Wolverine Worldwide

Financial Highlights

(Dollars in millions, except per share data)

Fiscal

Operating Highlights

2017 2016 2015
Revenue $2,350.0 $2,494.6 $2,691.6
Net earnings
Reported $0.3 $87.7 $122.8
Adjusted(1) $160.4 $133.7 $148.4
Cash and cash equivalents $481.0 $369.8 $194.1
Accounts receivable $271.3 $263.3 $298.9
Inventory $276.7 $348.7 $466.6
Debt $782.6 $820.7 $809.8
Capital expenditures $32.4 $55.3 $46.4

Key Ratios

2017 2016 2015
Gross margin 38.9% 38.5% 39.1%
Operating margin
Reported 1.0% 6.4% 7.5%
Adjusted(1) 10.9% 8.5% 8.9%
Effective income tax rate
Reported 93.7% 20.8% 25.2%
Adjusted(1) 27.7% 26.3% 27.0%
Diluted Earnings Per Share
Reported - $0.89 $1.20
Adjusted(1) $1.64 $1.36 $1.45

Corporate Statistics

2017 2016 2015
Shares used for computing diluted earnings per share (in millions) 95.4 96.2 100.0
Number of employees at year end 3,700 5,860 6,550

(1)Adjusted financial results exclude restructuring and other related costs, organizational transformation costs, incremental inventory mark-downs, impairment of intangible assets, environmental and other related costs, debt extinguishment and other costs and the impact of recent tax reform where applicable.

Market Information


Wolverine Worldwide is traded on the New York Stock Exchange under the symbol “WWW.” The following table shows the high and low stock prices on the New York Stock Exchange and dividends declared by fiscal quarter for 2017 and 2016. The number of stockholders of record on February 16, 2018, was 1,403.

Fiscal

2017 2016

Stock Price

High
Low
High
Low
First quarter $26.41 $20.94 $20.23 $14.74
Second quarter $28.11 $23.45 $20.70 $16.44
Third quarter $29.20 $25.29 $25.54 $18.51
Fourth quarter $32.05 $25.25 $25.31 $20.58

Cash Dividends Declared Per Share

2017 2016
First quarter $0.06 $0.06
Second quarter $0.06 $0.06
Third quarter $0.06 $0.06
Fourth quarter $0.06 $0.06
$0.24 $0.24

A quarterly dividend of $0.08 per share was declared during the first quarter of fiscal 2018.

Reconciliations to GAAP Measures


Reconciliation of reported revenue to underlying revenue* (Unaudited) (in millions)

GAAP Basis Fiscal 2017 Full-Year Foreign Exchange Impact Fiscal 2017 Full-Year Adjusted Basis GAAP Basis Fiscal 2016 Full-Year Adjustments(1) Fiscal 2016 Full-Year Adjusted Basis Underlying Growth Reported Decline
Revenue $2,350.0 ($1.7) $2,348.3 $2,494.6 ($159.3) $2,335.3 0.6% (5.8%)

(1)Adjustments include the impact of retail store closures and the transition of Stride Rite® to a license business model.

Reconciliation of reported debt to net debt* (Unaudited) (in millions)

Fiscal 2017 Q4

Fiscal 2016 Q4

GAAP reported debt $782.6 $820.7
Cash and cash equivalents (481.0) (369.8)
Net debt $301.6 $450.9

Reconciliation of full-year reported diluted EPS to diluted EPS adjusted to exclude restructuring and other related costs, organizational transformation costs, environmental and other related costs, incremental inventory mark-downs, impairment of intangible assets, debt extinguishment and other costs and the impact of recent tax reform* (Unaudited) (in millions)

GAAP Basis
Full-Year

Adjustments
(1)

As Adjusted
Full-Year

Diluted earnings per share – Fiscal 2017 - $1.64 $1.64
Diluted earnings per share – Fiscal 2016 0.89 0.47 1.36
Diluted earnings per share – Fiscal 2015 1.20 0.25 1.45

(1)Adjustments include the impact of restructuring and other related costs, impairment of intangible assets, organizational transformation costs, environmental and other related costs, incremental inventory mark-downs, debt extinguishment and other costs and the impact of recent tax reform.

Reconciliation of full-year reported net earnings to net earnings adjusted to exclude restructuring and other related costs, organizational transformation costs, environmental and other related costs, incremental inventory mark-downs, impairment of intangible assets, debt extinguishment and other costs and the impact of recent tax reform* (Unaudited) (in millions)

GAAP Basis
Full-Year

Adjustments
(1)

As Adjusted
Full-Year

Net earnings – Fiscal 2017 $0.3 $160.1 $160.4
Net earnings – Fiscal 2016 87.7 46.0 133.7
Net earnings – Fiscal 2015 122.8 25.6 148.4

(1)Adjustments include the impact of restructuring and other related costs, impairment of intangible assets, organizational transformation costs, environmental and other related costs, incremental inventory mark-downs, debt extinguishment and other costs and the impact of recent tax reform.

Reconciliation of full-year reported operating profit to operating profit adjusted to exclude restructuring and other related costs, impairment of intangible assets, environmental and other related costs, incremental inventory mark-downs and organizational transformation costs* (Unaudited) (in millions)

GAAP Basis
Full-Year

Adjustments
(1)

As Adjusted
Full-Year

Operating profit – Fiscal 2017 $23.9 $231.1 $255.0
Operating margin 1.0% 10.9%
Operating profit – Fiscal 2016 159.9 52.5 212.4
Operating margin 6.4% 8.5%
Operating profit – Fiscal 2015 201.1 37.6 238.7
Operating margin 7.5% 8.9%

(1)Adjustments include the impact of restructuring and impairment costs, organizational transformation costs, environmental and other costs and incremental inventory markdowns.

Reconciliation of full-year reported effective tax rate to adjusted to exclude the impact from restructuring and other related costs, organizational transformation costs, environmental and other related costs, incremental inventory markdowns, impairment of intangible assets, debt extinguishment and other costs and the impact of recent tax reform* (Unaudited) (in millions)

GAAP Basis
Full-Year

Adjustments
(1)

As Adjusted
Full-Year

Effective Tax Rate – Fiscal 2017 93.7% (66.0%) 27.7%
Effective Tax Rate – Fiscal 2016 20.8% 5.5% 26.3%
Effective Tax Rate – Fiscal 2015 25.2% 1.8% 27.0%

(1)Adjustments include the impact of restructuring and other related costs, impairment of intangible assets, organizational transformation costs, environmental and other related costs, incremental inventory markdowns, debt extinguishment and other costs and the impact of recent tax reform.

*To supplement the consolidated financial statements presented in accordance with Generally Accepted Accounting Principles ("GAAP"), the Company describes what certain financial measures would have been if restructuring and other related costs, incremental inventory mark-downs, organizational transformation costs which include gains or losses from divestitures, impairment of intangible assets, environmental and other related costs and the impact from recent tax reform were excluded. The Company also describes underlying revenue, which excludes the impact of foreign exchange, the impact of retail store closures, the transition of Stride Rite® to a license business model and the impact of the quarterly calendar change. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior period by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business.  The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis.  The Company evaluates results of operations on both a reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company believes providing constant currency information provides valuable supplemental information regarding results of operations, consistent with how the Company evaluates performance. The Company calculates constant currency by converting the current-period local currency financial results using the prior period exchange rates and comparing these adjusted amounts to our current period reported results. Management does not, nor should investors, consider such non-GAAP financial measures in isolation from, or as a substitution for, financial information prepared in accordance with GAAP.  A reconciliation of all non-GAAP measures included in this press release, to the most directly comparable GAAP measures are found in the financial tables above.