt”), delayed most capital projects, suspended share repurchases, implemented select employee furloughs and organizational changes, compensation changes forhas enhanced the Company's management team and Board of Directors, delayed or canceled certain future product purchases across its portfolio of brands, initiated conversations with landlords to seek lease concessions, and took additional steps to reduce discretionary spending and other expenditures.

•The Company temporarily closed all U.S. and Canada retail stores on March 17, 2020. Stores began reopening in May under a phased approach and as of the end of the second quarter all stores had reopened with newly instituted health and safety protocols for customers and employees following regulatory guidance and protocols promulgated and health authorities and government officials. During the period stores were closed, the Company’s distribution centers remained open and the Company’s direct on-line channels continued to serve customer ~~demand.~~shopping experience.

The COVID-19 pandemic has had a material adverse impact, and is expected to continue to have ~~a material adverse~~an impact, on the Company’s financial results. ~~The full nature~~During the first two quarters of 2021, disruption in the global supply chain due to vessel shortages, containers damaged and ~~extent~~lost in transit, and U.S. port congestion resulted in transportation delays that interrupted the flow of the ~~impact will depend on future developments, including, among other things; the continued spread~~Company’s inventory and ~~duration~~caused delays of shipments to wholesale partners. The Company expects certain aspects of the ~~pandemic;~~disruption in the ~~negative~~global supply chain to continue, which may impact ~~on global and regional economies and economic activity; actions governments, businesses and individuals take in response~~results for the remaining portion of fiscal 2021. Expenses related to the ~~pandemic;~~COVID-19 pandemic incurred in the ~~effects~~second quarter and first two quarters of 2021 included $11.0 million and $15.0 million, respectively, of incremental air freight cost to expedite the delivery of inventory resulting from production and shipping delays. Expenses in the second quarter and first two quarters of 2020 related to the COVID-19 pandemic ~~including all~~included $14.1 million and $18.7 million, respectively, of ~~the foregoing, on the Company’s manufacturers, distributors, suppliers, joint venture partners, wholesale customers~~costs related to severance expenses, credit loss expenses and other ~~counterparties, and how quickly the global economy and demand for the Company's products recovers after the pandemic subsides. The Company continues to monitor the situation closely~~costs..

~~2020~~2021 FINANCIAL OVERVIEW

•Revenue was ~~$349.1~~$631.9 million for the second quarter of ~~2020,~~2021, representing ~~a decline~~an increase of ~~38.6%~~81.0% compared to the second quarter of ~~2019.~~2020. The change in revenue reflected a ~~31.7% decline~~63.0% increase from the Michigan Group and a ~~46.9% decline~~110.6% increase from the Boston Group. Changes in foreign exchange rates ~~decreased~~increased revenue by ~~$2.0~~$11.6 million during the second quarter of ~~2020.~~ 2021. Owned eCommerce revenue ~~increased~~decreased during the second quarter of 2021 by 2.7% compared to the second quarter of 2020 ~~by 96.0% compared~~which benefited from closure of brick-and-mortar stores in response to the ~~second quarter~~pandemic.

Table of ~~2019.~~Contents

•Gross margin was 42.8% in the second quarter of 2021 compared to 42.2% in the second quarter of ~~2020 compared to 40.5% in the second quarter of 2019.~~2020.

•The effective tax rates in the second quarters of 2021 and 2020 were 17.7% and ~~2019 were~~ (28.3)% ~~and 19.4%~~, respectively.

•Diluted earnings ~~(loss)~~ per share for the second ~~quarters~~quarter of ~~2020 and 2019 were $(0.02)~~2021 was $0.53 per share ~~and $0.45~~compared to diluted loss per share ~~respectively.~~of $0.02 per share for the second quarter of 2020.

•The Company declared cash dividends of $0.10 per share in both the second quarters of ~~2020~~2021 and ~~2019.~~2020.

~~Table of Contents~~

•Cash flow provided by operating activities was ~~$39.0~~$51.7 million and ~~$3.9~~$39.0 million for the first two quarters of ~~2020~~2021 and ~~2019,~~2020, respectively, and was ~~$115.6~~$25.4 million and ~~$136.3~~$115.6 million for the second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

•Compared to the second quarter of ~~2019,~~2020, inventory decreased ~~$20.0~~$54.8 million, or ~~4.9%~~14.2%, and total debt decreased $306.0 million, or 29.9%.

RESULTS OF OPERATIONS


		Quarter Ended										Year-To-Date Ended											Quarter Ended				Year-To-Date Ended
(In millions, except per share data)	(In millions, except per share data)	June 27, 2020		June 29, 2019		Percent Change		June 27, 2020		June 29, 2019		Percent Change		(In millions, except per share data)	July 3, 2021		June 27, 2020		Percent Change		July 3, 2021		June 27, 2020		Percent Change
Revenue	Revenue	$	349.1	$	568.6	(38.6)	%	$	788.4	$	1,092.0	(27.8)	%	Revenue	$	631.9	$	349.1	81.0	%	$	1,142.6	$	788.4	44.9	%
Cost of goods sold	Cost of goods sold	201.9		338.2		(40.3)		459.4		641.4		(28.4)		Cost of goods sold	361.5		201.9		79.0		649.9		459.4		41.5

Gross profit	Gross profit	147.2		230.4		(36.1)		329.0		450.6		(27.0)		Gross profit	270.4		147.2		83.7		492.7		329.0		49.8
Selling, general and administrative expenses	Selling, general and administrative expenses	143.6		168.7		(14.9)		299.7		332.7		(9.9)		Selling, general and administrative expenses	201.8		143.6		40.5		376.2		299.7		25.5

Environmental and other related costs, net of recoveries	Environmental and other related costs, net of recoveries	(3.9)		6.2		(162.9)		4.9		10.0		(51.0)		Environmental and other related costs, net of recoveries	4.8		(3.9)		223.1		(5.4)		4.9		(210.2)
Operating profit	Operating profit	7.5		55.5		(86.5)		24.4		107.9		(77.4)		Operating profit	63.8		7.5		750.7		121.9		24.4		399.6
Interest expense, net	Interest expense, net	10.5		6.7		56.7		18.3		13.6		34.6		Interest expense, net	9.7		10.5		(7.6)		19.3		18.3		5.5
Debt extinguishment and other costs	Debt extinguishment and other costs	0.2		—		—		0.2		—		—		Debt extinguishment and other costs	—		0.2		(100.0)		—		0.2		(100.0)
Other income, net		(1.7)		(1.0)		(70.0)		(2.3)		(2.3)		—
Other expense (income), net														Other expense (income), net	0.1		(1.7)		105.9		2.9		(2.3)		226.1
Earnings (loss) before income taxes	Earnings (loss) before income taxes	(1.5)		49.8		(103.0)		8.2		96.6		(91.5)		Earnings (loss) before income taxes	54.0		(1.5)		*		99.7		8.2		*
Income tax expense (benefit)	Income tax expense (benefit)	0.4		9.6		(95.8)		(2.7)		15.8		(117.1)		Income tax expense (benefit)	9.6		0.4		*		16.9		(2.7)		725.9
Net earnings (loss)	Net earnings (loss)	(1.9)		40.2		(104.7)		10.9		80.8		(86.5)		Net earnings (loss)	44.4		(1.9)		*		82.8		10.9		659.6
Less: net earnings (loss) attributable to noncontrolling interests		(0.3)		—		—		(0.5)		0.1		(600.0)
Less: net loss attributable to noncontrolling interests														Less: net loss attributable to noncontrolling interests	(0.3)		(0.3)		—		(0.4)		(0.5)		20.0
Net earnings (loss) attributable to Wolverine World Wide, Inc.	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	(1.6)	$	40.2	(104.0)	%	$	11.4	$	80.7	(85.9)	%	Net earnings (loss) attributable to Wolverine World Wide, Inc.	$	44.7	$	(1.6)	*		$	83.2	$	11.4	629.8	%

Diluted earnings (loss) per share	Diluted earnings (loss) per share	$	(0.02)	$	0.45	(104.4)	%	$	0.14	$	0.88	(84.1)	%	Diluted earnings (loss) per share	$	0.53	$	(0.02)	*		$	0.98	$	0.14	600.0	%

* Percentage change not meaningful

REVENUE

Revenue was ~~$349.1~~$631.9 million for the second quarter of ~~2020,~~2021, representing ~~a decline~~an increase of ~~38.6%~~81.0% compared to the second quarter of ~~2019.~~2020. The change in revenue reflected a ~~31.7% decline~~63.0% increase from the Michigan Group and a ~~46.9% decline~~110.6% increase from the Boston Group. The Michigan Group’s revenue ~~decline~~increase was driven by ~~low-thirties decline~~high-eighties increase from Merrell^®, ~~high-thirties decline~~high-forties increase from Cat^®, ~~high-twenties decline~~low-seventies increase from Wolverine^®, ~~mid-teens decline~~high-fifties increase from ~~Chaco~~Bates^®, and ~~a high-forties decline~~mid-forties increase from ~~Hush Puppies~~Harley-Davidson^®. The Boston Group’s revenue ~~decline~~increase was driven by ~~low-sixties decline~~high-one-hundred twenties increase from Saucony®, high-one-hundred single digit increase from Sperry^®, ~~high-twenties decline~~mid-sixties increase from Keds®, and low-one-hundred single digit increase from Kids’. Changes in foreign exchange rates increased revenue by $11.6 million during the second quarter of 2021. Owned eCommerce revenue decreased during the second quarter of 2021 by 2.7% compared to the second quarter of 2020 which benefited from closure of brick-and-mortar stores in response to the pandemic.

Revenue was $1,142.6 million for the first two quarters of 2021, representing an increase of 44.9% compared to the first two quarters of 2020. The change in revenue reflected a 40.2% increase from the Michigan Group and a 50.7% increase from the Boston Group. The Michigan Group’s revenue increase was driven by low-fifties increase from Merrell®, low-forties increase from Cat®, mid-forties increase from Wolverine®, mid-twenties increase from Bates®, and mid-thirties increase from Harley-Davidson®. The Boston Group’s revenue increase was driven by low-nineties increase from Saucony^®, ~~high-forties decline~~mid-thirties increase from ~~Keds~~Sperry^®, and ~~a low-fifties decline~~mid-thirties increase from Kids’. Changes in foreign exchange rates ~~decreased~~increased revenue by ~~$2.0~~$20.2 million ~~during the second quarter of 2020. Owned eCommerce revenue increased during the second quarter of 2020 by 96.0% compared to the second quarter of 2019.~~

~~Revenue was $788.4 million for~~Table of Contents

during the first two ~~quarters~~quarters of 2020, representing a decline of 27.8% compared to the first two quarters of 2019. The change in revenue reflected a 25.1% decline from the Michigan Group and a 30.1% decline from the Boston Group. The Michigan Group’s revenue decline was driven by low-twenties decline from ~~Merrell~~^®~~, mid-thirties decline from~~ ~~Cat~~^®~~, low-twenties decline from~~ ~~Wolverine~~^®~~, mid-twenties decline from~~ ~~Chaco~~^®~~, and a high-thirties decline from~~ ~~Hush Puppies~~^®~~. The Boston Group’s revenue decline was driven by low-forties decline from~~ ~~Sperry~~^®~~, low-teens decline from~~ ~~Saucony~~^®~~, high-twenties decline from~~ ~~Keds~~^®~~, and a mid-thirties decline from Kids’. Changes in foreign exchange rates decreased revenue by $4.9 million during the first two quarters of 2020.~~ 2021. Owned eCommerce revenue increased during the first two quarters of ~~2020~~2021 by ~~61.8%~~24.6% compared to the first two quarters of ~~2019.~~2020.

GROSS MARGIN

Gross margin was 42.8% in the second quarter of 2021 compared to 42.2% in the second quarter of ~~2020~~2020. The gross margin increase in the second quarter was driven by favorable product mix and average selling price across the Company’s brands mainly attributable to Merrell®, Saucony® and Sperry® (260 basis points), favorable product mix and average selling price through the Company’s direct to consumer channel (150 basis points), partially offset by incremental air freight costs resulting from production and shipping delays caused by the COVID-19 pandemic (320 basis points).

Gross margin was 43.1% in the first two quarters of 2021 compared to ~~40.5%~~41.7% during the first two quarters of 2020. The gross margin increase in the first two quarters was driven by favorable product mix and average selling price across the Company’s brands mainly attributable to Merrell®, Saucony® and Wolverine® (200 basis points), favorable product mix and average selling price through the Company’s direct to consumer channel (150 basis points), partially offset by incremental air freight costs resulting from production and shipping delays caused by the COVID-19 pandemic (190 basis points).

OPERATING EXPENSES

Operating expenses increased $66.9 million, from $139.7 million in the second quarter of ~~2019. Gross margin~~2020 to $206.6 million in the second quarter of 2021. The increase was ~~41.7%~~primarily driven by higher general and administrative costs ($18.6 million), higher selling costs ($16.9 million), higher incentive compensation costs ($15.6 million), higher advertising costs ($15.4 million), higher environmental and other related costs, net of insurance recoveries ($8.7 million), higher distribution costs ($4.2 million), and higher product development costs ($1.5 million), partially offset by lower non-operating costs incurred due to the COVID-19 pandemic ($14.0 million). Environmental and other related costs were $4.8 million and $1.9 million in the second quarter of 2021 and 2020, respectively.

Operating expenses increased $66.2 million, from $304.6 million in the first two quarters of 2020 ~~compared~~ to ~~41.3% during~~$370.8 million in the first two quarters of ~~2019.~~2021. The ~~gross margin~~ increase in the current year periods resulted from a favorable sales channel shift to higher margin eCommerce and favorable wholesale product mix, partially offset by increased tariffs on inventory sourced from China.

~~Table of Contents~~

~~OPERATING EXPENSES~~

~~Operating expenses decreased $35.2 million, from $174.9 million in the second quarter of 2019 to $139.7 million in the second quarter of 2020. The decrease~~ was primarily driven by ~~lower selling~~higher incentive compensation costs ($~~20.1~~29.8 million), ~~lower product development~~higher advertising costs ($~~4.0~~24.0 million), ~~lower distribution costs ($2.4 million), lower~~higher general and administrative costs ($~~13.4~~23.1 million), higher selling costs ($13.0 million), higher distribution costs ($4.3 million), and higher product development costs ($0.9 million), partially offset by lower non-operating costs incurred due to the COVID-19 pandemic ($18.6 million) and lower environmental and other related costs, net of insurance recoveries ($~~10.1~~10.3 million)~~, partially offset by higher advertising ($1.0 million), higher incentive compensation ($1.2 million),~~. Environmental and ~~higher non-operating~~other related costs ~~incurred due to COVID-19 ($12.7 million).~~

~~Operating expenses decreased $38.1~~were $10.3 million ~~from $342.7~~and $10.7 million in the first two quarters of ~~2019~~2021 and 2020, respectively.

INTEREST, OTHER AND INCOME TAXES

Net interest expense was $9.7 million in the second quarter of 2021 compared to ~~$304.6~~$10.5 million in the second quarter of 2020. Net interest expense was $19.3 million in the first two quarters of 2021 compared to $18.3 million in the first two quarters of 2020. Changes in interest expense is due to changes in average debt balances outstanding between the periods and changes in the average interest rate on debt outstanding resulting from the 6.375% senior notes issued in May 2020.

Other expense was $0.1 million in the second quarter of 2021, compared to other income of $1.7 million in the second quarter of 2020. The decrease in other income was primarily driven by higher non-service pension costs ($1.2 million) and lower foreign exchange derivative gains reclassified from accumulated other comprehensive income (loss) ($1.3 million), partially offset by higher sublease income ($0.4 million).

Other expense was $2.9 million in the first two quarters of 2021, compared to other income of $2.3 million in the first two quarters of 2020. The decrease in other income was primarily driven by ~~lower selling~~higher non-service pension costs ($~~20.4~~2.5 million), ~~lower product development costs~~higher losses from equity method investments ($~~5.8~~1.7 million), ~~lower distribution costs~~higher foreign exchange remeasurement charges ($~~3.9~~1.2 million)~~, lower incentive compensation ($7.5 million), lower general~~ and ~~administrative costs ($11.5 million), and~~ lower ~~environmental and other related costs, net of insurance recoveries ($5.1 million), partially offset by higher non-operating costs incurred due to COVID-19 ($16.2 million).~~

~~INTEREST, OTHER AND INCOME TAXES~~

Net interest expense was $10.5 million in the second quarter of 2020 compared to $6.7 million in the second quarter of 2019. Net interest expense was $18.3 million in the first two quarters of 2020 compared to $13.6 million in the first two quarters of 2019. Interest expense increased in the current year periods due to higher average debt balances in 2020.

~~Other income was $1.7 million in the second quarter of 2020, compared to $1.0 million in the second quarter of 2019. The increase was driven by~~ foreign exchange derivative gains reclassified from ~~AOCI~~accumulated other comprehensive income (loss) ($1.3 million), partially offset by higher ~~non-service pension costs~~sublease income ($0.5 million). Other income was $2.3 million in the first two quarter of 2020, compared to $2.3 million in the first two quarters of 2019. Other income in the current period included higher non-service pension costs ($1.0 ~~million) and gains on foreign exchange derivatives reclassified from AOCI ($1.3~~ million).

The effective tax rates in the second quarter of 2021 and 2020 were 17.7% and ~~2019 were~~ (28.3)% ~~and 19.4%~~, respectively. The effective tax rates in the first two quarters of 2021 and 2020 were 16.9% and ~~2019 were~~ (33.0)% ~~and 16.4%~~, ~~respectively.~~ respectively. The ~~change in~~lower effective tax rate ~~is driven by a decrease of~~for the prior year reflected larger discrete benefits than the current year. In addition, because pretax ~~book~~ income in the ~~Company's material~~current year is higher than the prior year, discrete adjustments had a lesser impact on the income tax ~~jurisdictions as a result~~rate than they had in the prior year.

Table of ~~the global COVID-19 pandemic.~~Contents

REPORTABLE SEGMENTS

The Company’s portfolio of brands is organized into the following two operating segments, which the Company has determined to be reportable segments.

~~Table of Contents~~

The reportable segment results are as follows:

Quarter Ended Year-To-Date Ended
(In millions) June 27,
2020 June 29,
2019 Change Percent Change June 27,
2020 June 29,
2019 Change Percent
Change
REVENUE
Wolverine Michigan Group $ 217.4 $ 318.2 $ (100.8) (31.7) % $ 465.2 $ 620.9 $ (155.7) (25.1) %
Wolverine Boston Group 122.5 230.7 (108.2) (46.9) 304.6 435.5 (130.9) (30.1)
Other 9.2 19.7 (10.5) (53.3) 18.6 35.6 (17.0) (47.8)
Total $ 349.1 $ 568.6 $ (219.5) (38.6) % $ 788.4 $ 1,092.0 $ (303.6) (27.8) %


		Quarter Ended														Year-To-Date Ended															Quarter Ended				Year-To-Date Ended
(In millions)	(In millions)	June 27, 2020		June 29, 2019		Change		Percent Change		June 27, 2020		June 29, 2019		Change		Percent Change		(In millions)	July 3, 2021		June 27, 2020		Change		Percent Change		July 3, 2021		June 27, 2020		Change		Percent Change
REVENUE																		REVENUE
Wolverine Michigan Group																		Wolverine Michigan Group	$	354.4	$	217.4	$	137.0	63.0	%	$	652.1	$	465.2	$	186.9	40.2	%
Wolverine Boston Group																		Wolverine Boston Group	258.0		122.5		135.5		110.6	%	458.9		304.6		154.3		50.7	%
Other																		Other	19.5		9.2		10.3		112.0	%	31.6		18.6		13.0		69.9	%
Total																		Total	$	631.9	$	349.1	$	282.8	81.0	%	$	1,142.6	$	788.4	$	354.2	44.9	%
OPERATING PROFIT (LOSS)	OPERATING PROFIT (LOSS)																			OPERATING PROFIT (LOSS)
Wolverine Michigan Group	Wolverine Michigan Group	$	38.4	$	59.3	$	(20.9)	(35.2)	%	$	81.5	$	117.8	$	(36.3)	(30.8)	%	Wolverine Michigan Group	$	75.5	$	38.4	$	37.1	96.6	%	$	134.7	$	81.5	$	53.2	65.3	%
Wolverine Boston Group	Wolverine Boston Group	8.6		37.2		(28.6)		(76.9)		27.4		69.2		(41.8)		(60.4)		Wolverine Boston Group	47.0		8.6		38.4		446.5	%	81.1		27.4		53.7		196.0	%
Other	Other	0.4		1.5		(1.1)		(73.3)		0.3		2.3		(2.0)		(87.0)		Other	1.2		0.4		0.8		200.0	%	1.5		0.3		1.2		400.0	%
Corporate	Corporate	(39.9)		(42.5)		2.6		6.1		(84.8)		(81.4)		(3.4)		(4.2)		Corporate	(59.9)		(39.9)		(20.0)		(50.1)	%	(95.4)		(84.8)		(10.6)		12.5	%
Total	Total	$	7.5	$	55.5	$	(48.0)	(86.5)	%	$	24.4	$	107.9	$	(83.5)	(77.4)	%	Total	$	63.8	$	7.5	$	56.3	750.7	%	$	121.9	$	24.4	$	97.5	399.6	%

Further information regarding the reportable segments can be found in Note 16 to the consolidated condensed financial statements.

Wolverine Michigan Group

The Michigan Group’s revenue ~~decreased $100.8~~increased $137.0 million, or ~~31.7%~~63.0%, in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. The revenue ~~decline included low-thirties decline~~increase was driven by high-eighties increase from Merrell^®, ~~high-thirties decline~~high-forties increase from Cat^®, ~~high-twenties decline~~low-seventies increase from Wolverine^®, ~~mid-teens decline~~high-fifties increase from ~~Chaco~~Bates^®, and ~~a high-forties decline~~mid-forties increase from ~~Hush Puppies~~Harley-Davidson^®. The Michigan Group’s revenue ~~decreased $155.7~~increased $186.9 million, or ~~25.1%~~40.2% in the first two quarters of ~~2020~~2021 compared to the first two quarters of ~~2019.~~2020. The revenue ~~decline~~increase was driven by ~~low-twenties decline~~low-fifties increase from Merrell^®, ~~mid-thirties decline~~low-forties increase from Cat^®, ~~low-twenties decline~~mid-forties increase from Wolverine^®, mid-twenties ~~decline~~increase from ~~Chaco~~Bates^®, and ~~a high-thirties decline~~mid-thirties increase from ~~Hush Puppies~~Harley-Davidson^®. The ~~decline~~ increase across all brands in the second quarter and the first two quarters is due to economic recovery from the effects of the COVID-19 pandemic ~~partially offset by eCommerce growth.The closure~~felt in the prior period including closures of brick-and-mortar stores and due to accelerated growth from Merrell^®~~owned retail stores due to~~ and Wolverine® resulting from strength in the ~~COVID-19 pandemic also contributed to the revenue decline.~~outdoors and work categories.

The Michigan Group’s operating profit ~~decreased $20.9~~increased $37.1 million in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~ 2020. The operating profit ~~decline~~increase was due to the revenue ~~declines,~~increases, partially offset by a ~~$17.4~~20 basis point decrease in gross margin and a $21.5 million ~~decrease~~increase in selling, general and administrative costs. The ~~Michigan Group’s operating profit decreased $36.3 million~~decrease in gross margin in the ~~first two quarters of 2020 compared to the first two quarters of 2019. The operating profit decline~~current year period was due to ~~the revenue declines,~~higher air freight costs, partially offset by ~~a $25.5 million decrease in~~improved product mix and average selling ~~general and administrative costs.~~price. The ~~decrease~~increase in selling, general and administrative expenses in the current year ~~periods~~period was primarily due to higher advertising costs and higher employee costs.

The Michigan Group’s operating profit increased $53.2 million in the first two quarters of 2021 compared to the first two quarters of 2020. The operating profit increase was due to ~~declines~~the revenue increases, partially offset by a 20 basis point decrease in ~~distribution,~~gross margin and $26.8 million increase in selling, general and administrative costs. The decrease in gross margin in the current year period was due to higher air freight costs, partially offset by improved product mix and average selling price including

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higher margin eCommerce sales. The increase in selling, general and administrative expenses in the current year period was primarily due to higher advertising ~~and reductions in employee~~ costs and ~~other discretionary spending.~~higher employee costs.

Wolverine Boston Group

The Boston Group’s revenue ~~decreased $108.2~~increased $135.5 million, or ~~46.9%~~110.6%, during the second quarter of ~~2020 compared~~2021 compared to the second quarter of ~~2019.~~ 2020. The revenue ~~decline included low-sixties decline for~~increase was driven by high-one-hundred twenties increase from Saucony®, high-one-hundred single digit increase from Sperry^®, ~~high-twenties decline for~~ ~~Saucony~~^®~~, high-forties decline for~~mid-sixties increase from Keds^®, and ~~a low-fifties decline for~~low-one-hundred single digit increase from Kids’. The Boston Group’s revenue ~~decreased~~increased by ~~$130.9~~$154.3 million, or ~~30.1%~~50.7%, during the first two quarters of ~~2020~~2021 compared to the first two quarters of ~~2019~~. 2020. The revenue ~~decline~~increase included ~~low-forties decline for~~low-nineties increase from Saucony®, mid-thirties increase from Sperry^®~~, low-teens decline for~~ ~~Saucony~~^®~~, high-twenties decline for~~ ~~Keds~~^®, and a mid-thirties ~~decline for~~increase from Kids’. The ~~decline~~increase across all brands in the second quarter and the first two quarters is due to economic recovery from the effects of the COVID-19 pandemic ~~partially offset by eCommerce growth.The~~felt in the prior period including closure of ~~Sperry~~^®~~owned retail~~brick-and-mortar stores and due to accelerated growth from Saucony® resulting from strength in the ~~COVID-19 pandemic also contributed to the revenue decline.~~running category and innovative product launches.

The Boston Group’s operating profit ~~decreased $28.6~~increased $38.4 million in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. The operating profit ~~decline~~increase was due to the revenue ~~declines,~~increases and a 130 basis point increase in gross margin, partially offset by ~~a $13.5~~$23.0 million ~~decrease~~increase in selling, general and administrative costs. The increase in gross margin in the current year period was due to improved product mix and average selling price including higher margin eCommerce sales. The increase in selling, general and administrative expenses in the current year period was primarily due to higher advertising costs and higher employee costs.

The Boston Group’s operating profit ~~decreased $41.8~~increased $53.7 million in the first two quarters of ~~2020~~2021 compared to the first two quarters of ~~2019.~~2020. The operating profit ~~decline~~increase was due to the revenue ~~declines,~~increases and a 270 basis point increase in gross margin, partially offset by a ~~$10.0~~$23.4 million ~~decrease~~increase in selling, general and administrative costs. The ~~decrease~~increase in gross margin in the current year period was due to improved product mix and average selling price including higher margin eCommerce sales. The increase in selling, general and administrative expenses

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in the current year ~~periods~~period was primarily due to ~~declines in distribution,~~higher advertising ~~and reductions in employee~~ costs and ~~other discretionary spending.~~higher employee costs.

Other

The Other category’s revenue ~~decreased $10.5~~increased $10.3 million, or ~~53.3%~~112.0%, in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. The revenue increase was driven by mid-one-hundred teens increase in the performance leathers business. The Other category’s revenue ~~decreased $17.0~~increased $13.0 million, or ~~47.8%~~69.9%, during the first two quarters of ~~2020~~2021 compared to the first two quarters of ~~2019~~.2020. The ~~decrease in the current year periods~~revenue increase was ~~due to a decline~~driven by low-seventies increase in the performance leathers ~~business as a result~~business.

Corporate

Corporate expenses increased $20.0 million in the second quarter of2021 compared to the second quarter of 2020 primarily due to higher environmental and other related costs, net of insurance recoveries ($8.7 million), higher incentive compensation costs ($18.7 million) and higher employee costs ($8.3 million), partially offset by lower ~~demand~~bad debt expense ($7.0 million) and lower non-operating costs incurred due to the COVID-19 pandemic ($7.1 million).

Corporate expenses increased $10.6 million in the first two quarters of 2021 compared to the first two quarters of 2020second quarter of2021 primarily due to higher incentive compensation costs ($30.1 million), higher employee costs ($5.5 million) and higher indirect purchased services ($4.4 million), partially offset by lower environmental and other related costs, net of insurance recoveries ($10.3 million), lower bad debt expense ($10.4 million) and lower ~~revenue from multi-branded stores and third-party sourcing commission revenue resulting from~~non-operating costs incurred due to the COVID-19 ~~pandemic.~~pandemic ($9.2 million).

LIQUIDITY AND CAPITAL RESOURCES


(In millions)	(In millions)	June 27, 2020		December 28, 2019		June 29, 2019		(In millions)	July 3, 2021		January 2, 2021		June 27, 2020
Cash and cash equivalents	Cash and cash equivalents	$	422.6	$	180.6	$	116.5	Cash and cash equivalents	$	345.8	$	347.4	$	422.6
Debt	Debt	1,024.4		798.4		811.0		Debt	718.4		722.5		1,024.4
Available revolving credit facility ⁽¹⁾	Available revolving credit facility ⁽¹⁾	669.2		434.3		428.1		Available revolving credit facility (1)	793.9		793.9		669.2

⁽¹⁾Amounts are net of both borrowings, if any, and outstanding standby letters of credit in accordance with the terms of the Revolving Credit Facility.

Year-To-Date Ended
(In millions) June 27,
2020 June 29,
2019
Net cash provided by operating activities $ 39.0 $ 3.9
Net cash provided by (used in) investing activities 9.2 (42.4)
Net cash provided by financing activities 195.1 11.0
Additions to property, plant and equipment 6.6 18.3
Depreciation and amortization 15.4 15.0

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Liquidity

Cash and cash equivalents of ~~$422.6~~$345.8 million as of ~~June 27, 2020~~July 3, 2021 were ~~$306.1~~$76.8 million ~~higher~~lower compared to June ~~29, 2019.~~27, 2020. The ~~increase~~decrease is due primarily to ~~the issuance~~net repayments of ~~$300.0~~debt of $308.5 million, ~~Senior Notes on May 11, 2020~~cash dividends paid of $33.5 million, share repurchases of $26.9 million, a decrease in proceeds from company owned life insurance policies of $24.5 million and cash outflows from investing activities of $11.2 million, partially offset by cash provided by operating activities during the previous four quarters of ~~$257.7 million, partially offset by share repurchases of $132.8 million, net repayments under the Amended Senior Credit Facility of $82.0 million, increased investing activity of $9.9~~$321.8 million and net cash ~~dividends paid~~received from stock-based compensation transaction of ~~$33.8~~$1.7 million. The Company had ~~$669.2~~$793.9 million of borrowing capacity available under the Revolving Credit Facility as of ~~June 27, 2020.~~July 3, 2021. Cash and cash equivalents located in foreign jurisdictions totaled ~~$105.0~~$162.3 million as of ~~June 27, 2020.~~July 3, 2021.

In connection with the Company’s acquisition of the Sweaty Betty brand, on August 2, 2021, the Company funded the purchase price through a combination of cash on hand and borrowings on the revolving credit facility.

Cash flow from operating activities is expected to be sufficient to meet the Company’s working capital needs for the foreseeable future. Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce ~~debt.~~debt, pay dividends, and pursue acquisitions.

The Company may purchase up to an additional $460.6 million of shares under its existing common stock repurchase program which expires in 2023. The common stock repurchase program does not obligate the Company to acquire particular amount of shares and may be suspended at any time. The Company repurchased $26.9 million and $21.0 million of shares in the first two quarters of 2021 and 2020, respectively.

A detailed discussion of environmental remediation costs is found in Note 15 to the consolidated condensed financial statements. The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual site. As of ~~June 27, 2020,~~July 3, 2021, the Company had a reserve of ~~$106.7~~$93.1 million, of which ~~$34.5~~$24.8 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities with the remaining ~~$72.2~~$68.3 million recorded in other liabilities expected to be paid over the course of up to 25 years. The Company's remediation activity at its former Tannery site and sites where the Company disposed of Tannery byproducts is ongoing. It is difficult to estimate the cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods. Developments may occur that could materially change the Company’s current cost estimates. The Company adjusts recorded liabilities as further information develops or circumstances change.

~~There is significant uncertainty regarding the~~The future impact of the COVID-19 pandemic on the Company’s statement of operations and cash ~~flows.~~flows remains uncertain. The actions the Company has taken and continues to take to improve the Company’s liquidity are discussed above in this Item 2.

~~Operating Activities~~

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~~The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.~~

For the first two quarters of 2020, an increase in net working capital represented a use of cash of $27.1 million. Working capital balances were unfavorably impacted by a decrease in accounts payable of $45.9 million, an increase in inventories of $41.0 million,2 and a decrease in other operating liabilities of $14.5 million, partially offset by a decrease in accounts receivable of $64.5 million, a decrease in other operating assets of $6.3 million, and an increase in income taxes payable of $3.5 million. Operating cash flows were favorably impacted by Environmental and other related costs, net of cash payments and recoveries received of $34.2 million, which are inclusive of a lump sum amount of $55.0 million from 3M Company during the first quarter of 2020. See Note 15 for additional information regarding this settlement.

~~Investing Activities~~

~~The Company made capital expenditures of $6.6 million and $18.3 million in~~ ~~the first two quarters~~ ~~of 2020 and 2019, respectively, for building improvements, new retail stores and information system enhancements. During the~~ ~~second~~ quarter of 2020, the Company made a cash investment of $3.5 million in joint ventures. During the first quarter of 2020, the Company made a contingent consideration payment of $5.5 million related to the ~~Saucony~~^® ~~Italy distributor acquisition. See Note 17 for additional information regarding the acquisition. During the~~ ~~second~~ ~~quarter of 2020, the Company received proceeds of $25.6 million from company-owned life insurance policy liquidations.~~below under “Financing Arrangements.”

Financing ~~Activities~~Arrangements

On May 5, 2020, the Company entered into a Second Amendment to(the “Amendment”) which amended its senior credit ~~facility.~~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 ~~Second~~ Amendment, the Company borrowed ~~an incremental~~ $171.0 million in aggregate principal ~~in Incremental Term Loan.~~amount of an incremental term loan. The ~~Incremental Term Loan will mature on May 4, 2021 and bear interest at a rate equal either to (i)~~incremental term loan was fully repaid by the ~~applicable base rate plus 1.250% or (ii) LIBOR plus 2.250%.~~ end of 2020.

The Amended Senior Credit Facility also includes a $200.0 million term loan facility and an $800.0 million Revolving Credit Facility, both with maturity dates of December 6, 2023, that ~~remain~~remained unchanged as a result of the ~~Second~~ 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.

On May 11, 2020, the Company issued $300.0 million aggregate principal amount of 6.375% ~~Senior Notes~~senior notes due on May 15, 2025 with related interest payments due ~~semi-annually beginning~~semi-annually. The Company also has $250.0 million of 5.00% senior notes outstanding that are due on ~~November 15, 2020. These~~September 1, 2026 with related interest payments due semi-annually. Both senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.

As of ~~June 27, 2020,~~July 3, 2021, the Company was in compliance with all covenants and performance ratios under the Amended Senior Credit Facility.

The Company’s debt at ~~June 27, 2020~~July 3, 2021 totaled ~~$1,024.4~~$718.4 million compared to ~~$798.4~~$722.5 million at ~~December 28, 2019.~~January 2, 2021. The Company expects to use the ~~increased~~current borrowings for working capital and general corporate purposes. The ~~increased cash~~decreased debt position resulted from ~~net incremental borrowings under~~ the ~~Amended Senior Credit Facility and~~required payments on Term Loan A made during the first two quarters, partially offset by lower unamortized debt

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issuance costs. The May 11, 2020 ~~Senior Notes~~senior notes allow for greater financial flexibility in light of ~~current~~ uncertainty in the global markets resulting from the COVID-19 pandemic.

Cash Flows

The following table summarizes cash flow activities:


	Year-To-Date Ended
(In millions)	July 3, 2021		June 27, 2020
Net cash provided by operating activities	$	51.7	$	39.0
Net cash provided by (used in) investing activities	(8.1)		9.2
Net cash provided by (used in) financing activities	(45.1)		195.1
Additions to property, plant and equipment	6.7		6.6
Depreciation and amortization	14.4		15.4

Operating Activities

The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.

For the first two quarters of 2021, an increase in net working capital represented a use of cash of $64.3 million. Working capital balances were unfavorably impacted by an increase in accounts receivable of $103.9 million and an increase in inventories of $89.1 million, partially offset by an increase in accounts payable of $94.8 million, an increase in other operating liabilities of $21.9 million, a decrease in other operating assets of $10.3 million, and an increase in income taxes payable of $1.7 million. Operating cash flows were favorably impacted by stock-based compensation expense of $21.6 million and depreciation and amortization expense of $14.4 million.

Investing Activities

The Company ~~repurchased $21.0~~made capital expenditures of $6.7 million and ~~$207.4~~$6.6 million in the first two quarters of 2021 and 2020, respectively, for building improvements, new retail stores, distribution operations improvements and information system enhancements. The Company also received $25.6 million of ~~shares~~proceeds during the second quarter of 2020 related to a company-owned life insurance policy. During the first quarter of 2020, the Company made a contingent consideration payment of $5.5 million related to the Saucony® Italy distributor acquisition.

Financing Activities

The Company’s decrease in financing activity between years is primarily due to debt activity that occurred in the first two quarters of 2020 that did not occur during the first two quarters of 2021. The prior year activity included long term debt borrowings under the Amended Senior Credit Facility and ~~2019,~~issuance of senior notes of $471.0 million and proceeds from company-owned life insurance policies of $24.5 million, partially offset by net revolving credit payments of $235.0 million and payments of debt issuance costs of $6.4 million. The Company paid $5.0 million in principal payments associated with its financing arrangements during each of the first two quarters of 2021 and 2020, respectively. The Company ~~may purchase up to an additional $487.4~~also paid $13.1 million ~~of shares under its existing common stock repurchase program which expires in 2023. As part of its strategy to increase liquidity~~ and ~~flexibility of Company’s capital structure as result of the COVID-19 pandemic, the Company suspended share repurchases in March 2020. The Company also paid~~ $19.9 million in the first two quarters of 2021 and 2020, respectively, in connection with shares or units withheld to pay employee taxes related to awards under stock incentive plans and received ~~$24.5~~$12.0 million and $2.1 million in ~~connection with company-owned life insurance policies.~~proceeds from the exercise of stock options in the first two quarters of 2021 and 2020, respectively. The Company received $4.8 million and $1.8 million in the first two quarters of 2021 and 2020 from noncontrolling owners of the Company’s China joint venture to support the growth of the joint venture.

The Company declared a cash ~~dividend~~dividends of ~~$0.10~~$0.20 per share in the ~~second quarter~~first two quarters of ~~2020~~2021 and ~~2019, respectively, or $8.2~~2020. Dividends paid in the first two quarters totaled $16.9 million and ~~$8.6~~$17.0 million for 2021 and 2020, respectively. A quarterly dividend of $0.10 per share was declared on ~~April 29, 2020~~August 4, 2021 to shareholders of record on ~~July~~October 1, ~~2020.~~2021.

CRITICAL ACCOUNTING POLICIES

The preparation of the Company’s consolidated condensed financial statements, which have been prepared in accordance with U.S. GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of

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which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Historically, actual results have not been materially different from the Company’s estimates. However, actual results may differ materially from these estimates under different assumptions or conditions.

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The Company has identified the critical accounting policies used in determining estimates and assumptions in the amounts reported and for information regarding our critical accounting policies refer to Management Discussion and Analysis of Financial Conditions and Results of Operations in the ~~2019~~2020 Form ~~10-K and Note 5, Goodwill and indefinite-lived intangibles for discussion regarding the valuation of goodwill and indefinite-lived intangible assets.~~10-K. Management believes there have been no material changes in those critical accounting policies.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company faces market risk to the extent that changes in foreign currency exchange rates affect the Company’s foreign assets, liabilities and inventory purchase commitments. The Company manages these risks by attempting to denominate contractual and other foreign arrangements in U.S. dollars. The Company does not believe that there has been a material change in the nature of the Company’s primary market risk exposures, including the categories of market risk to which the Company is exposed and the particular markets that present the primary risk of loss to the Company. As of the date of this Quarterly Report on Form 10-Q, the Company does not know of any material change in the near-term in the general nature of its primary market risk exposure.

Under the provisions of FASB ASC 815, the Company is required to recognize all derivatives on the balance sheet at fair value. Derivatives that are not qualifying hedges must be adjusted to fair value through earnings. If a derivative is a qualifying hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in ~~AOCI~~accumulated other comprehensive income (loss) until the hedged item is recognized in earnings.

The Company conducts wholesale operations outside of the U.S. in Canada, continental Europe, United Kingdom, Colombia, Hong Kong, China and Mexico where the functional currencies are primarily the Canadian dollar, euro, British pound, Colombian peso, Hong Kong dollar, Chinese renminbi and Mexican peso, respectively. The Company utilizes foreign currency forward exchange contracts to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business as well as to manage foreign currency translation exposure. As of July 3, 2021 and June 27, 2020, ~~and June 29, 2019,~~ the Company had outstanding forward currency exchange contracts to purchase primarily U.S. dollars in the amounts of ~~$161.1~~$293.9 million and ~~$238.1~~$161.1 million, respectively, with maturities ranging up to ~~412~~538 and ~~468~~412 days, respectively.

The Company also has sourcing locations in Asia, where financial statements reflect the U.S. dollar as the functional currency. However, operating costs are paid in the local currency. Revenue generated by the Company from third-party foreign licensees is calculated in the local currencies but paid in U.S. dollars. Accordingly, the Company’s reported results are subject to foreign currency exposure for this stream of revenue and expenses. Any associated foreign currency gains or losses on the settlement of local currency amounts are reflected within the Company's consolidated condensed statement of operations and comprehensive income.

Assets and liabilities outside the U.S. are primarily located in the United Kingdom, Canada and the Netherlands. The Company’s investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term. As of July 3, 2021, a weaker U.S. dollar compared to certain foreign currencies increased the value of these investments in net assets by $0.9 million from their value as of January 2, 2021. As of June 27, 2020, a stronger U.S. dollar compared to certain foreign currencies decreased the value of these investments in net assets by $8.3 million from their value ~~as of~~at December 28, 2019. ~~As of June 29, 2019, a weaker U.S. dollar compared to certain foreign currencies increased the value of these investments in net assets by $5.0 million from their value at December 29, 2018.~~ The Company has a cross currency swap, which has been designated as a hedge of a net investment in a foreign operation. As of ~~June 27, 2020,~~July 3, 2021, the hedge had a notional amount of $79.8 million and will mature on September 1, 2021.

The Company is exposed to interest rate changes primarily as a result of interest expense on borrowings used to finance acquisitions and working capital requirements. As of July 3, 2021 and June 27, 2020, the Company’s total variable-rate debt was $175.0 million and $483.5 million, ~~and the Company held two interest rate swap agreements, denominated in U.S. dollars, that effectively converted $314.6 million to fixed-rate debt.~~respectively.

The Company does not enter into contracts for speculative or trading purposes, nor is it a party to any leveraged derivative instruments.

ITEM 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on, and as of the time of such evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures, as defined in Securities Exchange Act Rule 13a-15(e), were effective as of the end of the period covered by this report. There have been no changes during the quarter ended ~~June 27, 2020~~July 3, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. Risk Factors

There have been no material changes in the assessment of the Company’s risk factors from those set forth in the Company’s Annual Report on Form 10-K for the year ended ~~December 28, 2019, except for the risk factors included below:~~

~~The COVID-19 pandemic has had a material adverse impact on the Company’s operations and financial results, and such impact could worsen and last for an unknown period of time.~~

The COVID-19 pandemic has negatively affected the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets both globally and in the United States. This has led to a decline in discretionary spending by consumers and, in turn, a negative effect on the Company’s financial condition and results of operations. The extent to which the COVID-19 pandemic impacts the Company’s business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous evolving factors outside of our control that we cannot currently fully predict or assess, the duration and scope of the pandemic and effectiveness of containment efforts; the negative impact on global and regional economies and economic activity, including the duration and magnitude of its impact on unemployment rates, consumer discretionary spending and levels of consumer confidence; and actions governments, businesses and individuals may take in response to the pandemic. The timing of recovery after the pandemic is also uncertain. The Company’s business has been and could continue to be materially adversely affected by several factors related to the COVID-19 pandemic, including, but not limited to:

•The inability of our employees, suppliers, and other business providers to carry out tasks at ordinary levels of performance as a result of measures taken to limit the spread of COVID-19, such as those promulgated by governmental authorities.

•Further outbreaks could require the closure of our and our wholesale customers recently reopened retail stores. As a result, there can be no assurance as to whether recently reopened stores can remain open.

•~~Decreased retail traffic resulting from social distancing restrictions.~~

•~~Negative effects on consumer spending due to general macroeconomic conditions, decreased disposable income and increased unemployment.~~

•~~Wholesale and distributor customer order cancellations resulting from lower consumer demand.~~

•~~Decline in the performance or financial condition of the Company’s major wholesale customers as a result of retail store closures, bankruptcy, or liquidation.~~

•Disruption to the operations of the Company’s distribution centers and our third-party manufacturers because of facility closures, reductions in operating hours, labor or material shortages, travel limitations or mass transit disruptions.

•~~Additional expenses related to mitigating the pandemic’s impact on regular operations.~~

•~~Increased cyber security risk due to the increase in the number of employees working remotely.~~

The disruption to the global economy and to our business may lead to triggering events that may indicate that the carrying value of certain assets, such as long-lived assets, intangibles and goodwill, may not be recoverable. Any related non-cash impairment charges will adversely affect our results of operations.

~~COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider as presenting significant risks to our operations.~~

January 2, 2021.

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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding the Company’s purchases of its own common stock during the second quarter of ~~2020.~~2021.

Issuer Purchases of Equity Securities


Period	Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs		Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Amount that May Yet Be Purchased Under the Plans or Programs
Period 4 (March 29, 2020 to May 2, 2020)
Period 4 (April 4, 2021 to May 8, 2021)								Period 4 (April 4, 2021 to May 8, 2021)
Common Stock Repurchase Program⁽¹⁾	Common Stock Repurchase Program⁽¹⁾	—	$	—	—	$	487,440,708	Common Stock Repurchase Program(1)	—	$	—	—	$	487,440,708
Employee Transactions⁽²⁾	Employee Transactions⁽²⁾	4,796	$	20.54	—			Employee Transactions(2)	99,405	$	39.63	—
Period 5 (May 3, 2020 to May 30, 2020)
Period 5 (May 9, 2021 to June 5, 2021)								Period 5 (May 9, 2021 to June 5, 2021)
Common Stock Repurchase Program⁽¹⁾	Common Stock Repurchase Program⁽¹⁾	—	$	—	—	$	487,440,708	Common Stock Repurchase Program(1)	569,395	$	37.82	569,395	$	465,894,806
Employee Transactions⁽²⁾	Employee Transactions⁽²⁾	—	$	—	—			Employee Transactions(2)	2,505	$	36.82	—
Period 6 (May 31, 2020 to June 27, 2020)
Period 6 (June 6, 2021 to July 3, 2021)								Period 6 (June 6, 2021 to July 3, 2021)
Common Stock Repurchase Program⁽¹⁾	Common Stock Repurchase Program⁽¹⁾	—	$	—	—	$	487,440,708	Common Stock Repurchase Program(1)	146,632	$	36.20	146,632	$	460,584,931
Employee Transactions⁽²⁾	Employee Transactions⁽²⁾	988	$	22.97	—			Employee Transactions(2)	490	$	34.72	—
Total for the second Quarter Ended June 27, 2020
Total for the second Quarter Ended July 3, 2021								Total for the second Quarter Ended July 3, 2021
Common Stock Repurchase Program⁽¹⁾	Common Stock Repurchase Program⁽¹⁾	—	$	—	—	$	487,440,708	Common Stock Repurchase Program(1)	716,027	$	37.49	716,027	$	460,584,931
Employee Transactions⁽²⁾	Employee Transactions⁽²⁾	5,784	$	20.96	—			Employee Transactions(2)	102,400	$	39.54	—

⁽¹⁾~~On February 11, 2019, the Company’s Board of Directors approved a common stock repurchase program that authorized the repurchase of $400.0 million of common stock over a four-year period.~~ On September 11, 2019, the Company’s Board of Directors approved a new common stock repurchase program that authorizes the repurchase of $400.0 million of common stock over a four-year period, incremental to the $113.4 million remaining under the previous program. Since that date, the Company repurchased $52.8 million of common stock. The annual amount of any stock repurchases is restricted under the terms of the Company's Amended Senior Credit Facility and senior notes indenture. ~~As part of the Company’s strategy to increase liquidity and flexibility of the capital structure as a result of the COVID-19 pandemic, the Company suspended share repurchases in March 2020.~~

⁽²⁾Employee transactions include: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of employee stock options who exercised options, and (2) restricted shares and units withheld to offset statutory minimum tax withholding that occurs upon vesting of restricted shares and units. The Company’s employee stock compensation plans provide that the shares delivered or attested to, or withheld, shall be valued at the closing price of the Company’s common stock on the date the relevant transaction occurs.

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ITEM 6. Exhibits

Exhibits filed as a part of this Form 10-Q are incorporated by reference herein.


Exhibit Number						Document

3.1						Amended and Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 24, 2014.

3.2						Amended and Restated By-laws. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May ~~8, 2019.~~

~~4.1~~						~~Senior Notes Indenture, dated May 11, 2020, among Wolverine World Wide, Inc., the guarantors named therein, and Wells Fargo Bank, National Association. Incorporated by reference to Exhibit~~ 4 .1 ~~to the Company’s Current Report on Form 8-K filed on May 11, 2020.~~

~~4.2~~						~~Form of 6.375% Senior Notes due 2025. Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on May 11, 2020.~~

~~10.1~~						~~Second Amendment, dated~~ ~~as of~~ ~~May 5, 2020, to the Amended~~ ~~and~~ ~~Restated~~ ~~Credit Agreement,dated~~ ~~as of December 6, 2018, among Wolverine World Wide, Inc., as parent borrower, JPMorgan Chase Bank, N.A., as administrative agent and as a lender~~7 , ~~the other borrowers party thereto, and the other lenders party thereto. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on May~~ 20 621 ~~, 2020.~~.

31.1						Certification of Chairman, Chief Executive Officer and President under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Senior Vice President, Chief Financial Officer and Treasurer under Section 302 of the Sarbanes-Oxley Act of 2002.

32						Certification pursuant to 18 U.S.C. §1350.













101						The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 27, 2020,~~July 3, 2021, formatted in Inline XBRL: (i) Consolidated Condensed Statements of Operations and Comprehensive Income; (ii) Consolidated Condensed Balance Sheets; (iii) Consolidated Condensed Statements of Cash Flows; (iv) Consolidated Condensed Statements of Stockholders’ Equity; and (v) Notes to Consolidated Condensed Financial Statements.

104						The cover page of the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 27, 2020,~~July 3, 2021, formatted in Inline XBRL (included in Exhibit 101).

* Management contract or compensatory plan or arrangement.

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Table of Contents

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.


August ~~6, 2020~~5, 2021						/s/ Blake W. Krueger
Date						Blake W. Krueger Chairman and Chief Executive Officer ~~and President~~ (Principal Executive Officer and Duly Authorized Signatory for Registrant)


August ~~6, 2020~~5, 2021						/s/ Michael D. Stornant
Date						Michael D. Stornant Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer and Duly Authorized Signatory for Registrant)

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	Year-To-Date Ended June 27, 2020										Year-To-Date Ended June 29, 2019
(In millions)	Wholesale		Consumer-Direct		Total		Wholesale		Consumer-Direct		Total
Wolverine Michigan Group	$	363.3	$	101.9	$	465.2	$	549.6	$	71.3	$	620.9
Wolverine Boston Group	223.6		81.0		304.6		367.2		68.3		435.5
Other	17.5		1.1		18.6		33.4		2.2		35.6
Total	$	604.4	$	184.0	$	788.4	$	950.2	$	141.8	$	1,092.0


(In millions)	Operating Leases
Remainder of 2020	$	21.5
2021	30.8
2022	28.1
2023	21.0
2024	18.1
Thereafter	107.6
Total future payments	227.1
Less: imputed interest	50.4
Recognized lease liability	$	176.7