Wolverine World Wide, Inc. posted its sixth consecutive year of record results.
“The Company had an exceptional year in 2006 as illustrated by our strong financial performance,” stated Timothy J. O'Donovan, the Company's Chairman and CEO. The Company achieved record revenue totaling $1.142 billion for 2006, a 7.6 percent increase over 2005 revenue of $1.061 billion. For the fourth quarter of 2006, the Company reported revenue of $341.7 million, a 6.5 percent increase over fourth quarter 2005 revenue of $321.0 million.
Fourth quarter 2006 earnings per share increased to $0.42, a 16.7 percent increase over fourth quarter 2005 earnings per share of $0.36. Fiscal 2006 earnings per share grew to a record $1.47, which reflected a 15.7 percent increase over the $1.27 reported in 2005 and exceeded the Company's earnings per share estimate. Included in the fourth quarter and full-year 2006 results is a one-time $0.02 per share income tax benefit, resulting from the closure of prior year tax audits.
According to Blake W. Krueger, President and COO of the Company, “Our business model continues to meet our long-term objectives of generating annual mid to upper-single digit revenue increases while driving earnings per share increases at a double-digit pace. For 2006, all of our four major branded operating groups contributed to the profit increase and three of our four branded groups contributed to the revenue increase. The Outdoor Group set the pace, led by Merrell Footwear, which posted strong double-digit revenue and earnings improvements. Our strategy of leveraging a highly recognized global portfolio of brands delivered consistent growth and a record financial performance for a sixth straight year, which resulted in a double-digit earnings per share increase for the fourth consecutive year.”
“In the fourth quarter, gross margin increased 140 basis points in comparison to the same quarter of last year, resulting in a 50 basis point improvement for the full year,” reported the Company's CFO, Stephen L. Gulis Jr. “The strong gross margin expansion was offset by increased selling and administrative expenses related to investments in Merrell Apparel and Patagonia Footwear. Operating margin for the full year 2006 exceeded our plan and improved to 10.8 percent.”
“Accounts receivable decreased 2.9 percent on a 6.5 percent revenue gain in the fourth quarter. Inventory increased 14.2 percent, with the vast majority of the increase occurring in the Outdoor Group to support the growth of the global Merrell Footwear business and the initial launch of Patagonia Footwear. Our strong operating results generated $108 million of cash from operating activities and our year-end return on assets and return on equity reached record levels.”
Mr. O'Donovan continued, “Our investments in Patagonia Footwear and Merrell Apparel are on plan as we began delivering Patagonia Footwear for the spring season and Merrell Apparel will launch in the third quarter of 2007. Our 2006 year-end backlog is up more than 10 percent over the prior year-end level, and we are confirming our 2007 estimates with a revenue range of $1.200 to $1.230 billion and an earnings per share range of $1.56 to $1.62.”
“We are delivering on our vision 'To Excite Consumers Around The World With Innovative Footwear And Apparel That Bring Style To Purpose.' As our brands continue to be enthusiastically embraced by consumers around the globe, we remain steadfast in our dedication to offering a unique point-of-view to the marketplace with fresh thinking and innovative new products.”
WOLVERINE WORLD WIDE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) ($000's, except per share data) 16 Weeks Ended 52 Weeks Ended December 30 December 31, December 30, December 31, 2006 2005 2006 2005 Revenue $341,739 $321,002 $1,141,887 $1,060,999 Cost of products sold 214,022 205,324 700,349 655,800 Gross margin 127,717 115,678 441,538 405,199 Selling and administrative expenses 95,180 83,404 318,243 291,891 Operating margin 32,537 32,274 123,295 113,308 Interest (income) expense, net (217) 619 (203) 1,911 Other expense (income) 287 322 1,206 150 70 941 1,003 2,061 Earnings before income taxes 32,467 31,333 122,292 111,247 Income taxes 8,823 10,889 38,645 36,780 Net earnings $23,644 $20,444 $83,647 $74,467 Diluted earnings per share $.42 $.36 $1.47 $1.27