Wolverine World Wide, Inc. reported revenue for fiscal 2002 reached a record $827.1 million, a 14.9 percent increase from the $720.1 million reported for the full year 2001. For the fourth quarter of 2002, revenue rose to a record $261.4 million, a 16.7 percent improvement from the $224.0 million reported for the fourth quarter of 2001.
Earnings for fiscal 2002 grew to a record $1.15 per share, a 7.5 percent increase from the $1.07 per share reported in 2001. Fourth quarter 2002 earnings increased to $0.42 per share, a 10.5 percent increase from the same quarter of 2001, and $0.02 per share higher than the First Call estimate.
“Fiscal 2002 was a year of significant achievement for Wolverine World Wide,” stated Timothy J. ODonovan, the Company’s President and CEO. “We delivered our third consecutive year of record revenue, generated record profits and made significant reductions in working capital, all of which contributed to record cash flow during 2002.
“The Company’s strong performance was fueled by Merrell, which realized over a 30 percent revenue increase, well in excess of the planned growth rate for the business. Since acquiring Merrell five years ago, the business has grown over sevenfold, and is now the Company’s leading profit producing brand.
“We are also pleased with the number of other businesses which contributed to the Company’s 2002 results. The Hush Puppies Company benefited from strong performances from its U.K. and Canadian wholesale and International Licensing operations. The Wolverine Footwear Group realized significant gains in its Harley-Davidson(R) and Bates(R) businesses. The CAT(R) Footwear division strengthened its position globally through its U.K. and European acquisitions.
“We made significant progress in the execution of our repositioning plans for the U.S.-based CAT(R) Footwear and Hush Puppies(R) operations. Following a slow start to 2002, the U.S. operations for CAT(R) and Hush Puppies(R) gained momentum in the back half of the year. Wolverine(R) Boots and Shoes generated earnings growth from full-year 2001 levels, despite experiencing a planned revenue reduction to exit under-performing product lines. The recently acquired CAT(R) and Merrell(R) European operations performed as planned in this transition year, accounting for more than two-thirds of the Company’s year-over-year revenue increase while generating profits slightly above the breakeven level.”
Stephen L. Gulis Jr., the Company’s CFO, reported, “On a pre-acquisition basis, full year 2002 gross margins increased 50 basis points to 36.2 percent compared to the 35.7 percent reported during fiscal 2001. Including acquisitions, full year gross margins were 35.6 percent.
“Excluding acquisitions, selling and administrative expenses as a percent of revenues increased 80 basis points for fiscal 2002 to 26.1 percent, compared to the 25.3 percent reported in 2001. This increase reflects higher employee benefit costs, including a significant increase in pension expense caused by current financial market conditions. Including acquisitions, selling and administrative expenses as a percent of revenues grew 100 basis points to 26.3 percent for full year 2002, reflecting startup investment for Merrell Europe.
“Record cash flow from operating activities exceeded $85.0 million during 2002, as asset management programs yielded positive results. On a pre-acquisition basis, inventories and accounts receivable at year end declined 16.6 percent and 7.6 percent respectively. Including acquisitions, inventories decreased 4.5 percent while accounts receivable grew only 2.6 percent from the prior year end — a solid performance considering the nearly 15 percent sales gain achieved this year.”
ODonovan concluded, “We have made significant progress toward our vision to become the premier company in the non-athletic segment of the footwear market. Our plan to accelerate the growth of our bigger businesses is working, and the turnaround plans for the U.S.-based CAT(R) Footwear and Hush Puppies(R) brands are beginning to yield positive results. Strategically, we now have a strong foothold and the right infrastructure in place to service Europe, the world’s largest market for better-grade footwear. Finally, we are entering 2003 with a very strong balance sheet with total debt of only $72.9 million and cash on hand of $27.1 million.
“Looking to 2003, we are starting the year with a strong order backlog, up 19 percent from year end 2001 levels, with orders scheduled for first half delivery improving by approximately 15 percent. For fiscal 2003, we continue to anticipate revenues reaching the $875 to $885 million range, and earnings improving to a range of $1.21 to $1.24 per share. The EPS guidance for 2003 includes the previously disclosed $0.11 per share increase in pension expense.”
The Company will host a conference call at 10:00 a.m. EST today to discuss these results and current business trends. To listen to the call at the Company’s website, go to www.wolverineworldwide.com , click on “For Our Investors” in the navigation bar, click on “Conference Call” from the top navigation bar of the “For Our Investors” page, and then click on “Webcast.” To listen to the webcast, your computer must have Windows Media Player, which can be downloaded for free at www.wolverineworldwide.com . In addition, the conference call can be heard at. A replay of the call will be available at the Company’s website through February 19, 2003.
With a commitment to service and product excellence, Wolverine World Wide, Inc. is one of the world’s leading marketers of branded casual, active lifestyle, work, outdoor sport and uniform footwear and slippers. The Company’s portfolio of highly recognized brands includes: Bates(R), Hush Puppies(R), HYTEST(R), Merrell(R) and Wolverine(R). The Company also markets footwear under popular licensed brands including CAT(R), Harley-Davidson(R) and Stanley(R). The Company’s products are carried by leading retailers in the U.S. and are distributed internationally in over 140 countries. For additional information, please visit our website, www.wolverineworldwide.com .
This press release contains forward-looking statements, including those relating to 2003 sales and earnings, backlog orders, expected improvements in working capital, re-orders, pension expenses and cash flow. In addition, words such as “estimates,” “expects,” “intends,” “should,” “will,” variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Risk Factors”) that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. Risk Factors include, among others: changes in consumer preferences or spending patterns; cancellation of future orders; cost and availability of inventories; reliance on foreign sourcing; the impact of competition and pricing; integration and operations of newly acquired businesses; retail buying patterns; consolidation in the retail sector; changes in economic and market conditions; acts and effects of war and terrorism; and additional factors discussed in the Company’s reports filed with the Securities and Exchange Commission and exhibits thereto. Other Risk Factors exist, and new Risk Factors emerge from time to time that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company undertakes no obligation to update, amend or clarify forward-looking statements.
WOLVERINE WORLD WIDE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
($000's, except share and per share data)
16 Weeks Ended 52 Weeks Ended
Dec 28, Dec 29, Dec 28, Dec 29,
2002 2001 2002 2001
Net sales and other
operating income $261,356 $223,969 $827,106 $720,066
Cost of products sold 168,869 143,326 532,878 463,030
Gross profit 92,487 80,643 294,228 257,036
Selling and
administrative
expenses 66,338 55,087 217,154 182,178
Operating profit 26,149 25,556 77,074 74,858
Other expense 591 1,257 5,420 6,311
Earnings before income
taxes and Minority
interest 25,558 24,299 71,654 68,547
Income taxes 8,407 8,261 23,599 23,307
Earnings before
minority interest 17,151 16,038 48,055 45,240
Minority interest (83) - (143) -
Net earnings $17,068 $16,038 $47,912 $45,240
