Subsidiary Guarantors of the Public Bonds | SUBSIDIARY GUARANTORS OF THE PUBLIC BONDS The following tables present consolidated condensed financial information for (a) the Company (for purposes of this discussion and table, “Parent”); (b) the guarantors of the Public Bonds, which include substantially all of the domestic, 100 % owned subsidiaries of the Parent (“Subsidiary Guarantors”); and (c) the wholly- and partially-owned foreign subsidiaries of the Parent, which do not guarantee the Notes (“Non-Guarantor Subsidiaries”). Separate financial statements of the Subsidiary Guarantors are not presented because they are fully and unconditionally, jointly and severally liable under the guarantees, except for normal and customary release provisions. WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the fiscal year ended January 2, 2016 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ 613.3 $ 2,628.6 $ 723.8 $ (1,274.1 ) $ 2,691.6 Cost of goods sold 458.4 1,948.8 375.2 (1,145.5 ) 1,636.9 Restructuring costs (0.1 ) 2.8 0.3 — 3.0 Gross profit 155.0 677.0 348.3 (128.6 ) 1,051.7 Selling, general and administrative expenses 127.9 559.2 257.5 (128.6 ) 816.0 Restructuring and impairment costs 3.5 24.0 7.1 — 34.6 Operating profit 23.6 93.8 83.7 — 201.1 Other expenses: Interest expense (income), net 38.6 0.1 (0.5 ) — 38.2 Debt extinguishment costs 1.6 — — — 1.6 Other income (1.2 ) (1.1 ) (1.0 ) — (3.3 ) Total other expense (income) 39.0 (1.0 ) (1.5 ) — 36.5 Earnings (loss) before income taxes (15.4 ) 94.8 85.2 — 164.6 Income tax expense (benefit) (6.3 ) 38.6 9.1 — 41.4 Earnings (loss) before equity in earnings of consolidated subsidiaries (9.1 ) 56.2 76.1 — 123.2 Equity in earnings of consolidated subsidiaries 131.9 13.6 88.0 (233.5 ) — Net earnings 122.8 69.8 164.1 (233.5 ) 123.2 Less: net earnings attributable to noncontrolling interest — — 0.4 — 0.4 Net earnings attributable to Wolverine World Wide, Inc. $ 122.8 $ 69.8 $ 163.7 $ (233.5 ) $ 122.8 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income For the fiscal year ended January 2, 2016 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net earnings $ 122.8 $ 69.8 $ 164.1 $ (233.5 ) $ 123.2 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments (31.8 ) — (31.8 ) 31.8 (31.8 ) Change in fair value of foreign exchange contracts (2.2 ) — (2.2 ) 2.2 (2.2 ) Change in fair value of interest rate swap (2.8 ) — — — (2.8 ) Pension adjustments 28.8 1.2 — (1.2 ) 28.8 Other comprehensive income (loss) (8.0 ) 1.2 (34.0 ) 32.8 (8.0 ) Comprehensive income 114.8 71.0 130.1 (200.7 ) 115.2 Less: comprehensive loss attributable to noncontrolling interest (1.4 ) — (1.0 ) 1.4 (1.0 ) Comprehensive income attributable to Wolverine World Wide, Inc. $ 116.2 $ 71.0 $ 131.1 $ (202.1 ) $ 116.2 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the fiscal year ended January 3, 2015 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ 607.8 $ 3,276.1 $ 848.8 $ (1,971.6 ) $ 2,761.1 Cost of goods sold 442.9 2,594.9 483.5 (1,847.5 ) 1,673.8 Restructuring costs 0.1 — 0.9 — 1.0 Gross profit 164.8 681.2 364.4 (124.1 ) 1,086.3 Selling, general and administrative expenses 126.1 555.1 258.1 (124.1 ) 815.2 Acquisition-related integration costs 6.5 1.1 7.6 — 15.2 Restructuring costs 3.0 10.4 12.6 — 26.0 Operating profit (loss) 29.2 114.6 86.1 — 229.9 Other expenses: Interest expense (income), net 45.4 0.1 (0.1 ) — 45.4 Debt extinguishment costs 1.3 — — — 1.3 Other expense (income), net — (1.3 ) 3.0 — 1.7 Total other expense (income) 46.7 (1.2 ) 2.9 — 48.4 Earnings (loss) before income taxes (17.5 ) 115.8 83.2 — 181.5 Income tax expense 0.7 37.7 9.2 — 47.6 Earnings (loss) before equity in earnings of consolidated subsidiaries (18.2 ) 78.1 74.0 — 133.9 Equity in earnings of consolidated subsidiaries 151.3 9.4 74.7 (235.4 ) — Net earnings 133.1 87.5 148.7 (235.4 ) 133.9 Less: net earnings attributable to noncontrolling interest — — 0.8 — 0.8 Net earnings attributable to Wolverine World Wide, Inc. $ 133.1 $ 87.5 $ 147.9 $ (235.4 ) $ 133.1 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income For the fiscal year ended January 3, 2015 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net earnings $ 133.1 $ 87.5 $ 148.7 $ (235.4 ) $ 133.9 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments (17.4 ) — (18.5 ) 17.4 (18.5 ) Change in fair value of foreign exchange contracts 9.4 — 9.4 (9.4 ) 9.4 Change in fair value of interest rate swap (0.2 ) — — — (0.2 ) Pension adjustments (32.1 ) (10.3 ) — 10.3 (32.1 ) Other comprehensive loss (40.3 ) (10.3 ) (9.1 ) 18.3 (41.4 ) Comprehensive income 92.8 77.2 139.6 (217.1 ) 92.5 Less: comprehensive loss attributable to noncontrolling interest — — (0.3 ) — (0.3 ) Comprehensive income attributable to Wolverine World Wide, Inc. $ 92.8 $ 77.2 $ 139.9 $ (217.1 ) $ 92.8 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Operations For the fiscal year ended December 28, 2013 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Revenue $ 538.2 $ 3,849.1 $ 774.4 $ (2,470.6 ) $ 2,691.1 Cost of goods sold 383.8 3,207.9 415.4 (2,388.1 ) 1,619.0 Restructuring costs 0.1 — 7.5 — 7.6 Gross profit 154.3 641.2 351.5 (82.5 ) 1,064.5 Selling, general and administrative expenses 139.0 506.7 266.8 (82.5 ) 830.0 Acquisition-related transaction and integration costs 16.9 14.9 9.7 — 41.5 Restructuring and impairment costs — — 0.7 — 0.7 Operating profit (loss) (1.6 ) 119.6 74.3 — 192.3 Other expenses: Interest expense (income), net 52.1 (0.2 ) 0.1 — 52.0 Debt extinguishment costs 13.1 — — — 13.1 Other expense (income), net (3.7 ) 0.1 3.1 — (0.5 ) Total other expense (income) 61.5 (0.1 ) 3.2 — 64.6 Earnings (loss) before income taxes (63.1 ) 119.7 71.1 — 127.7 Income tax expense 1.5 19.3 5.9 — 26.7 Earnings (loss) before equity in earnings of consolidated subsidiaries (64.6 ) 100.4 65.2 — 101.0 Equity in earnings of consolidated subsidiaries 165.0 114.5 21.7 (301.2 ) — Net earnings 100.4 214.9 86.9 (301.2 ) 101.0 Less: net earnings attributable to noncontrolling interest — — 0.6 — 0.6 Net earnings attributable to Wolverine World Wide, Inc. $ 100.4 $ 214.9 $ 86.3 $ (301.2 ) $ 100.4 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income For the fiscal year ended December 28, 2013 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net earnings $ 100.4 $ 214.9 $ 86.9 $ (301.2 ) $ 101.0 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments (5.4 ) — (5.4 ) 5.4 (5.4 ) Change in fair value of foreign exchange contracts 0.9 — 0.9 (0.9 ) 0.9 Change in fair value of interest rate swap 1.6 — — — 1.6 Pension adjustments 81.2 13.1 — (13.1 ) 81.2 Other comprehensive (loss) income 78.3 13.1 (4.5 ) (8.6 ) 78.3 Comprehensive income 178.7 228.0 82.4 (309.8 ) 179.3 Less comprehensive income (loss) attributable to noncontrolling interest (0.1 ) — 0.6 — 0.5 Comprehensive income attributable to Wolverine World Wide, Inc. $ 178.8 $ 228.0 $ 81.8 $ (309.8 ) $ 178.8 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets As of January 2, 2016 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 27.2 $ 2.6 $ 164.3 $ — $ 194.1 Accounts receivable, net 84.8 105.8 108.3 — 298.9 Inventories: Finished products (0.8 ) 371.7 77.1 — 448.0 Raw materials and work-in-process 0.8 1.8 16.0 — 18.6 Total inventories — 373.5 93.1 — 466.6 Prepaid expenses and other current assets 10.7 24.9 18.6 — 54.2 Total current assets 122.7 506.8 384.3 — 1,013.8 Property, plant and equipment: Gross cost 228.4 170.5 32.6 — 431.5 Accumulated depreciation (178.1 ) (103.6 ) (18.2 ) — (299.9 ) Property, plant and equipment, net 50.3 66.9 14.4 — 131.6 Other assets: Goodwill 2.7 353.3 73.1 — 429.1 Indefinite-lived intangibles 3.8 675.3 6.3 — 685.4 Amortizable intangibles, net 0.6 96.7 — — 97.3 Deferred income taxes — — 3.7 — 3.7 Deferred financing costs, net 13.8 — — — 13.8 Other 50.5 15.6 3.8 — 69.9 Intercompany accounts receivable 19.8 3,002.0 583.9 (3,605.7 ) — Investment in affiliates 3,388.4 854.0 949.4 (5,191.8 ) — Total other assets 3,479.6 4,996.9 1,620.2 (8,797.5 ) 1,299.2 Total assets $ 3,652.6 $ 5,570.6 $ 2,018.9 $ (8,797.5 ) $ 2,444.6 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets - continued As of January 2, 2016 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 37.3 $ 98.7 $ 63.7 $ — $ 199.7 Accrued salaries and wages 17.2 4.3 7.0 — 28.5 Other accrued liabilities 42.6 35.6 30.0 — 108.2 Current maturities of long-term debt 16.9 — — — 16.9 Total current liabilities 114.0 138.6 100.7 — 353.3 Long-term debt, less current maturities 802.5 0.6 — — 803.1 Accrued pension liabilities 91.2 18.4 — — 109.6 Deferred income taxes (75.2 ) 249.8 4.0 — 178.6 Other liabilities 17.0 11.2 2.1 — 30.3 Intercompany accounts payable 1,739.4 1,360.0 506.3 (3,605.7 ) — Stockholders’ equity Wolverine World Wide, Inc. stockholders’ equity 963.7 3,792.0 1,399.8 (5,191.8 ) 963.7 Noncontrolling interest — — 6.0 — 6.0 Total stockholders’ equity 963.7 3,792.0 1,405.8 (5,191.8 ) 969.7 Total liabilities and stockholders’ equity $ 3,652.6 $ 5,570.6 $ 2,018.9 $ (8,797.5 ) $ 2,444.6 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets As of January 3, 2015 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ 11.4 $ 3.3 $ 209.1 $ — $ 223.8 Accounts receivable, net 18.8 181.4 112.5 — 312.7 Inventories: Finished products 59.5 260.0 78.6 — 398.1 Raw materials and work-in-process 2.1 1.3 12.5 — 15.9 Total inventories 61.6 261.3 91.1 — 414.0 Deferred income taxes 12.8 14.0 1.3 — 28.1 Prepaid expenses and other current assets 24.8 21.4 17.4 — 63.6 Total current assets 129.4 481.4 431.4 — 1,042.2 Property, plant and equipment: Gross cost 230.7 150.7 33.9 — 415.3 Accumulated depreciation (183.3 ) (72.6 ) (22.6 ) — (278.5 ) Property, plant and equipment, net 47.4 78.1 11.3 — 136.8 Other assets: Goodwill 7.9 353.0 77.9 — 438.8 Indefinite-lived intangibles 4.3 674.9 11.3 — 690.5 Amortizable intangibles, net 0.6 111.5 — — 112.1 Deferred income taxes — — 2.8 — 2.8 Deferred financing costs, net 16.5 — — — 16.5 Other 49.8 11.9 3.1 — 64.8 Intercompany accounts receivable 22.1 2,225.4 621.1 (2,868.6 ) — Investment in affiliates 3,158.2 608.8 1,221.3 (4,988.3 ) — Total other assets 3,259.4 3,985.5 1,937.5 (7,856.9 ) 1,325.5 Total assets $ 3,436.2 $ 4,545.0 $ 2,380.2 $ (7,856.9 ) $ 2,504.5 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Balance Sheets - continued As of January 3, 2015 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 37.5 $ 66.4 $ 45.5 $ — $ 149.4 Accrued salaries and wages 23.2 6.0 6.9 — 36.1 Other accrued liabilities 31.6 40.9 36.0 — 108.5 Current maturities of long-term debt 46.7 — — — 46.7 Total current liabilities 139.0 113.3 88.4 — 340.7 Long-term debt, less current maturities 853.5 0.6 — — 854.1 Accrued pension liabilities 106.6 21.5 — — 128.1 Deferred income taxes (60.7 ) 274.7 3.0 — 217.0 Other liabilities 13.3 10.6 2.7 — 26.6 Intercompany accounts payable 1,451.0 734.5 683.1 (2,868.6 ) — Stockholders’ equity: Wolverine World Wide, Inc. stockholders’ equity 933.5 3,389.8 1,598.5 (4,988.3 ) 933.5 Noncontrolling interest — — 4.5 — 4.5 Total stockholders’ equity 933.5 3,389.8 1,603.0 (4,988.3 ) 938.0 Total liabilities and stockholders’ equity $ 3,436.2 $ 4,545.0 $ 2,380.2 $ (7,856.9 ) $ 2,504.5 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flow For the fiscal year ended January 2, 2016 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ 221.2 $ 24.3 $ (30.0 ) $ — $ 215.5 Investing activities Additions to property, plant and equipment (15.9 ) (21.1 ) (9.4 ) (46.4 ) Other 0.3 (3.9 ) — — (3.6 ) Net cash used in investing activities (15.6 ) (25.0 ) (9.4 ) — (50.0 ) Financing activities Borrowings of long-term debt 450.0 — — — 450.0 Payments of long-term debt (530.9 ) — — — (530.9 ) Payments of debt issuance costs (2.4 ) — — — (2.4 ) Cash dividends paid (24.4 ) — — — (24.4 ) Purchase of common stock for treasury (92.6 ) — — — (92.6 ) Purchases of shares under employee stock plans (7.7 ) — — — (7.7 ) Proceeds from the exercise of stock options 13.3 — — — 13.3 Excess tax benefits from stock-based compensation 4.9 — — — 4.9 Contributions from noncontrolling interests — — 2.5 — 2.5 Net cash (used in) provided by financing activities (189.8 ) — 2.5 — (187.3 ) Effect of foreign exchange rate changes — — (7.9 ) — (7.9 ) Increase (decrease) in cash and cash equivalents 15.8 (0.7 ) (44.8 ) — (29.7 ) Cash and cash equivalents at beginning of the year 11.4 3.3 209.1 — 223.8 Cash and cash equivalents at end of the year $ 27.2 $ 2.6 $ 164.3 $ — $ 194.1 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flow For the fiscal year ended January 3, 2015 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ 274.1 $ 9.1 $ 31.4 $ — $ 314.6 Investing activities Additions to property, plant and equipment (7.7 ) (19.6 ) (2.7 ) — (30.0 ) Investment in joint ventures — — (1.1 ) — (1.1 ) Other (2.4 ) (1.2 ) (0.1 ) — (3.7 ) Net cash used in investing activities (10.1 ) (20.8 ) (3.9 ) — (34.8 ) Financing activities Payments of long-term debt (249.8 ) — — — (249.8 ) Cash dividends paid (24.0 ) — — — (24.0 ) Purchases of shares under employee stock plans (10.5 ) — — — (10.5 ) Proceeds from the exercise of stock options 7.3 — — — 7.3 Excess tax benefits from stock-based compensation 5.6 — — — 5.6 Contributions from noncontrolling interest — — 1.0 — 1.0 Net cash provided by (used in) financing activities (271.4 ) — 1.0 — (270.4 ) Effect of foreign exchange rate changes — — 0.2 — 0.2 Increase (decrease) in cash and cash equivalents (7.4 ) (11.7 ) 28.7 — 9.6 Cash and cash equivalents at beginning of the year 18.8 15.0 180.4 — 214.2 Cash and cash equivalents at end of the year $ 11.4 $ 3.3 $ 209.1 $ — $ 223.8 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flow For the fiscal year ended December 28, 2013 (In millions) Parent Subsidiary Guarantors Non-Guarantor Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ 127.1 $ (10.0 ) $ 85.2 $ — $ 202.3 Investing activities Additions to property, plant and equipment (11.9 ) (25.0 ) (4.8 ) — (41.7 ) Proceeds from sale of property, plant and equipment — 2.8 — — 2.8 Investment in joint venture — — (2.5 ) — (2.5 ) Other (2.9 ) (1.3 ) 0.9 — (3.3 ) Net cash used in investing activities (14.8 ) (23.5 ) (6.4 ) — (44.7 ) Financing activities Borrowings of long-term debt 775.0 — — — 775.0 Payments of long-term debt (875.0 ) — — — (875.0 ) Payments of debt issuance costs (2.3 ) — — — (2.3 ) Cash dividends paid (23.7 ) — — — (23.7 ) Purchases of shares under employee stock plans (0.8 ) — — — (0.8 ) Proceeds from the exercise of stock options 8.6 — — — 8.6 Excess tax benefits from stock-based compensation 3.4 — — — 3.4 Contributions from noncontrolling interest — — 2.0 — 2.0 Net cash (used in) provided by financing activities (114.8 ) — 2.0 — (112.8 ) Effect of foreign exchange rate changes — — (2.0 ) — (2.0 ) Increase (decrease) in cash and cash equivalents (2.5 ) (33.5 ) 78.8 — 42.8 Cash and cash equivalents at beginning of the year 21.3 48.5 101.6 — 171.4 Cash and cash equivalents at end of the year $ 18.8 $ 15.0 $ 180.4 $ — $ 214.2 |