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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to
____________________
Commission File Number: 1-6024
WOLVERINE WORLD WIDE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-1185150
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
9341 COURTLAND DRIVE,
ROCKFORD, MICHIGAN 49351
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (616) 866-5500
Securities registered pursuant to Section 12(b)
of the Securities Exchange Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $1 Par Value New York Stock Exchange/Pacific
Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes __X__ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Number of shares outstanding of the registrant's Common Stock, $1 par value
(excluding shares of treasury stock) as of March 1, 1996: 18,377,912
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant based on the closing price on the New York
Stock Exchange on March 1, 1996: $497,563,340
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the registrant's annual
stockholders' meeting to be held April 17, 1996, are incorporated by
reference into Part III of this report.
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PART I
ITEM 1. BUSINESS.
GENERAL.
Wolverine World Wide, Inc. (the "Company") is a leading designer,
manufacturer and marketer of a broad line of quality comfortable casual
shoes, rugged outdoor and work footwear, and constructed slippers and
moccasins. The Company, a Delaware corporation, is the successor of a 1969
reorganization of a Michigan corporation of the same name, originally
organized in 1906, which in turn was the successor of a footwear business
established in Grand Rapids, Michigan in 1883.
Consumers on six continents purchased approximately 29.8 million pairs
of Company branded footwear during fiscal 1995, making the Company a
global leader among U.S. shoe companies in the marketing of branded
non-athletic footwear. The Company's products generally feature contemporary
styling with patented technologies designed to provide maximum comfort. The
products are marketed throughout the world under widely recognized brand
names, including HUSH PUPPIES[REGISTERED], WOLVERINE[REGISTERED],
BATES[REGISTERED], CATERPILLAR[REGISTERED] and COLEMAN[REGISTERED]. The
Company believes that its primary competitive strengths are its well
recognized brand names, broad range of comfortable footwear, patented
comfort technologies, distribution through numerous channels and
diversified manufacturing and sourcing base.
The Company's footwear is sold under a variety of brand names designed
to appeal to most consumers of non-athletic footwear at numerous price
points. The Company's footwear products are organized under three
operating divisions: (i) The Hush Puppies Company, focusing on comfortable
casual shoes, (ii) the Wolverine Footwear Group, focusing on work, outdoor
and lifestyle boots and shoes and (iii) the Tru-Stitch Footwear Division,
focusing on slippers and moccasins under private labels for third party
retailers. The Company's Global Operations Group is responsible for
manufacturing and sourcing, including the operation of the Company-owned
pigskin tannery. The Company's footwear is distributed domestically to
approximately 30,000 department store, footwear chain, catalog specialty
retailer and mass merchant accounts, as well as 58 Company-owned retail
stores. The Company's products are distributed worldwide through
approximately 150 licensees and distributors in over 90 countries.
Footwear has accounted for 90% or more of the consolidated revenues of the
Company for each of the last three years. For further financial
information regarding the Company, see the consolidated financial
statements of the Company, which are attached as Appendix A to this Form
10-K.
On March 22, 1996, the Company completed the acquisition of certain
assets of Hy-Test, Inc. ("Hy-Test") from The Florsheim Shoe Company. The
acquisition includes various assets of the Hy-Test work, safety and
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occupational footwear business. The Hy-Test business will be operated as
part of the Wolverine Footwear Group.
The Company, through its Wolverine Leathers Division, is one of the
premier tanners of quality pigskin leather for the shoe and leather goods
industries. The pigskin leather tanned by the Company is used in a
significant portion of the footwear manufactured and sold by the Company,
and is also sold to other domestic and foreign manufacturers of shoes.
PRODUCTS.
The Company's product offerings include casual, dress, work and
uniform shoes, and work, sport and uniform boots as well as constructed
slippers and moccasins. Footwear is offered by the Company under many
recognizable brand names including HUSH PUPPIES[REGISTERED],
WOLVERINE[REGISTERED], BATES[REGISTERED], CATERPILLAR[REGISTERED] and
COLEMAN[REGISTERED]. The Company also manufactures constructed slippers
and moccasins and markets them on a private label basis through its Tru-Stitch
Footwear Division. Through its manufacturing facilities and third-party
contractors, the Company combines quality materials and skilled
workmanship from around the world to produce footwear according to its
specifications.
THE HUSH PUPPIES COMPANY. The Company believes that HUSH
PUPPIES'[REGISTERED] 38-year heritage as a pioneer of comfortable casual
shoes positions the brand to capitalize on the global trend toward more
casual workplace and leisure attire. The diverse product line includes
numerous styles for both work and casual wear, utilizes comfort features,
such as the COMFORT CURVE[REGISTERED] sole and patented BOUNCE[REGISTERED]
technology, and is marketed under the advertising theme "We Invented
Casual<Trademark>." HUSH PUPPIES[REGISTERED] shoes are sold to men,
women and children in over 70 countries and are distributed through
a multi-tiered network of department stores, specialty retailers,
catalogs and Company-owned stores.
THE WOLVERINE FOOTWEAR GROUP. The Wolverine Footwear Group is one of
the world's largest work and outdoor footwear companies, encompassing
multiple brands designed with performance and comfort features to serve a
variety of work, outdoor and lifestyle functions. The
WOLVERINE[REGISTERED] brand, which has been in existence for 112 years, is
identified with performance and quality and includes products bearing the
names WOLVERINE[REGISTERED], WOLVERINE WILDERNESS[REGISTERED] and WOLVERINE
SPORTSMAN<Trademark>. The Wolverine Footwear Group also includes the
BATES[REGISTERED], CATERPILLAR[REGISTERED], COLEMAN[REGISTERED] and
HY-TEST[REGISTERED] product lines. The product lines feature patented
technologies and designs, such as the DURASHOCKS[REGISTERED] and HIDDEN
TRACKS<Trademark> systems, and the use of quality materials and components.
WOLVERINE BOOTS AND SHOES. The Company believes the
WOLVERINE[REGISTERED] brand has built its reputation by making quality,
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durable and comfortable work boots and shoes. The development of
DURASHOCKS[REGISTERED] technology allowed the WOLVERINE[REGISTERED] brand
to introduce a broad line of work footwear with a focus on comfort.
WOLVERINE[REGISTERED] brand work boots and shoes, including steel toes,
target male and female industrial and farm workers and are distributed
through department stores and specialty and independent retailers.
WOLVERINE WILDERNESS. The WOLVERINE WILDERNESS[REGISTERED] line
introduced DURASHOCKS[REGISTERED] technology and other comfort features to
products designed for rugged outdoor use. This broad product line includes
all-terrain sport boots, walking shoes, trail hikers, rugged casuals and
outdoor sandals. The line targets active lifestyles and is distributed
through department stores and specialty and independent retailers.
WOLVERINE SPORTSMAN. The Company's WOLVERINE SPORTSMAN<Trademark>
boots target hunters, fishermen and other active outdoor users. Warmth,
waterproofing and comfort are achieved through the use of GORTEX[REGISTERED],
THINSULATE[REGISTERED] and the Company's DURASHOCKS[REGISTERED] brand
technologies. The WOLVERINE SPORTSMAN<Trademark> line is sold through
specialty retail and catalog distribution channels that serve hunting
and fishing enthusiasts.
BATES. The Company's Bates Division is an industry leader in
supplying footwear to military and civilian uniform users. The Bates
Division utilizes DURASHOCKS[REGISTERED] and other proprietary comfort
technologies in the design of its military-style boots and oxfords.
Civilian uniform uses include police, postal, restaurant and other
industrial occupations. Bates Division products are also distributed
through specialty retailers and catalogs.
CATERPILLAR. The Company has been granted the exclusive worldwide
rights to manufacture, market and distribute certain footwear and related
accessories under the CATERPILLAR[REGISTERED], CAT DESIGN[REGISTERED] and
other trademarks. The Company believes the association with
CATERPILLAR[REGISTERED] equipment enhances the reputation of its boots for
quality, ruggedness and durability. The diversity of the product line and
strong recognition of the CATERPILLAR[REGISTERED] brand name allow the
Company to distribute products through a wide variety of channels,
including mass merchants, department stores and independent retailers.
These products are primarily targeted at work and industrial users.
COLEMAN. The Company has been granted the exclusive rights to
manufacture, market, distribute and sell certain outdoor footwear under the
COLEMAN[REGISTERED] brand in the United States, Japan and Canada.
COLEMAN[REGISTERED] brand footwear products include lightweight hiking
boots, rubber footgear and outdoor sandals, which are sold primarily at
value-oriented prices through mass merchants.
HY-TEST. On March 22, 1996, the Company completed the acquisition of
certain assets of the Hy-Test work, safety and occupational footwear
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business from The Florsheim Shoe Company. The HY-TEST[REGISTERED] product
line consists primarily of high quality work boots and shoes.
HY-TEST[REGISTERED] brand footwear is sold to male and female industrial
workers, primarily through a network of independent shoemobile
distributors.
THE TRU-STITCH FOOTWEAR DIVISION. Through the Tru-Stitch Footwear
Division, the Company is the leading supplier of constructed slippers in
the United States.
The styling of TRU-STITCH[REGISTERED] footwear reflects consumer
demand for the "rugged indoor" look by using natural leathers such as
moosehide, shearling and suede in constructed slipper and indoor and
outdoor moccasin designs. The Company designs and manufactures constructed
slippers and moccasins on a private label basis according to customer
specifications. Such products are manufactured for leading United States
retailers and catalogs, such as Nordstrom, J.C. Penney, L.L. Bean, Eddie
Bauer and Lands' End.
THE WOLVERINE LEATHERS DIVISION. The Company's Global Operations
Group includes the Wolverine Leathers Division, the largest domestic tanner
of pigskin, primarily for use in the footwear industry.
WOLVERINE LEATHERS[REGISTERED] brand products are manufactured in the
Company's pigskin tannery located in Rockford, Michigan. The Company
believes these leathers offer superior performance and cost advantages over
cowhide leathers. The Company's waterproof, stain resistant and washable
leathers are featured in all of the Company's domestic footwear lines and
many products offered by the Company's international licensees.
MARKETING.
The Company's overall marketing strategy is to develop brand-specific
plans and related promotional materials for the United States market which
foster a differentiated and globally consistent image for each of the
Company's core brands. Each brand group within the Company has its own
marketing personnel who develop the marketing strategy for products within
that group. Domestic marketing campaigns target both the Company's retail
accounts and consumers, and strive to increase overall brand awareness for
the Company's products. The Company's advertisements typically emphasize
the comfort and quality of its footwear, in addition to durability,
functionality and other performance aspects. Components of the brand-specific
plans include print, radio and television advertising, in-store
point of purchase displays, Shop-in-Shop design, promotional materials, and
sales and technical floor assistance.
The Company's brand groups provide its international licensees and
distributors with creative direction and materials to convey consistent
messages and brand images. Examples of assistance provided by the Company
to its licensees and distributors are (i) direction concerning the
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categories of footwear to be promoted, (ii) photography and layouts, (iii)
broadcast advertising, including commercials and film footage, (iv) point
of purchase presentation specifications and blueprints, (v) sales
materials, and (vi) consulting concerning retail store layout and design.
The Company believes the strengths of its brand names provide a competitive
advantage. In support of this belief, the Company has significantly
increased its expenditures on marketing and promotion to support the
position of its products and enhance brand awareness.
DOMESTIC SALES AND DISTRIBUTION.
The Company uses a wide variety of distribution channels to distribute
its products. To meet the diverse needs of its broad customer base, the
Company uses three primary distribution strategies.
- Traditional wholesale distribution is used to service department
stores (such as J.C. Penney, Sears and Nordstrom), large footwear
chains (such as Famous Footwear and Chernin's), specialty
retailers, catalogs and independent retailers. A dedicated sales
force and customer service team, advertising and point of
purchase support and in-stock inventories are used to service
these accounts.
- Volume direct programs provide branded and private label footwear
at competitive prices with limited marketing support. These
programs service major retail, mail order and government
customers.
- First cost agreements are primarily utilized to furnish brands
licensed by the Company to mass merchants (such as Wal-Mart) on a
royalty basis.
In connection with the March 22, 1996, acquisition of the Hy-Test business,
the Company plans to distribute and sell HY-TEST[REGISTERED] brand products
primarily through an established network of independent shoemobile
distributors. The Company may also distribute additional products through
this independent distributor network.
In addition to its wholesale activities, the Company operated 58
domestic retail shoe stores as of March 22, 1996, under two formats,
consisting of factory outlet stores and mall-based speciality stores. In
fiscal 1990, the Company implemented a strategic plan to focus the majority
of its resources on its wholesale businesses. As a result, the Company's
retail operations were significantly downsized and repositioned from 176
stores operating under seven formats in 1990 to the current store base.
The Company expects the scope of its retail operations to remain relatively
consistent in the foreseeable future. Most of the Company's 49 factory
outlet stores carry a large selection of first quality Company branded
footwear at a discount to conventional retail prices. The 9 regional mall-based
full service, full price HUSH PUPPIES[REGISTERED] Specialty Stores
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feature a broad selection of men's and women's HUSH PUPPIES[REGISTERED]
brand footwear and are used by the Company to test new styles and
merchandizing strategies. The Company also adopted a plan in 1994 to
discontinue its operation of leased shoe departments in the Lamonts Apparel
chain and completed the plan in July 1995.
A broad distribution base insulates the Company from dependence on any
one customer. No customer of the Company accounted for more than 10% of
the Company's net sales and other operating income in fiscal 1995.
Retail footwear sales are seasonal with significant increases in sales
experienced during the Christmas, Easter and back-to-school periods. Due
to this seasonal nature of footwear sales, the Company experiences some
fluctuation in the levels of working capital. The Company provides working
capital for such fluctuations through internal financing and through a
revolving credit agreement that the Company has in place. The Company
expects the seasonal sales pattern to continue in future years.
GLOBAL LICENSING.
The Company derives royalty income from licensing the HUSH
PUPPIES[REGISTERED], WOLVERINE[REGISTERED], WOLVERINE
WILDERNESS[REGISTERED], and other trademarks to domestic and foreign
licensees for use on footwear and related products. The Company, as a
licensee, sells footwear bearing the CATERPILLAR[REGISTERED] and
COLEMAN[REGISTERED] trademarks through foreign distributors. Licensing and
distributing enables the Company to develop international markets without
the capital commitment required to maintain inventories or fund localized
marketing programs. In fiscal 1995, the Company's foreign licensees and
distributors sold an estimated 14.3 million pairs of footwear, an increase
from approximately 11.5 million pairs sold in fiscal 1994.
The Company continues to develop a global network of licensees and
distributors to market its footwear brands. The Company assists in
designing products that are appropriate to each foreign market but are
consistent with the global brand position. The licensees and distributors
then either manufacture their own product or purchase goods from either the
Company or third-party manufacturers. Each licensee and distributor is
responsible for the marketing and distribution of the Company's products.
MANUFACTURING AND SOURCING.
Although approximately one half of the Company's product line is
purchased or sourced from third parties, the remainder is produced at
Company-owned facilities. The Company's footwear is manufactured in
several domestic and certain related foreign facilities located in
Michigan, Arkansas, New York, the Caribbean Basin and Canada. In addition,
in connection with the acquisition of the Hy-Test business, the Company acquired
a 104,000 square foot shoe factory in Kirksville, Missouri. The Company has
implemented a "twin plant" concept whereby the labor intensive cutting and
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fitting construction of the "upper" is performed at the Company's
facilities in the Caribbean Basin and the technology intensive
construction, or "bottoming," is performed at the Company's domestic
facilities.
The Company has retooled most of its factories since the beginning of
fiscal 1993, giving each facility the flexibility to produce a variety of
footwear, and has departed from the industry's historic practice of
dedicating a given facility for production of specific footwear products.
The traditional dedication of facilities at times caused internal conflicts
in manufacturing capacity and did not permit the Company to quickly respond
to changes in market preference and demand. The Company now produces
various products for both men and women in most of its domestic facilities,
providing greater flexibility for the Company to respond to both market and
customer-specific demand.
The Company sources certain footwear from a variety of foreign
manufacturing facilities in the Asia-Pacific region, Central and South
America and Europe. The Company maintains technical offices in the Asia-
Pacific region to facilitate the sourcing and importation of quality
footwear. The Company has established guidelines for each of its third-
party manufacturers in order to monitor product quality, labor practices,
and financial viability.
The Company's domestic manufacturing operations allow the Company to
(i) reduce its lead time, enabling it to quickly respond to market demand
and reduce inventory risk, (ii) lower freight and shipping costs and (iii)
closely monitor product quality. The Company's foreign manufacturing
strategy allows the Company to (i) benefit from lower labor costs, (ii)
source the highest quality raw materials from around the world and (iii)
avoid additional capital expenditures necessary for factories and
equipment. The Company believes that its overall global manufacturing
strategy gives the Company maximum flexibility to properly balance the need
for timely shipments, high quality products and competitive pricing.
The Company owns and operates a pigskin tannery, which is one of the
premier tanners of quality leather for the footwear industry. The Company
and its licensees receive virtually all of their pigskin requirements from
the tannery. The Company believes the tannery provides a strategic
advantage for the Company by producing leather using proprietary technology
at prices below those available from other sources. The continued
operation of this tannery is important to the Company's competitive
position in the footwear industry.
The Company's principal required raw material is quality leather,
which it purchases primarily from a select group of domestic suppliers,
including the Company's tannery. The global availability of shearling and
cowhide leather eliminates any reliance by the Company upon a sole
supplier. However, the Company currently purchases the vast majority of
the raw pigskins used in a significant portion of its tannery operations from
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a single domestic source, which has been a reliable and consistent supplier
for over 30 years. The Company purchases all of its other raw materials
and component parts from a variety of sources, none of which is believed by
the Company to be a dominant supplier.
The Company is subject to the normal risks of doing business abroad
due to its international operations, including the risk of expropriation,
acts of war, political disturbances and similar events, and loss of most
favored nations trading status. With respect to international sourcing
activities, management believes that over a period of time, it could
arrange adequate alternative sources of supply for the products currently
obtained from its foreign suppliers. A sustained disruption of such
sources of supply could, particularly on a short-term basis, have an
adverse impact on the Company's operations.
TRADEMARKS, LICENSES AND PATENTS.
The Company holds a number of registered and common law trademarks
that identify its products. The trademarks that are most widely used by
the Company include HUSH PUPPIES[REGISTERED], WOLVERINE[REGISTERED],
WOLVERINE WILDERNESS AND SUN DESIGN[REGISTERED], BATES[REGISTERED],
DURASHOCKS[REGISTERED], BOUNCE AND DESIGN[REGISTERED], COMFORT
CURVE[REGISTERED], TRU-STITCH[REGISTERED], and SIOUX MOX[REGISTERED]. The
Company is licensed to market certain footwear under the
COLEMAN[REGISTERED] trademark in the United States and Canada and in Japan
pursuant to agreements extending through December 31, 2000, and June 30,
1999, respectively. The Company is also licensed to market certain
footwear throughout the world under the CATERPILLAR[REGISTERED] and CAT
DESIGN[REGISTERED] trademarks pursuant to an agreement that extends through
December 31, 1999. Pigskin leather produced by the Company is sold under
the trademarks WOLVERINE LEATHERS[REGISTERED], ALL WEATHER LEATHERS<Trademark>
and SATIN SUEDE<Trademark>. In addition, with the acquisition of the Hy-Test
business, the Company acquired the HY-TEST[REGISTERED] and other trademarks.
The Company believes that its products are identified by consumers by
its trademarks and that its trademarks are valuable assets. The Company is
not aware of any infringing uses or any prior claims of ownership of its
trademarks that could materially affect its current business. It is the
policy of the Company to pursue registration of its primary marks whenever
possible and to vigorously defend its trademarks against infringement or
other threats to the greatest extent practicable under the laws of the
United States and other countries. The Company is also the holder of
several patents, copyrights and various other proprietary rights. The
Company protects all of its proprietary rights to the greatest extent
practicable under applicable law.
ORDER BACKLOG.
At March 1, 1996, the Company had a backlog of orders of approximately
$107 million compared with a backlog of approximately $87 million at March 1,
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1995. While orders in backlog are subject to cancellation by customers,
the Company has not experienced significant cancellation of orders in the
past and the Company expects that substantially all of the orders will be
shipped in fiscal 1996. The backlog at a particular time is affected by a
number of factors, including seasonality and the scheduling of the
manufacture and shipment of products. Accordingly, a comparison of backlog
from period to period is not necessarily meaningful and may not be
indicative of eventual actual shipments.
COMPETITION.
The Company's footwear lines are manufactured and marketed in a highly
competitive environment. The Company competes with numerous manufacturers
(domestic and foreign) and importers of footwear, some of which are larger
and have greater resources than the Company. The Company's major
competitors for its brands of footwear are located in the United States.
The Company has at least ten major competitors in connection with the
sale of its work shoes and boots, at least eight major competitors in
connection with the sale of its sport boots, and at least fifteen major
competitors in connection with the sale of its casual and dress shoes.
Product performance and quality, including technological improvements,
product identity, competitive pricing, and the ability to adapt to style
changes are all important elements of competition in the footwear markets
served by the Company. The footwear industry in general is subject to
changes in consumer preferences. The Company strives to meet competition
and maintain its competitive position through promotion of brand awareness,
manufacturing efficiencies, its tannery operations, and the style, comfort
and value of its products. Future sales by the Company will be affected by
its continued ability to sell its products at competitive prices and to
meet shifts in consumer preference.
Because of the lack of reliable published statistics, the Company is
unable to state with certainty its position in the footwear industry. The
market share in the footwear industry is highly fragmented and no one
company has a dominant market position; however, the Company believes it is one
of the three largest domestic manufacturers of footwear.
RESEARCH AND DEVELOPMENT.
In addition to normal and recurring product development, design and
styling activities, the Company engages in research and development related
to new and improved materials for use in its footwear and other products
and in the development and adaptation of new production techniques. The
Company's continuing relationship with the Biomechanics Evaluation
Laboratory at Michigan State University has led to specific biomechanical design
concepts, such as BOUNCE[REGISTERED], DURASHOCKS[REGISTERED] and HIDDEN
TRACKS<Trademark> comfort technologies, that have been incorporated in the
Company's footwear. The Company also maintains a footwear design center in
Italy to develop contemporary styling for the Company and its international
licensees.
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While the Company continues to be a leading developer of footwear
innovations, research and development costs do not represent a material
portion of operating expenses.
ENVIRONMENTAL MATTERS.
Compliance with federal, state and local regulations with respect to
the environment has not had, nor is it expected to have, any material
effect on the capital expenditures, earnings or competitive position of the
Company. The Company uses and generates, and in the past has used and
generated, certain substances and wastes that are regulated or may be
deemed hazardous under certain federal, state and local regulations with
respect to the environment. The Company from time to time works with
federal, state and local agencies to resolve cleanup issues at various
waste sites or other regulatory issues.
The Company is one of 14 companies presently identified as potentially
responsible parties ("PRPs") by the Michigan Department of Environmental
Quality ("MDEQ") at the Sunrise Landfill Site near Wayland, Michigan. The
MDEQ has demanded that the PRPs pay approximately $3.7 million as
reimbursement for past costs of excavating drums of hazardous waste at the
site and join in financing further investigation and remedial efforts. It
is too early to accurately estimate the cost of completing the cleanup of
the site, but it could exceed $15 million. Preliminary test results
suggest that it may be possible to leave the remaining drums in place,
thereby significantly reducing the costs of remediation. In August 1994,
the PRPs, including the Company, entered into a consent agreement with the
MDEQ in which they agreed to collectively pay $323,000 in costs incurred by
the MDEQ prior to July 1991, to investigate possible responses, and to
implement interim measures to control current and prevent future
environmental degradation. The Company's share of the investigative and
interim response activity costs, approximately $90,000, has already been
fully paid.
In October, 1995, after further investigation and consideration of the
facts, the Company withdrew from further active participation as part of
the PRP Group due to the Company's determination that based on the
available evidence its involvement (if any) at the site was negligible, and
that the $90,000 previously paid by the Company has fully satisfied what
limited responsibility the Company might have at the site. The Company
does not believe the ultimate resolution of this matter will have a
material adverse effect on the Company's financial condition or results of
operation.
EMPLOYEES.
As of December 9, 1995, the Company had approximately 5,586 domestic
and foreign production, office and sales employees. Approximately 1,400
employees were covered by eight union contracts expiring at various dates
through 1998. The Company has experienced no work stoppages since 1990.
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The Company presently considers its employee relations to be good.
ITEM 2. PROPERTIES.
The principal executive, sales and administration offices of the
Company are located in Rockford, Michigan and consist of administration and
office buildings of approximately 123,300 square feet. The Company also
has additional administrative and sales offices in Arkansas, New York,
Italy, Canada and the Asia-Pacific region totaling approximately 32,400
square feet, the majority of which is leased.
The Company's pigskin tannery, located in Rockford, Michigan,
encompasses approximately 160,000 square feet and is supported by four
procurement facilities in various states. The Company's footwear
manufacturing operations are conducted at 21 separate facilities, totaling
approximately 954,000 square feet of manufacturing space. These facilities
are located in Arkansas, Michigan, Missouri, New York, Mexico, Puerto Rico,
the Dominican Republic and Canada. These totals include the purchase of a
104,000 square foot shoe factory in Kirksville, Missouri, acquired by the
Company on March 22, 1996, in connection with the acquisition of Hy-Test.
Approximately 444,000 square feet of manufacturing space is under lease at
eight locations and the remaining thirteen facilities are Company-owned.
The Company believes its footwear manufacturing facilities are generally
among the most modern in the industry.
The Company maintains thirteen warehouses, located in four states and
Canada, containing approximately 1,100,000 square feet. The majority of
these warehouses are Company-owned, with approximately 430,000 square feet
at six locations under lease. In addition, the Company's retail
operations are conducted throughout the United States and as of March 22,
1996, consisted of approximately 58 locations. All retail locations,
except two factory outlet stores in Company-owned facilities, are subject
to operating leases.
The Company's Board of Directors has approved $13.0 million to expand the
Company's corporate headquarters complex in Rockford, Michigan. The Company
expects to fund this expenditure through available balances under a revolving
credit facility.
The Company believes that its current facilities, including the
planned expansion discussed above, are suitable and adequate to meet its
anticipated needs for the next twelve months.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in litigation and various legal matters
arising in the normal course of business. The Company is also involved in
certain environmental compliance activities, including proceedings
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involving cleanup issues associated with a waste disposal site, as more
fully described in Item 1 of this Annual Report on Form 10-K. The Company
has considered facts that have been ascertained and opinions of counsel
handling these matters, and does not believe the ultimate resolution of
such proceedings will have a material adverse effect on the Company's
financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table lists the names and ages of the Executive Officers
of the Company as of the date of this Annual Report on Form 10-K, and the
positions presently held with the Company. The information provided below
the table lists the business experience of each such Executive Officer
during the past five years. All Executive Officers serve at the pleasure
of the Board of Directors of the Company, or if not appointed by the Board
of Directors, they serve at the pleasure of management.
NAME AGE POSITIONS HELD WITH THE COMPANY
Geoffrey B. Bloom 54 President and Chief Executive Officer
Steven M. Duffy 43 Vice President and President of the
Global Operations Group
V. Dean Estes 46 Vice President and President of the
Wolverine Footwear Group
Stephen L. Gulis, Jr. 38 Vice President and Chief Financial
Officer
Blake W. Krueger 42 General Counsel and Secretary
L. James Lovejoy 64 Vice President of Corporate
Communications
Thomas P. Mundt 46 Vice President of Strategic Planning
and Treasurer
Timothy J. O'Donovan 50 Executive Vice President and President
of The Hush Puppies Company
Robert J. Sedrowski 46 Vice President of Human Resources
Geoffrey B. Bloom has served the Company as President and Chief
Executive Officer since April 1993. From 1987 to 1993 he served the
Company as President and Chief Operating Officer.
-12-
Steven M. Duffy has served the Company as a Vice President since April
1993 and is President of the Company's Global Operations Group. From 1989
to April 1993 he served the Company in various senior manufacturing
positions.
V. Dean Estes has served the Company as a Vice President since 1995.
Mr. Estes is also President of the Wolverine Footwear Group. Since he
joined the Company in 1975, Mr. Estes has served in various positions
relating to the sales, marketing and product development functions of the
Company's work boot and shoe and related businesses.
Stephen L. Gulis, Jr., has served the Company as Vice President and
Chief Financial Officer since February 1994. From April 1993 to February
1994 he served the Company as Vice President of Finance and Corporate
Controller, and from 1986 to 1993 he was the Vice President of
Administration and Control for The Hush Puppies Company.
Blake W. Krueger has served the Company as General Counsel and
Secretary since April 1993. He has been a partner of the law firm of
Warner Norcross & Judd LLP since 1985.
L. James Lovejoy has served the Company as Vice President of Corporate
Communications since 1991. From 1984 to 1991 he was the Director of
Corporate Communications for Gerber Products Company, a manufacturer of
baby food and consumer products.
Thomas P. Mundt has served the Company as Vice President of Strategic
Planning and Treasurer since December 1993. From 1988 to 1993 he served in
various financial and planning positions at Sears Roebuck & Co., including
Vice President Planning, Coldwell Banker's Real Estate Group and Director
of Corporate Planning for Sears Roebuck & Co.
Timothy J. O'Donovan has served the Company as Executive Vice
President since 1982. In addition, Mr. O'Donovan is President of The Hush
Puppies Company.
Robert J. Sedrowski has served the Company as Vice President of Human
Resources since October 1993. From 1990 to 1993 he served as Director of
Human Resources for the Company.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Wolverine World Wide, Inc. common stock is traded on the New York
and Pacific Stock Exchanges under the symbol "WWW." The following table
shows the high and low sales prices by calendar quarter for 1995 and 1994 as
reported on the New York Stock Exchange. The stock prices and cash dividends
declared shown below have been retroactively adjusted to reflect the
-13-
three-for-two stock splits announced in April 1995 and March 1994. The number
of stockholders of record of common stock was 1,975 on March 1, 1996.
1995 1994
HIGH LOW HIGH LOW
1st quarter $ 19 1/8 $ 15 3/8 $ 16 1/2 $ 12 7/8
2nd quarter 24 1/4 18 7/8 16 1/4 12 3/8
3rd quarter 28 1/8 19 5/8 18 1/8 13 3/8
4th quarter 34 1/8 25 1/2 18 1/8 13 1/2
CASH DIVIDENDS DECLARED PER SHARE:
1995 1994
1st quarter $.033 $.027
2nd quarter $.035 $.027
3rd quarter $.035 $.027
4th quarter $.035 $.027
Dividends of $.035 and $.04 per share were declared for the first
quarter and second quarter, respectively, of fiscal 1996.
ITEM 6. SELECTED FINANCIAL DATA.
FIVE-YEAR OPERATING AND FINANCIAL SUMMARY <F1><F2>
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
1995 1994 1993 1992 1991
SUMMARY OF OPERATIONS
Net sales and other
operating income $ 413,957 $378,473 $323,315 $282,863 $271,622
Earnings from
continuing operations 24,067 18,050 11,754 4,699 4,563
Per share of common stock:
Primary earnings from con-
tinuing operations<F3><F4> $ 1.41 $ 1.10 $ 0.75 $ 0.32 $ 0.31
Cash dividends<F4><F5> 0.14 0.11 0.07 0.07 0.07
-14-
1995 1994 1993 1992 1991
FINANCIAL POSITION AT YEAR END
Total assets $283,554 $228,970 $205,029 $200,817 $201,047
Long-term debt, less
current maturities 30,594 43,482 44,913 42,656 31,596
NOTES TO FIVE-YEAR OPERATING AND FINANCIAL SUMMARY
1. This summary should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto, which are
attached as Appendix A to this Form 10-K.
2. The results from operations exclude discontinued operations and are
before the cumulative effect of accounting changes.
3. Primary earnings from continuing operations per share are based on the
weighted average number of shares of common stock outstanding during
the year and the assumed exercise of dilutive stock options.
4. On March 10, 1994 and April 19, 1995, the Company announced three-for-
two stock splits on shares of common stock outstanding on March 21,
1994, and May 1, 1995, respectively. All share and per share data
have been retroactively adjusted for the increased shares resulting
from these stock splits.
5. Cash dividends per share of common stock represent the rates paid by
the Company on the shares outstanding at the dates of declaration.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OPERATIONS.
RESULTS OF OPERATIONS - 1995 COMPARED TO 1994
Net sales and other operating income from continuing operations
increased 9.4% to $414.0 million during 1995 from $378.5 million in 1994.
This growth was created by volume increases in the Company's work and sport
boot product lines which increased 32.7% domestically and in the Company's
Hush Puppies and Wolverine International Divisions, which combined posted a
29.3% increase in revenues. Additionally, sales increases were generated
by United States Department of Defense contracts, which helped offset a
decrease in the Hush Puppies Retail Division resulting from a 1994 decision
to downsize the retail operations. Sales in the Hush Puppies Wholesale
-15-
Division remained flat due to the generally difficult retail environment
for apparel and footwear in the United States.
The Wolverine Footwear Group continued to grow at a record pace in
1995. Net sales for the group improved 25.9% on the strength of core work
products offered in both the Wolverine and Caterpillar brands. These
increases were partially offset by a slight volume shortfall in the Bates
Division which continued to be affected by military downsizing and reduced
emphasis on export markets. During 1995, the Bates Division strategy was
focused on building a strong civilian uniform business to complement its
military business.
The Hush Puppies Wholesale Division fell short of 1994 net sales
levels by 2.4%. During 1995, the loss of certain Company-controlled
distribution channels negatively affected wholesale revenues. Net sales
and other operating income for the Hush Puppies International Division
increased 17.0% in 1995 over 1994 levels, reflecting new international
opportunities and the growth of established programs. Additionally, Hush
Puppies Retail sales were down $4.6 million, resulting primarily from the
store closings noted above.
The Tru-Stitch Footwear Division's net sales were 7.0% below the
record levels posted in 1994 primarily due to a softening of sales in the
catalog sector at the end of 1995. Despite this reduction, Company
products were placed in several new distribution channels.
The Wolverine Leathers Division recorded a modest revenue improvement
of 1.1% in 1995. This performance represents the second consecutive year
of revenue increases for the division. This growth was due in part to
favorable pricing opportunities in the pigskin procurement markets and
increased volume in proprietary sueded products. The division's recent
restructuring has placed additional focus on proprietary sueded product.
Gross margin as a percentage of net sales and other operating income
declined 1.8 percentage points to 29.8% in 1995 from 31.6% in 1994.
Aggressive promotional pricing programs designed to generate business in
the fourth quarter resulted in margin erosion for the wholesale businesses.
One-time transition costs to upgrade manufacturing processes and increase
manufacturing flexibility in the Company's Arkansas facilities and costs
associated with increasing upper capacities in the Company's Caribbean
operations also resulted in lower gross margin levels.
Selling and administrative expenses of $86.0 million in 1995 declined
$4.3 million from $90.3 million in 1994, and as a percentage of net sales
dropped to 20.8% in 1995 from 23.9% in 1994. Selling, administrative, and
distribution costs associated with the increased sales volume combined with
advertising and promotional investments for the Wolverine Footwear Group
increased costs by $4.2 million in 1995 over the prior year. Tight cost
-16-
controls throughout the remainder of the organization offset the above
noted increases of the Wolverine Footwear Group. In addition, the Company
lowered its employee benefit expenses and eliminated selling, general, and
administrative costs of the Hush Puppies Retail operations by closing
certain unprofitable stores.
Interest expense of $4.7 million is $0.7 million greater than the 1994
level of $4.0 million as a result of higher average borrowings throughout
the year to fund working capital requirements associated with sales growth.
The effect of higher average borrowings was partially offset by lower
average borrowing rates.
Interest income of $1.0 million increased $0.4 million. The Company
invested a portion of the funds from an equity offering in the fourth
quarter which accounted for approximately one-half of the increase.
The 1995 effective tax rate on earnings from continuing operations of
29.5% increased from 29.0% in 1994. The reduction from the federal
statutory rate of 35% was principally a result of non-taxable earnings of
the Company's Caribbean operations.
Net earnings from continuing operations of $24.1 million ($1.41 per
share) for 1995 reflect a 33.3% increase over earnings of $18.1 million
($1.10 per share) reported for 1994. Increased earnings from continuing
operations are primarily a result of the items noted above.
Primary earnings per share for 1995 was $1.41 compared to $1.01 per
share in 1994. Fully diluted earnings per share of $1.40 and $1.00 were
reported for 1995 and 1994, respectively.
RESULTS OF OPERATIONS - 1994 COMPARED TO 1993
Net sales and other operating income from continuing operations for
1994 of $378.5 million compare with $323.3 million for 1993, a 17.1%
increase. This increase was primarily the result of record sales in the
Wolverine Footwear Group and the Tru-Stitch Footwear Division.
Additionally, strong sales increases occurred in The Hush Puppies Company
and the Wolverine Leathers Division.
The Wolverine Footwear Group's record sales were fueled by a 31.9%
increase in the domestic and international work and sport boot divisions.
This increase was offset by a 6.1% decrease in the Bates Division. The
work and sport boot gains continued to reflect superior product
characteristics and the continued trend toward utilizing these products for
everyday use. The reduced shipments in the Bates Division reflect the
continued downsizing of the United States military and reduced demand in
export markets.
-17-
The Tru-Stitch Footwear Division reached record net sales by recording
a 23.9% increase over record 1993 levels. The increase resulted from
further increases in catalog accounts and a full year of operations of the
B & B Shoe Company, which was acquired in 1993.
The Hush Puppies Company recorded a 11.1% increase in volume for the
year with all operating groups reporting an increase. The brand
repositioning which began in 1992 continued to have a positive impact on
the domestic wholesale business and contributed to gains in the
international and retail operations. Despite the closing of thirty stores
during the year, the retail operations reported a 4.6% sales increase.
The Global Operations Group recorded increased net sales in the
Wolverine Leathers Division while its contract sales remained flat. The
Wolverine Leathers Division recorded a revenue increase of 23.2% which
reflects the opportunities created from increased pricing pressure on
cowhide prices. This increase was obtained despite the actions taken to
reduce its product offerings and to focus on high-margin products.
Gross margins increased to 31.6% in 1994 compared to 29.8% in 1993.
Pricing pressures continued on both the wholesale and retail level and cost
increases on raw materials occurred throughout the Company during the year.
Despite these pressures, the Company was able to improve its margins by
increasing manufacturing efficiencies, providing improved sourcing to the
wholesale groups, and capitalizing on increased production levels which
provides incremental absorption of overhead costs. These benefits are
expected to continue and should provide the Company with the ability to
maintain its value pricing position.
Selling and administrative expenses increased $13.8 million in 1994
and as a percentage of net sales rose to 23.9% in 1994. This increase was
a result of increased investment spending in the Company's core brands as
advertising and marketing expenses of The Hush Puppies Company and the
Wolverine Footwear Group increased 40.3% on a combined basis.
Additionally, normal cost increases occurred in conjunction with the growth
of the Company and employee profit sharing costs increased as the overall
profitability of the Company improved.
Interest expense of $4.0 million was down in 1994 from the $4.7
million reported in 1993. The reduction resulted from reduced average
borrowings during the year and a more favorable interest rate on the
Company's long-term borrowings which resulted from the issuance of
replacement senior debt.
The 1994 effective tax rate on continuing operations of 29.0%
increased from 28.0% in 1993. The reduction from the federal statutory
rate of 35% was principally a result of non-taxable earnings of the
Company's Caribbean operations.
-18-
Earnings from continuing operations of $18.1 million ($1.10 per share)
for 1994 reflect a 53.6% increase over earnings of $11.8 million ($.75 per
share) reported for 1993. In 1994, the Company recorded a loss from
discontinued operations of $1.5 million ($.09 per share), net of income
taxes, to reflect the costs associated with the exiting of its Lamonts
Apparel leased shoe department business.
Primary earnings per share of $1.01 for 1994 compare to $.73 per share
for 1993. Fully diluted earnings per share of $1.00 and $.71 were reported
for 1994 and 1993, respectively.
LIQUIDITY AND CAPITAL RESOURCES.
Net cash provided by operating activities before working capital items
was $29.4 million in 1995 compared to $24.0 million in 1994. Of these
amounts, $28.1 million in 1995 and $11.6 million in 1994 were used to fund
increases in working capital. Accounts receivable of $83.4 million at
December 30, 1995, reflect a $12.7 million increase over the $70.7 million
balance at December 31, 1994. Inventories of $88.4 million at December 30,
1995, reflect a $9.4 million increase over the $79.0 million balance at
December 31, 1994. The increase in accounts receivable was directly
related to increased net sales and other operating income. Inventories
were increased to meet anticipated future demand in both wholesaling and
manufacturing operations. Order backlog was approximately 25% higher at
December 30, 1995, as compared to the previous year, supporting the need
for increased inventories.
Other current assets of $5.8 million at December 30, 1995 increased
$1.4 million over the 1994 balance of $4.4 million, primarily the result of
reclassifying the current portion of notes receivable from the 1992
disposition of the Brooks athletic footwear business. Substantially all
Brooks related notes receivable were collected subsequent to the 1995 year
end.
Additions to property, plant, and equipment of $18.6 million in 1995
compare to the $9.9 million reported in 1994. The majority of these
expenditures were related to the modernization of corporate facilities,
expansion of warehouse facilities, and purchases of manufacturing equipment
necessary to continue to upgrade the Company's footwear and leather
manufacturing facilities to respond to product demand on a timely and
cost-effective basis.
Short-term debt increased to $2.3 million in 1995 compared to $1.4
million in 1994. Long-term debt, excluding current maturities, of $30.6
million at the end of 1995 decreased 29.6% from the $43.5 million balance
at the end of 1994. The decrease in long-term debt levels are attributable
to the pay down of the Company's revolving credit facility with funds
generated by an equity offering discussed below.
-19-
The Company maintains short-term borrowing and commercial letter-of-credit
facilities of $54.4 million of which $23.2 million and $21.4 million
were used at the end of 1995 and 1994, respectively.
The combination of cash flows from operations and available credit
facilities are expected to be sufficient to meet future capital needs.
The Company paid dividends of $2.3 million, or $.14 per share, which
reflects a 27.3% increase over 1994 dividends of $0.11 per share.
Additionally, shares issued under stock incentive plans provided cash of
$4.3 million in 1995 compared to $2.5 million during 1994.
The Company further strengthened its financial position in 1995
through a successful public offering of 1,737,500 shares of common stock at
$29.875 per share. The $48.9 million of net proceeds from this offering
were used in part to reduce debt in the fourth quarter and to position the
Company for future growth. As a result, the current ratio at year end
increased to 5.7 to 1.0 in 1995 from 3.9 to 1.0 in 1994. The Company's
total debt to total capital ratio improved to .14 to 1.0 in 1995 from .26
to 1.0 in 1994.
On February 14, 1996, the Company signed an agreement to acquire
certain assets of the Hy-Test work, safety, and occupational footwear
business of The Florsheim Shoe Company for approximately $22,750,000 in
cash. This product line acquisition will be financed using existing cash
reserves.
INFLATION.
Inflation has not had a significant impact on the Company over the
past three years nor is it expected to have a significant effect in the
foreseeable future. The Company continuously attempts to minimize the
effect of inflation through cost reductions and improved productivity.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The response to this Item is set forth in Appendix A of this Annual
Report on Form 10-K and is here incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information regarding directors of the Company contained under the
captions "Board of Directors" and "Section 16(a) Reporting Delinquencies"
in the definitive Proxy Statement of the Company dated March 15, 1996, is
incorporated herein by reference. The information regarding Executive
Officers is provided in the Supplemental Item following Item 4 of Part I
above.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the captions "Compensation of
Directors," "Executive Compensation," "Employment Agreements, Termination
of Employment and Change in Control Arrangements" in the definitive Proxy
Statement of the Company dated March 15, 1996, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the captions "Ownership of Common
Stock" and "Securities Ownership of Management" contained in the definitive
Proxy Statement of the Company dated March 15, 1996, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information regarding certain employee loans following the caption
"Executive Compensation," under the subheading "Stock Options," and the
information contained under the captions "Compensation of Directors" and
"Certain Relationships and Related Transactions" contained in the definitive
Proxy Statement of the Company dated March 15, 1996, are incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K.
ITEM 14(a)(1). FINANCIAL STATEMENTS. Attached as Appendix A.
The following consolidated financial statements of Wolverine World
Wide, Inc. and subsidiaries are filed as a part of this report:
-21-
- Consolidated Balance Sheets as of December 30, 1995 and December
31, 1994.
- Consolidated Statements of Stockholders' Equity for the Fiscal
Years Ended December 30, 1995, December 31, 1994, and January 1,
1994.
- Consolidated Statements of Operations for the Fiscal Years Ended
December 30, 1995, December 31, 1994 and January 1, 1994.
- Consolidated Statements of Cash Flows for Fiscal Years Ended
December 30, 1995, December 31, 1994 and January 1, 1994.
- Notes to Consolidated Financial Statements as of December 30,
1995.
- Report of Independent Auditors.
ITEM 14(a)(2). FINANCIAL STATEMENT SCHEDULES. Attached as Appendix
B.
The following consolidated financial statement schedule of
Wolverine World Wide, Inc. and subsidiaries is filed as a part of this
report:
- Schedule II--Valuation and qualifying accounts.
All other schedules (I, III, IV, and V) for which provision is made in
the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
ITEM 14(a)(3). EXHIBITS.
The following exhibits are filed as part of this report:
EXHIBIT
NUMBER DOCUMENT
3.1 Certificate of Incorporation, as amended. Previously filed as
Exhibit 4(a) to the Company's Quarterly Report on Form 10-Q for
the period ended June 18, 1994. Here incorporated by reference.
3.2 Amended and Restated Bylaws.
4.1 Certificate of Incorporation, as amended. See Exhibit 3.1 above.
-22-
EXHIBIT
NUMBER DOCUMENT
4.2 Rights Agreement dated as of May 7, 1987, as amended and restated
as of October 24, 1990. Previously filed with Amendment No. 1 to
the Company's Form 8-A filed November 13, 1990. Here
incorporated by reference. This agreement has been amended by
the Second Amendment to Rights Agreement included as Exhibit 4.6
below.
4.3 Amended and Restated Credit Agreement dated as of October 13,
1994 with NBD Bank, N.A. as Agent. Previously filed as Exhibit
4(c) to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994. Here incorporated by reference.
4.4 Note Purchase Agreement dated as of August 1, 1994 relating to 7.81%
Senior Notes. Previously filed as Exhibit 4(d) to the Company's
Quarterly Report on Form 10-Q for the period ended September 10,
1994. Here incorporated by reference.
4.5 The Registrant has several classes of long-term debt instruments
outstanding in addition to that described in Exhibit 4.4 above.
The amount of none of these classes of debt outstanding on March
1, 1996 exceeds 10% of the Company's total consolidated assets.
The Company agrees to furnish copies of any agreement defining
the rights of holders of any such long-term indebtedness to the
Securities and Exchange Commission upon request.
4.6 Second Amendment to Rights Agreement made as of October 28, 1994
(amending the Rights Agreement included as Exhibit 4.2 above).
Previously filed as Exhibit 4(f) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994. Here
incorporated by reference.
10.1 Stock Option Plan of 1979, and amendment.* Previously filed as an
exhibit to the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1988. Here incorporated by
reference.
10.2 1993 Stock Incentive Plan.* Previously filed as Exhibit 10(b) to
the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994. Here incorporated by reference.
10.3 1988 Stock Option Plan.* Previously filed as an exhibit to the
Company's registration statement on Form S-8, filed July 21,
1988, Registration No. 33-23196. Here incorporated by reference.
-23-
EXHIBIT
NUMBER DOCUMENT
10.4 Amended and Restated Directors Stock Option Plan.* Previously
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994. Here incorporated by
reference.
10.5 Amended and Restated Agreement executed on May 26, 1994 and dated
as of July 24, 1992, between the Company and Thomas D.
Gleason.* Previously filed as Exhibit 10(e) to the Company's
Quarterly Report on Form 10-Q for the period ended June 18, 1994.
Here incorporated by reference.
10.6 Employment Agreement dated April 27, 1993, between the Company
and Geoffrey B. Bloom.* Previously filed as Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994. Here incorporated by reference.
10.7 Executive Short-Term Incentive Plan for 1994.* Previously filed
as Exhibit 10(g) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 1994. Here incorporated by
reference.
10.8 Management Short-Term Incentive Plan for 1994.* Previously filed
as Exhibit 10(h) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 1994. Here incorporated by
reference.
10.9 Stock Option Loan Program.* Previously filed as Exhibit 10(h) to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1991. Here incorporated by reference.
10.10 Deferred Compensation Agreement dated as of August 24, 1989 between
the Company and Thomas D. Gleason.* Previously filed as part of
Exhibit 10(i) of the Company's Annual Report on Form 10-K for the
fiscal year ended January 2, 1993. Here incorporated by reference.
10.11 Supplemental Executive Retirement Plan.* Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the period ended September 9, 1995. Here incorporated by
reference. Each of the Company's executive officers participate at
the 2.4% level.
10.12 Sustained Growth (Three Year) Plan for the three year period 1993
to 1995.*
10.13 Executive Long-Term Incentive (Three Year) Plan for the three
year period 1994-1996.*
-24-
EXHIBIT
NUMBER DOCUMENT
10.14 Executive Long-Term Incentive (Three Year) Plan for the three
year period 1995-1997.*
10.15 Termination of Employment and Change of Control Agreements.* The
form of agreement was previously filed as Exhibit 10(m) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993. Here incorporated by reference. An updated
participant schedule is attached as Exhibit 10.15.
10.16 Indemnification Agreements.* The form of agreement was
previously filed as Exhibit 10(n) to the Company's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993. Here
incorporated by reference. An updated participant schedule is
attached as Exhibit 10.16.
10.17 Supplemental Retirement Benefits.* Previously filed as
Exhibit 10(l) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1988. Here incorporated by
reference.
10.18 Benefit Trust Agreement dated May 19, 1987, and Amendments Number
1, 2 and 3 thereto.* Previously filed as Exhibit 10(p) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993. Here incorporated by reference.
10.19 1996 Executive Short-Term Incentive Plan (Annual Bonus Plan).*
10.20 Letter Agreement dated May 2, 1994, between the Company and
George A. Andrews.* Previously filed as Exhibit 10(t) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994. Here incorporated by reference.
10.21 1984 Executive Incentive Stock Purchase Plan, and amendment.*
Previously filed as Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the fiscal year ended January 2, 1988. Here
incorporated by reference.
10.22 Supplemental Director's Fee Agreement dated as of March 27, 1995,
between the Company and Phillip D. Matthews.* Previously filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the period ended March 25, 1995. Here incorporated by reference.
10.23 Restricted Stock Agreement dated as of March 27, 1995, between the
Company and Phillip D. Matthews.* Previously filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the
period ended March 25, 1995. Here incorporated by reference.
-25-
EXHIBIT
NUMBER DOCUMENT
10.24 Deferred Compensation Agreement dated as of April 21, 1994,
between the Company and Charles F. Morgo.* Previously filed as
Exhibit 10(x) to the Company's Quarterly Report on Form 10-Q for
the period ended June 18, 1994. Here incorporated by reference.
10.25 Employment Agreement dated April 21, 1994, between the Company
and Charles F. Morgo.* Previously filed as Exhibit 10(y) to the
Company's Quarterly Report on Form 10-Q for the period ended June
18, 1994. Here incorporated by reference.
10.26 Restricted Stock Agreement dated April 21, 1994, between the
Company and Charles F. Morgo.* Previously filed as Exhibit 10(z)
to the Company's Quarterly Report on Form 10-Q for the period
ended June 18, 1994. Here incorporated by reference.
10.27 1994 Directors' Stock Option Plan.* Previously filed as Exhibit
10(aa) to the Company's Quarterly Report on Form 10-Q for the
period ended June 18, 1994. Here incorporated by reference.
10.28 1995 Stock Incentive Plan.* Previously filed as an Appendix to
the Company's Definitive Proxy Statement with respect to the
Company's Annual Meeting of Stockholders held on April 19, 1995.
Here incorporated by reference.
11 Computation of Per Share Earnings.
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule.
____________________________
*Management contract or compensatory plan or arrangement.
The Company will furnish a copy of any exhibit listed above to any
stockholder without charge upon written request to Mr. Blake W. Krueger,
General Counsel and Secretary, 9341 Courtland Drive, Rockford, Michigan
49351.
ITEM 14(b). REPORTS ON FORM 8-K.
No reports on Form 8-K were filed in the fourth quarter of the fiscal
year ended December 30, 1995.
-26-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 28, 1996 By:/S/STEPHEN L. GULIS, JR.
Stephen L. Gulis, Jr.
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
*/S/PHILLIP D. MATTHEWS Chairman of the Board of March 28, 1996
Phillip D. Matthews Directors
*/S/GEOFFREY B. BLOOM President, Chief Executive March 28, 1996
Geoffrey B. Bloom Officer and Director
*/S/THOMAS D. GLEASON Vice Chairman of the Board March 28, 1996
Thomas D. Gleason of Directors
*/S/TIMOTHY J. O'DONOVAN Executive Vice President March 28, 1996
Timothy J. O'Donovan and Director
/S/STEPHEN L. GULIS, JR. Vice President and Chief March 28, 1996
Stephen L. Gulis, Jr. Financial Officer
(Principal Financial and
Accounting Officer)
*/S/DANIEL T. CARROLL Director March 28, 1996
Daniel T. Carroll
-27-
*/S/ALBERTO L. GRIMOLDI Director March 28, 1996
Alberto L. Grimoldi
*/S/DAVID T. KOLLAT Director March 28, 1996
David T. Kollat
*/S/DAVID P. MEHNEY Director March 28, 1996
David P. Mehney
*/S/STUART J. NORTHROP Director March 28, 1996
Stuart J. Northrop
*/S/JOSEPH A. PARINI Director March 28, 1996
Joseph A. Parini
*/S/JOAN PARKER Director March 28, 1996
Joan Parker
*/S/ELIZABETH A. SANDERS Director March 28, 1996
Elizabeth A. Sanders
*BY/S/STEPHEN L. GULIS, JR.
Stephen L. Gulis, Jr.
Attorney-in-Fact
-28-
APPENDIX A
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF FISCAL YEAR END
1995 1994
(THOUSANDS OF DOLLARS)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 27,088 $ 2,949
Accounts receivable, less allowances
(1995--$3,407;1994--$3,959) 83,392 70,669
Inventories:
Finished products 45,814 48,637
Raw materials and work-in-process 42,536 30,388
88,350 79,025
Refundable income taxes 2,935 1,629
Deferred income taxes 7,321 8,843
Net current assets of discontinued operation 991
Other current assets 5,789 4,430
TOTAL CURRENT ASSETS 214,875 168,536
PROPERTY, PLANT AND EQUIPMENT:
Land 1,071 1,292
Buildings and improvements 30,930 30,638
Machinery and equipment 77,730 65,098
109,731 97,028
Less accumulated depreciation 62,846 61,680
46,885 35,348
OTHER ASSETS 21,794 25,086
TOTAL ASSETS $ 283,554 $ 228,970
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks $ 2,339 $ 1,432
Accounts payable 15,188 18,257
Salaries, wages and other compensation 7,825 8,474
Other accrued expenses 12,211 14,553
Current maturities of long-term debt 84 304
TOTAL CURRENT LIABILITIES 37,647 43,020
LONG-TERM DEBT, less current maturities 30,594 43,482
OTHER LIABILITIES:
Supplemental employee retirement benefits 8,883 9,265
Deferred income taxes 2,216 1,860
11,099 11,125
-1-
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value:
Authorized: 2,000,000 shares
Issued: none
Common stock, $1 par value:
Authorized: 25,000,000 shares;
Issued, including treasury shares:
1995--18,782,580 shares;
1994--16,705,014 shares 18,783 11,315
Additional paid-in capital 70,716 25,004
Retained earnings 123,593 101,873
Accumulated translation adjustments (324) 332
Unearned compensation (1,827) (1,181)
Cost of shares in treasury:
1995--547,913 shares; 1994--533,992 shares (6,727) (6,000)
TOTAL STOCKHOLDERS' EQUITY 204,214 131,343
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 283,554 $ 228,970
( ) Denotes deduction.
See accompanying notes to consolidated financial statements.
-2-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FISCAL YEAR
1995 1994 1993
(THOUSANDS OF DOLLARS)
COMMON STOCK
Balance at beginning of the year $ 11,315 $ 7,622 $ 7,467
Proceeds from issuance of common stock 1,738
Common stock issued from exercise of
stock options (1995--352,336 shares;
1994--334,450 shares; 1993--348,938
shares) 288 179 155
Three-for-two stock split 5,442 3,514
Balance at end of the year 18,783 11,315 7,622
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of the year 25,004 26,469 24,438
Proceeds from issuance of common stock 47,131
Excess of proceeds from exercise of stock
options, including income tax benefits,
over par value of shares issued 4,023 2,351 2,031
Excess of cost of treasury shares over face
value of subordinated notes converted (302)
Three-for-two stock split (5,442) (3,514)
Balance at end of the year 70,716 25,004 26,469
RETAINED EARNINGS
Balance at beginning of the year 101,873 86,986 76,580
Net earnings 24,067 16,598 11,492
Cash dividends (1995--$.14 per share;
1994--$.11 per share; 1993--$.07 per
share) (2,347) (1,711) (1,086)
Balance at end of the year 123,593 101,873 86,986
ACCUMULATED TRANSLATION ADJUSTMENTS
Balance at beginning of the year 332 398 351
Equity adjustments from foreign
currency translation (656) (66) 47
Balance at end of the year (324) 332 398
UNEARNED COMPENSATION
Balance at beginning of the year (1,181) (604) (415)
Awards under stock incentive plans (1,490) (1,016) (480)
Compensation expense 844 439 291
Balance at end of the year (1,827) (1,181) (604)
-3-
COST OF SHARES IN TREASURY
Balance at beginning of the year (6,000) (8,725) (8,708)
Issuance of common stock from treasury
(1995--10,000 shares; 1994--250,000 shares
upon conversion of subordinated notes) 125 2,802
Common stock purchased for treasury
(1995--23,921 shares; 1994--2,214 shares;
1993--526 shares) (852) (77) (17)
Balance at end of the year (6,727) (6,000) (8,725)
TOTAL STOCKHOLDERS' EQUITY AT END OF
THE YEAR $ 204,214 $ 131,343 $ 112,146
( ) Denotes deduction.
See accompanying notes to consolidated financial statements.
-4-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FISCAL YEAR
1995 1994 1993
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Net sales and other operating income $ 413,957 $ 378,473 $ 323,315
Costs and expenses:
Cost of products sold 290,469 258,818 227,026
Selling and administrative expenses 85,993 90,297 76,543
Interest expense 4,717 3,981 4,745
Interest income (1,039) (644) (859)
Other expenses (income) net (297) 598 (469)
379,843 353,050 306,986
Earnings from continuing
operations before income taxes 34,114 25,423 16,329
Income taxes 10,047 7,373 4,575
Earnings from continuing operations 24,067 18,050 11,754
Loss from discontinued operation,
net of income taxes:
Operating loss (330) (262)
Loss on disposal (1,122)
(1,452) (262)
Net earnings $ 24,067 $ 16,598 $ 11,492
Primary earnings per share:
Continuing operations $ 1.41 $ 1.10 $ .75
Discontinued operation (.09) (.02)
Net earnings $ 1.41 $ 1.01 $ .73
Fully diluted net earnings per share $ 1.40 $ 1.00 $ .71
See accompanying notes to consolidated financial statements.
-5-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEAR
1995 1994 1993
(THOUSANDS OF DOLLARS)
OPERATING ACTIVITIES
Net earnings $ 24,067 $ 16,598 $ 11,492
Adjustments necessary to reconcile
net earnings to net cash provided
by operating activities:
Depreciation and amortization 5,765 5,664 5,182
Deferred income taxes 1,878 200 3,299
Pension income (1,319) (731) (503)
Loss from discontinued operation 1,452 262
Other (952) 855 (575)
Changes in operating assets and
liabilities:
Accounts receivable (12,723) (8,347) (10,998)
Inventories (9,325) (11,520) (6,312)
Other operating assets (1,000) (404) 2,347
Accounts payable (3,069) 5,682 (1,813)
Other operating liabilities (1,950) 2,944 3,139
Net cash provided by operating activities 1,372 12,393 5,520
INVESTING ACTIVITIES
Additions to property, plant and equipment (18,645) (9,858) (6,605)
Cash from discontinued operations 747 12,664
Other 3,632 (930) 1,899
Net cash provided by (used in) investing
activities (15,013) (10,041) 7,958
FINANCING ACTIVITIES
Proceeds from short-term borrowings 2,907 4,000 775
Payments of short-term debt (2,000) (4,516) (15,204)
Proceeds from long-term borrowings 58,181 75,886 57,000
Payments of long-term debt (71,289) (79,245) (55,777)
Proceeds from issuance of common stock 48,869
Cash dividends (2,347) (1,711) (1,086)
Purchase of common stock for treasury (852) (77) (17)
Shares issued under stock incentive plans 4,311 2,530 2,186
Net cash provided by (used in)
financing activities 37,780 (3,133) (12,123)
Increase (decrease) in cash and
cash equivalents 24,139 (781) 1,355
-6-
Cash and cash equivalents at
beginning of year 2,949 3,730 2,375
Cash and cash equivalents at end of year $ 27,088 $ 2,949 $ 3,730
OTHER CASH FLOW INFORMATION
Interest paid $ 5,187 $ 4,361 $ 5,661
Income taxes paid 5,683 4,219 957
( ) Denotes reduction in cash and cash equivalents.
See accompanying notes to consolidated financial statements.
-7-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Wolverine
World Wide, Inc. and its majority-owned subsidiaries (the Company). Upon
consolidation, all intercompany accounts, transactions, and profits have
been eliminated.
FISCAL YEAR
The Company's fiscal year is the 52- or 53-week period that ends on the
Saturday nearest the end of December. All fiscal years presented herein
are 52-week periods.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Revenue is recognized on the sale of products when the related goods have
been shipped and legal title has passed to the customer.
CASH EQUIVALENTS
All short-term investments with a maturity of three months or less when
purchased are considered cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
by the last-in, first-out (LIFO) method for substantially all manufacturing
inventories (see Note C). Inventories of the Company's retail operations
are valued using the retail method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for new facilities, major renewals and betterments. Normal
repairs and maintenance are expensed as incurred.
-1-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Depreciation of plant and equipment is computed using the straight-line
method over the estimated useful lives of the respective assets.
ADVERTISING COSTS
Advertising costs are expensed as incurred.
INCOME TAXES
The provision for income taxes is based on the earnings or loss reported in
the consolidated financial statements. A deferred income tax asset or
liability is determined by applying currently enacted tax laws and rates to
the cumulative temporary differences between the carrying value of assets
and liabilities for financial statement and income tax purposes. Deferred
income tax expense is measured by the net change in deferred income tax
assets and liabilities during the year.
EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
shares of common stock outstanding during each period and the assumed
exercise of dilutive stock options. Fully diluted earnings per share for
1994 and 1993 also include the effect of converting subordinated notes into
common stock.
Weighted average shares outstanding for purposes of calculating earnings
per share are as follows:
1995 1994 1993
Primary 17,114,468 16,358,056 15,716,736
Fully diluted 17,237,179 16,614,835 16,258,919
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company's financial instruments consist of cash and cash equivalents,
notes receivable, and long-term debt. The Company's estimate of the fair
value of these financial instruments approximates their carrying amounts at
December 30, 1995. Fair value was determined using discounted cash flow
analysis and current interest rates for similar instruments. The Company
does not hold or issue financial instruments for trading purposes.
The Company does not require collateral or other security on trade accounts
receivable.
-2-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RECLASSIFICATIONS
Certain amounts previously reported in 1994 and 1993 have been reclassified
to conform with the presentation used in 1995.
NOTE B - DISCONTINUED OPERATION
During the fourth quarter of 1994, the Company adopted a formal plan to
withdraw from its Lamonts Apparel leased shoe department business. In
connection with this exit plan, an estimated after-tax loss of $1,122,000
was recognized. The loss represents the cost of inventory liquidation,
write-off of leasehold improvements, and anticipated operating results
during the phase-out period. The exit plan was completed in 1995.
Summarized operating results of the Lamonts business are shown as a
discontinued operation in the accompanying consolidated statements of
operations and are as follows:
1994 1993
(THOUSANDS OF DOLLARS)
Net sales $ 9,061 $ 9,828
Loss before incomes taxes $ 500 $ 397
Income tax credit (170) (135)
Loss from operations $ 330 $ 262
NOTE C - INVENTORIES
Inventories of $70,162,000 at December 30, 1995, and $60,198,000 at
December 31, 1994, have been valued using the LIFO method. If the first-in,
first-out (FIFO) method had been used, inventories would have been
$22,171,000 and $19,667,000 higher than reported at December 30, 1995 and
December 31, 1994, respectively.
NOTE D - NOTES PAYABLE TO BANKS
Notes payable to banks consist of unsecured short-term debt of the
Company's Canadian subsidiary. The notes bear interest at the Canadian
prime rate (7.5% at December 30, 1995) plus 2%.
-3-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company also has short-term debt and commercial letter-of-credit
facilities that allow for borrowings up to $54,400,000. Amounts
outstanding under these facilities consist of letters of credit that
amounted to approximately $23,200,000 and $21,400,000 at December 30, 1995
and December 31, 1994, respectively.
NOTE E - LONG-TERM DEBT
Long-term debt consists of the following obligations:
1995 1994
(THOUSANDS OF DOLLARS)
7.8% senior notes to insurance companies $ 30,000 $ 30,000
Revolving credit obligations 13,000
Other 678 786
30,678 43,786
Less current maturities 84 304
$ 30,594 $ 43,482
The 7.8% senior notes to insurance companies require equal annual principal
payments of $4,285,000 on August 15, 1998 through 2004.
The revolving credit agreement, which expires on October 13, 1998, provides
for borrowings up to $50,000,000 with interest payable at variable rates
based on both LIBOR and the prime rate (8.5% at December 30, 1995).
Maximum borrowings under the agreement were $50,000,000 in 1995 and
$40,000,000 in 1994.
The revolving credit and insurance company loan agreements contain
restrictive covenants which, among other things, require the Company to
maintain certain financial ratios and minimum levels of working capital and
tangible net worth. The agreements also impose restrictions on securing
additional debt, sale and merger transactions, and the Company's
acquisition of its common stock. At December 30, 1995, unrestricted
retained earnings are $83,374,000.
Principal maturities of long-term debt during the four years subsequent to
1996 are as follows: 1997--$83,000; 1998--$4,370,000; 1999--$4,370,000:
2000--$4,352,000.
-4-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE F - LEASES
The Company leases machinery, transportation equipment and certain
warehouse and retail store space under operating lease agreements which
expire at various dates through 2007. At December 30, 1995, minimum rental
payments due under all noncancelable leases are as follows (THOUSANDS OF
DOLLARS):
1996 $ 5,098
1997 4,018
1998 3,394
1999 2,496
2000 1,712
Thereafter 4,985
Total minimum lease payments $ 21,703
Rental expense under all operating leases is as follows:
1995 1994 1993
(THOUSANDS OF DOLLARS)
Minimum rentals $ 6,090 $ 5,039 $ 5,210
Contingent rentals 185 1,106 1,138
$ 6,275 $ 6,145 $ 6,348
Contingent rentals are based on retail store sales volume.
NOTE G - CAPITAL STOCK
On March 10, 1994, and April 19, 1995, the Company announced three-for-two
stock splits on shares of common stock outstanding on March 21, 1994, and
May 1, 1995, respectively. All share and per share data included in the
consolidated financial statements have been retroactively adjusted for the
increased shares resulting from the stock splits.
The Company has a stock rights plan that is designed to protect stockholder
interests in the event the Company is confronted with coercive or unfair
takeover tactics. Under its terms, each stockholder received one right for
each share of common stock owned. The rights trade separately from common
stock and become exercisable only upon the occurrence of certain triggering
-5-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G - CAPITAL STOCK (CONTINUED)
events. Each right, when exercisable, will entitle the holder to purchase
one one-hundredth of a share of Series A junior participating preferred
stock for $40. The Company has designated 880,000 shares of preferred
stock as Series A junior participating preferred stock for possible future
issuance under the Company's stock rights plan. Upon issuance, each share
of Series A junior preferred stock will have 100 votes and a preferential
quarterly dividend equal to the greater of $6 per share or 100 times the
dividend declared on the Company's common stock.
In the event the Company is a party to a merger or other business
combination, regardless of whether the Company is the surviving
corporation, rights holders other than the party to the merger will be
entitled to receive common stock of the surviving corporation worth twice
the exercise price of the rights. The plan also provides for protection
against self-dealing transactions by a 15% stockholder or the activities of
an adverse person. The Company may redeem the rights for $.01 each at any
time prior to fifteen days after a triggering event. Unless redeemed
earlier, all rights expire on May 8, 1997.
The Company has stock incentive plans under which options to purchase
shares of common stock may be granted to officers, other key employees, and
nonemployee directors. Options are exercisable in equal annual installments
of 25% over three years beginning on the date the options are granted. All
unexercised options are available for future grants upon their
cancellation.
-6-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE G - CAPITAL STOCK (CONTINUED)
A summary of the transactions under the plans follows:
SHARES UNDER
OPTIONS OPTION PRICE
Outstanding at January 3, 1993 1,062,636 $ 3.89 to $ 5.91
Granted in 1993 220,275 7.69 to 13.73
Exercised (303,488) 3.89 to 8.00
Cancelled (1,857) 3.89 TO 4.45
Outstanding at January 1, 1994 977,566 3.89 to 5.91
Granted in 1994 294,938 13.42 to 17.92
Exercised (269,688) 3.89 to 8.83
Cancelled (6,804) 5.17 TO 15.97
Outstanding at December 31, 1994 996,012 3.89 to 17.92
Granted in 1995 292,912 14.71 TO 31.88
Exercised (288,611) 3.89 TO 18.08
Cancelled (1,008) 8.00 TO 18.08
Outstanding at December 30, 1995 999,305 $ 3.89 TO $31.88
Exercisable at December 30, 1995 619,979 $ 3.89 TO $31.88
Available for future grants:
At December 30, 1995 921,935
At December 31, 1994 527,565
Certain of the stock incentive plans allow the Company to make stock awards
to officers and other key employees at nominal exercise prices for future
services. Common stock acquired under these plans is subject to certain
restrictions, including prohibition against any sale, transfer, or other
disposition by the officer or employee, and a requirement to forfeit the
award upon termination of employment. These restrictions lapse over a
three- to five-year period from the date of the award. Shares aggregating
63,725 in 1995, 64,762 in 1994 and 45,450 in 1993 were awarded under these
plans. There were no cancellations of stock awards in 1995, 1994 or 1993.
Additional shares awarded will reduce the number of shares identified as
available for future grants in the above table.
-7-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H - RETIREMENT PLANS
The Company has noncontributory, defined benefit pension plans covering a
majority of its domestic employees. The Company's principal defined benefit
pension plan provides benefits based on the employee's years of service and
final average earnings (as defined), while the other plans provide benefits
at a fixed rate per year of service. The Company intends to annually
contribute amounts deemed necessary to maintain the plans on a sound
actuarial basis.
The Company also has individual deferred compensation agreements with
certain key employees that entitle them to receive payments from the
Company for a period of fifteen to eighteen years following retirement.
Under the terms of the individual contracts, the employees are eligible for
reduced benefits upon early retirement.
In addition, the Company sponsors a noncontributory, defined benefit plan
that provides postretirement life insurance benefits to full-time employees
who have worked ten or more consecutive years and attained age 60 while
employed by the Company. The Company does not provide postretirement
medical benefits.
The Company has a defined contribution money accumulation plan covering
substantially all employees that provides for Company contributions based
on earnings. In 1994, the Company combined this plan with its principal
defined benefit pension plan for funding purposes. Contributions to the
money accumulation plan were $1,050,000 in 1995, $935,000 in 1994 and
$760,000 in 1993.
-8-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H - RETIREMENT PLANS (CONTINUED)
The following summarizes the status of the Company's pension assets and
related obligations for its defined benefit pension plans:
SEPTEMBER 30
1995 1994
(THOUSANDS OF DOLLARS)
Pension assets at fair value $ 99,484 $ 73,793
Actuarial present value of accumulated plan benefits:
Vested 52,628 37,082
Nonvested 497 2,044
53,125 39,126
Effect of estimated future increases in compensation 9,145 8,887
Projected benefit obligation for service rendered
to date 62,270 48,013
Excess pension assets $ 37,214 $ 25,780
Components of excess pension assets:
Prepaid pension costs recognized in other assets $ 6,929 $ 5,610
Unrecognized amounts, net of amortization:
Transition assets 3,768 4,701
Prior service costs (3,048) (2,375)
Experience gains 29,565 17,844
$ 37,214 $ 25,780
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit
obligation were 7.5% and 5%, respectively, in 1995 and 8.5% and 5%,
respectively, in 1994. The change in the discount rate assumption increased
the projected benefit obligation by $10,700,000 at September 30, 1995.
Plan assets were invested in listed equity securities (80%), fixed income
funds (10%), and short-term and other investments (10%). Equity securities
include 150,450 shares of the Company's common stock with a fair value of
$4,119,000 at September 30, 1995.
-9-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE H - RETIREMENT PLANS (CONTINUED)
The following is a summary of net pension income recognized by the Company:
1995 1994 1993
(THOUSANDS OF DOLLARS)
Service cost pertaining to benefits
earned during the year $ (2,540) $ (2,410) $ (1,398)
Interest cost on projected benefit
obligation (3,771) (3,292) (3,247)
Actual net investment income 28,495 3,317 20,354
Net amortization and deferrals (20,865) 3,116 (15,206)
Net pension income $ 1,319 $ 731 $ 503
The expected long-term return on plan assets was 10% in 1995 and 9% in 1994
and 1993.
The Company's accumulated postretirement life insurance benefit obligation
is as follows:
1995 1994
(THOUSANDS OF DOLLARS)
Retirees $ 775 $ 675
Active plan participants 215 189
Accumulated postretirement benefit obligation 990 864
Unrecognized experience losses (153) (44)
Obligation recognized in other liabilities $ 837 $ 820
The discount rate used in determining the accumulated postretirement life
insurance benefit obligation was 7.5% in 1995 and 8.5% in 1994. The expense
associated with postretirement life insurance benefits was not significant.
-10-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I - INCOME TAXES
The provisions for income taxes pertaining to continuing operations consist
of the following:
1995 1994 1993
(THOUSANDS OF DOLLARS)
Currently payable (refundable):
Federal $ 4,610 $ 3,828 $ (175)
State and foreign 3,559 2,750 1,451
Deferred 1,878 795 3,299
$ 10,047 $ 7,373 $ 4,575
A reconciliation of the Company's total income tax expense and the amount
computed by applying the statutory federal tax rate of 35% to earnings from
continuing operations before income taxes is as follows:
1995 1994 1993
(THOUSANDS OF DOLLARS)
Income taxes at statutory rate $ 11,940 $ 8,898 $ 5,715
State income and foreign taxes,
net of federal income tax reduction 731 757 340
Nontaxable earnings of Puerto Rican
subsidiary and foreign affiliates (1,898) (1,712) (1,202)
Reduction of deferred income tax asset
valuation allowance (1,000)
Other (726) 430 (278)
$ 10,047 $ 7,373 $ 4,575
-11-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE I - INCOME TAXES (CONTINUED)
Deferred income taxes reflect the net income tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting and income tax purposes. Significant components of the
Company's net deferred income tax assets as of the end of 1995 and 1994 are
as follows:
1995 1994
(THOUSANDS OF DOLLARS)
Deferred income tax assets:
Accounts receivable and inventory
valuation allowances $ 3,434 $ 4,398
Deferred compensation accruals 2,466 2,425
Provision for losses and asset
valuation allowances related to
disposal of discontinued operation 874 1,004
Other amounts not deductible until paid 4,233 4,530
Total deferred income tax assets 11,007 12,357
Deferred income tax liabilities:
Tax over book depreciation 2,190 2,349
Prepaid pension costs 2,340 1,915
Unremitted earnings of Puerto Rican subsidiary 1,154 973
Other 218 137
Total deferred income tax liabilities 5,902 5,374
Net deferred income tax assets $ 5,105 $ 6,983
The Company has provided for substantially all taxes that would be payable
if accumulated earnings of its Puerto Rican subsidiary were distributed.
Similar taxes on the unremitted earnings of the Company's foreign
affiliates have not been provided because such earnings are considered
permanently invested. The additional taxes that would be payable if
unremitted earnings of its foreign affiliates were distributed are not
significant.
NOTE J - LITIGATION
The Company is involved in various environmental claims and other legal
actions arising in the normal course of business. After taking into
consideration legal counsel's evaluation of such actions, management is of
the opinion that their outcome will not have a significant effect on the
Company's consolidated financial position or results of operations.
-12-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE K - INDUSTRY INFORMATION
The Company is principally engaged in the manufacture and sale of footwear,
including casual shoes, slippers, moccasins, dress shoes, boots, uniform
shoes and work shoes. The Company is also the largest domestic tanner of
pigskin, which is used in a significant portion of shoes manufactured and
sold by the Company and sold to other domestic and foreign manufacturers of
shoes and other products. Royalty income is derived from licensing the
Company's trademarks to domestic and foreign licensees. As part of its
footwear business, the Company operates a number of domestic retail shoe
stores that sell Company-manufactured products as well as footwear
manufactured by unaffiliated companies. Foreign operations consist of a
75%-owned Canadian subsidiary and factories located in the Dominican
Republic and Mexico that produce shoe uppers for domestic operations.
Export sales, foreign operations, and related assets are not significant.
The Company markets its products primarily to customers in the retail
sector. Although the Company closely monitors the credit worthiness of its
customers and adjusts its credit policies and limits as needed, a
substantial portion of its debtors' ability to discharge amounts owed is
dependent upon the retail economic environment. The Company does not
believe that it is dependent upon any single customer, since none account
for more than 10% of consolidated net sales.
NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The Company reports its quarterly results of operations on the basis of
12-week periods for each of the first three quarters and a 16-week period
for the fourth quarter.
The following tabulation presents the Company's unaudited quarterly results
of operations for 1995 and 1994. Certain reclassifications have been made
to the 1994 amounts originally reported in the Company's quarterly reports
on Form 10-Q to segregate the results of a discontinued operation.
-13-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)
1995
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Net sales and other
operating income $ 76,331 $ 86,289 $100,460 $150,877
Gross margin 22,788 27,490 28,753 44,457
Net earnings 2,497 3,897 5,207 12,466
Net earnings per share:
Primary $ .15 $ .23 $ .31 $ .72
Fully diluted $ .15 $ .23 $ .31 $ .71
1994
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
Net sales and other
operating income $ 66,766 $ 79,319 $ 91,910 $140,478
Gross margin 21,107 24,421 26,905 47,222
Earnings from continuing
operations $ 1,391 $ 2,463 $ 3,757 $ 10,439
Loss from discontinued
operation (100) (79) (70) (1,203)
Net earnings $ 1,291 $ 2,384 $ 3,687 $ 9,236
Net earnings (loss) per share:
Primary:
Continuing operations $ .09 $ .15 $ .23 $ .63
Discontinued operation (.01) (.01) (.07)
$ .08 $ .14 $ .23 $ .56
Fully diluted $ .08 $ .14 $ .23 $ .55
NOTE M - SUBSEQUENT EVENT
On February 14, 1996, the Company signed an agreement to acquire certain
assets of the Hy-Test work, safety and occupational footwear business of
The Florsheim Shoe Company for approximately $22,750,000 in cash.
-14-
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Wolverine World Wide, Inc.
We have audited the accompanying consolidated balance sheets of Wolverine
World Wide, Inc. and subsidiaries as of December 30, 1995, and December 31,
1994, and the related consolidated statements of stockholders' equity,
operations and cash flows for each of the three fiscal years in the period
ended December 30, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Wolverine World Wide, Inc. and subsidiaries at December 30,
1995, and December 31, 1994, and the consolidated results of their
operations and their cash flows for each of the three fiscal years in the
period ended December 30, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
Ernst & Young LLP
Grand Rapids, Michigan
February 14, 1996
APPENDIX B
Schedule II - Valuation and Qualifying Accounts
Wolverine World Wide, Inc. and Subsidiaries
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
(1) (2)
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES (DESCRIBE) (DESCRIBE) PERIOD
FISCAL YEAR ENDED DECEMBER 30, 1995
Deducted from asset accounts:
Allowance for doubtful accounts $3,510,000 $ (589,000) $ 264,000<FA> $2,657,000
Allowance for cash discounts 449,000 2,851,000 2,550,000<FB> 750,000
$3,959,000 $2,262,000 $2,814,000 $3,407,000
FISCAL YEAR ENDED DECEMBER 31, 1994
Deducted from asset accounts:
Allowance for doubtful accounts $3,141,000 $1,722,000 $1,353,000<FA> $3,510,000
Allowance for cash discounts 270,000 1,236,000 1,057,000<FB> 449,000
$3,411,000 $2,958,000 $2,410,000 $3,959,000
FISCAL YEAR ENDED JANUARY 1, 1994
Deducted from asset accounts:
Allowance for doubtful accounts $2,454,000 $2,208,000 $1,521,000<FA> $3,141,000
Allowance for cash discounts 262,000 1,770,000 1,762,000<FB> 270,000
$2,716,000 $3,978,000 $3,283,000 $3,411,000
<FN>
<FA> ACCOUNTS CHARGED OFF, NET OF RECOVERIES.
<FB> DISCOUNTS GIVEN TO CUSTOMERS.
</FN>
Commission File No. 1-6024
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM 10-K
For the Fiscal Year Ended
December 30, 1995
Wolverine World Wide, Inc.
9341 Courtland Drive
Rockford, Michigan 49351
EXHIBIT INDEX
EXHIBIT
NUMBER
3.1 Certificate of Incorporation, as amended. Previously
filed as Exhibit 4(a) to the Company's Quarterly Report
on Form 10-Q for the period ended June 18, 1994. Here
incorporated by reference.
3.2 Amended and Restated Bylaws.
4.1 Certificate of Incorporation, as amended. See Exhibit
3.1 above.
4.2 Rights Agreement dated as of May 7, 1987, as amended and
restated as of October 24, 1990. Previously filed with
Amendment No. 1 to the Company's Form 8-A filed November
13, 1990. Here incorporated by reference. This
agreement has been amended by the Second Amendment to
Rights Agreement included as Exhibit 4.6 below.
4.3 Amended and Restated Credit Agreement dated as of
October 13, 1994 with NBD Bank, N.A. as Agent.
Previously filed as Exhibit 4(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994. Here incorporated by reference.
4.4 Note Purchase Agreement dated as of August 1, 1994
relating to 7.81% Senior Notes. Previously filed as
Exhibit 4(d) to the Company's Quarterly Report on Form
10-Q for the period ended September 10, 1994. Here
incorporated by reference.
4.5 The Registrant has several classes of long-term debt
instruments outstanding in addition to that described in
Exhibit 4.4 above. The amount of none of these classes
of debt outstanding on March 1, 1996 exceeds 10% of the
Company's total consolidated assets. The Company agrees
to furnish copies of any agreement defining the rights
of holders of any such long-term indebtedness to the
Securities and Exchange Commission upon request.
4.6 Second Amendment to Rights Agreement made as of October
28, 1994 (amending the Rights Agreement included as
Exhibit 4.2 above). Previously filed as Exhibit 4(f) to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994. Here incorporated by
reference.
10.1 Stock Option Plan of 1979, and amendment.* Previously
filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended January 2, 1988.
Here incorporated by reference.
10.2 1993 Stock Incentive Plan.* Previously filed as Exhibit
10(b) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 1, 1994. Here
incorporated by reference.
10.3 1988 Stock Option Plan.* Previously filed as an exhibit
to the Company's registration statement on Form S-8,
filed July 21, 1988, Registration No. 33-23196. Here
incorporated by reference.
10.4 Amended and Restated Directors Stock Option Plan.*
Previously filed as an exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended January 1,
1994. Here incorporated by reference.
10.5 Amended and Restated Agreement executed on May 26, 1994
and dated as of July 24, 1992, between the Company and
Thomas D. Gleason.* Previously filed as Exhibit 10(e)
to the Company's Quarterly Report on Form 10-Q for the
period ended June 18, 1994. Here incorporated by
reference.
10.6 Employment Agreement dated April 27, 1993, between the
Company and Geoffrey B. Bloom.* Previously filed as
Exhibit 10(f) to the Company's Annual Report on Form
10-K for the fiscal year ended January 1, 1994. Here
incorporated by reference.
10.7 Executive Short-Term Incentive Plan for 1994.*
Previously filed as Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994. Here incorporated by reference.
10.8 Management Short-Term Incentive Plan for 1994.*
Previously filed as Exhibit 10(h) to the Company's
Annual Report on Form 10-K for the fiscal year ended
January 1, 1994. Here incorporated by reference.
10.9 Stock Option Loan Program.* Previously filed as Exhibt 10(h)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 28, 1991. Here incorporated by reference.
-2-
10.10 Deferred Compensation Agreement dated as of August 24, 1989
between the Company and Thomas D. Gleason.* Previously filed
as part of Exhibit 10(i) of the Company's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993. Here
incorporated by reference.
10.11 Supplemental Executive Retirement Plan.* Previously
filed as Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the period ended September 9, 1995.
Here incorporated by reference. Each of the Company's executive
officers participate at the 2.4% level.
10.12 Sustained Growth (Three Year) Plan for the three year
period 1993 to 1995.*
10.13 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1994-1996.*
10.14 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1995-1997.*
10.15 Termination of Employment and Change of Control
Agreements.* The form of agreement was previously filed
as Exhibit 10(m) to the Company's Annual Report on Form
10-K for the fiscal year ended January 2, 1993. Here
incorporated by reference. An updated participant
schedule is attached as Exhibit 10.15.
10.16 Indemnification Agreements.* The form of agreement was
previously filed as Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the fiscal year ended
January 2, 1993. Here incorporated by reference. An
updated participant schedule is attached as
Exhibit 10.16.
10.17 Supplemental Retirement Benefits.* Previously filed as
Exhibit 10(l) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1988. Here
incorporated by reference.
10.18 Benefit Trust Agreement dated May 19, 1987, and
Amendments Number 1, 2 and 3 thereto.* Previously filed
as Exhibit 10(p) to the Company's Annual Report on
Form 10-K for the fiscal year ended January 2, 1993.
Here incorporated by reference.
10.19 1996 Executive Short-Term Incentive Plan (Annual Bonus Plan).*
-3-
10.20 Letter Agreement dated May 2, 1994, between the Company
and George A. Andrews.* Previously filed as Exhibit
10(t) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994. Here
incorporated by reference.
10.21 1984 Executive Stock Incentive Purchase Plan, and
amendment.* Previously filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988. Here incorporated by reference.
10.22 Supplemental Director's Fee Agreement dated as of March 27,
1995 between the Company and Phillip D. Matthews.*
Previously filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended March 25, 1995.
Here incorporated by reference.
10.23 Restricted Stock Agreement dated as of March 27, 1995 between
the Company and Phillip D. Matthews.* Previously filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the period ended March 25, 1995. Here incorporated by
reference.
10.24 Deferred Compensation Agreement dated as of April 21,
1994, between the Company and Charles F. Morgo.*
Previously filed as Exhibit 10(x) to the Company's
Quarterly Report on Form 10-Q for the period ended June
18, 1994. Here incorporated by reference.
10.25 Employment Agreement dated April 21, 1994, between the
Company and Charles F. Morgo.* Previously filed as
Exhibit 10(y) to the Company's Quarterly Report on Form
10-Q for the period ended June 18, 1994. Here
incorporated by reference.
10.26 Restricted Stock Agreement dated April 21, 1994, between
the Company and Charles F. Morgo.* Previously filed as
Exhibit 10(z) to the Company's Quarterly Report on Form
10-Q for the period ended June 18, 1994. Here
incorporated by reference.
10.27 1994 Directors' Stock Option Plan.* Previously filed as
Exhibit 10(aa) to the Company's Quarterly Report on Form
10-Q for the period ended June 18, 1994. Here
incorporated by reference.
-4-
10.28 1995 Stock Incentive Plan.* Previously filed as an
Appendix to the Company's Definitive Proxy Statement
with respect to the Company's Annual Meeting of
Stockholders held on April 19, 1995. Here incorporated
by reference.
11 Computation of Per Share Earnings.
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27 Financial Data Schedule.
___________________________
*Management contract or compensatory plan or arrangement.
-5-