Wolverine Q3 EPS Jumps 37.5% on 13.2% Sales Increase

Wolverine World Wide, Inc. reported record revenue and earnings for its third quarter of 2004, marking the eleventh consecutive quarter of both record revenue and net earnings for the company.

Third quarter 2004 revenue totaled $260.9 million, a 13.2% increase over third quarter 2003 revenue of $230.6 million. Earnings per share for the third quarter of 2004 were 55 cents compared to 40 cents reported for the third quarter of 2003, an increase of 37.5%.

For the first three quarters of 2004, revenue reached $684.5 million, a 12.9 percent gain over $606.1 million reported for the first three quarters of 2003. Earnings per share for the first three quarters of 2004 grew to $1.12 per share, up 38.3 percent from $0.81 per share for the same period of 2003.

“We are very pleased with the higher than expected revenue increase and solid profit contribution we experienced in the third quarter of 2004,” stated Timothy J. O'Donovan, the Company's President and CEO. “This record performance was driven by the Outdoor Group, consisting of Merrell and Sebago, with strong profit performances also delivered by the Wolverine, CAT and Hush Puppies Footwear Groups. On a year-to-date basis, all operating groups of the business have generated earnings gains.

“Retailers and consumers around the world are enthusiastically embracing our brands. The overall growth of our lifestyle-oriented business has resulted in earlier deliveries for the current Fall/Winter selling season, and our global market penetration gained further momentum in the quarter, most notably in Europe.”

“The business generated expense leverage of 120 basis points in the quarter, reflecting both aggressive expense management and the quarter's significant sales increase,” reported the Company's CFO, Stephen L. Gulis Jr. “We continue to invest heavily in product development and marketing and, for the year, total selling, general and administrative expenses as a percentage of sales are even with 2003. On a year-to-date basis, these expense controls and expanding gross margin have resulted in a 130 basis point improvement in operating margin.

“We aggressively managed our assets and further improved our balance sheet in the quarter by paying down senior debt totaling $4.3 million. Additionally, we continued to actively repurchase shares and closed the quarter with a strong cash position of $39.1 million.”

O'Donovan concluded, “New product innovation continues to drive the business and resulted in an increase in our quarter-end backlog of approximately 19 percent as compared to the end of the third quarter in 2003. All four of our footwear groups achieved backlog increases. On the strength of our year-to-date results, increased order backlog and anticipated re-order business for the remainder of the year, we are increasing the Company's 2004 estimates. We now expect revenue to range from $975 million to $985 million, as compared to our previous estimate of $960 to $980 million, and expect earnings per share to range from $1.60 to $1.62, up from our previous estimate of $1.44 to $1.52.

“Turning to 2005, we have begun our planning process and our initial estimates are for revenue to range from $1.035 to $1.055 billion and earnings per share to range from $1.77 to $1.84. These estimates are in line with our previously stated long-term financial objectives of growing revenue in the mid to upper single-digit range and generating double-digit earnings per share growth.”

                        WOLVERINE WORLD WIDE, INC.

                  CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)
                ($000's, except share and per share data)

                       Third Quarter Ended          Three Quarters Ended
                    September 11,  September 6,  September 11,  September 6,
                        2004           2003          2004           2003
  Revenue            $260,897       $230,571      $684,541       $606,096
  Cost of products
   sold               162,720        143,857       425,410        384,462
   Gross profit        98,177         86,714       259,131        221,634

  Selling and
   administrative
   expenses            65,188         60,424       189,842        168,129
   Operating profit    32,989         26,290        69,289         53,505

  Interest expense        667          1,257         2,495          3,805
  Other expense           (88)           605           157            501
                          579          1,862         2,652          4,306
   Earnings before
    income taxes
    and minority
    interest           32,410         24,428        66,637         49,199
  Income taxes         10,329          7,904        21,289         15,944

   Earnings before
    minority interest  22,081         16,524        45,348         33,255
  Minority interest       135            110           119            147

   Net earnings       $21,946        $16,414       $45,229        $33,108

  Diluted earnings
   per share             $.55           $.40         $1.12           $.81