SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the first twelve week accounting period ended March 25, 1995
OR
[ ] 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 Identification No.)
Incorporation or Organization)
9341 Courtland Drive, Rockford, Michigan 49351
(Address of Principal Executive Offices) (Zip Code)
(616) 866-5500
(Registrant's Telephone Number, Including Area Code)
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 the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
There were 16,852,434 shares of Common Stock, $1 par value,
outstanding as of April 20, 1995, of which 534,327 shares are
held as Treasury Stock. The shares outstanding, excluding shares
held in treasury, have been adjusted for the 3-for-2 stock split
payable on May 15, 1995, on shares outstanding at the close of
business on May 1, 1995.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Thousands of dollars)
<CAPTION>
March 25, December 31, March 26,
1995 1994 1994
(Unaudited) (Audited) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,286 $ 2,949 $ 3,160
Accounts receivable, less allowances
March 25, 1995 - $4,323
December 31, 1994 - $3,959
March 26, 1994 - $3,242 64,299 70,669 55,084
Inventories:
Finished products 64,218 48,637 49,495
Raw materials and work in process 32,244 30,388 31,131
96,462 79,025 80,626
Other current assets 11,733 14,902 12,310
Net current assets of
discontinued operations 2,066 991 3,548
TOTAL CURRENT ASSETS 177,846 168,536 154,728
PROPERTY, PLANT & EQUIPMENT
Gross cost 99,543 97,028 92,619
Less accumulated depreciation (63,398) (61,680) (60,101)
36,145 35,348 32,518
OTHER ASSETS 26,848 26,267 26,322
TOTAL ASSETS $240,839 $230,151 $213,568
</TABLE>
See notes to consolidated condensed financial statements.
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<TABLE>
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - Continued
(Thousands of dollars)
<CAPTION>
March 25, December 31, March 26,
1995 1994 1994
(Unaudited) (Audited) (Unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to banks $ 2,467 $ 1,432 $ 1,980
Accounts payable and other accrued
liabilities 40,241 41,284 36,142
Current maturities of long-term debt 170 304 4,720
TOTAL CURRENT LIABILITIES 42,878 43,020 42,842
LONG-TERM DEBT, less current maturities 52,701 43,482 44,663
OTHER NONCURRENT LIABILITIES 10,700 11,125 9,772
STOCKHOLDERS' EQUITY
Common Stock - par value $1, authorized
25,000,000 shares; shares issued
(including shares in treasury):
March 25, 1995 - 16,740,362 shares
December 31, 1994 - 16,705,013 shares
March 26, 1994 - 16,496,812 shares 16,740 11,315 11,225
Additional paid-in-capital 19,771 25,004 24,478
Retained earnings 103,803 101,873 87,855
Accumulated translation adjustments 246 332 341
Cost of shares in treasury:
March 25, 1995 - 533,992 shares
December 31, 1994 - 533,992 shares
March 26, 1994 - 681,778 shares (6,000) (6,000) (7,608)
TOTAL STOCKHOLDERS' EQUITY 134,560 132,524 116,291
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $240,839 $230,151 $213,568
</TABLE>
See notes to consolidated condensed financial statements.
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<TABLE>
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS
(Thousands of dollars, except per share data)
(Unaudited)
<CAPTION>
12 Weeks Ended
March 25, March 26,
1995 1994
<S> <C> <C>
Net sales and other operating income $ 76,331 $ 66,766
Cost of products sold 53,543 45,659
Gross margin 22,788 21,107
Selling and administrative expenses 18,913 18,229
Operating income 3,875 2,878
Other expenses (income):
Interest expense 701 740
Interest income (228) (75)
Other - net (217) 162
256 827
Earnings from continuing operations
before income taxes 3,619 2,051
Income taxes 1,122 660
Earnings from continuing operations 2,497 1,391
Loss from discontinued operations,
net of income taxes -- (100)
NET EARNINGS $ 2,497 $ 1,291
Primary earnings (loss) per share:
Continuing operations $ 0.15 $ 0.09
Discontinued operations -- (0.01)
Net earnings $ 0.15 $ 0.08
Fully diluted earnings per share $ 0.15 $ 0.08
Cash dividends per share $ 0.0333 $ 0.0267
Shares used for net earnings
per share computation:
Primary 16,683,028 16,113,234
Fully diluted 16,718,468 16,527,577
</TABLE>
See notes to consolidated condensed financial statements.
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<TABLE>
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Thousands of dollars)
(Unaudited)
<CAPTION>
12 Weeks Ended
March 25, March 26,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 2,497 $ 1,391
Depreciation, amortization and other
non-cash items 657 708
Loss from discontinued operations -- (100)
Changes in operating assets and liabilities:
Accounts receivable 6,370 7,217
Inventories (17,437) (13,771)
Other current assets 2,094 617
Accounts payable and other accrued
liabilities (1,043) 4,667
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (6,862) 729
FINANCING ACTIVITIES
Proceeds from long-term borrowings 12,090 8,000
Payments of long-term borrowings (3,005) (7,012)
Proceeds from short-term borrowings 3,035 --
Payments of short-term borrowings (2,000) --
Cash dividends (567) (422)
Proceeds from shares issued under
employee stock plans 192 1,478
Other -- 32
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,745 2,076
INVESTING ACTIVITIES
Additions to property, plant and equipment (2,515) (2,011)
Other (31) (1,364)
NET CASH USED IN INVESTING ACTIVITIES (2,546) (3,375)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 337 (570)
Cash and cash equivalents at beginning of year 2,949 3,730
CASH AND CASH EQUIVALENTS
AT END OF FIRST QUARTER $ 3,286 $ 3,160
</TABLE>
( ) - Denotes reduction in cash and cash equivalents.
See notes to consolidated condensed financial statements.
-5-
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 25, 1995
NOTE A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. For further
information, refer to the consolidated financial statements and footnotes
included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994. Certain amounts in 1994 have been reclassified to
conform with the presentation used in 1995.
NOTE B - Fluctuations
The Company's sales are seasonal, particularly in its major divisions, Hush
Puppies and the Wolverine Footwear Group. Seasonal sales patterns and the
fact that the fourth quarter has sixteen or seventeen weeks as compared to
twelve weeks in each of the first three quarters cause significant
differences in sales and earnings from quarter to quarter. These
differences, however, follow a consistent pattern each year.
NOTE C - Common Stock
On March 10, 1994, the Company announced a 3-for-2 stock split on shares
outstanding on March 21, 1994. Also, on April 19, 1995, the Company
announced an additional 3-for-2 stock split on shares outstanding on May 1,
1995. All share and per share data have been retroactively adjusted for
the increased shares resulting from the stock splits.
NOTE D - Earnings Per Share
Primary earnings per share are computed based on the weighted average
shares of common stock outstanding during each period assuming that the
stock splits described in Note C had been completed at the beginning of the
earliest period presented. Common stock equivalents (stock options) are
included in the computation of primary and fully diluted earnings per
share.
-6-
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results Of Operations - Comparisons Of First Quarter 1995 To First Quarter
1994
First quarter net sales of $76.3 million for 1995 exceeded 1994 levels by
$9.5 million, (a 14.2% increase). Strong shipments by the Wolverine
Footwear Group, a 35.0% increase, accounted for $9.3 million of the
quarterly sales increase with an additional increase of $1.8 million being
generated by the Leather division. These increases were offset by lower
shipments to the Department of Defense and a reduction in sales to Company
owned and independently operated Hush Puppies Retail locations. Increased
Department of Defense shipments are scheduled for the third and fourth
quarter of 1995. However, shipments to Company owned stores will be lower
in 1995, a result of the retail repositioning conducted in 1994.
Gross margin as a percentage of net sales for the first quarter of 1995 was
29.9% compared to the prior year level of 31.6%. Improved margins were
recorded in the Wolverine Footwear Group and Wolverine Leathers. These
improvements were offset by decreases in the Hush Puppies Company,
resulting from the soft retail climate, as well as inventory provisions
recorded to dispose of slow moving items.
Selling and administrative costs totaling $18.9 million (24.8% of net
sales) for the first quarter of 1995 remained relatively stable with the
first quarter 1994 levels of $18.2 million (27.3% of net sales).
Advertising and distribution costs associated with the increased sales
volume and investments in core brands increased these costs by $1.6
million. These increases were offset by reductions in fringe benefit and
selling expenses. We are anticipating that annualized selling and
administrative costs will normalize as a percentage of net sales in a range
approximating 1994 levels.
Interest expense for both the first quarter of 1995 and 1994 was $.7
million. Total interest expense reflects a reduction of the interest rate
on the senior notes. However, this rate reduction was offset by increases
in the variable rates on the Company s revolver debt and increases in the
average borrowings outstanding.
The effective income tax rates on net earnings decreased in 1995 from 1994
levels (31.0% compared to 32.2%) for the first quarter. The decrease was
caused by a higher percentage of pre-tax earnings being attributable to
non-taxable net earnings of foreign subsidiaries.
Net earnings of $2.5 million ($.15 per share) for the twelve weeks ended
March 25, 1995 compares favorably to earnings from continuing operations of
$1.4 million ($.09 per share) for the respective period of 1994. The earnings
mix continues to be diversified as approximately 50% of earnings were from
domestic operations with the balance being generated from international
operations. Increased earnings are primarily a result of the items noted above.
-7-
Financial Condition, Liquidity and Capital Resources
Accounts receivable of $64.3 million at March 25, 1995 reflects a decrease
of $6.4 million and an increase of $9.2 million as compared to the balances
at December 31, 1994 and March 26, 1994, respectively. Inventories of
$96.5. million at March 25, 1995 reflect an increase of $17.5 million and
$15.9 million over the balances at December 31, 1994 and March 26, 1994,
respectively. The increases are generally related to sales volume
increases and additional inventory required to meet future demand in both
wholesaling and manufacturing operations. Also, these working capital
needs were financed through increases in revolver debt as total proceeds
increased $4.1 million over the first quarter of 1994 and payments on long-
term debt decreased by an additional $4.0 million.
Other current assets totaling $13.8 million at March 25, 1995 reflect a
$2.1 million decrease from December 31, 1994 and March 26, 1994. The
decreases primarily reflect the disposition of the assets related to
discontinued operations in prior years.
Total interest bearing debt of $55.3 million on March 25, 1995 compares to
$45.2. million and $51.4 million at December 31, 1994 and March 26, 1994,
respectively. The increase in debt since December 31, 1994 reflects the
seasonal working capital requirements of the Company. The Company is
currently examining its long term capital requirements as the growth of the
Company will require increases in capital needs over the next several
years. Long term opportunities are being evaluated to supplement cash flow
from future earnings and existing credit facilities to assure that the
Company s requirements can be met.
The first quarter 1995 dividend declared of $.0333 per share of common
stock represents a 24.7% increase over the $.0267 per share declared for
the first quarter of 1994. The dividend is payable May 1, 1995 to
stockholders of record on April 3, 1995. Additionally, the Board of
Directors approved a 3-for-2 stock split for holders of record on May 1,
1995 and an additional quarterly dividend increase of 5.0%.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders.
On April 19, 1995, the Company held its 1995 Annual Meeting of
Stockholders. The purposes of the meeting were: to elect four directors
for three-year terms expiring in 1998; to consider and approve the 1995
Stock Incentive Plan; and to consider and ratify the appointment of Ernst &
Young LLP as independent auditors for the current fiscal year.
Four candidates nominated by management were elected by the stockholders to
serve as directors of the Company at the meeting. The following sets forth
the results of the voting with respect to each candidate:
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<TABLE>
<CAPTION>
Name of Candidate Shares Voted
<S> <C> <C> <C>
Geoffrey B. Bloom For 8,973,069
Authority Withheld 21,899
Broker Non-votes 0
David T. Kollat For 8,973,338
Authority Withheld 21,630
Broker Non-votes 0
David P. Mehney For 8,973,244
Authority Withheld 21,724
Broker Non-votes 0
Timothy J. O'Donovan For 8,972,894
Authority Withheld 22,074
Broker Non-votes 0
</TABLE>
The stockholders voted to approve the 1995 Stock Incentive Plan. The
following sets forth the results of the voting with respect to this matter:
<TABLE>
<CAPTION>
Shares Voted
<S> <C> <C>
For 7,323,549
Against 1,579,818
Abstentions 91,601
Broker Non-votes 0
</TABLE>
The stockholders voted to ratify the appointment of Ernst & Young LLP by
the Board of Directors as independent auditors of the Company for the
current fiscal year. The following sets forth the results of the voting
with respect to this matter:
<TABLE>
<CAPTION>
Shares Voted
<S> <C> <C>
For 8,988,436
Against 3,412
Abstentions 3,120
Broker Non-votes 0
</TABLE>
-9-
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following documents are filed as exhibits to this
report on Form 10-Q:
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. Previously filed as Exhibit 3(b) to
the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994. Here incorporated by reference.
3.3 Amendment to 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 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 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 Supplemental Director's Fee Agreement dated as of March 27, 1995,
between the Company and Phillip D. Matthews.
-10-
10.2 Restricted Stock Agreement as of March 27, 1995, between the
Company and Phillip D. Matthews.
10.3 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.
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter for which this report is filed.
-11-
SIGNATURES
Pursuant to the requirements 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.
AND SUBSIDIARIES
May 9, 1995 s/ Geoffrey B. Bloom
Geoffrey B. Bloom
President and Chief Executive Officer
(Duly Authorized Signatory for Registrant)
May 9, 1995 s/ Stephen L. Gulis, Jr.
Stephen L. Gulis, Jr.
Vice President and Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Signatory of Registrant)
-12-
EXHIBIT INDEX
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.
3.2 Amended and Restated Bylaws. Previously filed as Exhibit 3(b) to
the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994. Here incorporated by reference.
3.3 Amendment to 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 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 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 Supplemental Director's Fee Agreement dated as of March 27, 1995,
between the Company and Phillip D. Matthews.
-13-
10.2 Restricted Stock Agreement as of March 27, 1995, between the
Company and Phillip D. Matthews.
10.3 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.
27 Financial Data Schedule
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Exhibit 3.3
AMENDMENT TO BY-LAWS
OF
WOLVERINE WORLD WIDE, INC.
March 1, 1995
Section 12 of the Amended and Restated By-Laws of the corporation is
hereby amended, effective March 1, 1995, by adding the following sentence
to the end of said section:
The chairperson of any of the standing or special committees of
the Board of Directors may appoint one or more independent
directors to serve as alternates for members of the committee in
the absence or disability of regular members.
Exhibit 10.1
SUPPLEMENTAL DIRECTOR'S FEE AGREEMENT
THIS SUPPLEMENTAL DIRECTOR'S FEE AGREEMENT (the "Agreement") is
made as of March 27, 1995, by and between PHILLIP D. MATTHEWS, an
individual (the "Director"), and WOLVERINE WORLD WIDE, INC., a Delaware
corporation (the "Company").
R E C I T A L S:
Director is an independent, non-employee director of the Company.
Due to his unique and substantial experience in business, the Company
desires that Director serve as Chairman of the Company's Board of Directors
for a minimum period of two years, subject to his election to the Board of
Directors by the shareholders of the Company. In connection with such
service, the Company desires that Director commit a substantial amount of
his time, efforts and attention to the affairs of the Company and make
himself regularly available for consultation with the executive officers of
the Company. In performing such services, the Company recognizes and
anticipates that Director may be required to forego other business
opportunities and reduce or eliminate his participation in other ventures
with which he is currently or might become involved. The parties to this
Agreement entered into a Supplemental Director's Fee Agreement on April 27,
1993 (the "Prior Agreement"). The parties have agreed to terminate the
Prior Agreement pursuant to the terms provided in this Agreement. Director
is willing and desires to serve as Chairman of the Company's Board of
Directors on the terms set forth in this Agreement.
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
1. Service as Chairman. Director agrees to serve as Chairman
of the Company's Board of Directors during the term of this Agreement.
Director will serve in such position as an officer of the Board of
Directors and not as an executive officer or employee of the Company. In
connection with such service, Director agrees to assist in the overall
management of the Company as the Chairman of the Board, and to perform such
other services as the Board of Directors may reasonably request. Director
agrees to devote such amounts of his time, efforts and attention to the
affairs of the Company as may be required in his reasonable judgment to
perform such services to the satisfaction of the Company's Board of
Directors. Director agrees to make himself available on a regular basis
for consultation with the Company's executive officers. Notwithstanding
anything in this Agreement to the contrary, nothing in this Agreement shall
guarantee or require or compel the Company or the Board of Directors to
retain Director in the position of Chairman of the Board or otherwise
infringe upon the unfettered right of the Board of Directors to elect or
appoint any other person to the position of Chairman of the Board of
Directors.
2. Term; Renewal. The term of this Agreement shall be for a
period commencing as of January 2, 1995, and ending on December 31, 1996.
Unless the Company delivers written notice to the Director on or prior to
December 1, 1996, or December 1 of any succeeding year during the term of
this Agreement, of its intention not to renew the term of this Agreement
for an additional one-year period, then this Agreement shall be
automatically renewed for an additional one-year period on the same terms
and conditions set forth in this Agreement.
3. Compensation. In consideration of the extraordinary time,
effort and attention Director has agreed to commit to the Company in
connection with such service as Chairman of the Company's Board of
Directors considerably above and beyond the time, effort and attention
expected of other directors of the Company, the Company agrees to
compensate Director as follows:
(a) Retainer; Meeting Fees. The Company shall pay to Director
the Company's standard retainer fee for service as a member of the
Board of Directors as in effect from time to time as and when payable
to all directors of the Company. The Company shall also pay to
Director the standard fee for attendance at and participation in
meetings of the Board of Directors as and when payable to all
directors of the Company. Director shall not be entitled to
compensation for attendance at meetings of committees of the Company's
Board of Directors.
(b) Additional Compensation. For calendar year 1995, the
Company shall pay to Director a fee of Seventy-Five Thousand Dollars
($75,000), and for calendar year 1996, the Company shall pay to
Director a fee of Fifty Thousand Dollars ($50,000). During any
renewal term, Director's annual fee shall be in an amount agreed upon
between Director and the Company in an amount not to exceed Fifty
Thousand Dollars ($50,000). The annual fee for each year shall be
paid in twelve (12) equal, monthly installments payable on the last
day of each month.
(c) Business Expenses. The Company shall pay or reimburse
Director for actual and reasonable business expenses incurred by
Director in connection with his service as Chairman of the Company's
Board of Directors during the term of this Agreement and will also pay
directly or reimburse Director for office, clerical and related
expenses incurred by Director in connection with such service in an
amount not to exceed Twelve Thousand Dollars ($12,000) for 1995 and
Eight Thousand Dollars ($8,000) for 1996.
(d) Restricted Stock Award. The Company shall grant to Director
a restricted stock award for 10,000 shares of the Company's Common
Stock, $1.00 par value (the "Restricted Stock"). The Restricted Stock
shall vest according to the following schedule: 3,334 shares of the
Restricted Stock shall vest on the date of the Restricted Stock
Agreement; an additional 3,333 shares of the Restricted Stock shall
vest on January 1, 1996; and the remaining 3,333 shares of Restricted
-2-
Stock shall vest on January 1, 1997. The award of Restricted Stock to
Director shall be evidenced by a written agreement containing such
terms and conditions, consistent with this Agreement, as the members
of the Compensation Committee of the Company's Board of Directors may
determine, including forfeiture of the Restricted Stock in certain
circumstances.
4. Termination. This Agreement may be terminated by the
Company or by Director as follows:
(a) Discretionary Termination by Director. Director may
terminate this Agreement at any time in Director's discretion, for any
reason or without reason, upon sixty (60) days' advance written notice
delivered to the Chief Executive Officer and the Chairman of the
Compensation Committee of the Company's Board of Directors.
(b) Termination by Company for Cause. The Company may terminate
this Agreement immediately for Cause. "Cause" shall include, without
limitation, Director's material breach of this Agreement; the willful
and continued failure to perform his duties as provided in this
Agreement; misappropriation of Company property; activities in aid of
a competitor; dishonesty; conviction of a crime involving moral
turpitude injurious to the Company; or removal from office by the
stockholders of the Company as provided in the Delaware General
Corporation Law, as such law may be amended.
(c) Termination by Non-renewal. This Agreement will
automatically terminate at the end of its term or the end of any one-
year renewal term if the Company has provided the Director with the
notice of non-renewal specified in Section 2 above.
(d) Discretionary Termination by Company. The Company may
terminate this Agreement at any time in its discretion, for any reason
or without reason. Any termination of this Agreement by the Company,
other than termination for Cause or by non-renewal, shall be deemed to
have been a termination under this subsection.
5. Compensation Upon Termination. The date on which any
termination becomes effective is referenced in this Agreement as the
"Termination Date." Upon any termination of this Agreement, Director shall
be entitled to continue to receive the standard retainer fee and regular
fees for attendance at meetings of the Board, plus additional fees for
attendance at meetings of Board committees held after the Termination Date,
if Director continues to be a director of the Company. In addition,
Director shall be entitled to receive the compensation set forth below:
(a) If the Agreement is terminated pursuant to Sections 4(a) or
4(b) above, Director shall be entitled to receive the additional
compensation provided in Section 3(b) of this Agreement earned by
Director through the Termination Date, prorated on the basis of a 365
day year, and reimbursement pursuant to Section 3(c) of all expenses
incurred through the Termination Date.
-3-
(b) If the Agreement is terminated pursuant to Section 4(d)
above, except as provided in Section 6 below, Director shall be
entitled to receive the full amount of the additional compensation
provided in Section 3(b) of this Agreement, and reimbursement pursuant
to Section 3(c) of all actual and reasonable expenses incurred through
the Termination Date.
6. Termination Following Change in Control. If this Agreement
is terminated by the Company pursuant to Sections 4(c) or 4(d) following a
Change in Control (as hereafter defined), Director shall be entitled to
receive a lump sum payment in cash on the Termination Date of Fifty
Thousand Dollars ($50,000). Director shall be entitled to receive the
compensation provided in Section 3(b) prorated through the date he receives
the lump sum payment provided above, and shall not be entitled to any
compensation provided in Section 3(b) for the remaining term of this
Agreement from and after such date. For purposes of this Agreement, a
"Change in Control" shall mean any change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A issued under the Securities Exchange Act of 1934 (the "1934
Act"); provided, that without limitation a Change in Control shall have
occurred for purposes of this Agreement if: (i) any "person" (as such term
is defined in Sections 13(d) and 14(d)(2) of the 1934 Act) is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined voting power
of the Company's then-outstanding securities; or (ii) during any period of
two (2) consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's stockholders, of each new director
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who were directors at the beginning of such period.
7. Entire Agreement; Termination of Prior Agreement. No
Agreements or representations, oral or otherwise, express or implied, with
respect to the matters covered by this Agreement have been made by either
party which are not set forth expressly in this Agreement, and this
Agreement supersedes any other agreements on the matters covered by this
Agreement. The parties agree that the Prior Agreement is hereby terminated
and canceled as of January 1, 1995.
8. Amendment and Waiver. This Agreement has been authorized by
the Company's Board of Directors. No provisions of this Agreement may be
amended, modified, waived or discharged unless such amendment, waiver,
modification or discharge is agreed to in a writing specifically authorized
by a written Board resolution, and signed by Director and by such director
or officer as may be specifically designated by the Board of Directors of
the Company in such resolution. No waiver by either party at any time of
any breach or non-performance of this Agreement by the other party shall be
deemed a waiver of any prior or subsequent breach or non-performance.
9. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
-4-
of any other provision of this Agreement, which will remain in full force
and effect as if the invalid or unenforceable provision were absent from
this Agreement.
10. Binding Effect; Assignability. All of the terms of this
Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the successors and authorized assigns of the
Company and Director. Neither the Company nor Director shall assign any of
their respective rights or obligations under this Agreement to any other
person, firm or corporation without the prior written consent of the other
party.
11. Notices. Notices to a party under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered, sent
by certified or registered mail (postage prepaid), shipped and receipted by
express courier service (charges prepaid), or mailed first class (postage
prepaid), or transmitted by telecopier or similar facsimile transmitter:
(a) If to Director:
Mr. Phillip D. Matthews
1340 Oak View Avenue
San Marino, California 91108
Fax: (818) 577-4833
(b) If to the Company:
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
Attn: General Counsel
Fax: (616) 866-0660
12. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an
original and the counterparts shall together constitute one and the same
instrument.
13. Governing Law. The validity, interpretation, and
construction of this Agreement shall be governed by the laws of the State
of Michigan as applicable to contracts made and to be performed in the
State of Michigan, without regard to principles of conflicts of law.
-5-
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date and year first written above.
WOLVERINE WORLD WIDE, INC.
By s/ Daniel T. Carroll
Daniel T. Carroll,
Director and Chairman of the
Compensation Committee of the Board
of Directors
"Company"
s/ Phillip D. Matthews
Phillip D. Matthews
"Director"
-6-
Exhibit 10.2
Grantee: Phillip D. Matthews
Address: 1340 Oak View Avenue
San Marino, CA 91108
Number of Shares: 10,000
Date of Award: March 27, 1995
Restricted Stock Number: 94R/PDM-1
RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement ("Agreement") is made as of the
award date set forth above between WOLVERINE WORLD WIDE, INC., a Delaware
corporation ("Wolverine"), and PHILLIP D. MATTHEWS, the Chairman of
Wolverine's Board of Directors ("Matthews").
The Compensation Committee of Wolverine's Board of Directors (the
"Committee") hereby awards restricted stock to Matthews, conditioned upon
his continued service as Chairman of the Board of Directors of Wolverine
and subject to the terms, conditions, and provisions contained in this
Agreement.
1. Award. Wolverine hereby awards to Matthews 10,000 shares of
Wolverine's common stock, $1 par value, subject to restrictions imposed
under this Agreement (the "Restricted Stock").
2. Transferability. Until the restrictions lapse as set forth in
paragraph 3 below, the Restricted Stock granted under this Agreement is not
transferable by Matthews except by will or according to the laws of descent
and distribution. In addition, all rights with respect to the Restricted
Stock are exercisable during Matthews' lifetime only by Matthews or his
guardian or legal representative. Wolverine shall place an appropriate
legend upon any certificate representing shares of Restricted Stock awarded
under this Agreement and may also issue appropriate stop transfer
instructions to its transfer agent with respect to such shares.
3. Lapsing of Restrictions. Except as otherwise provided in this
Agreement, the restrictions imposed on the Restricted Stock awarded
pursuant to this Agreement shall lapse as follows: restrictions on 3,334
shares of the Restricted Stock shall lapse on the date of this Agreement;
restrictions on an additional 3,333 shares of the Restricted Stock shall
lapse on January 1, 1996; and restrictions on the remaining 3,333 shares of
the Restricted Stock shall lapse on January 1, 1997. The periods during
which Restricted Stock is subject to restrictions imposed under this
Agreement shall be known as "Restricted Periods."
4. Certifications. Matthews intends to continue to serve as
Chairman of the Board of Wolverine for the remainder of Matthews' term
during which the Restricted Stock evidenced by this Agreement was granted.
Matthews hereby represents and warrants that Matthews is acquiring the
Restricted Stock awarded under this Agreement for Matthews' own account and
investment and without any intent to resell or distribute the Restricted
Stock. Matthews shall not resell or distribute the Restricted Stock after
any Restricted Period except in compliance with such conditions as
Wolverine may reasonably specify to ensure compliance with federal and
state securities laws.
5. Termination of Chairman of the Board Status. If Matthews' status
as Chairman of the Board with Wolverine is terminated during any Restricted
Period for any reason other than Matthews' death, disability, termination
"for cause" as defined in the Supplemental Director's Fee Agreement of even
date herewith between Wolverine and Matthews ("Fee Agreement"), or
termination by Wolverine following a "Change of Control" (as such term is
defined in the Fee Agreement), all Restricted Stock still subject to
restrictions at the date of such termination shall automatically be
forfeited and returned to Wolverine; provided, however, that in the event
of a termination of Chairman of the Board status by Wolverine, the
Committee may, in its sole discretion, waive the automatic forfeiture of
any or all such shares of Restricted Stock and/or may add such new
restrictions to such shares of Restricted Stock as it deems appropriate.
In the event Matthews' status as Chairman of the Board is terminated with
Wolverine because of death or disability during any Restricted Period, the
restrictions applicable to Matthews' shares of Restricted Stock still
subject to restriction shall terminate automatically with respect to that
number of shares (rounded to the nearest whole number) equal to the total
number of shares of Restricted Stock still subject to restriction
multiplied by the number of full months that have lapsed since the date of
grant divided by the maximum number of full months of the Restricted
Period, and all remaining shares shall be forfeited and returned to
Wolverine; provided, however, that the Committee may, in its sole
discretion, waive the restrictions remaining on any or all such remaining
shares of Restricted Stock either before or after Matthews' death or
disability. In the event Matthews' status as Chairman of the Board with
Wolverine is terminated by Wolverine following a "Change of Control" (as
such term is defined in the Fee Agreement), the restrictions applicable to
Matthews' shares of Restricted Stock shall immediately terminate. In the
event Matthews' status as Chairman of the Board with Wolverine is
terminated "for cause" (as such term is defined in the Fee Agreement),
Matthews shall have no further right to receive any Restricted Stock, and
all Restricted Stock still subject to restrictions at the date of such
termination shall automatically be forfeited and returned to Wolverine.
6. No Obligation of Wolverine. The award of Restricted Stock under
this Agreement shall not impose upon Wolverine any obligation to retain
Matthews as Chairman of the Board or in any other capacity for any given
period or upon any specific terms. Wolverine may at any time remove
Matthews from his position as Chairman of the Board in accordance with
Wolverine's By-Laws, Certificate of Incorporation, or applicable law, free
from any liability or claim under this Agreement except as expressly
provided otherwise herein.
-2-
7. Stockholder Rights. During the Restricted Period, Matthews shall
have all voting, dividend, liquidation, and other rights with respect to
the Restricted Stock held of record by Matthews as if Matthews held
unrestricted common stock; provided, however, that the unvested portion of
any Restricted Stock award shall be subject to any restrictions on
transferability or risks of forfeiture imposed pursuant to this Agreement.
Any noncash dividends or distributions paid with respect to shares of
unvested Restricted Stock shall be subject to the same restrictions as
those relating to the Restricted Stock awarded under this Agreement. After
the restrictions applicable to the Restricted Stock lapse, Matthews shall
have all stockholder rights, including the right to transfer the shares,
subject to such conditions as Wolverine may reasonably specify to ensure
compliance with federal and state securities laws.
8. Corporate Changes. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, merger, consolidation,
combination, exchange of shares, or any other change in the corporate
structure or shares of Wolverine, the number and class of shares of
Restricted Stock shall be appropriately adjusted.
9. Effective Date. This award of Restricted Stock shall be
effective as of the date first set forth above.
10. Amendment. This Agreement shall not be modified except in a
writing executed by the parties hereto.
WOLVERINE WORLD WIDE, INC.
By s/ Geoffrey B. Bloom
Geoffrey B. Bloom, Chief Executive
Officer
s/ Phillip D. Matthews
Phillip D. Matthews
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF
WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES FOR THE 12 WEEK
ACCOUNTING PERIOD ENDED MARCH 25, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-25-1995
<CASH> 3,286
<SECURITIES> 0
<RECEIVABLES> 64,299
<ALLOWANCES> 4,323
<INVENTORY> 96,462
<CURRENT-ASSETS> 177,846
<PP&E> 99,543
<DEPRECIATION> 63,398
<TOTAL-ASSETS> 240,839
<CURRENT-LIABILITIES> 42,878
<BONDS> 55,338
<COMMON> 16,740
0
0
<OTHER-SE> 117,820
<TOTAL-LIABILITY-AND-EQUITY> 240,839
<SALES> 76,331
<TOTAL-REVENUES> 76,331
<CGS> 53,543
<TOTAL-COSTS> 53,543
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 701
<INCOME-PRETAX> 3,619
<INCOME-TAX> 1,122
<INCOME-CONTINUING> 2,497
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,497
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
