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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1998
[ ] 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)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (616) 866-5500
Securities registered pursuant to Section 12(b) of the Securities Exchange
Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $1 Par Value New York Stock Exchange/Pacific Exchange,
Inc.
Securities registered pursuant to Section 12(g) of the Act: None
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 _____
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Number of shares outstanding of the registrant's Common Stock, $1 par value
(excluding shares of treasury stock) as of March 2, 1998: 42,742,513.
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant based on the closing price on the New York
Stock Exchange on March 2, 1998: $1,239,532,877.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the registrant's annual
stockholders' meeting to be held April 27, 1998, are incorporated by
reference into Part III of this report.
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PART I
ITEM 1. BUSINESS.
GENERAL.
Wolverine World Wide, Inc. (the "Company") is a leading designer,
manufacturer and marketer of a broad line of quality comfortable casual
shoes, rugged outdoor and work footwear, and constructed slippers and
moccasins. The Company, a Delaware corporation, is the successor of a 1969
reorganization of a Michigan corporation of the same name, originally
organized in 1906, which in turn was the successor of a footwear business
established in Grand Rapids, Michigan in 1883.
Consumers on six continents purchased over 37 million pairs of Company
branded footwear during fiscal 1997, making the Company a global leader
among U.S. shoe companies in the marketing of branded casual, work and
outdoor footwear. The Company's products generally feature contemporary
styling with patented technologies designed to provide maximum comfort.
The products are marketed throughout the world under widely recognized
brand names, including HUSH PUPPIES[REGISTERED], WOLVERINE[REGISTERED],
BATES[REGISTERED], CATERPILLAR[REGISTERED], COLEMAN[REGISTERED],
HY-TEST[REGISTERED], MERRELL[REGISTERED] and HARLEY-DAVIDSON[REGISTERED].
The Company believes that its primary competitive strengths are its well
recognized brand names, broad range of comfortable footwear, patented
comfort technologies, numerous distribution channels and diversified
manufacturing and sourcing base.
The Company's footwear is sold under a variety of brand names designed
to appeal to most consumers of casual, work and outdoor footwear at
numerous price points. The Company's footwear products are organized under
four operating divisions: (i) The Hush Puppies Company, focusing on
comfortable casual shoes, (ii) the Wolverine Footwear Group, focusing on
work, outdoor and lifestyle boots and shoes, (iii) the
CATERPILLAR[REGISTERED] Footwear Group, focusing on the
CATERPILLAR[REGISTERED] product line of work and lifestyle products and
(iv) the Wolverine Slipper Group, focusing on slippers and moccasins under
the HUSH PUPPIES[REGISTERED] brand and other private labels for third party
retailers. The Company's Global Operations Group is responsible for
manufacturing and sourcing, including the operation of the Company-owned
pigskin tannery. The Company's footwear is distributed domestically to
approximately 52,000 department store, footwear chain, catalog, specialty
retailer and mass merchant accounts, as well as 60 Company-owned retail
stores. The Company's products are distributed worldwide through
approximately 150 licensees and distributors in over 100 countries.
Footwear has accounted for 90% or more of the consolidated revenues of the
Company for each of the last three years. For further financial
information regarding the Company, see the consolidated financial
statements of the Company, which are attached as Appendix A to this Form
10-K.
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The Company, through its Wolverine Leathers Division, is one of the
premier tanners of quality pigskin leather for the shoe and leather goods
industries. The pigskin leather tanned by the Company is used in a
significant portion of the footwear manufactured and sold by the Company,
and is also sold to Company licensees and other domestic and foreign
manufacturers of shoes.
On September 7, 1997, the Company obtained a global license from The
Coleman Company, Inc. to manufacture and market COLEMAN[REGISTERED] brand
footwear. The Company's prior COLEMAN[REGISTERED] license was limited to
the U.S., Canada and Japan. On October 17, 1997, the Company acquired
certain assets of the MERRELL[REGISTERED] outdoor footwear business from
the Outdoor Division of Sports Holdings Corp. The acquisition included
substantially all the assets of the MERRELL[REGISTERED] hiking and rugged
outdoor footwear business and global rights to the MERRELL[REGISTERED]
trademark. In addition, on March 12, 1998, the Company was granted the
rights to manufacture and market footwear, including motorcycle, casual,
work and western boots under the HARLEY-DAVIDSON[REGISTERED] brand. The
COLEMAN[REGISTERED], MERRELL[REGISTERED] and HARLEY-DAVIDSON[REGISTERED]
footwear businesses are operated as part of the Wolverine Footwear Group.
PRODUCTS.
The Company's products include casual, dress, work and uniform shoes,
hiking and outdoor shoes, boots and sandals, and work and uniform boots as
well as constructed slippers and moccasins. Footwear is offered by the
Company under many recognizable brand names including HUSH
PUPPIES[REGISTERED], WOLVERINE[REGISTERED], BATES[REGISTERED],
CATERPILLAR[REGISTERED], COLEMAN[REGISTERED], HY-TEST[REGISTERED],
MERRELL[REGISTERED] and HARLEY-DAVIDSON[REGISTERED]. The Company also
manufactures constructed slippers and moccasins and markets them on a
private label basis through its Wolverine Slipper Group. Through its
manufacturing facilities and third-party contractors, the Company combines
quality materials and skilled workmanship from around the world to produce
footwear according to its specifications.
The Company's four operating divisions and the Wolverine Leathers
Division are described below.
1. THE HUSH PUPPIES COMPANY. The Company believes that
HUSH PUPPIES'[REGISTERED] 40-year heritage as a pioneer of
comfortable casual shoes positions the brand to capitalize on the
global trend toward more casual workplace and leisure attire.
The diverse product line includes numerous styles for both work
and casual wear and utilizes comfort features, such as the
COMFORT CURVE[REGISTERED] sole and patented BOUNCE[REGISTERED]
technology. The product line features the popular HUSH
PUPPIES[REGISTERED] Classics line of colorful, fashionable,
casual shoes. HUSH PUPPIES[REGISTERED] shoes are sold to men,
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women and children in over 80 countries and are distributed
through a multi-tiered network of department stores, specialty
retailers, national chains, catalogs and Company-owned stores.
In addition, the HUSH PUPPIES[REGISTERED] brand apparel and
accessory licensing program includes eyewear, toy dogs and
apparel.
2. THE WOLVERINE FOOTWEAR GROUP. The Wolverine Footwear
Group is one of the world's largest work and outdoor footwear
companies, encompassing multiple brands designed with performance
and comfort features to serve a variety of work, outdoor and
lifestyle functions. The WOLVERINE[REGISTERED] brand, which has
been in existence for 114 years, is identified with performance
and quality and markets work and outdoor footwear in two
categories: (i) work and industrial footwear; and (ii) rugged
outdoor and sport footwear. The Wolverine Footwear Group also
includes the BATES[REGISTERED], HY-TEST[REGISTERED] and
HARLEY-DAVIDSON[REGISTERED] product lines. The product lines feature
patented technologies and designs, such as the
DURASHOCKS[REGISTERED] and DURASHOCKS SR<Trademark> systems, and
the use of quality materials and components. In addition, the
Wolverine Footwear Group includes the Wolverine Outdoor Division,
which markets hiking and outdoor shoes, boots and sandals through
the MERRELL[REGISTERED] and COLEMAN[REGISTERED] product lines.
WOLVERINE[REGISTERED] WORK AND INDUSTRIAL
FOOTWEAR. The Company believes the
WOLVERINE[REGISTERED] brand has built its reputation by
making quality, durable and comfortable work boots and
shoes. The development of DURASHOCKS[REGISTERED]
technology allowed the WOLVERINE[REGISTERED] brand to
introduce a broad line of work footwear with a focus on
comfort. The WOLVERINE[REGISTERED] Work product line
features work boots and shoes, including steel toe
boots and shoes, targeting male and female industrial
and farm workers. This product line is distributed
through department stores and specialty and independent
retailers.
WOLVERINE[REGISTERED] RUGGED OUTDOOR AND SPORT
FOOTWEAR. The WOLVERINE[REGISTERED] rugged outdoor
and sport product lines incorporate
DURASHOCKS[REGISTERED] and DURASHOCKS SR<Trademark>
technology and other comfort features into products
designed for rugged outdoor use. This broad product
line includes all-terrain sport boots, walking shoes,
trail hikers, rugged casuals and outdoor sandals. The
line targets active lifestyles and is distributed
through department stores and specialty and independent
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retailers. The Company also produces boots that target
hunters, fishermen and other active outdoor users.
Warmth, waterproofing and comfort are achieved through
the use of GORE-TEX[REGISTERED], THINSULATE[REGISTERED]
and the Company's patented DURASHOCKS[REGISTERED]
technologies. This line is sold through specialty
retail and catalog distribution channels that serve
hunting and fishing enthusiasts. In addition, in 1997,
the Company introduced WOLVERINE[REGISTERED] brand
rubber footwear, boots and waders for hunters,
fishermen and farm workers. This product line is sold
through mass merchants and specialty retail stores.
BATES. The Company's Bates Division is an
industry leader in supplying footwear to military and
civilian uniform users. The Bates Division utilizes
DURASHOCKS[REGISTERED], DURASHOCKS SR<Trademark> and
other proprietary comfort technologies in the design of
its military-style boots and oxfords including the
BATES[REGISTERED] ENFORCER<Trademark> Series footwear
line. The Bates Division currently contracts with the
U.S. Department of Defense and other governmental
organizations to supply military footwear. Civilian
uniform uses include police, security, postal,
restaurant and other industrial occupations. Bates
Division products are also distributed through
specialty retailers and catalogs.
HY-TEST. The HY-TEST[REGISTERED] product line
consists primarily of high quality work boots and shoes
designed to protect male and female industrial workers
from footwear injuries. HY-TEST[REGISTERED] footwear
incorporates various safety features into its product
lines, including steel toe footwear and electrical
hazard, static dissipating and conductive footwear to
protect against hazards of the workplace. In addition,
HY-TEST[REGISTERED] brand footwear incorporates
features such as FOOT RESTS[REGISTERED] comfort
technology to provide comfort together with safety for
working men and women. HY-TEST[REGISTERED] footwear is
distributed primarily through a network of mobile truck
"ShoemobilesTM" providing direct sales to workers at
industrial facilities.
HARLEY-DAVIDSON. On March 12, 1998, the Company
entered into a License Agreement with the Harley-Davidson
Motor Company granting the Company the right to
manufacture, market, distribute and sell footwear
under the HARLEY-DAVIDSON[REGISTERED] brand in most
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countries of the world. The Company's rights to the
HARLEY-DAVIDSON[REGISTERED] brand become effective in
North America, South America and Central America in
1998, and become effective in the remaining areas of
the world at various times in the future, such that by
January 1, 2000, the Company will have the exclusive
right to produce and distribute HARLEY-DAVIDSON[REGISTERED]
footwear in most countries of the
world. HARLEY-DAVIDSON[REGISTERED] brand footwear
products include motorcycle, casual, work and western
boots. HARLEY-DAVIDSON[REGISTERED] footwear will be
sold primarily through a network of 600 independent
HARLEY-DAVIDSON[REGISTERED] dealerships and through
department stores and specialty retailers.
WOLVERINE OUTDOOR DIVISION. The Wolverine Outdoor
Division consists of the MERRELL[REGISTERED] and
COLEMAN[REGISTERED] footwear brands.
- MERRELL. The MERRELL[REGISTERED] product line,
acquired by the Company on October 17, 1997, consists
primarily of technical hiking and rugged outdoor
footwear designed for backpacking, day hiking and
rugged every day use. MERRELL[REGISTERED] products are
sold primarily through specialty retailers and
catalogs.
- COLEMAN. The Company has been granted the
exclusive worldwide rights to manufacture, market,
distribute and sell outdoor footwear under the
COLEMAN[REGISTERED] brand. COLEMAN[REGISTERED] brand
footwear products include lightweight hiking boots,
rubber footgear and outdoor sandals, which are sold
primarily at value-oriented prices through mass
merchants.
3. THE CATERPILLAR[REGISTERED] FOOTWEAR GROUP. The
CATERPILLAR[REGISTERED] Footwear Group began operating as a
separate division of the Company in 1997. Previously, the
CATERPILLAR[REGISTERED] Footwear Group operated as part of the
Wolverine Footwear Group. The Company has been granted the
exclusive worldwide rights to manufacture, market and distribute
footwear under the CATERPILLAR[REGISTERED], CAT
DESIGN[REGISTERED] and other trademarks. The Company believes
the association with CATERPILLAR[REGISTERED] equipment enhances
the reputation of its boots for quality, ruggedness and
durability. CATERPILLAR[REGISTERED] brand footwear products
include work boots and shoes, sport boots, rugged casuals and
lifestyle footwear. In addition, in 1997 the Company introduced
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CAT[REGISTERED] Marine Power footwear, designed for industrial
and recreational uses in marine areas and on water covered
surfaces. The diversity of the product line and strong
recognition of the CATERPILLAR[REGISTERED] brand name allow the
Company and its international distributors to distribute products
through a wide variety of channels, including mass merchants,
department stores and independent retailers.
CATERPILLAR[REGISTERED] brand products target work and industrial
users and active lifestyle users.
4. THE WOLVERINE SLIPPER GROUP. Through the Wolverine
Slipper Group, the Company is one of the leading suppliers of
constructed slippers in the United States. The styling of the
Wolverine Slipper Group's footwear reflects consumer demand for
the "rugged indoor" look by using natural leathers such as
moosehide, shearling and suede in constructed slipper and indoor
and outdoor moccasin designs. The Company designs and
manufactures constructed slippers and moccasins on a private
label basis according to customer specifications. Such products
are manufactured for leading United States retailers and
catalogs, such as Nordstrom, J.C. Penney, L.L. Bean, Eddie Bauer
and Lands' End. In addition, in late 1996, the Wolverine Slipper
Group added branded HUSH PUPPIES[REGISTERED] slippers to its
traditional line of private label slippers.
5. THE WOLVERINE LEATHERS DIVISION. The Wolverine
Leathers Division produces pigskin leathers primarily for use in
the footwear industry. The Wolverine Leathers Division is the
largest domestic tanner of pigskin and is included in the
Company's Global Operations Group. WOLVERINE
LEATHERS[REGISTERED] brand products are manufactured in the
Company's pigskin tannery located in Rockford, Michigan. The
Company believes these leathers offer superior performance and
cost advantages over cowhide leathers. The Company's waterproof,
stain resistant and washable leathers are featured in many of the
Company's domestic footwear lines and many products offered by
the Company's international licensees and distributors.
MARKETING.
The Company's overall marketing strategy is to develop brand-specific
plans and related promotional materials for the United States market to
foster a differentiated and globally consistent image for each of the
Company's core brands. Each brand group within the Company has its own
marketing personnel who develop the marketing strategy for products within
that group. Domestic marketing campaigns target both the Company's retail
accounts and consumers, and strive to increase overall brand awareness for
the Company's products. The Company's advertisements typically emphasize
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fashion, comfort, quality, durability, functionality and other
performance and lifestyle aspects of the Company's footwear. Components of
the brand-specific plans include print, radio and television advertising,
in-store point of purchase displays, promotional materials, and sales and
technical assistance.
The Company's brand groups provide its international licensees and
distributors with creative direction and materials to convey consistent
messages and brand images. Examples of marketing assistance provided by
the Company to its licensees and distributors are (i) direction concerning
the categories of footwear to be promoted, (ii) photography and layouts,
(iii) broadcast advertising, including commercials and film footage, (iv)
point of purchase presentation specifications, blueprints and packaging,
(v) sales materials, and (vi) consulting concerning retail store layout and
design. The Company believes the strengths of its brand names provide a
competitive advantage. In support of this belief, the Company has
significantly increased its expenditures on marketing and promotion to
support the position of its products and enhance brand awareness.
DOMESTIC SALES AND DISTRIBUTION.
The Company uses a wide variety of distribution channels to distribute
its products. To meet the diverse needs of its broad customer base, the
Company uses four primary distribution strategies.
- Traditional wholesale distribution is used to service department
stores (such as J.C. Penney, Sears and Nordstrom), large footwear
chains (such as Famous Footwear and Chernin's), specialty
retailers, catalog and independent retailers, and military
outlets. A dedicated sales force and customer service team,
advertising and point of purchase support, and in-stock
inventories are used to service these accounts.
- Volume direct programs provide branded and private label footwear
at competitive prices with limited marketing support. These
programs service major retail, mail order and government
customers.
- First cost agreements are primarily utilized to furnish brands
licensed by the Company to mass merchants (such as Wal-Mart) on a
royalty basis.
- A network of independent SHOEMOBILE<Trademark> distributors is
primarily used to distribute and sell HY-TEST[REGISTERED] brand
products. The Company also distributes additional products
through this independent distributor network.
In addition to its wholesale activities, the Company operated 60
domestic retail shoe stores as of March 30, 1998, under two formats,
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consisting of factory outlet stores and mall-based speciality stores. The
Company expects the scope of its retail operations to remain relatively
consistent in the foreseeable future. Most of the Company's 54 factory
outlet stores carry a large selection of first quality Company branded
footwear at a discount to conventional retail prices. The 6 regional
mall-based full service, full price HUSH PUPPIES[REGISTERED] Specialty Stores
feature a broad selection of men's and women's HUSH PUPPIES[REGISTERED]
brand footwear and are used by the Company to test new styles and
merchandising strategies. In addition, one of the mall-based full service,
full price HUSH PUPPIES[REGISTERED] Specialty Stores also features other
Company brands in addition to HUSH PUPPIES[REGISTERED].
A broad distribution base insulates the Company from dependence on any
one customer. No customer of the Company accounted for more than 10% of
the Company's net sales and other operating income in fiscal 1997.
Retail footwear sales are seasonal with significant increases in sales
experienced during the Christmas, Easter and back-to-school periods. Due
to this seasonal nature of footwear sales, the Company experiences some
fluctuation in the levels of working capital. The Company provides working
capital for such fluctuations through internal financing and through a
revolving credit agreement that the Company has in place. The Company
expects the seasonal sales pattern to continue in future years.
INTERNATIONAL OPERATIONS AND GLOBAL LICENSING
The Company records revenue from foreign sources through a combination
of sales generated from the Company's wholly owned operations in Canada,
the United Kingdom and Russia, and from royalty income through a network of
independent licensees and distributors. The Company's owned operations
include Hush Puppies UK, Ltd., Merrell Europe Ltd., Hush Puppies Canada and
Wolverine Russia, Inc., which provides operational support, marketing
assistance and consulting services to promote the sale of both HUSH
PUPPIES[REGISTERED] and CATERPILLAR[REGISTERED] brand footwear in Russia.
The Company's owned operations are located in markets where the Company
believes it can gain a strategic advantage.
The Company derives royalty income from sales of Company footwear
bearing the HUSH PUPPIES[REGISTERED], WOLVERINE[REGISTERED],
BATES[REGISTERED], HY-TEST[REGISTERED] and other trademarks by independent
distributors and licensees. The Company also derives royalty income from
sales of footwear bearing the CATERPILLAR[REGISTERED], COLEMAN[REGISTERED]
and HARLEY-DAVIDSON[REGISTERED] trademarks through foreign distributors.
Licensing and distributing enables the Company to develop international
markets without the capital commitment required to maintain inventories or
fund localized marketing programs.
In fiscal 1997, the Company's wholly owned foreign operations,
together with the Company's foreign licensees and distributors sold an
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estimated 18 million pairs of footwear, an increase from approximately 15
million pairs sold in fiscal 1996.
The Company continues to develop a global network of licensees and
distributors to market its footwear brands. The Company assists in
designing products that are appropriate to each foreign market but are
consistent with the global brand position. The licensees and distributors
then purchase goods from either the Company or authorized third-party
manufacturers pursuant to a distribution agreement or manufacture branded
products consistent with Company standards pursuant to a license agreement.
Each distributor and licensee is responsible for independently marketing
and distributing Company branded products in their respective territories,
with general oversight provided by the Company.
MANUFACTURING AND SOURCING.
Although approximately two-thirds of the Company's product line is
purchased or sourced from third parties, the remainder is produced at
Company-owned facilities. The Company's footwear is manufactured in
several domestic and certain related foreign facilities located in
Michigan, Arkansas, Missouri, New York, the Caribbean Basin, Costa Rica,
Mexico and Canada. The Company has implemented a "twin plant" concept
whereby a majority of the labor intensive cutting and fitting construction
of the "upper" portion of shoes and boots is performed at the Company's
facilities in the Caribbean Basin, Costa Rica and Mexico and the technology
intensive construction, or "bottoming," is performed at the Company's
domestic and Canadian facilities.
The Company has retooled most of its factories since the beginning of
fiscal 1993, giving each facility the flexibility to produce a variety of
footwear, and has departed from the industry's historic practice of
dedicating a given facility to production of specific footwear products.
The traditional dedication of facilities at times caused internal conflicts
in manufacturing capacity and did not permit the Company to quickly respond
to changes in market preference and demand. The Company now produces
various products for both men and women in most of its domestic and
international facilities, providing greater flexibility for the Company to
respond to both market and customer-specific demand.
The Company sources certain footwear from a variety of foreign
manufacturing facilities in the Asia-Pacific region, Central and South
America and Europe. The Company maintains technical offices in the
Asia-Pacific region and in Europe to facilitate the sourcing and importation
of quality footwear. The Company has established guidelines for each of its
third-party manufacturers in order to monitor product quality, labor
practices and financial viability. In addition, Wolverine has developed
its "Engagement Criteria for Partners & Sources" to ensure that its
domestic and foreign manufacturers, licensees and distributors use ethical
business standards, comply with all applicable health and safety laws and
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regulations, are committed to environmentally safe practices, treat
employees fairly with respect to wages, benefits and working conditions,
and do not use child or prison labor.
The Company's domestic manufacturing operations allow the Company to
(i) reduce its lead time, enabling it to quickly respond to market demand
and reduce inventory risk, (ii) lower freight and shipping costs, and (iii)
closely monitor product quality. The Company's foreign manufacturing
strategy allows the Company to (i) benefit from lower labor costs, (ii)
source the highest quality raw materials from around the world, and (iii)
avoid additional capital expenditures necessary for factories and
equipment. The Company believes that its overall global manufacturing
strategy gives the Company maximum flexibility to properly balance the need
for timely shipments, high quality products and competitive pricing.
The Company owns and operates a pigskin tannery, which is one of the
premier tanners of quality leather for the footwear industry. The Company
and its licensees receive virtually all of their pigskin requirements from
the tannery. The Company believes the tannery provides a strategic
advantage for the Company by producing leather using proprietary technology
at prices below those available from other sources. The continued
operation of this tannery is important to the Company's competitive
position in the footwear industry.
The Company's principal required raw material is quality leather,
which it purchases primarily from a select group of domestic suppliers,
including the Company's tannery. The global availability of shearling and
cowhide leather eliminates any reliance by the Company upon a sole
supplier. The Company currently purchases the vast majority of the raw
pigskins used in a significant portion of its tannery operations from two
domestic sources. One of these sources has been a reliable and consistent
supplier for over 30 years. The Company purchases all of its other raw
materials and component parts from a variety of sources, none of which is
believed by the Company to be a dominant supplier.
The Company is subject to the normal risks of doing business abroad
due to its international operations, including the risk of expropriation,
acts of war, political disturbances and similar events, the imposition of
trade barriers, quotas and tariffs and loss of most favored nation trading
status. With respect to international sourcing activities, management
believes that over a period of time, it could arrange adequate alternative
sources of supply for the products currently obtained from its foreign
suppliers. A sustained disruption of such sources of supply could,
particularly on a short-term basis, have an adverse impact on the Company's
operations.
TRADEMARKS, LICENSES AND PATENTS.
The Company holds a number of registered and common law trademarks
that identify its products. The trademarks that are most widely used by
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the Company include HUSH PUPPIES[REGISTERED], WOLVERINE[REGISTERED],
BATES[REGISTERED], DURASHOCKS[REGISTERED], BOUNCE AND DESIGN[REGISTERED],
COMFORT CURVE[REGISTERED], TRU-STITCH[REGISTERED], SIOUX MOX[REGISTERED],
HY-TEST[REGISTERED] and MERRELL[REGISTERED]. The Company is licensed to
manufacture and market footwear throughout the world under the
COLEMAN[REGISTERED] trademark pursuant to an agreement that extends through
December 31, 2002, with an automatic five year renewal, subject to the
Company achieving certain sales volumes. The Company is also licensed to
manufacture and market footwear throughout the world under the
CATERPILLAR[REGISTERED] and CAT DESIGN[REGISTERED] trademarks pursuant to
an agreement that extends through December 31, 2002. In addition, pursuant
to a long-term agreement, the Company is licensed to manufacture and
market footwear throughout most countries of the world under the
HARLEY-DAVIDSON[REGISTERED] trademark. Pigskin leather produced by the
Company is sold under the trademarks WOLVERINE LEATHERS[REGISTERED] and
ALL SEASON WEATHER LEATHERS<Trademark>.
The Company believes that its products are identified by consumers by
its trademarks and that its trademarks are valuable assets. The Company is
not aware of any infringing uses or any prior claims of ownership of its
trademarks that could materially affect its current business. It is the
policy of the Company to pursue registration of its primary marks whenever
possible and to vigorously defend its trademarks against infringement or
other threats to the greatest extent practicable under the laws of the
United States and other countries. The Company also holds several patents,
copyrights and various other proprietary rights. The Company protects all
of its proprietary rights to the greatest extent practicable under
applicable law.
ORDER BACKLOG.
At March 20, 1998, the Company had a backlog of orders of
approximately $168 million compared with a backlog of approximately
$141 million at March 21, 1997. While orders in backlog are subject to
cancellation by customers, the Company has not experienced significant
cancellation of orders in the past and the Company expects that
substantially all of the orders will be shipped in fiscal 1998. The
backlog at a particular time is affected by a number of factors, including
seasonality and the scheduling of the manufacture and shipment of products.
Accordingly, a comparison of backlog from period to period is not
necessarily meaningful and may not be indicative of eventual actual
shipments.
COMPETITION.
The Company's footwear lines are manufactured and marketed in a highly
competitive environment. The Company competes with numerous manufacturers
(domestic and foreign) and importers of footwear, some of which are larger
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and have greater resources than the Company. The Company's major
competitors for its brands of footwear are located in the United States.
The Company has at least ten major competitors in connection with the sale
of its work shoes and boots, at least eight major competitors in connection
with the sale of its sport boots, and at least fifteen major competitors in
connection with the sale of its casual and dress shoes. Product
performance and quality, including technological improvements, product
identity, competitive pricing, and the ability to adapt to style changes
are all important elements of competition in the footwear markets served by
the Company. The footwear industry in general is subject to changes in
consumer preferences. The Company strives to meet competition and maintain
its competitive position through promotion of brand awareness,
manufacturing efficiencies, its tannery operations, and the style, comfort
and value of its products. Future sales by the Company will be affected by
its continued ability to sell its products at competitive prices and to
meet shifts in consumer preferences.
Because of the lack of reliable published statistics, the Company is
unable to state with certainty its position in the footwear industry. The
market share in the footwear industry is highly fragmented and no one
company has a dominant market position; however, the Company believes it is
among the largest domestic manufacturers of footwear.
RESEARCH AND DEVELOPMENT.
In addition to normal and recurring product development, design and
styling activities, the Company engages in research and development related
to new and improved materials for use in its footwear and other products
and in the development and adaptation of new production techniques. The
Company's continuing relationship with the Biomechanics Evaluation
Laboratory at Michigan State University has led to specific biomechanical
design concepts, such as BOUNCE[REGISTERED], DURASHOCKS[REGISTERED] and
HIDDEN TRACKS[REGISTERED] comfort technologies, that have been incorporated
in the Company's footwear. The Company also maintains a footwear design
center in Italy to develop contemporary styling for the Company and its
international licensees and distributors. While the Company continues to
be a leading developer of footwear innovations, research and development
costs do not represent a material portion of operating expenses.
ENVIRONMENTAL MATTERS.
Compliance with federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment
have not had, nor are they expected to have, any material effect on the
capital expenditures, earnings or competitive position of the Company. The
Company uses and generates, and in the past has used and generated, certain
substances and wastes that are regulated or may be deemed hazardous under
certain federal, state and local regulations with respect to the
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environment. The Company from time to time works with federal, state and
local agencies to resolve cleanup issues at various waste sites or other
regulatory issues.
EMPLOYEES.
As of January 3, 1998, the Company had approximately 6,696 domestic
and foreign production, office and sales employees. Approximately 1,801
employees were covered by eight union contracts expiring at various dates
through February 11, 2002. The Company has experienced no work stoppages
since 1990. The Company presently considers its employee relations to be
good.
ITEM 2. PROPERTIES.
The Company owned or leased the following offices and manufacturing
facilities as of January 3, 1998:
<TABLE>
<CAPTION>
OWNED SQUARE
LOCATION TYPE OF FACILITY LEASED FOOTAGE
<S> <C> <C> <C>
Rockford, MI Administration/Sales Owned 193,300
Jonesboro, AR Administration/Sales Leased 5,680
Malone, NY Administration/Sales Owned 11,718
New York, NY Administration/Sales Leased 3,811
Montecatine Terme, Italy Administration/Sales Leased 2,800
St. Laurent, Quebec, Canada Administration/Sales Leased 2,800
Saint-Sauveur-des-Monts, Quebec, Canada Administration/Sales Leased 1,500
Taipei, Taiwan Administration/Sales Leased 2,800
Chungil, Taiwan Administration/Sales Leased 2,800
Leicechire, England, United Kingdom Administration/Sales Leased 13,250
Bristol, England, United Kingdom Administration/Sales Leased 2,200
TOTAL ADMINISTRATION/SALES 242,659
Rockford, MI Tannery Owned 160,000
Des Moines, IA Procurement Owned 6,200
Dyersburg, TN Procurement Leased 12,000
Durant, OK Procurement Leased 12,900
Dennison, KS Procurement Leased 1,855
TOTAL TANNERY AND PROCUREMENT 192,955
Jonesboro, AR Manufacturing Leased 79,197
Monette, AR Manufacturing Owned 18,030
Russellville, AR Manufacturing Leased 41,808
Rockford, MI Manufacturing Owned 20,833
Rockford, MI Manufacturing Owned 19,624
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<PAGE>
Rockford, MI Manufacturing Owned 7,790
Big Rapids, MI Manufacturing Owned 77,626
Kirksville, MO Manufacturing Owned 104,000
Malone, NY Manufacturing Owned 90,664
Malone, NY Manufacturing Owned 37,596
Malone, NY Manufacturing Owned 8,100
Malone, NY Manufacturing Owned 27,125
Bombay, NY Manufacturing Owned 58,980
Monterrey, MX Manufacturing Leased 60,000
Aquadilla, Puerto Rico Manufacturing Leased 62,100
San Pedro, Dominican Republic Manufacturing Leased 65,111
Santo Domingo, Dominican Republic Manufacturing Leased 54,332
Alexandria, Ontario, Canada Manufacturing Owned 28,000
Cartago, Costa Rica Manufacturing Leased 88,308
TOTAL MANUFACTURING 949,224
Jonesboro, AR Warehouse Leased 2,000
Jonesboro, AR Warehouse Leased 19,500
Jonesboro, AR Warehouse Owned 13,500
Jonesboro, AR Warehouse Owned 15,478
Walnut Ridge, AR Warehouse Leased 2,000
Rockford, MI Warehouse Owned 304,278
Rockford, MI Warehouse Owned 93,140
Rockford, MI Warehouse Owned 75,000
Grand Rapids, MI Warehouse Leased 20,000
Cedar Springs, MI Warehouse Leased 32,900
Cedar Springs, MI Warehouse Leased 230,000
Big Rapids, MI Warehouse Owned 39,800
Howard City, MI Warehouse Leased 350,000
Malone, NY Warehouse Owned 115,211
Bombay, NY Warehouse Owned 26,000
St. Laurent, Quebec, Canada Warehouse Leased 33,000
TOTAL WAREHOUSE 1,371,807
</TABLE>
The Company believes that its current facilities are suitable and
adequate to meet its anticipated needs for the next twelve months.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in litigation and various legal matters
arising in the normal course of business, including certain environmental
compliance activities. The Company has considered facts that have been
ascertained and opinions of counsel handling these matters, and does not
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<PAGE>
believe the ultimate resolution of such proceedings will have a material
adverse effect on the Company's financial condition or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the
fiscal year covered by this report.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table lists the names and ages of the Executive Officers
of the Company as of the date of this Annual Report on Form 10-K, and the
positions presently held with the Company. The information provided below
the table lists the business experience of each such Executive Officer
during the past five years. All Executive Officers serve at the pleasure
of the Board of Directors of the Company, or if not appointed by the Board
of Directors, they serve at the pleasure of management.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD WITH THE COMPANY
---- --- -------------------------------
<S> <C> <C> <C>
Gary M. Acromite 41 Vice President and Chief
Information Officer
Geoffrey B. Bloom 56 Chief Executive Officer and
Chairman of the Board
Steven M. Duffy 45 Executive Vice President and
President, Global Operations
Group
V. Dean Estes 48 Vice President and President,
Wolverine Footwear Group
Stephen L. Gulis, Jr. 40 Executive Vice President, Chief Financial
Officer and Treasurer
Blake W. Krueger 44 Executive Vice President, General Counsel
and Secretary
Thomas P. Mundt 48 Vice President of Strategic Planning and
Corporate Communications
Timothy J. O'Donovan 52 Chief Operating Officer and President
Nicholas P. Ottenwess 35 Corporate Controller
Robert J. Sedrowski 48 Vice President of Human Resources
James D. Zwiers 30 Associate General Counsel and Assistant
Secretary
</TABLE>
Gary M. Acromite has served the Company as Vice President and Chief
Information Officer since February 1998. From 1995 to February 1998 he
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<PAGE>
served the Company as Chief Information Officer. From 1982 to 1995 he
served in various information services positions with Honeywell, Inc. and
most recently was Director of Information Services.
Geoffrey B. Bloom has served the Company as Chief Executive Officer
and Chairman of the Board since April 1996. From 1993 to 1996 he served
the Company as President and Chief Executive Officer. From 1987 to 1993 he
served the Company as President and Chief Operating Officer.
Steven M. Duffy has served the Company as an Executive Vice President
since April 1996 and is President of the Company's Global Operations Group.
From 1993 to 1996 he served the Company as a Vice President. From 1989 to
April 1993 he served the Company in various senior manufacturing positions.
V. Dean Estes has served the Company as a Vice President since 1995.
Mr. Estes is also President of the Wolverine Footwear Group. Since he
joined the Company in 1975, Mr. Estes has served in various positions
relating to the sales, marketing and product development functions of the
Company's work boot and shoe and related businesses.
Stephen L. Gulis, Jr., has served the Company as Executive Vice
President, Chief Financial Officer and Treasurer since April 1996. From
1994 to April 1996 he served the Company as Vice President and Chief
Financial Officer. From 1993 to 1994 he served the Company as Vice
President of Finance and Corporate Controller, and from 1986 to 1993 he was
the Vice President of Administration and Control for The Hush Puppies
Company.
Blake W. Krueger has served the Company as Executive Vice President,
General Counsel and Secretary since April 1996. From 1993 to April 1996 he
served the Company as General Counsel and Secretary. From 1985 to 1996 he
was a partner of the law firm of Warner Norcross & Judd LLP.
Thomas P. Mundt has served the Company as Vice President of Strategic
Planning and Corporate Communications since April 1996. From December 1993
to April 1996, he served the Company as Vice President of Strategic
Planning and Treasurer. From 1988 to 1993 he served in various financial
and planning positions at Sears Roebuck & Co., including Vice President
Planning, Coldwell Banker's Real Estate Group and Director of Corporate
Planning for Sears Roebuck & Co.
Timothy J. O'Donovan has served the Company as Chief Operating Officer
and President since April 1996. From 1982 to April 1996 he served the
Company as Executive Vice President.
Nicholas P. Ottenwess has served as Corporate Controller of the Company
since September 1997. From 1993 to September 1997 he served as Vice President
of Finance & Administration for The Hush Puppies Company.
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<PAGE>
Robert J. Sedrowski has served the Company as Vice President of Human
Resources since October 1993. From 1990 to 1993 he served as Director of
Human Resources for the Company.
James D. Zwiers has served the Company as Associate General Counsel
and Assistant Secretary since January 1998. From 1995 to 1998 he was an
attorney with the law firm of Warner Norcross & Judd LLP. From 1992 to
1995 he attended the University of Michigan Law School. From 1990 to 1992
he was a Certified Public Accountant at BDO Siedman LLP.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Wolverine World Wide, Inc. common stock is traded on the New York
Stock Exchange and the Pacific Exchange, Inc. under the symbol "WWW." The
following table shows the high and low sales prices by calendar quarter for
1997 and 1996 as reported on the New York Stock Exchange. The prices shown
below have been retroactively adjusted to reflect the three-for-two stock
splits announced in April 1997 and July 1996. The number of stockholders of
record of common stock on March 2, 1998, was 1,992.
<TABLE>
<CAPTION>
1997 1996
---- ----
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C> <C>
1st quarter $ 26 1/4 $ 18 9/16 $ 13 3/8 $ 11 3/16
2nd quarter 27 5/8 22 11/16 15 1/16 13 1/16
3rd quarter 31 1/8 21 5/8 17 3/8 14 15/16
4th quarter 26 3/8 19 7/16 19 5/16 17 1/8
</TABLE>
<TABLE>
CASH DIVIDENDS DECLARED PER SHARE:
<CAPTION>
1997 1996
---- ----
<S> <C> <C> <C>
1st quarter $ .0217 $ .0178
2nd quarter .0217 .0178
3rd quarter .0217 .0178
4th quarter .0217 .0178
</TABLE>
Cash dividends declared per share for 1997 and 1996 have been
retroactively adjusted to reflect the three-for-two stock splits announced in
April 1997 and July 1996. Dividends of $.0275 were declared for the first
quarter of fiscal 1998.
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ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
FIVE-YEAR OPERATING AND FINANCIAL SUMMARY <F1>
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales and other
operating income $ 665,125 $ 511,029 $ 413,957 $ 387,534 $ 333,143
Net earnings 41,539 32,856 24,067 16,598 11,492
Per share of common stock:
Net earnings<F2><F3>:
Basic $ 1.00 $ .81 $ .66 $ .48 $ .35
Diluted .96 .76 .62 .45 .31
Cash dividends<F3><F4> .09 .07 .06 .05 .03
FINANCIAL POSITION AT YEAR END
Total assets $ 449,663 $ 361,598 $ 283,554 $ 231,582 $ 205,112
Long-term debt 92,264 41,309 30,678 43,786 49,645
</TABLE>
[FN]
NOTES TO FIVE-YEAR OPERATING AND FINANCIAL SUMMARY
<F1> This summary should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto, which are
attached as Appendix A to this Form 10-K.
<F2> Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the year after adjustment
for nonvested common stock. Diluted earnings per share are based on
the weighted average number of shares of common stock outstanding
during the year and the assumed exercise of dilutive stock options.
<F3> On April 17, 1997, July 11, 1996, April 19, 1995, and March 10, 1994,
the Company announced three-for-two stock splits on shares of common
stock outstanding at May 2, 1997, July 26, 1996, May 1, 1995, and
March 21, 1994, respectively. All share and per share data has been
retroactively adjusted for the increased shares resulting from these
stock splits.
<F4> Cash dividends per share represent the rates paid by the Company on
the shares outstanding.
</FN>
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OPERATIONS.
RESULTS OF OPERATIONS - 1997 COMPARED TO 1996
Net sales and other operating income increased 30.2% to $665.1 million
during 1997 from $511.0 million in 1996. The Hush Puppies Company had a
$67.5 million (33.7%) increase in 1997 net sales, while the Wolverine
Footwear Group contributed $42.9 million (24.4%) of additional sales in
1997 as compared to 1996. The CATERPILLAR[REGISTERED] Footwear Group
continued its strong growth rate showing a $24.9 million (63.7%) increase
in 1997 net sales over 1996. The Wolverine Leathers Division recognized a
$14.5 million (56.1%) net sales improvement in 1997 over 1996. Sales of
the Wolverine Slipper Group were flat for 1997 as compared to the prior
year.
The Hush Puppies North American wholesale operations' net sales
increased $21.8 million (16.4%) over the 1996 level as a result of the
continued popularity of the HUSH PUPPIES[REGISTERED] Classics product line.
Net sales and other operating income for the Hush Puppies International
Division increased $1.3 million (12.1%) in 1997 over 1996 levels,
reflecting solid growth rates throughout the world. The Hush Puppies
Retail Division's net sales increased $6.1 million (20.2%) in 1997 with
same-store net sales improving 7.9%. Hush Puppies (U.K.) Ltd., which was
acquired at the end of the third quarter of 1996, had a $36.4 million
increase over its four months of 1996 operations.
The Wolverine Footwear Group continued its strong performance in 1997
as the Wolverine Boots and Shoes Division reported a $22.8 million (19.0%)
increase in net sales and other operating income over 1996.
HY-TEST[REGISTERED] Boots and Shoes, which was acquired near the end of the
first quarter of 1996, had a $12.1 million (49.4%) increase in 1997 net
sales over its nine months of 1996 operations. BATES[REGISTERED] footwear
net sales and other operating income improved $4.3 million (14.8%) in 1997
over 1996 reflecting increased penetration into military, uniform and
export markets. The MERRELL[REGISTERED] outdoor footwear business was
acquired in the fourth quarter of 1997 and contributed marginally to net
sales and other operating income.
The CATERPILLAR[REGISTERED] Footwear Group recognized a $24.9 million
(63.7%) increase in 1997 net sales and other operating income over 1996.
Domestically, the CAT[REGISTERED] Footwear brand continues to gain momentum
as approximately 800 new specialty and department store customers were
added in 1997. Internationally, the brand continues to show solid growth
gains in the United Kingdom and Europe and has accelerated its growth in
the Pacific Rim and Latin American regions.
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<PAGE>
The Wolverine Slipper Group's net sales and other operating income was
1.0% above the level recorded in 1996. Higher sales of HUSH
PUPPIES[REGISTERED] branded slippers offset lower sales of private branded
products in 1997.
The Wolverine Leathers Division recorded a significant net sales
improvement of $14.5 million (56.1%) in 1997 with both licensee and
domestic accounts contributing to the increase. The 1997 performance
represented the fourth consecutive year of net sales increases for the
division. Strong demand for performance leather and sueded products
continues to drive volume increases.
Gross margin as a percentage of net sales and other operating income
increased to 30.7% in 1997 from 30.5% in 1996. Gross margin dollars
increased $48.3 million (31.0%) in 1997 to $204.1 million as compared to
$155.8 million in 1996. The Hush Puppies Company reported a gross margin
improvement of 4.3 percentage points in 1997 based primarily on results of
the North American Wholesale operations where initial pricing improvements
and manufacturing and sourcing efficiencies were achieved. The 1997
improvement in gross margin percentage by The Hush Puppies Company was
tempered to some degree by the higher level of operations of Hush Puppies
(U.K.) Ltd., which operates at lower gross margin levels than comparable
U.S. operations. The Wolverine and CATERPILLAR[REGISTERED] Footwear Groups
experienced slightly lower gross margin percentages in 1997 as compared to
1996 as a result of initial investments required to position recent
acquisitions and new products in both domestic and international markets.
Additionally, gross margin gains of the Wolverine Leathers Division were
offset by lower gross margins of the Wolverine Slipper Group in 1997. Both
of these businesses operate at comparable gross margin percentages that are
lower than those experienced by the Company's wholesale footwear
operations.
Selling and administrative expenses as a percentage of net sales and
other operating income decreased to 20.6% in 1997 from 21.0% in 1996 as
these costs increased $29.7 million (27.6%) to $137.2 million in 1997 from
$107.5 million in 1996. Excluding the 1997 acquisition of the
MERRELL[REGISTERED] outdoor footwear business and the 1996 acquisitions of
HY-TEST[REGISTERED] and Hush Puppies (U.K.) Ltd., selling, advertising and
distribution costs increased $15.4 million or 21.4% during 1997. The
reduction in selling and administrative expenses as a percentage of net
sales and other operating income occurred despite increased investments in
branded marketing initiatives, significant information system upgrades,
higher profit sharing provisions and costs associated with employee
performance incentive plans.
Interest expense of $5.5 million was $2.4 million greater in 1997 than
the 1996 level of $3.1 million. The increase in interest expense for 1997
reflects additional borrowings on the revolving credit facility over the
1996 level resulting from the 1997 acquisition of the MERRELL[REGISTERED]
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<PAGE>
outdoor footwear business and increased working capital requirements
associated with higher sales volume. Additionally, proceeds from the
November 1995 equity offering provided cash which resulted in lower average
borrowings for the first quarter of 1996.
On September 24, 1997, the Company moved to strengthen its domestic
footwear businesses by closing three Arkansas women's shoe factories and
converting a New York slipper factory into a warehouse. These actions
resulted in a restructuring charge of $3.5 million in 1997. The
restructuring balanced the sourcing mix for HUSH PUPPIES[REGISTERED]
women's shoes and the Wolverine Slipper Group as more products will be
sourced internationally in future years.
The 1997 effective tax rate of 32.0% increased from 31.1% in 1996 as a
result of earnings from certain foreign subsidiaries, which are taxed
generally at lower rates, becoming a smaller percentage of total
consolidated earnings.
Net earnings of $41.5 million for 1997 reflect a 26.4% increase over
net earnings of $32.9 million reported for 1996. Diluted earnings per
share for 1997 were $0.96 compared to $0.76 per share in 1996. Prior to the
one-time after-tax restructuring charge of $2.3 million, diluted earnings
per share were $1.01 for 1997. Basic earnings per share of $1.00 and $0.81
were reported for 1997 and 1996, respectively. Increased net earnings are
primarily a result of the items noted above.
RESULTS OF OPERATIONS--1996 COMPARED TO 1995
Net sales and other operating income increased 23.4% to $511.0 million
during 1996 from $414.0 million in 1995. The Wolverine Footwear Group
continued its strong performance, accounting for $37.9 million (9.2%) of
the increase in consolidated net sales as sales of its products increased
by 21.3% over 1995. The Hush Puppies Wholesale Division reported a $19.2
million increase in net sales over 1995, reflecting the popularity of the
HUSH PUPPIES[REGISTERED] Classics product line. The Wolverine Leathers
Division experienced sales increases showing a $3.5 million (15.6%)
improvement over 1995. Sales to the United States Department of Defense
increased by $13.5 million in 1996. Sales of the Wolverine Slipper Group
declined $4.6 million (10.0%) in 1996 when compared to 1995. Sales for the
Hush Puppies Retail Division remained flat for 1996.
The Wolverine Footwear Group reported a $37.9 million (21.3%) net
sales improvement over 1995, its fifth consecutive year of over 20%
increases. CATERPILLAR[REGISTERED] brand was successful with a spring
product launch into casuals boasting a 64.2% revenue increase in domestic
and international markets. HY-TEST[REGISTERED] Boots and Shoes proved to
be a strong addition to the group adding $24.6 million to net sales in 1996
since the date of acquisition. BATES[REGISTERED] footwear sales improved
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<PAGE>
11.0% as the civilian market continued to grow and military shipments
increased. WOLVERINE[REGISTERED] brand shipments slipped 4.7% due to
reduced demand during the first half of 1996 as the work boot market was
oversaturated with product.
The Hush Puppies Wholesale Division increased sales 18.9% over the
1995 levels. Strong second half shipments of the HUSH PUPPIES[REGISTERED]
Classics product line helped contribute to the increase. Net sales and
other operating income for the Hush Puppies International Division
increased $.4 million (4.0%) in 1996 over 1995 levels, reflecting the
growth of established programs throughout the world. Additionally, the
Hush Puppies Retail Division same-store sales were up $.4 million (2.1%).
Hush Puppies (U.K.) Ltd. reported $26.4 million in 1996 net sales since its
acquisition in the third quarter.
Net sales for the Wolverine Slipper Group were $4.6 million (10.0%)
below the levels posted in 1995, reflecting strong competitive pressures
and decreases in catalogue house orders. Reduced orders for traditional
private label products were offset by the new HUSH PUPPIES[REGISTERED]
branded slipper business, which resulted in shipments of approximately $4.0
million in its first year.
The Wolverine Leathers Division recorded a significant revenue
improvement of $3.5 million (15.6%) in 1996. This performance represented
the third consecutive year of revenue increases for the division and its
most successful year in nearly a decade. This growth was due in part to
increased demand for premium satin sueded products which was partially
offset by a reduction in procurement revenues totaling $1.3 million.
Gross margin increased $32.3 million (26.1%) in 1996 to $155.8 million
as compared to $123.5 million in 1995 and as a percentage of net sales and
other operating income increased to 30.5% in 1996 from 29.8% in 1995.
Improved margins were recorded in both the Hush Puppies Wholesale Division
($8.7 million) and the Wolverine Footwear Group ($21.6 million) through
improved initial pricing margins, increased licensing revenues and
manufacturing and sourcing efficiencies. The Wolverine Leathers Division
continued its strong performance reporting a $2.3 million gross margin
increase achieved by a more favorable product mix to higher margin
products. The Hush Puppies Retail Division also contributed to the
improved margins with a $1.8 million increase in 1996 as inventory
management programs improved initial turnover which reduced reliance on
promotional programs and markdown allowances.
Selling and administrative expenses of $107.5 million in 1996
increased $21.5 million (25.0%) from $86.0 million in 1995, and as a
percentage of net sales increased to 21.0% in 1996 from 20.8% in 1995. The
1996 acquisitions of HY-TEST[REGISTERED] and Hush Puppies (U.K.) Ltd.
accounted for $6.4 million of the increase. Selling, administrative and
distribution costs associated with the higher sales volume, combined with a
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<PAGE>
$3.5 million increase in advertising and promotional investments in the
Wolverine Footwear Group and The Hush Puppies Company, increased costs by
$11.1 million in 1996 over the prior year. Other drivers of general and
administrative costs were increases in profit sharing provisions,
information systems investments and costs associated with senior executive
stock incentive and retirement programs.
Interest expense of $3.1 million was $1.6 million (33.7%) less than
the 1995 level of $4.7 million as a result of lower average borrowings
throughout the year. The lower borrowing levels were primarily
attributable to a reduction in the balance of the Company's revolving
credit facility with funds generated by the November 1995 equity offering.
Interest income of $1.5 million increased $0.5 million in 1996 over
1995. The increase was generated by short-term investing of the available
funds from the equity offering during the first quarter of 1996.
The 1996 effective tax rate of 31.1% increased from 29.5% in 1995 as a
result of earnings from certain foreign subsidiaries, which are taxed
generally at lower rates, becoming a smaller percentage of total
consolidated earnings.
Net earnings of $32.9 million for 1996 reflect a 36.5% increase over
net earnings of $24.1 million reported for 1995. Diluted earnings per
share for 1996 were $0.76 compared to $0.62 per share in 1995. Basic
earnings per share of $0.81 and $0.66 were reported for 1996 and 1995,
respectively. Increased net earnings are primarily a result of the items
noted above.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $0.2 million in 1997
compared to net cash provided by operating activities of $17.4 million in
1996. Cash of $52.6 million (34.1% of the net sales and other operating
income increase) in 1997 and $22.0 million (22.7% of the net sales and
other operating income increase) in 1996 was used to fund working capital
requirements. Accounts receivable of $138.1 million at January 3, 1998,
reflect a $12.1 million (9.6%) increase over the $126.0 million balance at
December 28, 1996. Inventories of $143.8 million at January 3, 1998,
reflect a $26.4 million (22.5%) increase over the $117.4 million balance at
December 28, 1996. The 1997 acquisition of the assets of the
MERRELL[REGISTERED] outdoor footwear business contributed 4.7% and 4.0% of
the increases in accounts receivable and inventories, respectively. The
Company's order backlog was approximately 20% higher at January 3, 1998, as
compared to the previous year, supporting the need for increased
inventories to meet anticipated future demand. Accounts payable of $24.3
million at January 3, 1998, reflects a $17.0 million (41.1%) decrease over
the $41.3 million balance at December 28, 1996. The decrease in accounts
payable is primarily attributable to the timing of 1997 year end payments
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<PAGE>
compared to 1996. The 1996 accounts payable balance also included
significant inventory purchases at the Hush Puppies (U.K.) Ltd. operation
near year end.
Additions to property, plant and equipment of $35.4 million in 1997
compare to $20.6 million reported in 1996. The majority of these
expenditures were related to the construction of a new corporate business
center, modernization of existing office buildings, replacement of legacy
information systems, expansion of warehouse facilities and purchases of
manufacturing equipment necessary to upgrade the Company's footwear and
leather manufacturing facilities. Depreciation and amortization of $9.2
million in 1997 compares to $7.1 million in 1996. This increase was a
result of the capital investments noted above and the amortization of
goodwill related to the 1997 and 1996 acquisitions discussed below.
The Company maintains short-term borrowing and commercial
letter-of-credit facilities of $58.4 million, of which $39.3 million and
$29.5 million were outstanding at the end of 1997 and 1996, respectively.
Long-term debt of $94.2 million at the end of 1997 increased $52.9 million
from the $41.3 million balance at the end of 1996. The increase in debt
primarily resulted from seasonal working capital requirements of the
Company, investments in capital improvements and the purchase of the
MERRELL[REGISTERED] outdoor footwear business.
It is expected that continued growth of the Company will require
increases in capital funding over the next several years. In the first
quarter of 1998, the Company renegotiated its long-term revolving debt
agreement and increased the amount available under its domestic credit
facilities from $100 million to $150 million. In addition, the Company's
subsidiary in the United Kingdom has a $17.2 million, three-year variable
rate revolving credit agreement expiring in January 2000 to support its
working capital requirements. The combination of credit facilities and
cash flows from operations is expected to be sufficient to meet future
capital needs.
The Company paid dividends of $3.7 million in 1997, or $.09 per share,
which reflects a 24.0% increase over the $3.0 million, or $0.07 per share
paid in 1996. Additionally, shares issued under stock incentive plans
provided cash of $8.9 million in 1997 compared to $3.7 million during 1996.
On October 17, 1997, the Company completed the purchase of
substantially all of the assets of the MERRELL[REGISTERED] outdoor footwear
business from the Outdoor Division of Sports Holdings Corp. The purchase
price of this acquisition was $16.3 million of which $15.8 million was paid
in cash in 1997.
During 1996, the Company completed two acquisitions, the work, safety
and occupational footwear business of Hy-Test, Inc. from The Florsheim Shoe
Company and the rights to and certain assets of the HUSH PUPPIES[REGISTERED]
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<PAGE>
wholesale shoe business in the United Kingdom and Ireland from British Shoe
Corporation, a subsidiary of Sears Plc. The combined purchase price of these
acquisitions was $31.5 million of which $29.2 million was paid in cash in
1996. The Company has an active program to evaluate strategic business
acquisitions on a global basis and may, from time to time, make additional
acquisitions.
The current ratio at year-end was 4.7 to 1.0 in 1997 compared with 3.8
to 1.0 in 1996. The Company's total debt to total capital ratio increased
to .26 to 1.0 in 1997 from .15 to 1.0 in 1996.
IMPACT OF YEAR 2000
The Company is currently in the process of addressing a problem that
is facing all users of automated information systems. The "Year 2000 Issue"
is the result of computer programs being written using two digits rather
than four to define the applicable year. Any of the Company's computer
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. This situation could result in
a system failure or miscalculations causing disruptions to operations,
including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
Based on a recent assessment, the Company determined that it will be
required to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter. This modification and replacement process will be implemented
by the Company's Information Systems team and will be supervised primarily
by an Executive Oversight Committee, consisting of internal executive
management and various other third parties. The Company presently believes
that with modifications to existing software and conversions to new
software, the Year 2000 Issue will not pose significant operational
problems for its computer systems. However, if such modifications and
conversions are not made, or are not completed in a timely manner, the Year
2000 Issue could have a material impact on the operations of the Company.
The Company is in the process of initiating formal communications with
significant suppliers and customers to determine the extent to which the
Company may be vulnerable to a failure by any of these third parties to
remediate their own Year 2000 issues. The Company's total Year 2000
project costs include the estimated costs and time associated with
anticipated third party Year 2000 issues based on presently available
information. However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will be timely converted and
will not have an adverse effect on the Company's operations. The Company
does not sell technology-based products and believes it has no exposure to
contingencies related to the Year 2000 Issue in this regard.
-26-
<PAGE>
The Company will utilize both internal and external resources to
reprogram, or replace, and test its information systems software for Year
2000 modifications. A significant portion of the Company's Year 2000 issues
will be resolved by the installation of Year 2000 compliant systems. The
new systems are designed to handle the Company's information systems for
order processing, warehousing and finance on a fully integrated enterprise-
wide basis (the "Base System"). Manufacturing systems, which are generally
Year 2000 compliant, will not be replaced. Implementation of the Base
System began in 1997 primarily in response to business demand and growth,
although implementation of the Base System will replace software that is
not Year 2000 compliant as an ancillary benefit. Any remaining Year 2000
problems will be addressed through a combination of reprogramming and
replacement. The Company anticipates completing the Year 2000 project no
later than June 30, 1999, which is prior to any anticipated impact on its
operating systems.
The Company currently estimates that total costs for implementing the
new Base System will approximate $20 million and that total costs for
additional reprogramming, replacement and other Year 2000 compliance issues
not covered by implementation of the Base System will approximate $2
million. To the extent these costs represent investment in new or upgraded
technology with definable value lasting beyond 2000 and Year 2000
compliance is merely an ancillary benefit, the Company will capitalize and
depreciate such assets over their estimated useful lives. To the extent
that Year 2000 costs do not qualify as capital investments, the Company
will expense such costs as incurred.
The costs of Year 2000 modifications and the date on which the Company
believes it will complete the project are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events, including the continued availability of certain resources, third
party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those anticipated. Specific factors that might cause
such material differences include, but are not limited to, the availability
and cost of personnel trained in this area, supplier compliance and
contingency actions, and similar uncertainties.
INFLATION
Inflation has not had a significant impact on the Company over the
past three years nor is it expected to have a significant impact in the
foreseeable future. The Company continuously attempts to minimize the
effect of inflation through cost reductions and improved productivity.
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<PAGE>
FORWARD-LOOKING STATEMENTS
This discussion and analysis of financial condition and results of
operations, and other sections of this Annual Report, contain forward-looking
statements that are based on management's beliefs, assumptions,
current expectations, estimates and projections about the footwear
industry, the economy, and about the Company itself. Words such as
"anticipates," "believes," "estimates," "expects," "forecasts," "intends,"
"is likely," "plans," "predicts," "projects," variations of such words and
similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions ("Future 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. Furthermore, the Company undertakes no obligation to update,
amend or clarify forward-looking statements, whether as a result of new
information, future events or otherwise.
Future Factors include, but are not limited to, uncertainties relating
to changes in demand for the Company's products; changes in consumer
preferences or spending patterns; the cost and availability of inventories,
services, labor and equipment furnished to the Company; the degree of
competition by the Company's competitors; changes in government and
regulatory policies; changes in trading policies or import and export
regulations; changes in interest rates, tax laws, duties or applicable
assessments; technological developments; and changes in domestic or
international economic conditions. These matters are representative of the
Future Factors that could cause a difference between an ultimate actual
outcome and a forward-looking statement.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable for fiscal year 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The response to this Item is set forth in Appendix A of this Annual
Report on Form 10-K and is here incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information regarding directors of the Company contained under the
captions "Board of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the definitive Proxy Statement of the Company
dated March 27, 1998, is incorporated herein by reference. The information
regarding Executive Officers is provided in the Supplemental Item following
Item 4 of Part I above.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the captions "Compensation of
Directors," "Executive Compensation," "Employment Agreements and
Termination of Employment and Change in Control Arrangements," and
"Compensation Committee Report on Executive Compensation" in the definitive
Proxy Statement of the Company dated March 27, 1998, is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the captions "Ownership of Common
Stock" and "Securities Ownership of Management" contained in the definitive
Proxy Statement of the Company dated March 27, 1998, is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information regarding certain employee loans following the caption
"Executive Compensation," under the subheading "Stock Options," and the
information contained under the captions "Compensation of Directors" and
"Certain Relationships and Related Transactions" contained in the
definitive Proxy Statement of the Company dated March 27, 1998, are
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K.
ITEM 14(A)(1). FINANCIAL STATEMENTS. Attached as Appendix A.
The following consolidated financial statements of Wolverine World
Wide, Inc. and subsidiaries are filed as a part of this report:
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<PAGE>
- Consolidated Balance Sheets as of January 3, 1998, and December
28, 1996.
- Consolidated Statements of Stockholders' Equity for the Fiscal
Years Ended January 3, 1998, December 28, 1996, and December 30,
1995.
- Consolidated Statements of Operations for the Fiscal Years Ended
January 3, 1998, December 28, 1996, and December 30, 1995.
- Consolidated Statements of Cash Flows for the Fiscal Years Ended
January 3, 1998, December 28, 1996, and December 30, 1995.
- Notes to Consolidated Financial Statements as of January 3, 1998.
- Report of Independent Auditors.
ITEM 14(a)(2). FINANCIAL STATEMENT SCHEDULES. Attached as Appendix B.
The following consolidated financial statement schedule of
Wolverine World Wide, Inc. and subsidiaries is filed as a part of this
report:
Schedule II--Valuation and qualifying accounts.
All other schedules (I, III, IV, and V) for which provision is made in
the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are
inapplicable and, therefore, have been omitted.
ITEM 14(a)(3). EXHIBITS.
The following exhibits are filed as part of this report:
EXHIBIT
NUMBER DOCUMENT
3.1 Certificate of Incorporation, as amended. Previously filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the period ended June 14, 1997. Here incorporated by reference.
3.2 Amended and Restated Bylaws. Previously filed as Exhibit 3.2 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 30, 1995. Here incorporated by reference.
4.1 Certificate of Incorporation, as amended. See Exhibit 3.1 above.
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<PAGE>
4.2 Rights Agreement dated as of April 17, 1997. Previously
filed with the Company's Form 8-A filed April 12, 1997.
Here incorporated by reference.
4.3 Credit Agreement dated as of October 11, 1996, with NBD Bank
as Agent. Previously filed as Exhibit 4.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1996. Here incorporated by reference.
4.4 Note Purchase 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 outstanding on March
2, 1998, 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.
10.1 Stock Option Plan of 1979, and amendment.<F*> Previously filed
as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended January 2, 1988. Here incorporated by
reference.
10.2 1993 Stock Incentive Plan.<F*> Previously filed as Exhibit 10(b)
to the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994. Here incorporated by reference.
10.3 1988 Stock Option Plan.<F*> Previously filed as an exhibit to the
Company's registration statement on Form S-8, filed July 21,
1988, Registration No. 33-23196. Here incorporated by reference.
10.4 Amended and Restated Directors Stock Option Plan.<F*> Previously
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994. Here incorporated by
reference.
10.5 Employees Pension Plan.<F*>
10.6 Employment Agreement dated April 27, 1993, between the Company
and Geoffrey B. Bloom.<F*> Previously filed as Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994. Here incorporated by reference.
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<PAGE>
10.7 Executive Long-Term Incentive (Three Year) Plan 1996-1998 Period.<F*>
Previously filed as Exhibit 10.7 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 28, 1996. Here
incorporated by reference.
10.8 1994 Directors' Stock Option Plan.<F*> Previously filed as Exhibit
10(aa) to the Company's Quarterly Report on Form 10-Q for the
period ended June 18, 1994. Here incorporated by reference.
10.9 Stock Option Loan Program.<F*> Previously filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1991. Here incorporated by reference.
10.10 Executive Severance Agreement.<F*>
10.11 Supplemental Executive Retirement Plan, as amended.<F*>
Previously filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended June 15, 1996.
Here incorporated by reference. An updated participant
schedule is attached as Exhibit 10.11.
10.12 1995 Stock Incentive Plan.<F*> 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.
10.13 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1994-1996.<F*> Previously filed as Exhibit
10.13 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
10.14 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1995-1997.<F*> Previously filed as Exhibit
10.14 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
10.15 Indemnification Agreements.<F*> The form of agreement was
previously filed as Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993. Here incorporated by reference. The Company has
entered into an Indemnification Agreement with each director
and executive officer.
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<PAGE>
10.16 Supplemental Retirement Benefits.<F*> Previously filed as
Exhibit 10(l) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988. Here
incorporated by reference.
10.17 Benefit Trust Agreement dated May 19, 1987, and Amendments
Number 1, 2 and 3 thereto.<F*> Previously filed as
Exhibit 10(p) to the Company's Annual Report on Form 10-K
for the fiscal year ended January 2, 1993. Here
incorporated by reference.
10.18 1996 Executive Short-Term Incentive Plan (Annual Bonus
Plan).<F*> Previously filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 30, 1995. Here incorporated by reference.
10.19 Outside Directors' Deferred Compensation Plan.<F*> Previously
filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended June 15, 1996. Here
incorporated by reference.
10.20 1984 Executive Incentive Stock Purchase Plan, and
amendment.<F*> Previously filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988. Here incorporated by reference.
10.21 Supplemental Director's Fee Agreement dated as of March 27,
1995, between the Company and Phillip D. Matthews.<F*>
Previously filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended March 25, 1995.
Here incorporated by reference.
10.22 Restricted Stock Agreement dated as of March 27, 1995,
between the Company and Phillip D. Matthews.<F*> Previously
filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended March 25, 1995. Here
incorporated by reference.
10.23 1997 Stock Incentive Plan.<F*> Previously filed as Appendix A
to the Company's Definitive Proxy Statement with respect to
the Company's Annual Meeting of Stockholders held on April
16, 1997. Here incorporated by reference.
10.24 Executive Short-Term Incentive Plan (Annual Bonus Plan).<F*>
Previously filed as Appendix B to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
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<PAGE>
10.25 Executive Long-Term Incentive Plan (3-Year Bonus Plan).<F*>
Previously filed as Appendix C to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
11 Computation of Per Share Earnings.
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule for the quarterly period ended
September 6, 1997.
27.3 Restated Financial Data Schedule for the quarterly period ended
June 14, 1997.
27.4 Restated Financial Data Schedule for the fiscal year ended
December 28, 1996.
27.5 Restated Financial Data Schedule for the quarterly period ended
September 7, 1996.
27.6 Restated Financial Data Schedule for the quarterly period ended
June 15, 1996.
27.7 Restated Financial Data Schedule for the quarterly period ended
March 23, 1996.
27.8 Restated Financial Data Schedule for the fiscal year ended
December 30, 1995.
____________________________
[FN]
<F*>Management contract or compensatory plan or arrangement.
</FN>
The Company will furnish a copy of any exhibit listed above to any
stockholder without charge upon written request to Mr. Blake W. Krueger,
Executive Vice President, General Counsel and Secretary, 9341 Courtland
Drive, Rockford, Michigan 49351.
ITEM 14(b). REPORTS ON FORM 8-K.
No reports on Form 8-K were filed in the fourth quarter of the fiscal
year ended January 3, 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 31, 1998 By:/S/STEPHEN L. GULIS, JR.
Stephen L. Gulis, Jr.
Executive Vice President,
Chief Financial Officer and
Treasurer
(Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
*/S/GEOFFREY B. BLOOM Chief Executive Officer March 31, 1998
Geoffrey B. Bloom and Chairman of the Board
of Directors
*/S/TIMOTHY J. O'DONOVAN President and Director March 31, 1998
Timothy J. O'Donovan
/S/STEPHEN L. GULIS, JR. Executive Vice President, Chief March 31, 1998
Stephen L. Gulis, Jr. Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
*/S/DANIEL T. CARROLL Director March 31, 1998
Daniel T. Carroll
*/S/ALBERTO L. GRIMOLDI Director March 31, 1998
Alberto L. Grimoldi
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<PAGE>
*/S/DAVID T. KOLLAT Director March 31, 1998
David T. Kollat
*/S/PHILLIP D. MATTHEWS Director March 31, 1998
Phillip D. Matthews
*/S/DAVID P. MEHNEY Director March 31, 1998
David P. Mehney
*/S/JOSEPH A. PARINI Director March 31, 1998
Joseph A. Parini
*/S/JOAN PARKER Director March 31, 1998
Joan Parker
*/S/ELIZABETH A. SANDERS Director March 31, 1998
Elizabeth A. Sanders
*/S/PAUL D. SCHRAGE Director March 31, 1998
Paul D. Schrage
/S/STEPHEN L. GULIS, JR.
Stephen L. Gulis, Jr.
Attorney-in-Fact
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<PAGE>
APPENDIX A
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF FISCAL YEAR END
(THOUSANDS OF DOLLARS) 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,768 $ 8,534
Accounts receivable, less allowances
(1997 $7,292; 1996 $5,634) 138,066 125,999
Inventories:
Finished products 100,272 71,346
RAW MATERIALS AND WORK-IN-PROCESS 43,562 46,081
- ----------------------------------------------------------------------------------------------------------
143,834 117,427
Refundable income taxes 7,174 2,062
Deferred income taxes 4,880 8,149
OTHER CURRENT ASSETS 4,139 2,457
- ----------------------------------------------------------------------------------------------------------
Total current assets 303,861 264,628
Property, plant and equipment:
Land 1,178 1,178
Buildings and improvements 58,483 40,284
MACHINERY AND EQUIPMENT 103,720 89,317
- ----------------------------------------------------------------------------------------------------------
163,381 130,779
LESS ACCUMULATED DEPRECIATION 73,050 67,776
- ----------------------------------------------------------------------------------------------------------
90,331 63,003
Other assets
Goodwill and other intangibles, less accumulated
amortization (1997 $1,017; 1996 $193) 18,789 11,454
Cash value of life insurance 13,166 11,812
Prepaid pension costs 9,963 6,981
Assets held for exchange 6,033
Notes receivable 4,388 2,439
OTHER 3,132 1,281
- ----------------------------------------------------------------------------------------------------------
55,471 33,967
- ----------------------------------------------------------------------------------------------------------
Total assets $ 449,663 $ 361,598
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 3,251 $ 1,026
Accounts payable 24,318 41,273
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<PAGE>
Salaries, wages and other compensation 13,512 9,010
Taxes, other than income taxes 3,463 4,174
Other accrued expenses 15,934 14,251
CURRENT MATURITIES OF LONG-TERM DEBT 4,417 76
- -----------------------------------------------------------------------------------------------------------
Total current liabilities 64,895 69,810
Long-term debt, less current maturities 89,847 41,233
Supplemental employee retirement benefits 7,741 7,353
Deferred income taxes 4,203 2,830
Other noncurrent liabilities 547 1,080
Stockholders' equity:
Common stock, $1 par value:
Authorized: 80,000,000 shares
Issued, including treasury shares:
1997 43,310,718 shares; 1996 42,243,609 shares 43,311 42,244
Additional paid-in capital 64,912 53,943
Retained earnings 190,799 152,948
Accumulated translation adjustments (68) 79
Unearned compensation (4,285) (2,908)
Cost of shares in treasury:
1997 758,113 SHARES; 1996 557,323 SHARES (12,239) (7,014)
- ----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 282,430 239,292
- ----------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 449,663 $ 361,598
==========================================================================================================
</TABLE>
( ) Denotes deduction.
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FISCAL YEAR
(THOUSANDS OF DOLLARS) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of the year $ 42,244 $ 41,551 $ 36,847
Proceeds from issuance of common stock 3,911
Common stock issued under stock incentive
plans (1997 1,067,109 shares;
1996 693,027 SHARES; 1995 792,756 SHARES) 1,067 693 793
- ----------------------------------------------------------------------------------------------------------
Balance at end of the year 43,311 42,244 41,551
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of the year 53,943 48,475
Proceeds from issuance of common stock 44,957
Proceeds over par value and income tax benefits
associated with common stock issued under
STOCK INCENTIVE PLANS 10,969 5,468 3,518
- ----------------------------------------------------------------------------------------------------------
Balance at end of the year 64,912 53,943 48,475
RETAINED EARNINGS
Balance at beginning of the year 152,948 123,066 101,346
Net earnings 41,539 32,856 24,067
Cash dividends (1997 $.09 per share;
1996 $.07 PER SHARE; 1995 $.06 PER SHARE) (3,688) (2,974) (2,347)
- ----------------------------------------------------------------------------------------------------------
Balance at end of the year 190,799 152,948 123,066
ACCUMULATED TRANSLATION ADJUSTMENTS
Balance at beginning of the year 79 (324) 332
EQUITY ADJUSTMENTS FROM FOREIGN CURRENCY TRANSLATION (147) 403 (656)
- ----------------------------------------------------------------------------------------------------------
Balance at end of the year (68) 79 (324)
UNEARNED COMPENSATION
Balance at beginning of the year (2,908) (1,827) (1,181)
Awards under stock incentive plans (3,117) (2,469) (1,490)
COMPENSATION EXPENSE 1,740 1,388 844
- ----------------------------------------------------------------------------------------------------------
Balance at end of the year (4,285) (2,908) (1,827)
COST OF SHARES IN TREASURY
Balance at beginning of the year (7,014) (6,727) (6,000)
-4-
<PAGE>
Issuance of 10,000 shares of common stock
from treasury 125
Common stock purchased for treasury
(199--200,790 shares; 1996 9,410 shares;
1995--23,921 SHARES) (5,225) (287) (852)
- ----------------------------------------------------------------------------------------------------------
BALANCE AT END OF THE YEAR (12,239) (7,014) (6,727)
- ----------------------------------------------------------------------------------------------------------
Total stockholders' equity at end of the year $ 282,430 $ 239,292 $ 204,214
==========================================================================================================
</TABLE>
( ) Denotes deduction.
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEAR
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and other operating income $ 665,125 $ 511,029 $ 413,957
Costs and expenses:
Cost of products sold 460,999 355,224 290,469
Selling and administrative expenses 137,157 107,492 85,993
Interest expense 5,455 3,127 4,717
Interest income (845) (1,532) (1,039)
Restructuring charge 3,450
OTHER INCOME -- NET (2,172) (949) (297)
- ----------------------------------------------------------------------------------------------------------
604,044 463,362 379,843
- ----------------------------------------------------------------------------------------------------------
Earnings before income taxes 61,081 47,667 34,114
INCOME TAXES 19,542 14,811 10,047
- ----------------------------------------------------------------------------------------------------------
Net earnings $ 41,539 $ 32,856 $ 24,067
==========================================================================================================
Net earnings per share:
Basic $ $ 1.00 $ .81 $ .66
Diluted .96 .76 .62
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR
(THOUSANDS OF DOLLARS) 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 41,539 $ 32,856 $ 24,067
Adjustments necessary to reconcile net earnings
to net cash provided by (used in) operating activities:
Depreciation and amortization 9,151 7,147 5,765
Deferred income taxes (credit) 4,642 (214) 1,878
OTHER (2,980) (398) (781)
- ----------------------------------------------------------------------------------------------------------
52,352 39,391 30,929
Changes in operating assets and liabilities:
Accounts receivable (6,092) (32,752) (12,723)
Inventories (27,744) (19,526) (9,325)
Other operating assets (5,794) 154 (1,000)
Accounts payable (17,162) 26,085 (3,069)
OTHER OPERATING LIABILITIES 4,214 4,056 (1,950)
- ----------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (226) 17,408 2,862
INVESTING ACTIVITIES
Business acquisitions (15,753) (29,158)
Additions to property, plant and equipment (35,419) (20,639) (18,645)
OTHER (5,950) 4,086 3,632
- ----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (57,122) (45,711) (15,013)
FINANCING ACTIVITIES
Proceeds from short-term borrowings 4,711 2,907
Payments of short-term debt (3,090) (1,313) (2,000)
Proceeds from long-term borrowings 112,090 58,000 58,181
Payments of long-term debt (59,135) (47,369) (71,289)
Proceeds from issuance of common stock 48,869
Cash dividends (3,688) (2,974) (2,347)
Purchase of common stock for treasury (5,225) (287) (852)
PROCEEDS FROM SHARES ISSUED UNDER STOCK INCENTIVE PLANS 8,919 3,692 2,821
- ----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 54,582 9,749 36,290
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (2,766) (18,554) 24,139
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 8,534 27,088 2,949
- ----------------------------------------------------------------------------------------------------------
-7-
<PAGE>
Cash and cash equivalents at end of the year $ 5,768 $ 8,534 $ 27,088
=============================================================================================================
OTHER CASH FLOW INFORMATION
Interest paid $ 6,361 $ 3,595 $ 5,187
Income taxes paid 11,174 8,426 5,683
</TABLE>
( ) Denotes reduction in cash and cash equivalents.
See accompanying notes to consolidated financial statements.
-8-
<PAGE>
WOLVERINE WORLD WIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------------------------------
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Wolverine
World Wide, Inc. and its wholly owned subsidiaries (collectively, the
Company). Upon consolidation, all intercompany accounts, transactions and
profits have been eliminated.
FISCAL YEAR
The Company's fiscal year is the 52- or 53-week period that ends on the
Saturday nearest the end of December. Fiscal years presented herein
include the 53-week period ended January 3, 1998, and the 52-week periods
ended December 28, 1996, and December 30, 1995.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Revenue is recognized on the sale of products when the related goods have
been shipped and legal title has passed to the customer.
CASH EQUIVALENTS
All short-term investments with a maturity of three months or less when
purchased are considered cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
by the last-in, first-out (LIFO) method for substantially all inventories
(see Note C). Foreign and retail inventories are valued using the methods
approximating cost under the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost and include
expenditures for new facilities, major renewals and betterments. Normal
repairs and maintenance are expensed as incurred.
Depreciation of plant and equipment is computed using the straight-line
method. The depreciable lives for buildings and improvements range from
five to forty years and from three to ten years for machinery and
equipment.
-9-
<PAGE>
ADVERTISING COSTS
Advertising costs are expensed as incurred and totaled $26,976,000 in 1997,
$21,186,000 in 1996 and $17,592,000 in 1995.
INCOME TAXES
The provision for income taxes is based on the earnings reported in the
consolidated financial statements. A deferred income tax asset or
liability is determined by applying currently enacted tax laws and rates to
the cumulative temporary differences between the carrying value of assets
and liabilities for financial statement and income tax purposes. Deferred
income tax expense (credit) is measured by the net change in deferred
income tax assets and liabilities during the year.
EARNINGS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 128, EARNINGS PER SHARE. SFAS No. 128 replaced the calculation
of primary and fully diluted earnings per share with basic and diluted
earnings per share. Basic earnings per share does not consider the
potentially dilutive effects of common stock equivalents as was the case
with the former computation of primary earnings per share, and requires
adjustments for nonvested common stock issued under stock incentive plans.
Diluted earnings per share is computed in substantially the same manner as
previously reported and assumes the exercise of dilutive stock options.
All earnings per share amounts have been restated to conform with SFAS No.
128.
The following table sets forth the reconciliation of weighted average
shares used in the computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding during the year 42,214,620 41,541,944 37,246,444
Adjustment for nonvested common stock (699,107) (900,898) (976,819)
- ------------------------------------------------------------------------------------------------------------
Denominator for basic earnings per share 41,515,513 40,641,046 36,269,625
Effect of dilutive stock options 1,249,070 1,412,691 1,261,013
Adjustment for nonvested common stock 699,107 900,898 976,819
- ------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share 43,463,690 42,954,635 38,507,457
============================================================================================================
</TABLE>
Options to purchase 116,275 shares of common stock in 1997 have not been
included in the denominator for computation of diluted earnings per share
because related exercise prices were greater than the average market price
for the period and, therefore, were antidilutive. Antidilutive options in
1996 and 1995 were not significant.
-10-
<PAGE>
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company's financial instruments consist of cash and cash equivalents,
accounts and notes receivable, accounts payable and long-term debt. The
Company's estimates of the fair values of these financial instruments
approximate their carrying amounts at January 3, 1998, and December 28,
1996. Fair value was determined using discounted cash flow analyses and
current interest rates for similar instruments. The Company does not hold
or issue financial instruments for trading purposes.
The Company does not require collateral or other security on trade accounts
receivable.
COMPREHENSIVE INCOME
In June 1997, The Financial Accounting Standards Board (FASB) issued SFAS
No. 130, REPORTING COMPREHENSIVE INCOME, which is effective for fiscal
years beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting comprehensive income and its components in
financial statements. The new standard defines comprehensive income as
including net earnings and any revenues, expenses, gains and losses that,
under generally accepted accounting principles, are excluded from net
earnings and recognized directly as a component of stockholders' equity.
Comprehensive income must be reported in a financial statement that is
displayed as prominently as other financial statements. Management will
adopt SFAS No. 130 in the first quarter of 1998 and does not anticipate
that it will have a significant effect on its financial reporting, as the
Company has limited transactions that are not presently reported as a part
of its operating results.
RECLASSIFICATIONS
Certain amounts previously reported in 1996 and 1995 have been reclassified
to conform with the presentation used in 1997.
- -----------------------------------------------------------------------------
NOTE B BUSINESS ACQUISITIONS
- -----------------------------------------------------------------------------
On October 17, 1997, the Company acquired the assets of the Merrell outdoor
footwear business from the Outdoor Division of Sports Holding Corp. for
cash of $15,753,000, including related transaction expenses, and a $500,000
note payable in 1998.
On March 22, 1996, the Company acquired the assets and assumed certain
liabilities of the work, safety and occupational footwear business of
Hy-Test, Inc. from The Florsheim Shoe Company for a cash purchase price of
$24,468,000, including related transaction expenses.
On August 24, 1996, the Company acquired the rights to and certain assets
of the Hush Puppies[REGISTERED] wholesale shoe business in the United
Kingdom and Ireland from British Shoe Corporation, a subsidiary of Sears
-11-
<PAGE>
Plc, for a purchase price of $7,045,000, of which $2,355,000 is payable
over a three-year period ending in 1999.
The acquisitions were accounted for using the purchase method and,
accordingly, the operating results of these acquired businesses are
included in the consolidated statements of operations since the dates of
acquisition. The purchase prices were allocated to the net assets acquired
based on their fair market values at the dates of acquisition. Goodwill
and other intangibles recognized in connection with these transactions
totaled $5,914,000 in 1997 and $11,480,000 in 1996, and are being amortized
over periods ranging from five to seventeen years.
Consolidated net sales would have approximated $685,000,000 in 1997,
$602,000,000 in 1996 and $557,000,000 in 1995 on a pro forma basis if the
acquisitions had occurred at the beginning of 1995. Consolidated pro forma
net earnings for all three years would not have been materially different
from reported amounts.
- -----------------------------------------------------------------------------
NOTE C INVENTORIES
- -----------------------------------------------------------------------------
Inventories of $122,607,000 at January 3, 1998, and $99,483,000 at December
28, 1996, have been valued using the LIFO method. If the FIFO method had
been used, inventories would have been $18,204,000 and $19,695,000 higher
than reported at January 3, 1998, and December 28, 1996, respectively.
- -----------------------------------------------------------------------------
NOTE D DEBT
- -----------------------------------------------------------------------------
Notes payable consist primarily of unsecured short-term debt of the
Company's Canadian and United Kingdom subsidiaries. The notes bear interest
of up to 1% over the respective foreign bank base rate (6.55% weighted
average base rate at January 3, 1998).
The Company has short-term debt and commercial letter-of-credit facilities
that allow for total borrowings up to $58,399,000. In addition to the notes
payable discussed above, amounts outstanding under these facilities consist
of letters-of-credit that totaled $37,047,000 and $28,506,000 at January 3,
1998, and December 28, 1996, respectively.
Long-term debt consists of the following obligations:
-12-
<PAGE>
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS) 1997 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
7.8% senior notes payable to insurance companies $ 30,000 $ 30,000
Revolving credit obligations 63,922 11,000
OTHER 342 309
- -----------------------------------------------------------------------------------------------------------
94,264 41,309
LESS CURRENT MATURITIES 4,417 76
- -----------------------------------------------------------------------------------------------------------
$ 89,847 $ 41,233
===========================================================================================================
</TABLE>
The 7.8% senior notes payable to insurance companies require equal annual
principal payments of $4,285,000 in 1998 through 2003, with the balance due
on August 15, 2004.
The Company has domestic and foreign revolving credit agreements that allow
for borrowings of up to $167,227,000 ($100,000,000 in 1996), of which
$17,227,000 pertains to the Company's United Kingdom subsidiary. The
agreements require that interest be paid at variable rates based on both
LIBOR and the domestic prime rate. The weighted average interest rate of
outstanding borrowings under these facilities was 6.1% at January 3, 1998,
and 5.9% at December 28, 1996. The foreign commitment expires on January
9, 2000, and the domestic facility expires on October 11, 2001. Maximum
borrowings under the agreements were $99,600,000 in 1997 and $39,000,000 in
1996.
The revolving credit and insurance company loan agreements contain
restrictive covenants which, among other things, require the Company to
maintain certain financial ratios and minimum levels of tangible net worth.
At January 3, 1998, unrestricted retained earnings are $53,081,000. The
agreements also impose restrictions on securing additional debt, sale and
merger transactions and the disposition of significant assets.
Principal maturities of long-term debt during the four years subsequent to
1998 are as follows: 1999 $4,290,000; 2000 $9,411,000; 2001 $63,285,000;
2002 $4,285,000.
Interest costs of $768,000 in 1997, $610,000 in 1996 and $211,000 in 1995
were capitalized in connection with the construction of new corporate
facilities and other capital improvement projects.
-13-
<PAGE>
- -----------------------------------------------------------------------------
NOTE E LEASES
- -----------------------------------------------------------------------------
The Company leases machinery, transportation equipment and certain
warehouse and retail store space under operating lease agreements which
expire at various dates through 2012. At January 3, 1998, minimum rental
payments due under all noncancelable leases are as follows:
1998 $7,055,000; 1999 $6,044,000; 2000 $5,079,000; 2001 $3,897,000;
2002 $2,794,000; thereafter $16,589,000.
Rental expense under all operating leases consisted primarily of minimum
rentals and totaled $9,013,000 in 1997, $7,468,000 in 1996 and $6,275,000
in 1995.
- -----------------------------------------------------------------------------
NOTE F CAPITAL STOCK
- -----------------------------------------------------------------------------
The Company has 2,000,000 authorized shares of $1 par value preferred
stock, of which none is issued and outstanding.
On April 17, 1997, July 11, 1996, and April 19, 1995, the Company announced
three-for-two stock splits on shares of common stock outstanding at May 2,
1997, July 26, 1996, and May 1, 1995, respectively. All share and per
share data included in the consolidated financial statements has been
retroactively adjusted for the increased shares resulting from these stock
splits.
The Company has a preferred stock rights plan that is designed to protect
stockholder interests in the event the Company is confronted with coercive
or unfair takeover tactics. One right is associated with each share of
common stock currently outstanding. The rights trade with the common stock
and become exercisable only upon the occurrence of certain triggering
events. Each right, when exercisable, will entitle the holder to purchase
one one-hundredth of a share of Series B junior participating preferred
stock for $120. The Company has designated 500,000 shares of preferred
stock as Series B junior participating preferred stock for possible future
issuance under the Company's preferred stock rights plan. Upon issuance
for reasons other than liquidation, each share of Series B junior
participating preferred stock will have 100 votes and a preferential
quarterly dividend equal to the greater of $21 per share or 100 times the
dividend declared on common stock.
In the event the Company is a party to a merger or other business
combination, regardless of whether the Company is the surviving
corporation, rights holders other than the party to the merger will be
entitled to receive common stock of the surviving corporation worth twice
the exercise price of the rights. The plan also provides for protection
-14-
<PAGE>
against self-dealing transactions by a 15% stockholder or the activities of
an adverse person (as defined). The Company may redeem the rights for $.01
each at any time prior to a person being designated as an adverse person or
fifteen days after a triggering event. Unless redeemed earlier, all rights
expire on May 7, 2007.
The Company has stock incentive plans under which options to purchase
shares of common stock may be granted to officers, other key employees and
nonemployee directors. Options granted are exercisable for up to ten years
and vest over various periods ranging up to three years. All unexercised
options are available for future grants upon their cancellation.
A summary of the transactions under the stock option plans is as follows:
<TABLE>
<CAPTION>
SHARES UNDER WEIGHTED-AVERAGE
OPTIONS OPTION PRICE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at January 1, 1995 2,241,027 $ 3.81
Granted in 1995 659,052 8.27
Exercised (649,374) 9.79
CANCELED (2,268) 6.83
- ----------------------------------------------------------------------------------------------------------
Outstanding at December 30, 1995 2,248,437 5.43
Granted in 1996 624,666 13.05
Exercised (515,227) 13.85
CANCELED (16,098) 11.02
- ----------------------------------------------------------------------------------------------------------
Outstanding at December 28, 1996 2,341,778 7.71
Granted in 1997 798,015 24.12
Exercised (922,491) 20.48
CANCELED (35,861) 17.09
- ----------------------------------------------------------------------------------------------------------
Outstanding at January 3, 1998 2,181,441 $ 13.65
==========================================================================================================
Available for grant:
At January 3, 1998 1,879,818
============================================================================
At December 28, 1996 1,286,088
============================================================================
</TABLE>
The weighted-average grant-date fair value was $7.91 in 1997 and $4.27 in
1996 for stock options granted.
The exercise price of options outstanding at January 3, 1998, ranges from
$1.73 to $28.50. A summary of stock options outstanding at January 3, 1998,
by range of option price is as follows:
-15-
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
-------------------------------------------
NUMBER OF OPTIONS OPTION PRICE REMAINING
-----------------------------------------------------
OUTSTANDING EXERCISABLE OUTSTANDING EXERCISABLE CONTRACTUAL LIFE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Less than $10 933,303 800,876 $ 6.05 $ 5.74 5.9 years
$10 to $20 514,062 244,921 12.66 12.56 8.1 years
GREATER THAN $20 734,076 368,896 23.98 24.44 9.3 Years
- -------------------------------------------------------------------------------------------------------------
2,181,441 1,414,693 $ 13.65 $ 11.79 7.6 years
=============================================================================================================
</TABLE>
The Company has elected to follow Accounting Principles Board (APB) Opinion
No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations in accounting for its stock incentive plans because the
alternative fair value accounting provided for under SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, requires the use of option
valuation models that were not specifically developed for valuing the types
of stock incentive plans maintained by the Company. Under APB Opinion No.
25, compensation expense is recognized when the market price of the
underlying stock award on the date of grant exceeds any related exercise
price.
Pro forma information regarding net earnings and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its stock awards since January 1, 1995, using the fair value
method. The fair value of these awards was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions: risk free interest rate of 6%; dividend yield of 0.5%;
expected market price volatility factor of 0.32; and an expected option
life of four years.
The Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options which have no vesting provisions and are
fully transferable. In addition, the model requires input of highly
subjective assumptions. Because the Company's stock options have
characteristics significantly different from traded options and the input
assumptions can materially affect the estimate of fair value, in
management's opinion, the Black-Scholes option model does not necessarily
provide a reliable measure of the fair value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of stock
options are amortized to expense over the related vesting period. The
Company's pro forma information under SFAS No. 123 is as follows:
-16-
<PAGE>
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net earnings $ 38,945 $ 31,613 $ 23,589
Pro forma net earnings per share:
Basic $ .94 $ .78 $ .65
Diluted .90 .74 .62
</TABLE>
The Company also has nonvested stock award plans for officers and other key
employees. Common stock issued under these plans is subject to certain
restrictions, including prohibition against any sale, transfer or other
disposition by the officer or employee, and a requirement to forfeit the
award upon termination of employment. These restrictions lapse over a
three- to five-year period from the date of the award. Shares aggregating
154,862 in 1997, 200,418 in 1996 and 143,381 in 1995 were awarded under
these plans. The weighted-average award-date fair value was $23.75 in 1997
and $13.09 in 1996 for the shares awarded. Rights to 8,250 shares in 1997
and 21,869 shares in 1996 were cancelled, and there were no cancellations
in 1995. Any future shares awarded reduce the number of shares identified
as available for future grants in the stock option table. The market value
of the shares awarded is recognized as unearned compensation in the
consolidated statements of stockholders' equity and is amortized to
operations over the vesting period.
- -----------------------------------------------------------------------------
NOTE G RETIREMENT PLANS
- -----------------------------------------------------------------------------
The Company has noncontributory, defined benefit pension plans covering a
majority of its domestic employees. The Company's principal defined benefit
pension plan provides benefits based on the employee's years of service and
final average earnings (as defined), while the other plans provide benefits
at a fixed rate per year of service. The Company intends to annually
contribute amounts deemed necessary to maintain the plans on a sound
actuarial basis.
The Company also has individual deferred compensation agreements with
certain current and former employees that entitle them to receive payments
from the Company for a period of fifteen to eighteen years following
retirement. Under the terms of the individual contracts, the employees are
eligible for reduced benefits upon early retirement. The Company maintains
life insurance policies which are intended to fund these deferred benefits.
The Company has a defined contribution money accumulation plan covering
substantially all employees that provides for Company contributions based
on earnings. This plan is combined with the principal defined benefit
pension plan for funding purposes. Contributions to the money accumulation
plan were $1,495,000 in 1997, $1,200,000 in 1996 and $1,050,000 in 1995.
-17-
<PAGE>
The following summarizes the status of the Company's pension assets and
related obligations for its defined benefit pension plans:
<TABLE>
<CAPTION>
SEPTEMBER 30,
(THOUSANDS OF DOLLARS) 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pension assets at fair value $ 131,406 $ 104,673
Actuarial present value of accumulated plan benefits:
Vested 66,707 60,315
NONVESTED 1,625 1,048
- ------------------------------------------------------------------------------------------------------------
68,332 61,363
EFFECT OF ESTIMATED FUTURE INCREASES IN COMPENSATION 12,889 11,914
- ------------------------------------------------------------------------------------------------------------
PROJECTED BENEFIT OBLIGATION FOR SERVICE RENDERED TO DATE 81,221 73,277
- ------------------------------------------------------------------------------------------------------------
Excess pension assets $ 50,185 $ 31,396
============================================================================================================
Components of excess pension assets:
Prepaid pension costs recognized in other assets $ 9,963 $ 6,981
Unrecognized amounts, net of amortization:
Transition assets 1,902 2,834
Prior service costs (7,140) (4,601)
EXPERIENCE GAINS 45,460 26,182
- ------------------------------------------------------------------------------------------------------------
$ 50,185 $ 31,396
============================================================================================================
</TABLE>
The discount rate and rate of increase in future compensation levels used
in determining the actuarial present value of the projected benefit
obligation were 7.5% and 5%, respectively, in 1997 and 1996.
Plan assets were invested in listed equity securities (81%), fixed income
funds (15%) and short-term and other investments (4%). Equity securities
include 338,512 shares of the Company's common stock with a fair value of
$8,547,000 at September 30, 1997.
The following is a summary of net pension income recognized by the Company:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost pertaining to benefits earned during the year $ (3,698) $ (3,626) $ (2,540)
Interest cost on projected benefit obligation (5,116) (4,704) (3,771)
-18-
<PAGE>
Actual net investment income 29,924 8,066 28,495
NET AMORTIZATION AND DEFERRALS (18,481) 1,865 (20,865)
- ------------------------------------------------------------------------------------------------------------
Net pension income $ 2,629 $ 1,601 $ 1,319
============================================================================================================
</TABLE>
The expected long-term return on plan assets was 10% in each year.
- -----------------------------------------------------------------------------
NOTE H INCOME TAXES
- -----------------------------------------------------------------------------
The provisions for income taxes consist of the following:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $ 12,505 $ 13,247 $ 7,375
State and foreign 2,395 1,778 794
DEFERRED (CREDIT) 4,642 (214) 1,878
- ------------------------------------------------------------------------------------------------------------
$ 19,542 $ 14,811 $ 10,047
============================================================================================================
</TABLE>
A reconciliation of the Company's total income tax expense and the amount
computed by applying the statutory federal tax rate of 35% to earnings
before income taxes is as follows:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at statutory rate $ 21,378 $ 16,683 $ 11,940
State income taxes, net of federal income tax reduction 777 746 520
Nontaxable earnings of Puerto Rican subsidiary and
foreign affiliates (2,233) (1,854) (1,562)
OTHER (380) (764) (851)
- ------------------------------------------------------------------------------------------------------------
$ 19,542 $ 14,811 $ 10,047
============================================================================================================
</TABLE>
Significant components of the Company's deferred income tax assets and
liabilities as of the end of 1997 and 1996 are as follows:
-19-
<PAGE>
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS) 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred income tax assets:
Accounts receivable and inventory valuation allowances $ 1,256 $ 5,175
Deferred compensation accruals 2,207 1,959
OTHER AMOUNTS NOT DEDUCTIBLE UNTIL PAID 6,281 5,107
- ------------------------------------------------------------------------------------------------------------
Total deferred income tax assets 9,744 12,241
Deferred income tax liabilities:
Tax over book depreciation (3,032) (2,699)
Prepaid pension costs (4,239) (2,632)
Unremitted earnings of Puerto Rican subsidiary (1,543) (1,343)
OTHER (253) (248)
- ------------------------------------------------------------------------------------------------------------
TOTAL DEFERRED INCOME TAX LIABILITIES (9,067) (6,922)
- ------------------------------------------------------------------------------------------------------------
Net deferred income tax assets $ 677 $ 5,319
============================================================================================================
</TABLE>
The Company has provided for all taxes that would be payable if accumulated
earnings of its Puerto Rican subsidiary were distributed. Similar taxes on
the unremitted earnings of the Company's foreign affiliates have not been
provided because such earnings are considered permanently invested. The
additional taxes that would be payable if unremitted earnings of its
foreign affiliates were distributed approximate $6,042,000 at January 3,
1998, and $3,950,000 at December 28, 1996.
- -----------------------------------------------------------------------------
NOTE I LITIGATION AND CONTINGENCIES
- -----------------------------------------------------------------------------
The Company is involved in various environmental claims and other legal
actions arising in the normal course of business. The environmental claims
include sites where the Environmental Protection Agency has notified the
Company that it is a potentially responsible party with respect to
environmental remediation. It is not possible at this time to reasonably
estimate the amount of any obligations for remediation, because the extent
of environmental impact, allocation among responsible parties, remediation
alternatives and concurrence of regulatory authorities have not yet
advanced to a stage where a reasonable estimate of any loss can be made.
However, after taking into consideration legal counsel's evaluation of all
actions and claims against the Company, management is currently of the
opinion that their outcome will not have a significant effect on the
Company's consolidated financial position or future results of operations.
-20-
<PAGE>
- -----------------------------------------------------------------------------
NOTE J INDUSTRY INFORMATION
- -----------------------------------------------------------------------------
The Company is principally engaged in the manufacture and sale of footwear,
including casual shoes, slippers, moccasins, dress shoes, boots, uniform
shoes and work and outdoor shoes. The Company is also the largest domestic
tanner of pigskin, which is used in a significant portion of shoes
manufactured and sold by the Company and is sold to other domestic and
foreign manufacturers of shoes and other products. Royalty income is derived
from licensing the Company's trademarks to domestic and foreign licensees.
As part of its footwear business, the Company operates a number of domestic
retail shoe stores that sell Company-manufactured products as well as
footwear manufactured by unaffiliated companies. Foreign operations consist
of Canadian and United Kingdom subsidiaries, and factories located in the
Dominican Republic, Puerto Rico, Mexico and Costa Rica which produce shoe
components for domestic operations. Export sales, foreign operations and
related assets are not significant. Approximately 28% of the Company's
employees are subject to bargaining unit contracts extending through
various dates to 2002.
The Company markets its products primarily to customers in the retail
sector. Although the Company closely monitors the credit worthiness of its
customers and adjusts its credit policies and limits as needed, a
substantial portion of its debtors' ability to discharge amounts owed is
dependent upon the retail economic environment. The Company does not
believe that it is dependent upon any single customer, since none account
for more than 10% of consolidated net sales.
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION, which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 establishes new standards
for the way public business enterprises report information about operating
segments in annual financial statements and requires selected information
be presented in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic operating
areas and major customers. Management will adopt the new requirements
retroactively in 1998 and has not yet completed its analysis of the effect
of SFAS No. 131 on its segment reporting.
- -----------------------------------------------------------------------------
NOTE K QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------------
The Company generally reports its quarterly results of operations on the
basis of 12-week periods for each of the first three quarters and a 16-week
period for the fourth quarter. The fourth quarter of 1997 includes 17
weeks of operating results, while the fourth quarter of 1996 includes 16
weeks, because 1997 was a 53-week period.
-21-
<PAGE>
The Company's unaudited quarterly results of operations are as follows:
<TABLE>
<CAPTION>
1997
- ------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and other operating income $ 129,301 $ 127,789 $ 162,246 $ 245,789
Gross margin 38,389 40,817 47,910 77,010
Net earnings 4,693 7,368 9,199 20,279
Net earnings per share:
Basic $ .11 $ .18 $ .22 $ .49
Diluted .11 .17 .21 .47
</TABLE>
<TABLE>
<CAPTION>
1996
- ------------------------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) QUARTER QUARTER QUARTER QUARTER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales and other operating income $ 83,842 $ 94,153 $ 120,466 $ 212,568
Gross margin 25,323 31,317 36,013 63,152
Net earnings 3,393 5,433 7,350 16,680
Net earnings per share:
Basic $ .08 $ .14 $ .18 $ .41
Diluted .08 .12 .17 .39
</TABLE>
Net earnings per share for the first three quarters of 1997 and all
quarters in 1996 have been restated as a result of the required adoption of
SFAS No. 128 (see Note A).
- -----------------------------------------------------------------------------
NOTE L RESTRUCTURING CHARGE
- -----------------------------------------------------------------------------
On September 24, 1997, the Company announced a restructuring of its
domestic manufacturing and warehousing operations under which it closed
three Hush Puppies[REGISTERED] women's shoe factories and converted a
slipper factory into a warehouse. The total restructuring charge of
$3,450,000 includes employee termination benefits ($2,472,000) and other
closing costs ($978,000) associated with the facilities, and is disclosed
separately in the 1997 consolidated statement of operations. As of January
3, 1998, $1,620,000 of the restructuring costs have been incurred and
charged against the related liability.
-22-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Wolverine World Wide, Inc.
We have audited the accompanying consolidated balance sheets of Wolverine
World Wide, Inc. and subsidiaries as of January 3, 1998, and December 28,
1996, and the related consolidated statements of stockholders' equity,
operations and cash flows for each of the three fiscal years in the period
ended January 3, 1998. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Wolverine World Wide, Inc. and subsidiaries at January 3, 1998,
and December 28, 1996, and the consolidated results of their operations and
their cash flows for each of the three fiscal years in the period ended
January 3, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information
set forth therein.
/s/Ernst & Young LLP
Grand Rapids, Michigan
February 6, 1998
-23-
<PAGE>
APPENDIX B
<PAGE>
Schedule II - Valuation and Qualifying Accounts of Continuing Operations
Wolverine World Wide, Inc. and Subsidiaries
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------
ADDITIONS
------------------------
(1) (2)
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING OF COSTS AND OTHER ACCOUNTS DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES (DESCRIBE) (DESCRIBE) PERIOD
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED JANUARY 3, 1998
Deducted from asset accounts:
Allowance for doubtful accounts $ 4,228,000 $ 2,956,000 $ 1,146,000 (A) $ 6,038,000
Allowance for cash discounts 1,406,000 7,690,000 7,842,000 (B) 1,254,000
Inventory valuation allowances 2,954,000 6,888,000 5,290,000 (C) $ 4,552,000
----------- ------------ ----------- ------------
$ 8,588,000 $ 17,534,000 $14,278,000 $ 11,844,000
=========== ============ =========== ============
FISCAL YEAR ENDED DECEMBER 28, 1996
Deducted from asset accounts:
Allowance for doubtful accounts $ 2,657,000 $ 2,005,000 $ 434,000 (A) $ 4,228,000
Allowance for cash discounts 750,000 4,896,000 4,240,000 (B) 1,406,000
Inventory valuation allowances 1,317,000 5,535,000 3,898,000 (C) 2,954,000
----------- ------------ ----------- -------------
$ 4,724,000 $ 12,436,000 $ 8,572,000 $ 8,588,000
=========== ============ =========== =============
FISCAL YEAR ENDED DECEMBER 30, 1995
Deducted from asset accounts:
Allowance for doubtful accounts $ 3,510,000 $ (746,000) $ 107,000 (A) $ 2,657,000
Allowance for cash discounts 449,000 2,851,000 2,550,000 (B) 750,000
Inventory valuation allowances 1,753,000 4,261,000 4,697,000 (C) 1,317,000
----------- ------------ ----------- -------------
$ 5,712,000 $ 6,366,000 $ 7,354,000 $ 4,724,000
=========== ============ =========== =============
</TABLE>
(A) ACCOUNTS CHARGED OFF, NET OF RECOVERIES.
(B) DISCOUNTS GIVEN TO CUSTOMERS.
(C) ADJUSTMENT UPON DISPOSAL OF RELATED INVENTORIES.
<PAGE>
Commission File No. 1-6024
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM 10-K
For the Fiscal Year Ended
January 3, 1998
Wolverine World Wide, Inc.
9341 Courtland Drive
Rockford, Michigan 49351
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT
3.1 Certificate of Incorporation, as amended. Previously filed as
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the period ended June 14, 1997. Here incorporated by reference.
3.2 Amended and Restated Bylaws. Previously filed as Exhibit 3.2 to
the Company's Annual Report on Form 10-K for the fiscal year
ended December 30, 1995. Here incorporated by reference.
4.1 Certificate of Incorporation, as amended. See Exhibit 3.1 above.
4.2 Rights Agreement dated as of April 17, 1997. Previously
filed with the Company's Form 8-A filed April 12, 1997.
Here incorporated by reference.
4.3 Credit Agreement dated as of October 11, 1996, with NBD Bank
as Agent. Previously filed as Exhibit 4.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 28, 1996. Here incorporated by reference.
4.4 Note Purchase 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 outstanding on March
2, 1998, 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.
10.1 Stock Option Plan of 1979, and amendment.<F*> Previously filed
as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended January 2, 1988. Here incorporated by
reference.
10.2 1993 Stock Incentive Plan.<F*> Previously filed as Exhibit 10(b)
to the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1994. Here incorporated by reference.
10.3 1988 Stock Option Plan.<F*> Previously filed as an exhibit to the
Company's registration statement on Form S-8, filed July 21,
1988, Registration No. 33-23196. Here incorporated by reference.
<PAGE>
10.4 Amended and Restated Directors Stock Option Plan.<F*> Previously
filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended January 1, 1994. Here incorporated by
reference.
10.5 Employees Pension Plan.<F*>
10.6 Employment Agreement dated April 27, 1993, between the Company
and Geoffrey B. Bloom.<F*> Previously filed as Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994. Here incorporated by reference.
10.7 Executive Long-Term Incentive (Three Year) Plan 1996-1998 Period.<F*>
Previously filed as Exhibit 10.7 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 28, 1996. Here
incorporated by reference.
10.8 1994 Directors' Stock Option Plan.<F*> Previously filed as Exhibit
10(aa) to the Company's Quarterly Report on Form 10-Q for the
period ended June 18, 1994. Here incorporated by reference.
10.9 Stock Option Loan Program.<F*> Previously filed as Exhibit 10(h)
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 28, 1991. Here incorporated by reference.
10.10 Executive Severance Agreement.<F*>
10.11 Supplemental Executive Retirement Plan, as amended.<F*>
Previously filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended June 15, 1996.
Here incorporated by reference. An updated participant
schedule is attached as Exhibit 10.11.
10.12 1995 Stock Incentive Plan.<F*> 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.
10.13 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1994-1996.<F*> Previously filed as Exhibit
10.13 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
10.14 Executive Long-Term Incentive (Three Year) Plan for the
three year period 1995-1997.<F*> Previously filed as Exhibit
10.14 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1995. Here incorporated by
reference.
-32-
<PAGE>
10.15 Indemnification Agreements.<F*> The form of agreement was
previously filed as Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 2,
1993. Here incorporated by reference. The Company has
entered into an Indemnification Agreement with each director
and executive officer.
10.16 Supplemental Retirement Benefits.<F*> Previously filed as
Exhibit 10(l) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988. Here
incorporated by reference.
10.17 Benefit Trust Agreement dated May 19, 1987, and Amendments
Number 1, 2 and 3 thereto.<F*> Previously filed as
Exhibit 10(p) to the Company's Annual Report on Form 10-K
for the fiscal year ended January 2, 1993. Here
incorporated by reference.
10.18 1996 Executive Short-Term Incentive Plan (Annual Bonus
Plan).<F*> Previously filed as Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 30, 1995. Here incorporated by reference.
10.19 Outside Directors' Deferred Compensation Plan.<F*> Previously
filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended June 15, 1996. Here
incorporated by reference.
10.20 1984 Executive Incentive Stock Purchase Plan, and
amendment.<F*> Previously filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the fiscal year
ended January 2, 1988. Here incorporated by reference.
10.21 Supplemental Director's Fee Agreement dated as of March 27,
1995, between the Company and Phillip D. Matthews.<F*>
Previously filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended March 25, 1995.
Here incorporated by reference.
10.22 Restricted Stock Agreement dated as of March 27, 1995,
between the Company and Phillip D. Matthews.<F*> Previously
filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended March 25, 1995. Here
incorporated by reference.
10.23 1997 Stock Incentive Plan.<F*> Previously filed as Appendix A
to the Company's Definitive Proxy Statement with respect to
the Company's Annual Meeting of Stockholders held on April
16, 1997. Here incorporated by reference.
-3-
<PAGE>
10.24 Executive Short-Term Incentive Plan (Annual Bonus Plan).<F*>
Previously filed as Appendix B to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
10.25 Executive Long-Term Incentive Plan (3-Year Bonus Plan).<F*>
Previously filed as Appendix C to the Company's Definitive
Proxy Statement with respect to the Company's Annual Meeting
of Stockholders held on April 16, 1997. Here incorporated
by reference.
11 Computation of Per Share Earnings.
21 Subsidiaries of Registrant.
23 Consent of Independent Auditors.
24 Powers of Attorney.
27.1 Financial Data Schedule.
27.2 Restated Financial Data Schedule for the quarterly period ended
September 6, 1997.
27.3 Restated Financial Data Schedule for the quarterly period ended
June 14, 1997.
27.4 Restated Financial Data Schedule for the fiscal year ended
December 28, 1996.
27.5 Restated Financial Data Schedule for the quarterly period ended
September 7, 1996.
27.6 Restated Financial Data Schedule for the quarterly period ended
June 15, 1996.
27.7 Restated Financial Data Schedule for the quarterly period ended
March 23, 1996.
27.8 Restated Financial Data Schedule for the fiscal year ended
December 30, 1995.
____________________________
[FN]
<F*>Management contract or compensatory plan or arrangement.
</FN>
<PAGE>
EXHIBIT 10.5
WOLVERINE EMPLOYEES' PENSION PLAN
(As Amended and Restated Effective January 1, 1996)
2/13/98 - [#3460v3]
38th Amd
<PAGE>
WOLVERINE EMPLOYEES' PENSION PLAN
TABLE OF CONTENTS
Article Page
SECTION 1 - Introduction . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2. Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3. Employers. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4. Administration of the Plan . . . . . . . . . . . . . . . . . . .1
1.5. Funding of Benefits. . . . . . . . . . . . . . . . . . . . . . .1
1.6. Plan Benefits for Members Who Terminated Employment
Prior to January 1. 1995 . . . . . . . . . . . . . . . . . . . .2
1.7. Supplements. . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.8. UFCW Employees . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 2 - Membership and Retirement Dates. . . . . . . . . . . . . . . .3
2.1. Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2. Notice of Membership . . . . . . . . . . . . . . . . . . . . . .3
2.3. Normal Retirement Date . . . . . . . . . . . . . . . . . . . . .3
2.4. Early Retirement Date. . . . . . . . . . . . . . . . . . . . . .3
2.5 Deferred Retirement Date . . . . . . . . . . . . . . . . . . . .3
2.6. Disability Retirement Date . . . . . . . . . . . . . . . . . . .4
2.7. Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . .4
2.8. Maternity and Paternity Absence. . . . . . . . . . . . . . . . .4
2.9. Leased Employees . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 3 - Bases of Pensions. . . . . . . . . . . . . . . . . . . . . . .5
3.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.2. Credited Service . . . . . . . . . . . . . . . . . . . . . . . .5
3.3. Breaks in Service. . . . . . . . . . . . . . . . . . . . . . . .6
3.4. Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.5. Final Average Earnings . . . . . . . . . . . . . . . . . . . . .7
3.6. Controlled Group Member. . . . . . . . . . . . . . . . . . . . .8
3.7. Predecessor Company. . . . . . . . . . . . . . . . . . . . . . .8
3.8. Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 4 - Amount of Pension Benefits . . . . . . . . . . . . . . . . . .9
4.1. Normal or Deferred Retirement. . . . . . . . . . . . . . . . . .9
4.2. Early Retirement - Deferred Payment. . . . . . . . . . . . . . 10
4.3. Early Retirement - Immediate Payment . . . . . . . . . . . . . 12
<PAGE>
4.4. Monthly Social Security Allowance. . . . . . . . . . . . . . 12
4.5. Actuarial Equivalent . . . . . . . . . . . . . . . . . . . . 13
4.6 Benefits Nonforfeitable at Normal Retirement . . . . . . . . 14
4.7. Benefit Limitations. . . . . . . . . . . . . . . . . . . . . 14
4.8. Combined Benefit Limitations . . . . . . . . . . . . . . . . 14
4.9. Deferred Retirement Minimum Benefit. . . . . . . . . . . . . 15
4.10. Temporary Limitation on Benefit Accrual . . . . . . . . . . 15
SECTION 5 - Disability Pension . . . . . . . . . . . . . . . . . . . . . 16
5.1. Disability Pension . . . . . . . . . . . . . . . . . . . . . . 16
5.2. Permanent Disability . . . . . . . . . . . . . . . . . . . . . 16
5.3. Payment of Disability Pension. . . . . . . . . . . . . . . . . 16
5.4. Discontinuance of Disability Pension . . . . . . . . . . . . . 17
5.5. Charges Against Pensions and Deferred Benefits . . . . . . . . 17
5.6. Reemployment After Disability. . . . . . . . . . . . . . . . . 17
SECTION 6 - Termination of Employment Before Retirement. . . . . . . . . 18
6.1. Monthly Deferred Benefit . . . . . . . . . . . . . . . . . . . 18
6.2. Early Commencement of Benefit. . . . . . . . . . . . . . . . . 18
6.3. Termination Prior to Five Years of Credited Service. . . . . . 18
SECTION 7 - Payment of Benefits. . . . . . . . . . . . . . . . . . . . . 19
7.1 Normal Form of Payment . . . . . . . . . . . . . . . . . . . 19
7.2. Optional Forms of Payment . . . . . . . . . . . . . . . . . . 20
7.3. Election and Discontinuance of Options. . . . . . . . . . . . 20
7.4. Designation of Beneficiaries . . . . . . . . . . . . . . . . 21
7.5. Required Benefit Payments . . . . . . . . . . . . . . . . . . 22
7.6. Re-employment . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7. Facility of Payment . . . . . . . . . . . . . . . . . . . . . 23
7.8. Missing Members or Beneficiaries. . . . . . . . . . . . . . . 23
7.9. Lump Sum Payment of Accrued Benefits. . . . . . . . . . . . . 24
7.10. Restrictions on Distributions . . . . . . . . . . . . . . . . 25
7.11. Direct Transfer of Eligible Rollover Distributions. . . . . . 25
SECTION 8 - Death Benefits . . . . . . . . . . . . . . . . . . . . . . . 26
8.1. Death Before Commencement of Benefits. . . . . . . . . . . . . 26
8.2. Death After Commencement of Benefits . . . . . . . . . . . . . 26
8.3. Pre-retirement Spouse's Benefit. . . . . . . . . . . . . . . . 26
<PAGE>
SECTION 9 - The Committee. . . . . . . . . . . . . . . . . . . . . . . . 28
9.1. Membership. . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2. Committee's General Powers Rights and Duties. . . . . . . . . 28
9.3. Manner of Action. . . . . . . . . . . . . . . . . . . . . . . 29
9.4. Interested Committee Member . . . . . . . . . . . . . . . . . 29
9.5. Resignation or Removal of Committee Members . . . . . . . . . 29
9.6. Information Required by Committee . . . . . . . . . . . . . . 30
9.7. Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.8. Uniform Rules . . . . . . . . . . . . . . . . . . . . . . . . 30
9.9. Review of Benefit Determinations. . . . . . . . . . . . . . . 30
9.10. Committee's Decision Final. . . . . . . . . . . . . . . . . . 30
SECTION 10 - General Provisions. . . . . . . . . . . . . . . . . . . . . 31
10.1. Additional Employers. . . . . . . . . . . . . . . . . . . . . 31
10.2. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . 31
10.3. Gender and Number. . . . . . . . . . . . . . . . . . . . . . 31
10.4. Controlling Law. . . . . . . . . . . . . . . . . . . . . . . 31
10.5. Employment Rights. . . . . . . . . . . . . . . . . . . . . . 31
10.6. Litigation by Members. . . . . . . . . . . . . . . . . . . . 32
10.7. Interests Not Transferable. . . . . . . . . . . . . . . . . . 32
10.8. Absence of Guaranty . . . . . . . . . . . . . . . . . . . . . 32
10.9. Action by Employers. . . . . . . . . . . . . . . . . . . . . 32
SECTION 11 - Contributions . . . . . . . . . . . . . . . . . . . . . . . 33
11.1. Employer Contributions. . . . . . . . . . . . . . . . . . . . 33
11.2. Member Contributions. . . . . . . . . . . . . . . . . . . . . 33
11.3. Application of Forfeitures. . . . . . . . . . . . . . . . . . 33
11.4. No Interest in Employers. . . . . . . . . . . . . . . . . . . 33
SECTION 12 - Amendment and Termination . . . . . . . . . . . . . . . . . 34
12.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.2. Termination. . . . . . . . . . . . . . . . . . . . . . . . . 34
12.3. Nonforfeitability on Termination. . . . . . . . . . . . . . . 35
12.4. Notice of Amendment or Termination. . . . . . . . . . . . . . 35
12.5. Allocation and Distribution of Assets on Termination. . . . . 35
SECTION 13 - Special Restrictions. . . . . . . . . . . . . . . . . . . . 38
13.1. Effective Date and Overriding Provisions. . . . . . . . . . . 38
13.2. Plan Termination. . . . . . . . . . . . . . . . . . . . . . . 38
13.3. Plan Merger. . . . . . . . . . . . . . . . . . . . . . . . . 38
<PAGE>
13.4. Vesting Benefit Accrual, Etc. . . . . . . . . . . . . . . . 39
13.5. Restricted Date. . . . . . . . . . . . . . . . . . . . . . . 39
13.6. Prohibition Against Amendment. . . . . . . . . . . . . . . . 39
SECTION 14 - Direct Transfer of Eligible Rollover Distributions. . . . . 40
14.1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14.2. Definition of Eligible Rollover Distribution. . . . . . . . . 40
14.3. Definition of Eligible Retirement Plan. . . . . . . . . . . . 40
14.4. Definition of Distributee. . . . . . . . . . . . . . . . . . 40
14.5. Definition of Direct Rollover. . . . . . . . . . . . . . . . 40
SUPPLEMENT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
A-1. Benefits for UFCW Employees. . . . . . . . . . . . . . . . . . 42
A-2. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . 42
A-3. Effective Dates of Benefit Increase. . . . . . . . . . . . . . 42
A-4. This Supplement Controlling. . . . . . . . . . . . . . . . . . 42
SUPPLEMENT B - Special Rules for Top-Heavy Plans . . . . . . . . . . . . 43
B-1. Purpose and Effect . . . . . . . . . . . . . . . . . . . . . . 43
B-2. Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . 43
B-3. Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . 43
B-4. Minimum Vesting. . . . . . . . . . . . . . . . . . . . . . . . 44
B-5. Minimum Benefit. . . . . . . . . . . . . . . . . . . . . . . . 44
B-6 Aggregation of Plans . . . . . . . . . . . . . . . . . . . . . 45
B-7. No Duplication of Benefits . . . . . . . . . . . . . . . . . . 45
B-8. Adjustment of Combined Benefit Limitations . . . . . . . . . . 45
B-9. Use of Terms . . . . . . . . . . . . . . . . . . . . . . . . . 45
SUPPLEMENT C - Provisions Relating to Certain Former Participants Under
Webster Manufacturing Unit Hourly-Rated Employees'
Pension Plan. . . . . . . . . . . . . . . . . . . . . . . 46
C-1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 46
C-2. Full Vesting of Webster Participant's Benefit. . . . . . . . . 46
C-3. Amount of Webster Participant's Benefit at Normal
Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . 46
C-4. Supplemental Benefit for Webster Participants. . . . . . . . . 46
C-5. Form of Payment of Webster Participant's Benefit . . . . . . . 47
C-6. Lump Sum Payment of Webster Participant's Accrued Benefit. . . 47
C-7. Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . 47
<PAGE>
SUPPLEMENT D - Section 414(k) Account. . . . . . . . . . . . . . . . . . 48
SECTION D1 - Introduction. . . . . . . . . . . . . . . . . . . . . . . . 48
D1.l. Background . . . . . . . . . . . . . . . . . . . . . . . . . 48
D1.2. Section 414(k) Arrangement. . . . . . . . . . . . . . . . . 48
D1.3. Purpose; Section 414(k) Account Arrangement. . . . . . . . . 48
D1.4. Definitions; Applicability of Plan Provisions; Effective
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION D2 - Eligibility and Participation . . . . . . . . . . . . . . . 49
D2.1. Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . 49
D2.2. Participation. . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION D3 - Participant Contributions . . . . . . . . . . . . . . . . . 50
SECTION D4 - Employer Contributions. . . . . . . . . . . . . . . . . . . 50
D4.1. Employer Matching Contribution . . . . . . . . . . . . . . . 50
D4.2. Source of Employer Matching Contribution . . . . . . . . . . 50
D4.3. Limitations and Conditions on Employer Matching
Contribution . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION D5 - Section 414(k) Trust Account and the Investment Funds . . . 51
D5.1. Section 414(k) Trust Account . . . . . . . . . . . . . . . . 51
D5.2. The Investment Funds . . . . . . . . . . . . . . . . . . . . 51
D5.3. Investment Fund Elections. . . . . . . . . . . . . . . . . . 51
D5.4. Investment Fund Transfers. . . . . . . . . . . . . . . . . . 51
D5.5. Availability of Plan Assets. . . . . . . . . . . . . . . . . 52
SECTION D6 - Period of Participation . . . . . . . . . . . . . . . . . . 52
D6.1. Settlement Date. . . . . . . . . . . . . . . . . . . . . . . 52
D6.2. Restricted Participation . . . . . . . . . . . . . . . . . . 52
SECTION D7 - Accounting. . . . . . . . . . . . . . . . . . . . . . . . . 53
D7.1. Separate Accounts. . . . . . . . . . . . . . . . . . . . . . 53
D7.2. Accounting Dates . . . . . . . . . . . . . . . . . . . . . . 53
D7.3. Adjustment of Participants' Accounts . . . . . . . . . . . . 53
D7.4. Allocation of Employer Matching Contributions. . . . . . . . 54
D7.5. Changing Payments and Distributions. . . . . . . . . . . . . 54
D7.6. Rollovers. . . . . . . . . . . . . . . . . . . . . . . . . . 55
D7.7. Statement of Account . . . . . . . . . . . . . . . . . . . . 55
D7.8. Contribution Limitations . . . . . . . . . . . . . . . . . . 55
D7.9. Limitation on Allocation of Contributions. . . . . . . . . . 55
D7.10. Highly Compensated Participant . . . . . . . . . . . . . . . 56
<PAGE>
D7.11. Allocation of Earnings to Distributions of Excess
Contributions. . . . . . . . . . . . . . . . . . . . . . . . 56
D7.12. Multiple Use of Alternative Limitation . . . . . . . . . . . 56
SECTION D8 - Payment of Account Balances . . . . . . . . . . . . . . . . 57
D8.1. Retirement or Death. . . . . . . . . . . . . . . . . . . . . 57
D8.2. Resignation or Dismissal . . . . . . . . . . . . . . . . . . 57
D8.3. Remainders . . . . . . . . . . . . . . . . . . . . . . . . . 57
D8.4. Manner of Distribution . . . . . . . . . . . . . . . . . . . 58
D8.5. Designation of Beneficiary . . . . . . . . . . . . . . . . . 58
D8.6. Pre-Retirement Survivor Annuity and Joint and Survivor
Annuity. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION D9 - Reemployment. . . . . . . . . . . . . . . . . . . . . . . . 60
D9.1. Resumption of Participation. . . . . . . . . . . . . . . . . 60
D9.2. Reinstatement of Remainder . . . . . . . . . . . . . . . . . 60
SECTION D10 - Employer Contribution Formula. . . . . . . . . . . . . . . 61
D10.1. Formula Employer Contribution. . . . . . . . . . . . . . . . 61
D10.2. Preliminary Employer Contribution. . . . . . . . . . . . . . 61
D10.3. Adjusted Net Income. . . . . . . . . . . . . . . . . . . . . 61
D10.4. Assets, Average Assets . . . . . . . . . . . . . . . . . . . 62
D10.5. Eligible Compensation, Participating Compensation. . . . . . 62
SUPPLEMENT E - Benefits for Certain Former Employees . . . . . . . . . . 63
SUPPLEMENT F - Nondiscriminatory Executive Benefits. . . . . . . . . . . 64
F.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
F.2 A Executive. . . . . . . . . . . . . . . . . . . . . . . . . . 64
F.3 B Executive. . . . . . . . . . . . . . . . . . . . . . . . . . 64
F.4 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . 64
SUPPLEMENT G - Benefits for Certain Former Employees of
Frolic Footwear Division and the Wolverine Slipper Group . 65
APPENDIX A - Covered Employee Groups . . . . . . . . . . . . . . . . . . 66
APPENDIX B - Historical and Current Dollar Multipliers . . . . . . . . . 67
<PAGE>
WOLVERINE EMPLOYEES' PENSION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1976)
SECTION 1
INTRODUCTION
1.1. PURPOSE. Wolverine Employees' Pension Plan is maintained by
Wolverine World Wide, Inc. (the "company") to provide retirement and other
benefits for eligible employees.
1.2. PLAN YEAR. Wolverine Employees' Pension Plan was established as
of January 1, 1969. Wolverine Employees' Pension Plan, as amended, and as
set forth below (the "plan") is effective as of January 1, 1976. A "plan
year" is the twelve month period beginning on January 1 and ending on the
following December 31.
1.3. EMPLOYERS. Any subsidiary or affiliate of the company may adopt
the plan with the company's consent, as described in subsection 10.1. A
"subsidiary" of the company is any corporation 50 percent or more of the
voting stock of which is owned, directly or indirectly, by the company. An
"affiliate" of the company is any corporation 50 percent or more of the
voting stock of which is owned, directly or indirectly, by the owners of 50
percent or more of the voting stock of the company. The company and any
subsidiaries or affiliates of the company which adopt the plan are referred
to below collectively as the "employers" and individually as an "employer."
The plan shall not apply to employees of any branch or division of these
corporations which is hereafter established (as a result of merger,
acquisition or otherwise) unless and until it is extended to such branch or
division in the manner provided in subsection 10.1. Any action required or
permitted to be taken by an employer under the plan shall be by resolution
of its Board of Directors, or by a person or persons authorized by
resolution of its Board of Directors.
1.4. ADMINISTRATION OF THE PLAN. The Plan will be administered by a
plan committee (the "committee") consisting of not less than three nor more
than seven persons appointed by the company, as described in Section 9.
Any notice or document required to be given to or filed with the committee
will be properly given or filed if delivered or mailed, by registered mail,
postage prepaid, to the committee, in care of the company, at Rockford,
Michigan.
1.5. FUNDING OF BENEFITS. Funds contributed under the plan will be
held and invested, until distribution, by a trustee (the "trustee")
appointed by the company. The trustee will act under a trust agreement
between the company and the trustee which implements and forms a part of
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the plan. The trustee as of January 1, 1976 is National Bank of Detroit,
located in Detroit, Michigan. Copies of the plan and trust agreement, and
any amendments thereto, will be on file at the office of the Secretary of
the company and of each employer which adopts the plan where they may be
examined by any eligible employee or member. The provisions of and benefits
under the plan are subject to the terms and provisions of the trust agreement.
1.6. PLAN BENEFITS FOR MEMBERS WHO RETIRE OR TERMINATED EMPLOYMENT.
The benefits provided hereunder for any member who retires or whose
employment with the employers otherwise terminates will, except as
otherwise specifically provided herein, be governed in all respects by the
terms of the plan as in effect on the date of the member's retirement or
other termination of employment.
1.7. SUPPLEMENTS. From time to time, the company may adopt
supplements to the plan for the purpose of modifying the provisions of the
plan as they apply to the employees of an employer (or any group or
classification of employees of an employer) to provide additional,
substitute or restrictive terms and provisions of the plan as it applies to
such employees, including provisions to preserve benefits attributable to
such employees' participation in a plan of an employer or predecessor of an
employer or to coordinate such benefits with the benefits of this plan.
Each such supplement will be attached to and form a part of this plan, will
specify the group or class of employees to which it applies and will
supersede the provisions of the plan to the extent necessary to eliminate
any inconsistencies between the plan and such supplement.
1.8. UFCW EMPLOYEES. Effective January 1, 1984, pension benefits for
UFCW employees (as defined in Supplement A of the plan) will be provided
solely under the separate plans established for them and in no event will
any benefits be paid or payable to or on account of UFCW employees under
this plan.
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SECTION 2
MEMBERSHIP AND RETIREMENT DATES
2.1. ELIGIBILITY. Each employee of an employer who is a member of the
plan immediately preceding January l, 1976 will continue as a member on and
after that date. Each other employee of an employer will become a member
of the plan on January 1, 1976 or the July 1 or January 1 thereafter
coincident with or next following the date he meets all of the following
requirements:
(a) He is a regular employee; and
(b) He is a member of a group of employees to whom the plan has
been and continues to be extended by an employer as described in Appendix A
to the plan.
A "regular employee" is one who normally renders or is scheduled to render
personal services to one or more employers and controlled group members for
1,000 or more hours per year. For purposes of this subsection, an employee
who, except for the requirement of subparagraph (a) above, would otherwise
become a member of the plan, shall become a member of the plan on January
1, 1976 or the July 1 or January 1 thereafter coincident with or next
following the end of the 12-month period (commencing on his date of hire
and each anniversary thereof) during which he has completed 1,000 or more
hours of service (as defined in subsection 3.2).
Each employee of Wolverine Hy-Test, Inc. who meets the eligibility
requirements as of the effective date of the Thirty-Fifth Amendment
(_____________, 1996) shall become a Participant on that date.
2.2. NOTICE OF MEMBERSHIP. The committee will notify each employee of
the date he becomes a member of the plan.
2.3. NORMAL RETIREMENT DATE. A member's "normal retirement date"
will be the first day of the month coincident with or next following the
date he attains age 65 years.
2.4. EARLY RETIREMENT DATE. A member's "early retirement date" will
be the first day of the month coincident with or next following the date on
which he retires or is retired from the employ of all of the employers
before his normal retirement date but after he has both attained age 60
years and completed ten or more years of credited service.
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2.5 DEFERRED RETIREMENT DATE. A member's "deferred retirement date"
will be the first day of the month coincident with or next following the
date of his retirement from the employ of all of the employers after his
normal retirement date.
2.6. DISABILITY RETIREMENT DATE. A member's "disability retirement
date" will be the first day of the month coincident with or next following
the date on which he retires or is retired from the employ of all of the
employers because of total and permanent disability (as defined in Section
S) before his normal retirement date but after he has completed fifteen or
more years of credited service.
2.7. RETIREMENT DATE. A member's "retirement date" will be one of the
dates described above on which he retires or is retired from the employ of
all of the employers.
2.8. MATERNITY AND PATERNITY ABSENCE. In the case of a maternity or
paternity absence (as defined below) which commences on or after January 1,
1985, a member shall be credited, for the first plan year in which he
otherwise would have incurred a one-year break in service (and solely for
purposes of determining whether such a break in service has occurred), with
the hours of service which normally would have been credited to him but for
such absence (or, if the committee is unable to determine the hours which
would have been so credited, 8 hours for each work day of such absence),
but in no event more than 501 hours for any one absence. A "maternity or
paternity absence" means a member's absence from work because of the
pregnancy of the member or birth of a child of the member, the placement of
a child with the member in connection with the adoption of such child by
the member, or for purposes of caring for the child immediately following
such birth or placement. The committee may require the member to furnish
such information as the committee considers necessary to establish that the
member's absence was for one of the reasons specified above.
2.9. LEASED EMPLOYEES. A leased employee (as defined below) shall not
be eligible to become a member of the plan. A "leased employee" means any
person who is not an employee of an employer, but who has provided services
to an employer of a type which have historically (within the business field
of the employers) been provided by employees, on a substantially full-time
basis for a period of at least one year, pursuant to an agreement between
an employer and a leasing organization. The period during which a leased
employee performs service for an employer shall be taken into account for
purposes of subsections 2.1 and 6.1 of the plan; unless (i) such leased
employee is a participant in a money purchase pension plan maintained by
the leasing organization which provides a non-integrated employer
contribution rate of at least 10 percent of compensation, immediate
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<PAGE>
participation for all employees and full and immediate vesting, and (ii)
leased employees do not constitute more than 20 percent of the employers'
nonhighly compensated work force.
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<PAGE>
SECTION 3
BASES OF PENSIONS
3.1. GENERAL. A member's pension will be based on his credited
service and may also be based on his final average earnings, both as
determined in accordance with the provisions hereof.
3.2. CREDITED SERVICE. A member's "credited service" means the total
of his years of employment computed in accordance with the following rules:
(a) A member will be entitled to a full or fractional year of
credited service for each full or fractional year of credited service to
which he was entitled under the plan prior to January 1, 1976, in
accordance with the terms of the plan in effect prior to that date.
(b) In computing the amount of a member's monthly pension,
disability pension or monthly deferred benefits (but not for purposes of
determining a member's eligibility for such benefits) a member shall be
entitled to one year of credited service for each plan year beginning after
December 31, 1975 during which he is a member of the plan and has completed
1,000 or more hours of service.
(c) In determining a member's eligibility for monthly pension,
disability pension or monthly deferred benefits (but not for the purpose of
otherwise computing the amount of such monthly pension, disability pension
or monthly deferred benefits), a member shall be entitled to one year of
credited service for each plan year beginning after December 31, 1975
during which he has completed 1,000 hours of service for an employer or a
controlled group member.
(d) A member's credited service in excess of 30 years shall be
disregarded for all purposes of the plan, except that his credited service
in excess of 25 years shall be disregarded for purposes of subparagraphs
4.1(c), 4.2(c) and 6.1(a)(iii). In applying the foregoing limitations on
credited service, earlier years of credited service shall be disregarded
before later years of credited service.
(e) A period of concurrent employment with two or more employers
or controlled group members will be considered as employment with only one
of them during the period.
(f) A leave of absence will not interrupt membership in the plan
and will be included in determining a member's credited service; provided,
however, that a period of leave of absence in excess of one year shall not
be included in determining the credited service of a member for purposes of
subparagraph (b) above.
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<PAGE>
(g) To the extent provided in the plan or by the committee, a
member's employment with a predecessor company will be considered as
employment with an employer. For purposes of subsection (c) (a member's
eligibility for monthly or disability pension or monthly deferred benefits)
and Appendix D, Section D8, but not for purposes of subsection (b), a
member who was a Wolverine Hy-Test, Inc. employee and became a Participant
on the effective date of the Thirty-Fifth Amendment shall receive credited
service equal to the full years of benefit service credited to the member
under the Florsheim Shoe Company Retirement Plan on that date.
(h) Termination of employment of a member with one employer or a
controlled group member will not interrupt his credited service for
purposes of the plan if, concurrently with or immediately after such
termination, he is employed by one or more other employers or controlled
group members.
An "hour of service" means each hour for which an employee is directly or
indirectly paid or entitled to payment by an employer or controlled group
member for the performance of duties and for reasons other than the
performance of duties, including each hour for which back pay, irrespective
of mitigation of damages, has been either awarded or agreed to by an
employer or controlled group member, determined and credited in accordance
with Department of Labor Reg. Sec. 2530.200b-2.
3.3. BREAKS IN SERVICE. If a member's employment with an employer or
controlled group member should terminate and such member is subsequently
reemployed by an employer or controlled group member, the following shall
apply:
(a) If the reemployment occurs before the member has five
consecutive one-year breaks in service (as defined below), membership in
the plan will be immediately reinstated upon reemployment if he then meets
the requirement of subparagraph 2.1(c), and the credited service to which
the member was entitled at the time of termination shall also be
reinstated.
(b) A "one-year break in service" means a plan year during which
a member has not completed more than 500 hours of service.
(c) If the member was eligible for monthly pension or deferred
benefits under this plan at the time of termination, membership in this
plan will be immediately reinstated upon reemployment, if he then meets the
requirements of subparagraph 2.1(c), and the credited service to which the
member was entitled at the time of termination shall also be reinstated.
(d) Notwithstanding any other provisions of this plan:
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<PAGE>
(i) the reinstatement of the credited service prior to
January 1, 1976 to which a member was entitled at the time of termination
of employment shall, except as provided in subparagraph (ii) below, be
determined in accordance with the terms of the plan in effect at the date
of his termination of employment.
(ii) if employment with an employer or controlled group
member terminates (or terminated) after an employee had completed four or
more years of continuous employment and if said employee is subsequently
reemployed by an employer and remains employed so as to be entitled to ten
or more years of credited service following his reemployment, or is
subsequently reemployed by an employer after becoming 55 years of age and
remains employed until attaining normal retirement age as defined by this
plan, then all periods of his credited service and service with the
employers shall be included in computing his credited service hereunder,
and the resulting total number of years of credited service shall be used
to compute the member's benefits according to the method of computation
obtained at the time the member retires or otherwise terminates employment
under the plan.
(e) Notwithstanding the foregoing provisions of this subsection
3.3, the reinstatement of credited service earned prior to January 1, 1976
to which a member was entitled at the time of termination of employment
shall be determined in accordance with the terms of the plan in effect at
the date of his termination of employment.
Credited service, for purposes of this subsection, shall mean the credited
service used in determining a member's eligibility for a monthly pension,
disability pension or monthly deferred benefits.
3.4. EARNINGS. A member's "earnings" means his total cash
compensation for services rendered to the employers, but before any
reduction for basic contributions he had elected under Wolverine World
Wide, Inc. Money Accumulation Plan or contributions he had elected under
Wolverine World Wide, Inc. Pre-Tax Premium Plan excluding any earnings
attributable to payments to the member from the Wolverine World Wide, Inc.
Executive Long Term Incentive Plan. In the case of a salesman who is
compensated on a commission basis, his "earnings" for any period shall be
an amount equal to 70% of the amount that would otherwise be determined
under the preceding sentence to be his earnings. Notwithstanding the
preceding provisions of this subsection 3.4, in no event shall the amount
of a member's compensation for any year taken into account for purposes of
the plan exceed $200,000 ($150,000 for benefits accruing in years beginning
after December 31, 1993), or such greater amount as may be determined by
the Commissioner of Internal Revenue for that year.
-8-
<PAGE>
3.5. FINAL AVERAGE EARNINGS. The "final average earnings" of a member
shall be the monthly average of his earnings for the four consecutive
calendar years for which his earnings were highest within the ten
consecutive calendar years ending with the year of his retirement or
earlier termination of employment (or the monthly average of his earnings
for the entire period he received earnings if such period is less than four
calendar years). For purposes of the preceding sentence, a member's
earnings for the calendar year of his retirement or earlier termination of
employment shall be annualized (based on his current rate of pay plus
non-deferred bonus), and he shall be deemed to have received earnings during
that entire calendar year. Such average shall be computed by dividing the
total of the member's earnings for such four calendar year period (or
shorter total period if applicable) by 48 (or by the number of months
within that shorter period).
3.6. CONTROLLED GROUP MEMBER. A "controlled group member" means (i)
any corporation which is not the company but is a member of a controlled
group of corporations (within the meaning of Section 1563(a) of the
Internal Revenue Code, determined without regard to Sections 1563(a)(4) and
1563(e)(3)(C) thereof) which contains the company, or (ii) any trade or
business (whether or not incorporated) which is under common control with
the company (within the meaning of Section 414(c) of the Internal Revenue
Code).
3.7. PREDECESSOR COMPANY. A "predecessor company" means any
corporation or other entity the stock, assets or business of which is
acquired by an employer, whether by merger, consolidation, purchase of
assets or otherwise, and any predecessor thereto designated by the company.
3.8. LEAVE OF ABSENCE. A "leave of absence" as used in the plan
means an absence from active employment with an employer or controlled
group member for service in the United States Armed Forces, sickness,
accident, vacation or other similar reasons, and when granted will be
governed by rules uniformly applied to all employees similarly situated.
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SECTION 4
AMOUNT OF PENSION BENEFITS
4.1. NORMAL OR DEFERRED RETIREMENT. A member who retires on or after
his normal retirement date will be entitled to a monthly pension in an
amount equal to the greater of:
(a) the excess of:
(i) 1.6 percent of final average earnings multiplied by the
member's years of credited service (not in excess of 30 years), over
(ii) his Monthly Social Security Allowance (as defined in
subsection 4.4); or
(b) the applicable amount specified in Appendix B multiplied by
his number of years of credited service, but disregarding credited service
in excess of 30 years;
(c) for a Supplement F "A Executive", 2.4 percent of final
average earnings multiplied by the "A Executive's" years of credited
service (not in excess of 25 years); for a Supplement F "B Executive", 2.0
percent of final average earnings multiplied by the "B Executive's" years
of credited service (not in excess of 25 years);
less any charge against such pension under subsection 5.5. In no event
shall the amount of a member's monthly pension be less than his accrued
benefit as of December 31, 1988 (determined under the terms of the plan as
then in effect as though the member had terminated employment on that
date).
In no event shall a member's monthly pension be less than an amount equal
to the sum of his accrued benefit under the plan as of December 31, 1993
(based on his credited service and earnings through that date and the terms
of the plan as then in effect) plus his benefit accrued under the plan
after December 31, 1993 (based on his credited service and earnings after
that date and the terms of the plan as in effect on his retirement date).
(d) FRESH START WITH EXTENDED WEAR-AWAY FOR SECTION 401(A)(7)
MEMBERS. Notwithstanding anything in this subsection 4.1 to the contrary,
with respect to a "Section 401(a) (17) member," the amount determined under
clause (a) above shall be the greater of:
(i) the "actual benefit amount," or
(ii) the sum of (A) the member's "adjusted accrued benefit"
and (B) the member's "future service benefit."
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<PAGE>
For the purpose of the preceding sentence, a "Section
401(a)(17) member" means an employee with accrued benefits in plan years
beginning before January 1, 1994 that were determined taking into account
earnings that exceeded $150,000 in any plan year. The "actual benefit
amount" shall equal the amount (determined after limiting the member's
earnings to $150,000 effective as of January 1, 1994 as required by Section
401(a)(17) of the Code) actually determined under clause (a) of subsection
4.1 without regard to this subsection 4.1(c). The member's adjusted
accrued benefit shall equal the member's accrued benefit determined as of
the last day of the last plan year beginning before January 1, 1994
(determined without regard to the reduction to $150,000 of the
compensation limit of Section 401(a)(17) of the Code) and, if such accrued
benefit would have been greater but for the application of Section 415 of
the Code, adjusted as permitted under Section 415(d) of the Code. The
member's "future service benefit" shall equal the member's benefit
determined under clause (a) above as applied to his years of service
following December 31, 1993. Such future service benefit shall be
determined in accordance with the provisions of (1) or (2) below, whichever
is applicable to the member: (1) With respect to a member who would have
less than 30 years of credited service as of the later of December 31, 1993
or his normal retirement date, his future service benefits shall equal the
excess of (1) 1.6 percent of his final average earnings multiplied by his
years of credited service credited for plan years beginning after December
31, 1993 (not in excess of the difference between 30 years and the number
of years of credited service used in determining the member's adjusted
accrued benefit under the plan as of the last day of the last plan year
beginning before January 1, 1994), over (2) his Monthly Social Security
Allowance (as defined in subsection 4.4). In calculating a member's
Monthly Social Security Allowance for purposes of the immediately preceding
sentence, only his years of credited service credited for plan years
beginning after December 31, 1993 shall be taken into account and then only
so many years which are not in excess of the difference between 30 years
and the number of years of credited service used in determining the
member's adjusted accrued benefit under the plan as of the last day of the
last plan year beginning before January 1, 1994.
(2) With respect to a member who is not described in
(1) above, his future service benefit shall be determined by multiplying
(A) the excess of (1) 1.6 percent of his final average earnings multiplied
by his total years of credited service (not in excess of 30 but without
regard to the year in which credited), over (2) his Monthly Social Security
Allowance (as defined in subsection 4.4), by (B) a fraction, the numerator
of which is the member's total years of credited service at his normal
retirement date credited for plan years beginning after December 31, 1993
and the denominator of which is the number of his total years of credited
service on his normal retirement date (not limited to 30 years or service
earned after December 31, 1993).
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4.2. EARLY RETIREMENT - DEFERRED PAYMENT. A member who retires on an
early retirement date will be entitled to a monthly pension, commencing at
his normal retirement date, in an amount equal to the greater of:
(a) The amount determined (i) by multiplying 1.6 percent of what
his final average earnings would have been at his normal retirement date by
the number of years of credited service (not in excess of 30 years) he
would have had at his normal retirement date, assuming he had continued in
the active employ of the employers to that date and had continued to
receive the same earnings he was receiving immediately prior to his early
retirement date; (ii) by reducing the amount determined under (i) above by
his Monthly Social Security Allowance (as defined in subsection 4.4 but
based on the number of years of credited service he would have had at his
normal retirement date); and (iii) by multiplying the amount determined
under (ii) above by a fraction, the numerator of which shall be his number
of years of credited service (not limited to 30 years) at his early
retirement date and the denominator of which shall be the total number of
years of credited service (not limited to 30 years) he would have had at
his normal retirement date assuming he had continued in the active employ
of the employers to that date; or
(b) The applicable amount specified in Appendix B multiplied by
his number of years of credited service, but disregarding credited service
in excess of 30 years; less any charge against such pension under
subsection 5.5.
(c) A member's benefit under subsection (a) shall be the greater
of:
(i) the member's benefit determined under (a) for all years
of credited service;
(ii) the member's benefit determined under (a) immediately
before January 1, 1996 plus the member's accrued benefit for years of
credited service beginning on and after January 1, 1996.
(d) FRESH START WITH EXTENDED WEAR-AWAY FOR SECTION 401(A)(17)
MEMBERS. Notwithstanding anything in this subsection 4.2 to the contrary,
with respect to a "Section 401(a)(17) member," the amount determined under
clause (a) above shall be the greater of:
(i) the "actual benefit amount," or
(ii) the sun of (A) the member's adjusted accrued benefit"
and (B) the member's "future service benefit."
For the purpose of the preceding sentence, a "Section
401(a)(17) member means an employee with accrued benefits in plan years
beginning before January 1, 1994 that were determined taking into account
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earnings that exceeded $150,000 in any plan year. The "actual benefit
amount" shall equal the amount (determined after limiting the members'
earnings to $150,000 effective as of January 1, 1994 as required by Section
401(a)(17) of the Code) actually determined under clause (a) of subsection
4.2, whichever is applicable to the member, without regard to this
subsection 4.2(c). The member's "adjusted accrued benefit" shall equal the
member's accrued benefit determined as of the 1st day of the last plan year
beginning before January 1, 1994 (determined without regard to the
reduction to $150,000 of the compensation limit of Section 401(a)(17) of the
Code) and, if such accrued benefit would have been greater but for the
application of Section 415 of the Code, adjusted as permitted under Section
415(d) of the Code. The member's future service benefit shall equal the
member's benefit determined under clause (a) above as applied to his years of
service following December 31, 1993. Such future service benefit shall equal
the product of:
(1) the excess of (A) 1.6 percent of what his final
average earnings would have been at his normal retirement date multiplied
by the number of years of credited service (not in excess of 30) he would
have had at his normal retirement date, assuming he had continued in the
active employ of the employers to that date and continued to receive the
same earnings he was receiving immediately prior to his early retirement
date, over (B) his Monthly Social Security Allowance (as defined in
subsection 4.4 but based on the number of years of credited service he
would have at his normal retirement date), and
(2) a fraction the numerator of which shall be his
number of years of credited service (not limited to 30 years) for plan
years beginning after December 31, 1993 at his early retirement date and
the denominator of which shall be the total number of years of credited
service he would have had at his normal retirement date assuming he had
continued in the active employ of the employers to that date (not limited
to 30 years or service earned after December 31, 1993).
4.3. EARLY RETIREMENT - IMMEDIATE PAYMENT. In lieu of receiving the
monthly pension otherwise payable under subsection 4.2 commencing on his
normal retirement date, a member who retires on an early retirement date
may elect a monthly pension commencing on his early retirement date or on
the first day of any calendar month thereafter before his normal retirement
date. Such monthly pension will be computed in accordance with subsection
4.2, but reduced (except as provided in the following sentence) by 1/3 of
one percent thereof for each month by which commencement of the pension
precedes the member's normal retirement date. If the amount of a member's
monthly pension is determined under subparagraph 4.2(a), then only the
portion thereof calculated under subparagraph 4.2(a)(i) shall be reduced as
provided in the preceding sentence, and the portion thereof calculated
under subparagraph 4.2(a)(ii) shall be reduced by 1/180th thereof for each
of the first 60 months and by 1/360th thereof for each of the next 60
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months, by which commencement of the pension precedes the member's Social
Security retirement age. An election by a member under this subsection 4.3
must be in writing and filed with the committee prior to the date earlier
payment of the member's pension is to begin.
4.4. MONTHLY SOCIAL SECURITY ALLOWANCE. A member's "Monthly Social
Security Allowance" shall be an amount equal to the lesser of:
(a) the product of:
(i) 3/4 of 1% of the lesser of:
(A) the member's Final Average Compensation (as
defined below), or
(B) the member's Covered Compensation (as defined
below),
multiplied by
(ii) the member's number of years of credited service (up to
30 years); or
(b) one-half of the member's monthly pension or deferred benefit
calculated under subparagraph 4.1(a)(i) or 4.2(a)(i), whichever applies,
but based on the smallest of:
(i) the member's final average earnings,
(ii) the member's Final Average Compensation, or
(iii) the member's Covered Compensation.
A member's "Final Average Compensation" is the monthly average of the
member's earnings from the employers during the three consecutive plan
years immediately preceding the year of his retirement or earlier
termination of employment, but excluding earnings for any year in excess of
the Social Security taxable wage base for that year. A member's "Covered
Compensation" is the monthly average of the Social Security taxable wage
bases in effect for each of the 35 calendar years ending with the year the
member attains (or would attain) Social Security retirement age, assuming
that the Social Security taxable wage base for future years is the same as
the Social Security taxable wage base in effect for the current year. If
payment of a member's monthly pension begins on or after his normal
retirement date but prior to his Social Security retirement age, the
member's Monthly Social Security Allowance shall be reduced by 1/180th
thereof for each month by which payment of the member's benefits precedes
his Social Security retirement age.
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4.5. ACTUARIAL EQUIVALENT. For purposes of subsection 5.6.
subparagraph 7.2(b), subsections 7.6 and 7.9, and paragraph B-2 of
Supplement B, the "actuarial equivalent" of the amount of a member's
monthly pension or deferred benefit (otherwise payable to him on a life
annuity basis commencing on his normal retirement date) or the present
value of a member's cumulative accrued benefits shall be computed as of the
first day of the plan year on the basis of:
(a) The annual rate of interest on 30-year Treasury Securities
determined for the third month preceding the plan year in which benefits
begin;
(b) the prevailing Commissioner's Standard Table under Code
Section 417(e)(3) (which for 1995 is 83 GAM modified by Revenue Ruling 95-6);
and
(c) such other assumptions uniformly applied to all members.
No adjustment in a determination of an actuarially equivalent value or
amount or present value of a member's benefits shall be made if the
foregoing method of determining actuarial equivalence or present value is
changed subsequent to the date a computation is made.
4.6 BENEFITS NONFORFEITABLE AT NORMAL RETIREMENT. A member's right
to his normal retirement benefit shall be nonforfeitable on and after the
date he attains age 65 years.
4.7. BENEFIT LIMITATIONS. Notwithstanding any other provisions of the
plan, a member's monthly pension or monthly deferred benefit as of the end
of any plan year may not exceed an amount which is equivalent to a monthly
pension or deferred benefit payable for life only (not taking into account
that portion of any joint and survivor annuity which constitutes a
qualified joint and survivor annuity under the Internal Revenue Code),
equal to $7,500 (or such greater amount as may be determined by the
Commissioner of Internal Revenue for calendar years ending after December
31, 1987 which begin with or within that plan year). If payment of a
member's monthly pension or deferred benefit begins before he attains the
social security retirement age, such limitation shall be reduced so that it
is equivalent to a monthly benefit of $7,500 commencing at the social
security retirement age. If payment of a member's monthly pension begins
after he attains the social security retirement age, such limitation shall
be increased so that it is equivalent to a monthly benefit of $7,500
commencing at the social security retirement age. For purposes of adjusting
amounts under this subsection 4.7, the interest rate assumption shall be
the greater (or the lesser, in the case of benefits beginning after the
social security retirement age) of 5% or the rate specified in subsection
4.5 for determining actuarial equivalence. In the case of a member with
less than 10 years of participation in the plan, the foregoing limitation
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shall be multiplied by a fraction, the numerator of which shall be the
member's number of full and fractional years of participation in the plan
(but not less than 1) and the denominator of which shall be 10. The
preceding sentence shall be applied separately with respect to each change
in the benefit structure of the plan. The provisions of this subsection 4.7
shall not reduce the monthly pension or deferred benefit of any member
below such member's accrued benefit as of December 31, 1986 (determined
under the terms of the plan as in effect on May 5, 1986 as though the
member had terminated employment on December 31, 1986).
4.8. COMBINED BENEFIT LIMITATIONS. If a member of this plan also is a
participant in a defined contribution plan maintained by an employer or
controlled group member, the aggregate benefits payable to, or on account
of, him under both plans will be determined in a manner consistent with
Section 415 of the Internal Revenue Code and Section 1106 of the Tax Reform
Act of 1986. Accordingly, there will be determined with respect to the
member a defined benefit plan fraction and a defined contribution plan
fraction in accordance with said Sections 415 and 1106. The benefits
provided for the member under this plan will be adjusted to the extent
necessary so that the sum of such fractions determined with respect to the
participant does not exceed 1.0. For purposes of this subsection, the
benefits provided under Supplement D shall be treated as paid from a
separate defined contribution plan.
4.9. DEFERRED RETIREMENT MINIMUM BENEFIT. In no event shall the
monthly pension of a member who retires after his normal retirement date be
less than (i) the amount of monthly pension he would have received if he
had retired on this normal retirement date, plus (ii) an actuarially
determined increase, reflecting the aggregate amount of monthly pension
payments which were not paid to such member for those calendar months of
employment, if any, beginning on or after his normal retirement date during
which he worked fewer than 8 days or completed fewer than 40 hours of
service. If payment of a member's monthly pension begins prior to
retirement on his required commencement date (as defined in subsection
7.5), then: (a) the amount of any additional pension that otherwise would
be accrued by the member after that date shall be reduced (but not below
zero) by the actuarial equivalent of the pension payments made to the
member after that date; and (b) the amount of pension payable to the member
shall be adjusted, as of each subsequent January 1, to reflect the
additional benefits, if any, accrued by the member during the immediately
preceding calendar year.
4.10. TEMPORARY LIMITATION ON BENEFIT ACCRUAL. Notwithstanding
any other contrary provision of the plan, in calculating the accrued
benefit (including the right to any optional benefit provided under the
plan) of any participant, such participant shall accrue no additional
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benefit under the plan on or after the date this provision is adopted to
the extent that such additional benefit accrual exceeds the benefit which
would otherwise accrue in accordance with the terms of the plan as
subsequently amended to comply with those qualification requirements
described in Income Tax Regulations Section 1.401(b)-1(b)(2) (ii) (TRA
'86). This provision shall be effective until the last day of the first
plan year commencing in 1989 and shall be effective for such period if and
only if the subsequent TRA '86 amendment is made on or before the last day
of the first plan year commencing in 1989. In addition the benefit accrued
by any participant during the 1989 plan year shall in no event exceed the
benefit accrual provided during the 1989 plan year with respect to such
participant under the terms of the plan as subsequently amended to comply
with TRA '86. However, such participants accrued benefit shall not be less
than what the participant had accrued as of the last day of the last plan
year beginning before January 1, 1989.
4.11. NO DUPLICATION OF BENEFITS. If a member who is entitled to
a monthly pension or deferred benefit under this plan also is or was
entitled to a benefit under any other pension plan (other than a
governmental plan) to which an employer or controlled group member has made
contributions, then, except as otherwise specifically provided, the
benefits payable to such a member under this plan shall be reduced by an
amount which is actuarially equivalent to the portion, if any, of his
benefits under such other plan which is based on service which is also
taken into account in determining his benefits under this plan.
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SECTION 5
DISABILITY PENSION
5.1. DISABILITY PENSION. If a member becomes totally and permanently
disabled (as described in subsection 5.2) after the completion of 15 or
more years of credited service, and such disability continues for a period
of six months and he is retired on a disability retirement date, he will be
entitled to a monthly disability pension in an amount equal to the
applicable amount specified in Appendix B multiplied by his number of years
of credited service, but disregarding credited service in excess of 30
years, less any charge against such pension under subsection 5.5. If the
member is living on the date which otherwise would have been his normal
retirement date, then his benefits shall be recomputed under subsection 4.1
as of his normal retirement date on the basis of his credited service and
his final average earnings as at his disability retirement date, if such
recomputation will produce an increased pension for the member.
5.2. PERMANENT DISABILITY. A member shall be considered to be totally
and permanently disabled for purposes of the plan if in the opinion of a
qualified physician selected by the committee the member has incurred a
disability which prevents him from engaging in any employment or occupation
for remuneration or profit, and in the opinion of such physician the
disability will be permanent and continuous during the remaining lifetime
of the member. A member will not be considered to have become totally and
permanently disabled for purposes of the plan if his disability:
(a) resulted from war, or an act of war, or as a result of his
having willfully or illegally participated in fights, riots or civil
insurrection; or
(b) was incurred while serving in the armed forces or any nation
or arose as a result of such service and he is receiving a military
disability pension on account thereof, or if his disability was incurred
during or arose out of employment by someone other than an employer.
The committee, before approving payment of any disability pension, may
require reasonable proof in such form as the committee may decide,
including the certificate of a duly licensed physician, that the member
has incurred a disability as described above in this subsection and is
entitled to receive disability benefits under the Social Security Act.
5.3. PAYMENT OF DISABILITY PENSION. A member's disability pension will
be payable as provided in subsection 7.1, the first payment to be made on
the member's disability retirement date. A member entitled to a monthly
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disability pension under this Section 5 will be entitled to elect an
optional form of benefit under subsection 7.2.
5.4. DISCONTINUANCE OF DISABILITY PENSION. A member shall not be
entitled to receive disability pension payments under the plan if at any
time prior to his normal retirement date the committee finds that he no
longer is disabled as described in subsection 5.2, or if he refuses to
submit to a medical examination at any reasonable time prior to his normal
retirement date (but not more frequently than semi-annually) for the
purpose of verifying the continuance of his disability.
5.5. CHARGES AGAINST PENSIONS AND DEFERRED BENEFITS. The monthly
pension or deferred benefits otherwise payable to a member under the plan
shall be reduced by any payments to or on behalf of such member:
(a) On account of disability due to injury or occupational
disease for which the employer is liable pursuant to Worker's Compensation
or occupational disease laws (other than payment of actually incurred
medical expenses) after the member is eligible to receive and has met all
requirements for commencement of a normal retirement, early retirement,
disability pension or deferred benefit.
(b) In the nature of a disability pension (other than a
military service disability pension, Disability Insurance Benefits under
the Social Security Act, or payments under any state law enacted pursuant
to Title I of the Social Security Act) under federal or state law.
Payments on account of dismemberment or loss of sight, and payments arising
from the total and permanent disability provisions of group life insurance
policies shall not be so deducted. However, any lump sum payment on
account of Workmen's Compensation or other disability benefits payable in a
lump sum which are deductible in accordance with the foregoing shall be
charged on a monthly basis against the pension or deferred benefits
otherwise payable under the plan, commencing with the date such lump sum
payment is received by the member. A lump sum payment shall be so charged,
however, only to the extent that the lump sum payment would not previously
have been exhausted if the member had been receiving the monthly amount of
his pension or deferred benefits and the lump sum payment had been charged
since the earlier of the member's disability retirement date and the date
the member last completed an hour of service. In no event will any pension
or deferred benefits be paid to a member until any lump sum payment
received by him, as charged in accordance with the preceding sentence, is
exhausted.
5.6. REEMPLOYMENT AFTER DISABILITY. If a member's disability pension
is discontinued in accordance with subsection 5.4 and he is reemployed by
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an employer immediately thereafter, his credited service as at his
disability retirement date will be reinstated. His benefits, if any,
payable after his period of reemployment is terminated shall be determined
in accordance with the plan. If such member is not reemployed by an
employer immediately after his disability pension is discontinued, he will
be entitled to such benefits as he otherwise may be eligible to receive
under the plan based on his credited service and final average earnings to
his disability retirement date. Any such benefits will be reduced by
amounts determined by the committee to be actuarially equivalent to the
benefits previously paid to the member under the plan.
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SECTION 6
TERMINATION OF EMPLOYMENT BEFORE RETIREMENT
6.1. MONTHLY DEFERRED BENEFIT. A member whose employment with all of
the employers is terminated for any reason other than his death before his
retirement date, but after he has completed five or more years of credited
service, will be entitled to a monthly deferred benefit commencing on his
normal retirement date and payable in accordance with subsection 7.1. The
amount of his monthly deferred benefit will be computed in accordance with
subsection 4.2 (as in effect as of the date that his employment with the
employers terminated) as though such date were his early retirement date.
A member entitled to a monthly deferred benefit under this Section 6 will
not be entitled to elect an optional form of benefit under subsection 7.2.
6.2. EARLY COMMENCEMENT OF BENEFIT. A member who is entitled to a
monthly deferred benefit under subsection 6.1 and who has completed ten or
more years of credited service may elect to have such benefit commence as
of the first day of any month after he attains age 60 years but before his
normal retirement date, payable as provided in subsection 7.1. Such
monthly deferred benefit will be computed in accordance with subsection
6.1, but will be reduced (except as provided in the following sentence) by
1/3 of one percent thereof for each month by which commencement of the
benefit precedes the member's normal retirement date. If the amount of a
member's monthly deferred benefit is determined under subparagraph 4.2(a),
then only the portion thereof calculated under subparagraph 4.2(a)(i) shall
be reduced as provided in the preceding sentence, and the portion thereof
calculated under subparagraph 4.2(a)(ii) shall be reduced by 1/180th
thereof for each of the first 60 months and by 1/360th thereof for each of
the next 60 months, by which commencement of the benefit precedes the
member's Social Security retirement age. Each election under this
subsection 6.2 must be in writing and filed with the committee prior to the
date earlier payment of his monthly deferred benefit will begin.
6.3. TERMINATION PRIOR TO FIVE YEARS OF CREDITED SERVICE. If a
member's employment with the company terminates for any reason including
his death before he has completed five years of credited service, no
benefits shall be payable under the plan.
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SECTION 7
PAYMENT OF BENEFITS
7.1 NORMAL FORM OF PAYMENT. Except as otherwise specifically
provided, payment of monthly pensions (including disability pensions) and
monthly deferred benefits shall be made to a member as follows:
(a) JOINT AND SURVIVOR ANNUITY. A member who is legally married
on the date as of which such payments commence and who has not made an
election in accordance with subparagraph (c) below shall receive a joint
and survivor annuity which shall provide for payment to the member of 90
percent of the amount otherwise payable to him in accordance with the plan
on a life annuity basis, continuing during the member's lifetime, and if
the member's spouse is living at the date of the member's death, payment of
45 percent of such amount to be made to such spouse until the spouse's
death occurs.
(b) LIFE ANNUITY. A member who does not qualify for a joint and
survivor annuity under subparagraph (a) above, or a member who prior to the
date as of which such payments commence elects under subparagraph (c) below
not to receive his monthly pension, monthly disability pension or monthly
deferred benefit in the form of a joint and survivor annuity, shall receive
a monthly pension, monthly disability pension or monthly deferred benefit
in accordance with the plan on a life annuity basis.
(c) ELECTION TO WAIVE JOINT AND SURVIVOR ANNUITY. A member may
make a written election to waive the joint and survivor annuity at any time
during the 90-day period ending on the date payment of his benefits
commences. Such an election will be effective only if the member's spouse
consents to the election in writing, and such consent acknowledges the
effect of the waiver and is witnessed by a plan representative or a notary
public. At least nine months prior to the earliest date on which a member
may begin to receive benefits under the plan (without regard to any
requirement for consent), the committee shall furnish him with a written
explanation of the terms and conditions of the joint and survivor annuity
under subparagraph (a) above; the member's right to make, and the effect
of, an election to waive the joint and survivor annuity; the requirement of
spousal consent to such a waiver; and the member's right to make and the
effect of, a revocation of such waiver. An election under this
subparagraph may be revoked by a member at any time prior to the date
payment of his benefits commences.
For purposes of this subsection 7.1, a member's spouse means the spouse to
whom the member was married at the date payment of his benefits commenced.
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7.2. OPTIONAL FORMS OF PAYMENT. Subject to the provisions of
subsection 7.3, in lieu of the normal form and amount of pension specified
in subsection 7.1, a member before his normal or earlier retirement date
(or as permitted by subsection 5.3), may elect a benefit of actuarially
equivalent value in one of the following forms:
(a) A member who is legally married on the date as of which
payments commence may elect to receive a joint and survivor annuity
providing payment to the member of 80 percent of the amount otherwise
payable to him on a life annuity basis, continuing during the member's
lifetime and, if the member's spouse is living at the date of the member's
death, payment of the same amount to such spouse until the spouse's death
occurs.
(b) A life and five-year certain annuity providing payment to
the member of 97 percent of the amount otherwise payable to him on a life
annuity basis, continuing during the member's lifetime and, if the member
dies before receiving 60 monthly payments, payment of the same amount to
his beneficiary (as defined in subsection 7.4) for the balance of such 60-month
period.
(c) A life and ten-year certain annuity providing payment to the
member of 91 percent of the amount otherwise payable to him on a life
annuity basis, continuing during the member's lifetime and, if the member
dies before receiving 120 monthly payments, payment of the same amount to
his beneficiary (as defined in subsection 7.4) for the balance of such 120-month
period.
(d) Such other form or amount of pension or benefit of an
actuarially equivalent value as may be authorized by the committee and
offered to all members on a non-discriminatory basis.
Payment of an optional form of pension will commence no later than the date
on which the member's pension in the normal form otherwise would commence
under subsection 7.1, and shall comply with the requirements of Section
401(a) (9) of the Internal Revenue Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the regulations
thereunder.
7.3. ELECTION AND DISCONTINUANCE OF OPTIONS. A member's election of an
optional form of pension specified in subsection 7.2 shall be subject to
the following:
(a) An election of an option under subsection 7.2 must be in
writing and signed by the member; and will be effective only if the
member's spouse, if any, consents to the election in writing, and such
consent acknowledges the effect of the election and is witnessed by a plan
representative or a notary public.
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(b) The committee shall provide each member with a written
explanation of the terms and conditions of the options described in
subsection 7.2 and the effect of an election to receive his benefits in a
form other than that set forth in subparagraph 7.1(a).
(c) Evidence of a member's good health may be required before
election of an optional form of pension will be permitted under subsection
7.2 unless request for payment in the optional form is made before the
later of a date 90 days following the date as of which the plan is adopted
by his employer or a date at least six months before the member's
retirement date.
(d ) A member who has elected an option may revoke it at any time
prior to his retirement date by writing filed with the committee. A member
may not change an option unless a request for change is made at least six
months before his normal or earlier retirement date or unless evidence of
good health of the member satisfactory to the committee is filed within a
reasonable time after the request is made. A revocation or change of an
option may be made without the consent of any person the member designated
in the option. Notwithstanding the above, any change is subject to
subparagraph 7.3(a) above.
(e) If a member who elected an optional form of pension dies
before his retirement date, the option elected automatically will be
cancelled and no benefits will be paid to any person under the option;
provided, however, if the member had continued in the employ of the
employers after his normal retirement date, survivorship benefits will be
paid in accordance with the option elected in the same manner and amount as
would have been paid if the member had retired on the date of his death and
died immediately thereafter.
(f) If a member elects the optional form of pension payable
under subparagraph 7.2(a) and his spouse dies before the member's
retirement date or if the member retires on a disability retirement date,
the option automatically will be cancelled and the member's pension will be
paid to him as provided in subsection 7.1 unless a new election can be and
is made by the member.
(g) If a member who elected an optional form of pension resigns
or is dismissed from the employ of all of the employers before retirement
under the plan, the option elected automatically will be cancelled and,
unless he is entitled to receive a monthly deferred benefit under
subsection 6.1, no benefits will be payable under the plan to or on account
of the member.
7.4. DESIGNATION OF BENEFICIARIES. A member who has elected an
optional form of pension under subsection 7.2 may, from time to time,
designate any person or persons (who may be designated concurrently,
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contingently or successively) to whom any benefits payable under the option
after the member's death are to be distributed. A beneficiary designation
will be effective only when it is signed and filed with the committee while
the member is still alive and will cancel all beneficiary designations
previously filed by the member. If a member designates someone other than
(or in addition to) his spouse as his primary beneficiary, his spouse must
consent in writing to the designation. Such a consent will be effective
only if it acknowledges the effect of the beneficiary designation and is
witnessed by a plan representative or a notary public. If a member
designates someone other than (or in addition to) his spouse as his primary
beneficiary, and his spouse does not (or cannot) consent and is living at
his death, the member's beneficiary designation shall be ineffective, and
his benefits shall be distributed to his spouse. If a deceased member
failed to designate a beneficiary as provided above, or if the designated
beneficiary dies before the member or before complete payment of the
member's benefits, the member's benefits shall be distributed to his spouse
or, if there is none, the committee, in its discretion, may direct payment
of such benefits as follows:
(a) To or for the benefit of any one or more of his relatives by
blood, adoption or marriage and in such proportions as the committee
determines; or
(b) To the legal representative or representatives of the estate
of the last to die of the member and his designated beneficiary.
7.5. REQUIRED BENEFIT PAYMENTS. Unless a member makes an election to
defer payment, payment of benefits under the plan to a member shall
commence not later than the 60th day after the latest of the end of the
plan year in which:
(a) the member attains age 65 years,
(b) the tenth anniversary of the year in which the member
commenced participation in the plan occurs, or
(c) the member terminates employment with the company.
Notwithstanding the foregoing sentence, payment of the benefits of a
member who is not a 5 percent owner of an employer and who attained age 70-1/2
before January 1, 1988 must commence by April 1 of the calendar year
next following the later of the calendar year in which the member attains
age 70-1/2 or the calendar year in which his retirement date occurs (his
"required commencement date"). Payment of the benefits of (a) a member who
is a 5 percent owner of an employer at any time during the plan year ending
with or within the calendar year in which such member attains age 66-1/2 or
any subsequent plan year, and (b) a member who is not a 5 percent owner of
an employer and who attains age 70-1/2 on or after January 1, 1988 must
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commence by April 1 of the calendar year next following the calendar year
in which the member attains age 70-1/2 (his "required commencement date");
except that payment of the benefits of a member who is not a 5 percent
owner of an employer and who attained age 70-1/2 during the calendar year
beginning on January 1, 1988 and ending on December 31, 1988 must commence
by April 1, 1990 (his "required commencement date"). A member whose
benefits commence in accordance with the immediately preceding sentence but
whose employment with the employers has not terminated shall continue to
receive credited service pursuant to subsection 3.2, except that credited
service in excess of 30 years shall be disregarded. A member's benefits
shall not be payable over a period greater than the joint and last survivor
expectancy of the member and his beneficiary. If a member dies before his
required commencement date, his benefits must be distributed over a period
not exceeding the greatest of: (i) five years from the death of the member;
(ii) in the case of payments to a designated beneficiary other than the
member's spouse, the life expectancy of such beneficiary, provided payments
begin within one year of the member's death; or (iii) in the case of
payments to the member's spouse, the life expectancy of such spouse,
provided payments begin by the date the participant would have attained age
70-1/2. The life expectancy of a member, his spouse or his designated
beneficiary shall be determined by use of the expected return multiples
contained in the regulations under Section 72 of the Internal Revenue Code.
If a participant so elects, the life expectancy of the participant and his
spouse shall be recalculated annually. In the absence of such an election,
life expectancies shall not be recalculated.
7.6. RE-EMPLOYMENT. If a former employee who is receiving, or is
entitled to receive, a monthly pension or a monthly deferred benefit is
re-employed by the company, no benefits shall be payable to him under the plan
during his period of re-employment, and any benefits payable under the plan
to him after his period of re-employment ends shall be determined in
accordance with the plan as then in effect, shall take into account the
benefits to which he was entitled prior to re-employment or prior to his
normal retirement date, as applicable, and shall be actuarially adjusted to
reflect any benefits he previously received.
7.7. FACILITY OF PAYMENT. When a person entitled to benefits under the
plan is under legal disability, or, in the committee's opinion, is in any
way incapacitated so as to be unable to manage financial affairs, the
committee may direct the trustee to pay the benefits to such person's legal
representative, or to a relative or friend of such person for such person's
benefit, or the committee may direct the application of such benefits for
the benefit of such person. Any payment made in accordance with the
preceding sentence shall be a full and complete discharge of any liability
for such payment under the plan.
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7.8. MISSING MEMBERS OR BENEFICIARIES. Neither the committee nor any
employer is required to search for or locate a member or beneficiary. If
the committee attempts to notify a member or beneficiary that he is
entitled to benefits under the plan, and the member or beneficiary fails to
claim his benefits or make his whereabouts known to the committee within a
reasonable time after the notification, the benefits of the member or
beneficiary shall be forfeited; provided that such benefits shall be
reinstated if the member or beneficiary subsequently makes a claim for the
forfeited benefits.
7.9. LUMP SUM PAYMENT OF ACCRUED BENEFITS.
(a) If the present value of a member's entire nonforfeitable
accrued benefit under the plan, or the pre-retirement spouse's benefit
payable under subsection 8.3 of the plan, does not exceed $3,500, the
trustee shall pay such present value to the member (or in the event of his
death, to his surviving spouse) in a lump sum on or before the January 1 or
July 1 next following the one-year anniversary of his termination of
employment. Notwithstanding the provisions of subsection 3.3, if a member
who received a lump sum payment under this subsection 7.9 is subsequently
reemployed by an employer, his years of employment before his termination
of employment shall be disregarded in determining his credited service
under the plan.
(b) QDRO. If the plan receives a QDRO, the QDRO requires (or
the alternate payee consents) and the present value of the accrued benefit
attributable to all alternate payees does not exceed a present value of
$10,000, the trustee shall pay the value of the alternate payee's benefit
in a lump sum as soon as administratively practicable. "QDRO" means a
qualified domestic relations order, as defined in Code Section 414(p), that
is issued by a competent state court and that meets the following
conditions:
(i) ALTERNATE PAYEE. The alternate payee must be the
spouse or former spouse or a child or other dependent of the participant.
(ii) REASON FOR PAYMENTS. The payments must relate to
alimony, support of a child or other dependent, or a division of marital
property.
(iii) CONTENTS. The QDRO must contain the name and
address of the participant and the alternate payee, the amount of benefits
or percentage of the participant's vested accrued benefit to be paid to the
alternate payee, the valuation date as of which the amount or percentage is
to be determined, and instructions concerning the timing and method of
payment.
(iv) RESTRICTIONS. A QDRO may not require:
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(A) This plan to pay more than the actuarially
equivalent present value of the participant's vested accrued benefit to the
participant and all alternate payees;
(B) A method, payment date, or duration of payment not
otherwise permitted under this article; and
(C) Cancellation of the prior rights of another
alternate payee.
7.10. RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any
other provisions of the plan, for any plan year the benefits paid to a
member who was among the 25 highly compensated employees and highly
compensated former employees (as defined in Section 414(q) of the Internal
Revenue Code) receiving the greatest compensation from the employers for
that or any prior plan year shall be restricted to an amount equal to the
payments that would be made on behalf of the member for that plan year
under a single life annuity that is the actuarial equivalent of the
member's accrued benefit under the plan. The foregoing restriction shall
not apply for any plan year if:
(a) After payment of all benefits payable under the plan to such
member for that year, the value of plan assets equals or exceeds 110
percent of the value of the aggregate current liabilities to all members
and beneficiaries under the plan; or
(b) The value of all benefits payable under the plan to such
member for that year is less than one percent of the value of the aggregate
current liabilities to all members and beneficiaries under the plan before
payment of such benefits; or
(c) The value of the benefits payable under the plan to such
member for that year does not exceed 53,500; or
(d) The plan terminates and the benefit received by such member
is nondiscriminatory under Section 401(a)(4) of the Internal Revenue Code;
or
(e) Such member has agreed to repay to the plan amounts
distributed therefrom that are in excess of the foregoing restrictions and
which are necessary for the distribution of assets upon plan termination to
satisfy Section 401(a)(4) of the Internal Revenue Code, provided that
such agreement has been secured or collateralized in accordance with
applicable governmental requirements.
7.11. DIRECT TRANSFER OF ELIGIBLE ROLLOVER DISTRIBUTIONS. If
payment of a member's benefits constitutes an eligible rollover
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distribution under Section 402(c)(4) of the Internal Revenue Code, then
the member may elect to have such distribution paid directly to an eligible
retirement plan described in Section 402(c)(8)(B) of the Internal Revenue
Code. Each election by a member under this subsection 7.11 shall be made
at such time and in such manner as the committee shall determine, and shall
be effective only in accordance with such rules as shall be established
from time to time by the committee.
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SECTION 8
DEATH BENEFITS
8.1. DEATH BEFORE COMMENCEMENT OF BENEFITS. Except as provided in
subsection 8.3 and in this subsection, no death benefits are payable on
account of a member who dies before commencement of his benefits under the
plan. If a member dies on or after his 65th birthday but before his
retirement date, and a spouse's benefit is not payable on behalf of the
member under subsection 8.3, survivorship benefits will be paid in
accordance with the form in which the member's benefits would have been
paid if he had retired on the last day of the month in which his death
occurred and died immediately thereafter. Survivorship benefits payable
under this subsection 8.1 shall commence on the first day of the month next
following the date of the member's death.
8.2. DEATH AFTER COMMENCEMENT OF BENEFITS. The death benefits, if any,
of a member who dies after commencement of his benefits under the plan are
those specified under the form in which his benefits were being paid.
8.3. PRE-RETIREMENT SPOUSE'S BENEFIT. A benefit shall be payable to
the spouse of a member who dies after August 22, 1984, subject to and
determined in accordance with the following terms and conditions:
(a) ELIGIBILITY FOR SPOUSE'S BENEFIT. A monthly spouse's benefit
shall be payable on behalf of a member who, at the date of his death:
(i) was married and had been married to the same spouse for
the six month period ending on that date;
(ii) had either attained age 65 years or completed five or
more years of credited service;
(iii) had not begun to receive benefits under the plan.
(b) AMOUNT OF SPOUSE'S BENEFIT. The spouse's benefit shall be in
an amount determined as follows:
(i) If the member was employed and had attained age 65
years at the date of his death, 50% of the amount of monthly pension to
which the member would have been entitled if the first day of the month
coincident with or next following the date of his death were his retirement
date and his benefits were payable in the form specified in subparagraph
7.1(a), computed pursuant to subsection 4.1.
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(ii) If the member's death occurs while employed and after
he had completed ten or more years of credited service but before
attainment of age 65 years, 50% of the amount of monthly pension which
would have been provided under the normal form of payment (as described in
subparagraph 7.1(a)), computed pursuant to subsection 4.1 had he continued
in the employ of the employer until his normal retirement date, but based
on his final average earnings as at his date of death.
(iii) If the member was not employed at the date of his
death and had not met the requirements of subsection 2.4 as of the date he
left the employ of the employer but had completed ten or more years of
credited service, 50% of the amount of monthly deferred benefit if his
benefits were payable in the form described in subparagraph 7.1(a),
computed pursuant to subsection 4.2.
(iv) If the member's death occurs after he had completed
five or more years of credited service but before he had either completed
ten years of credited service or attained age 65 years, 50% of the amount of
monthly deferred benefit, computed pursuant to subsection 6.2, to which the
member would have been entitled if his benefits were payable in the form
specified in subparagraph 7.1(a) of the plan commencing on the first day of
the month coincident with or next following the date the member would have
attained age 60 years (or his date of death, if later).
(c) PAYMENT OF SPOUSE'S BENEFIT. Survivorship benefits payable
under subparagraphs 8.3(b)(i) and (ii) shall commence on the first day of
the month following the date of the member's death and shall end with the
month in which the member's spouse dies. Survivorship benefits payable
under subparagraphs 8.3(b)(iii) and (iv) shall commence as of the first
day of the month coincident with or next following the later of the date of
the member's death or the date the member would have attained age 60 years
and shall end with the month in which the member's spouse dies.
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SECTION 9
THE COMMITTEE
9.1. MEMBERSHIP. A committee consisting of not less than three nor
more than seven persons (who may but need not be employees of the
employers) shall be appointed by the company. The Secretary of the company
shall certify to the trustee from time to time the appointment to (and
termination of) office of each member of the committee and the person who
is selected as secretary of the committee.
9.2. COMMITTEE'S GENERAL POWERS, RIGHTS AND DUTIES. Except as otherwise
specifically provided and in addition to the powers, rights and duties
specifically given to the committee elsewhere in the plan and the trust
agreement, the committee shall have the following powers, rights and
duties:
(a) To select a secretary, if it believes it advisable, who may
but need not be a committee member.
(b) To construe and interpret the provisions of the plan and
make factual determinations thereunder, including the discretionary power
to determine the rights or eligibility of employees or members and any
other persons, and the amounts of their benefits under the plan, and to
remedy ambiguities, inconsistencies or omissions, and such determinations
shall be binding on all parties.
(c) To adopt such rules of procedure and regulations as in its
opinion may be necessary for the proper and efficient administration of the
plan and as are consistent with the plan and trust agreement.
(d) To enforce the plan in accordance with the terms of the plan
and the trust agreement and the rules and regulations adopted by the
committee as above.
(e) To direct the trustee as respects payments or distributions
from the trust fund in accordance with the provisions of the plan.
(f) To furnish the employers with such information as may be
required by them for tax or other purposes in connection with the plan.
(g) To employ agents, attorneys, accountants, actuaries or other
persons (who also may be employed by an employer) and to allocate or
delegate to them such powers, rights and duties as the committee may
consider necessary or advisable to properly carry out administration of the
plan, provided that such allocation or delegation and the acceptance
thereof by such agents, attorneys, accountants, actuaries or other persons,
shall be in writing.
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(h) To direct the trustee as respects investments in and
withdrawals from Wolverine Investment Trust, as described in Article VII of
the trust.
9.3. MANNER OF ACTION. During a period in which two or more committee
members are acting, the following provisions apply where the context
admits:
(a) A committee member by writing may delegate any or all of his
rights, powers, duties and discretions to any other member, with the
consent of the latter.
(b) The committee members may act by meeting or by writing
signed without meeting, and may sign any document by signing one document
or concurrent documents.
(c) An action or a decision of a majority of the members of the
committee as to a matter shall be as effective as if taken or made by all
members of the committee.
(d) If, because of the number qualified to act, there is an even
division of opinion among the committee members as to a matter, a
disinterested party selected by the committee shall decide the matter and
his decision shall control.
(e) Except as otherwise provided by law, no member of the
committee shall be liable or responsible for an act or omission of the
other committee members in which the former has not concurred.
(f) The certificate of the secretary of the committee or of a
majority of the committee members that the committee has taken or
authorized any action shall be conclusive in favor of any person relying on
the certificate.
9.4. INTERESTED COMMITTEE MEMBER. If a member of the committee also is
a member of the plan, he may not decide or determine any matter or question
concerning distributions of any kind to be made to him or the nature or
mode of settlement of his benefits unless such decision or determination
could be made by him under the plan if he were not serving on the
committee.
9.5. RESIGNATION OR REMOVAL OF COMMITTEE MEMBERS. A member of the
committee may be removed by the company at any time by ten days' prior
written notice to him and the other members of the committee. A member of
the committee may resign at any time by giving ten days' prior written
notice to the company and the other members of the committee. The company
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may fill any vacancy in the membership of the committee; provided, however,
that if a vacancy reduces the membership of the committee to less than
three, such vacancy shall be filed as soon as practicable. The company
shall give prompt written notice thereof to the other members of the
committee. Until any such vacancy is filled, the remaining members may
exercise all of the powers, rights and duties conferred on the committee.
9.6. INFORMATION REQUIRED BY COMMITTEE. Each person entitled to
benefits under the plan must file with the committee from time to time in
writing such person's post office address and each change of post office
address. Any communication, statement or notice addressed to any such
person at the last post office address filed with the committee will be
binding upon such person for all purposes of the plan. Each person entitled
to benefits under the plan also shall furnish the committee with such
documents, evidence, data or information as the committee considers
necessary or desirable for the purpose of administering the plan. The
employers shall furnish the committee with such data and information as the
committee may deem necessary or desirable in order to administer the plan.
The records of an employer as to an employee's or member's period of
employment, termination of employment and the reason therefor, leave of
absence, reemployment and earnings will be conclusive on all persons unless
determined to the committee's satisfaction to be incorrect.
9.7. EVIDENCE. Evidence required of anyone under the plan may be by
certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.
9.8. UNIFORM RULES. The committee shall administer the plan on a
reasonable and nondiscriminatory basis and shall apply uniform rules to all
members similarly situated.
9.9. REVIEW OF BENEFIT DETERMINATIONS. The committee will provide
notice in writing to any member or beneficiary whose claim for benefits
under the plan is denied and the committee shall afford such member or
beneficiary a full and fair review of its decision if so requested.
9.10. COMMITTEE'S DECISION FINAL. Subject to applicable law, any
interpretation of the provisions of the plan and any decisions on any
matter within the discretion of the committee made by the committee in good
faith shall be binding on all persons. A misstatement or other mistake of
fact shall be corrected when it becomes known and the committee shall make
such adjustment on account thereof as it considers equitable and
practicable.
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SECTION 10
GENERAL PROVISIONS
10.1. ADDITIONAL EMPLOYERS. Any subsidiary or affiliate of the
company that is not an employer may adopt the plan and become an employer
and a party to the trust agreement by:
(a) Filing with the company, the committee and the trustee a
certified copy of a resolution of its Board of Directors adopting the plan;
and
(b) Filing with the trustee and the committee a certified copy
of a resolution of the Board of Directors of the company consenting to such
action.
The plan may be extended to any branch or division of the company or of any
subsidiary or affiliate of the company, and such branch or division shall
become an employer upon filing with the committee a written instrument
(approved by the committee) to that effect.
10.2. WAIVER OF NOTICE. Any notice required under the plan may be
waived by the person entitled to notice.
10.3. GENDER AND NUMBER. Where the context admits, words in the
masculine gender shall include the feminine and neuter genders, the
singular shall include the plural, and the plural shall include the
singular.
10.4. CONTROLLING LAW. Except to the extent superseded by laws of
the United States, the laws of Michigan shall be controlling in all matters
relating to the plan and trust agreement.
10.5. EMPLOYMENT RIGHTS. The plan does not constitute a contract
of employment, and membership in the plan will not give any employee the
right to be retained in the employ of an employer, nor any right or claim
to any benefit under the plan, unless such right or claim has specifically
accrued under the terms of the plan.
10.6. LITIGATION BY MEMBERS. If a legal action begun against the
trustee, one or more employers, the committee or any member or members
thereof, by or on behalf of any person results adversely to that person, or
if a legal action arises because of conflicting claims to a member's or
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other person's benefits, the cost to the trustee, the employers, the
committee or any member or members thereof of defending the action shall be
charged to the extent permitted by law to the sums, if any, which were
involved in the action or were payable to the member or other person
concerned.
10.7. INTERESTS NOT TRANSFERABLE. The interests of members and
their beneficiaries under the plan and the trust agreement are not subject
to the claims of their creditors and, except as may be required by the tax
withholding provisions of the Internal Revenue Code or any state's income
tax act, may not be voluntarily or involuntarily sold, transferred,
alienated or assigned except under a QDRO.
10.8. ABSENCE OF GUARANTY. Neither the committee nor any employer
in any way guarantees the trust fund from loss or depreciation. Except as
required by applicable law, the employers do not guarantee any payment to
any person. The liability of the trustee or the committee to make any
payment under the plan will be limited to the assets held by the trustee
which are available for that purpose.
10.9. ACTION BY EMPLOYERS. Any action required or permitted to be
taken by an employer under the plan shall be by resolution of its Board of
Directors, by resolution of a duly authorized committee of its Board of
Directors, or by a person or persons authorized by resolution of its Board
of Directors or such committee.
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SECTION 11
CONTRIBUTIONS
11.1. EMPLOYER CONTRIBUTIONS. Subject to the provisions of Section
12, the employers expect and intend to contribute to the plan from time to
time such amounts as shall be required under accepted actuarial principles
to maintain the plan in a sound condition. Each employer's contribution
for a plan year is conditioned on its deductibility under Section 404 of
the Internal Revenue Code in that year.
11.2. MEMBER CONTRIBUTIONS. No member will be required or
permitted to make any contributions under the plan.
11.3. APPLICATION OF FORFEITURES. Forfeitures arising under the
plan for any reason shall not be used to increase the benefit any person
otherwise would be entitled to receive under the plan at any time prior to
termination of the plan or prior to the complete discontinuance of
contributions by his employer. The amounts so forfeited with respect to any
employer shall be used to reduce the employer's contributions under the
plan.
11.4. NO INTEREST IN EMPLOYERS. The employers shall have no
right, title or interest in the trust fund, nor will any part thereof at
any time revert or be repaid to an employer, directly or indirectly,
unless:
(a) the Internal Revenue Service initially determines that the
plan does not meet the requirements of Section 401(a) of the Internal
Revenue Code, in which event any contribution by the employer must be
returned within one year after the date the initial qualification is
denied;
(b) all liabilities under the plan attributable to such employer
shall have been paid or provided for in full and assets remain in the trust
fund because of an erroneous actuarial computation, in which event the
assets remaining shall revert and be repaid to the employer;
(c) a contribution is made by such employer by mistake of fact
and such contribution is returned to the employer within one year after
payment to the trustee; or
(d) a contribution conditioned on the deductibility thereof is
disallowed as an expense for federal income tax purposes and such
contribution (to the extent disallowed) is returned to the employer within
one year after the disallowance of the deduction.
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The amount of any contribution that may be returned to an employer pursuant
to subparagraph (c) or (d) above must be reduced by any losses of the trust
fund allocable thereto.
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SECTION 12
AMENDMENT AND TERMINATION
12.1. AMENDMENT. While the employers expect and intend to
continue the plan, the company reserves the right to amend the plan (in
accordance with the procedures set forth in subsection 10.9) from time to
time, except as follows:
(a) The duties and liabilities of the committee under the plan
cannot be changed substantially without its consent;
(b) No amendment shall reduce the value of a member's benefits
to less than the amount he would be entitled to receive if he had resigned
from the employ of all of the employers on the day of the amendment;
(c) In the case of an amendment which changes any vesting
schedule under the plan, a member who has completed three or more years of
credited service must be permitted to elect, within a reasonable time after
the adoption of such amendment, to have the nonforfeitable percentage of
his benefits computed under the plan without regard to such amendment;
(d) In the case of any merger or consolidation with, or transfer
of assets or liabilities to, any other plan, each member's benefit if the
plan terminated immediately after such merger, consolidation or transfer
shall be equal to or greater than the benefit he would have been entitled
to receive if the plan had terminated immediately before the merger,
consolidation or transfer; and
(e) Except as provided in Section 11, under no condition shall
any amendment result in the return or repayment to any employer of any part
of the trust fund or the income therefrom, or result in the distribution of
the trust fund for the benefit of anyone other than employees and former
employees of the employers and any other persons entitled to benefits under
the plan.
12.2. TERMINATION. The plan will terminate as to all employers on
any date specified by the company (in accordance with the procedures set
forth in sub-section 10.9) if thirty days' advance written notice of the
termination is given to the committee, the trustee and the other employers.
The plan will terminate as to an individual employer on the first to occur
of the following:
(a) The date it is terminated by that employer (in accordance
with the procedures set forth in subsection 10.9) if 30 days' advance
written notice of the termination is given to the committee, the trustee
and the other employers.
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(b) The date that employer is judicially declared bankrupt or
insolvent.
(c) The date that employer completely discontinues its
contributions under the plan (a mere failure of the employer to make a
contribution for any year shall not be considered as a discontinuance so
long as the plan does not have an accumulated funding deficiency under
Section 412 of the Internal Revenue Code as applied to that employer at the
end of such year).
(d) The dissolution, merger, consolidation or reorganization of
that employer, or the sale by that employer of all or substantially all of
its assets, except that:
(i) in any such event arrangements may be made with the
consent of the company whereby the plan will be continued by any successor
to that employer or any purchaser of all or substantially all of its
assets, in which case the successor or purchaser will be substituted for
that employer under the plan and the trust agreement; and
(ii) if an employer is merged, dissolved or in any other way
reorganized into, or consolidated with, any other employer, the plan as
applied to the former employer will automatically continue in effect
without a termination thereof.
12.3. NONFORFEITABILITY ON TERMINATION. On termination or partial
termination of the plan as respects any employer, the rights of all
affected members to benefits accrued to the date of such termination or
partial termination shall be nonforfeitable, but shall be payable only to
the extent funded as of such date.
12.4. NOTICE OF AMENDMENT OR TERMINATION. Members will be notified
of amendment or termination within a reasonable time.
12.5. ALLOCATION AND DISTRIBUTION OF ASSETS ON TERMINATION. On
termination of the plan as respects any employer, the committee will direct
the allocation and distribution of plan assets allocable to members
employed by that employer and to retired or terminated members and other
persons entitled to benefits under the plan to the extent of their benefits
attributable to employment with that employer. After payment of any
expenses of administration and liquidation allocable to such plan assets,
such plan assets remaining shall be allocated and distributed to such
members and other persons in the following manner and order to the extent
of the sufficiency of such plan assets:
(a) FIRST, to the following persons:
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(i) To each person who was receiving a benefit under the
plan as of the beginning of the three-year period ending on the date of
termination of the plan, the portion of such person's benefit which
constitutes a "basic-benefit" under Title IV of the Employee Retirement
Income Security Act of 1974, determined in accordance with the terms of the
plan in effect during the five-year period ending on such date under which
such person's benefit would be the least; and
(ii) To each member who had not retired at the beginning of
the three-year period ending on the date of termination of the plan but who
was eligible for retirement at the beginning of such three-year period, the
portion of any benefit which constitutes a "basic benefit" under Title IV
of the Employee Retirement Income Security Act of 1974 and which would have
been payable if the member had retired and begun to receive a benefit at
the beginning of such three-year period, determined in accordance with the
terms of the plan in effect during the five-year period ending on such date
under which such member's benefit would be the least.
(b) NEXT, to each person who was entitled to a benefit under the
plan as of the date of termination of the plan, the portion of his benefit
which constitutes a "basic benefit" under Title IV of the Employee
Retirement Income Security Act of 1974 (determined without regard to
Sections 4022(b)(5) and 4022(b)(6) thereof), properly adjusted for any
allocation of assets with respect to his benefit made under subparagraph
(a) above.
(c) NEXT, to each person who was entitled to a benefit under the
plan as of the date of termination of the plan, his nonforfeitable benefit,
properly adjusted for any allocation of assets with respect to his benefit
made under subparagraphs (a) or (b) above.
(d) FINALLY, to each person who was a member of the plan on the
date of termination of the plan, his benefit under the plan accrued up to
that date, properly adjusted for any allocation of assets with respect to
his benefit made under subparagraphs (a), (b) or (c) above. In making
such allocations, the benefits contemplated under subparagraph (a) above
shall be completely provided for before any allocations are made under
subparagraphs (b), (c) and (d), and the allocations provided for in
subparagraph (b) above shall be completely provided for before making any
allocations under subparagraphs (c) and (d), and so forth. In the event
that:
(i) The assets available for allocation under either of
subparagraphs (a) or (b) above are not sufficient to satisfy in full the
benefits of all persons described in that subparagraph, the assets shall be
allocated pro rata among such persons on the basis of the present value (as
of the date of termination of the plan) of their respective benefits
described in that subparagraph.
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(ii) The assets available for allocation under subparagraph
(c) above are not sufficient to satisfy in full the benefits of persons
described in that subparagraph, except as provided in the following
sentence, the assets shall be allocated to each such person on the basis of
his benefit determined in accordance with the terms of the plan in effect
at the beginning of the 5-year period ending on the date of termination of
the plan, properly adjusted for any allocation of assets with respect to
his benefit made under subparagraphs (a) or (b). If the assets available
for allocation under subparagraph (c) above are sufficient to satisfy the
benefits described in the preceding sentence, then the benefits of persons
described in that subparagraph shall be determined on the basis of the plan
as amended by the most recent plan amendment effective during such 5-year
period under which the assets available for allocation are sufficient to
satisfy in full the benefits of such persons, and any assets remaining to
be allocated under such subparagraph shall be allocated on the basis of the
plan as amended by the next succeeding plan amendment effective during such
period.
(iii) There are not sufficient assets to make allocation
under subparagraph (d) above, the allocation otherwise to be made under
that subparagraph shall be proportionately reduced. Distribution may be
made in cash or property or partly in each, provided property is
distributed at its fair market value as of the date of distribution as
determined by the trustee.
12.6. LIMITATIONS ON TERMINATION. Notwithstanding any other
provisions of the plan, in the event of termination of the plan, the
benefits of any highly compensated employee or highly compensated former
employee (as defined in Section 414(q) of the Internal Revenue Code) shall
be limited to benefits that are nondiscriminatory under Section 401(a)(4)
of the Internal Revenue Code.
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SECTION 13
SPECIAL RESTRICTIONS
13.1. EFFECTIVE DATE AND OVERRIDING PROVISIONS. The following
provisions of this Section 13 shall become effective on a "restricted date"
(as defined in subsection 13.5 below) and, upon becoming effective, shall
remain effective until the following related unrestricted date, and during
that period shall supersede any other Provisions of the plan to the extent
necessary to eliminate any inconsistencies between the provisions of this
Section and said other provisions, subject to any amendment of the plan
required by applicable law.
13.2. PLAN TERMINATION. If the plan is terminated during the
period beginning on a restricted date and ending on the related
unrestricted date, and after all liabilities have been paid or provided for
in full assets remain in the trust fund because of an erroneous actuarial
computation, then such remaining assets shall first be applied, to the
extent permissible under applicable law, to the purchase of retiree medical
and retiree life insurance payable to members and their beneficiaries in
satisfaction of the employers' then-existing obligations, and any assets
still remaining shall be applied on a pro rata basis to increase the
benefits of members and their beneficiaries, subject, however, to the
applicable legal limitations on benefits payable from tax-qualified plans.
13.3. PLAN MERGER. In the event of any merger or consolidation of
the plan with another plan or any transfer of assets or liabilities of the
plan to another plan which is effected during the period beginning on a
restricted date and ending on the related unrestricted date, then: (a) the
accrued benefit of each member who is actively employed by an employer as
of the effective date of such merger, consolidation or transfer of assets
or liabilities and with respect to whom liability for the payment of
benefits hereunder is being merged or consolidated with or transferred to
another plan shall become fully vested; (b) the vested accrued benefit of
each member, retired or terminated member, and beneficiary in the plan
shall be increased in accordance with subsection 14.2 hereof as if the plan
had terminated as to all employers immediately prior to any such merger,
consolidation or transfer; and (c) prior to consummation of any such
merger, consolidation or transfer, the accrued benefit (as increased
hereunder, if applicable) of each member, retired or terminated member, and
beneficiary with respect to whom liability for the payment of benefits
hereunder is being merged or consolidated with or transferred to another
plan shall be satisfied by the purchase of a guaranteed annuity contract
from a financially sound insurance company which represents an irrevocable
commitment to satisfy the accrued benefit (as increased hereunder, if
applicable) of such person.
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13.4. VESTING BENEFIT ACCRUAL, ETC. During the period beginning
on a restricted date and ending on the related unrestricted date, the
provisions of the plan may not be amended in any manner which would
adversely affect in any way the computation or amount of or the entitlement
to retirement benefits hereunder, including, but not limited to, any
adverse change in or to: (a) the rate at which benefits accrue or vest; (b)
the compensation recognized hereunder; or (c) the optional forms of
payment available to a member, retired or terminated member, or beneficiary
hereunder, including the time of commencement of such benefits and any
actuarial factors utilized in connection therewith.
13.5. RESTRICTED DATE. For purposes of this Section 13, the term
"restricted date" means the first date on which either: (i) any "person" or
"group" [as such terms are used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Act")] becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of more than fifty percent (50%) of the then outstanding voting
stock of the company, other than through a transaction arranged by, or
consummated with the prior approval of, its board of directors; or (ii)
during any period of two consecutive years (not including any period prior
to the adoption of this provision), individuals who at the beginning of
such period constitute the board of directors (and any new director whose
election by the board of directors or whose nomination for election by the
company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority thereof. An
"unrestricted date" means the last day of the two-year period following the
restricted date.
13.6. PROHIBITION AGAINST AMENDMENT. Except as may be otherwise
required by applicable law, the provisions of this Section 13 may not be
amended or deleted, nor superseded by any other provision of the plan,
during the period beginning on a restricted date and ending on the related
unrestricted date, without the written consent of a majority in both number
and interest of the members who are actively employed by the employers both
immediately prior to the restricted date and at the date of such amendment.
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SECTION 14
DIRECT TRANSFER OF ELIGIBLE
ROLLOVER DISTRIBUTIONS
14.1. PURPOSE. This Section 14 applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the plan to the
contrary that would otherwise limit a distributee's election under this
Section 14, a distributee may elect, at the time and in the manner
prescribed by the plan administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
14.2. DEFINITION OF ELIGIBLE ROLLOVER DISTRIBUTION. An eligible
rollover distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
14.3. DEFINITION OF ELIGIBLE RETIREMENT PLAN. An eligible
retirement plan is an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
14.4. DEFINITION OF DISTRIBUTEE. A distributee includes an
employee or former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former employee's spouse
or former spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
14.5. DEFINITION OF DIRECT ROLLOVER. A direct rollover is a
payment by the plan to the eligible retirement plan specified by the
distributee.
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The Employer has executed this instrument this _____ day of
_________________, 19__.
WOLVERINE WORLD WIDE, INC.
By _________________________________________
Stephen L. Gulis, Jr.
Its: Vice President and Chief Financial
Officer
EMPLOYER
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SUPPLEMENT A
A-1. BENEFITS FOR UFCW EMPLOYEES. Pursuant to collective bargaining
agreements between the company and collective bargaining representatives of
employees at the company's Tannery, Factory C and Distribution Center
facilities, which employees are represented by The United Food and
Commercial Workers International Union, AFL-CIO ("the UFCW") a separate
pension plan and trust will be established for employees represented by
each such UFCW bargaining unit, effective January 1, 1984. On and after
January 1, 1984, pension benefits for employees of the company represented
by the UFCW bargaining units including former employees and retired
employees who were represented by such bargaining units and who are
eligible for benefits under this plan ("UFCW employees") will be provided
solely under such separate plans and trusts. From and after January 1,
1984, this plan shall no longer be extended to any UFCW employees and in no
event will any benefits be paid to or on account of any such UFCW employees
under this plan.
A-2. TRANSFER OF ASSETS. Plan assets, as apportioned by the actuary
to provide for and secure the accrued vested benefits of UFCW employees
will be transferred and assigned to the separate trust established for each
UFCW bargaining unit.
A-3. EFFECTIVE DATES OF BENEFIT INCREASE. For purposes of determining
the amount of benefits payable to any employee hereunder, "$7.00" shall be
substituted for "$6.00" where the latter amount appears in subparagraph
4.1(b), 4.2(b), subsection 5.1 and subparagraph 6.1(a) on the following
dates:
(a) May 1, 1983 UFCW employees represented by the
Factory C Bargaining unit.
(b) August 16, 1983 UFCW employees represented by the
tannery bargaining unit.
(c) October 15, 1983 UFCW employees represented by the
Distribution Center bargaining unit.
(d) July 1, 1983 All other employees.
A-4. THIS SUPPLEMENT CONTROLLING. In the event of any conflict
between any of the provisions of this Supplement and any other provisions
of the plan, the provisions of this Supplement shall control.
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SUPPLEMENT B
SPECIAL RULES FOR TOP-HEAVY PLANS
B-1. PURPOSE AND EFFECT. The purpose of this Supplement B is to
comply with the requirements of Section 416 of the Internal Revenue Code of
1954. The provisions of this Supplement B shall be effective for each plan
year beginning after December 31, 1983 in which the plan is a "top-heavy
plan" within the meaning of Section 416(g) of the Internal Revenue Code.
B-2. TOP-HEAVY PLAN. In general, the plan will be a top-heavy plan
for any plan year if, as of the last day of the preceding plan year (the
"determination date"), the present value of the cumulative accrued benefits
of members who are key employees (as defined in Section 416(i)(1) of the
Internal Revenue Code) exceeds 60 percent of the present value of the
cumulative accrued benefits of all members. In making the foregoing
determination, the following special rules shall apply:
(a) The present value of a member's accrued benefit shall be
increased by the aggregate distributions, if any, made with respect to the
member during the 5-year period ending on the determination date.
(b) The accrued benefit of a member who was previously a key
employee, but who is no longer a key employee, shall be disregarded.
(c) The accrued benefit of a beneficiary of a member shall be
considered an accrued benefit of the member.
(d) The accrued benefit of a member who did not perform any
services for an employer during the 5-year period ending on the
determination date shall be disregarded.
(e) The accrued benefit of a participant who is not a key
employee shall be determined under the method used for all plans of the
employers or, if there is no such method, as if such benefit accrued no
faster than the slowest accrual rate permitted under Section 411(b)(1)(C)
of the Internal Revenue Code.
B-3. KEY EMPLOYEE. In general, a "key employee" is an employee who,
at any time during the 5-year period ending on the determination date, is:
(a) an officer of an employer or controlled group member
receiving annual compensation greater than 50% of the limitation in effect
under Section 415(b)(1)(A) of the Internal Revenue Code; provided, that
for purposes of this subparagraph (a), no more than 50 employees of the
employers and controlled group members (or if lesser, the greater of 3
employees or 10 percent of the employees)shall be treated as officers;
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(b) one of the ten employees receiving annual compensation from
the employers and/or controlled group members of more than the limitation
in effect under Section 415(c)(1)(A) of the Internal Revenue Code and
owning the largest interests in an employer or controlled group member;
(c) a 5 percent owner or an employer or controlled group member;
or
(d) a 1 percent owner of an employer or controlled group member
receiving annual compensation from the employers and/or controlled group
members of more than $150,000.
B-4. MINIMUM VESTING. For any plan year in which the plan is a top-heavy
plan, a member's vested percentage in his accrued benefit shall not
be less than the percentage determined under the following table:
<TABLE>
<CAPTION>
VESTED
YEARS OF CREDITED SERVICE PERCENTAGE
------------------------- ----------
<S> <C> <C>
Less than 2 0
2 20
3 40
4 60
5 80
6
or more 100
</TABLE>
If the foregoing provisions of this paragraph B-4 become effective, and the
plan subsequently ceases to be a top-heavy plan, each member who has then
completed three or more years of credited service may elect to continue to
have the vested percentage of his accrued benefit determined under the
provisions of this paragraph B-4.
B-5. MINIMUM BENEFIT. A member's monthly pension or deferred benefit,
commencing at his normal retirement date and payable as a life annuity,
shall not be less than an amount equal to 2 percent of his average
compensation (as defined below), multiplied by the number of years (not to
exceed 10) of his top-heavy service (as defined below). A member's
"average compensation" means the monthly average of his compensation for
the 5 consecutive years of which his compensation was highest, disregarding
any compensation paid after the last year in which the plan is a top-heavy
plan. A member shall be entitled to a year of "top-heavy service" for each
year of his credited service after December 31, 1983 during which the plan
is a top-heavy plan and he is a member thereunder.
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B-6 AGGREGATION OF PLANS. In accordance with section 416(g)(2) of
the Internal Revenue Code, other plans maintained by the employers or
controlled group members may be required or permitted to be aggregated with
this plan for purposes of determining whether the plan is a top-heavy plan.
For all purposes hereof:
(a) A "required aggregation group" means each qualified plan of
the employer controlled group members in which at least one key employee
participates, and any other qualified plan of the employer or controlled
group member which enables the plan to meet the requirements of Sections
401(a)(4) and 410 of the Internal Revenue Code.
(b) A "permissive aggregation group" means the required
aggregation group of plans plus any other plan or plans of the employer or
controlled group members which, when considered as a group with the
required aggregation group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Internal Revenue Code.
B-7. NO DUPLICATION OF BENEFITS. If the employers and/or controlled
group members maintained more than one plan, the minimum benefit otherwise
required under paragraph B-5 above may be reduced in accordance with
regulations of the Secretary of the Treasury to prevent inappropriate
duplication of minimum benefits or contributions.
B-8. ADJUSTMENT OF COMBINED BENEFIT LIMITATIONS. In order to reduce
the overall limitations on combined plan contributions and benefits under
Section 415 of the Internal Revenue Code, the number 1.00 shall be
substituted for 1.25 in determining defined benefit fractions and defined
contribution fractions in accordance with Section 415 of the Internal
Revenue Code and Section 235 of the Tax Equity and Fiscal Responsibility
Act of 1982 for purposes of subsection 4.8. Provided, however, that the
foregoing sentence shall not apply if (A) the top-heavy ratio is 0.90 or
less and (B) each non-key employee receives an additional minimum benefit
or contribution under a plan of the employer. In the case of a non-key
employee participating only in this or another defined benefit plan, the
additional minimum benefit for each year of service counted is one
percentage point, up to a maximum of ten percentage points, of the member's
average compensation for the five consecutive years when the member had the
highest aggregate compensation from the employer, computed as described in
B-5 above. In the case of a non-key employee participating only in a
defined contribution plan, the additional minimum contribution is one
percent of the member's compensation. In the case of a non-key employee
participating in both this or another defined benefit plan and a defined
contribution plan, there is no minimum benefit, but the minimum
contribution under the defined contribution plan shall be 7-1/2% of the
member's compensation.
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B-9. USE OF TERMS. All terms and provisions of the plan shall apply
to this Supplement B, except that where the terms and provisions of the
plan and this Supplement B conflict, the terms and provisions of this
Supplement B shall govern.
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SUPPLEMENT C
TO
WOLVERINE EMPLOYEES' PENSION PLAN
PROVISIONS RELATING TO CERTAIN FORMER PARTICIPANTS
UNDER WEBSTER MANUFACTURING UNIT
HOURLY-RATED EMPLOYEES' PENSION PLAN
C-1. INTRODUCTION. Effective May 31, 1988, Webster Manufacturing Unit
Hourly-Rated Employees' Pension Plan (the "Webster Plan") shall be merged
into and continued in the form of this plan, and participants in the
Webster Plan shall become members in this plan. Each such participant is
referred to below in this Supplement as a "Webster Participant". The amount
and form of each Webster Participant's benefit under this plan shall be
governed by the terms of this Supplement C.
C-2. FULL VESTING OF WEBSTER PARTICIPANT'S BENEFIT. Each Webster
Participant who terminates employment on or after May 31, 1988 shall be
fully vested in his benefits under the plan.
C-3. AMOUNT OF WEBSTER PARTICIPANT'S BENEFIT AT NORMAL RETIREMENT
DATE. A Webster Participant's normal benefit under the plan is a monthly
retirement income, commencing on the Webster Participant's normal
retirement date and payable during his lifetime, in an amount equal to the
sum of: (a) $3.00 multiplied by his number of full and fractional years of
credited service under the plan after May 31, 1988; plus (b) $3.00
multiplied by his number of full and fractional years of benefit service
accrued under the Webster Plan after December 31, 1969 and before June 1,
1988; plus (c) $1.20 multiplied by his number of full and fractional years
of benefit service accrued under the Webster Plan before January 1, 1970. A
Webster Participant who was participating in the Webster Plan on December
31, 1987 and who terminates employment on or after May 31, 1988 shall be
entitled to a full year of benefit service for 1988. Except as provided in
paragraph C-4 below, the amount of monthly retirement income computed under
this paragraph C-3 will be used to determine the amount of a Webster
Participant's benefit for all purposes of the plan.
C-4. SUPPLEMENTAL BENEFIT FOR WEBSTER PARTICIPANTS. In addition to the
amount of retirement income computed under paragraph C-3 above, a Webster
Participant who terminates employment on or after May 31, 1988 will be
entitled, regardless of his age at date of hire, to a supplemental monthly
retirement income, commencing on his normal retirement date and payable
during his lifetime, which is actuarially equivalent to the single sum
amount determined as of his employment termination date) as follows:
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(a) If the Webster Participant had completed at least 1 but less
than 10 years of service, an amount equal to $111 multiplied by his number
of years of service;
(b) If the Webster Participant had completed at least 10 but
less than 20 years of service, an amount equal to $166.50 multiplied by his
number of years of service; and
(c) If the Webster Participant had completed 20 or more years of
service, an amount equal to $222 multiplied by his number of years of
service.
C-5. FORM OF PAYMENT OF WEBSTER PARTICIPANT'S BENEFIT. Except as
provided in paragraph C-6 below, a Webster Participant's benefit under this
Supplement C shall be payable in accordance with subsection 7.1 of the
plan. If payments begin before the Webster Participant's normal retirement
date, such benefit shall be reduced in accordance with subsection 4.3 of
the plan.
C-6. LUMP SUM PAYMENT OF WEBSTER PARTICIPANT'S ACCRUED BENEFIT. If the
present value of (a) a Webster Participant's entire nonforfeitable accrued
benefit under the plan, or (b) the pre-retirement spouse's benefit payable
on account of a Webster Participant under subsection 8.3 of the plan, does
not exceed $3,500; the committee, in its discretion, may direct the trustee
to pay such present value to the Webster Participant (or in the event of
his death, to his surviving spouse) in a lump sum upon his termination of
employment. If the present value of a Webster Participant's entire
nonforfeitable accrued benefit under the plan exceeds $3,500, the Webster
Participant may elect to have such present value (or the portion thereof
which is attributable to the supplemental benefit determined under
paragraph C-4 above) paid to him in a lump sum upon his termination of
employment; provided that, if a joint and survivor annuity would otherwise
be provided under subsection 7.1 of the plan, the Webster Participant's
spouse must consent in writing to such form of distribution. If the present
value of a pre-retirement spouse's benefit payable on account of a Webster
Participant under subsection 8.3 of the plan exceeds $3,500, the Webster
Participant's surviving spouse may elect to have such present value paid in
a lump sum. For purposes of this paragraph C-6, a present value shall be
determined as of the date of distribution by using an interest rate not
greater than the interest rate which would be used (as of the date of
distribution) by the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on plan
termination. Notwithstanding the provisions of subsection 3.3 of the plan,
if a Webster Participant who received a lump sum payment under this
paragraph C-6 is subsequently reemployed by an employer, his years of
employment before his termination of employment shall be disregarded in
determining his credited service under the plan.
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C-7. LIMITATIONS. Except to the extent expressly provided herein to
the contrary, the benefits provided pursuant to this Supplement C for a
Webster Participant are subject to all of the terms and conditions of this
plan. Unless specified otherwise, terms used in this Supplement C which are
defined in the plan are intended to have the same meanings as given them in
this plan.
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SUPPLEMENT D
TO
WOLVERINE EMPLOYEES' PENSION PLAN
SECTION 414(K) ACCOUNT
SECTION D1
INTRODUCTION
D1.1. BACKGROUND. Wolverine World Wide, Inc. (the "company")
maintains the Wolverine Employees' Pension Plan (the "plan"). The company
also maintains the Wolverine World Wide, Inc. Money Accumulation Plan (the
"Money Accumulation Plan"). The purpose of the Money Accumulation Plan is
to enable eligible employees to elect to defer a portion of their
compensation by means of employer contributions on their behalf and to make
voluntary contributions from their own funds, and thereby provide for their
future security. Prior to January 1, 1994, participants in the Money
Accumulation Plan were also eligible to receive employer matching
contributions based on the amount of their basic contributions under the
Money Accumulation Plan. However, effective January 1, 1994, employer
matching contributions under the Money Accumulation Plan were discontinued.
D1.2. SECTION 414(K) ARRANGEMENT. Section 414(k) of the Internal
Revenue Code permits the sponsor of a defined benefit pension plan that is
qualified under Section 401(a) of the Internal Revenue Code to implement an
arrangement within the defined benefit plan whereby a participant's benefit
is based partly on the balance of a separate account established under the
plan (a "Section 414(k) account"). For purposes of most requirements
under Section 401(a), benefits based on Section 414(k) accounts are treated
as benefits provided under a defined benefit plan. However, for certain
limited purposes specified in Section 414(k), a defined benefit plan which
includes a Section 414(k) account is treated as consisting of a defined
contribution plan to the extent benefits are based on the separate account
of a participant, and as a defined benefit plan with respect to the
remaining portion of benefits under the plan.
D1.3. PURPOSE; SECTION 414(K) ACCOUNT ARRANGEMENT. The company
desires to establish a Section 414(k) account arrangement within the plan
for the purpose of providing employer matching contributions to individuals
who are participants in both the Money Accumulation Plan and the Section
414(k) account arrangement, where such matching contributions are based on
a participant's basic contributions under the Money Accumulation Plan. To
facilitate such an arrangement, the company will establish a Section 414(k)
account under the plan for each participant in accordance with this
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Supplement D. At all times, the Section 414(k) account arrangement shall
constitute a part of the plan. Employer matching contributions made
pursuant to this Supplement D shall be funded by allocating existing plan
assets to participants' Section 414(k) accounts. Nothing in this
Supplement D shall require additional employer contributions to the plan
beyond those made from existing plan assets as described in the preceding
sentence.
D1.4. DEFINITIONS; APPLICABILITY OF PLAN PROVISIONS; EFFECTIVE
DATE. Except as otherwise expressly stated herein, the benefits provided
under the Section 414(k) account arrangement as established within the plan
shall be governed exclusively by the terms and provisions of this
Supplement D. Notwithstanding the preceding sentence, all terms used in
this Supplement D which are not defined herein shall have the meaning given
such terms in the plan, and to the extent not inconsistent with the terms
of this Supplement D, the Section 414(k) account arrangement shall be
subject to the provisions of the plan that are consistent with the
purposes, terms and operation of this Supplement D. The term "defined
benefit provisions" means the terms of the plan, exclusive of Supplement D.
Solely for purposes of this Supplement D, the term "excess plan assets"
means, as of any date, the amount by which the value of the assets held in
the trust fund (excluding amounts held in the Section 414(k) Trust Account)
exceeds the lesser of (i) 150% of the current liability of the plan (as
defined in Section 412(c)(7)(B) of the Internal Revenue Code) or (ii) the
accrued liability (including normal cost) of the plan (as defined in
Section 412(c)(7)(A)(i) of the Internal Revenue Code). As used in the
preceding sentence, the terms "current liability" and "accrued liability"
shall exclude any benefit obligations arising under this Supplement D. The
value of assets held in the trust fund shall be determined under the
valuation method used by the plan for purposes of Section 412(c)(7) of the
Internal Revenue Code. The term "existing plan assets" means, as of any
date, those assets held in the trust fund which have not previously been
allocated to participants' Section 414(k) accounts pursuant to subsection
7.4 hereof. The effective date of this Supplement D and the Section 414(k)
account arrangement established hereunder shall be January 1, 1994 (the
"effective date").
SECTION D2
ELIGIBILITY AND PARTICIPATION
D2.1. ELIGIBILITY. Each participant in the Money Accumulation
Plan who is eligible to make basic contributions to that plan on or after
January 1, 1994 shall be eligible to participate in the benefits provided
under this Supplement D.
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D2.2. PARTICIPATION. Strictly for purposes of the benefits
provided under this Supplement D, each employee who is eligible to
participate in this Supplement D in accordance with subsection 2.1 above
shall become a participant in this plan as of the first accounting date on
which an employer matching contribution is allocated to his Section 414(k)
account, and will continue as a participant until the later to occur of his
settlement date or the date on which all assets in his Section 414(k)
account to which he is entitled have been distributed or applied to
purchase an annuity contract in accordance with Section 8 of this
Supplement D. Each participant in this Supplement D may also be a
participant for purposes of the defined benefit provisions of this plan to
the extent he satisfies the participation requirements set forth in Section
2 of the plan.
SECTION D3
PARTICIPANT CONTRIBUTIONS
Participant contributions shall neither be required nor permitted
under this Supplement D.
SECTION D4
EMPLOYER CONTRIBUTIONS
D4.1. EMPLOYER MATCHING CONTRIBUTION. For each plan year, the
employers will make an employer matching contribution in an amount equal to
the formula employer contribution determined under subsection 10.1 for that
year, but reduced by the total amount of remainders, if any, to be
allocated as of the last day of such plan year.
D4.2. SOURCE OF EMPLOYER MATCHING CONTRIBUTION. Employer matching
contributions under this Supplement D shall be made only by allocating a
portion of the then existing plan assets to participants' Section 414(k)
accounts and, thus, to the Section 414(k) Trust Account within the trust
fund. Nothing in this Supplement D shall obligate the company or any
employer to make any contributions to the plan out of its general corporate
assets in excess of those required by the defined benefit provisions.
D4.3. LIMITATIONS AND CONDITIONS ON EMPLOYER MATCHING CONTRIBUTION.
Notwithstanding any other provision of this Supplement D to the contrary,
if, as of the first day of any plan year, the plan has no excess plan
assets, then in no event shall existing plan assets be used to make required
employer matching contributions for such plan year.
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SECTION D5
SECTION 414(K) TRUST ACCOUNT AND THE INVESTMENT FUNDS
D5.1. SECTION 414(K) TRUST ACCOUNT. The trustee shall establish a
Section 414(k) Trust Account as a separate account under the trust fund.
Employer matching contributions allocated to participants' Section 414(k)
accounts under subsection 7.4 of this Supplement D will be held by the
trustee in the Section 414(k) Trust Account.
D5.2. THE INVESTMENT FUNDS. The Section 414(k) Trust Account
shall consist of such investment funds as the committee shall determine
from time to time. Pending investment, reinvestment or distribution as
provided in this Supplement D, the trustee may temporarily retain the
assets of any one or more of the investment funds in cash, commercial
paper, short-term government obligations, or undivided interests or
participations in common or collective short-term investment funds. Any
investment fund may be partially or entirely invested in any common or
commingled fund or in any group annuity, deposit administration or separate
account contract issued by a legal reserve life insurance company which is
invested generally in property of the kind specified for the investment
fund. The committee, in its discretion, may direct the trustee to
establish such investment funds or to terminate any of the investment funds
as it shall from time to time consider appropriate and in the best
interests of the participants. The funds established hereunder may be
referred to collectively as the "investment funds" and individually as an
"investment fund."
D5.3. INVESTMENT FUND ELECTIONS. A participant from time to time
may elect one or more of the investment funds for the investment of all or
a portion of the employer matching contributions on his behalf. Each such
election shall be made at such time, in such manner, and with respect to
such investment funds as the committee shall determine, and shall be
effective only in accordance with such rules as the committee shall
establish. If a participant fails to make an election under this
subsection 5.3, his share of the employer matching contributions will be
invested in such investment fund as shall be designated by the committee.
D5.4. INVESTMENT FUND TRANSFERS. A participant may elect that all
or a part of his interest in an investment fund shall be liquidated and the
proceeds thereof transferred to one or more of the other investment funds.
Each such election shall be made at such time, in such manner, and with
respect to such investment funds as the committee shall determine, and
shall be effective only in accordance with such rules as shall be
established from time to time by the committee.
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D5.5. AVAILABILITY OF PLAN ASSETS. Notwithstanding any other
provision of this Supplement D or the defined benefit provisions of the
plan, all assets held in the trust fund (including assets held in the
Section 414(k) Trust Account) shall at all times be available to pay all
benefits under the plan, whether under the defined benefit provisions of
the plan or this Supplement D.
SECTION D6
PERIOD OF PARTICIPATION
D6.1. SETTLEMENT DATE. A participant's "settlement date" will be
the date on which his employment with all of the employers is terminated
because of the first to occur of the following:
(a) EARLY, NORMAL OR LATE RETIREMENT. The date of the
participant's retirement under the plan. A participant's right to his
account balances shall be nonforfeitable on and after attaining age 65
years (his "normal retirement age").
(b) DISABILITY RETIREMENT. The date the participant is retired
from the employ of all of the employers at any age because of disability,
as determined by a qualified physician selected by the committee. A
participant will be considered disabled for the purposes of this
subparagraph if, on account of a disability, he is no longer capable of
engaging in any employment or occupation for remuneration or profit, and
such disability will be permanent and continuous for the rest of his life.
(c) DEATH. The date of the participant's death.
(d) RESIGNATION OR DISMISSAL. The date the participant resigns
or is dismissed from the employ of all of the employers before retirement
under subparagraph (a) or (b) above.
If a participant is transferred from employment with an employer to
employment with a controlled group member then, for the purpose of
determining when his settlement date occurs under this subsection 6.1, his
employment with such controlled group member (or any controlled group
member to which he is subsequently transferred) shall be considered as
employment with the employers.
D6.2. RESTRICTED PARTICIPATION. If (i) payment of all of a
participant's account balances is not made at his settlement date; or (ii)
a participant transfers to a controlled group member; the participant or
his beneficiary will be treated as a participant for all purposes of the
plan, except as follows:
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(a) The participant will not share in employer matching
contributions after his settlement date, or during any period he is
employed by a controlled group member; except as provided in subsection
7.4.
(b) The beneficiary of a deceased participant cannot designate a
beneficiary under subsection 8.5.
If a participant whose participation in the plan is restricted for the
reason specified in (ii) above subsequently is employed by an employer, he
will again become an active participant in the plan on the date he is
reemployed.
SECTION D7
ACCOUNTING
D7.1. SEPARATE ACCOUNTS. The committee will maintain a separate
"Section 414(k) account" in the name of each participant which will
reflect his share of employer matching contributions under this Supplement
D, and the income, losses, appreciation and depreciation attributable
thereto. The committee also may maintain such other accounts in the names
of participants or otherwise as it considers advisable. Unless the context
indicates otherwise, references in this Supplement D to a participant's
"accounts" means all accounts maintained in his name under this Supplement
D.
D7.2. ACCOUNTING DATES. A "regular accounting date" is the last
day of any plan year. A "special accounting date" is each March 31, June
30 and September 30, any date designated as such by the committee and the
date on which the plan is terminated in its entirety or a partial
termination of the plan occurs. The term "accounting date" includes both a
regular accounting date and a special accounting date.
D7.3. ADJUSTMENT OF PARTICIPANTS' ACCOUNTS. As of each accounting
date the committee shall:
(a) FIRST, credit participant's accounts with their pro rata
share of any increase or charge such accounts with their pro rata share of
any decrease in the value of the adjusted net worth (as defined below) of
each investment fund in which such accounts have an interest as of that
date;
(b) NEXT, allocate and credit employer matching contributions,
if any, that are to be credited as of that date in accordance with
subsection 7.4; and
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(c) FINALLY, charge to the proper accounts all payments or
distributions made under subsection 8.4 as of that date.
The "adjusted net worth" of an investment fund as at any date means the
then net worth of such investment fund as determined by the trustee, less
an amount equal to the employer matching contributions deposited in such
fund but not yet allocated to the accounts of participants and remainders
being held pursuant to subsection 6.3. Remainders will not be adjusted in
accordance with subparagraph (a) above.
D7.4. ALLOCATION OF EMPLOYER MATCHING CONTRIBUTIONS. Subject to
subsection 7.8, as of each regular accounting date, each employer's
matching contribution for the plan year ending on that date will be
allocated and credited to the Section 414(k) accounts of participants who
were employed by such employer on the last day of that plan year or who
died or retired under subparagraph 6.1(a) or (b) during that year, as
follows:
(a) FIRST, each employer's matching contribution will be
allocated and credited to the Section 414(k) accounts of such participants,
pro rata, according to the basic contributions (up to 2%) made by them,
respectively, to the Money Accumulation Plan during that plan year; except
that the portion of any employer's matching contribution credited to any
participant's Section 414(k) account under this subparagraph shall not
exceed 20% of his basic contributions (up to 2%) for that plan year;
(b) NEXT, each employer's matching contribution, to the extent
not allocated under subparagraph (a) above, will be allocated and credited
to the Section 414(k) accounts of such participants, pro rata, according to
the basic contributions (over 2% but not more than 6%) made by them,
respectively, to the Money Accumulation Plan during that plan year; except
that the portion of any employer's matching contribution credited to any
participant's Section 414(k) account under this subparagraph shall not
exceed 20% of his basic contributions (over 2% but not more than 6%) for
that plan year; and
(c) FINALLY, each employer's matching contribution, to the
extent not allocated under subparagraphs (a) and (b) above, will be
allocated and credited to the Section 414(k) accounts of such participants,
pro rata, according to the basic contributions (up to 6%) made by them,
respectively, to the Money Accumulation Plan during that plan year.
D7.5. CHANGING PAYMENTS AND DISTRIBUTIONS. All payments or
distributions made to a participant or his beneficiary under this
Supplement D will be charged to the Section 414(k) account of such
participant.
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D7.6. ROLLOVERS. No rollover contributions of any kind, including
direct transfers of benefits from other plans meeting the requirements of
Section 401(a) of the Internal Revenue Code, are permitted to the plan
under this Supplement D.
D7.7. STATEMENT OF ACCOUNT. As soon as practicable after the last
day of each calendar quarter, each participant will be furnished with a
statement reflecting the balance of his Section 414(k) account.
D7.8. CONTRIBUTION LIMITATIONS. For each plan year, the annual
addition (as defined below) to a participant's accounts under this
Supplement D and all other defined contribution plans maintained by the
employers shall not exceed the lesser of $30,000 (or, if greater, 1/4 of
the dollar limitation in effect under Section 415(b)(1)(A) of the
Internal Revenue Code for the calendar year which begins with or within
that plan year) or 25 percent of the participant's compensation during that
year. The term "annual addition" for any plan year means the sum of the
employer contributions, participant contributions and remainders credited
to a participant's accounts for that year. Any employer matching
contributions which cannot be allocated to a participant because of the
foregoing limitations shall be applied to reduce employer matching
contributions in succeeding plan years, in order of time.
D7.9. LIMITATION ON ALLOCATION OF CONTRIBUTIONS. Notwithstanding
the foregoing provisions of this Section 7, in no event shall the
contribution percentage (as defined below) of the highly compensated
participants (as defined in subsection 7.10) for any plan year exceed the
greater of:
(a) the contribution percentage of all other participants for
such plan year multiplied by 1.25; or
(b) the contribution percentage of all other participants for
such plan year multiplied by 2.0; provided that the contribution percentage
of the highly compensated participants does not exceed that of all other
participants by more than 2 percentage points.
The "contribution percentage" of a group of participants for a plan year
means the average of the ratios (determined separately for each participant
in such group) of: (i) the employer matching contributions allocated to
such participant for such plan year; to (ii) the participant's compensation
for such plan year. The employer matching contributions allocated to the
highly compensated participants will be reduced (in the order of their
contribution percentages beginning with the highest percentage) to the
extent necessary to meet the requirements of this subsection 7.9. If,
because of the foregoing limitations, a portion of the employer matching
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contributions allocated to a highly compensated participant may not be
credited to his account for a plan year, such portion (and the earnings
thereon) shall be distributed to the participant within two and one-half
months after the end of that plan year.
D7.10. HIGHLY COMPENSATED PARTICIPANT. A "highly compensated
participant" means any present or former employee who, during the current
or immediately preceding year:
(a) was a 5 percent owner of an employer;
(b) received annual compensation from the employers of more than
$75,000 (or such greater amount as may be determined by the Commissioner of
Internal Revenue for that year);
(c) received annual compensation from the employers of more than
$50,000 (or such greater amount as may be determined by the Commissioner of
Internal Revenue for that year) and was in the top-paid 20% of the
employees; or
(d) was an officer of an employer receiving annual compensation
greater than 50% of the limitation then in effect under Section 415(b)(1)(A)
of the Internal Revenue Code; provided, that for purposes of this
subparagraph (d), no more than 50 employees of the employers (or if lesser,
the greater of 3 employees or 10 percent of the employees) shall be treated
as officers.
D7.11. ALLOCATION OF EARNINGS TO DISTRIBUTIONS OF EXCESS
CONTRIBUTIONS. The earnings allocable to distributions of employer
contributions exceeding the limits of subsection 7.9 ("excess matching
contributions") shall be determined by multiplying the earnings
attributable to the participant's share of employer matching contributions
for the plan year by a fraction, the numerator of which is the excess
matching contributions, and the denominator of which is the balance in the
participant's Section 414(k) account on the last day of such year reduced
by gains (or increased by losses) attributable to such account during that
year. The earnings attributable to such excess matching contributions
determined in accordance with the preceding sentence shall be increased to
reflect the earnings to the date of distribution by an amount equal to ten
percent of the earnings determined in accordance with the preceding
sentence multiplied by the number of calendar months that have elapsed
since the end of the applicable year. For purposes of the foregoing, a
distribution occurring on or before the fifteenth day of the month will be
treated as having been made on the last day of the preceding month, and a
distribution occurring after such fifteenth day will be treated as having
been made on the first day of the next subsequent month.
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D7.12. MULTIPLE USE OF ALTERNATIVE LIMITATION. In accordance with
Treasury Regulation Section 1.401(m)-2(c), multiple use of the alternative
limitation will be corrected in the manner described in Treasury Regulation
Section 1.401(m)-1(e). The term "alternative limitation" as used above
means the alternative methods of compliance with Sections 401(k) and 401(m)
of the Internal Revenue Code contained in Sections 401(k)(3)(A)(ii)(II)
and 401(m)(2)(A)(ii) thereof, respectively.
SECTION D8
PAYMENT OF ACCOUNT BALANCES
D8.1. RETIREMENT OR DEATH. If a participant's employment with all
of the employers is terminated because of retirement under subparagraph
6.1(a) or (b), or if a participant dies while in the employ of an employer,
the balance in his Section 414(k) account as at the accounting date
coincident with or next following his settlement date (after all
adjustments required under this Supplement D as of that date have been
made) shall be nonforfeitable and shall be distributable to him, or in the
event of his death to his beneficiary, under subsection 8.4.
D8.2. RESIGNATION OR DISMISSAL. If a participant resigns or is
dismissed from the employ of all of the employers before retirement under
subparagraph 6.1(a) or (b), the balance in his Section 414(k) account as at
the accounting date coincident with or next following his settlement date
(after all adjustments required under this Supplement D as of that date
have been made) will be reduced to an amount computed in accordance with
the following schedule:
<TABLE>
<CAPTION>
IF THE PARTICIPANT'S THE PERCENTAGE OF HIS
NUMBER OF YEARS OF CREDITED SECTION 414(K)
SERVICE IS: ACCOUNT WILL BE:
---------- ----------------
<S> <C> <C>
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
</TABLE>
The resulting balance in his Section 414(k) account will be distributable
to the participant under subsection 8.4. A participant shall be entitled
to 1/12th of a year of service for each month (or portion thereof) during
which he is employed by an employer or controlled group member.
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The 414(k) account of a participant, whose employment was terminated upon
the closing of B&B Shoe Division shall be nonforfeitable upon his
termination of employment.
D8.3. REMAINDERS. The amount by which a participant's Section
414(k) account is reduced under subsection 8.2 shall be a "remainder." A
remainder shall be treated as a separate account [which is not subject to
adjustment under sub-paragraph 7.3(a)] until the last day of the plan year
in which the participant's settlement date occurs, and then shall be
applied in the manner provided in subsection 4.1 to reduce employer
matching contributions as of that date; and when so applied will be
treated, for purposes of subsection 7.4, as though it were an employer
matching contribution made under subsection 4.1. If the participant is
reemployed by an employer or controlled group member before he incurs five
consecutive one-year breaks in service, subsection 9.2 shall apply.
D8.4. MANNER OF DISTRIBUTION. Subject to the provisions of
subsection 8.6, after each participant's settlement date, distribution of
the net credit balance in the participant's Section 414(k) account will be
made to or for the benefit of the participant, or in the case of his death
to or for the benefit of his beneficiary, by payment in a lump sum.
D8.5. DESIGNATION OF BENEFICIARY. Subject to the provisions of
subsection 8.6, each participant from time to time, by signing a form
furnished by the committee, may designate any person or persons (who may be
designated concurrently, contingently or successively) to whom his benefits
under this Supplement D are to be paid if he dies before he receives all of
his benefits. A beneficiary designation form will be effective only when
the form is filed with the committee while the participant is alive and
will cancel all beneficiary designation forms previously filed with the
committee. If a deceased participant failed to designate a beneficiary as
provided above, or if the designated beneficiary dies before the
participant or before complete payment of the participant's benefits, the
committee, in its discretion, may direct the trustee to pay the
participant's benefits as follows:
(a) To or for the benefit of any one or more of his relatives by
blood, adoption or marriage and in such proportions as the committee
determines; or
(b) To the legal representative or representatives of the estate
of the last to die of the participant and his designated beneficiary.
The term "designated beneficiary" as used in this Supplement D means the
person or persons (including a trustee or other legal representative acting
in a fiduciary capacity) designated by a participant as his beneficiary in
the last effective beneficiary designation form filed with the committee
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under this subsection and to whom a deceased participant's benefits are
payable under this Supplement D. The term "beneficiary" as used in this
Supplement D means the natural or legal person or persons to whom a
deceased participant's benefits are payable under this subsection.
D8.6. PRE-RETIREMENT SURVIVOR ANNUITY AND JOINT AND SURVIVOR
ANNUITY. Notwithstanding anything contained in this Supplement D to the
contrary, the following provisions of this subsection 8.6 shall apply in
the case of distributions to or on behalf of a participant:
(a) PRE-RETIREMENT SURVIVOR ANNUITY. If a married participant
dies prior to commencement of his benefits under this Supplement D, one-half
of his Section 414(k) account balance will be applied to provide a
pre-retirement survivor annuity (as defined below), unless he has made an
election under subparagraph (b). A "pre-retirement survivor annuity" is an
annuity payable for the life of the participant's spouse.
(b) ELECTION TO WAIVE PRE-RETIREMENT SURVIVOR ANNUITY. A
participant may make a written election to waive the pre-retirement
survivor annuity at any time on or after the first day of the plan year in
which he attains age 35 years. Such an election will be effective only if
the participant's spouse consents to the election in writing, and such
consent acknowledges the effect of the waiver and is witnessed by a plan
representative or a notary public. Within the three plan years prior to
the plan year in which a participant attains age 35, the Committee shall
provide him with a written explanation of the terms and conditions of the
pre-retirement survivor annuity; the participant's right to make, and the
effect of, an election to waive the pre-retirement survivor annuity; the
requirement of spousal consent to such a waiver; and the participant's
right to make, and the effect of, a revocation of such a waiver. An
election under this subparagraph may be revoked by a participant at any
time prior to his death. If a participant has elected to waive the
pre-retirement survivor annuity, all of his Section 414(k) account balance (or
one-half of his account balance if he has not made such an election) at his
death will be distributed pursuant to subsection 8.4.
(c) JOINT AND SURVIVOR ANNUITY. A participant's Section 414(k)
account balance will be applied to provide a joint and survivor annuity (as
defined below), unless he has made an election under subparagraph (d). A
"joint and survivor annuity" means: (i) an annuity payable for the life of
the participant, with a survivor annuity payable for the life of his spouse
of one-half of the amount payable during the joint lives of the participant
and his spouse; or (ii) in the case of a participant who is not married at
the date payment of his benefits is to commence, an annuity payable for the
life of the participant.
(d) ELECTION TO WAIVE JOINT AND SURVIVOR ANNUITY. A participant
may make a written election to waive the joint and survivor annuity at any
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time during the 90-day period ending on the date payment of his benefits
commences. Such an election will be effective only if the participant's
spouse consents to the election in writing, and such consent acknowledges
the effect of the waiver and is witnessed by a plan representative or a
notary public. Within a reasonable time before payment of a participant's
benefits is to commence, the committee shall provide him with a written
explanation of the terms and conditions of the joint and survivor annuity;
the participant's right to make, and the effect of, an election to waive
the joint and survivor annuity; the requirement of spousal consent to such
a waiver; and the participant's right to make, and the effect of, a
revocation of such a waiver. An election under this subparagraph may be
revoked by a participant at any time prior to the date payment of his
benefits commences. If a participant has elected to waive the joint and
survivor annuity, his Section 414(k) account balance will be distributed
pursuant to subsection 8.4.
(e) LUMP SUM PAYMENTS. Notwithstanding the foregoing provisions
of this subsection 8.6, distribution of a participant's Section 414(k)
account balance may be made in the form of a lump sum payment; provided
that: (i) if a joint and survivor annuity would otherwise be provided under
subparagraph (c) above and the account balances exceed $3,500, the
participant and his spouse must consent in writing to such form of
distribution; and (ii) if a pre-retirement survivor annuity would otherwise
be provided under subparagraph (a) above and one-half of the account
balance exceeds $3,500, the participant's surviving spouse must consent in
writing to such form of distribution.
SECTION D9
REEMPLOYMENT
D9.1. RESUMPTION OF PARTICIPATION. If a participant's employment
with all of the employers should terminate and such participant is
subsequently reemployed by an employer, he shall again become eligible to
participate in this Supplement D as of his date of rehire if he then meets
the requirements of subsection 2.1, and the years of service to which he
was entitled at the time of termination shall be reinstated. If an
employee who is not participating in this Supplement D should terminate
employment and then subsequently be reemployed by an employer, his
eligibility for participation shall be determined in accordance with
subsection 2.1, he shall be eligible to participate in this Supplement D as
of his date of rehire if he then meets the requirements of subsection 2.1,
and the years of service he had accrued prior to his termination shall be
disregarded for purposes of subsection 8.2 only if his number of
consecutive one-year breaks in service (as defined below) occurring after
his termination equal or exceed the greater of (i) five, or (ii) his years
of service prior to his termination. If an employee's or participant's
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employment with the employers and controlled group members should terminate
and such employee or participant is subsequently reemployed by an employer
or controlled group member before he has a one-year break in service, the
period between his date of termination and date of rehire (but not to
exceed 12 months) shall be included in determining his years of service.
In no event shall years of service occurring after a participant incurs
five consecutive one-year breaks in service be used to determine the
percentage of his Section 414(k) account to which he was entitled as of a
prior settlement date. A participant shall incur a "one-year break in
service" if he is not in the employ of an employer or controlled group
member for a period of 12 consecutive months following his termination of
employment.
D9.2. REINSTATEMENT OF REMAINDER. If a participant whose
employment had terminated because of resignation or dismissal before he was
entitled to the full balance in his Section 414(k) account is reemployed by
an employer or controlled group member before he incurs five consecutive
one-year breaks in service, he may repay to the trustee (within five years
of his date of reemployment) the total amount distributed to him from his
Section 414(k) account as a result of his earlier termination of
employment. If a participant makes such a repayment to the trustee, both
the amount of the repayment and the remainder which resulted from his
earlier termination of employment shall be credited to his Section 414(k)
account as of the regular accounting date coincident with or next following
the date of repayment (after all other adjustments required under this
Supplement D as of that date have been made). Remainders which are
credited to participants' Section 414(k) accounts as of a regular
accounting date under this subsection 9.2 shall reduce: first, remainders
to be allocated as of that date under subsection 8.3; then, income and
gains of the trust fund to be credited as of that date under subparagraph
7.3(a); and finally, employer matching contributions to be allocated as of
that date under subsection 7.4.
SECTION D10
EMPLOYER CONTRIBUTION FORMULA
D10.1. FORMULA EMPLOYER CONTRIBUTION. For each plan year, the
formula employer contribution will be an amount equal to:
(a) the preliminary employer contribution (as determined under
subsection 10.2) for the company's fiscal year which ends closest to the
end of such plan year; multiplied by;
(b) a fraction, the numerator of which is the participating
compensation (as defined in subsection 10.5) for such plan year and the
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denominator of which is the eligible compensation (as defined in subsection
10.5) for such plan year.
For any plan year, the company may, before the beginning of such plan year,
establish a minimum formula employer contribution to be made under this
Supplement D for that year. In no event, however, will the formula
employer contribution for any plan year exceed an amount equal to the
lesser of: (i) 50% of the basic contributions (up to 6%) made to the Money
Accumulation Plan by participants entitled to share in the employer
matching contribution for such year; or (ii) the maximum amount of employer
matching contributions which may be allocated to participants' Section
414(k) accounts for such plan year after applying the limitations of
subsections 7.8 and 7.9.
D10.2. PRELIMINARY EMPLOYER CONTRIBUTION. The "preliminary
employer contribution" for a fiscal year of the company shall be an amount
equal to the sum of:
(a) 5% of that portion, if any, of the adjusted net income (as
defined in subsection 10.3) for such year which equals or exceeds 3% but
does not exceed 5% of the average assets (as defined in subsection 10.4)
for such year; plus
(b) 10% of that portion, if any, of the adjusted net income for
such year which exceeds 5% of the average assets for such year.
D10.3. ADJUSTED NET INCOME. The "adjusted net income" for any
fiscal year means the consolidated net income of the employers for that
year determined according to recognized accounting principles and
practices, except as follows:
(a) No deduction or allowance shall be made on account of
Federal, state or local income taxes.
(b) No account shall be taken of the employers' contributions
under this Supplement D.
(c) Capital gains and losses and extraordinary charges and
credits shall be disregarded.
D10.4. ASSETS, AVERAGE ASSETS. The term "assets" means the
total consolidated assets of the employers as reflected on their balance
sheet. The "average assets" for any fiscal year means an amount equal to:
the sum of the assets at the beginning of that year plus the assets at the
end of each of the thirteen 4-week accounting periods during that year;
divided by 14.
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D10.5. ELIGIBLE COMPENSATION, PARTICIPATING COMPENSATION. The
"eligible compensation" for any plan year means the total cash compensation
paid to all employees of the employers, but disregarding any compensation
paid before an employee completes six months of service (as defined under
the Money Accumulation Plan). The "participating compensation" for any
plan year means the total eligible compensation of those participants who
are entitled to share in the employers' contribution for such year.
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SUPPLEMENT E
TO
WOLVERINE EMPLOYEES' PENSION PLAN
BENEFITS FOR CERTAIN FORMER EMPLOYEES
E-1. PURPOSE. The purpose of this Supplement E is to provide
benefits for certain members of Wolverine Employees' Pension Plan (the
"Plan") who retire under The Wolverine Special Severance Program (the
"Program").
E-2. SUPPLEMENT E PARTICIPANT. An employee of an employer will be a
"Supplement E Participant" if he meets both of the following requirements:
(a) he is a member of the Plan; and
(b) he is eligible for and elects between November 3, 1994 and
December 18, 1994 to retire under the Program.
E-3. FULL VESTING. Each Supplement E Participant shall be fully
vested in his benefits under the Plan.
E-4. AMOUNT OF PENSION. Each Supplement E Participant shall be
entitled to a monthly pension computed in accordance with subsection 4.1 of
the Plan, based on his final average earnings and years of credited service
at the date that his employment with the employers terminates. If the
pension of a Supplement E Participant is determined under subparagraph
4.2(a) of the Plan, then the amount payable to the Supplement E Participant
as of the first day of any month coincident with or preceding the date he
attains age 62 years shall be calculated as though the amount determined
under subparagraph 4.2(a)(ii) of the Plan were zero.
E-5. COMMENCEMENT OF PENSION. Payment of the monthly pension to a
Supplement E Participant shall begin as of the first day of the month
coincident with or next following the date that his employment with the
employers terminates, in the full amount determined under paragraph E-4
above. The pension of a Supplement E Participant shall not be reduced for
commencement prior to normal retirement date.
E-6. NO HIGHLY COMPENSATED EMPLOYEES. In no event shall a Supplement
E Participant who is a "highly compensated employee" within the meaning of
Section 414(q) of the Internal Revenue Code be entitled to any benefits
under this Supplement E.
-71-
<PAGE>
E-7. USE OF TERMS. All terms and provisions of the Plan shall apply
to this Supplement E, except that where the terms and provisions of the
Plan and this Supplement E conflict, the terms and provisions of this
Supplement E shall govern.
-72-
<PAGE>
SUPPLEMENT F
TO
WOLVERINE EMPLOYEES' PENSION PLAN
NONDISCRIMINATORY EXECUTIVE BENEFITS
F.1 PURPOSE. The purpose of this Supplement is to define and designate
certain executives of the Company to receive benefits under a
nondiscriminatory enhancement of the plans' benefit formula.
F.2 A EXECUTIVE. An "A Executive" is a member whose name is listed below
in this section:
* L. Dubrow * T. O'Donovan
* S. Duffy * R. Sedrowski
* D. Estes * R. Thomas
* S. Gulis
F.3 B EXECUTIVE. A "B Executive" is a member whose name is listed below
in this Section:
* G. Andrews * J. Lovejoy
* W. Auger * M. Mercado
* O. Baxter * T. Mundt
* W. Brown * J. Riedy
* R. DeBlasio * L. Sipple
* T. Gedra * J. Smith
* C. Lauer * D. West
F.4 MODIFICATIONS. The Company may add, remove, or reclassify a member
under this Supplement. The modification of a member's status may not
reduce a member's benefit as determined on the date immediately before the
latest of the following dates: 15 days after the member receives notice of
the modification; the date that the amendment was adopted; or the effective
date of the Amendment.
-73-
<PAGE>
SUPPLEMENT G
TO
WOLVERINE EMPLOYEES' PENSION PLAN
BENEFITS FOR CERTAIN FORMER EMPLOYEES OF FROLIC FOOTWEAR DIVISION
OR THE WOLVERINE SLIPPER GROUP
G-1. PURPOSE. The purposes of this Supplement G is to provide
benefits for certain members of Wolverine Employees' Pension Plan (the
"Plan") who terminate employment under The Frolic Footwear Special
Severance Program dated August 4, 1997 (the "Frolic Program"), and the
Wolverine Slipper Group Special Severance Program (the "Slipper Program")
dated December ____, 1997.
G-2. SUPPLEMENT G PARTICIPANT. An employee of an employer will be a
"Supplement G Participant" if he meets both of the following requirements:
(a) he is a member of the Plan; and
(b) he is eligible for and elects to terminate employment under
the "Frolic Program" no later than September 15, 1997, or under the
"Slipper Program" no later than January 30, 1998.
G-3. FULL VESTING. Each Supplement G Participant shall be fully
vested in his benefits under the Plan.
G-4. AMOUNT OF PENSION. Each Supplement G Participant shall be
entitled to a monthly pension computed under subsection 4.1 of the Plan,
based on his final average earnings and years of credited service at the
date that his employment with the employers terminates. If the pension of
a Supplement G Participant is determined under subparagraph 4.1(a) of the
Plan, then the amount payable to the Supplement G Participant as of the
first day of any month on or before the date he attains age 62 years shall
be calculated as though the amount determined under subparagraph 4.1(a)(ii)
of the Plan was zero.
G-5. COMMENCEMENT OF PENSION. Payment of the monthly pension to a
Supplement G Participant shall begin as of the first day of the month
coincident with or next following the date that his employment with the
employers terminates, in the full amount determined under paragraph G-4
above. The pension of a Supplement G Participant shall not be reduced for
commencement prior to normal retirement date.
-74-
<PAGE>
G-6. NO HIGHLY COMPENSATED EMPLOYEES. A Supplement G Participant who
is a "highly compensated employee" within the meaning of Section 414(q) of
the Internal Revenue Code shall not be entitled to any benefits under this
Supplement G.
-75-
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
COVERED EMPLOYEE GROUPS
(Other than Supplement D)
EFFECTIVE DATE
UNIT UNDER PLAN
---- --------------
<S> <C> <C>
Frolic Footwear Division - 02-01-70
Salaried
Hush Puppies Retail, Inc. - 01-01-77
Division 5
Tru-Stitch Footwear Division - 01-01-70
Salaried
Tru-Stitch Footwear Division - 01-01-85
Hourly - Non Union
Wolverine Employees 01-01-69
Brooks Shoe Company, Inc. 01-01-82
Viner Bros., Inc. 04-01-84
Town & Country Shoes, Inc. 06-01-81
Wolverine Hy-Test, Inc.
non-collectively bargained employees __-__-96
</TABLE>
<TABLE>
<CAPTION>
COVERED EMPLOYEE GROUPS
(Supplement D)
EFFECTIVE DATE
--------------
<S> <C> <C>
Wolverine World Wide, Inc. 01-01-94
Town & Country Shoes, Inc. 01-01-94
Brooks Shoe Company, Inc. 01-01-94
Viner Bros, Inc. 01-01-94
Little Falls Footwear Division 01-01-94
Hush Puppies Retail, Inc. - Division 05 01-01-94
Wolverine World Wide, Inc. Salaried at Puerto Rico 01-01-94
Wolverine Procurement, Inc. 01-01-94
B&B Shoe Division. 01-01-94
Wolverine Hy-Test, Inc.
non-collectively bargained employees __-__-96
</TABLE>
-76-
<PAGE>
APPENDIX B
<TABLE>
<CAPTION>
RETIREMENT DATE (NORMAL/DEFERRED BENEFIT),
DATE OF DISABILITY (DISABILITY RETIREMENT
BENEFIT) OR TERMINATION OF EMPLOYMENT DATE DOLLAR BENEFIT
(EARLY RETIREMENT/MONTHLY DEFERRED MULTIPLIER AMENDMENT
- ------------------------------------------ ---------- ---------
<S> <C> <C>
January 1, 1976 - December 31, 1978 $4 (pre-1/1/76 0
Service)/ $6
(post-12/31/75
Service)
January 1, 1979 - December 31, 1983 $6.00 Third
January 1, 1984 - December 31, 1975 $7.00 Fifth
January 1, 1986 - December 31, 1988 $8.00 Thirteenth
January 1, 1989 - December 31, 1989 $8.50 Eighteenth
January 1, 1990 - December 31, 1991 $9.00 Eighteenth
January 1, 1992 - December 31, 1992 $11.00 Twenty-Second
January 1, 1993 - December 31, 1993 $12.00 Twenty-Fifth
January 1, 1994 - December 31, 1994 $14.00 Twenty-Sixth
January 1, 1995 - December 31, 1995 $15.00 Twenty-Ninth
January 1, 1996 - December 31, 1997 $16.00 Thirty-Fourth
January 1, 1998 or after $18.00 Thirty-Seventh
</TABLE>
-77-
<PAGE>
APPENDIX TO EMPLOYEES' PENSION PLAN
As of the date of this Annual Report on Form 10-K, the following persons
are designated as "A Executives" or "B Executives," as indicated below, for
purposes of Supplement F:
<TABLE>
<CAPTION>
"A Executives" "B Executives"
-------------- --------------
<S> <C> <C>
Geoffrey B. Bloom Gary M. Acromite
Louis A. Dubrow Owen S. Baxter
Steven M. Duffy William J. B. Brown
V. Dean Estes Arthur G. Croci
Stephen L., Gulis, Jr. Richard C. DeBlasio
Blake W. Krueger John Deem
Timothy J. O'Donovan Ted Gedra
Robert J. Sedrowski Blaine C. Jungers
Thomas P. Mundt
James Riedy
Dan L. West
</TABLE>
<PAGE>
EXHIBIT 10.10
The following persons have Executive Severance Agreements with the
Company in the form filed herewith with the names or amounts set forth
below inserted in the blanks identified by the following column headings.
<TABLE>
<CAPTION>
(I) (II) (III)
<S> <C> <C>
Geoffrey B. Bloom 3 36
Timothy J. O'Donovan 3 36
Steven M. Duffy 3 36
Stephen L. Gulis, Jr. 3 36
Blake W. Krueger 3 36
Gary M. Acromite 2 24
Owen S. Baxter 2 24
William J. B. Brown 2 24
Arthur G. Croci 2 24
Richard C. DeBlasio 2 24
John Deem 2 24
Louis A. Dubrow 2 24
V. Dean Estes 2 24
Thomas P. Mundt 2 24
Nicholas P. Ottenwess 2 24
Robert J. Sedrowski 2 24
</TABLE>
<PAGE>
WOLVERINE WORLD WIDE, INC
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the __ day of ___, 199__ (the
"Effective Date"), by and between Wolverine World Wide, Inc., a Delaware
corporation ("Wolverine"), and _______(I)_________ ("Executive").
W I T N E S S E T H:
WHEREAS, Executive currently serves as a key employee of Wolverine
and/or its subsidiaries and his/her services and knowledge are valuable to
Wolverine in connection with the management of one or more of Wolverine's
principal operating facilities, divisions, or subsidiaries; and
WHEREAS, Wolverine considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of Wolverine and its stockholders; and
WHEREAS, the Board has determined that it is in the best interests of
Wolverine and its stockholders to secure Executive's continued services and to
ensure Executive's continued dedication and objectivity in the event of any
threat or occurrence of, or negotiation or other action that could lead to, or
create the possibility of, a Change in Control (as hereafter defined) of
Wolverine, without concern as to whether Executive might be hindered or
distracted by personal uncertainties and risks created by any such
possible Change in Control, and to encourage Executive's full attention and
dedication to Wolverine and/or its subsidiaries, the Board has authorized
Wolverine to enter into this Agreement.
NOW, THEREFORE, WOLVERINE AND EXECUTIVE AGREE AS FOLLOWS:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means (1) the willful and continued failure by Executive
to substantially perform his or her duties with Company (other than any
such failure resulting from Executive's incapacity due to physical or
mental illness, or any such actual or anticipated failure resulting from
Executive's termination for Good Reason) after a demand for substantial
performance is delivered to Executive by the Board and/or its Chairman
(which demand shall specifically identify the manner in which the Board
and/or its Chairman believes that Executive has not substantially performed
his or her duties); or (2) the willful engaging by Executive in gross
misconduct materially and demonstrably injurious to the Company. For
purposes of this Section, no act or failure to act on the part of Executive
<PAGE>
shall be considered "willful" unless done or omitted to be done by
Executive not in good faith and without reasonable belief that his or her
action(s) or omission(s) was in the best interests of the Company.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until the Company provides
Executive with a copy of a resolution adopted by an affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for the purpose (after reasonable notice to
Executive and an opportunity for Executive, with counsel, to be
heard before the Board), finding that in the good faith opinion of the
Board the Executive has been guilty of conduct set forth in subsections (1)
or (2) above, setting forth the particulars in detail. A determination of
Cause by the Board shall not be binding upon or entitled to deference by
any finder of fact in the event of a dispute, it being the intent of the
parties that such finder of fact shall make an independent determination of
whether the termination was for "Cause" as defined in (1) and (2) above.
(c) "Change in Control" means:
(1) the acquisition by any individual, entity, or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act, of
20% or more of either (i) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change in Control:
(a) any acquisition by the Company, (b) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, (c) any acquisition by
any corporation pursuant to a reorganization, merger, or consolidation
involving the Company, if, immediately after such reorganization,
merger, or consolidation, each of the conditions described in
clauses (i), (ii), and (iii) of subsection (3) shall be satisfied, or
(d) any acquisition by the Executive or any group of persons including
the Executive; and provided further that, for purposes of clause (a),
if any Person (other than the Company or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company) shall become the beneficial
owner of 20% or more of the Outstanding Company Common Stock or 20% or
more of the Outstanding Company Voting Securities by reason of an
acquisition by the Company and such Person shall, after such
acquisition by the Company, become the beneficial owner of any
-2-
<PAGE>
additional shares of the Outstanding Company Common Stock or any
additional Outstanding Voting Securities, such additional beneficial
ownership shall constitute a Change in Control;
(2) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of such Board; provided, however, that any individual who
becomes a director of the Company subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by the vote of at least three-quarters of the directors then
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be deemed to have been a member of the Incumbent Board; and
provided further, that no individual who was initially elected as a
director of the Company as a result of an actual or threatened election
contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other
than the Board, shall be deemed to have been a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a
reorganization, merger, or consolidation unless, in any such case,
immediately after such reorganization, merger, or consolidation, (i)
more than 50% of the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger, or
consolidation and more than 50% of the combined voting power of the
then outstanding securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
or entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior or such reorganization, merger, or
consolidation and in substantially the same proportions relative to
each other as their ownership, immediately prior to such
reorganization, merger, or consolidation, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case
may be, (ii) no Person (other than the Company, any employee
benefit plan (or related trust) sponsored or maintained by the Company
or the corporation resulting from such reorganization, merger, or
consolidation (or any corporation controlled by the Company), or any
Person which beneficially owned, immediately prior to such
reorganization, merger, or consolidation, directly or indirectly, 20%
or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 20% or more of the then outstanding
shares of common stock of such corporation or 20% or more of the
-3-
<PAGE>
combined voting power of the then outstanding securities of such
corporation entitled to vote generally in the election of
directors, and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization,
merger, or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Board
providing for such reorganization, merger, or consolidation; or
(4) approval by the stockholders of the Company of (i) a plan of
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company other than to a corporation with respect to which, immediately
after such sale or other disposition, (a) more than 50% of the then
outstanding shares of common stock thereof and more than 50% of the
combined voting power of the then outstanding securities thereof
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such sale or
other disposition and in substantially the same proportions relative to
each other as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be,(b) no
Person (other than the Company, any employee benefit plan (or related
trust) sponsored or maintained by the Company or such corporation (or
any corporation controlled by the Company), or any Person which
beneficially owned, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20% or
more of the then outstanding shares of Common stock thereof or 20% or
more of the combined voting power of the then outstanding securities
thereof entitled to vote generally in the election of directors and (c)
at least a majority of the members of the board of directors thereof
were members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing for such sale
or other disposition.
Notwithstanding anything contained in this Agreement to the contrary,
if Executive's employment is terminated prior to a Change in Control
and Executive reasonably demonstrates that such termination was at the
request of or in response to a third party who has indicated an
intention or taken steps reasonably calculated to effect a Change in
Control (a "Third Party") who effectuates a Change in Control, then
for all purposes of this Agreement, the date of a Change of Control
shall mean the date immediately prior to the date of such termination
of Executive's employment.
-4-
<PAGE>
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" means the common stock of the Company, $1 par
value per share.
(f) "Company" means Wolverine World Wide, Inc., a Delaware
corporation, and any corporation or other entity in which Wolverine World
Wide, Inc. has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities of such
corporation or other entity entitled to vote generally in the election of
directors.
(g) "Date of Termination" means the effective date on which
Executive's employment by the Company terminates as specified in a Notice
of Termination by the Company or Executive, as the case may be.
Notwithstanding the previous sentence, (i) if the Executive's employment is
terminated for Disability, as defined in Section 1(h), then such
Date of Termination shall be no earlier than thirty (30) days following the
date on which a Notice of Termination is received, and (ii) if the
Executive's employment is terminated by the Company other than for Cause,
then such Date of Termination shall be no earlier than thirty (30) days
following the date on which a Notice of Termination is received.
(h) "Disability" means Executive's failure to substantially perform
his/her duties with the Company on a full-time basis for at least one
hundred eighty (180) consecutive days as a result of Executive's incapacity
due to mental or physical illness.
(i) "Good Reason" means, without Executive's express written consent,
the occurrence of any of the following events in connection with a Change
in Control:
(1) (i) the assignment to Executive of any duties inconsistent
in any material adverse respect with Executive's position(s), duties,
responsibilities, or status with the Company immediately prior to
such Change in Control, (ii) a material adverse change in Executive's
reporting responsibilities, titles or offices with the Company as in
effect immediately prior to such Change in Control, (iii) any removal
or involuntary termination of Executive by the Company otherwise than
as expressly permitted by this Agreement (including any purported
termination of employment which is not effected by a Notice of
Termination), or (iv) any failure to re-elect Executive to any
position with the Company held by Executive immediately prior to
such Change in Control;
(2) a reduction by the Company in Executive's rate of annual
base salary as in effect immediately prior to such Change in Control
or as the same may be increased from time to time thereafter;
-5-
<PAGE>
(3) any requirement of the Company that Executive (i) be based
anywhere other than the facility where Executive is located at the
time of the Change in Control or reasonably equivalent facilities
within Kent County, Michigan or (ii) travel for the business of the
Company to an extent substantially more burdensome than the travel
obligations of Executive immediately prior to such Change in Control;
(4) the failure of the Company to continue the Company's
executive incentive plans or bonus plans in which Executive is
participating immediately prior to such Change in Control or a
reduction of the Executive's target incentive award opportunity under
the Company's Executive Long-Term Incentive Plan (three-year
bonus plan), Executive Short-Term Incentive Plan and the Executive
Short-Term Individual Bonus Plan (annual bonus plans) or other bonus
plan adopted by the Company, unless Executive is permitted to
participate in other plans providing Executive with substantially
comparable benefits or receives compensation as a substitute for such
plans providing Executive with a substantially equivalent economic
benefit;
(5) the failure of the Company to (i) continue in effect any
employee benefit plan or compensation plan in which Executive is
participating immediately prior to such Change in Control, unless
Executive is permitted to participate in other plans providing
Executive with substantially comparable benefits or receives
compensation as a substitute for such plans providing Executive with
a substantially equivalent economic benefit, or the taking of any
action by the Company which would adversely affect Executive's
participation in or materially reduce Executive's benefits under any
such plan, (ii) provide Executive and Executive's dependents with
welfare benefits (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and
programs) in accordance with the most favorable plans, practices,
programs, and policies of the Company in effect for Executive
immediately prior to such Change in Control, (iii) provide fringe
benefits in accordance with the most favorable plans, practices,
programs, and policies of the Company in effect for Executive
immediately prior to such Change in Control, or (iv) provide
Executive with paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Company as in effect
for Executive immediately prior to such Change in Control;
(6) the failure of the Company to pay any amounts owed Executive
as salary, bonus, deferred compensation or other compensation;
-6-
<PAGE>
(7) the failure of the Company to obtain an assumption agreement
from any successor as contemplated in Section 9(b);
(8) any purported termination of Executive's employment which is
not effected pursuant to a Notice of Termination which satisfies the
requirements of a Notice of Termination; or
(9) any other material breach by Company of its obligations
under this Agreement.
For purposes of this Agreement, any good faith determination of Good
Reason made by Executive shall be conclusive on the parties; provided,
however, that an isolated and insubstantial action taken in good faith and
which is remedied by the Company within ten(10) days after receipt of
notice thereof given by Executive shall not constitute Good Reason.
Any event or condition described in this Section 1(g) which occurs prior to
a Change in Control, but which Executive reasonably demonstrates was at the
request of or in response to a Third Party who effectuates a Change in
Control or who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control, shall constitute Good Reason
following a Change in Control for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.
(j) "Nonqualifying Termination" means a termination of Executive's
employment (1) by the Company for Cause, (2) by Executive for any reason
other than for Good Reason with Notice of Termination, (3) as a result of
Executive's death, (4) by the Company due to Executive's Disability, unless
within thirty (30) days after Notice of Termination is provided to
Executive after such Disability Executive shall have returned to
substantial performance of Executive's duties on a full-time basis, or (5)
as a result of Executive's Retirement. For purposes of this Agreement,
termination by the Company shall not include a transfer of employment
between subsidiaries of Wolverine or between Wolverine and its
subsidiaries. The terms of such transfer, however, may serve as the basis
for termination of employment by Executive for Good Reason.
(k) "Notice of Termination" means a written notice by the Company or
Executive, as the case may be, to the other, which (1) indicates the
specific reason for Executive's termination, (2) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment, and
(3) specifies the termination date. The failure by Executive or the
Company to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right
of Executive or the Company hereunder or preclude Executive or the Company
from asserting such fact or circumstance in enforcing Executive's or the
Company's rights hereunder.
-7-
<PAGE>
(l) "Positive Spread" means the spread between the exercise price of
the options held by Executive under the 1993 Stock Incentive Plan, the 1995
Stock Incentive Plan, the 1997 Stock Incentive Plan or any other stock
option plan now or subsequently adopted by the Company, and the higher of
(1) the closing price of the Common Stock as reported on the Termination
Date on the New York Stock Exchange, or if the New York Stock Exchange is
closed on that date, the last preceding date on which the New York Stock
Exchange was open and on which shares of Common Stock were traded, or (2)
the highest price per share paid in connection with the Change in Control.
(m) "Retirement" means termination of employment by either the
Executive or the Company on or after the Executive's normal retirement date
under the terms of retirement plans of the Company, but not earlier than
the age of 65.
(n) "Termination Period" means the period of time beginning with a
Change in Control and ending on the earliest to occur of Executive's death
and ______(II)______ years following such Change in Control.
2. TERM OF AGREEMENT. This Agreement shall commence on the Effective
Date and shall continue in effect through the third anniversary of the Effective
Date. However, on the first anniversary of the Effective Date, and on each such
anniversary thereafter, the term of this Agreement will be extended
automatically for one (1) year (to a total of three (3) years) unless, not later
than six (6) months prior to such anniversary date, the Company gives Executive
written notice that it has elected not to extend this Agreement; provided that
(a) no such action shall be taken by the Company during any period of time when
the Board has knowledge that any person has taken steps reasonably calculated to
effect a Change in Control until, in the opinion of the Board, such person has
abandoned or terminated its efforts to effect a Change in Control, and (b) this
Agreement shall continue in effect for at least _______(III)______ months
following the occurrence of a Change in Control. Notwithstanding anything in
this Section 2 to the contrary, this Agreement shall terminate upon termination
of Executive's employment with the Company prior to a Change in Control (except
as otherwise provided hereunder).
3. OBLIGATIONS OF EXECUTIVE. Executive agrees that in the event any
person or group attempts a Change in Control, he/she shall not voluntarily leave
the employ of the Company (other than as a result of Disability or upon
Retirement) without Good Reason until the earlier of (a) the termination of
such attempted Change in Control or (b) the occurrence of a Change in Control.
For purposes of this Section 3, Good Reason shall be determined as if a Change
in Control had occurred when such attempted Change in Control became known to
the Board. Termination of employment by Executive without Good Reason, however,
shall not entitle Executive to benefits under Section 4 unless he/she is
entitled to such benefits under another provision of this Agreement.
-8-
<PAGE>
4. SEVERANCE BENEFITS. If the employment of Executive shall terminate
during the Termination Period, other than by reason of a Nonqualifying
Termination, then Executive shall receive the following severance benefits as
compensation for services rendered:
(a) LUMP SUM CASH PAYMENT. Within five (5) days after the Date of
Termination, Executive shall receive a lump sum cash payment in an amount
equal to the sum of the following:
(1) Executive's unpaid base salary from the Company through the
Date of Termination at the rate in effect (without taking into
account any reduction of base salary constituting Good Reason), just
prior to the time a Notice of Termination is given plus any benefit
awards (including both the cash and stock components) and bonus
payments which pursuant to the terms of any plans have been earned or
become payable, to the extent not theretofore paid;
(2) As payment in lieu of a bonus to be paid under the Executive
Short-Term Incentive Plan and the Executive Short-Term Individual
Bonus Plan (annual bonus plans) or comparable plans for the time
Executive was employed by the Company in the year of termination, an
amount equal to the number of days Executive was employed by the
Company prior to the Date of Termination in the year of termination
divided by the number of days in the year multiplied by 100% of the
greater of either (a) the bonus awarded to Executive under the
Executive Short-Term Incentive Plan for the immediately preceding
year, or (b) the average bonus paid to Executive over the preceding
two-year period under the Executive Short-Term Incentive Plan;
(3) As payment in lieu of bonuses that would have been paid
under each Executive Long-Term Incentive (Three Year) Plan ("Three
Year Plan") or other comparable plan(s) in which the Executive was
eligible to participate on the Date of Termination, the Executive
shall receive an amount based on the earnings per share goals under
each of the Three Year Plans. The earnings per share for each Three
Year Plan will be calculated in the following manner:
(a) for any year prior to the year of termination, the earnings
per share will equal the actual earnings per share attained in that
year;
(b) for the year of termination, the earnings per share will
equal the projected earnings per share based upon the latest internal
company projection for such year;
(c) for any year subsequent to the year of termination, the
earnings per share will equal the earnings per share required to
attain the maximum goal under the Three Year Plan for that year.
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<PAGE>
After attaining the total earnings per share for all three years
of each Three Year Plan, the payment made for each Three Year Plan
will equal the bonus the Executive would have received under the
Three Year Plan using the earnings per share determinations above,
multiplied by the number of days the Executive participated in the
Three Year Plan prior to the Date of Termination, divided by the
total number of days in the Three Year Plan.
(4) ______(II)________ times the sum of the following:
(a) Executive's highest annual rate of base salary from the
Company in effect during the 12-month period prior to the Date of
Termination, plus (b) the greater of the average amount earned by
Executive during the previous two (2) years or for the previous year
under the Executive Short Term Incentive Plan and the Executive
Short-Term Individual Bonus Plan (or other annual bonus plans), plus
(c) the greater of the average amount earned by Executive during the
previous two (2) years or for the previous year under each of the
Executive Long-Term Incentive (Three Year) Plans(or other similar
plans), in which Executive participates at the Date of Termination.
(5) 100% of the Positive Spread for any options held by
Executive, whether vested or not vested, which are not incentive
stock options as defined under Section 422 of the Code payable upon
surrender by Executive of such options; and
(6) 100% of the Positive Spread for any options held by
Executive, whether vested or not vested, which are incentive stock
ptions as defined under Section 422 of the Code payable upon
surrender by Executive of such options.
(b) LOANS. Any loans that the Executive had outstanding under
the loan program of the Company shall remain payable according to the
terms of such program.
(c) BENEFITS. Excepting any retirement plans covered by
Subsection 4(d) below, the Company shall maintain in full force and
effect for the benefit of Executive all employee benefit plans,
programs and arrangements that the Executive was entitled to
participate in immediately prior to the Date of Termination for the
longer of six (6) months after the Date of Termination or the date
upon which the Executive receives comparable benefits from a new
employer. The Company, however, need not maintain such benefit
plans, programs or arrangements after one(1) year following the Date
of Termination. If the Executive's participation in any such plan
or program is barred, the Company shall arrange to provide comparable
benefits substantially similar to those which the Executive received
under such plans and programs.
-10-
<PAGE>
(d) RETIREMENT BENEFITS. In addition to the benefits the
Executive is entitled to receive under any retirement plans in which
the Executive participates on the Date of Termination, the Company
shall pay the Executive a cash payment at the Executive's normal
retirement age, as defined by such plan, (except to the extent
benefits are payable at an earlier date under the terms of that plan)
of an amount equal to the actuarial equivalent of any additional
benefit the Executive would have been entitled to receive under the
terms of the plan or program without regard to any vesting or minimum
service requirements under the plan had the Executive received three
(3) additional years of service following the Date of Termination,
subject to any maximum years of service limitations under any
retirement plan. The earnings for those three (3) additional years of
services shall equal the Executive's annualized earnings at the Date
of Termination (with earnings calculated the same as "Earnings" are
defined in the Company's Supplemental Executive Retirement Plan
("SERP")) and without taking into account any reduction of base salary
constituting Good Reason. For purposes of this Subsection, retirement
plans" shall be deemed to include, without limitation, the Company's
Pension Plan and the Company's SERP.
(e) ADJUSTMENTS. If Executive is entitled to receive a Payment
equal to or between one hundred percent (100%) and one hundred fifteen
percent (115%) of the amount that would trigger application of the
Excise Tax (as hereafter defined), meaning Executive will receive no
Gross-Up Payment with respect to the Payment in accordance with
Section 5, the Company shall determine whether the Executive would
receive a greater after-tax net amount if the Payment is reduced by an
amount sufficient to make the Excise Tax inapplicable to the Payment
rather than paying the applicable Excise Tax. If the Company
determines that the Executive will receive a greater after-tax net
amount by reducing the Payment, such determination shall be final, and
the Company shall reduce the Payment by an amount sufficient to make
the Excise Tax inapplicable to the Payment otherwise due to
Executive.
The Company may retain the Accounting Firm (as hereafter defined) to
assist with any calculations required under this Subsection (e) and
Executive agrees to furnish such tax and financial information as may
reasonably be required for calculations under this Subsection (e). In
the event the Company reduces any Payment to an Executive under this
Subsection (e), the Executive shall be entitled to determine which
elements or benefits, or combination thereof, constituting the Payment
will be reduced or deferred, subject to confirmation by the Company
that the reduction or deferral elected by Executive will exempt the
Payment from any Excise Tax.
(f) OUT-PLACEMENT SERVICES. The Company shall provide the
Executive with executive out-placement services by entering into a
contract with a company chosen by the Executive specializing in such
services.
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<PAGE>
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, if
any payment or distribution by the Company to or for the benefit of
Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 5 (a "Payment"))
that exceeds one hundred fifteen percent (115%) of the amount that would
trigger application of the excise tax imposed by Section 4999 of the Code,
or any successor Code provision (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), or any interest or penalties are incurred by Executive with
respect to Excise Tax on such amount, then Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes) including, without
limitation, any income and employment taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax, imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. The Company shall not be obligated
to make any Gross-Up Payment to Executive with respect to any Payment equal
to or less than one hundred fifteen percent (115%) of the amount that would
trigger application of the Excise Tax.
(b) Subject to the provisions of Section 5(c), all determinations
required to be made under this Section 5, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be
made by the public accounting firm that is retained by the Company as of
the date immediately prior to the Change in Control (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company
and Executive within fifteen (15) business days of the receipt of notice
from Executive that there has been a Payment, or such earlier time as is
requested by the Company or Executive (collectively, the "Determination").
In the event that the Accounting Firm is serving as accountant or auditor
for the individual, entity, or group affecting the Change in Control,
Executive shall appoint another nationally recognized public accounting
firm to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 5, shall be paid
by the Company to Executive within five (5) days of the receipt of the
Determination. If the Accounting Firm determines that no Excise Taxes are
payable by Executive, it shall furnish Executive with a written opinion
that failure to report the Excise Tax on Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. If the Accounting Firm determines that Excise Taxes are
payable and that the associated Payment does not exceed one hundred fifteen
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<PAGE>
percent (115%) of the amount that would trigger application of the Excise
Tax, the Accounting Firm shall notify Executive that Executive is
responsible for payment of the Excise Tax. The Determination by the
Accounting Firm shall be binding upon the Company and Executive; however,
as a result of the uncertainty in the application of Section 4999 of the
Code at the time of the Determination, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 5(c) and Executive thereafter is required to make payment of any
Excise Tax that qualifies for a Gross-Up Payment in accordance with this
Section 5, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten(10) business days after Executive
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires
to contest such claim, Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(3) cooperate with the Company in good faith in order
effectively to contest such claim, and
(4) permit the Company to participate in any proceeding relating
to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income or employment
tax (including interest and penalties with respect thereto) imposed as a
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<PAGE>
result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 5(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings, and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct Executive to pay
the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs Executive to pay
such claim and sue for a refund, the Company shall advance the amount of
such payment to Executive on an interest-free basis and shall indemnify and
hold Executive harmless, on an after-tax basis, from any Excise Tax or
income or employment tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and provided further, that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section 5, Executive becomes entitled to receive, and
receives, any refund with respect to such claim, Executive shall (subject
to the Company's complying with the requirements of Section 5) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by Executive of an amount advanced by the Company pursuant to
Section 5, a determination is made that Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
6. WITHHOLDING TAXES. The Company may withhold from all payments due to
Executive (or his/her beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local, or other law, the Company is required to
withhold therefrom.
7. REIMBURSEMENT OF EXPENSES. If any contest or dispute shall arise
under or related to this Agreement involving termination of Executive's
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<PAGE>
employment with the Company or involving the failure or refusal of the Company
to perform fully in accordance with the terms hereof, the Company shall
reimburse Executive, on a current basis, for all legal fees and expenses, if
any, incurred by Executive in connection with such contest or dispute regardless
of the result thereof.
8. SCOPE OF AGREEMENT. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company.
9. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving
or resulting corporation or as a result of any transfer of all or
substantially all of the assets of the Company. In the event of
any such merger, consolidation, or transfer of assets, the provisions of
this Agreement shall be binding upon the surviving or resulting corporation
or the person or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any merger,
consolidation or transfer of assets referred to in this Section 9, it will
cause any successor or transferee unconditionally to assume, by written
instrument delivered to Executive (or his/her beneficiary or estate), all
of the obligations of the Company hereunder. Failure of the Company to
obtain such assumption prior to the effectiveness of any such merger,
consolidation, or transfer of assets shall be a breach of this Agreement
and shall constitute Good Reason hereunder and shall entitle Executive to
compensation and other benefits from the Company in the same amount and on
the same terms as Executive would be entitled hereunder if Executive's
employment were terminated following a Change in Control other than by
reason of a Nonqualifying Termination. For purposes of implementing the
foregoing, the date on which any such merger, consolidation, or transfer
becomes effective shall be deemed the date Good Reason occurs, and shall be
the Date of Termination if requested by Executive.
(c) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die while any amounts would be payable to Executive
hereunder had Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to such person or persons appointed in writing by Executive
to receive such amounts or, if no person is so appointed, to Executive's
estate.
10. NOTICE. For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
-15-
<PAGE>
deemed to have been duly given when delivered or received by facsimile
transmission or five (5) days after deposit in the United States mail, certified
and return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
________________________
________________________
________________________
________________________
If to the Company:
General Counsel
Wolverine World Wide, Inc.
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
11. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make any payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against Executive or
others. In no event shall Executive be obligated to seek other employment
or take other action by way of mitigation of the amounts payable to
Executive under any of the provisions of this Agreement and, such amounts
shall not be reduced whether or not Executive obtains other employment.
(b) If there shall be any dispute between the Company and Executive
in the event of any termination of Executive's employment then, until there
is a final, nonappealable, determination pursuant to arbitration declaring
that such termination was for Cause, that the determination by Executive of
the existence of Good Reason was not made in good faith, or that the
Company is not otherwise obligated to pay any amount or provide any benefit
to Executive and his/her dependents or other beneficiaries, as the case may
be, under Section 4, the Company shall pay all amounts, and provide all
benefits, to Executive and his/her dependents or other beneficiaries, as
the case may be, that the Company would be required to pay or provide
pursuant to Section 4 as though such termination were by the Company
without Cause or by Executive with Good Reason; provided, however, that the
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<PAGE>
Company shall not be required to pay any disputed amounts pursuant to this
Section 11 except upon receipt of an undertaking by or on behalf of
Executive to repay all such amounts to which Executive is ultimately
determined by the arbitrator not to be entitled.
12. GOVERNING LAW; VALIDITY. The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which other provisions shall remain in
full force and effect.
13. ARBITRATION. Any dispute or controversy under this Agreement shall be
settled exclusively by arbitration in Rockford, Michigan, in accordance with the
rules of the American Arbitration Association then in effect; provided, however,
that Executive shall be entitled to seek specific performance of his/her right
to be paid pursuant to Section 11(b) during a dispute. Judgment may be entered
on the arbitration award in any court having jurisdiction. The Company shall
bear all costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 13.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
15. MISCELLANEOUS. No provision of this Agreement may be modified or
waived unless such modification is agreed to in writing and signed by Executive
and by a duly authorized officer of the Company, or such waiver is signed by the
waiving party. No waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. Failure by Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right Executive
or the Company may have hereunder, including without limitation, the right of
Executive to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this
Agreement. The rights of, and benefits payable to, Executive, his/her estate,
or his/her beneficiaries pursuant to this Agreement are in addition to any
rights of, or benefits payable to, Executive, his/her estate, or his/her
beneficiaries under any other employee benefit plan or compensation
program of the Company, except that no benefits pursuant to any other employee
plan or compensation program that become payable or are paid in accordance with
this Agreement shall be duplicated by operation of this Agreement. No
agreements or representations, oral or otherwise, express or implied, with
regard to the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement.
-17-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company. Executive has executed
this Agreement as of the day and year written below.
WOLVERINE WORLD WIDE, INC.
By: ______________________________________
Its: ______________________________________
"Company"
AGREED TO THIS ___ DAY OF _______, 199__.
/s/_________________(I)___________________
"Executive"
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<PAGE>
EXHIBIT 10.11
The following persons have a percentage benefit
multiplier under the Supplemental Executive Retirement Plan (the
"Plan") of 2.4% or 2.0%, as indicated below, in lieu of the 1.6%
of final average monthly remuneration benefit multiplier
described in the Plan:
2.4% 2.0%
______________ ____________
Geoffrey B. Bloom Gary M. Acromite
Louis A. Dubrow Owen S. Baxter
Steven M. Duffy William J.B. Brown
V. Dean Estes Arthur G. Croci
Stephen L. Gulis, Jr. Richard C. DeBlasio
Blake W. Krueger John Deem
Timothy J. O'Donovan Ted Gedra
Robert J. Sedrowski Blaine C. Jungers
Thomas P. Mundt
James Riedy
Dan L. West
<PAGE>
EXHIBIT 11 - COMPUTATION OF PER SHARE EARNINGS
WOLVERINE WORLD WIDE, INC.
<TABLE>
<CAPTION> FISCAL YEAR ENDED
------------------------------------------
JANUARY 3, DECEMBER 26, DECEMBER 30,
1998 1996 1995
------------------------------------------
<S>
BASIC <C> <C> <C>
Average shares outstanding 42,214,620 41,541,944 37,246,444
Adjustment for nonvested common
stock (699,107) (900,898) (976,819)
------------ ----------- -----------
Total 41,515,513 40,641,046 36,269,625
============ =========== ===========
Net earnings $ 41,539,000 $32,856,000 $24,067,000
============ =========== ===========
Per share amount $ 1.00 $ 0.81 $ 0.66
============ =========== ===========
DILUTED
Average shares outstanding 42,214,620 41,541,944 37,246,444
Effect of dilutive stock options 1,249,070 1,412,691 1,261,013
----------- ----------- -----------
Total 43,463,690 42,954,635 38,507,457
============ =========== ===========
Net earnings $ 41,539,000 $32,856,000 $24,067,000
============ =========== ===========
Per share amount $ 0.96 $ 0.76 $ 0.62
============ =========== ===========
<FN>
<FA> On April 17, 1997, July 11, 1996, and April 19, 1995, the Company
announced three-for-two stock splits on shares of common stock outstanding
on May 2, 1997, July 26, 1996, and May 1, 1995, respectively. All share and
per share data has been retroactively adjusted for the increased shares
resulting from these stock splits.
</FN>
</TABLE>
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
WOLVERINE WORLD WIDE, INC.
STATE OR COUNTRY OF
NAME INCORPORATION OR ORGANIZATION
Aquadilla Shoe Corporation Michigan
BSI Shoes, Inc. Michigan
Brooks France, S.A. France
Dominican Wolverine Shoe Company Limited Cayman Islands
Frolic de Mexico S.A. de C.V. Mexico
Spartan Shoe Company Limited Cayman Islands
Hush Puppies Retail, Inc. Michigan
d/b/a Little Red Shoe House
Hush Puppies Factory Direct
Wolverine Design Center, Inc. Michigan
Hy-Test, Inc. Michigan
Wolverine Procurement, Inc. Michigan
Wolverine Sourcing, Inc. Michigan
Hush Puppies Canada Footwear, Ltd. Canada
Hush Puppies (UK) Ltd. England
Wolverine Outdoors, Inc. Michigan
Wolverine Russia, Inc. Michigan
Merrell Europe Ltd. England
Wolverine de Costa Rica, S.A. Costa Rica
Canada North Footwear Group, Inc. Canada
All of the subsidiaries of the Registrant are wholly owned.
<PAGE>
EXHIBIT 23--CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-63689, 33-55213, 33-64854, 33-23195, 33-23196, 2-92600
and 2-68548) pertaining to various stock option and incentive plans of
Wolverine World Wide, Inc. of our report dated February 6, 1998, with
respect to the consolidated financial statements and schedule of Wolverine
World Wide, Inc. and subsidiaries included in the Annual Report on Form 10-K
for the fiscal year ended January 3, 1998.
Grand Rapids, Michigan
March 30, 1998 /s/ Ernst & Young LLP
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 31, 1998 /S/ GEOFFREY B. BLOOM
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 26, 1998 /S/ DANIEL T. CARROLL
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
February 2, 1998 /S/ ALBERTO L. GRIMOLDI
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
February 3, 1998 /S/ DAVID T. KOLLAT
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
February 2, 1998 /S/ PHILLIP D. MATTHEWS
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 31, 1998 /S/ DAVID P. MEHNEY
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 26, 1998 /S/ TIMOTHY J. O'DONOVAN
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 29, 1998 /S/ JOSEPH A. PARINI
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
February 1, 1998 /S/ JOAN PARKER
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 31, 1998 /S/ ELIZABETH A. SANDERS
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 28, 1998 /S/ PAUL D. SCHRAGE
<PAGE>
POWER OF ATTORNEY
The undersigned, in his or her capacity as a director
or officer, or both, as the case may be, of Wolverine World Wide,
Inc., does hereby appoint GEOFFREY B. BLOOM; TIMOTHY J.
O'DONOVAN; STEPHEN L. GULIS, JR.; BLAKE W. KRUEGER; and JEFFREY
A. OTT, or any of them, his or her attorneys or attorney, with
full power of substitution, to execute in his or her name an
Annual Report of Wolverine World Wide, Inc. on Form 10-K for its
fiscal year ended January 3, 1998, and any amendments to that
report, and to file it or them with the Securities and Exchange
Commission. Each attorney shall have power and authority to do
and perform in the name and on behalf of the undersigned, in any
and all capacities, every act to be done in the premises as fully
and to all intents and purposes as the undersigned could do in
person, and the undersigned hereby ratifies and approves the acts
of such attorneys.
DATE SIGNATURE
January 31, 1998 /S/ STEPHEN L. GULIS, JR.
<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 PERIOD ENDED
JANUARY 3, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-3-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JAN-3-1998
<CASH> 5,768
<SECURITIES> 0
<RECEIVABLES> 138,066
<ALLOWANCES> 7,292
<INVENTORY> 143,834
<CURRENT-ASSETS> 303,861
<PP&E> 163,381
<DEPRECIATION> 73,050
<TOTAL-ASSETS> 449,663
<CURRENT-LIABILITIES> 64,895
<BONDS> 89,847
<COMMON> 43,311
0
0
<OTHER-SE> 239,119
<TOTAL-LIABILITY-AND-EQUITY> 449,663
<SALES> 665,125
<TOTAL-REVENUES> 665,125
<CGS> 460,999
<TOTAL-COSTS> 460,999
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,455
<INCOME-PRETAX> 61,081
<INCOME-TAX> 19,542
<INCOME-CONTINUING> 41,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,539
<EPS-PRIMARY> 1.00
<EPS-DILUTED> .96
</TABLE>
<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 PERIOD ENDED
SEPTEMBER 6, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> SEP-06-1997
<CASH> 5,825
<SECURITIES> 0
<RECEIVABLES> 128,965
<ALLOWANCES> 5,499
<INVENTORY> 175,585
<CURRENT-ASSETS> 324,693
<PP&E> 149,182
<DEPRECIATION> 71,237
<TOTAL-ASSETS> 441,462
<CURRENT-LIABILITIES> 62,930
<BONDS> 107,231
<COMMON> 43,109
0
0
<OTHER-SE> 217,190
<TOTAL-LIABILITY-AND-EQUITY> 441,462
<SALES> 419,336
<TOTAL-REVENUES> 419,336
<CGS> 292,220
<TOTAL-COSTS> 292,220
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,195
<INCOME-PRETAX> 31,265
<INCOME-TAX> 10,005
<INCOME-CONTINUING> 21,260
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,260
<EPS-PRIMARY> .51
<EPS-DILUTED> .49
</TABLE>
<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 PERIOD ENDED
JUNE 14, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-14-1997
<CASH> 3,979
<SECURITIES> 0
<RECEIVABLES> 108,516
<ALLOWANCES> 6,277
<INVENTORY> 175,745
<CURRENT-ASSETS> 299,416
<PP&E> 140,994
<DEPRECIATION> 70,270
<TOTAL-ASSETS> 407,466
<CURRENT-LIABILITIES> 61,226
<BONDS> 84,235
<COMMON> 42,739
0
0
<OTHER-SE> 209,137
<TOTAL-LIABILITY-AND-EQUITY> 407,466
<SALES> 257,090
<TOTAL-REVENUES> 257,090
<CGS> 177,884
<TOTAL-COSTS> 177,884
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,263
<INCOME-PRETAX> 17,736
<INCOME-TAX> 5,675
<INCOME-CONTINUING> 12,061
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,061
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
</TABLE>
<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 PERIOD ENDED
DECEMBER 28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> DEC-28-1996
<CASH> 8,534
<SECURITIES> 0
<RECEIVABLES> 125,999
<ALLOWANCES> 5,634
<INVENTORY> 117,427
<CURRENT-ASSETS> 264,628
<PP&E> 130,779
<DEPRECIATION> 67,776
<TOTAL-ASSETS> 361,598
<CURRENT-LIABILITIES> 69,810
<BONDS> 41,233
<COMMON> 28,357
0
0
<OTHER-SE> 210,935
<TOTAL-LIABILITY-AND-EQUITY> 361,598
<SALES> 511,029
<TOTAL-REVENUES> 511,029
<CGS> 355,224
<TOTAL-COSTS> 355,224
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,127
<INCOME-PRETAX> 47,667
<INCOME-TAX> 14,811
<INCOME-CONTINUING> 32,856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,856
<EPS-PRIMARY> .81
<EPS-DILUTED> .76
</TABLE>
<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 PERIOD ENDED
SEPTEMBER 7, 1996 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-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> SEP-07-1996
<CASH> 2,450
<SECURITIES> 0
<RECEIVABLES> 106,557
<ALLOWANCES> 5,383
<INVENTORY> 124,362
<CURRENT-ASSETS> 248,510
<PP&E> 123,755
<DEPRECIATION> 66,931
<TOTAL-ASSETS> 334,941
<CURRENT-LIABILITIES> 43,558
<BONDS> 59,536
<COMMON> 28,316
0
0
<OTHER-SE> 191,988
<TOTAL-LIABILITY-AND-EQUITY> 334,941
<SALES> 298,461
<TOTAL-REVENUES> 298,461
<CGS> 205,808
<TOTAL-COSTS> 205,808
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,119
<INCOME-PRETAX> 23,442
<INCOME-TAX> 7,266
<INCOME-CONTINUING> 16,176
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,176
<EPS-PRIMARY> .40
<EPS-DILUTED> .37
</TABLE>
<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 PERIOD ENDED
JUNE 15, 1996 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-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-15-1996
<CASH> 8,444
<SECURITIES> 0
<RECEIVABLES> 81,204
<ALLOWANCES> 4,648
<INVENTORY> 128,780
<CURRENT-ASSETS> 227,800
<PP&E> 117,706
<DEPRECIATION> 65,473
<TOTAL-ASSETS> 308,483
<CURRENT-LIABILITIES> 42,076
<BONDS> 42,555
<COMMON> 28,537
0
0
<OTHER-SE> 184,945
<TOTAL-LIABILITY-AND-EQUITY> 308,483
<SALES> 177,995
<TOTAL-REVENUES> 177,995
<CGS> 121,355
<TOTAL-COSTS> 121,355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,459
<INCOME-PRETAX> 12,791
<INCOME-TAX> 3,965
<INCOME-CONTINUING> 8,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,826
<EPS-PRIMARY> .22
<EPS-DILUTED> .20
</TABLE>
<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 PERIOD ENDED
MARCH 23, 1996 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-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-23-1996
<CASH> 8,920
<SECURITIES> 0
<RECEIVABLES> 78,746
<ALLOWANCES> 3,450
<INVENTORY> 106,162
<CURRENT-ASSETS> 228,315
<PP&E> 112,473
<DEPRECIATION> 63,979
<TOTAL-ASSETS> 299,198
<CURRENT-LIABILITIES> 38,685
<BONDS> 42,569
<COMMON> 18,866
0
0
<OTHER-SE> 188,706
<TOTAL-LIABILITY-AND-EQUITY> 299,198
<SALES> 83,842
<TOTAL-REVENUES> 83,842
<CGS> 58,519
<TOTAL-COSTS> 58,519
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 626
<INCOME-PRETAX> 4,938
<INCOME-TAX> 1,545
<INCOME-CONTINUING> 3,393
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,393
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
<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 PERIOD ENDED
DECEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 27,088
<SECURITIES> 0
<RECEIVABLES> 83,392
<ALLOWANCES> 3,407
<INVENTORY> 88,350
<CURRENT-ASSETS> 214,875
<PP&E> 109,731
<DEPRECIATION> 62,846
<TOTAL-ASSETS> 283,554
<CURRENT-LIABILITIES> 37,647
<BONDS> 30,594
<COMMON> 18,783
0
0
<OTHER-SE> 185,431
<TOTAL-LIABILITY-AND-EQUITY> 283,554
<SALES> 413,957
<TOTAL-REVENUES> 413,957
<CGS> 290,469
<TOTAL-COSTS> 290,469
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,717
<INCOME-PRETAX> 34,114
<INCOME-TAX> 10,047
<INCOME-CONTINUING> 24,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,067
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.62
</TABLE>
