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SEC-RPT-Panel


1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000110471,WWW,WOLVERINE WORLD WIDE INC /DE/,10-K,2002-03-29,2001-12-29,2002-03-29T05:00:00.000Z,0000905729-02-000051,wwwform10k032702.htm,,1554622,0,0,https://www.sec.gov/Archives/edgar/data/110471/000090572902000051/wwwform10k032702.htm,https://www.sec.gov/Archives/edgar/data/110471/000090572902000051/,2001,2001,1

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+Item 1. Business .
+General.
+Wolverine World Wide, Inc. (the "Company") is a leading designer, manufacturer and marketer of a broad line of quality 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 around the world purchased more than 36 million pairs of Company branded footwear during fiscal 2001, 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 proprietary technologies designed to provide maximum comfort. The products are marketed throughout the world under widely recognized brand names, including Bates ®, CAT ®, Coleman ®, Harley-Davidson ®, Hush Puppies ®, HyTest ®, Merrell ®, Stanley® and Wolverine ®. The Company believes that its primary competitive strengths are its well-recognized brand names, broad range of comfortable footwear, patented and proprietary 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 three operating divisions: (i) the Wolverine Footwear Group, focusing on work, outdoor and lifestyle boots and shoes, (ii) the Performance Footwear Group, focusing on the CAT ® and Merrell ® product lines of performance and lifestyle footwear and (iii) the Casual Footwear Group, focusing on Hush Puppies ® brand comfortable casual shoes, slippers and moccasins under the Hush Puppies® brand and other private labels for third party retailers. The Company's Global Operations Group is responsible for manufacturing, sourcing, distribution and customer support for the various Company brands. The Company's footwear is distributed domestically through 64 Company-owned retail stores and to accounts including department stores, footwear chains, catalogs, specialty retailers, mass merchants and Internet retailers. Many of the retailers to whom Wolverine distributes operate multiple storefront locations. The Company's products are distributed worldwide in over 140 markets through licensees and distributors.
+The Company, through its Wolverine Leathers Division, operates a Company-owned tannery and 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. In addition, Wolverine Procurement, Inc., a Company-owned subsidiary, both performs skinning operations and purchases raw pigskins which it then cures and sells to the Wolverine Leathers Division and to outside customers for processing into pigskin leather products.
+For financial information regarding the Company, see the consolidated financial statements of the Company, which are attached as Appendix A to this Form 10-K. The Company has one reportable operating segment, Branded Footwear. The "Branded Footwear" segment is engaged in the manufacture and marketing of branded footwear, including casual shoes, slippers, moccasins, dress shoes, boots, uniform shoes, work shoes and performance outdoor footwear. The Company's "Other Businesses" category consists of the Company's retail stores, apparel and accessory licensing, tannery and pigskin
+procurement operations. Financial information regarding the Company's operating segments and financial information about geographic areas can be found in Note 9 to the consolidated financial statements of the Company, which are attached as Appendix A to this Form 10-K.
+Branded Footwear.
+The Company sources and markets a broad range of footwear styles including shoes, boots and sandals under many recognizable brand names including Bates ®, CAT ®, Coleman ®, Harley-Davidson ®, Hush Puppies ®, HyTest ®, Merrell ®, Stanley® and Wolverine ®. The Company, through its wholly owned subsidiary, Wolverine Slipper Group, Inc., also sources constructed slippers and moccasins and markets them under the Hush Puppies ® and Turtle Fur ® trademarks and on a private label basis. The Company combines quality materials and skilled workmanship from around the world to produce footwear according to its specifications at both Company-owned and independent manufacturing facilities.
+The Company's three branded footwear operating divisions are described below.
+1. The Wolverine Footwear Group . The Wolverine Footwear Group encompasses multiple brands designed with performance and comfort features to serve a variety of work, outdoor and lifestyle functions. The Wolverine ® brand, which has been in existence for 119 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 ® and HyTest ® product lines. These products feature quality materials and components and patented technologies and designs, such as DuraShocks ®, DuraShocks SR ™, Wolverine Fusion ™ and Wolverine Durashocks Motion Control ™, and unique proprietary technologies such as the SEMC ® non-metallic composite safety toe and the new Wolverine Compressor ™ technology. The Wolverine Footwear Group also markets Harley-Davidson® footwear. Harley-Davidson® footwear styles include traditional motorcycle riding designs as well as contemporary fashion, military and western inspired footwear. The Wolverine Footwear Group also markets hiking and outdoor shoes, boots and sandals through the Coleman ® footgear line of products. In addition, the Wolverine Footwear Group markets Stanley® work boots and shoes.
+Wolverine ® Work and Industrial Footwear . The Company believes the Wolverine ® brand has built its reputation by offering quality, durable and comfortable work boots and shoes. The development of DuraShocks ® technology allowed the Wolverine ® brand to introduce a broad line of work footwear with a focus on comfort. The Wolverine Fusion ™, Wolverine Durashocks Motion Control™, SEMC® composite safety toe and Compressor™ technologies continue the Company's tradition of comfortable work and industrial footwear. The Wolverine® work product line features work boots and shoes, including steel toe boots and shoes, targeting male and female industrial and farm workers.
+-2-
+Wolverine ® Rugged Outdoor and Sport Footwear . The Wolverine ® rugged outdoor and sport product lines incorporate DuraShocks ®, DuraShocks SR ™, Wolverine Fusion ™, Wolverine Durashocks Motion Control ™ and Compressor ™ technology and other comfort features into products designed for rugged outdoor and casual use. This broad product line targets active lifestyles and includes all-terrain sport boots, walking shoes, trail hikers, rugged casuals and outdoor sandals. 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 ® and Thinsulate ® brand fabrics and the Company's performance leathers and patented DuraShocks ® technologies.
+Bates ® Uniform Footwear . The Company's Bates Uniform Footwear Division is an industry leader in supplying footwear to military and civilian uniform users. The Bates Uniform Footwear Division utilizes DuraShocks ®, DuraShocks SR ™, CoolTech ® and other proprietary comfort technologies in the design of its military-style boots and oxfords including the Bates ® Enforcer Series ® and Special Ops ™ footwear lines. The Bates Uniform Footwear Division 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 Uniform Footwear Division products are also distributed through specialty retailers and catalogs.
+HyTest ®. The HyTest ® product line consists primarily of high quality work boots and shoes designed to protect male and female industrial workers from foot injuries. HyTest ® footwear incorporates various safety features into its product lines, including steel toe, composite toe, electrical hazard, static dissipating and conductive footwear to protect against hazards of the workplace. In addition, HyTest ® brand footwear incorporates features such as FootRests ® comfort technology and the proprietary SEMC® composite toe to provide comfort together with safety for working men and women. HyTest ® footwear is distributed primarily through a network of independently owned Shoemobile ® mobile truck retail outlets providing direct sales of the Company's occupational and work footwear brands to workers at industrial facilities.
+Harley-Davidson ® Footwear . Pursuant to a license arrangement with the Harley-Davidson Motor Company, the Company has the exclusive right to manufacture, market, distribute and sell Harley-Davidson ® brand footwear throughout the world. Harley-Davidson ® brand footwear products include motorcycle, casual, fashion, work and western footwear for men, women and children. Harley-Davidson ® footwear is sold globally through a network of approximately 650
+3
+independent Harley-Davidson ® dealerships as well as through department stores and specialty retailers.
+Coleman ® Footgear . The Company has been granted the exclusive rights to manufacture, market, distribute and sell outdoor footwear under the Coleman ® brand in Europe, Asia and the Middle East. Coleman ® brand footwear products include lightweight hiking boots, outdoor sport boots, rubber footgear and outdoor sandals, which are sold primarily at value-oriented prices through specialty retailers and mass merchants.
+Stanley ® Footgear . Pursuant to a license arrangement completed in 2000 with the Stanley Works, the Company has an exclusive license to manufacture, market, distribute and sell footwear under the Stanley® brand. The Stanley® Footgear line provides the Company with an entry into the value-price work footwear market. Stanley® Footgear is currently marketed in Payless ShoeSource, Inc. stores throughout the United States.
+2. The Performance Footwear Group . The Performance Footwear Group began operating as a separate division of the Company in 1999. The Performance Footwear Group is comprised of two of the Company's performance-lifestyle brands, CAT ® and Merrell ®.
+CAT ® Footwear . The Company has been granted the exclusive worldwide rights to manufacture, market and distribute footwear under the Caterpillar ®, CAT & Design ®, Walking Machines ® and other trademarks. The Company believes the association with CAT ® equipment enhances the reputation of its boots for quality, ruggedness and durability. CAT ® brand footwear products include work boots and shoes, sport boots, rugged casuals and lifestyle footwear. In addition, the Company also manufactures and markets CAT ® Marine Power footwear, designed for industrial and recreational marine uses. CAT ® footwear products target work and industrial users and active lifestyle users. CAT® footwear is marketed in over 130 countries worldwide.
+Merrell ® Footwear . The Merrell ® product line consists primarily of technical hiking, rugged outdoor and outdoor inspired casual footwear designed for backpacking, day hiking and every day use. The Merrell ® product line also includes the "After-Sport" product line, incorporating Merrell ® Footwear's technical hiking and outdoor expertise with Wolverine Performance Leathers™ and other technical materials to create footwear with unique styling, performance and comfort features. Merrell ® products are sold primarily through outdoor specialty retailers, department stores and catalogs.
+4
+3. The Casual Footwear Group . The Casual Footwear Group consists of the Hush Puppies Company and the Wolverine Slipper Group, Inc. Each of these groups is described below.
+The Hush Puppies Company . Over its 44-year heritage, the Hush Puppies ® brand has been a pioneer of comfortable casual shoes. The diverse product line includes numerous styles for both work and casual wear and utilizes comfort features, such as the Comfort Curve ® sole, Float Fx™ , patented Bounce ® technology and lightweight Zero-G ™ constructions. Hush Puppies ® shoes are sold to men, women and children in over 90 countries through department stores, catalogs, and independent retailers.
+Wolverine Slipper Group, Inc. Through its wholly owned subsidiary, Wolverine Slipper Group, Inc., the Company is one of the leading suppliers of constructed slippers in the United States. The styling of 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. Wolverine Slipper Group, Inc., designs and manufactures constructed slippers, aftersport footwear and moccasins on a private label basis according to customer specifications. In addition to its traditional line of private label slippers, Wolverine Slipper Group, Inc. also manufactures and markets slipper products under the popular Hush Puppies ® and Turtle Fur ® brands and has developed a College Clogs™ program for the sale of licensed collegiate slipper products.
+Other Businesses.
+In addition to the manufacture and marketing of the Company's footwear products that are reported in the Branded Footwear segment, the Company also (i) operates a Company-owned pigskin tannery through its Wolverine Leathers Division, (ii) purchases and cures raw pigskins for sale to various customers through its wholly owned subsidiary Wolverine Procurement, Inc., (iii) operates 64 domestic retail footwear stores, and (iv) licenses the Company's brand names for use on non-footwear products.
+1. The Wolverine Leathers Division . The Wolverine Leathers Division produces pigskin leathers primarily for use in the footwear industry . Wolverine Leathers ® brand products are manufactured in the Company's pigskin tannery located in Rockford, Michigan. The Company believes these leathers offer superior performance and 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. Wolverine performance leathers are also featured in certain outside brands of athletic and outdoor footwear.
+2. Wolverine Procurement, Inc . Wolverine Procurement, Inc. performs skinning operations and purchases raw pigskins from third parties, which it then cures and sells to the Wolverine Leathers Division and to outside customers for processing into pigskin leather products.
+5
+3. Retail Stores . The Company operated 64 domestic retail shoe stores as of February, 2002, under three formats, consisting of 61 factory outlet stores under the Hush Puppies and Family name, two mall-based stores called Up Footgear ™ and one Hush Puppies specialty store. The Company expects the scope of its retail operations to remain relatively consistent in the foreseeable future. Most of the Company's 61 factory outlet stores carry a large selection of first quality Company branded footwear at discounted retail prices. The Up Footgear ™ stores feature Company brands such as Wolverine ®, Merrell ®, Hush Puppies ®, CAT ® and Harley-Davidson ®. These stores also carry a selection of branded footwear from other manufacturers. The Hush Puppies ® specialty store is located in the Mall of America in Minneapolis, Minnesota and showcases Hush Puppies ® footwear.
+4. Apparel and Accessory Licensing . The Company's Apparel and Accessory Licensing Division licenses the Company's brands for use on non-footwear products including apparel, eyewear, watches, socks, handbags and plush toys. Current licensing programs include Hush Puppies ® brand apparel, eyewear, watches and plush toys, and Wolverine ® brand apparel, gloves and watches.
+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 consistent image for each of the Company's core footwear brands. Each footwear brand group 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 branded products. The Company's advertisements typically emphasize 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 footwear 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 its footwear brand names provide a competitive advantage. In support of this belief, the Company makes significant 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 branded footwear products. To meet the diverse needs of its broad customer base, the Company uses three 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 Walking Company and Famous Footwear), specialty retailers (such as Eastern Mountain Sports), 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.
+6
+•
+Volume direct programs provide branded and private label footwear at competitive prices with limited marketing support. These programs service major retail, mail order, mass merchants and government customers.
+•
+A network of independent Shoemobile ® distribution outlets is used to distribute the Company's work and occupational footwear at industrial facilities.
+In addition to its wholesale activities, the Company also operates domestic retail shoe stores as described above. The Company is developing various programs both independently and with its retail customers for the distribution of its products over the Internet and operates a direct to customer site at www.upfootgear.com .
+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 2001.
+Footwear sales are seasonal with significant increases in sales experienced during the fall hunting season, Christmas, Easter and back-to-school periods. Due to this seasonal nature of footwear sales, the Company experiences some fluctuation in its 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 of branded footwear products generated from the Company's owned operations in Canada, the United Kingdom, France, Germany, and The Netherlands and from royalty income through a network of independent licensees and distributors. The Company's owned operations include Hush Puppies (UK) Ltd., Merrell (Europe) Limited, Hush Puppies Canada Footwear, Ltd., and the Merrell Canada division. In addition, in January 2002, the Company established a new subsidiary to manage the CAT® footwear brand in the European market. This new joint venture entity, Wolverine Europe Limited, purchased on-going operations and assets of the European CAT footwear business from Overland Group Limited of London, England. The markets served directly by Wolverine Europe will include Austria, France, Germany, The Netherlands, and the United Kingdom, and it will continue to coordinate and oversee support for other European markets served by independently-owned distributors. In October of 2001, the Company also expanded its owned Merrell operations in the United Kingdom to cover the additional countries of Austria, Belgium, France, Germany, Luxembourg, The Netherlands and Spain. A new subsidiary, Merrell Europe B.V. was formed to direct the operations of these additional countries. 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 ®, Wolverine ®, Bates ®, HyTest ®, Merrell ® and other trademarks by independent distributors and licensees. The Company also derives royalty income from sales of footwear bearing the CAT ®, Coleman ® and Harley-Davidson ® trademarks through foreign distributors. License and distribution arrangements enable the Company to develop international markets without the capital commitment required to maintain inventories or fund localized marketing programs. In fiscal 2001, the Company's
+7
+wholly owned foreign operations, together with the Company's foreign licensees and distributors sold an estimated 18 million pairs of footwear, which is similar to the level of international sales in fiscal 2000.
+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. Distributors and licensees are responsible for independently marketing and distributing Company branded products in their respective territories, with product and market support provided by the Company.
+Manufacturing and Sourcing.
+The Company controls the sourcing and manufacture of approximately 75% of the pairs of footwear marketed under the Company's brand names globally. The balance is controlled directly by the Company's licensees. Of the pairs controlled by the Company, approximately 85% are purchased or sourced from third parties, with the remainder produced at Company-owned facilities. Footwear produced by the Company is manufactured at Company-owned facilities in several domestic and certain affiliated foreign facilities located in Michigan, Arkansas, the Dominican Republic and Mexico. For some of the Company-produced footwear, 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 Dominican Republic and Mexico and the technology intensive construction, or "bottoming," is performed at the Company's domestic facilities.
+The Company's factories each have the flexibility to produce a variety of footwear, and depart from the industry's historic practice of dedicating a given facility to production of specific footwear products. This flexibility allows the Company to quickly respond to changes in market preference and demand. The Company produces primarily slippers and work footwear in its domestic and international facilities, allowing the Company to respond to both market and customer-specific demand. In fiscal 2000, the Company announced its intention to close its facilities in Malone, New York; Kirksville, Missouri; Aguadilla, Puerto Rico; San Jose, Costa Rica; and Alexandria, Ontario, Canada. Consolidating operations into the remaining facilities allows the Company to take better advantage of sophisticated global sourcing alternatives. The Company significantly completed these closures in 2001 resulting in more flexible and efficient sourcing of Company products.
+The Company sources a majority of its footwear from a variety of foreign manufacturing facilities in the Asia-Pacific region, Central and South America, India and Europe. The Company maintains technical offices in the Asia-Pacific region 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, the Company has developed its "Engagement Criteria for Partners & Sources" to require that its domestic and foreign manufacturers, licensees and distributors use ethical business standards, comply with all applicable health and safety laws and 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
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+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 through its Wolverine Leathers Division, 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 Company's principal required raw material is quality leather, which it purchases from a select group of domestic and offshore 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 one domestic source. This source has been a reliable and consistent supplier for over 30 years. Alternative sources of pigskin are available, however the price, processing and/or product characteristics are less advantageous to the Company. 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 or terrorism, 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 significant portfolio of registered and common law trademarks that identify its branded footwear products. The trademarks that are most widely used by the Company include Hush Puppies ®, Wolverine ®, Bates ®, Wolverine Fusion ™, DuraShocks ®, Hidden Tracks ®, Bounce ®, Comfort Curve ®, HyTest ®, Merrell ® and FootRests ®. The Company has obtained the right to manufacture, market and distribute footwear throughout most countries of the world under the CAT ® and Harley-Davidson ® trademarks; the right to manufacture, market and distribute footwear in the United States and other countries under the Stanley ® trademark; the right to manufacture, market and distribute slippers in the United States and certain other countries under the Turtle Fur ® trademark; and the right to manufacture, market and distribute footwear in Europe, Asia and the Middle East under the Coleman ® trademark ― all pursuant to license arrangements with the respective trademark owners. All of the Company's licenses are long term and extend for three or more years with renewal options with the exception of the Turtle Fur® license which expires in March 2004. Pigskin leather produced by the Company's Wolverine Leathers Division is sold under the trademarks Wolverine Leathers ®, Weather Tight ® and All Season Weather Leathers ™.
+9
+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 many design and utility patents, copyrights and various other proprietary rights. The Company protects all of its proprietary rights to the greatest extent practicable under applicable laws.
+Order Backlog.
+At March 23, 2002, the Company had a backlog of footwear orders of approximately $233 million compared with a backlog of approximately $195 million at March 24, 2001. Approximately half of the backlog increase is related to orders for products expected to be shipped in the third and fourth quarters of 2002 and can be affected by the timing of customer requests for shipment of the ordered products. 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 2002. The backlog at a particular time is affected by a number of factors, including seasonality, retail conditions, product availability and the schedule for 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 domestic and foreign marketers, manufacturers and importers of footwear, some of which are larger and have greater resources than the Company. The Company's major competitors for its brands of footwear are located in the United States and Europe. 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 twenty major competitors in connection with the sale of its casual, work and outdoor 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 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. Market shares in the non-athletic footwear industry are highly fragmented and no one company has a dominant market position.
+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
+10
+branded 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, for example, has led to specific biomechanical design concepts, such as Bounce ®, DuraShocks ® and Hidden Tracks ® comfort technologies, that have been incorporated in the Company's footwear. 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 and its subsidiaries. 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 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 December 29, 2001, the Company had approximately 4,614 domestic and foreign production, office and sales employees. Approximately 753 employees were covered by four union contracts expiring at various dates through March 31, 2004. The Company has experienced no work stoppages since 1990. The Company presently considers its employee relations to be good.
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+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 caption "Wolverine's Board of Directors" under the subheading "Compensation of Directors" and under the caption "Related Matters" under the subheading "Certain Relationships and Related Transactions" contained in the definitive Proxy Statement of the Company dated March 15, 2002, are incorporated herein by reference.
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+Certain Relationships and Related
+Transactions
+During 2001, Wolverine engaged J. Walter
+Thompson, an international advertising firm, to perform public
+relations and marketing services. Wolverine paid $258,543 in
+fees and expenses to J. Walter Thompson. Ms. Joan
+Parker, a director of Wolverine, is a Senior Partner with
+J. Walter Thompson. Wolverine anticipates continuing its
+relationship with J. Walter Thompson during the current
+year.
+Wolverine has entered into agreements with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is a large
+shareholder, granting to Grimoldi, S.A. the exclusive rights to
+distribute and sell footwear products in Argentina under the
+Hush Puppies® , Caterpillar® and
+Merrell® trademarks. Wolverine and Grimoldi, S.A.
+executed a similar agreement that grants rights with respect to
+Brazil, which was subsequently terminated by mutual agreement in
+fiscal 2001. Under these agreements, Grimoldi, S.A., or its
+subsidiary, pays Wolverine royalties and certain sublicense fees
+based on sales or purchases of footwear products in Argentina
+and Brazil.
+Under the agreements described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees in 2001 totaling $938,500. These
+agreements were made under terms and conditions customary for
+other international licensees and distributors, and all payments
+due under these agreements were invoiced or paid in accordance
+with Wolverine’s customary terms and practices.
+In the ordinary course of their business,
+Wolverine and its subsidiaries sell footwear for resale,
+samples, components of footwear products (such as leather and
+shoe soles), advertising materials and miscellaneous items to
+licensees, distributors and customers. In 2001, purchases of
+such items by Grimoldi, S.A. totaled $443,583 (including any
+applicable sublicense fees for products containing licensed
+proprietary technology). All of these purchases were made
+pursuant to Wolverine’s customary trade terms and were
+invoiced or paid in accordance with Wolverine’s customary
+payment terms and schedules applicable to all licensees,
+distributors and customers.
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements
+38
+Table of Contents
+between Wolverine and Grimoldi, S.A. Wolverine
+expects similar transactions to occur between Grimoldi, S.A. and
+Wolverine and its subsidiaries during 2002.
+Compensation Committee Interlocks and Insider
+Participation
+Wolverine’s Compensation Committee consists
+of Donald V. Fites, Phillip D. Matthews, David P.
+Mehney, Elizabeth A. Sanders, and Paul D. Schrage.
+While Mr. Matthews was not at any time an employee of
+Wolverine or its subsidiaries, he served as Chairman of the
+Board of Wolverine from 1993 until 1996.

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1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000110471,WWW,WOLVERINE WORLD WIDE INC /DE/,10-K,2007-02-28,2006-12-30,2007-02-28T19:07:02.000Z,0000905729-07-000103,www10k_022807.htm,WOLVERINE WORLD WIDE FORM 10-K,1413839,0,0,https://www.sec.gov/Archives/edgar/data/110471/000090572907000103/www10k_022807.htm,https://www.sec.gov/Archives/edgar/data/110471/000090572907000103/,2006,2006,1

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+Item 1. Business .
+General.
+Wolverine World Wide, Inc. (the "Company") is a leading designer, manufacturer and marketer of a broad line of quality casual shoes, rugged outdoor and work footwear. The Company, a Delaware corporation, is the successor 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.
+Approximately 46.9 million pairs of Company branded footwear were sold during fiscal 2006, making the Company a global leader among footwear companies in the marketing of branded casual, work and outdoor footwear. The Company's products generally feature contemporary styling with proprietary technologies designed to provide maximum comfort and performance. The products are marketed throughout the world under widely recognized brand names, including Bates ®, Cat ®, Harley-Davidson ®, Hush Puppies ®, HyTest ®, Merrell ®, Patagonia ®, Sebago ® and Wolverine ® footwear. The Company believes that its primary competitive strengths are its well-recognized brand names, broad range of comfortable footwear, patented and proprietary designs and comfort technologies, numerous distribution channels and diversified manufacturing and sourcing base. Cat ® is a registered trademark of Caterpillar Inc., Harley-Davidson ® is a registered trademark of H-D Michigan, Inc. and Patagonia ® is a registered trademark of Patagonia, Inc.
+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 units: (i) the Wolverine Footwear Group, focusing primarily on the Bates ®, HyTest ® and Wolverine ® product lines of work, outdoor, uniform and lifestyle boots and shoes, and Wolverine ® brand apparel, (ii) the Outdoor Group, currently focusing on the Sebago ®, Patagonia ® and Merrell ® product lines of performance and lifestyle footwear, and, beginning with the anticipated product launch in 2007, Merrell ® brand apparel, (iii) the Heritage Brands Group, focusing on the Cat ® product lines of work and lifestyle footwear and the Harley-Davidson ® lines of lifestyle and performance footwear, and (iv) The Hush Puppies Company, focusing on the Hush Puppies ® brand of comfortable casual and dress footwear. The Company also licenses its brands for use on non-footwear products including apparel, eyewear, watches, socks, gloves, handbags and plush toys.
+The Company's Global Operations Group is responsible for manufacturing, sourcing, distribution and customer support for the various Company brands. The Company's footwear is distributed domestically through 82 Company-owned retail stores and to numerous accounts including department stores, footwear chains, catalogs, specialty retailers, mass merchants and Internet retailers. Many of the retailers to which Wolverine distributes operate multiple storefront locations. The Company's products are marketed worldwide in more than 170 countries through Company-owned wholesale operations, licensees and distributors.
+3
+The Company, through its Wolverine Leathers Division, operates a tannery which tans pigskin leather for the shoe and leather goods industries. A significant portion of the pigskin leather tanned by the Company is used in the footwear marketed by the Company, and is also sold to Company licensees and other domestic and foreign manufacturers of footwear. In addition, Wolverine Procurement, Inc., a Company-owned subsidiary, performs skinning operations and purchases raw pigskins which it then cures and sells to outside customers for processing into pigskin leather products.
+For financial information regarding the Company, see the consolidated financial statements of the Company and the notes thereto, which are attached as Appendix A to this Form 10-K. The Company has one reportable segment, Branded Footwear and Licensing. The Branded Footwear and Licensing segment is engaged in manufacturing, sourcing, licensing, marketing and distributing branded footwear and apparel, including casual shoes and apparel, dress shoes, boots, uniform shoes, work shoes and rugged outdoor footwear and apparel. The Company's Other Business units consist of its retail stores, tannery and pigskin procurement operations. Financial information regarding the Company's business segments and financial information about geographic areas is found in Note 9 to the consolidated financial statements of the Company that are attached as Appendix A to this Form 10-K.
+Branded Footwear and Licensing.
+The Company sources and markets a broad range of footwear styles including shoes, boots and sandals under many recognizable brand names including Bates ®, Cat ®, Harley-Davidson ®, Hush Puppies ®, HyTest ®, Merrell ®, Patagonia ®, Sebago ® and Wolverine ®. The Company combines quality materials and skilled workmanship from around the world to produce footwear according to its specifications at both Company-owned and independent manufacturing facilities. The Company also licenses its brands for use on non-footwear products including apparel, eyewear, watches, socks, handbags and plush toys. Current significant licensing programs include Hush Puppies ® apparel, eyewear, watches, socks, handbags and plush toys, and Wolverine ® brand gloves, eyewear, socks and headwear.
+The Company's four branded footwear and licensing operating units are described below.
+1. The Outdoor Group . The Outdoor Group consists of Merrell ®, Sebago ®, and Patagonia ® footwear and includes performance outdoor, hiking and nautical footwear as well as casual and after-sport footwear.
+Merrell ® Footwear. The Merrell ® product line consists primarily of technical hiking, rugged outdoor and outdoor-inspired casual footwear designed for backpacking, day hiking and everyday use. The Merrell ® product line also includes the "After-Sport" category, incorporating Merrell ® footwear's technical hiking and outdoor expertise with Wolverine Performance Leathers™ and other technical materials to create footwear with unique styling, performance and comfort features. In addition to footwear, the Outdoor Group markets a line of Merrell ® packs, bags and luggage. The Outdoor Group also intends to launch a line of Merrell ® brand apparel in fiscal 2007. Merrell ® products are sold primarily through outdoor specialty retailers, department stores and catalogs. Merrell ® footwear is marketed in approximately 100 countries worldwide.
+Sebago® Footwear. The Sebago ® product line consists primarily of performance nautical and American-inspired casual footwear for men and women such as boat shoes and handsewn loafers that have been manufactured and distributed since 1946.
+4
+Highly recognized Sebago ® line extensions include Sebago Docksides ®, Drysides™ , Campsides™ and Athletic Marine. The Sebago ® product line is marketed in approximately 110 countries worldwide. The Sebago ® manufacturing and design tradition of quality componentry, durability, comfort and "Americana" heritage is further supported by targeted distribution to better-grade independent, marine and department store retailers throughout the world.
+Patagonia® Footwear. In 2005, the Company entered into a license agreement providing the Company with exclusive worldwide rights to manufacture, market, distribute and sell footwear under the Patagonia®, Water Girl® and other trademarks. The Outdoor Group has launched its Patagonia® Footwear line for Spring 2007.
+2. Wolverine Footwear Group . The Wolverine Footwear Group encompasses footwear primarily under the Wolverine ®, Bates ®, and HyTest ® brands and markets footwear designed with performance and comfort features to serve a variety of work, outdoor and lifestyle functions.
+Wolverine ® Work and Industrial Footwear . The Wolverine ® brand has built its reputation by offering high quality work boots and shoes that incorporate innovative technologies to deliver comfort and durability. The Wolverine ® brand, which has been in existence for 124 years, markets work and outdoor footwear in three categories: (i) work and industrial; (ii) outdoor sport; and (iii) rugged casual. The development of DuraShocks ® technology and Wolverine MultiShox™ technology, has allowed the Wolverine ® brand to introduce a broad line of work footwear with a focus on comfort. The Wolverine Fusion ®, DuraShocks SR™ and Wolverine Compressor™ technologies represent the Company's tradition of comfortable work and industrial footwear, a tradition that is continued and enhanced with the development of the Wolverine MultiShox™ Individual Comfort System. The Wolverine® work product line features work boots and shoes, including steel toe boots and shoes, targeting male and female industrial and farm workers. The Wolverine ® rugged casual and outdoor sport product lines incorporate DuraShocks ® technology and other comfort features into products designed for casual and outdoor sport use. The rugged casual line targets active lifestyles and includes trail shoes, rugged casuals and outdoor sandals. The outdoor sport line is designed to meet the demands of hunters, fishermen and other active outdoor sportsmen and women. Warmth, waterproofing and comfort are achieved through the use of Gore-Tex ® (a registered trademark of W.L. Gore & Associates, Inc.) and Thinsulate ® (a registered trademark of Minnesota Mining and Manufacturing Company) brand fabrics, the Company's performance leathers and patented DuraShocks ® technologies. The Wolverine Footwear Group has also launched a line of work and rugged casual Wolverine ® brand apparel. In addition, the Wolverine ® brand is licensed for use on eyewear, headwear, gloves and socks.
+Bates ® Uniform Footwear . The Bates Uniform Footwear Division is an industry leader in supplying footwear to military and civilian uniform users. The Bates Uniform Footwear Division utilizes DuraShocks ®, DuraShocks SR ™, CoolTech ® and other proprietary comfort technologies in the design of its military-style boots and oxfords including the Bates ®, Enforcer Series ® and Special Ops ™ footwear lines. The Bates Uniform Footwear Division contracts with the U.S. Department of Defense and the militaries of several foreign countries to supply military footwear. Civilian uniform uses include police, security, postal, restaurant and other industrial occupations. Bates
+5
+Uniform Footwear Division's products are also distributed through specialty retailers and catalogs.
+HyTest ® Safety Footwear . The HyTest ® product line consists primarily of high-quality work boots and shoes designed to protect male and female industrial workers from foot injuries. HyTest ® footwear incorporates various specialty safety features into its product lines, including steel toe, composite toe, metatarsal guards, electrical hazard, static dissipating and conductive footwear to protect against hazards of the workplace. In addition, HyTest ® brand footwear incorporates features such as FootRests ® comfort technology to provide comfort together with safety for working men and women. HyTest ® footwear is distributed primarily through a network of independently-owned Shoemobile ® mobile truck retail outlets providing direct sales of the Company's occupational and work footwear brands to workers at industrial facilities and also through direct sales arrangements with large industrial customers.
+3. The Heritage Brands Group . The Heritage Brands Group consists of Caterpillar ® Footwear and Harley-Davidson ® Footwear.
+Caterpillar ® Footwear. Pursuant to a license arrangement with Caterpillar Inc., the Company has exclusive worldwide rights to manufacture, market and distribute footwear under the Caterpillar ®, Cat & Design ®, Walking Machines ® and other trademarks. The Company believes the association with Cat ® equipment enhances the reputation of its footwear for quality, ruggedness and durability. Cat ® brand footwear products include work boots and shoes, sport boots, rugged casuals and lifestyle footwear, including lines of work and casual footwear featuring Cat ® iTechnology™ and Hidden Tracks ® comfort features. In addition, the Company also manufactures and markets Cat ® Marine Power ® footwear, designed for industrial and recreational marine uses. Cat ® footwear products target work and industrial users and active lifestyle users. Cat ® footwear is marketed in approximately 150 countries worldwide. Cat ®, Caterpillar ®, Cat & Design ®, Walking Machines ® and Marine Power ® are registered trademarks of Caterpillar Inc.
+Harley-Davidson ® Footwear . Pursuant to a license arrangement with the Harley-Davidson Motor Company, the Company has the exclusive right to manufacture, market, distribute and sell Harley-Davidson ® brand footwear throughout the world. Harley-Davidson ® brand footwear products include motorcycle, casual, fashion, work and western footwear for men, women and children. Harley-Davidson ® footwear is sold globally through a network of independent Harley-Davidson ® dealerships as well as through department stores and specialty retailers. Harley-Davidson ® is a registered trademark of H-D Michigan, Inc.
+4. The Hush Puppies Company . Since 1958, the Hush Puppies ® brand has been a leader in the casual footwear market. The brand offers shoes and boots for men, women and children, and is marketed in approximately 130 countries. The modern styling is complemented by a variety of comfort features and proprietary technologies that have earned the brand its reputation for comfort. In addition, the Hush Puppies ® brand is licensed for use on apparel, eyewear, handbags, socks, watches and plush toys.
+6
+Other Businesses.
+In addition to manufacturing, sourcing, marketing and distributing the Company's footwear and apparel products as reported in the Branded Footwear and Licensing segment, the Company also (i) operates a Company-owned pigskin tannery through its Wolverine Leathers Division, (ii) purchases and cures raw pigskins for sale to various customers through its wholly-owned subsidiary Wolverine Procurement, Inc., and (iii) operates 82 domestic retail footwear stores.
+1. The Wolverine Leathers Division . The Wolverine Leathers Division produces pigskin leathers primarily for use in the footwear industry. Wolverine Leathers® brand products are primarily manufactured in the Company's pigskin tannery located in Rockford, Michigan. The Company believes these leathers offer superior performance and advantages over cowhide leathers. The Company's waterproof and stain resistant leathers are featured in many of the Company's domestic footwear lines and many products offered by the Company's international licensees and distributors. Wolverine performance leathers are also featured in certain outside brands of athletic and outdoor footwear.
+2. Wolverine Procurement, Inc . Wolverine Procurement, Inc. performs skinning operations and purchases raw pigskins from third parties, which it cures and sells to the Wolverine Leathers Division and to outside customers for processing into pigskin leather products.
+3. Wolverine Retail . The Company operates 82 domestic retail shoe stores as of February 2007. These stores are under the Hush Puppies ®, Hush Puppies and Family SM , Track'N Trail® and Rockford Footwear Depot SM names. Both the Rockford Footwear Depot SM and Track'N Trail® retail formats carry a large selection of Company branded footwear featuring such brands as Wolverine® , Merrell® , Hush Puppies® , Cat® , Patagonia®, Sebago® and Harley-Davidson® . The Company also operates direct-to-customer retail websites, including www.upfootgear.com , www.trackandtrail.com , www.catfootwear.com , www.hushpuppies.com and www.sebago.com .
+Marketing.
+The Company's overall marketing strategy is to develop brand-specific plans and related promotional materials for the United States and international markets to foster a differentiated and consistent image for each of the Company's core footwear brands. Each footwear brand group has its own marketing personnel who develop the marketing strategy for products within that group. Marketing campaigns and strategies vary by brand and may target accounts and/or end users as they strive to increase overall brand awareness for the Company's branded products. The Company's advertisements typically emphasize fashion, comfort, quality, durability, functionality and other performance and lifestyle aspects of the Company's footwear. Components of the brand-specific plans vary and may include print, radio and television advertising, event sponsorships, in-store point of purchase displays, promotional materials, and sales and technical assistance.
+The Company's footwear brand groups provide its international licensees and distributors with creative direction and materials to convey consistent messages and brand images. Examples of marketing assistance that may be provided by the Company to its licensees and distributors are (i) direction on 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 on retail store layout and design. The Company
+7
+believes its footwear brand names provide a competitive advantage and the Company makes significant 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 branded footwear products. To meet the diverse needs of its broad customer base, the Company uses the following distribution strategies.
+•
+Traditional wholesale distribution is used to service department stores, large footwear chains, specialty retailers, catalogs, independent retailers and uniform 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 footwear at competitive prices with limited marketing support. These programs service major retail, mail order, mass merchant and government customers.
+•
+A network of independent Shoemobile ® distribution outlets is used to distribute the Company's work and occupational footwear at industrial facilities.
+•
+The Company solicits all branches of the United States military and enters bids for contracts to supply specific footwear products. Such contracts typically contain future purchase options that are not required to be exercised.
+In addition to its wholesale activities, the Company also operates a domestic retail operation as described above. The Company continues to develop various programs, both independently and with its retail customers, for the distribution of its products.
+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 revenue in fiscal 2006.
+The Company experiences moderate fluctuations in sales volume during the year as reflected in quarterly revenue (and taking into consideration the 16 weeks or 17 weeks included in the fourth accounting period versus the 12 weeks included in the first three accounting periods). The Company also experiences some fluctuation in its levels of working capital, typically including an increase in working capital requirements near the end of the third quarter. 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 current seasonal sales patterns to continue in future years.
+International Operations and Global Licensing.
+The Company records revenue from foreign sources through a combination of (i) sales of branded footwear products generated from the Company's owned operations in Canada, the United Kingdom, Austria, Finland, France, Germany, Italy, The Netherlands, Spain, Sweden and Switzerland and from sales to international distributors for certain markets and businesses, and (ii) from royalty income through a network of independent licensees and distributors. The Company's owned operations include Hush Puppies (UK) Ltd., Wolverine Europe B.V. (formerly known as Merrell Europe B.V.), Merrell (Europe) Limited, Wolverine Europe Limited and Wolverine World Wide Corporation, Inc. (formerly known as
+8
+Hush Puppies Canada Footwear, Ltd.). 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 products (primarily Company footwear) bearing the Hush Puppies ®, Wolverine ®, Bates ®, HyTest ®, Merrell ®, Sebago ® and other trademarks by independent distributors and licensees. The Company also derives royalty income from sales of footwear bearing the Cat ® and Harley-Davidson ® trademarks through foreign distributors. License and distribution arrangements enable the Company to develop sales in international markets without the capital commitment required to maintain related foreign operations, employees, inventories or localized marketing programs.
+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. Independent licensees and distributors purchase goods from either the Company or authorized third-party manufacturers pursuant to distribution agreements or manufacture branded products consistent with Company standards pursuant to license agreements. Distributors and licensees are responsible for independently marketing and distributing Company branded products in their respective territories, with product and market support provided by the Company.
+Manufacturing and Sourcing.
+The Company controls the sourcing and manufacture of approximately 76% of the pairs of footwear marketed under the Company's brand names globally. The balance is controlled directly by the Company's licensees. Of the pairs controlled by the Company, approximately 88% are purchased or sourced from third parties, with the remainder produced at Company-operated facilities. Footwear produced by the Company is manufactured at Company-operated facilities in several domestic and certain affiliated foreign facilities located in Michigan, Arkansas, and the Dominican Republic. For some of the Company-produced footwear, a "twin plant" concept is utilized 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 Dominican Republic and Arkansas, and the technology intensive construction, or "bottoming," is performed primarily at the Company's Michigan facilities.
+The Company's factories each have the flexibility to produce a variety of footwear, which departs from the industry's historical practice of dedicating a given facility to production of specific footwear products. This flexibility allows the Company to quickly respond to changes in market preference and demand. The Company currently produces military footwear and work, casual and dress casual footwear in its owned facilities.
+The Company sources a majority of its footwear from a variety of foreign manufacturing facilities in the Asia-Pacific region, South America and India. The Company maintains technical offices in the Asia-Pacific region 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, the Company has adopted "Engagement Criteria for Partners & Sources" to require that its domestic and foreign manufacturers, licensees and distributors use ethical business standards, comply with all applicable health and safety laws and 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 production lead time, enabling it to quickly respond to market demand and reduce inventory risk,
+9
+(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 manufacturing costs and state-of-the-art manufacturing facilities, (ii) source the highest quality raw materials from around the world, and (iii) avoid additional capital expenditures necessary for owned factories and equipment. The Company believes that its overall global manufacturing strategy gives the Company the flexibility to properly balance the need for timely shipments, high quality products and competitive pricing.
+The Company owns and operates a pigskin tannery through its Wolverine Leathers Division. The Company and its licensees receive a majority of their pigskin leather requirements from the tannery. The Company believes the tannery provides a strategic advantage for the Company by producing pigskin leather using proprietary technology at prices below those available from other sources.
+The Company's principal required raw material is quality leather, which it purchases from a select group of domestic and offshore suppliers, including the Company's tannery. The global availability of common upper materials and specialty leathers 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 one domestic source. This source has been a reliable and consistent supplier for over 30 years. Alternative sources of pigskin are available; however the price, processing and/or product characteristics are less advantageous to the Company. 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 or terrorism, political disturbances and similar events, the imposition of trade barriers, quotas, tariffs and duties, loss of most favored nation trading status and currency and exchange rate fluctuations. 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 have an adverse impact on the Company's operations and financial condition.
+Trademarks, Licenses and Patents.
+The Company holds a significant portfolio of registered and common law trademarks that identify its branded footwear products. The owned trademarks that are most widely used by the Company include Hush Puppies ®, Wolverine ®, Bates ®, Wolverine Fusion ®, DuraShocks ®, Wolverine MultiShox TM , Wolverine Compressor TM , Hidden Tracks ®, iTechnology TM , Bounce ®, Comfort Curve ®, HyTest ®, Merrell ®, Continuum ®, Sebago ®, Q-Form TM and Track'N Trail ®. Pigskin leather produced by the Company's Wolverine Leathers Division is sold under the trademarks Wolverine Leathers ®, Wolverine Warrior Leather ®, Weather Tight ® and All Season Weather Leathers ™. The Company has obtained license rights to manufacture, market and distribute footwear throughout the world under the Cat ®, Harley-Davidson ® and Patagonia ® trademarks, and the right to manufacture, market and distribute footwear in the United States and other countries under the Stanley ® trademark, all pursuant to license arrangements with the respective trademark owners. The Company's license agreement for Stanley ® footgear will terminate effective June 30, 2008. The Cat ® footwear license has a current term extending through December 2011. The Harley-Davidson ® footwear license is long term and extends for more than five years. The Patagonia ® footwear license extends for more than five years and also includes conditional renewal options. All of these license agreements are subject to early termination provisions.
+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
+10
+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 many design and utility patents, copyrights and various other proprietary rights. The Company protects all of its proprietary rights to the greatest extent practicable under applicable laws.
+Order Backlog.
+At February 17, 2007, the Company had an order backlog of approximately $354 million compared with an order backlog of approximately $317 million at February 18, 2006, determined on a basis consistent with the current year. Substantially all of the backlog relates to demand for products expected to be shipped in 2007. Orders in backlog are subject to cancellation by customers and to changes in planned customer demand or at-once orders. The backlog at a particular time is affected by a number of factors, including seasonality, retail conditions, expected customer demand, product availability and the schedule for 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 domestic and foreign marketers, manufacturers and importers of footwear, some of which are larger and have greater resources than the Company. The Company's major competitors for its brands of footwear are located in the United States and Europe. The Company has at least ten major competitors in connection with the sale of its work shoes and boots, at least ten major competitors in connection with the sale of its sport boots, and at least thirty major competitors in connection with the sale of its casual, work and outdoor shoes. Product performance and quality, including technological improvements, product identity, competitive pricing and ability to control costs, 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 maintain its competitive position through promotion of brand awareness, manufacturing and sourcing efficiencies, 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. Market shares in the non-athletic footwear industry are highly fragmented and no one company has a dominant market position.
+Research and Development.
+In addition to normal and recurring product development, design and styling activities, the Company engages in research and development related to the development of new production techniques and to improving the function, performance, reliability and quality of its branded footwear and other products. The Company's continuing relationship with the Biomechanics Evaluation Laboratory at Michigan State University, for example, has led to specific biomechanical design concepts, such as Bounce ®, DuraShocks ® and Hidden Tracks ® comfort technologies, that have been incorporated in the Company's footwear. 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.
+11
+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 and its subsidiaries. The Company uses and generates certain substances and wastes that are regulated or may be deemed hazardous under certain federal, state and local regulations with respect to the environment. The Company from time to time works with federal, state and local agencies to resolve cleanup issues at various waste sites and other regulatory issues.
+Employees.
+As of December 30, 2006, the Company had approximately 4,532 domestic and foreign production, office and sales employees. Approximately 457 employees were covered by four union contracts expiring at various dates through April 30, 2009. The Company presently considers its employee relations to be good.
+Available Information.
+Information about the Company, including the Company's Code of Conduct & Compliance, Corporate Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics, Audit Committee Charter, Compensation Committee Charter, Executive Committee Charter and Governance Committee Charter, is available at its website, www.wolverineworldwide.com. Printed copies of the documents listed above are available, without charge, by writing to the Company at 9341 Courtland Drive, N.E., Rockford, Michigan 49351, Attention: General Counsel.
+The Company also makes available on or through its website, free of charge, the Company's annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports (along with certain other Company filings with the Securities and Exchange Commission ("SEC")) as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. These materials are also accessible on the SEC's website at www.sec.gov.

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1	+ Item 13. Certain Relationships and Related Transactions .
2	+ The information contained under the caption "Related Matters" under the subheading "Certain Relationships and Related Transactions" contained in the definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be held on April 19, 2007, is incorporated herein by reference. The information contained under the caption "Corporate Governance Principles" under the subheading "Independence" contained in the definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be held on April 19, 2007, is incorporated herein by reference.

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+Item 9A. Controls and Procedures .
+Evaluation of Disclosure Controls and Procedures.
+An evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on and as of the time of such evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. There have been no changes during the year ended December 30, 2006 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
+Management's Report on Internal Control Over Financial Reporting.
+Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over
+35
+financial reporting as of December 30, 2006, based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 30, 2006.
+Management's assessment of the effectiveness of our internal control over financial reporting as of December 30, 2006 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report which is included in Appendix A and is incorporated into this Item 9A by reference.
+Changes in Internal Control Over Financial Reporting.
+There was no change in the Company's internal control over financial reporting that occurred during the sixteen-week period ended December 30, 2006 that has materially affected, or that is reasonably likely to materially affect, the Company's internal control over financial reporting.

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+“Certain Relationships and Related Transactions.”
+7
+Table of Contents
+Stock
+Ownership Requirements for Directors and Executive
+Officers
+For many years, the Board has believed that directors and
+management should have a significant financial stake in
+Wolverine to align their interests with those of the
+stockholders. For that reason, several years ago the Board
+adopted formal requirements that directors and executive
+management own specified amounts of Wolverine stock (including
+ownership credit for stock units allocated to non-employee
+directors under the Deferred Compensation Plan) within five
+years of their respective election to the Board or appointment
+as a member of executive management. The ownership requirements
+are as follows: (i) for directors, five times the current
+Board retainer, (ii) for the Chief Executive Officer, five
+times base salary, (iii) for other executive officers,
+between two and three times base salaries, and (iv) for
+other executive management, between one and two times base
+salaries.
+Code of
+Conduct & Compliance
+For years, Wolverine and its employees and directors have
+followed an extensive Code of Conduct & Compliance
+(“Code”). This comprehensive Code establishes basic
+guidelines to help employees and directors comply with
+applicable legal requirements and sets forth Wolverine’s
+expectations regarding business ethics, integrity, honesty,
+fairness and keeping commitments. The Code contains
+Wolverine’s principles and procedures regarding conflicts
+of interest, corporate opportunities, confidentiality, fair
+dealing, protection and proper use of Wolverine’s assets,
+compliance with laws, rules and regulations, engagement criteria
+for Wolverine’s trading partners, “whistle
+blower” protection provisions, expectations regarding the
+integrity of books and records, and guidelines and procedures
+for many other subjects. Employees are surveyed annually to
+identify any areas of noncompliance with the Code, and the
+results of this survey are reported to the Board.
+Accounting
+and Finance Code of Ethics
+The Board has adopted an Accounting and Finance Code of Ethics
+(“Finance Ethics Code”). This is an ethics code
+focused on the financial reporting process and is intended to
+protect the interests of all of Wolverine’s constituents,
+including stockholders, employees, customers and the communities
+in which Wolverine conducts business. Many of the basic tenets
+of the Finance Ethics Code have been incorporated for many years
+in the Code. The Finance Ethics Code is applicable to
+Wolverine’s Chief Executive Officer, Chief Financial
+Officer and Corporate Controller and sets forth specific rules
+of conduct and expectations regarding the financial reporting
+process, protection of Wolverine’s assets, compliance with
+rules and regulations and honest and ethical conduct in
+connection with the financial reporting process and related
+disclosures. The Finance Ethics Code and the Code are available
+on the Corporate Governance section of the Investors section of
+Wolverine’s website at www.wolverineworldwide.com ,
+where Wolverine will post any waiver of these codes for
+directors or executive officers.
+Board
+Committee Charters
+The Board has organized and formed three committees, the Audit
+Committee, the Compensation Committee and the Governance
+Committee. The Board has approved a committee charter for each
+committee that contains basic principles regarding the
+committee’s organization, purpose, authority and
+responsibilities. The performance of each committee is reviewed
+annually by committee members and the Board.
+Leadership
+Since 1993, the Board has operated with an independent Lead
+Director, who is selected by the independent directors. The
+duties of the independent Lead Director include:
+(a) working closely with the Chairman regarding the agenda
+and scheduling for Board and committee meetings;
+(b) overseeing information sent to the Board;
+(c) presiding over executive sessions; (d) serving as
+a liaison between the Chairman and the independent Directors;
+(e) presiding over Board meetings in the absence of the
+Chairman; and (f) being available for consultation and
+communications with stockholders as appropriate.
+Attendance
+The Board prides itself on its ability to recruit and retain
+directors who have a diversity of experience, who have the
+highest personal and professional integrity, who have
+demonstrated exceptional ability and judgment and who are
+effective (in conjunction with the other members of the Board)
+in collectively serving the long-term interests of the
+stockholders. Board and committee attendance is central to the
+proper functioning of the Board of Directors and is a priority.
+Directors are expected to make every effort to attend every
+Board meeting. Directors are also expected to attend the Annual
+Meeting of Stockholders in person. All 11 then-current directors
+attended the 2007 annual meeting.
+8
+Table of Contents
+Communication
+with the Board
+Stockholders and interested parties may communicate with members
+of Wolverine’s Board of Directors through various links
+provided on the Corporate Governance section of the Investors
+section of Wolverine’s website at
+www.wolverineworldwide.com or by sending correspondence
+to the Board, a specific Board committee or a Board member
+c/o General
+Counsel, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E.,
+Rockford, Michigan 49351. Any communications submitted by any of
+the above means (or the means described below) are received by
+Wolverine’s General Counsel and forwarded to the
+appropriate person or persons. Complaints or concerns regarding
+Wolverine’s financial statements and accounting, auditing,
+internal control and reporting practices can be reported to the
+audit committee (including anonymous and confidential
+submissions) by sending an
+e-mail to
+financialconcerns@wwwinc.com or by writing to the audit
+committee
+c/o the
+General Counsel at the above address.
+Board and
+Company Culture
+Wolverine’s comprehensive governance guidelines and
+principles are coupled with a robust, open and effective Board
+environment that promotes respect, trust and candor, fosters a
+culture of open dissent and permits each director to express
+opinions and contribute to the Board process. Directors are
+expected to have unrestricted access to management and any
+company information they desire. The participation of Board
+members and the open exchange of opinions is further encouraged
+at the Board committee level through the periodic rotation of
+Board members among its standing committees. This open and
+candid operating environment is shared by management and the
+Board and is essential to fully realize the benefits of
+Wolverine’s formal governance guidelines, principles,
+charters and policies.
+9
+Table of Contents
+Ownership
+of Wolverine Stock
+Five
+Percent Stockholders
+The following table sets forth information concerning the number
+of shares of Wolverine stock held by each entity known to
+Wolverine to be the beneficial owner of more than five percent
+of Wolverine’s outstanding shares of common stock:
+Five Percent Stockholders
+Amount and Nature of Beneficial
+Ownership of Common Stock
+Shared Voting
+Total
+Name and Address
+Sole Voting
+Sole Dispositive
+or Dispositive
+Beneficial
+Percent
+of Beneficial Owner
+Power
+Power
+Power
+Ownership
+of Class
+Barclays Global Investors, NA(1)
+2,326,764
+3,034,322
+0
+3,034,322
+5.8
+45 Fremont Street
+San Francisco, CA 94105
+Franklin Resources, Inc.(2)
+3,092,239
+3,092,239
+0
+3,092,239
+5.9
+One Franklin Parkway
+San Mateo, CA 94403
+(1)
+Based on information set forth in Schedule 13G filed
+February 5, 2008. The Schedule 13G indicates that
+Barclays Global Investors, NA and other related entities (some
+of which are investment advisors or banks) beneficially own, in
+the aggregate, 3,034,322 shares of Wolverine common stock.
+(2)
+Based on information set forth in Schedule 13G filed
+February 8, 2008. The Schedule 13G indicates that
+Franklin Resources, Inc. and one or more open- or close-end
+investment companies and other managed accounts that are
+investment management clients of investment managers that are
+direct and indirect subsidiaries of Franklin Resources, Inc.
+beneficially own, in the aggregate, 3,092,239.
+10
+Table of Contents
+Stock
+Ownership By Management
+The following table sets forth the number of shares of common
+stock beneficially owned as of March 3, 2008, by each of
+Wolverine’s directors and nominees for director, each of
+the named executive officers and all of Wolverine’s
+directors, nominees for director and executive officers as a
+group. An asterisk in the column for “Percent of
+Class” means the individual beneficially owns less than one
+percent of the common stock:
+Stock Ownership By Management
+Amount and Nature of Beneficial
+Ownership of Common Stock(1)
+Sole Voting
+Shared Voting
+Total
+Name of
+and Dispositive
+or Dispositive
+Stock
+Beneficial
+Percent
+Beneficial Owner
+Power
+Power(2)
+Options(3)
+Ownership(3)
+of Class
+Jeffrey M. Boromisa
+—
+—
+10,736
+10,736
+*
+Kenneth A. Grady
+6,800
+—
+3,034
+9,834
+*
+William K. Gerber
+500
+—
+6,891
+7,391
+*
+Alberto L. Grimoldi
+10,168
+—
+42,784
+52,952
+*
+Stephen L. Gulis, Jr.
+158,632
+1,890
+254,529
+415,051
+*
+David T. Kollat
+83,934
+—
+56,665
+140,599
+*
+Blake W. Krueger
+234,899
+—
+283,037
+517,936
+1.01
+Brenda J. Lauderback
+5,100
+—
+11,040
+16,140
+*
+Phillip D. Matthews(4)
+34,238
+—
+56,665
+90,903
+*
+David P. Mehney
+50,520
+49,250
+56,665
+156,435
+*
+Timothy J. O’Donovan
+309,510
+125,821
+502,351
+937,682
+1.83
+Nicholas P. Ottenwess
+33,291
+190
+85,961
+119,442
+*
+Shirley D. Peterson
+3,000
+—
+19,603
+22,603
+*
+Michael A. Volkema
+5,000
+—
+14,903
+19,903
+*
+James D. Zwiers
+37,641
+—
+32,842
+70,483
+*
+All directors and executive officers as a group
+980,233
+177,151
+1,437,706
+2,595,090
+5.07
+(1)
+The numbers of shares stated are based on information provided
+by each person listed and include shares personally owned of
+record and shares that, under applicable regulations, are
+considered to be otherwise beneficially owned.
+(2)
+These numbers include shares over which the listed person is
+legally entitled to share voting or dispositive power by reason
+of joint ownership, trust or other contract or property right,
+and shares held by spouses, children or other relatives over
+whom the listed person may have influence by reason of
+relationship.
+(3)
+The numbers in the Stock Options column represent shares that
+may be acquired within 60 days after March 3, 2008, by
+the exercise of stock options granted under Wolverine’s
+various stock option plans. These numbers are also included in
+the Total Beneficial Ownership column.
+(4)
+Mr. Matthews pledged 34,238 shares of Wolverine common
+stock in connection with a post-paid variable forward sale
+contact entered into on February 15, 2007 with an
+unaffiliated third party buyer.
+11
+Table of Contents
+Executive
+Compensation
+COMPENSATION

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1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000110471,WWW,WOLVERINE WORLD WIDE INC /DE/,10-K,2009-03-04,2009-01-03,2009-03-04T15:54:31.000Z,0001362310-09-003153,c81880e10vk.htm,FORM 10-K,1546511,0,0,https://www.sec.gov/Archives/edgar/data/110471/000136231009003153/c81880e10vk.htm,https://www.sec.gov/Archives/edgar/data/110471/000136231009003153/,2008,2008,1

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+Item 1. Business .
+General.
+Wolverine World Wide, Inc. (the “Company”) is a leading designer, manufacturer and marketer of
+a broad range of quality casual shoes, rugged outdoor and work footwear. The Company, a Delaware
+corporation, is the successor 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.
+Approximately 46.6 million pairs of the Company’s branded footwear were sold during fiscal
+2008, making the Company a global leader among footwear companies in the marketing of branded
+casual, work and outdoor footwear. The Company’s products generally feature contemporary styling
+with proprietary technologies designed to provide maximum comfort and performance. The products
+are marketed throughout the world under widely recognized brand names, including Bates ® , Cat ®
+Footwear, Chaco ® , Cushe ® , Harley-Davidson ® Footwear, Hush Puppies ® , HyTest ® , Merrell ® , Patagonia ®
+Footwear, Sebago ® and Wolverine ® . The Company believes that its primary competitive strengths are
+its well-recognized brand names, broad range of comfortable footwear, patented and proprietary
+designs and comfort technologies, numerous distribution channels and diversified manufacturing and
+sourcing base. Cat ® is a registered trademark of Caterpillar Inc., Harley-Davidson ® is a
+registered trademark of H-D Michigan, Inc. and Patagonia ® is a registered trademark of Patagonia,
+Inc.
+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 units: (i) the Wolverine Footwear Group, consisting of
+the Bates ® , HyTest ® and Wolverine ® boots and shoes, and Wolverine ® brand apparel, (ii) the Outdoor
+Group, consisting of Merrell ® , Patagonia ® and Chaco ® footwear, and Merrell ® brand apparel, (iii)
+the Heritage Brands Group, consisting of Cat ® footwear, Harley-Davidson ® footwear and Sebago ®
+footwear, and (iv) The Hush Puppies Company, consisting of Hush Puppies ® footwear and Cushe ®
+footwear. The Company also licenses its brands for use on non-footwear products, including
+apparel, eyewear, watches, socks, gloves, handbags and plush toys.
+The Company’s Global Operations Group is responsible for manufacturing, sourcing, distribution
+and customer support for the various Company brands. The Company’s footwear is distributed
+domestically through Company-owned retail stores, to governments and municipalities and to numerous
+accounts, including department stores, footwear chains, catalogs, specialty retailers, mass
+merchants and Internet retailers. Many of the retailers to which Wolverine distributes operate
+multiple storefront locations. The Company’s products are marketed worldwide in approximately 180
+countries and territories through Company-owned wholesale operations, licensees and distributors.
+The Company, through its Wolverine Leathers Division, operates a pigskin leather business
+supplying pigskin leather for the shoe and leather goods industries. A significant portion of the
+Wolverine Leathers Division’s pigskin leather is used in the footwear marketed by the Company, and
+is also sold to Company licensees and other domestic and foreign manufacturers of footwear. The
+Company currently operates a tanning facility to support the Wolverine Leathers Division business.
+The Company has announced that it will likely close its tanning facility and outsource leather
+processing in 2009. In addition, Wolverine Procurement, Inc., a Company-owned subsidiary, performs
+skinning operations and purchases raw pigskins, which it then cures and sells to outside customers
+for processing into pigskin leather products.
+5
+Table of Contents
+For financial information regarding the Company, see the consolidated financial statements of
+the Company and the notes thereto, which are attached as Appendix A to this Form 10-K. The Company
+has one reportable segment, Branded Footwear, Apparel, and Licensing. The Branded Footwear,
+Apparel, and Licensing segment is engaged in manufacturing, sourcing, licensing, marketing and
+distributing branded footwear and apparel, including casual shoes and apparel, dress shoes, boots,
+uniform shoes, work shoes and rugged outdoor footwear and apparel. The Company’s Other Business
+units consist of its retail stores, leathers and pigskin procurement operations. Financial
+information regarding the Company’s business segments and financial information about geographic
+areas is found in Note 9 to the consolidated financial statements of the Company that are attached
+as Appendix A to this Form 10-K.
+Branded Footwear, Apparel and Licensing.
+The Company sources and markets a broad range of footwear styles, including shoes, boots and
+sandals under many recognizable brand names, including Bates ® , Cat ® , Chaco ® , Cushe
+® ,
+Harley-Davidson ® , Hush Puppies ® , HyTest ® , Merrell ® , Patagonia ® , Sebago ®
+and Wolverine ® . The
+Company combines quality materials and skilled workmanship from around the world to produce
+footwear according to its specifications at both Company-owned and third-party manufacturing
+facilities. The Company also markets Merrell ® , Sebago ® , and Wolverine ® brand apparel and licenses
+its brands for use on non-footwear products, including apparel, eyewear, watches, socks, handbags,
+gloves and plush toys. Current significant licensing programs include Hush Puppies ® apparel,
+eyewear, watches, socks, handbags and plush toys, and Wolverine ® brand gloves, eyewear, socks and
+headwear.
+The Company’s four branded footwear, apparel, and licensing operating units are described
+below.
+1. The Outdoor Group . The Outdoor Group consists of Merrell ® Footwear,
+Patagonia ® Footwear, Chaco ® Footwear and Merrell ® Apparel. Outdoor Group products include
+performance outdoor and hiking footwear, casual and after-sport footwear and performance and
+casual Merrell ® Apparel.
+Merrell ® Footwear. The Merrell ® Footwear line consists primarily of running,
+technical hiking, rugged outdoor and outdoor-inspired casual footwear designed for
+backpacking, day hiking and everyday use. The Merrell ® Footwear line also includes
+the “After-Sport” category, incorporating Merrell ® Footwear’s technical hiking and
+outdoor expertise with Wolverine Performance Leathers ™ and other technical materials
+to create footwear with unique styling, performance and comfort features. Merrell ®
+Footwear products are sold primarily through outdoor specialty retailers, department
+stores and catalogs. Merrell ® Footwear is marketed in approximately 150 countries
+and territories worldwide.
+Merrell ® Apparel. The Merrell ® Apparel line consists primarily of technical
+outdoor and outdoor-inspired casual apparel and performance socks. In addition to
+Merrell ® Apparel, the Outdoor Group markets Merrell ® packs, bags and luggage.
+Patagonia ® Footwear. The Company entered into a license agreement providing
+the Company with exclusive worldwide rights to manufacture, market, distribute and
+sell footwear under the Patagonia ® , Water Girl ® and other trademarks. The Patagonia ®
+Footwear line focuses primarily on casual and outdoor performance footwear.
+Chaco ® Footwear and ULU ® Footwear . The Company acquired the Chaco ® and ULU ®
+Footwear businesses in January 2009. The Chaco ® line is focused primarily on
+performance sandals and ULU ® is focused primarily on fashionable, performance winter
+boots.
+6
+Table of Contents
+2. Wolverine Footwear Group . The Wolverine Footwear Group encompasses footwear
+primarily under the Wolverine ® , Bates ® , and HyTest ® brands and markets footwear designed
+with performance and comfort features to serve a variety of work, outdoor and lifestyle
+functions. The Wolverine Footwear Group also markets Wolverine ® brand apparel.
+Wolverine ® Work and Industrial Footwear . The Wolverine ® brand has built its
+reputation by offering high quality work boots and shoes that incorporate innovative
+technologies to deliver comfort and durability. The Wolverine ® brand, which has
+been in existence for 126 years, markets work and outdoor footwear in three
+categories: (i) work and industrial; (ii) outdoor sport; and (iii) rugged casual.
+The development of DuraShocks ® technology and MultiShox ® technology has allowed the
+Wolverine ® brand to introduce a broad line of work footwear with a focus on comfort.
+The Wolverine Fusion ® , DuraShocks SR ™ and Wolverine Compressor ® technologies
+represent the Company’s tradition of comfortable work and industrial footwear, a
+tradition that is continued and enhanced with the development of the MultiShox ®
+Individual Comfort System and the Contour Welt ™ product line. The Wolverine ®
+work product line features work boots and shoes, including steel toe boots and
+shoes, targeting industrial and farm workers. The Wolverine ® rugged casual and
+outdoor sport product lines incorporate DuraShocks ® technology and other comfort
+features into products designed for casual and outdoor sport use. The rugged casual
+line targets active lifestyles and includes trail shoes, rugged casuals and outdoor
+sandals. The outdoor sport line is designed to meet the demands of hunters,
+fishermen and other active outdoor sports enthusiasts. Warmth, waterproofing and
+comfort are achieved through the use of Gore-Tex ® (a registered trademark of W.L.
+Gore & Associates, Inc.) and Thinsulate ® (a registered trademark of Minnesota Mining
+and Manufacturing Company) brand fabrics, the Company’s performance leathers and
+patented DuraShocks ® technologies.
+Wolverine ® Apparel and Licensing . The Wolverine Footwear Group markets a line
+of work and rugged casual Wolverine ® brand apparel. In addition, the Wolverine ®
+brand is licensed for use on eyewear, headwear, gloves and socks.
+Bates ® Uniform Footwear . The Bates Uniform Footwear Division is an industry
+leader in supplying footwear to military and civilian uniform users. The Bates
+Uniform Footwear Division utilizes DuraShocks ® , DuraShocks SR ™, CoolTech ® and other
+proprietary comfort technologies in the design of its military-style boots and
+oxfords, including the Bates ® , Enforcer Series ® and Special Ops ™ footwear lines.
+The Bates Uniform Footwear Division contracts with the U.S. Department of Defense
+and the militaries of several foreign countries to supply military footwear.
+Civilian uniform uses include police, security, postal, restaurant and other
+industrial occupations. Bates Uniform Footwear Division’s products are also
+distributed through specialty retailers and catalogs.
+HyTest ® Safety Footwear . The HyTest ® product line consists primarily of
+high-quality work boots and shoes designed to protect industrial workers from foot
+injuries. HyTest ® footwear incorporates various specialty safety features into its
+product lines,
+including steel toe, composite toe, metatarsal guards, electrical hazard, static
+dissipating and conductive footwear to protect against hazards of the workplace. In
+addition, HyTest ® brand footwear incorporates features, such as FootRests ® comfort
+technology, to provide comfort together with safety for working men and women.
+HyTest ® footwear is distributed primarily through a network of independently-owned
+Shoemobile ® mobile truck retail outlets providing direct sales of the Company’s
+occupational and work footwear brands to workers at industrial facilities and also
+through direct sales arrangements with large industrial customers.
+7
+Table of Contents
+3. The Heritage Brands Group . The Heritage Brands Group consists of
+Caterpillar ® Footwear, Harley-Davidson ® Footwear and the Sebago ® product line.
+Caterpillar ® Footwear. Pursuant to a license arrangement with Caterpillar
+Inc., the Company has exclusive worldwide rights to manufacture, market and
+distribute footwear under the Caterpillar ® , Cat & Design ® , Walking Machines ® and
+other trademarks. The Company believes the association with Cat ® equipment enhances
+the reputation of its footwear for quality, ruggedness and durability. Cat ® brand
+footwear products include work boots and shoes, sport boots, rugged casuals and
+lifestyle footwear, including lines of work and casual footwear featuring
+iTechnology ™ and Hidden Tracks ® comfort features. In addition, the
+Company also manufactures and markets Cat ® Marine Power ® footwear, designed for
+industrial and recreational marine uses. Cat ® footwear products target work and
+industrial users and active lifestyle users. Cat ® footwear is marketed in
+approximately 140 countries and territories worldwide. Cat ® , Caterpillar ® , Cat &
+Design ® , Walking Machines ® and Marine Power ® are registered trademarks of
+Caterpillar Inc.
+Harley-Davidson ® Footwear . Pursuant to a license arrangement with the
+Harley-Davidson Motor Company, the Company has the exclusive right to manufacture,
+market, distribute and sell Harley-Davidson ® branded footwear throughout the world.
+Harley-Davidson ® branded footwear products include motorcycle, casual, fashion, work
+and western footwear for men, women and children. Harley-Davidson ® footwear is sold
+globally through a network of independent Harley-Davidson ® dealerships, as well as
+through department stores and specialty retailers. Harley-Davidson ® is a registered
+trademark of H-D Michigan, Inc.
+Sebago ® . The Sebago ® product line consists primarily of performance nautical
+and American-inspired casual footwear for men and women, such as boat shoes and
+handsewn loafers, that have been manufactured and distributed since 1946. Highly
+recognized Sebago ® line extensions include Sebago Docksides ® , Sebago Drysides ™,
+Sebago Campsides ™ and Athletic Marine. The Sebago ® product line is marketed in
+approximately 115 countries and territories worldwide. The Sebago ® manufacturing and
+design tradition of quality componentry, durability, comfort and “Americana”
+heritage is further supported by targeted distribution to better-grade independent,
+marine and department store retailers throughout the world. The Company expects to
+launch a classic and marine Sebago ® apparel line in 2009.
+8
+Table of Contents
+4. The Hush Puppies Company .
+Hush Puppies . Since 1958, the Hush Puppies ® brand has been a leader in the
+casual footwear market. The brand offers shoes and boots for men, women and
+children,
+and is marketed in approximately 140 countries and territories. The modern styling
+is complemented by a variety of comfort features and proprietary technologies that
+have earned the brand its reputation for comfort. In addition, the Hush Puppies ®
+brand is licensed for use on apparel, eyewear, handbags, socks, watches and plush
+toys.
+Cushe . The Company acquired the Cushe ® Footwear business in January 2009. The
+Cushe business focuses on relaxed, design-led footwear for active men and women.
+Other Businesses.
+In addition to manufacturing, sourcing, marketing and distributing the Company’s footwear and
+apparel products as reported in the Branded Footwear, Apparel, and Licensing segment, the Company
+also (i) operates 90 North American and 2 U.K.-based retail footwear stores, (ii) operates a
+performance leathers business through its Wolverine Leathers Division, and (iii) purchases and
+cures raw pigskins for sale to various customers through its wholly-owned subsidiary Wolverine
+Procurement, Inc.
+1. Wolverine Retail . The Company operates 90 North American and 2 U.K.-based
+retail shoe stores as of February 2009. These stores are operated under the Hush Puppies ® ,
+Hush Puppies and Family SM , Track’N Trail ® , Rockford Footwear Depot ® and Merrell ®
+names. Both the Rockford Footwear Depot ® and Track’N Trail ® retail formats carry a large
+selection of Company-branded footwear, featuring such brands as Wolverine ® , Merrell ® , Hush
+Puppies ® , Cat ® , Patagonia ® , Sebago ® and Harley-Davidson ® . The Company also operates
+direct-to-customer retail websites, including www.upfootgear.com , www.trackandtrail.com ,
+www.catfootwear.com , www.hushpuppies.com, www.sebago.com and www.merrell.com .
+2. The Wolverine Leathers Division . The Wolverine Leathers Division produces
+and markets pigskin leathers primarily for use in the footwear industry. The Company
+believes pigskin leathers offer superior performance and advantages over cowhide leathers.
+The Company’s waterproof and stain resistant leathers are featured in some of the Company’s
+domestic footwear lines and many products offered by the Company’s international licensees
+and distributors. Wolverine performance leathers are also featured in certain outside
+brands of athletic and outdoor footwear.
+3. Wolverine Procurement, Inc . Wolverine Procurement, Inc. performs skinning
+operations and purchases raw pigskins from third parties, which it cures and sells to the
+Wolverine Leathers Division and to outside customers for processing into pigskin leather
+products.
+Marketing.
+The Company’s overall marketing strategy is to develop brand-specific plans and related
+promotional materials for U.S. and international markets to foster a differentiated and consistent
+image for each of the Company’s core brands. Each brand group has its own marketing personnel who
+develop the marketing strategy for products within that group. Marketing campaigns and strategies
+vary by brand and may target accounts and/or end users as they strive to increase overall brand
+awareness for the Company’s branded products. The Company’s advertisements typically emphasize
+fashion, comfort, quality, durability, functionality and other performance and lifestyle aspects of
+the Company’s products. Components of the brand-specific plans vary and may include print, radio
+and television advertising, event sponsorships, in-store point of purchase displays, promotional
+materials, and sales and technical assistance.
+9
+Table of Contents
+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 that may be provided by the Company to its licensees and distributors are (i) direction
+on 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 on retail store
+layout and design. The Company believes its brand names provide a competitive advantage and the
+Company makes significant 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 domestic distribution channels to distribute its branded
+footwear products. To meet the diverse needs of its broad customer base, the Company uses the
+following distribution strategies:
+•
+Traditional wholesale distribution is used to service department
+stores, large footwear chains, specialty retailers, catalogs,
+independent retailers and uniform 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 footwear at competitive prices with
+limited marketing support. These programs service major retail, mail
+order, mass merchant and government customers.
+•
+A network of independent Shoemobile ® distribution outlets is used to
+distribute the Company’s work and occupational footwear at industrial
+facilities.
+•
+The Company solicits all branches of the United States military and
+enters bids for contracts to supply specific footwear products. Such
+contracts typically contain future purchase options that are not
+required to be exercised.
+In addition to its
+wholesale activities, the Company also operates a retail operation as
+described above. The Company continues to develop various programs, both independently and with its
+retail customers, for the distribution of its products.
+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 revenue in fiscal 2008.
+The Company experiences moderate fluctuations in sales volume during the year as reflected in
+quarterly revenue (and taking into consideration the 16 weeks or 17 weeks included in the fourth
+accounting period versus the 12 weeks included in the first three accounting periods). The Company
+also experiences some fluctuation in its levels of working capital, typically including an increase
+in working capital requirements near the end of the third quarter. The Company provides working
+capital for such fluctuations through internal financing and through a revolving credit agreement.
+The Company expects current seasonal sales patterns to continue in future years.
+10
+Table of Contents
+International Operations and Global Licensing.
+The Company records revenue from foreign sources through a combination of (i) sales of branded
+footwear products generated from the Company’s owned operations in Canada, the United Kingdom,
+Austria, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden and Switzerland and from
+sales to international distributors for certain markets and businesses and (ii) from royalty income
+through a network of third-party licensees and distributors. The Company’s owned operations are
+located in markets where the Company believes it can gain a strategic advantage by more directly
+controlling the sale into retail accounts.
+The Company derives royalty income from sales of products (primarily Company footwear) bearing
+the Hush Puppies ® , Wolverine ® , Bates ® , Merrell ® , Sebago ® and other trademarks by independent
+distributors and licensees. The Company also derives royalty income from sales of footwear bearing
+the Cat ® and Harley-Davidson ® trademarks through foreign distributors. License and distribution
+arrangements enable the Company to develop sales in international markets without the capital
+commitment required to maintain related foreign operations, employees, inventories or localized
+marketing programs.
+The Company continues to develop its 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. Independent licensees and distributors
+purchase goods from either the Company or authorized third-party manufacturers pursuant to
+distribution agreements or manufacture branded products consistent with Company standards pursuant
+to license agreements. Distributors and licensees are responsible for independently marketing and
+distributing Company branded products in their respective territories, with product and market
+support provided by the Company.
+Manufacturing and Sourcing.
+The Company controls the sourcing and/or manufacture of approximately 81% of the pairs of
+footwear marketed globally under the Company’s brand names. The balance is controlled directly by
+the Company’s licensees. Of the pairs purchased by the Company, approximately 93% are purchased or
+sourced from third parties, with the remainder produced at Company-operated facilities. The
+Company sources a majority of its footwear from a variety of foreign manufacturing facilities in
+the Asia-Pacific region, South America and India. The Company maintains technical offices in the
+Asia-Pacific region 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, the Company has adopted “Engagement
+Criteria for Partners & Sources” to require that its domestic and foreign manufacturers, licensees
+and distributors use ethical business standards, comply with all applicable health and safety laws
+and 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. Footwear
+produced by the Company is manufactured at Company-operated facilities located in Michigan,
+Arkansas, and the Dominican Republic.
+The Company’s factories each have the flexibility to produce a variety of footwear, which
+departs from the industry’s historical practice of dedicating a given facility to production of
+specific footwear products. This flexibility allows the Company to quickly respond to changes in
+market preference and demand. The Company currently produces military footwear as well as work,
+casual and dress casual footwear in its owned facilities. For some of the Company-produced
+footwear, a “twin plant” concept is utilized 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 Dominican Republic and Arkansas, and
+the technology intensive construction, or “bottoming,” is performed primarily at the Company’s
+facilities in Michigan and the Dominican Republic.
+11
+Table of Contents
+The Company’s owned manufacturing operations allow the Company to (i) reduce its production
+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 (a) benefit from lower manufacturing costs and
+state-of-the-art manufacturing facilities, (b) source the highest quality raw materials from around
+the world, and (c) avoid additional capital expenditures necessary for owned factories and
+equipment. The Company believes that its overall global manufacturing strategy gives the Company
+the flexibility to properly balance the need for timely shipments, high quality products and
+competitive pricing.
+The Company owns and operates a pigskin tannery through its Wolverine Leathers Division. The
+Company and its licensees receive a majority of their pigskin leather requirements from this
+tannery. During 2009, the Company will evaluate strategic alternatives for the Company-owned
+leather business. The Company’s management currently expects that this evaluation will result in
+the closure of the Company’s pigskin tannery and outsourcing of the Company’s pigskin leather
+processing.
+The Company’s principal required raw material is quality leather, which it purchases from a
+select group of domestic and offshore suppliers, including the Company’s tannery. The global
+availability of common upper materials and specialty leathers 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 Wolverine Leathers Business from one domestic source.
+This source has been a reliable and consistent supplier for over 30 years. Alternative sources of
+raw pigskin are available; however the price, processing and/or product characteristics are less
+advantageous to the Company. 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 or terrorism, political disturbances
+and similar events, the imposition of trade barriers, quotas, tariffs and duties, loss of most
+favored nation trading status and currency and exchange rate fluctuations. 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 have an adverse impact on the
+Company’s operations and financial condition.
+Trademarks, Licenses and Patents.
+The Company holds a significant portfolio of registered and common law trademarks that
+identify its branded footwear and apparel products. The owned trademarks that are most widely used
+by the Company include Hush Puppies ® , Wolverine ® , Bates ® , Cushe ® , Chaco ® , Soft Style ® , Wolverine
+Fusion ® , DuraShocks ® , MultiShox ® , Wolverine Compressor ® , Hidden Tracks ® , iTechnology TM ,
+Bounce ® , Comfort Curve ® , HyTest ® , Merrell ® , Continuum ® , Sebago ® , Q-Form ® and Track ‘N Trail ® .
+Pigskin leather marketed by the Company’s Wolverine Leathers Division is sold under the trademarks
+Wolverine Leathers & Design ® , Wolverine Warrior Leather ® , Weather Tight ® and All Season Weather
+Leathers ™. As of the date of this Annual Report, the Company has obtained license rights to
+manufacture, market and distribute footwear throughout the world under the Cat ® , Harley-Davidson ®
+and Patagonia ® trademarks pursuant to license arrangements with the respective trademark owners.
+The Cat ® , Harley-Davidson ® , and Patagonia ® licenses extend for five or more years and are subject
+to early termination for breach.
+12
+Table of Contents
+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 trademarks whenever practicable and to
+vigorously defend its trademarks against infringement or other threats. The Company also holds
+many design and utility patents, copyrights and various other proprietary rights. The Company
+vigorously protects its proprietary rights under applicable laws.
+Order Backlog.
+At February 21, 2009, the Company had an order backlog of approximately $357 million compared
+to an order backlog of approximately $389 million at February 16, 2008, determined on a basis
+consistent with the current year. Substantially all of the backlog relates to demand for products
+expected to be shipped in 2009. Orders in the backlog are subject to cancellation by customers and
+to changes in planned customer demand or at-once orders. The backlog at a particular time is
+affected by a number of factors, including seasonality, retail conditions, expected customer
+demand, product availability and the schedule for 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 domestic and foreign marketers, manufacturers and
+importers of footwear, some of which are larger and have greater resources than the Company. The
+Company’s major competitors for its brands of footwear are located in the United States and Europe.
+The Company has at least thirty major competitors in connection with the sale of its casual, work
+and outdoor footwear. Product performance and quality, including technological improvements,
+product identity, competitive pricing and ability to control costs, 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 maintain its competitive position through promotion of brand awareness,
+manufacturing and sourcing efficiencies, 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. Market shares in the non-athletic footwear
+industry are highly fragmented and no one company has a dominant market position.
+Research and Development.
+In addition to normal and recurring product development, design and styling activities, the
+Company engages in research and development related to the development of new production techniques
+and to improving the function, performance, reliability and quality of its branded footwear and
+other products. The Company’s continuing relationship with the Biomechanics Evaluation Laboratory
+at Michigan State University, for example, has helped validate and refine specific biomechanical
+design concepts, such as Bounce ® , DuraShocks ® and Hidden Tracks ® comfort technologies, that have
+been incorporated in the Company’s footwear. While the Company expects to continue to be a leading
+developer of footwear innovations, research and development costs do not represent a material
+portion of operating expenses.
+13
+Table of Contents
+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 and its subsidiaries. The Company
+uses and generates certain substances and wastes that are regulated or may be deemed hazardous
+under certain federal, state and local regulations with respect to the environment. The Company
+from time to time works with federal, state and local agencies to resolve cleanup issues at various
+waste sites and other regulatory issues.
+Employees.
+As of January 3, 2009, the Company had approximately 4,578 domestic and foreign production,
+office and sales employees. Approximately 528 employees were covered by four union contracts
+expiring at various dates through January 21, 2010. The Company presently considers its employee
+relations to be good.
+Available Information.
+Information about the Company, including the Company’s Code of Conduct & Compliance, Corporate
+Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics,
+Audit Committee Charter, Compensation Committee Charter, and Governance Committee Charter, is
+available at its website, www.wolverineworldwide.com. Printed copies of the documents listed above
+are available, without charge, by writing to the Company at 9341 Courtland Drive, N.E., Rockford,
+Michigan 49351, Attention: General Counsel.
+The Company also makes available on or through its website, free of charge, the Company’s
+annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and
+amendments to those reports (along with certain other Company filings with the Securities and
+Exchange Commission (“SEC”)) as soon as reasonably practicable after electronically filing such
+material with, or furnishing it to, the SEC. These materials are also accessible on the SEC’s
+website at www.sec.gov.

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+Item 13. Certain Relationships and Related Transactions, and Director Independence .
+The information contained under the caption “Related Matters” under the subheading “Certain
+Relationships and Related Transactions” contained in the definitive Proxy Statement of the Company
+with respect to the Annual Meeting of Stockholders to be held on April 23, 2009, is incorporated
+herein by reference. The information contained under the caption “Corporate Governance Principles”
+under the subheading “Independence” contained in the definitive Proxy Statement of the Company with
+respect to the Annual Meeting of Stockholders to be held on April 23, 2009, is incorporated herein
+by reference.

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+Item 9A. Controls and Procedures .
+Evaluation of Disclosure Controls and Procedures.
+An evaluation was performed under the supervision and with the participation of the Company’s
+management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness
+of the design and operation of the Company’s disclosure controls and procedures. Based on and as of
+the time of such evaluation, the Company’s management, including the Chief Executive Officer and
+Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were
+effective as of the end of the period covered by this report.
+Management’s Report on Internal Control Over Financial Reporting.
+Management is responsible for establishing and maintaining adequate internal control over
+financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Under the
+supervision and with the participation of our management, including our Chief Executive Officer and
+Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control
+over financial reporting as of January 3, 2009, based on the framework in Internal Control —
+Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
+(COSO). Based on that evaluation, our management concluded that our internal control over
+financial reporting was effective as of January 3, 2009.
+The effectiveness of the Company’s internal control over financial reporting as of January 3,
+2009, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as
+stated in its report, which is included in Appendix A and is incorporated into this Item 9A by
+reference.
+Changes in Internal Control Over Financial Reporting.
+There was no change in the Company’s internal control over financial reporting that occurred
+during the seventeen-week period ended January 3, 2009 that has materially affected, or that is
+reasonably likely to materially affect, the Company’s internal control over financial reporting.

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+“Certain Relationships and Related Transactions.”
+7
+Table of Contents
+Mr. Phillip D. Matthews served as a director in 2008 until
+his retirement as a director in April 2008, and was determined
+to be independent by the Board of Directors in February 2008.
+Our Board of Directors has adopted categorical Independence
+Standards, which are attached as Appendix A to this Proxy
+Statement and which are also available at our website. These
+Independence Standards comply with and, in some areas, exceed
+the director independence standards required by the NYSE. In
+summary, under these standards a director is considered
+independent only if the director and his or her immediate family
+members do not have, and generally have not had in the most
+recent three years, any material relationships with Wolverine,
+its subsidiaries or affiliates (including certain relationships
+with Wolverine’s independent auditors). The standards
+establish thresholds at which such relationships are deemed to
+be not material. In addition, the Board examines on a
+case-by-case
+basis transactions and relationships that are not of a nature
+addressed by the categorical standards.
+Corporate
+Governance Guidelines
+The Board has adopted Corporate Governance Guidelines that set
+forth the primary framework of governance principles applicable
+to Wolverine. The Corporate Governance Guidelines outline the
+general duties and functions of the Board and management, and
+set forth general principles regarding Board composition,
+independence, Board meetings and responsibilities, Board
+committees, expectations of directors, annual performance
+evaluations, management succession and ethical expectations.
+Stock
+Ownership Requirements for Directors and Executive
+Officers
+For many years, the Board has believed that directors and
+management should have a significant financial stake in
+Wolverine to align their interests with those of the
+stockholders. For that reason, several years ago the Board
+adopted formal requirements that directors and executive
+management own specified amounts of Wolverine stock (including
+ownership credit for stock units allocated to non-employee
+directors under the Deferred Compensation Plan) within five
+years of their respective election to the Board or appointment
+as a member of executive management. The ownership requirements
+necessitate holdings of a number of shares (including ownership
+credit for stock units allocated to non-employee directors under
+the Deferred Compensation Plan) of Wolverine stock with a value
+equal to at least (i) for directors, five times the current
+Board retainer, (ii) for the Chief Executive Officer, five
+times base salary, (iii) for other executive officers,
+between two and three times base salaries, and (iv) for
+other executive management, between one and two times base
+salaries.
+Code of
+Conduct & Compliance
+For years, Wolverine and its employees and directors have
+followed an extensive Code of Conduct & Compliance
+(“Code”). This comprehensive Code establishes basic
+guidelines to help employees and directors comply with
+applicable legal requirements and sets forth Wolverine’s
+expectations regarding business ethics, integrity, honesty and
+fairness. The Code contains Wolverine’s principles and
+procedures regarding conflicts of interest, corporate
+opportunities, confidentiality, fair dealing, protection and
+proper use of Wolverine’s assets, compliance with laws,
+rules and regulations, engagement criteria for Wolverine’s
+trading partners, “whistle blower” protection
+provisions, expectations regarding the integrity of books and
+records, and guidelines and procedures for many other subjects.
+Employees are surveyed annually to identify any areas of
+noncompliance with the Code, and the results of this survey are
+reported to the Board.
+Accounting
+and Finance Code of Ethics
+The Board has adopted an Accounting and Finance Code of Ethics
+(“Finance Ethics Code”). This is an ethics code
+focused on the financial reporting process and is intended to
+protect the interests of all of Wolverine’s constituents,
+including stockholders, employees, customers and the communities
+in which Wolverine conducts business. Many of the basic tenets
+of the Finance Ethics Code have been incorporated for many years
+in the Code. The Finance Ethics Code is applicable to
+Wolverine’s Chief Executive Officer, Chief Financial
+Officer and Corporate Controller and sets forth specific rules
+of conduct and expectations regarding the financial reporting
+process, protection of Wolverine’s assets, compliance with
+rules and regulations and honest and ethical conduct in
+connection with the financial reporting process and related
+disclosures. The Finance Ethics Code and the Code are available
+on the Corporate Governance section of the Investors section of
+Wolverine’s website at www.wolverineworldwide.com ,
+where Wolverine will post any waiver of or amendment to these
+codes for directors or executive officers.
+Board
+Committee Charters
+The Board has organized and formed three committees, the Audit
+Committee, the Compensation Committee and the Governance
+Committee. The Board has approved a committee charter for each
+committee that contains
+8
+Table of Contents
+basic principles regarding the committee’s organization,
+purpose, authority and responsibilities. The performance of each
+committee is reviewed annually by committee members and the
+Board.
+Leadership
+Since 1993, the Board has operated with an independent Lead
+Director, who is selected by the independent directors. The
+duties of the independent Lead Director include:
+(a) working closely with the Chairman regarding the agenda
+and scheduling for Board and committee meetings;
+(b) overseeing information sent to the Board;
+(c) presiding over executive sessions; (d) serving as
+a liaison between the Chairman and the independent Directors;
+(e) presiding over Board meetings in the absence of the
+Chairman; and (f) being available for consultation and
+communications with stockholders as appropriate.
+Attendance
+The Board prides itself on its ability to recruit and retain
+directors who have a diversity of experience, who have the
+highest personal and professional integrity, who have
+demonstrated exceptional ability and judgment and who are
+effective (in conjunction with the other members of the Board)
+in collectively serving the long-term interests of the
+stockholders. Board and committee attendance is central to the
+proper functioning of the Board of Directors and is a priority.
+Directors are expected to make every effort to attend every
+Board meeting. Directors are also expected to attend the Annual
+Meeting of Stockholders in person. All then-current directors
+attended the 2008 annual meeting.
+Communication
+with the Board
+Stockholders and interested parties may communicate with members
+of Wolverine’s Board of Directors through various links
+provided on the Corporate Governance section of the Investors
+section of Wolverine’s website at
+www.wolverineworldwide.com or by sending correspondence
+to the Board, a specific Board committee or a Board member
+c/o General
+Counsel, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E.,
+Rockford, Michigan 49351. Any communications submitted by any of
+the above means (or the means described below) are received by
+Wolverine’s General Counsel and forwarded to the
+appropriate person or persons. Any suggestions, concerns or
+reports of misconduct at Wolverine or complaints or concerns
+regarding Wolverine’s financial statements and accounting,
+auditing, internal control and reporting practices can be
+reported (including anonymous and confidential submissions) by
+submitting a report on www.WolverineReportLine.com or by
+writing to the audit committee
+c/o the
+General Counsel at the above address.
+Board and
+Company Culture
+Wolverine’s comprehensive governance guidelines and
+principles are coupled with a robust, open and effective Board
+environment that promotes respect, trust and candor, fosters a
+culture of open dissent and permits each director to express
+opinions and contribute to the Board process. Directors are
+expected to have unrestricted access to management and any
+company information they desire. The participation of Board
+members and the open exchange of opinions is further encouraged
+at the Board committee level through the periodic rotation of
+Board members among its standing committees. This open and
+candid operating environment is shared by management and the
+Board and is essential to fully realize the benefits of
+Wolverine’s formal governance guidelines, principles,
+charters and policies.
+9
+Table of Contents
+Non-Employee

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2	+ 0000110471,WWW,WOLVERINE WORLD WIDE INC /DE/,10-K,2010-03-03,2010-01-02,2010-03-03T19:51:37.000Z,0000950123-10-020483,c97050e10vk.htm,FORM 10-K,998336,0,0,https://www.sec.gov/Archives/edgar/data/110471/000095012310020483/c97050e10vk.htm,https://www.sec.gov/Archives/edgar/data/110471/000095012310020483/,2009,2009,1

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+Item 1.
+Business
+General
+Wolverine World Wide, Inc. (the “Company”) is a leading designer, manufacturer and marketer of a
+broad range of quality casual, rugged outdoor and work footwear and over the last few years has
+extended certain of its footwear brands into casual, outdoor and work apparel. The Company, a
+Delaware corporation, is the successor 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.
+Approximately 42.9 million pairs/units of the Company’s branded footwear and apparel were sold
+during fiscal 2009 in approximately 180 countries and territories around the world. The Company’s
+products generally feature contemporary styling with proprietary technologies designed to provide
+maximum comfort and performance. The products are marketed throughout the world under widely
+recognized brand names, including Bates ® , Cat ® Footwear,
+Chaco ® , Cushe TM , Harley-Davidson ®
+Footwear, Hush Puppies ® , HyTest ® ,
+Merrell ® , Patagonia ® Footwear, Sebago ® , Soft Style ® and Wolverine ® . The Company believes that
+its primary competitive advantages are its well-recognized brand names, its patented proprietary
+designs and comfort technologies, its wide range of distribution channels and its diversified
+manufacturing and sourcing base. Cat ® is a registered trademark of Caterpillar
+Inc., Harley-Davidson ® is a registered trademark of H-D Michigan, Inc. and
+Patagonia ® is a registered trademark of Patagonia, Inc.
+The Company’s products are sold at numerous price points under a variety of brand names designed to
+appeal to most consumers of casual, work and outdoor footwear. The Company’s products are
+organized under four operating units: (i) the Wolverine Footwear Group, consisting of the
+Bates ® , HyTest ® and Wolverine ® boots
+and shoes, and Wolverine ® brand apparel, (ii) the Outdoor Group, consisting of
+Merrell ® , Patagonia ® and Chaco ®
+footwear, and Merrell ® brand apparel, (iii) the Heritage Brands
+Group, consisting of Cat ® footwear, Harley-Davidson ®
+footwear and Sebago ® footwear and apparel, and (iv) The Hush Puppies
+Company, consisting of Hush Puppies ® footwear, Soft Style ® footwear
+and Cushe TM footwear. The Company also licenses some of its brands for use on
+non-footwear products.
+The Company’s Global Operations Group is responsible for manufacturing, sourcing, distribution and
+customer support for the Company’s business. The Company wholesales products domestically to a
+wide range of retail customers, including department stores, national chains, catalogs, specialty
+retailers, mass merchants and Internet retailers and to governments and municipalities. Many of
+the retailers carrying Wolverine products operate multiple storefront locations. The Company’s
+products are marketed worldwide in approximately 180 countries and territories through
+Company-owned wholesale operations, licensees and distributors.
+4
+Table of Contents
+For financial information regarding the Company, see the consolidated financial statements of the
+Company and the notes thereto, which are attached as Appendix A to this Form 10-K. The Company has
+one reportable segment, Branded Footwear, Apparel, and Licensing. The Branded Footwear, Apparel,
+and Licensing segment engages in manufacturing, sourcing, licensing, marketing and distributing
+branded footwear and apparel, including casual shoes and apparel, dress shoes, boots, uniform
+shoes, work shoes and rugged outdoor footwear and apparel. The Company’s Other Business units
+consist of its retail operations and leather and pigskin procurement operations, which are
+described below. Financial information regarding the Company’s business segments and financial
+information by geographic area is found in Note 9 to the consolidated financial statements of the
+Company that are attached as Appendix A to this Annual Report on Form 10-K.
+Branded Footwear, Apparel and Licensing
+The Company sources and markets a broad range of footwear styles, including shoes, boots and
+sandals under many recognizable brand names, including Bates ® ,
+Cat ® , Chaco ® , Cushe TM ,
+Harley-Davidson ® , Hush Puppies ® ,
+HyTest ® , Merrell ® , Patagonia ® ,
+Sebago ® , Soft Style ® and Wolverine ® .
+The Company combines quality materials and skilled workmanship to produce footwear according to its
+specifications at both Company-owned and third-party manufacturing facilities. The Company also
+markets Merrell ® , Sebago ® , and Wolverine ®
+brand apparel and licenses some of its brands for use on non-footwear products,
+including Hush Puppies ® apparel, eyewear, watches, socks, handbags and plush
+toys and Wolverine ® brand eyewear and gloves.
+The Company’s four branded footwear, apparel, and licensing operating units are described below.
+1.
+The Outdoor Group The Outdoor Group consists of
+Merrell ® Footwear, Merrell ® Apparel and
+accessories, Patagonia ® Footwear and Chaco ®
+Footwear. Outdoor Group products include performance outdoor and hiking
+footwear, casual and after-sport footwear and performance and casual Merrell ®
+apparel.
+Merrell ® Footwear The Merrell ® footwear
+line consists primarily of running, technical hiking, rugged outdoor and
+outdoor-inspired casual footwear designed for backpacking, day hiking and everyday
+use. The Merrell ® footwear line also includes the “After-Sport”
+category, incorporating Merrell ® Footwear’s technical hiking and
+outdoor expertise with Wolverine Performance Leathers ™ and other technical materials
+to create footwear with unique styling, performance and comfort features.
+Merrell ® footwear products are sold primarily through outdoor
+specialty retailers, department stores and catalogs. Merrell ®
+footwear is marketed in approximately 150 countries and territories
+worldwide.
+Merrell ® Apparel and Accessories The
+Merrell ® apparel line consists primarily of technical outdoor
+and outdoor-inspired casual apparel and performance socks. In addition to
+Merrell ® apparel, the Outdoor Group markets Merrell ®
+accessories, including packs, bags and luggage.
+Patagonia ® Footwear Pursuant to an agreement with Lost Arrow
+Corporation, the Company has obtained the exclusive worldwide rights to manufacture,
+market, distribute and sell footwear under Patagonia ® and other
+trademarks. The Patagonia ® Footwear line focuses primarily on
+casual and outdoor performance footwear. Patagonia ® is a registered
+trademark of Patagonia, Inc.
+Chaco ® Footwear The Company acquired Chaco ®
+in January, 2009. The line is focused primarily on technical outdoor performance
+sandals. The Chaco ® brand was launched in 1989 to meet the needs of the
+whitewater enthusiast and continues to focus on performance sandals for the outdoor
+enthusiast. Chaco ® footwear is sold primarily through specialty outdoor
+retailers and department stores.
+2.
+Wolverine Footwear Group The Wolverine Footwear Group markets footwear
+and apparel products under the Wolverine ® brand and footwear under
+the Bates ® and HyTest ® brands. Wolverine
+Footwear Group products feature performance and comfort features to serve a variety of
+work, outdoor and lifestyle functions.
+5
+Table of Contents
+Wolverine ® Footwear The Wolverine ® brand
+offers high quality work boots and shoes that incorporate innovative technologies to
+deliver comfort and durability. The Wolverine ® brand, which has
+been in existence for 127 years, markets work and outdoor footwear in three
+categories: (i) work and industrial; (ii) outdoor sport; and (iii) rugged casual.
+The development of DuraShocks ® , MultiShox ® ,
+Wolverine Fusion ® and Wolverine Compressor ®
+technologies as well as the development of the Contour Welt ®
+line have allowed the Wolverine ® brand to introduce a
+broad line of work footwear with a focus on comfort. The Wolverine ®
+work product line features work boots and shoes with protective features
+such as toe caps, metatarsal guards and electrical hazard protection, targeting
+industrial and farm workers. The Wolverine ® rugged casual and
+outdoor sport product lines incorporate DuraShocks ® , Wolverine
+iCS TM and other technologies and comfort features into products designed
+for casual and outdoor sport use. The rugged casual line targets active lifestyles
+and includes trail shoes and outdoor sandals. The outdoor sport line is designed to
+meet the demands of hunters, fishermen and other active outdoor sports enthusiasts.
+Wolverine ® Apparel and Licensing The Wolverine Footwear Group
+markets a line of work and rugged casual Wolverine ® brand
+apparel. In addition, the Company licenses its Wolverine ® brand
+for use on eyewear and gloves.
+Bates ® Uniform Footwear The Bates Uniform Footwear Division is
+an industry leader in supplying footwear to military and civilian uniform users.
+The Bates Uniform Footwear Division utilizes DuraShocks ® ,
+DuraShocks SR ™, CoolTech , Wolverine iCS TM and other proprietary comfort
+technologies in the design of its military-style boots and oxfords. The Bates
+Uniform Footwear Division contracts with the U.S. Department of Defense and the
+militaries of several foreign countries to supply military footwear. Civilian
+uniform uses include police, security, postal, restaurant and other industrial
+occupations. Bates Uniform Footwear Division’s products are also distributed
+through specialty retailers and catalogs.
+HyTest ® Safety Footwear The HyTest ® product
+line consists primarily of high-quality work boots and shoes that incorporate
+various specialty safety features, including steel toe, composite toe, metatarsal
+guards, electrical hazard, static dissipating and conductive footwear designed to
+protect against hazards of the workplace. HyTest ® footwear is
+distributed primarily through a network of independently-owned Shoemobile ®
+mobile truck retail outlets providing direct sales of the Company’s
+occupational and work footwear brands to workers at industrial facilities and also
+through direct sales arrangements with large industrial customers.
+3.
+The Heritage Brands Group The Heritage Brands Group consists of
+Cat ® Footwear, Harley-Davidson ® Footwear and
+the Sebago ® product line.
+Caterpillar ® Footwear Pursuant to a license arrangement with
+Caterpillar Inc., the Company has exclusive worldwide rights to manufacture, market
+and distribute footwear under the Caterpillar ® ,
+Cat ® , Cat & Design, Walking Machines ®
+and other trademarks. The Company believes the association with
+Cat ® equipment enhances the reputation of its footwear for
+quality, ruggedness and durability. Cat ® brand footwear
+products include work boots and shoes, sport boots, rugged casuals and lifestyle
+footwear, including lines of work and casual footwear featuring iTechnology ™ and
+Hidden Tracks ® comfort features. Cat ®
+footwear products target work and industrial users and active lifestyle
+users. Cat ® footwear is marketed in approximately 140 countries
+and territories worldwide. Cat ® ,
+Caterpillar ® , Cat & Design and Walking Machines ®
+are registered trademarks of Caterpillar Inc.
+Harley-Davidson ® Footwear Pursuant to a license arrangement
+with the Harley-Davidson Motor Company, the Company has the exclusive right to
+manufacture, market, distribute and sell Harley-Davidson ®
+branded footwear throughout the world. Harley-Davidson ®
+branded footwear products include motorcycle, casual, fashion, work and
+western footwear for men, women and children. Harley-Davidson ®
+footwear is sold globally through a network of independent
+Harley-Davidson ® dealerships, as well as through department
+stores and specialty retailers. Harley-Davidson ® is a
+registered trademark of H-D Michigan, Inc.
+6
+Table of Contents
+Sebago ® The Sebago ® product line has been
+marketed since 1946 and consists primarily of performance nautical and
+American-inspired casual footwear for men and women, such as boat shoes and hand
+sewn loafers. Highly recognized Sebago ® line extensions include
+Sebago Docksides ® , Drysides ™ and Athletic Marine. The
+Sebago ® product line is marketed in approximately 115 countries
+and territories worldwide. The Sebago ® manufacturing and design
+tradition of quality components, durability, comfort and “Americana” heritage is
+further supported by targeted distribution to better-grade independent, marine and
+department store retailers throughout the world. The Company also launched a
+classic and marine Sebago ® apparel line in 2009.
+4.
+The Hush Puppies Company
+Hush Puppies ® Since 1958, the Hush Puppies ® brand
+has been a leader in the casual footwear market. The brand offers shoes and boots
+for men, women and children, and is marketed in approximately 140 countries and
+territories. The modern styling is complemented by a variety of comfort features
+and proprietary technologies that have earned the brand its reputation for comfort,
+style and value. In addition, the Hush Puppies ® brand is
+licensed for use on certain items, including apparel, eyewear, handbags, socks,
+watches and plush toys.
+Soft Style ® The Soft Style ® product line consists primarily
+of women’s dress and casual footwear.
+Cushe TM The Company acquired the Cushe TM
+Footwear business in January 2009. The Cushe TM business focuses
+on relaxed, design-led footwear for active men and women. The
+Cushe TM Footwear business targets younger consumers and
+better-grade retailers with products ranging from sport casuals to sandals.
+Other Businesses
+In addition to manufacturing, sourcing, marketing and distributing the Company’s footwear and
+apparel products as reported in the branded footwear, apparel, and licensing segment, the Company
+also (i) operates 83 North American and 5 U.K.-based retail stores featuring footwear and apparel,
+(ii) operates a performance leathers business through its Wolverine Leathers Division, and (iii)
+purchases and cures raw pigskins for sale to various customers through its wholly-owned subsidiary
+Wolverine Procurement, Inc.
+1.
+Wolverine Retail . The Company operates 83 North American and 5
+U.K.-based retail stores as of February 2010. These stores are operated under the Hush
+Puppies ® , Hush Puppies and Family SM , Track’N
+Trail ® , Rockford Footwear Depot ® and
+Merrell ® names. Both the Rockford Footwear Depot ®
+and Track’N Trail ® retail formats carry a large
+selection of Company-branded products, featuring such brands as
+Wolverine ® , Merrell ® , Hush
+Puppies ® , Cat ® , Chaco ® ,
+Cushe TM , Patagonia ® , Sebago ®
+and Harley-Davidson ® . The Company also operates
+Merrell ® concept stores and Hush Puppies ® concept stores,
+providing a platform to showcase these brands exclusively. In addition, the Company
+operates 23 direct-to-customer retail websites, including, www.merrell.com,
+www.catfootwear.com , www.hushpuppies.com , www.sebago.com, www.wolverine.com,
+www.chacousa.com, www.cushe.com and www.batesfootwear.com .
+2.
+The Wolverine Leathers Division . The Wolverine Leathers Division
+markets pigskin leather primarily for use in the footwear industry. The Company
+believes pigskin leather offers superior performance and advantages over cowhide
+leather. The Company’s waterproof and stain resistant leathers are featured in some of
+the Company’s domestic footwear lines and many products offered by the Company’s
+international licensees and distributors.
+3.
+Wolverine Procurement, Inc . Wolverine Procurement, Inc. performs
+skinning operations and purchases raw pigskins from third parties, which it cures and
+sells to the Wolverine Leathers Division and to outside customers for processing into
+pigskin leather products.
+7
+Table of Contents
+Marketing
+The Company’s marketing strategy is to develop brand-specific plans and related promotional
+materials for U.S. and international markets to foster a consistent message for each of the
+Company’s core brands. Each brand group has dedicated marketing personnel who develop the
+marketing strategy for brands within that group. Marketing campaigns and strategies vary by brand
+and may target accounts and/or end users as they strive to increase awareness of, and affinity for,
+the Company’s branded products. The Company’s advertisements typically emphasize fashion, comfort,
+quality, durability, functionality and other performance and lifestyle aspects of the Company’s
+products. Components of the brand-specific plans vary and may include print, radio and television
+advertising, social networking sites, event sponsorships, 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, including (i) direction on
+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 on retail store
+layout and design. The Company believes its brand names provide a competitive advantage and the
+Company makes significant 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 domestic distribution channels and strategies to distribute its
+branded footwear products:
+•
+The Company uses a dedicated sales force and customer service team, advertising, point
+of purchase support and in-stock inventories to service department stores, national chains,
+specialty retailers, catalogs, independent retailers and uniform outlets.
+•
+Volume direct programs ship products directly to the retail customer without going
+through a Company distribution center and provide products at competitive prices with
+limited marketing support. These programs service major retail, mail order, mass merchant
+and government customers.
+•
+A network of independent Shoemobile ® distribution outlets distributes the
+Company’s work and occupational footwear at industrial facilities.
+•
+The Company solicits all branches of the United States military and enters bids for
+contracts to supply specific footwear products. Such contracts typically contain future
+purchase options that are not required to be exercised.
+In addition to its wholesale activities, the Company also operates a consumer-direct business as
+described above. The Company continues to develop new programs, both independently and with its
+retail customers, for the distribution of its products.
+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 revenue in fiscal 2009.
+The Company experiences moderate fluctuations in sales volume during the year as reflected in
+quarterly revenue (and taking into consideration the 16 weeks or 17 weeks included in the fourth
+accounting period versus the 12 weeks included in the first three accounting periods). The Company
+also experiences some fluctuation in its levels of working capital, typically including an increase
+in working capital requirements near the end of the third quarter. The Company provides working
+capital for such fluctuations through internal financing and through a revolving credit agreement.
+The Company expects current seasonal sales patterns to continue in future years.
+International Operations and Global Licensing
+The Company’s foreign-sourced revenue is generated from a combination of (i) sales of branded
+footwear and apparel through the Company’s owned operations in Canada, the United Kingdom, Austria,
+Finland, France,
+Germany, Italy, the Netherlands, Spain, Sweden and Switzerland; (ii) sales to international
+distributors for certain markets and businesses; and (iii) royalty income from a network of
+third-party licensees and distributors. The Company’s owned operations are located in markets
+where the Company believes it can gain a strategic advantage by more directly controlling the sale
+into retail accounts. License and distribution arrangements enable the Company to develop sales in
+international markets without the capital commitment required to maintain related foreign
+operations, employees, inventories or localized marketing programs.
+8
+Table of Contents
+The Company continues to develop its network of licensees and distributors to market its footwear
+brands. The Company assists in designing products that are appropriate to each foreign market, but
+consistent with the global brand position. Independent licensees and distributors purchase goods
+from either the Company or authorized third-party manufacturers pursuant to distribution agreements
+or manufacture branded products consistent with Company standards pursuant to license agreements.
+Distributors and licensees are responsible for independently marketing and distributing Company
+branded products in their respective territories, with product and marketing support from the
+Company.
+Manufacturing and Sourcing
+The Company controls the majority of the units of footwear and apparel marketed globally under the
+Company’s brand names. The balance is controlled directly by the Company’s licensees. Of the
+units sourced and/or manufactured by the Company, approximately 93% are purchased or sourced from
+third parties, with the remainder produced at Company-operated facilities. The Company sources a
+majority of its footwear from a variety of foreign manufacturing facilities in the Asia-Pacific
+region, South America and India. The Company maintains offices in the Asia-Pacific region to
+facilitate and develop strategies for the sourcing and importation of quality footwear and apparel.
+The Company has established guidelines for each of its third-party manufacturers in order to
+monitor product quality, labor practices and financial viability. The Company has adopted
+“Engagement Criteria for Partners & Sources” to require that its domestic and foreign
+manufacturers, licensees and distributors use ethical business standards, comply with all
+applicable health and safety laws and 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. Footwear produced by the Company is manufactured at Company-operated facilities
+located in Michigan and the Dominican Republic.
+The Company’s owned manufacturing operations allow the Company to (i) reduce its production lead
+time, enabling it to more quickly respond to market demand and reduce inventory risk, (ii) lower
+freight, shipping and duty costs for sales to certain markets, and (iii) more closely monitor
+product quality. The Company’s third party sourcing strategy allows the Company to (i) benefit
+from lower manufacturing costs and state-of-the-art manufacturing facilities, (ii) source the
+highest quality raw materials from around the world, and (iii) avoid capital expenditures necessary
+for additional owned factories. The Company believes that its overall global manufacturing
+strategy provides the flexibility to properly balance the need for timely shipments, high quality
+products and competitive pricing.
+The Company’s principal required raw material is quality leather, which it purchases from a select
+group of domestic and offshore suppliers. The global availability of common upper materials and
+specialty leathers eliminates any reliance by the Company upon a sole supplier.
+The Company currently purchases the vast majority of the raw pigskins used for its Wolverine
+Leathers Division from one domestic source, which has been a reliable and consistent supplier for
+over 30 years. Alternative sources of raw pigskin are available, but with less advantageous
+pricing, quality and compatibility with the Company’s processing method. The Company purchases all
+of its other raw materials and component parts from a variety of sources and does not believe that
+any of these sources are 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 or terrorism, political disturbances
+and similar events, the imposition of trade barriers, quotas, tariffs and duties, loss of most
+favored nation trading status and currency and exchange rate fluctuations. 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,
+but that a sustained disruption of such sources of supply could have an adverse impact on the
+Company’s results of operations and financial position.
+9
+Table of Contents
+Trademarks, Licenses and Patents
+The Company holds a significant portfolio of registered and common law trademarks that identify its
+branded products. The Company’s owned trademarks include Hush Puppies ® ,
+Wolverine ® , Bates ® , Cushe TM ,
+Chaco ® , Soft Style ® , Wolverine Fusion ® ,
+DuraShocks ® , MultiShox ® , Wolverine
+Compressor ® , Hidden Tracks ® ,
+iTechnology TM , Bounce ® , Comfort Curve ® ,
+HyTest ® , Merrell ® , M Circle Design (registered
+design trademark), Continuum ® , Sebago ® ,
+Q-Form ® and Track ‘N Trail ® . The Company’s Wolverine
+Leathers Division markets its pigskin leathers under the trademarks Wolverine Warrior
+Leather ® , Weather Tight ® , All Season Weather Leathers ™ and
+its registered Wolverine Leathers & Design trademark. The Company has the rights to manufacture,
+market and distribute footwear throughout the world under the Cat ® ,
+Harley-Davidson ® and Patagonia ® trademarks pursuant to
+license arrangements with the respective trademark owners. The Cat ® ,
+Harley-Davidson ® , and Patagonia ® licenses extend for five
+or more years and are subject to early termination for breach.
+The Company believes that consumers identify its products by the Company’s 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. The
+Company has a policy of pursuing registration of its primary trademarks whenever practicable and to
+vigorously defend its trademarks against infringement or other threats. The Company also holds
+many design and utility patents, copyrights and various other proprietary rights. The Company
+vigorously protects its proprietary rights under applicable laws.
+Order Backlog
+At February 20, 2010, the Company had an order backlog of approximately $424 million compared to an
+order backlog of approximately $357 million at February 21, 2009, determined on a consistent basis.
+Substantially all of the backlog relates to orders for products expected to be shipped in 2010.
+Orders in the backlog are subject to cancellation by customers and to changes in planned customer
+demand or at-once orders. The backlog at a particular time is affected by a number of factors,
+including seasonality, retail conditions, expected customer demand, product availability and the
+schedule for the manufacture and shipment of products. Accordingly, a comparison of backlog from
+period to period is not necessarily meaningful and may not be predictive of eventual actual
+shipments.
+Competition
+The Company markets its footwear and apparel lines in a highly competitive and fragmented
+environment. The Company competes with numerous domestic and international marketers and
+importers, some of which are larger and have greater resources than the Company. The Company has
+at least thirty major competitors for its brands of footwear and apparel. Product performance and
+quality, including technological improvements, product identity, competitive pricing and ability to
+control costs, and the ability to adapt to style changes are all important elements of competition
+in the footwear and apparel markets served by the Company. The footwear and apparel industries in
+general are subject to changes in consumer preferences. The Company strives to maintain its
+competitive position through promotions designed to increase brand awareness, manufacturing and
+sourcing efficiencies, 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 and apparel industries. Market shares in the non-athletic footwear
+and apparel industry are highly fragmented and no one company has a dominant market position.
+10
+Table of Contents
+Research and Development
+In addition to normal and recurring product development, design and styling activities, the Company
+engages in research and development related to the development of new production techniques and to
+improving the function,
+performance, reliability and quality of its branded footwear and other products. The Company’s
+continuing relationship with the Biomechanics Evaluation Laboratory at Michigan State University,
+for example, has helped validate and refine specific biomechanical design concepts, such as
+Bounce ® , DuraShocks ® and Hidden Tracks ®
+comfort technologies, that have been incorporated in the Company’s footwear. While the
+Company expects to continue 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 and its subsidiaries. The Company
+uses and generates certain substances and wastes that are regulated or may be deemed hazardous
+under certain federal, state and local regulations with respect to the environment. The Company
+from time to time works with federal, state and local agencies to resolve cleanup issues at various
+waste sites and other regulatory issues.
+Employees
+As of January 2, 2010, the Company had approximately 4,018 domestic and foreign production, office
+and sales employees. Approximately 149 employees were covered by two union contracts expiring at
+various dates through March 31, 2011. The Company presently considers its employee relations to be
+good.
+Available Information
+Information about the Company, including the Company’s Code of Conduct & Compliance, Corporate
+Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics,
+Audit Committee Charter, Compensation Committee Charter, and Governance Committee Charter, is
+available at its website at www.wolverineworldwide.com/investors_governance.asp . Printed copies of
+the documents listed above are available, without charge, by writing to the Company at 9341
+Courtland Drive, N.E., Rockford, Michigan 49351, Attention: General Counsel.
+The Company also makes available on or through its website, free of charge, the Company’s Annual
+Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments
+to those reports (along with certain other Company filings with the Securities and Exchange
+Commission (“SEC”)) as soon as reasonably practicable after electronically filing such material
+with, or furnishing it to, the SEC. These materials are also accessible on the SEC’s website at
+www.sec.gov .

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+Item 13.
+Certain Relationships and Related Transactions, and Director Independence
+The information contained under the caption “Related Matters” under the subheadings “Certain
+Relationships and Related Transactions” and “Related Person Transactions Policy” contained in the
+Definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be
+held on April 22, 2010, is incorporated herein by reference. The information contained under the
+caption “Corporate Governance” under the subheading “Director Independence” contained in the
+Definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be
+held on April 22, 2010, is incorporated herein by reference.

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+Item 9A.
+Controls and Procedures
+Evaluation of Disclosure Controls and Procedures
+An evaluation was performed under the supervision and with the participation of the Company’s
+management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness
+of the design and operation of the Company’s disclosure controls and procedures. Based on and as
+of the time of such evaluation, the Company’s management, including the Chief Executive Officer and
+Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were
+effective as of the end of the period covered by this report.
+Management’s Report on Internal Control Over Financial Reporting
+Management is responsible for establishing and maintaining adequate internal control over financial
+reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Under the
+supervision and with the participation of management, including our Chief Executive Officer and
+Chief Financial Officer, we conducted an evaluation of the effectiveness of internal control over
+financial reporting as of January 2, 2010, based on the framework in Internal Control — Integrated
+Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
+Based on that evaluation, management concluded that internal control over financial reporting was
+effective as of January 2, 2010.
+The effectiveness of the Company’s internal control over financial reporting as of January 2, 2010,
+has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated
+in its report, which is included in Appendix A and is incorporated into this Item 9A by reference.
+Changes in Internal Control Over Financial Reporting
+There was no change in the Company’s internal control over financial reporting that occurred during
+the sixteen-week period ended January 2, 2010 that has materially affected, or that is reasonably
+likely to materially affect, the Company’s internal control over financial reporting.
+40
+Table of Contents

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+related person transactions policy, as described below.
+Related Person
+Transactions Policy
+Wolverine’s Board adopted written policies and procedures
+regarding related person transactions. They require the
+Governance Committee to review and either approve or disapprove
+the Company entering into
+55
+Table of Contents
+any Interested Transactions (defined below). If advance approval
+is not feasible, then the Governance Committee must review and
+ratify the Interested Transaction at its next meeting.
+Interested
+Transaction
+Any transaction, arrangement or relationship or series of
+similar transactions, arrangements or relationships (including
+any indebtedness or guarantee of indebtedness) in which:
+(1)
+the aggregate amount involved is or is expected to exceed
+$100,000 since the beginning of Wolverine’s last completed
+fiscal year;
+(2)
+Wolverine is a participant; and
+(3)
+any Related Person (defined below) has or will have a direct or
+indirect interest (other than solely as a result of being a
+director or less than ten percent beneficial owner of another
+entity).
+Related Person
+Any:
+(a)
+person who is or was at any point during the last fiscal year
+for which Wolverine filed a Form 10-K and proxy statement, an
+executive officer, director or nominee for election as a
+director;
+(b)
+greater than five percent beneficial owner of Wolverine’s
+common stock; or
+(c)
+immediate family
+member *
+of any of the foregoing.
+*
+Immediate family member includes a
+person’s spouse, parents, stepparents, children,
+stepchildren, siblings, mothers- and
+fathers-in-law,
+sons- and
+daughters-in-law,
+and brothers- and
+sisters-in-law
+and anyone residing in such person’s home (other than a
+tenant or employee).
+The Governance Committee considers whether the Interested
+Transaction is on terms no less favorable than terms generally
+available to an unaffiliated third-party under the same or
+similar circumstances, the extent of the Related Person’s
+interest in the transaction, and other factors that it deems
+relevant. No director participates in any discussion or approval
+of an Interested Transaction for which he or she is a Related
+Person, except to provide all material information to the
+Governance Committee.
+The following Interested Transactions are pre-approved under the
+policies and procedures:
+(a)
+any transaction with another company where a Related
+Person’s only relationship is as an employee, director or
+beneficial owner of less than ten percent of that company’s
+shares, if the aggregate amount involved does not exceed the
+greater of $1,000,000, or two percent of that company’s
+total revenues.
+(b)
+any charitable contribution by Wolverine to a charitable
+organization where a Related Person is an employee, if the
+aggregate amount involved does not exceed the lesser of
+$100,000, or two percent of the charitable organization’s
+total annual receipts.
+ADDITIONAL
+INFORMATION
+Stockholders
+List
+A list of stockholders entitled to vote at the meeting will be
+available for review by Wolverine stockholders at the office of
+Kenneth A. Grady, Secretary and General Counsel of Wolverine,
+located at 9341 Courtland Drive, N.E., Rockford, Michigan 49351,
+during ordinary business hours for the
+10-day
+period before the meeting.
+56
+Table of Contents
+Director and
+Officer Indemnification
+The Company indemnifies its directors and NEOs to the fullest
+extent permitted by law so that they will be free from undue
+concern about personal liability in connection with their
+service to the Company.

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1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000110471,WWW,WOLVERINE WORLD WIDE INC /DE/,10-K,2014-02-25,2013-12-28,2014-02-25T19:09:49.000Z,0000110471-14-000003,wolverineform10-k2013.htm,FORM 10-K,25481918,1,0,https://www.sec.gov/Archives/edgar/data/110471/000011047114000003/wolverineform10-k2013.htm,https://www.sec.gov/Archives/edgar/data/110471/000011047114000003/,2013,2013,1

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+Item 1.
+Business
+General
+Wolverine World Wide, Inc. (the “Company”) is a leading designer, manufacturer and marketer of a broad range of quality casual footwear and apparel, performance outdoor and athletic footwear and apparel, children’s footwear, industrial work boots and apparel, and uniform shoes and boots. The Company, a Delaware corporation, is the successor 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.
+The Company sources and markets a broad range of footwear styles, including shoes, boots and sandals under many recognizable brand names including Bates ® , Cat ® , Chaco ® , Cushe ® , Harley-Davidson ® , Hush Puppies ® , HyTest ® , Keds ® , Merrell ® , Patagonia ® , Saucony ® , Sebago ® , Soft Style ® , Sperry Top-Sider ® , Stride Rite ® and Wolverine ® . Cat ® is a registered trademark of Caterpillar, Inc., Harley-Davidson ® is a registered trademark of H-D U.S.A., LLC and Patagonia ® is a registered trademark of Patagonia, Inc. The Company’s products generally feature contemporary styling with proprietary technologies designed to provide maximum comfort and performance. The Company believes that its primary competitive advantages are its well-recognized brand names, its patented proprietary designs, its diverse product offerings and comfort technologies, its wide range of distribution channels and its diversified manufacturing and sourcing base. The Company combines quality materials and skilled workmanship to produce footwear according to its specifications at both Company-owned and third-party manufacturing facilities. The Company also markets Merrell ® , Saucony ® , Sebago ® , Sperry Top-Sider ® and Wolverine ® brand apparel and accessories and licenses some of its brands for use on non-footwear products, including Hush Puppies ® apparel, eyewear, watches, socks, handbags and plush toys, Wolverine ® brand eyewear and gloves, Keds ® apparel, Saucony ® apparel , Sperry Top-Sider ® apparel , and Stride Rite ® apparel.
+The Company’s brands are sold at various price points targeting a wide range of consumers of casual, work, outdoor and athletic footwear and apparel. During the first quarter of fiscal 2013, the Company reorganized its portfolio of 16 brands, including brands acquired as part of the fiscal 2012 PLG acquisition, into the following three operating segments, which the Company has determined are reportable operating segments:
+•
+Lifestyle Group , consisting of Sperry Top-Sider ® footwear and apparel, Stride Rite ® footwear and apparel, Hush Puppies ® footwear and apparel, Keds ® footwear and apparel, and Soft Style ® footwear;
+•
+Performance Group , consisting of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Chaco ® footwear, Patagonia ® footwear, and Cushe ® footwear; and
+•
+Heritage Group , consisting of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Sebago ® footwear and apparel, Harley-Davidson ® footwear, and HyTest ® Safety footwear.
+The operating segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue of the operating segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; royalty income from the licensing of the Company’s trademarks; revenue from distribution arrangements with third-party distributors; and revenue from the Company’s mono-branded consumer direct businesses, including revenue from eCommerce websites. Prior year results have been restated to reflect the operating segment reorganization.
+The Company also reports an Other and Corporate category. The Other category consists of the Company’s multi-brand consumer direct business, leather marketing operations, and sourcing operations that include third-party commission revenues. The Corporate category consists of unallocated corporate expenses including acquisition-related transaction and integration costs and restructuring costs. The Company’s operating segments are determined on the basis of how the Company internally reports and evaluates financial information used to make operating decisions.
+The Company’s Global Operations Group is responsible for manufacturing, sourcing, distribution, logistics and customer support. The Company directly sells its products in the United States ("U.S."), Canada and certain countries in Europe to a wide range of retail customers, including department stores, national chains, catalog retailers, specialty retailers, mass merchants and Internet retailers, and to governments and municipalities. The Company’s products are marketed worldwide in approximately 200 countries and territories through Company-owned wholesale and consumer direct operations and through third-party licensees and distributors.
+For financial information regarding the Company, see the consolidated financial statements and the accompanying notes, which are attached as Appendix A to this Annual Report on Form 10-K. As described above, the Company has three reportable segments and the Other and Corporate categories. Financial information regarding the Company’s reportable segments and other operating categories and financial information by geographic area is found in Note 10 to the consolidated financial statements of the Company that are attached as Appendix A to this Annual Report on Form 10-K.
+4
+Table of Contents
+The Company's operating segments and related brands for fiscal 2013 are described in more detail below.
+1.
+Lifestyle Group - The Lifestyle Group consists of Sperry Top-Sider ® footwear and apparel, Stride Rite ® footwear and apparel, Hush Puppies ® footwear and apparel, Keds ® footwear and apparel, and Soft Style ® footwear.
+Sperry Top-Sider ® : Sperry Top-Sider ® is a leading nautical performance and lifestyle brand offering footwear, apparel and accessories to a broad range of consumers. The brand has been an American favorite since 1935 with the advent of the industry’s first boat shoe. Today, Sperry Top-Sider ® remains the unquestioned leader in the boat shoe category, but has also expanded its business into casuals, dress casuals, wet weather, boots and vulcanized product categories. Sperry Top-Sider ® has evolved into a well-balanced, multi-category and year-round lifestyle brand for men, women and children. In addition to its lifestyle products, Sperry Top-Sider ® also offers sport-specific and athlete-tested performance footwear solutions for sailors, boaters, anglers and multi-water sports enthusiasts. The Advance Water Technologies ™ product collection featuring A SV™ (Anti-Shock and Vibration) , Grip X3 Technology ® and SON-R Technology ® has allowed Sperry Top-Sider ® to reinforce its position as an innovation leader in these categories. The brand is primarily distributed through leading premium and better lifestyle retailers, as well as through its own Company-owned specialty retail stores.
+Stride Rite ® : With a history dating back to 1919, Stride Rite ® is an industry leader in children's footwear technology and innovation. Stride Rite ® is focused on delivering the best possible footwear across a range of categories for kids under 9 years of age. All Stride Rite ® products are created from an in-depth knowledge and understanding of how children walk and grow, every new material and component is rigorously tested to ensure safety, proper fit and durability for kids. Stride Rite’s ® RITE STEPs ™ program, featuring the brand’s proprietary Sensory Response Technology ™ , is a full footwear solution that meets children's needs from pre-walkers to pre-schoolers. Stride Rite ® sells product under its own namesake brand, as well as children's footwear offerings from Saucony ® , Sperry Top-Sider ® , Keds ® , Merrell ® and select other footwear brands, through a network of mall-based specialty retail stores and a consumer direct website. Stride Rite ® also distributes children's footwear through better department stores, independent retailers, sporting goods chains, mall specialty retailers, online retailers and national family footwear stores.
+Hush Puppies ® : Since 1958, the Hush Puppies ® brand has been a leader in casual footwear. The brand offers shoes, sandals and boots for men, women and children. The brand’s modern styling is complemented by a variety of comfort features and proprietary technologies that have earned the brand its reputation for comfort, style and value. In addition, the Company licenses the Hush Puppies ® brand for use on certain non-footwear products, including apparel, eyewear, handbags, socks, watches and plush toys.
+Keds ® : The Keds ® brand is an authentic casual lifestyle brand with a foundation in canvas footwear. This iconic American brand was founded in 1916 with the introduction of the Champion ® sneaker. The simple and chic design ignited a style revolution, capturing the hearts of girls everywhere from fashion icons to the girl next door. Today, Keds ® is a head-to-toe fashion brand fueled by a passion for imagination, inspiring a new generation of girls to stay authentic, optimistic and brave. The brand targets teen girl consumers through an extensive collection of Champion ® originals, as well as a wide assortment of fashion sneakers and slip-ons. The brand’s product architecture consists of both core offerings and seasonal iterations featuring updated prints, patterns, materials and constructions.
+Soft Style ® : The Soft Style ® product line consists primarily of women’s dress and casual footwear.
+2.
+Performance Group - The Performance Group consists of Merrell ® footwear and apparel, Saucony ® footwear and apparel, Chaco ® footwear, Patagonia ® footwear, and Cushe ® footwear.
+Merrell ® : Merrell ® footwear is designed to inspire and encourage participation in the outdoors. Known for quality, durability and comfort, Merrell ® uses a variety of proprietary designs and technologies to create footwear with distinctive styling, performance and comfort features for use on the trail or in town. Merrell ® footwear products offer a wide range of styles from technical hiking, multi-sport footwear and the minimalist Merrell ® Barefoot Collection, to versatile lifestyle products for more casual outdoor adventures for men, women and kids. Merrell ® footwear products are sold primarily through outdoor specialty retailers, sporting goods chains, department stores, online retailers and catalog retailers. The Merrell ® apparel line extends the Merrell ® commitment to an active outdoor lifestyle with a versatile line of apparel built for the summit or the street. The apparel line features stylized lifestyle silhouettes built with the technical, high performance, weather fighting materials that consumers expect from an outdoor brand. In addition to apparel, Merrell ® markets accessories for men and women, including packs, bags and luggage.
+5
+Table of Contents
+Saucony ® : Saucony ® is a leading global performance running brand with roots dating back to 1898. Saucony ® targets elite, dedicated and casual runners through best-in-class design, innovation and performance technology. The brand is focused on meeting the biomechanical needs of runners while maximizing comfort and protection, bringing to market innovations such as: PowerGrid™ midsole technology; Sauc-Fit ® , ComfortLite Sock Liner™ and HydraMAX™ upper technologies; and iBR+™ and XT-900™ outsole material innovations. Saucony ® offers five categories of footwear product—technical, natural motion, race, trail and lifestyle originals, as well as a complete line of performance running apparel. Through the Find Your Strong ™ brand platform, Saucony ® is strengthening connections with consumers and elevating the position of the brand globally. The brand’s products are distributed primarily through leading run specialty and sporting goods retailers.
+Chaco ® : The Chaco ® footwear line focuses primarily on performance sandals and closed-toe products for the outdoor enthusiast.
+Patagonia ® Footwear: Pursuant to an agreement with Lost Arrow Corporation, the Company has the exclusive footwear marketing and distribution rights under Patagonia ® and other trademarks. The Patagonia ® footwear line focuses primarily on casual and outdoor performance footwear. Patagonia ® is a registered trademark of Patagonia, Inc.
+Cushe ® : Cushe ® focuses on relaxed, design-led footwear for active men and women. The Cushe ® footwear business targets younger adult consumers and with products ranging from sport casual footwear to sandals sold through better-grade retailers.
+3.
+Heritage Group - The Heritage Group consists of Wolverine ® footwear and apparel, Cat ® footwear, Bates ® uniform footwear, Sebago ® footwear and apparel, Harley-Davidson ® footwear, and HyTest ® Safety footwear.
+Wolverine ® : The Wolverine ® brand offers high-quality boots and shoes that incorporate innovative technologies to deliver comfort and durability. The Wolverine ® brand, in existence since 1883, markets footwear in three categories: (i) work and industrial; (ii) outdoor sport; and (iii) rugged casual. The development of DuraShocks ® , MultiShox ® , Wolverine Fusion ® and Wolverine Compressor ® technologies, as well as the development of the Contour Welt ® line, allows the Wolverine ® brand to offer a broad line of work footwear with a focus on comfort. The Wolverine ® work product line targets industrial workers and features work boots and shoes with protective features such as toe caps, metatarsal guards and electrical hazard protection. The Wolverine ® rugged casual and outdoor sport product lines incorporate DuraShocks ® , Wolverine iCS ® and other technologies and comfort features into products designed for casual and outdoor sport use. The target consumers for the rugged casual line products have active lifestyles. The outdoor sport line is designed to meet the needs of hunters, fishermen and other active outdoor sports enthusiasts. The Heritage Group markets a line of work and rugged casual Wolverine ® brand apparel. In addition, the Company licenses its Wolverine ® brand for use on eyewear and gloves.
+Cat ® Footwear: Pursuant to a license arrangement with Caterpillar, Inc., the Company has exclusive footwear marketing and distribution rights under Caterpillar ® , Cat ® , Cat & Design, Walking Machines ® and other trademarks. The Company's association with Cat ® equipment encourages customers to view the footwear as rugged, durable and of high quality. Cat ® brand footwear products include work boots and shoes, sport boots, rugged casual and lifestyle footwear, including lines of work and casual footwear featuring iTechnology ™ and Hidden Tracks ® comfort features. Cat ® footwear targets work and industrial users and active lifestyle users. Cat ® , Caterpillar ® , Cat & Design and Walking Machines ® are registered trademarks of Caterpillar, Inc.
+Bates ® Uniform Footwear: The Bates ® brand is a leader in supplying footwear to military and civilian uniform wearers. Bates ® utilizes DuraShocks ® , DuraShocks SR ™ , Wolverine iCS ® and other proprietary comfort technologies in the design of its boots and oxford shoes. Bates ® supplies military footwear to the U.S. Department of Defense and the military branches of several foreign countries. Civilian uniform users include police officers; security, postal and restaurant workers; and others in industrial occupations. Bates ® products are also distributed through specialty retailers and catalog retailers.
+Sebago ® : The Sebago ® product line has been marketed since 1946 and consists primarily of performance nautical and American-inspired casual footwear for men and women, such as boat shoes and hand sewn loafers. Highly recognized Sebago ® line extensions include Sebago Docksides ® , Drysides ® and Triwater ™ . The Sebago ® manufacturing and design tradition of quality components, durability, comfort and “Americana” heritage is further supported by targeted distribution to better-grade independent, marine and department store retailers throughout the world.
+6
+Table of Contents
+Harley-Davidson ® Footwear: Pursuant to a license arrangement with the Harley-Davidson Motor Company, the Company has footwear marketing and distribution rights for Harley-Davidson ® branded footwear. Harley-Davidson ® branded footwear products include motorcycle, casual, fashion, work and western footwear for men, women and children. Harley-Davidson ® footwear is sold globally through a network of independent Harley-Davidson ® dealerships and other retail outlets. Harley-Davidson ® is a registered trademark of H-D U.S.A., LLC.
+HyTest ® Safety Footwear: The HyTest ® product line consists primarily of high-quality work boots and shoes that incorporate various specialty safety features designed to protect against hazards of the workplace, including steel toe, composite toe, metatarsal guards, electrical hazard protection, static dissipating and conductive footwear. HyTest ® footwear is distributed primarily through a network of independently-owned Shoemobile ® mobile truck retail outlets providing direct sales of the Company’s occupational and work footwear brands to workers at industrial facilities and also through direct sales arrangements with large industrial customers.
+Other Businesses
+In addition to its reportable segments, the Company also operates a multi-brand consumer direct business and a performance leathers business.
+Multi-brand Consumer Direct - The multi-brand consumer direct division includes brick and mortar and eCommerce operations which sell and distribute footwear and apparel from the Company's brand portfolio.
+Wolverine Leathers Division - The Wolverine Leathers Division markets pigskin leather for use primarily in the footwear industry. The Company believes pigskin leather offers superior performance and other advantages over cowhide leather. The Company’s waterproof and stain resistant leathers are featured in some of the Company’s footwear lines and sold to external footwear brands.
+Marketing
+The Company’s marketing strategy is to develop brand-specific plans and related promotional materials for U.S. and international markets to foster a consistent message for each of the Company’s core brands. Each brand operating group has dedicated marketing personnel who develop the marketing strategy for brands within that group. Marketing campaigns and strategies vary by brand, but are generally designed to target wholesale and retail customers in order to increase awareness of, and affinity for, the Company’s brands. The Company’s advertisements typically emphasize fashion, comfort, quality, durability, functionality and other performance and lifestyle attributes of the Company’s products. Components of the brand-specific marketing plans vary and may include print, radio and television advertising, search engine optimization, social networking sites, event sponsorships, in-store point-of-purchase displays, promotional materials and sales and technical assistance.
+In addition to the Company’s internal marketing efforts, each brand provides its third-party licensees and distributors with creative direction, brand images and other materials to convey globally consistent brand messaging, including (i) direction on the categories of footwear and apparel 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 services regarding retail store layout and design. The Company believes its brand names represent a competitive advantage, and the Company, along with its licensees and distributors, make significant marketing investments to promote and enhance the position of its products and enhance brand awareness.
+Domestic Sales and Distribution
+The Company targets a variety of domestic distribution channels for its branded products:
+•
+The Company uses a dedicated sales force and customer service team, third party sales representatives, advertising and point-of-purchase materials to support domestic sales.
+•
+The Company maintains core in-stock inventories to service department stores, national chains, specialty retailers, catalog retailers, independent retailers, uniform outlets and its own consumer direct business.
+•
+Volume direct programs ship products directly to the retail customer without going through a Company distribution center and provide products at competitive prices with limited marketing support. The Company uses these programs to service major retail, catalog, mass merchant and government customers.
+•
+A network of independent Shoemobile ® distribution outlets distributes certain of the Company’s work and occupational footwear brands at industrial facilities.
+•
+The Company solicits all branches of the U.S. military and submits bids for contracts to supply specific footwear products. Such contracts typically contain future purchase options that may or may not be exercised.
+7
+Table of Contents
+In addition to its wholesale activities, the Company also operates a mono- and multi-brand consumer direct distribution channel, as described above. The Company continues to develop new programs, both independently and in conjunction with its retail customers, for the distribution of its products.
+A broad distribution base insulates the Company from dependence on any one customer. No single customer accounted for more than 10% of the Company’s consolidated revenue in fiscal 2013 .
+The Company experiences moderate fluctuations in sales volume during the year as reflected in quarterly revenue (and taking into consideration the 16 weeks or 17 weeks included in the Company’s fiscal fourth quarter versus the 12 weeks included in each of the first three fiscal quarters). The Company expects current seasonal sales patterns to continue in future years. The Company also experiences some fluctuation in its levels of working capital, typically including an increase in net working capital requirements near the end of the first and third fiscal quarters. The Company meets its working capital requirements through internal free cash flow and, as needed, the Revolving Credit Facility, as discussed in more detail under the caption "Liquidity and Capital Resources" in Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations".
+International Operations and Global Licensing
+The Company’s foreign-sourced revenue is generated from a combination of (i) sales of branded footwear and apparel through the Company’s owned operations in Canada, the United Kingdom and certain countries in continental Europe, (ii) sales to third-party distributors for certain markets and businesses, (iii) income from a network of third-party licensees and distributors, and (iv) income from joint ventures that market the Company’s branded products in certain countries in South America and Asia. The Company’s international owned operations are located in markets where the Company believes it can gain a strategic advantage by directly controlling the sale of its products into retail accounts. License and distribution arrangements enable the Company to generate sales in other markets without the capital commitment required to maintain related foreign operations, employees, inventories or localized marketing programs. The Company has formed joint ventures to market and distribute footwear and apparel in Colombia and India. The Company believes that these joint ventures will provide it with a more meaningful ownership stake and near-term brand impact in these fast-growing markets than its traditional licensee and distributor arrangements.
+The Company continues to develop its international network of third-party licensees and distributors to market its branded products. The Company assists its licensees in designing products that are appropriate to each foreign market, but consistent with the global brand positioning. Pursuant to distribution or license agreements, third-party licensees and distributors either purchase goods directly from the Company and authorized third-party manufacturers or manufacture branded products themselves, consistent with Company standards. Distributors and licensees are responsible for independently marketing and distributing the Company’s branded products in their respective territories, with product and marketing support from the Company.
+Manufacturing and Sourcing
+The Company directly controls the majority of the units of footwear and apparel manufactured or sourced under the Company’s brand names. The Company’s licensees directly control the balance. A substantial majority of the units sourced or manufactured by the Company are procured from third parties, with the remainder produced at Company-owned facilities. The Company sources a majority of its footwear from numerous third-party manufacturers in Asia Pacific and South America. The Company maintains offices in the Asia Pacific region to facilitate and develop strategies for the sourcing and importation of quality footwear and apparel. The Company has established guidelines for each of its third-party manufacturers in order to monitor product quality, labor practices and financial viability. The Company has adopted “Engagement Criteria for Partners & Sources,” a policy that requires the Company’s domestic and foreign manufacturers, licensees and distributors to use ethical business standards, comply with all applicable health and safety laws and regulations, commit to use environmentally safe practices, treat employees fairly with respect to wages, benefits and working conditions and not use child or prison labor. The Company’s third-party sourcing strategy allows the Company to (i) benefit from lower manufacturing costs and state-of-the-art manufacturing facilities, (ii) source high quality raw materials from around the world, and (iii) avoid capital expenditures necessary for additional owned factories. The Company believes that its overall global manufacturing strategy provides the flexibility to properly balance the need for timely shipments, high quality products and competitive pricing. Footwear produced by the Company is manufactured at a Company-operated facility located in Michigan. During the fourth quarter of 2013, the Company substantially completed a restructuring of its manufacturing operations in the Dominican Republic that resulted in the closure of one facility and the sale to a third party of a second facility.
+The Company’s principal required raw material is quality leather, which it purchases from a select group of domestic and foreign suppliers. The global availability of common upper materials and specialty leathers eliminates any reliance by the Company on a sole supplier.
+The Company currently purchases all of the raw pigskins used for its Wolverine Leathers Division from one domestic source, which has been a reliable and consistent supplier to the Company for over 40 years. Alternative sources of raw pigskin are available, but the Company believes these sources offer less advantageous pricing, quality and compatibility with the Company’s processing
+8
+Table of Contents
+method. The Company purchases all of its other raw materials and component parts from a variety of sources and does not believe that any of these sources are 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 or terrorism, political disturbances and similar events, the imposition of trade barriers, quotas, tariffs and duties, loss of most favored nation trading status and currency and exchange rate fluctuations. 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, but that a sustained disruption of such sources of supply could have an adverse impact on the Company’s results of operations and financial position.
+Trademarks, Licenses and Patents
+The Company holds a significant portfolio of registered and common law trademarks that identify its branded products and technologies. The Company’s owned trademarks include Hush Puppies ® , Dog Likeness (registered design trademark), Wolverine ® , Bates ® , Cushe ® , Chaco ® , Soft Style ® , Wolverine Fusion ® , DuraShocks ® , MultiShox ® , Wolverine Compressor ® , Wolverine ICS ® , Hidden Tracks ® , iTechnology ™ , Bounce ® , Comfort Curve ® , HyTest ® , Merrell ® , M Circle Design (registered design trademark), Continuum ® , Sebago ® , Q Form ® , Sperry Top-Sider ® , Saucony ® , Stride Rite ® and Keds ® . The Company’s Wolverine Leathers Division markets its pigskin leathers under the trademarks Wolverine Warrior Leather ® , Weather Tight ® and All Season Weather Leathers™ . The Company has footwear marketing and distribution rights under the Cat ® , Harley-Davidson ® and Patagonia ® trademarks pursuant to license arrangements with the respective trademark owners. The Cat ® and Patagonia ® licenses extend for five or more years and the Harley-Davidson ® license has a term through December 31, 2015. All three licenses are subject to early termination for breach.
+The Company believes that consumers identify its products by the Company’s trademarks and that its trademarks are valuable assets. The Company is not aware of any third-party infringing uses or any prior claims of ownership of its trademarks that could materially affect its current business. The Company has a policy of registering its primary trademarks and vigorously defending its trademarks against infringement or other threats whenever practicable. The Company also holds many design and utility patents, copyrights and various other proprietary rights. The Company vigorously protects its proprietary rights under applicable laws.
+Order Backlog
+At February 8, 2014, the Company had an order backlog of approximately $1,005 million compared to an order backlog of approximately $1,000 million at February 9, 2013, determined on a consistent basis. The majority of the backlog relates to orders for products expected to ship in 2014 . Orders in the backlog are subject to cancellation by customers and to changes in planned customer demand or at-once orders. The backlog at any particular time is affected by a number of factors, including seasonality, retail conditions, expected customer demand, product availability and the schedule for the manufacture and shipment of products. Accordingly, a comparison of backlog from period to period is not necessarily meaningful and may not be predictive of eventual actual shipments.
+Competition
+The Company markets its footwear and apparel lines in a highly competitive and fragmented environment. The Company competes with numerous domestic and international footwear marketers, some of which are larger and have greater resources than the Company. The Company has a significant number of major competitors for its brands of footwear and apparel. Product performance and quality, including technological improvements, product identity, competitive pricing and ability to control costs and the ability to adapt to style changes are all important elements of competition in the footwear and apparel markets served by the Company. The footwear and apparel industries are subject to changes in consumer preferences. The Company strives to maintain its competitive position through promotions designed to increase brand awareness, manufacturing and sourcing efficiencies, 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 competitive position in the overall footwear and apparel industries. Market shares in the non-athletic footwear and apparel industry are highly fragmented and no one company has a dominant market position.
+Research and Development
+In addition to normal and recurring product development, design and styling activities, the Company engages in research and development activities related to the development of new production techniques and to the improvement of the function, performance, reliability and quality of its branded footwear and other products. For example, the Company’s continuing relationship with the Biomechanics Evaluation Laboratory at Michigan State University has helped validate and refine specific biomechanical design concepts, such as Bounce ® , DuraShocks ® and Hidden Tracks ® comfort technologies that have been incorporated into the Company’s footwear. The Company also utilizes the research and testing capabilities of the Saucony ® human performance and
+9
+Table of Contents
+innovation lab as well as research funded at university labs, including the University of Colorado and the University of Delaware, with a particular focus on quantifying the interaction between footwear and runners’ strides. While the Company expects to continue 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 foreign and domestic federal, state and local requirements 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 certain substances and wastes that are regulated or may be deemed hazardous to the environment under certain federal, state and local regulations. The Company works with domestic and foreign federal, state and local agencies from time to time to resolve cleanup issues at various sites and other regulatory issues.
+Employees
+As of December 28, 2013 , the Company had approximately 7,274 domestic and foreign production, office and sales employees. Approximately 57 employees were covered by a single union contract that expires on March 31, 2015. The Company presently considers its employee relations to be good.
+Available Information
+Information about the Company, including the Company’s Code of Conduct & Compliance, Corporate Governance Guidelines, Director Independence Standards, Accounting and Finance Code of Ethics, Audit Committee Charter, Compensation Committee Charter, Finance Committee Charter, and Governance Committee Charter, is available at its website at www.wolverineworldwide.com/investor-relations/corporate-governance . Printed copies of the documents listed above are available upon request, without charge, by writing to the Company at 9341 Courtland Drive, N.E., Rockford, Michigan 49351, Attention: General Counsel.
+The Company also makes available on or through its website at www.wolverineworldwide.com/investor-relations , free of charge, the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports (along with certain other Company filings with the Securities and Exchange Commission (“SEC”)), as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. These materials are also accessible on the SEC’s website at www.sec.gov .

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+Item 13.
+Certain Relationships and Related Transactions, and Director Independence
+The information contained under the caption “Related Party Matters” under the subheadings “Certain Relationships and Related Transactions” and “Related Person Transactions Policy” contained in the Definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be held on April 23, 2014 , is incorporated herein by reference. The information contained under the caption “Corporate Governance” under the subheading “Director Independence” contained in the Definitive Proxy Statement of the Company with respect to the Annual Meeting of Stockholders to be held on April 23, 2014 , is incorporated herein by reference.

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+Item 9A.
+Controls and Procedures
+Evaluation of Disclosure Controls and Procedures
+An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on and as of the time of such evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.
+Management’s Report on Internal Control Over Financial Reporting
+Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of internal control over financial reporting as of December 28, 2013 , based on the framework in the Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that internal control over financial reporting was effective as of December 28, 2013 .
+The effectiveness of the Company’s internal control over financial reporting as of December 28, 2013 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is included in Appendix A of this Annual Report on Form 10-K and is incorporated herein by reference.
+Changes in Internal Control Over Financial Reporting
+During the sixteen-week period ended December 28, 2013, the Company converted certain PLG legacy operating systems related to consumer direct operations to the Company's existing enterprise resource planning software system. The Company took the necessary steps to monitor and maintain appropriate internal controls while the legacy systems were being converted. These steps included procedures to preserve the integrity of the data converted and a review by management to validate the data converted. Additionally, the Company provided training related to this system to individuals using the system to carry out their job responsibilities. The Company anticipates that the conversion of this legacy system will strengthen the Company's overall system of internal controls due to enhanced automation and integration of related processes. The system change was undertaken to integrate systems and consolidate information and was not undertaken in response to any actual or perceived deficiencies in the Company's internal control over financial reporting.

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+Wolverine Worldwide has entered into agreements with Grimoldi S.A., an Argentinean corporation of which Mr. Alberto L. Grimoldi, a director of Wolverine Worldwide, is chairman and a 35% shareholder. The agreements grant Grimoldi, S.A. the exclusive rights to distribute and sell footwear products in Argentina under the Hush Puppies®, Caterpillar®, and Patagonia® brand names, and footwear and apparel under the Merrell® brand name. Grimoldi S.A. or its subsidiary purchases products, samples, footwear components, advertising materials and miscellaneous items from Wolverine Worldwide or pays Wolverine Worldwide royalties and certain sublicense fees based on sales or purchases of products in Argentina. Grimoldi S.A. was obligated to pay Wolverine Worldwide purchase prices, royalties, sublicense fees, service fees and interest relating to purchases made or royalties and fees incurred in fiscal year 2013 totaling $5,660,001. All of the transactions described above occurred pursuant to continuing contractual arrangements between Wolverine Worldwide and Grimoldi S.A. Wolverine Worldwide expects similar transactions to occur between Grimoldi S.A. and Wolverine Worldwide and its subsidiaries during fiscal year 2014. The Governance Committee reviewed and approved or ratified each of these transactions in accordance with Wolverine Worldwide’s related person transactions policy, as described below.
+RELATED PERSON TRANSACTIONS POLICY
+Wolverine Worldwide’s Board adopted written policies and procedures regarding related person transactions. They require the Governance Committee to review and either approve or disapprove the Company entering into any Interested Transactions (defined below). If advance approval is not feasible, then the Governance Committee must review and ratify the Interested Transaction at its next meeting.
+Interested Transaction
+Any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which:
+(1)
+the aggregate amount involved is or is expected to exceed $50,000 since the beginning of Wolverine Worldwide’s last completed fiscal year;
+(2)
+Wolverine Worldwide is a participant; and
+(3)
+any Related Person (defined below) has or will have a direct or indirect interest (other than solely as a result of being a director or less than ten percent beneficial owner of another entity or a limited partner in a partnership in which a Related Person, together with all other Related Persons, has an interest of less than ten percent).
+Related Person
+Any:
+(a)
+person who is or was at any point during the last fiscal year for which Wolverine Worldwide filed an Annual Report on Form 10-K and proxy statement, an executive officer, director or nominee for election as a director;
+(b)
+greater than five percent beneficial owner of Wolverine Worldwide’s common stock; or
+(c)
+immediate family member * of any of the foregoing.
+* Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee).
+The Governance Committee considers whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the Related Person’s interest in the transaction, and other factors that it deems relevant. No director participates in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except to provide all material information to the Governance Committee.
+Wolverine Worldwide Notice of 2014 Annual Meeting of Stockholders and Proxy Statement
+| Page 73
+Table of Contents

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1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2004-03-12,2003-12-31,2004-03-12T21:34:20.000Z,0001019056-04-000364,smadden_k2003.txt,FORM 10-K,220823,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905604000364/smadden_k2003.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905604000364/,2003,2003,1

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+ITEM 1 BUSINESS
+Steven Madden, Ltd. (together with its subsidiaries, the "Company")
+designs, sources, markets and sells fashion-forward footwear brands for women,
+men and children. The Company distributes products through its retail stores,
+its e-commerce website, department and specialty stores throughout the United
+States and Canada and through special distribution arrangements in Europe and in
+Central and South America. The Company's product line includes core products,
+which are sold year-round, complemented by a broad range of updated styles which
+are designed to establish or capitalize on market trends.
+The Company's business is comprised of three (3) distinct segments
+(wholesale, retail and private label). The wholesale division includes seven (7)
+brands: Steve Madden(R), Steven(R), l.e.i.(R), Candie's(R), Stevies(R),
+Unionbay(R) and the Steve Madden Mens brand. Steven Madden Retail, Inc., the
+Company's wholly-owned retail subsidiary, operates Steve Madden, Steven and Shoe
+Biz retail stores as well as the Company's outlet store and e-commerce website.
+The Company's wholly-owned private label subsidiary, Adesso-Madden, Inc.,
+designs and sources footwear products under private labels for many of the
+country's large mass merchandisers. The Company also licenses its Steve
+Madden(R) trademark for several accessory and apparel categories.
+Steven Madden, Ltd., was incorporated as a New York corporation on July 9,
+1990 and reincorporated under the same name in Delaware in November 1998. The
+Company has established a reputation for its creative designs, popular styles
+and quality products at accessible price points. The Company completed its
+initial public offering in December 1993 and its shares of Common Stock
+currently trade on The Nasdaq National Market under the symbol "SHOO".
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+The Company's website is http://www.stevemadden.com. This website primarily
+operates as an internet store where the Company's customers can purchase
+numerous styles of the Company's Steve Madden and Steve Madden Mens footwear
+products. At this time, the Company's Annual Reports on Form 10-K; Quarterly
+Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such
+reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
+Exchange Act of 1934, as amended, are not made available on the Company's
+website because the website is not equipped to make such filings available. The
+Company is looking into alternatives which will enable it to make such filings
+available on its website. The Company will provide paper copies of such filings
+free of charge upon request.
+Wholesale Divisions
+Madden Women's Wholesale
+The Steve Madden(R) Women's Wholesale Division ("Madden Women's Wholesale")
+designs, produces, sources, sells and markets the Company's Steve Madden(R)
+brand to major department stores, better specialty stores, and shoe stores
+throughout the United States. The Steve Madden(R) product line has become a
+leading footwear brand in the fashion conscious junior marketplace. To serve its
+customers (primarily women ages 16 to 25), Madden Women's Wholesale creates and
+markets fashion forward footwear designed to appeal to customers seeking
+exciting, new footwear designs at affordable prices.
+As the Company's largest division, Madden Women's Wholesale accounted for
+$109,285,000 of net sales in 2003, or approximately 34% of the Company's total
+sales. Many newly created styles of Madden Women's Wholesale are test marketed
+at the Company's retail stores. Within a few days, the Company can determine if
+the test product appeals to customers. This enables the Company to use its
+flexible sourcing model to rapidly respond to changing preferences which the
+Company believes is essential for success in the fashion footwear marketplace.
+l.e.i.(R) - Wholesale Division
+Pursuant to the Company's license agreement with Jones Investment Company,
+Inc., the Company has the right to use the l.e.i.(R) trademark in connection
+with the sale and marketing of footwear. The l.e.i.(R) trademark is well
+-1-
+known for jeanswear in the junior marketplace sold nationally through department
+and specialty stores. The Company's l.e.i.(R) footwear products are targeted to
+attract girls and young women ages 6 to 20 years old, a majority of which are
+younger than the typical Steve Madden(R) brand customer. The l.e.i. Wholesale
+Division generated net sales of $60,623,000 for the year ended December 31,
+2003, or approximately 19% of the Company's total revenues.
+Madden Men's Wholesale
+The Steve Madden Men's Wholesale Division ("Madden Men's Wholesale")
+markets a full collection of directional young men's shoes through major
+department stores, better specialty stores and independent shoe stores
+throughout the United States. Price points range from $70 to $100 at retail,
+targeted at men ages 18 to 44 years old.
+Madden Men's Wholesale accounted for $34,881,000 of net sales in 2003, or
+approximately 11% of the Company's total sales. Madden Men's Wholesale, which is
+primarily produced in China, maintains open stock inventory positions in select
+patterns to serve the replenishment programs of its wholesale customers.
+Candie's Footwear
+On May 12, 2003 the Company entered into a long-term license agreement with
+Candie's, Inc. to design, manufacture, and distribute Candie's(R) branded
+footwear for women and children worldwide through the Company's Candie's(R)
+division. The Candie's(R) footwear line has been an important resource for
+fashion and casual footwear primarily for young women and girls for over two
+decades. The Candie's(R) division, which began shipping product in the fourth
+quarter of 2003, generated net sales of $938,000 for the year ended December 31,
+2003.
+Diva Acquisition Corp. - Steven(R) Wholesale Division
+Diva Acquisition Corp. ("Steven") designs and markets women's fashion
+footwear under the "Steven(R)" trademark through major department and better
+footwear specialty stores and one (1) Company owned retail shoe store located in
+New York, New York. Priced a tier above the Steve Madden(R) brand, Steven's
+products are designed to appeal principally to fashion conscious women, ages 26
+to 45, who shop at department stores and footwear boutiques. The Company
+recorded wholesale sales from the Steven(R) brand of $12,519,000 for the year
+ended December 31, 2003, or approximately 4% of the Company's total net sales.
+Stevies Inc. - Wholesale Division
+The Company's Stevies Wholesale Division ("Stevies Wholesale") generated
+net sales of $10,120,000 for the year ended December 31, 2003, or approximately
+3% of the Company's total net sales. Stevies(R) products are marketed through
+department stores such as May Department Stores, Belk, Limited Too, as well as
+independent children's stores throughout the country.
+Unionbay Men's Footwear
+On January 7, 2003, the Company entered into a long-term license with
+Seattle Pacific Industries, Inc., under which the Company has the right to use
+the Unionbay(R) trademark in connection with the sale and marketing of footwear
+for men and boys. Unionbay(R) is known for casual apparel in the young men,
+junior and children's marketplace and is distributed nationally through
+department and specialty stores. The Unionbay(R) division, which began shipping
+product in the third quarter of 2003, generated net sales of $320,000 for the
+year ended December 31, 2003.
+Steven Madden Retail, Inc. - Retail Division
+As of December 31, 2003, the Company owned and operated seventy-six (76)
+retail shoe stores under the Steve Madden(R) name, one (1) under the Steven(R)
+name, five (5) outlet stores and one (1) Internet store (through the
+www.stevemadden.com website). In 2003, the Company opened six (6) new stores and
+closed three (3) under-performing stores. Most of the Steve Madden stores are
+located in major shopping malls in Arizona, California, Colorado, Connecticut,
+District of Columbia, Florida, Georgia, Illinois, Louisiana, Maryland,
+Massachusetts,
+-2-
+Michigan, Minnesota, Nevada, New Jersey, New York, Ohio, Pennsylvania, Puerto
+Rico, Rhode Island, Texas, Virginia and Wisconsin. The retail stores generated
+annual sales in excess of $644 per square foot. Sales are primarily from the
+sale of the Company's Steve Madden(R) product line. Comparative store sales
+decreased 4% in 2003 compared to 2002 while growth in sales was generated by new
+stores. Total sales for the retail division were $95,518,000 for 2003. Sales
+from the retail division for the year ended December 31, 2003 were approximately
+29% of the Company's net sales.
+The Company believes that the retail division will continue to enhance
+overall sales and profits of the Company while building equity in the Steve
+Madden brand. The Company plans to add eight to ten (8-10) new retail stores
+during 2004. The expansion of the retail division enables the Company to test
+and react to new products and classifications which, in turn, strengthens the
+product development efforts of the Steve Madden wholesale division.
+The Adesso-Madden, Inc. - Private Label Division
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a wholly
+owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to mass
+market merchandisers, shoe store chains and other value-priced retailers in
+connection with their procurement of private label shoes. As a buying agent, A-M
+arranges for shoe manufacturers to produce private label shoes to the
+specifications of its clients. The Company believes that by operating in the
+private label, mass merchandising market, the Company is able to maximize
+additional non-branded sales opportunities. This leverages the Company's overall
+sourcing and design capabilities. Currently, this division serves as a buying
+agent for the procurement of women's, men's and children's footwear for large
+retailers including Sears, Payless, Wal-Mart and Target. A-M receives buying
+agent's commissions from its clients. The private label division generated
+commission income of $5,056,000 for the year ended December 31, 2003.
+Licensing
+As of December 31, 2003, the Company licensed its Steve Madden trademark
+for use in connection with the manufacturing, marketing and sale of outerwear
+(including leather outerwear), belts, sunglasses, eyewear and hosiery. Each
+license agreement requires the licensee to pay to the Company a royalty based on
+net sales, a minimum royalty in the event that specified net sales targets are
+not achieved and a percentage of sales for advertising of the Steve Madden(R)
+brand.
+Design
+The Company has established a reputation for its creative designs, popular
+styles and quality products at affordable price points. The Company believes
+that its future success will depend in substantial part on its ability to
+continue to anticipate and react to changing consumer demands in a timely
+manner. To meet this objective, the Company has developed a unique design
+process that allows it to recognize and act quickly to changing consumer
+demands. The Company's design team works together to create designs which they
+believe fit the Company's image, reflect current or future trends and can be
+manufactured in a timely and cost-effective manner. Once the initial design is
+complete, a prototype is developed, which is reviewed and refined prior to the
+commencement of limited production. Most new Steve Madden designs are then
+tested in the Steve Madden(R) retail stores. Designs that prove popular are then
+offered to wholesale and retail distribution nationwide. The Company believes
+that its unique design and testing process and flexible sourcing model is a
+significant competitive advantage allowing the Company to mitigate the risk of
+the costly production and distribution of unpopular designs.
+Product Sourcing and Distribution
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of such products. The
+Company does not own or operate any manufacturing facility and sources its
+branded products through independently owned manufacturers in Brazil, China,
+Italy, Mexico, Spain, Taiwan and the United States. The Company has established
+relationships with a number of manufacturers in each country. Although the
+Company has not entered into any long-term manufacturing or supply contracts,
+the Company believes that a sufficient number of alternative sources exist for
+the manufacture of its products. The principal materials used in the Company's
+footwear are available from any number of sources, both within the United States
+and in foreign countries.
+-3-
+The Company's design and distribution processes are intended to be
+flexible, allowing the Company to respond to and accommodate changing consumer
+demand. The Company's production staff tracks warehouse inventory on a regular
+basis, monitors sell-through data and incorporates input on product demand from
+wholesale customers. The Company can use product feedback to adjust production
+or manufacture new products in as little as five weeks. Constant inventory
+tracking allows the Company to manage inventory on a continuous flow basis with
+the goal of optimizing inventory turns.
+The Company distributes its products from two (2) third party distribution
+warehouse centers located in California and New Jersey. The Company also
+distributes its Internet shipments from a third party fulfillment center located
+in Michigan. By utilizing distribution facilities that specialize in
+distributing products to certain customers (wholesale accounts, Steve Madden
+retail stores and Internet fulfillment), the Company believes that its customers
+are better served.
+Customers
+The Company's customers consist principally of department stores and
+specialty stores, including shoe boutiques. Presently, the Company sells
+approximately forty-one percent (41%) of its products at wholesale to department
+stores, including Federated Department Stores (Bloomingdale's, Bon Marche,
+Burdines, Macy's and Rich's), May Department Stores (Famous Barr, Filene's,
+Foley's, Hecht's, Lord and Taylor and Robinsons May), Dillard's, Marshall
+Field's and Nordstrom; and approximately forty percent (40%) to specialty
+stores, including Journeys, Limited Too and Mandees; and catalog retailers,
+including Victoria's Secret and Fingerhut. For the year ended December 31, 2003,
+May Department Stores and Federated Department Stores accounted for
+approximately fourteen percent (14%) and thirteen percent (13%) of the Company's
+wholesale sales, respectively.
+Distribution Channels
+The Company sells its products principally through its Company-owned retail
+stores, department stores, specialty shoe stores and discount stores in the
+United States and abroad. For the year 2003, retail stores and wholesale sales
+accounted for approximately twenty-nine percent (29%) and seventy-one percent
+(71%) of total sales, respectively. The following paragraphs describe each of
+these distribution channels.
+Steve Madden and Steven Retail Stores
+As of December 31, 2003, the Company operated seventy-seven (77)
+Company-owned retail stores (including one Internet store) under the Steve
+Madden(R) name and one (1) under the Steven(R) name. The Company believes that
+its retail stores will continue to enhance overall sales, profitability, and its
+ability to react to changing consumer trends. The stores are also a marketing
+tool which allows the Company to strengthen brand recognition and to showcase
+selected items from its full line of branded and licensed products. Furthermore,
+the retail stores provide the Company with a venue to test and introduce new
+products and merchandising strategies. Specifically, the Company often tests new
+designs at its Steve Madden(R) retail stores before scheduling them for mass
+production and wholesale distribution. In addition to these test marketing
+benefits, the Company has been able to leverage sales information gathered at
+Steve Madden(R) retail stores to assist its wholesale accounts in order
+placement and inventory management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square feet
+and is located in malls and street locations which attract the highest
+concentration of the Company's core demographic -- style-conscious young women
+ages 16 to 25 years old. The Steven(R) store has a more sophisticated design and
+format styled to appeal to its more mature target audience. In addition to
+carefully analyzing mall demographics, the Company also sets profitability
+guidelines for each potential store site. Specifically, the Company targets
+sites at which the demographics fit the consumer profile, the positioning of the
+site is well trafficked and the projected fixed annual rent expense does not
+exceed a specified percentage of sales over the life of the lease. By setting
+these standards, the Company believes that each store will contribute to the
+Company's overall profits both in the near- and longer-terms.
+-4-
+Outlet Stores
+Shoe Biz, Inc., a wholly owned subsidiary of the Company ("Shoe Biz"),
+operates five (5) outlet stores in New Jersey and New York, four (4) of which
+operate under the Shoe Biz name and one (1) of which operates as a Steve Madden
+Outlet store. Shoe Biz sells many product lines, including Steve Madden, Steven,
+Stevies and l.e.i.(R) footwear, at a price lower than typically charged by other
+"full price" retailers.
+Department Stores
+The Company currently sells to over 2,750 doors of twenty-two (22)
+department stores throughout the United States and Canada. The Company's major
+accounts include Federated Department Stores (Macy's, Bloomingdale's, Bon
+Marche, Burdine's and Rich's), May Department Stores (Filene's, Hecht's, Famous
+Barr, Foley's, Lord and Taylor and Robinsons May), Nordstrom, Dillard's and
+Marshall Field's.
+The Company provides merchandising support to its department store
+customers which includes in-store fixtures and signage, supervision of displays
+and merchandising of the Company's various product lines. The Company's
+wholesale merchandising effort includes the creation of in-store concept shops,
+where a broader collection of the Company's branded products are showcased.
+These in-store concept shops create an environment that is consistent with the
+Company's image and enable the retailer to display and stock a greater volume of
+the Company's products per square foot of retail space. In addition, these
+in-store concept shops encourage longer term commitment by the retailer to the
+Company's products and enhance consumer brand awareness.
+In addition to merchandising support, the Company's senior account
+executives maintain weekly communications with their accounts to guide them in
+placing orders and to assist them in managing inventory, assortment and retail
+sales. The Company leverages its sell-through data gathered at its retail stores
+to assist department stores in allocating their open-to-buy dollars to the most
+popular styles in the product line and to phase out styles with weaker
+sell-throughs.
+Specialty Stores/Catalog Sales
+The Company currently sells to specialty store locations throughout the
+United States and Canada. The Company's major specialty store accounts include
+Journeys, Limited Too and Mandees. The Company offers its specialty store
+accounts the same merchandising, sell-through and inventory tracking support
+offered to its department store accounts. Sales of the Company's products are
+also made through various catalogs, such as Victoria's Secret.
+Internet Sales
+The Company operates one (1) Internet website: www.stevemadden.com.
+Customers can purchase numerous styles of the Company's Steve Madden, Steven and
+Steve Madden Mens footwear, accessory and clothing products. Sales derived from
+the Company's Internet store increased 8% to $5,200,000 in 2003 from $4,800,000
+in 2002.
+Distribution Agreements
+In June 2002, the Company and Dabsan International, S.A. ("Dabsan") entered
+into an agreement whereby the Company granted Dabsan the exclusive right to sell
+Steve Madden products in certain Central and South American countries and the
+right to develop Steve Madden retail stores in certain Central and South
+American countries. Under the terms of the agreement, Dabsan is required to open
+two (2) Steve Madden stores by October 31, 2004 and is also required to purchase
+certain minimum amounts of Steve Madden shoes.
+In February 2003, the Company and F.E.E.T. sas ("FEET") entered into a
+distribution and license agreement whereby the Company granted FEET the
+exclusive right to sell Steve Madden products in certain European countries with
+a provision that expands the territory covered to include certain additional
+European countries and in North Africa. Under the terms of the agreement, FEET
+is required to purchase certain minimum amounts of Steve Madden shoes.
+-5-
+Competition
+The fashion footwear industry is highly competitive. The Company's
+competitors include specialty shoe companies as well as companies with
+diversified footwear product lines. The recent substantial growth in the sales
+of fashion footwear has encouraged the entry of many new competitors and
+increased competition from established companies. Most of these competitors,
+including Diesel, Kenneth Cole, Nine West, DKNY, Skechers, Nike and Guess, may
+have significantly greater financial and other resources than the Company. The
+Company believes effective advertising and marketing, fashionable styling, high
+quality and value are the most important competitive factors and intends to
+continue to employ these elements as it develops its products.
+In 2001, the Company launched the Steve Madden Mens brand which competes
+with several brands that are more established with greater consumer awareness,
+including Kenneth Cole, Skechers Collection, Tommy Hilfiger and Dr. Martin.
+Marketing and Sales
+Prior to 1997, the Company's marketing plans relied heavily on its few
+Steve Madden(R) retail store locations and word-of-mouth referrals. In 1998, the
+Company focused on creating a more integrated brand building program to
+establish Steve Madden as the leading designer of fashion footwear for
+style-conscious young women. As a result, the Company developed a national
+advertising campaign for lifestyle and fashion magazines which was also used in
+regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its website (www.stevemadden.com)
+where consumers can purchase Steve Madden(R), Steven and Steve Madden Mens
+products and interact with both the Company and other customers.
+The Company commenced a marketing campaign for the Stevies brand with
+separate marketing, advertising, promotional events and in-store displays
+targeting the Stevies customer. As for Steve Madden Mens, the Company supported
+the brand's roll-out with strategic marketing and advertising initiatives.
+In order to service its wholesale accounts, the Company retains a sales
+force of eighteen independent sales representatives. These sales representatives
+work on a commission basis and are responsible for placing the Company's
+products with its principal customers, including department and specialty
+stores. The sales representatives are supported by the Company's senior
+executives, a staff of fifteen account executives, one merchandise coordinator
+and twenty-seven customer service representatives who continually cultivate
+relationships with wholesale customers. This group of professionals assist
+accounts in merchandising and assessing customer preferences and inventory
+requirements, which ultimately serves to increase sales and profitability.
+Management Information Systems (MIS) Operations
+Sophisticated information systems are essential to the Company's ability to
+maintain its competitive position and to support continued growth. The Company
+operates on a dual AS/400 system which provides system support for all aspects
+of its business including manufacturing purchase orders; customer purchase
+orders; order allocations; invoicing; accounts receivable management; real time
+inventory management; quick response replenishment; point-of-sale support; and
+financial and management reporting functions. The Company has a PKMS bar coded
+warehousing system which is integrated with the wholesale system in order to
+provide accurate inventory positions and quick response size replenishment for
+its customers. In addition, the Company has installed an EDI system which
+provides a computer link between the Company and certain wholesale customers
+that enables both the customer and the Company to monitor purchases, shipments
+and invoicing. The EDI system also improves the Company's ability to respond to
+customer inventory requirements on a weekly basis.
+Receivables Financing; Line of Credit
+Under the terms of a factoring agreement with Capital Factors, Inc., the
+Company is permitted to draw down 80% of its invoiced receivables at an interest
+rate of two points below the Prime Rate (as defined in such agreement). The
+agreement provides that Capital Factors is not required to purchase all the
+Company's receivables and requires the Company to pay an unused line fee of .25%
+of the average daily unused portion of the maximum amount of the credit line. On
+September 1, 1998, the Company and Capital Factors amended its Factoring
+-6-
+Agreement to, among other things, provide the Company with a credit line of up
+to $15,000,000, subject to certain limitations. The Company has not recently
+borrowed funds under its credit line with Capital Factors. The agreement with
+Capital Factors was renewed for the period beginning June 30, 2002 through
+December 31, 2004. Capital Factors maintains a lien on all of the Company's
+inventory and receivables and assumes the credit risk for all assigned accounts
+approved by it.
+Trademarks and Service Marks
+The STEVE MADDEN and STEVE MADDEN plus Design trademarks and service marks
+have been registered in numerous International Classes (Int'l Cl. 25 for
+clothing and footwear; Int'l Cl. 18 for leather goods, such as handbags and
+wallets; Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry; Int'l Cl. 3 for
+cosmetics and fragrances; Int'l Cl. 20 for picture frames and furniture; Int'l
+Cl. 16 for paper goods; Int'l Cl. 24 for bedding; and Int'l Cl. 35 for retail
+store services) in the United States. The Company also has trademark
+registrations in the United States for the marks EYESHADOWS BY STEVE MADDEN
+(Int'l Cl. 9 for eyewear), ICE TEE (Int'l Cl. 25 for clothing and footwear),
+SOHO COBBLER (Int'l. Cl. 9 for eyewear; and Int'l Cl. 25 for clothing and
+footwear), SHOE BIZ By STEVE MADDEN (Int'l Cl. 25 for clothing and footwear; and
+Int'l Cl. 35 for retail store services) and STEVEN M. (Int'l Class 25 for
+clothing and footwear). Additionally, the Company has several pending trademark
+and service mark applications in the United States for various marks, including
+a stylized "H" Design (Int'l Cl. 25 for clothing and footwear), TEST & REACT
+(Int'l Cl. 42 for services consisting of conducting market studies), STEVEN
+(Int'l Cl. 25 for clothing and footwear) and TORCH STRIPE (Int'l Cl. 25 for
+footwear). The Company also has pending trademark and service mark applications
+in China and the 15 cooperating countries in Europe for TORCH STRIPE (Int'l Cl.
+25 for footwear).
+The Company further owns registrations for the STEVE MADDEN and STEVE
+MADDEN plus Design trademarks and service marks in various International Classes
+in Argentina, Australia, Bahrain, Brazil, Canada, Chile, China, Colombia, Hong
+Kong, Israel, Italy, Japan, Korea, Lebanon, Mexico, the Netherlands, Panama,
+Saudi Arabia, South Africa, Taiwan, the 15 cooperating countries of Europe and
+the Benelux countries and has pending applications for registration of the STEVE
+MADDEN and STEVE MADDEN plus Design trademarks and service marks in Bahrain,
+Belize, Costa Rica, El Salvador, Guatemala, Honduras, Korea, Kuwait, Lebanon,
+Malaysia, Oman, Peru, Qatar, Saudi Arabia, Turkey, the United Arab Emirates and
+Venezuela. Additionally, the Company owns registrations for the STEVEN trademark
+and service mark in various International Classes in Hong Kong, Lebanon and
+Japan and has pending applications for registration of the STEVEN trademark and
+service mark in Canada, China, Israel, Italy, Japan, Korea, Malaysia, Oman,
+Qatar, South Africa, Saudi Arabia, Taiwan, Thailand, Turkey, the United Arab
+Emirates and the United States. There can be no assurance, however, that the
+Company will be able to effectively obtain rights to the STEVE MADDEN mark
+throughout all of the countries of the world. Moreover, no assurance can be
+given that others will not assert rights in, or ownership of, trademarks and
+other proprietary rights of the Company or that the Company will be able to
+successfully resolve such conflicts. The failure of the Company to protect such
+rights from unlawful and improper appropriation may have a material adverse
+effect on the Company's business and financial condition.
+Additionally, the Company, through its Diva Acquisition Corp. subsidiary,
+owns registrations for the DAVID AARON trademark and service mark in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets; and
+Int'l Cl. 35 for retail store services), Australia, Canada, Hong Kong, Japan,
+South Africa and the 15 cooperating countries in Europe and for its D. AARON
+trademark in Spain. Also, the Company own registrations for the DAVID AARON
+trademark in International Class 3 for perfume and cosmetics; International
+Class 9 for eyewear; International Class 14 for jewelry; International Class 16
+for paper goods; International Class 18 for bags; International Class 24 for bed
+and bath products; International Class 25 for clothing and footwear and
+International Class 26 hair accessories in Korea. The Company believes that the
+DAVID AARON trademark has a significant value and is important to the marketing
+of the Company's products.
+The Company, through its Stevies, Inc. subsidiary, also owns various
+registrations for the STEVIES and STEVIES plus Design trademark and service mark
+in a number of International Classes in the United States (Int'l Cl. 18 for
+leather goods, such as handbags and wallets; Int'l Cl. 9 for eyewear;
+International Class 35 for retail store services and, International Class 26 for
+hair accessories) and for its STEVIES plus Design mark for various goods in
+Argentina, Bahrain, China, Hong Kong, Israel, Japan, Korea, Lebanon, Mexico,
+Taiwan and the 15 cooperating countries in Europe. Additionally Stevies, Inc.
+has several pending trademark and service mark applications for
+-7-
+registration of the STEVIES and STEVIES plus Design marks in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 14 for jewelry; Int'l Cl. 28 for toys; Int'l Cl. 26 for hair
+accessories; International Class 16 for paper goods; International Class 3 for
+perfume and cosmetics and, International Class 9 for CDs and eyewear) and in
+Brazil, Canada, Colombia, Indonesia, Kuwait, Malaysia, Mexico, Oman, Panama,
+Peru, Qatar, Saudi Arabia, South Africa, Thailand, Turkey, the United Arab
+Emirates and Venezuela. Finally, Stevies, Inc. also owns several pending
+trademark and service mark applications for registration of the STEVIES BY STEVE
+MADDEN mark in various International Classes in the United States (Int'l Cl. 25
+for clothing and footwear; Int'l Cl. 14 for jewelry; Int'l Cl. 18 for leather
+goods, such as handbags and wallets; Int'l Cl. 16 for paper goods; Int'l Cl. 3
+for cosmetics and fragrances; Int'l Cl. 9 for eyewear; Int'l Cl. 26 for hair
+accessories; Int'l Cl. 28 for toys; and Int'l Cl. 35 for retail store services).
+Employees
+On March 4, 2004, the Company employed approximately 1,150 employees, of
+whom approximately 500 work on a full-time basis and approximately 650 work on a
+part-time basis. The management of the Company considers relations with its
+employees to be good.

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+ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+The information required to be furnished pursuant to this item will be set
+forth in the Company's proxy statement for the 2004 Annual Meeting of
+Stockholders, and is incorporated herein by reference.

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+ITEM 9A CONTROLS AND PROCEDURES
+As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the
+"Exchange Act"), the Company's management, including the Company's Chief
+Executive Officer and Chief Financial Officer, has evaluated the effectiveness
+of its disclosure controls and procedures as of the end of the fiscal year
+covered by this annual report. Based on that evaluation, the Chief Executive
+Officer and Chief Financial Officer have concluded that the Company's disclosure
+controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
+were effective as of the end of the fiscal year covered by this annual report.
+As required by Rule 13a-15(d) under the Exchange Act, the Company's management,
+including the Company's Chief Executive Officer and Chief Financial Officer, has
+evaluated the Company's internal controls over financial reporting to determine
+whether any changes occurred during the fourth quarter of 2003 that have
+materially affected, or are reasonably likely to materially affect, the
+Company's internal control over financial reporting. Based on that evaluation,
+there has been no such change during the fourth quarter of 2003.
+-24-
+PART III

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+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with
+Peter J. Solomon & Company, a financial advisory firm of which Marc Cooper, one
+of the Company's directors, is a managing director. Under this agreement, the
+firm provided financial advisory and investment banking services to the Company.
+Pursuant to this agreement, the Company paid fees to Peter J. Solomon & Company
+in the amount of $75,000 during 2001 and $150,000 during 2002. During 2003, the
+Company paid $32,866 to Peter J. Solomon & Company for research and other
+expenses. This agreement was amended in March 2004. Under the amended agreement,
+the Company will pay fees to Peter J. Solomon & Company in the amount of
+$200,000 during 2004.
+The Company and Jeffrey Birnbaum, one of the Company's directors, have
+entered into an agreement whereby Mr. Birnbaum provides design consultation
+services to the Company. Pursuant to this agreement, Mr. Birnbaum received a fee
+of $200,000 from the Company in 2003.
+The Company paid John Madden, one of the Company's directors, $15,000
+in 2003 for investment consulting advice provided by Mr. Madden to the Company
+in 2002. In addition, in January 2004 the Company entered into an agreement with
+JLM Consultants, a company wholly-owned by Mr. Madden, whereby JLM Consultants
+will provide consulting services with respect to the development of
+international sales of the Company. Pursuant to this agreement, JLM Consultants
+will receive a monthly fee of $16,000.
+The Company had an agreement with Charles Koppelman, its Chairman,
+which expired on June 30, 2003. See "Agreement with the Chairman of the Board."
+The Company has an agreement with Steven Madden, a beneficial holder of
+more than 10% of the Company's outstanding shares of common stock. See
+"Agreement with Steven Madden."
+Compensation Committee Report On Executive Compensation
+The Compensation Committee is responsible for reviewing and approving
+the Company's compensation policies and the compensation paid to its executive
+officers, including the Chief Executive Officer and the other named executive
+officers. During 2003, the Compensation Committee was comprised of directors
+Peter Migliorini (chairman) and Roger Gladstone. Each member of the Compensation
+Committee was a non-employee director of the Company during 2003.
+The Compensation Committee's goal is to develop executive compensation
+policies and practices that are consistent with and linked to the Company's long
+term goal of maximizing stockholder value. The program is designed to facilitate
+the long-term success and growth of the Company through the attraction,
+motivation, and retention of outstanding executives.
+-21-
+The objectives of the Company's executive compensation programs are to:
+(i) attract and retain the highest quality executives, (ii) inspire and motivate

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1	+ cik,ticker,company_name,form,filing_date,report_date,acceptance_datetime,accession_number,primary_document,primary_doc_description,size,is_xbrl,is_inline_xbrl,document_url,filing_index_url,year,fiscal_year,is_primary_filing
2	+ 0000913241,SHOO,"STEVEN MADDEN, LTD.",10-K,2005-03-16,2004-12-31,2005-03-16T20:13:04.000Z,0001019056-05-000307,smadden_k2004.txt,FORM 10-K,250265,0,0,https://www.sec.gov/Archives/edgar/data/913241/000101905605000307/smadden_k2004.txt,https://www.sec.gov/Archives/edgar/data/913241/000101905605000307/,2004,2004,1

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+ITEM 1 BUSINESS
+Steven Madden, Ltd. (together with its subsidiaries, the "Company") designs,
+sources, markets and sells fashion-forward footwear brands for women, men and
+children. The Company distributes products through its retail stores, its
+e-commerce website, department and specialty stores throughout the United States
+and Canada and through special distribution arrangements in Europe, Central and
+South America, Australia and Indonesia. The Company's product line includes core
+products, which are sold year-round, complemented by a broad range of updated
+styles which are designed to establish or capitalize on market trends.
+The Company's business is comprised of three (3) distinct segments
+(wholesale, retail and private label). The wholesale division includes seven (7)
+brands: Steve Madden(R), Steven(R), l.e.i.(R), Candie's(R), Stevies(R),
+Unionbay(R) and Steve Madden Mens. Steven Madden Retail, Inc., the Company's
+wholly-owned retail subsidiary, operates Steve Madden, Steven and Shoe Biz
+retail stores as well as the Company's outlet stores and e-commerce website. The
+Company's wholly-owned private label subsidiary, Adesso-Madden, Inc., designs
+and sources footwear products under private labels for many of the country's
+large mass merchandisers. The Company also licenses its Steve Madden(R)
+trademark for several accessory and apparel categories.
+Steven Madden, Ltd., was incorporated as a New York corporation on July 9,
+1990 and reincorporated under the same name in Delaware in November 1998. The
+Company has established a reputation for its creative designs, popular styles
+and quality products at accessible price points. The Company completed its
+initial public offering in December 1993 and its shares of Common Stock
+currently trade on The Nasdaq National Market under the symbol "SHOO".
+The Company maintains its principal executive offices at 52-16 Barnett
+Avenue, Long Island City, NY 11104, telephone number (718) 446-1800.
+The Company's website is http://www.stevemadden.com. The Company makes
+available free of charge on its website its Annual Reports on Form 10-K,
+Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments
+to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the
+Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as
+reasonably practicable after such material is electronically filed with, or
+furnished to, the Securities and Exchange Commission (the "Commission"). The
+Company will provide paper copies of such filings free of charge upon request.
+Wholesale Divisions
+Madden Womens Wholesale
+The Steve Madden(R) Womens Wholesale Division ("Madden Womens Wholesale")
+designs, produces, sources, sells and markets the Company's Steve Madden(R)
+brand to major department stores, better specialty stores, and shoe stores
+throughout the United States. The Steve Madden(R) product line has become a
+leading footwear brand in the fashion conscious junior marketplace. To serve its
+customers (primarily women ages 16 to 25), Madden Womens Wholesale creates and
+markets fashion forward footwear designed to appeal to customers seeking
+exciting, new footwear designs at affordable prices.
+As the Company's largest division, Madden Womens Wholesale accounted for
+$114,000,000 of net sales in 2004, or approximately 34% of the Company's total
+net sales. Many newly created styles of Madden Womens Wholesale are test
+marketed at the Company's retail stores. Within a few days, the Company can
+determine if the test product appeals to customers. This enables the Company to
+use its flexible sourcing model to rapidly respond to changing preferences which
+the Company believes is essential for success in the fashion footwear
+marketplace.
+l.e.i.(R) - Wholesale Division
+Pursuant to the Company's license agreement with Jones Investment Company,
+Inc., the Company has the right to use the l.e.i.(R) trademark in connection
+with the sale and marketing of footwear through September 30, 2006. The
+l.e.i.(R) trademark is well known for jeanswear in the junior marketplace sold
+nationally through department and
+specialty stores. The Company's l.e.i.(R) footwear products are targeted to
+attract girls and young women ages 6 to 20 years old, a majority of which are
+younger than the typical Steve Madden(R) brand customer. The l.e.i. Wholesale
+Division generated net sales of $38,000,000 for the year ended December 31,
+2004, or approximately 11% of the Company's total net sales.
+Madden Mens Wholesale
+The Steve Madden Mens Wholesale Division ("Madden Mens Wholesale") markets a
+full collection of directional young men's shoes through major department
+stores, better specialty stores and independent shoe stores throughout the
+United States. Price points range from $70 to $100 at retail, targeted at men
+ages 18 to 44 years old.
+Madden Mens Wholesale accounted for $31,000,000 of net sales in 2004, or
+approximately 9% of the Company's total net sales. Madden Mens Wholesale, which
+is primarily produced in China, maintains open stock inventory positions in
+select patterns to serve the replenishment programs of its wholesale customers.
+Candie's Footwear
+Pursuant to the Company's license agreement with Candie's, Inc., ("Candie's")
+the Company designs, manufactures, and distributes Candie's(R) branded footwear
+for women and children worldwide through the Company's Candie's Wholesale
+Division ("Candie's Wholesale Division"). The Candie's(R) Wholesale Division
+generated net sales of $16,000,000 for the year ended December 31, 2004, or
+approximately 5% of the Company's total net sales.
+On December 6, 2004, the license agreement with Candie's was amended to
+reflect Candie's decision to name Kohl's Corporation as the exclusive provider
+of a new line of Candie's apparel. Pursuant to the amendment, commencing on
+January 1, 2007, the Company will no longer have the exclusive right to market
+Candie's branded footwear and will be permitted to sell Candie's branded
+footwear only to Kohl's. Under the terms of the amendment, Candie's has
+guaranteed that the Company will achieve minimum sales levels with Kohl's during
+the term of the agreement. In the event such minimum sales levels are not
+achieved, Candie's is required to compensate the Company in an amount based on a
+percentage of the sales shortfall.
+Diva Acquisition Corp. - Steven(R) Wholesale Division
+Diva Acquisition Corp. ("Steven(R) Wholesale Division") designs and markets
+women's fashion footwear under the "Steven(R)" trademark through major
+department and better footwear specialty stores and one (1) Company-owned retail
+shoe store located in New York City. Priced a tier above the Steve Madden(R)
+brand, Steven(R) products are designed to appeal principally to fashion
+conscious women, ages 26 to 45, who shop at department stores and footwear
+boutiques. Steven(R) Wholesale Division generated net sales of $21,000,000 for
+the year ended December 31, 2004, or approximately 6% of the Company's total net
+sales.
+Stevies Inc. - Wholesale Division
+The Company's Stevies(R) wholesale division ("Stevies(R) Wholesale Division")
+generated net sales of $10,000,000 for the year ended December 31, 2004, or
+approximately 3% of the Company's total net sales. Stevies(R) products are
+marketed through department stores such as May Department Stores, Belk, Limited
+Too, as well as independent children's stores throughout the country.
+Unionbay Men's Footwear
+Pursuant to the Company's license agreement with Seattle Pacific Industries,
+Inc., the Company has the right to use the Unionbay(R) trademark in connection
+with the sale and marketing of footwear for men and boys. Unionbay(R) is known
+for casual apparel in the young men, junior and children's marketplace and is
+distributed nationally through department and specialty stores. The Company's
+Unionbay(R) wholesale division generated net sales of $600,000 for the year
+ended December 31, 2004, or approximately .2% of the Company's total net sales.
+Steven Madden Retail, Inc. - Retail Division
+As of December 31, 2004, the Company owned and operated eighty-five (85)
+retail shoe stores under the Steve Madden(R) name, one (1) under the Steven(R)
+name, four (4) outlet stores and one (1) Internet store (through the
+2
+www.stevemadden.com website). In 2004, the Company opened ten (10) new stores
+and closed two (2) under-performing stores. Most of the Steve Madden stores are
+located in major shopping malls in Alabama, Arizona, California, Colorado,
+Connecticut, Delaware, Florida, Georgia, Illinois, Kansas, Louisiana, Maryland,
+Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York,
+North Carolina, Ohio, Pennsylvania, Puerto Rico, Rhode Island, Texas, Virginia,
+Wisconsin and the District of Columbia. The retail stores generated annual sales
+in excess of $694 per square foot. Sales are primarily from the sale of the
+Company's Steve Madden(R) product line. Comparative store sales increased 8.2%
+in 2004 compared to 2003 while growth in sales was generated by new stores. Net
+sales for the retail division were $108,000,000 for 2004. Net sales from the
+retail division for the year ended December 31, 2004 were approximately 32% of
+the Company's total net sales.
+The Company believes that the retail division will continue to enhance
+overall sales and profits of the Company while building equity in the Steve
+Madden brand. The Company plans to add twelve to fifteen (12 - 15) new retail
+stores during 2005. The expansion of the retail division enables the Company to
+test and react to new products and classifications which, in turn, strengthens
+the product development efforts of the Steve Madden wholesale division.
+The Adesso-Madden, Inc. - Private Label Division
+In September 1995, the Company incorporated Adesso-Madden, Inc. as a wholly
+owned subsidiary ("A-M"). A-M was formed to serve as a buying agent to mass
+market merchandisers, shoe store chains and other value-priced retailers in
+connection with their procurement of private label shoes. As a buying agent, A-M
+arranges for shoe manufacturers to produce private label shoes to the
+specifications of its clients. The Company believes that by operating in the
+private label, mass merchandising market, the Company is able to maximize
+additional non-branded sales opportunities. This leverages the Company's overall
+sourcing and design capabilities. Currently, this division serves as a buying
+agent for the procurement of women's, men's and children's footwear for large
+retailers including Sears, Payless, Wal-Mart and Target. A-M receives buying
+agent's commissions from its clients. The private label division generated
+commission income of $4,500,000 for the year ended December 31, 2004.
+Licensing
+As of December 31, 2004, the Company licensed its Steve Madden trademark for
+use in connection with the manufacturing, marketing and sale of outerwear
+including leather outerwear, belts, sunglasses, eyewear and hosiery. Each
+license agreement requires the licensee to pay to the Company a royalty based on
+net sales, a minimum royalty in the event that specified net sales targets are
+not achieved and a percentage of sales for advertising of the Steve Madden(R)
+brand. Licensing income was $2,310,000 for the year ended December 31, 2004.
+Design
+The Company has established a reputation for its creative designs, popular
+styles and quality products at affordable price points. The Company believes
+that its future success will depend in substantial part on its ability to
+continue to anticipate and react to changing consumer demands in a timely
+manner. To meet this objective, the Company has developed a unique design
+process that allows it to recognize and act quickly to changing consumer
+demands. The Company's design team strives to create designs which it believes
+fit the Company's image, reflect current or future trends and can be
+manufactured in a timely and cost-effective manner. Once the initial design is
+complete, a prototype is developed, which is reviewed and refined prior to the
+commencement of limited production. Most new Steve Madden designs are then
+tested in the Steve Madden(R) retail stores. Designs that prove popular are then
+offered to wholesale and retail distribution nationwide. The Company believes
+that its unique design and testing process and flexible sourcing model is a
+significant competitive advantage allowing the Company to mitigate the risk of
+the costly production and distribution of unpopular designs.
+Product Sourcing and Distribution
+The Company sources each of its product lines separately based on the
+individual design, styling and quality specifications of the products in such
+product lines. The Company does not own or operate manufacturing facilities;
+rather, it sources its branded products through independently owned
+manufacturers in Brazil, China, Italy, Mexico, Spain, Portugal and the United
+States. The Company has established relationships with a number of manufacturers
+in each of these countries. Although the Company has not entered into any
+long-term manufacturing or supply contracts, the Company believes that a
+sufficient number of alternative sources exist for the manufacture of its
+3
+products. The principal materials used in the Company's footwear are available
+from a number of sources, both within the United States and in foreign
+countries.
+The Company's design and distribution processes are intended to be flexible,
+allowing the Company to respond to and accommodate changing consumer demand. The
+Company's production staff tracks warehouse inventory on a regular basis,
+monitors sell-through data and incorporates input on product demand from
+wholesale customers. The Company can use product feedback to adjust production
+or manufacture new products in as little as five weeks.
+The Company distributes its products from two (2) third party distribution
+warehouse centers located in California and New Jersey. The Company also
+distributes its Internet shipments from a third party fulfillment center located
+in Michigan. By utilizing distribution facilities that specialize in
+distributing products to certain customers wholesale accounts, Steve Madden
+retail stores and Internet fulfillment, the Company believes that its customers
+are better served.
+Customers
+The Company's wholesale customers consist principally of department stores
+and specialty stores, including shoe boutiques. Presently, the Company sells
+approximately fifty-five percent (55%) of its products at wholesale to
+department and specialty stores, including Federated Department Stores
+(Bloomingdale's, Bon Marche, and Macy's), May Department Stores (Famous Barr,
+Filene's, Foley's, Hecht's, Lord and Taylor and Robinsons May), Dillard's,
+Marshall Field's and Nordstrom, Journeys, Limited Too and Mandees; and catalog
+retailers, including Victoria's Secret and Fingerhut. For the year ended
+December 31, 2004, May Department Stores and Federated Department Stores
+accounted for approximately $35,000,000 (15%) and $40,000,000 (17%) of the
+Company's wholesale net sales, respectively.
+Distribution Channels
+The Company sells its products principally through its Company-owned retail
+stores and through department stores, specialty shoe stores and discount stores
+in the United States and abroad. For the year 2004, net sales from the Company's
+Retail Division and the Company's Wholesale Division accounted for approximately
+$108,000,000 (32%) and $230,000,000 (68%) of the Company's total net sales,
+respectively. The following paragraphs describe each of these distribution
+channels.
+Steve Madden and Steven Retail Stores
+As of December 31, 2004, the Company operated eighty six (86) Company-owned
+retail stores (including one Internet store) under the Steve Madden(R) name and
+one (1) under the Steven(R) name. The Company believes that its retail stores
+will continue to enhance overall sales, profitability, and its ability to react
+to changing consumer trends. The stores are also a marketing tool which allows
+the Company to strengthen brand recognition and to showcase selected items from
+its full line of branded and licensed products. Furthermore, the retail stores
+provide the Company with a venue to test and introduce new products and
+merchandising strategies. Specifically, the Company often tests new designs at
+its Steve Madden(R) retail stores before scheduling them for mass production and
+wholesale distribution. In addition to these test marketing benefits, the
+Company has been able to leverage sales information gathered at Steve Madden(R)
+retail stores to assist its wholesale accounts in order placement and inventory
+management.
+A typical Steve Madden(R) store is approximately 1,400 to 1,600 square feet
+and is located in malls and street locations which attract the highest
+concentration of the Company's core demographic - style-conscious young women
+ages 16 to 25 years old. The Steven(R) store has a more sophisticated design and
+format styled to appeal to its more mature target audience. In addition to
+carefully analyzing mall demographics, the Company also sets profitability
+guidelines for each potential store site. Specifically, the Company targets well
+trafficked sites at which the demographics fit the Company's consumer profile
+and seeks to model new locations such that the projected fixed annual rent
+expense does not exceed a specified percentage of projected sales over the life
+of the lease. By setting these standards, the Company believes that each store
+will contribute to the Company's overall profits both in the near- and
+longer-terms.
+4
+Outlet Stores
+Shoe Biz, Inc., a wholly owned subsidiary of the Company ("Shoe Biz"),
+operates three (3) outlet stores in New Jersey and New York, two (2) of which
+operate under the Shoe Biz name and one (1) of which operates as a Steve Madden
+Outlet store. Shoe Biz sells many product lines, including Steve Madden, Steven,
+Stevies and l.e.i.(R) footwear, at a price lower than typically charged by other
+"full price" retailers.
+Department Stores
+The Company currently sells to over 3,204 doors of twenty-two (22) department
+stores throughout the United States and Canada. The Company's major accounts
+include Federated Department Stores (Macy's, Bloomingdale's and Bon Marche), May
+Department Stores (Filene's, Hecht's, Famous Barr, Foley's, Lord and Taylor and
+Robinsons May and Marshall Fields'), Nordstrom and Dillard's.
+The Company provides merchandising support to its department store customers
+which includes in-store fixtures and signage, supervision of displays and
+merchandising of the Company's various product lines. The Company's wholesale
+merchandising effort includes the creation of in-store concept shops, where a
+broader collection of the Company's branded products are showcased. These
+in-store concept shops create an environment that is consistent with the
+Company's image and enable the retailer to display and stock a greater volume of
+the Company's products per square foot of retail space. In addition, these
+in-store concept shops encourage longer term commitment by the retailer to the
+Company's products and enhance consumer brand awareness.
+In addition to merchandising support, the Company's key account executives
+maintain weekly communications with their accounts to guide them in placing
+orders and to assist them in managing inventory, assortment and retail sales.
+The Company leverages its sell-through data gathered at its retail stores to
+assist department stores in allocating their open-to-buy dollars to the most
+popular styles in the product line and to phase out styles with weaker
+sell-throughs.
+Specialty Stores/Catalog Sales
+The Company currently sells to specialty store locations throughout the
+United States and Canada. The Company's major specialty store accounts include
+Journeys, Mandees, Famous footwear and DSW. The Company offers its specialty
+store accounts the same merchandising, sell-through and inventory tracking
+support offered to its department store accounts. Sales of the Company's
+products are also made through various catalogs, such as Victoria's Secret.
+Internet Sales
+The Company operates one (1) Internet website: www.stevemadden.com. Customers
+can purchase numerous styles of the Company's Steve Madden(R), Steven and Steve
+Madden Mens footwear, accessory and clothing products. Sales derived from the
+Company's Internet website were $5,200,000 in 2004.
+Distribution Agreements
+In June 2002, the Company and Dabsan International, S.A. ("Dabsan") entered
+into an agreement whereby the Company granted Dabsan the exclusive right to sell
+Steve Madden products in certain Central and South American countries and the
+right to develop Steve Madden retail stores in certain Central and South
+American countries. Under the terms of the agreement, Dabsan was required to
+purchase certain minimum amounts of Steve Madden shoes. Dabsan was also required
+to open two (2) Steven Madden stores by October 31, 2004. However, in November
+2004, Dabsan and the Company mutually agreed that it was not practicable to
+enforce this requirement.
+In February 2003, the Company and F.E.E.T. sas ("FEET") entered into a
+distribution and license agreement whereby the Company granted FEET the
+exclusive right to sell Steve Madden products in certain European countries with
+a provision that expands the territory covered to include certain additional
+European countries and North Africa. Under the terms of the agreement, FEET is
+required to purchase certain minimum amounts of Steve Madden shoes. FEET is
+currently in default of its minimum purchase requirements and the parties are in
+discussion relating to the possible modification of the original terms of the
+agreement.
+5
+In May 2004, the Company and Les Importations Gelati Inc. ("Gelati") entered
+into a retail sales agreement whereby the Company granted Gelati the exclusive
+right to establish and operate Steve Madden retail stores in Canada. Under the
+terms of the agreement Gelati is required to pay the Company a minimum annual
+royalty for each store in operation in addition to a royalty for each pair of
+footwear sold in the stores. Gelati is required to open one store per year in
+2004, 2005 and 2006.
+In June 2004, the Company and Steve Madden (Aust) Pty Ltd ("Madden
+Australia") entered into a distribution agreement whereby the Company granted
+Madden Australia the exclusive right to sell certain Steve Madden products in
+Australia and New Zealand. Under the terms of the agreement, Madden Australia is
+required to purchase certain minimum amounts of Steve Madden shoes and received
+a right of first refusal with regard to the distribution of new licenses,
+products or trademarks in the territory. The term of the contract is three years
+(with an option to renegotiate certain terms after two years) plus one option
+for an additional five (5) years if certain minimum purchase requirements are
+met.
+Competition
+The fashion footwear industry is highly competitive. The Company's
+competitors include specialty shoe companies as well as companies with
+diversified footwear product lines. Many of these competitors, including Diesel,
+Kenneth Cole, Nine West, DKNY, Skechers, Nike and Guess, may have greater
+financial and other resources than the Company. The Company believes effective
+advertising and marketing, fashionable styling, high quality and value are the
+most important competitive factors and intends to continue to employ these
+elements as it develops its products.
+Marketing and Sales
+The Company has focused on creating an integrated brand building program to
+establish Steve Madden as the leading designer of fashion footwear for
+style-conscious young women and men. As a result, the Company developed a
+national advertising campaign for lifestyle and fashion magazines which was also
+used in regional marketing programs such as radio advertisements, television
+commercials, outdoor media, college event sponsorship and live online chat
+forums. The Company also continues to promote its website (www.stevemadden.com)
+where customers can purchase Steve Madden(R), Steven and Steve Madden Mens
+products and interact with both the Company and other customers.
+In order to service its wholesale accounts, the Company retains a sales force
+of eighteen independent sales representatives. These sales representatives work
+on a commission basis and are responsible for placing the Company's products
+with its principal customers, including department and specialty stores. The
+sales representatives are supported by the Company's senior executives, a staff
+of twelve account executives, two merchandise coordinator and twenty customer
+service representatives who continually cultivate relationships with wholesale
+customers. This group of professionals assist accounts in merchandising and
+assessing customer preferences and inventory requirements, which ultimately
+serves to increase sales and profitability.
+Management Information Systems (MIS) Operations
+Sophisticated information systems are essential to the Company's ability to
+maintain its competitive position and to support continued growth. The Company
+operates on a dual AS/400 system which provides system support for all aspects
+of its business including manufacturing purchase orders; customer purchase
+orders; order allocations; invoicing; accounts receivable management; real time
+inventory management; quick response replenishment; point-of-sale support; and
+financial and management reporting functions. The Company has a PKMS bar coded
+warehousing system which is integrated with the wholesale system in order to
+provide accurate inventory positions and quick response size replenishment for
+its customers. In addition, the Company has installed an EDI system which
+provides a computer link between the Company and certain wholesale customers
+that enables both the customer and the Company to monitor purchases, shipments
+and invoicing. The EDI system also improves the Company's ability to respond to
+customer inventory requirements on a weekly basis.
+6
+Receivables Financing; Line of Credit
+Under the terms of a factoring agreement with Capital Factors, Inc., the
+Company is permitted to draw down 80% of its invoiced receivables at an interest
+rate of one point below the Prime Rate (as defined in such agreement). The
+agreement provides that Capital Factors is not required to purchase all the
+Company's receivables and requires the Company to pay an unused line fee of .25%
+of the average daily unused portion of the maximum amount of the credit line. On
+September 1, 1998, the Company and Capital Factors amended its Factoring
+Agreement to, among other things, provide the Company with a credit line of up
+to $15,000,000, subject to certain limitations. The Company has not recently
+borrowed funds under its credit line with Capital Factors. The agreement with
+Capital Factors will continue in full force until terminated by either party
+upon sixty days notice. Capital Factors maintains a lien on all of the Company's
+receivables and assumes the credit risk for all assigned accounts approved by
+it.
+Trademarks and Service Marks
+The STEVE MADDEN and STEVE MADDEN plus Design trademarks and service marks
+have been registered in numerous International Classes (Int'l Cl. 25 for
+clothing and footwear; Int'l Cl. 18 for leather goods, such as handbags and
+wallets; Int'l Cl. 9 for eyewear; Int'l Cl. 14 for jewelry; Int'l Cl. 3 for
+cosmetics and fragrances; Int'l Cl. 20 for picture frames and furniture; Int'l
+Cl. 16 for paper goods; Int'l Cl. 24 for bedding; and Int'l Cl. 35 for retail
+store services) in the United States. The Company also has trademark
+registrations in the United States for the marks EYESHADOWS BY STEVE MADDEN
+(Int'l Cl. 9 for eyewear), ICE TEE (Int'l Cl. 25 for clothing and footwear),
+SHOE BIZ By STEVE MADDEN (Int'l Cl. 25 for clothing and footwear; and Int'l Cl.
+35 for retail store services) and STEVEN M. (Int'l Class 25 for clothing and
+footwear). Additionally, the Company has several pending trademark and service
+mark applications in the United States for various marks, including a stylized
+"H" Design (Int'l Cl. 25 for clothing and footwear), and STEVEN (Int'l Cl. 25
+for clothing and footwear). The Company also has pending trademark and service
+mark applications in China and the 25 cooperating countries in Europe for TORCH
+STRIPE (Int'l Cl. 25 for footwear).
+The Company further owns registrations for the STEVE MADDEN and STEVE MADDEN
+plus Design trademarks and service marks in various International Classes in
+Argentina, Australia, Bahrain, Brazil, Canada, Chile, China, Colombia, Hong
+Kong, Israel, Italy, Japan, Korea, Mexico, Panama, Saudi Arabia, South Africa,
+Taiwan, the 25 cooperating countries of Europe and the Benelux countries and has
+pending applications for registration of the STEVE MADDEN and STEVE MADDEN plus
+Design trademarks and service marks in Bahrain, Belize, Costa Rica, El Salvador,
+Guatemala, Honduras, Korea, Kuwait, Lebanon, Malaysia, Oman, Peru, Qatar, Saudi
+Arabia, Turkey, the United Arab Emirates and Venezuela. Additionally, the
+Company owns registrations for the STEVEN trademark and service mark in various
+International Classes in Hong Kong, Lebanon and Japan and has pending
+applications for registration of the STEVEN trademark and service mark in China,
+Israel, Italy, Japan, Korea, Malaysia, Oman, Qatar, South Africa, Saudi Arabia,
+Taiwan, Thailand, Turkey, the United Arab Emirates and the United States. There
+can be no assurance, however, that the Company will be able to effectively
+obtain rights to the STEVE MADDEN mark throughout all of the countries of the
+world. Moreover, no assurance can be given that others will not assert rights
+in, or ownership of, trademarks and other proprietary rights of the Company or
+that the Company will be able to successfully resolve such conflicts. The
+failure of the Company to protect such rights from unlawful and improper
+appropriation may have a material adverse effect on the Company's business and
+financial condition.
+Additionally, the Company, through its Diva Acquisition Corp. subsidiary,
+owns registrations for the DAVID AARON trademark and service mark in various
+International Classes in the United States (Int'l Cl. 25 for clothing and
+footwear; Int'l Cl. 18 for leather goods, such as handbags and wallets; and
+Int'l Cl. 35 for retail store services), Australia, Canada, Hong Kong, Japan,
+Korea, South Africa and the 25 cooperating countries in Europe and for its D.
+AARON trademark in Spain. Also, the Company own registrations for the DAVID
+AARON trademark in International Class 3 for perfume and cosmetics;
+International Class 9 for eyewear; International Class 14 for jewelry;
+International Class 16 for paper goods; International Class 18 for bags;
+International Class 24 for bed and bath products; International Class 25 for
+clothing and footwear and International Class 26 hair accessories in Korea. The
+Company believes that the DAVID AARON trademark has a significant value and is
+important to the marketing of the Company's products.
+The Company, through its Stevies, Inc. subsidiary, also owns various
+registrations for the STEVIES and STEVIES plus Design trademark and service mark
+in a number of International Classes in the United States (Int'l Cl. 18 for
+7
+leather goods, such as handbags and wallets; Int'l Cl. 9 for eyewear;
+International Class 35 for retail store services and, International Class 26 for
+hair accessories) and for its STEVIES plus Design mark for various goods in
+Argentina, Bahrain, China, Hong Kong, Israel, Japan, Korea, Lebanon, Mexico,
+Taiwan and the 25 cooperating countries in Europe. Additionally Stevies, Inc.
+has several pending trademark and service mark applications for registration of
+the STEVIES and STEVIES plus Design marks in various International Classes in
+the United States (Int'l Cl. 25 for clothing and footwear; Int'l Cl. 14 for
+jewelry; Int'l Cl. 28 for toys; Int'l Cl. 26 for hair accessories; International
+Class 16 for paper goods; International Class 3 for perfume and cosmetics and,
+International Class 9 for CDs and eyewear) and in Brazil, Canada, Colombia,
+Indonesia, Kuwait, Malaysia, Mexico, Oman, Panama, Peru, Qatar, Saudi Arabia,
+South Africa, Thailand, Turkey, the United Arab Emirates and Venezuela. Finally,
+Stevies, Inc. also owns several pending trademark and service mark applications
+for registration of the STEVIES BY STEVE MADDEN mark in various International
+Classes in the United States (Int'l Cl. 25 for clothing and footwear; Int'l Cl.
+14 for jewelry; Int'l Cl. 18 for leather goods, such as handbags and wallets;
+Int'l Cl. 16 for paper goods; Int'l Cl. 3 for cosmetics and fragrances; Int'l
+Cl. 9 for eyewear; Int'l Cl. 26 for hair accessories; Int'l Cl. 28 for toys; and
+Int'l Cl. 35 for retail store services).
+Employees
+On February 17, 2005, the Company employed approximately 1,510 employees, of
+whom approximately 490 work on a full-time basis and approximately 1,020 work on
+a part-time basis. The management of the Company considers relations with its
+employees to be good.

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+ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
+The information required to be furnished pursuant to this item will be set
+forth in the Company's proxy statement for the 2005 Annual Meeting of
+Stockholders, and is incorporated herein by reference.

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+ITEM 9A CONTROLS AND PROCEDURES
+Disclosure Controls and Procedures
+As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the
+"Exchange Act"), the Company's management, including the Company's Chief
+Executive Officer and Chief Financial Officer, has evaluated the effectiveness
+of its disclosure controls and procedures as of the end of the fiscal year
+covered by this annual report. Based on that evaluation, the Chief Executive
+Officer and Chief Financial Officer have concluded that the Company's disclosure
+controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
+were effective as of the end of the fiscal year covered by this annual report.
+Changes in Internal Control Over Financial Reporting
+As required by Rule 13a-15(d) under the Exchange Act, the Company's management,
+including the Company's Chief Executive Officer and Chief Financial Officer, has
+evaluated the Company's internal controls over financial reporting to determine
+whether any changes occurred during the fourth quarter of 2004 that have
+materially affected, or are reasonably likely to materially affect, the
+Company's internal control over financial reporting. Based on that evaluation,
+there has been no such material change during the fourth quarter of 2004.
+Management Report on Internal Controls
+As permitted by Commission Release No. 50754, the Company will include the
+information required by Items 308(a) and 308(b) of Regulation S-K in a Form
+10-K/A to be filed within 45 days. The Company has spent considerable time and
+resources analyzing, documenting and testing its system of internal controls,
+but has not yet completed its evaluation. Currently, the Company is not aware of
+any material weaknesses in its internal controls over financial reporting and
+related disclosures.

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+Certain Relationships and Related Transactions
+In July 2001, the Company entered into a consulting agreement with Peter J.
+Solomon & Company, a financial advisory firm of which Marc Cooper, one of the
+Company's directors, is a managing director. Under this agreement, the firm
+provided financial advisory and investment banking services to the Company. This
+agreement was amended in March 2004. Pursuant to this agreement, which expired
+on March 31, 2005, the Company paid fees and expenses to Peter J. Solomon &
+Company of $161,000, $33,000 and $150,000 for 2004, 2003 and 2002 respectively.
+Under the amended agreement, the Company paid fees to Peter J. Solomon & Company
+in the amount of $161,000 during 2004, and will pay fees in the amount of
+$50,000 plus expenses incurred during 2005.
+In July 2004, the Company entered into a consulting agreement with Charles
+Koppelman, who served as a director of the Company from June 1998 through May
+2004 and as Chairman of the Board from July 2001 through May 2004. Under this
+agreement, Mr. Koppelman provided consulting services that included enhancing
+and promoting the Company's brands and seeking licensing and acquisition
+opportunities. Pursuant to this agreement, Mr. Koppelman received 100,000 stock
+options and a fee of $105,000 in 2004. This agreement expires on June 30, 2005.
+In October 2002, the Company entered into an agreement with Jeffrey
+Birnbaum, one of the Company's directors. Under this agreement, Mr. Birnbaum
+provided consulting services with respect to the designing and manufacturing of
+shoes and general consulting services to the Company. Pursuant to this
+agreement, Mr. Birnbaum received a fee of $250,000 in 2004 besides for fees
+received for service to the Company as a director. Mr. Birnbaum has been the
+Product Development Manager of Dolphin Shoe Company since August 1982. Dolphin
+Shoe Company is one of the Company's domestic suppliers. In addition, Jeffrey
+Birnbaum's brother, Steven Birnbaum owns a trading company, Bulls Eye Trading
+("Bullseye") that acts as a selling agent for the Company. Jeffrey Birnbaum does
+not own an interest in Bullseye nor is he a director of Bullseye nor does
+Bullseye pay him any compensation.
+In January 2004, the Company entered into an agreement with John Madden and
+JLM Consultants, a company wholly-owned by John Madden, one of the Company's
+directors. Under this agreement, Mr. Madden provided consulting services with
+respect to the development of international sales of the Company. Under the
+agreement, in 2004, JLM Consultants received a monthly draw with recourse in the
+amount of $16,000 against sales commissions earned by Mr. Madden. Mr. Madden
+also received a $1,000 per month travel allowance and $1,700 per month toward
+health insurance premiums. Pursuant to this agreement, JLM Consultants received
+a total of $224,400 in 2004, besides for Mr. Madden's fees received for service
+to the Company as a director. In March 2005, JLM Consultants' draw against
+commissions with recourse was raised to $20,000 per month. JLM Consultants will
+receive an estimated total of $272,400 in 2005.
+The Madden Mens division of the Company purchases a significant amount of
+shoes from La Tandem International, Inc. Mr. James Chen, the brother of Harry
+Chen, is the President of La Tandem International, Inc., and La Tandem
+International, Inc. is owned or controlled by members of the Chen family. Harry
+Chen is the chairman and lead designer of the Madden Mens Division of the
+Company.
+In May 2002, the Company entered into an employment agreement between the
+Company, Adesso Madden, Inc., Joseph Masella and T.J.M. Sales Corporation. The
+agreement was subsequently amended on September 22, 2003. Mr. Masella is the
+president of T.J.M. Sales Corporation. Under the agreement as amended, T.J.M.
+Sales Corporation receives a biweekly draw in the amount of $16,000 against
+commissions earned by Mr. Masella on sales of Adesso Madden, Inc., and a
+biweekly draw with recourse, in the amount of $4,000 against commissions earned
+by Mr. Masella on net sales of the Candie's Women's Wholesale Division and
+Adesso Madden, Inc. T.J.M. Sales Corporation received commissions in the amount
+of $606,886 in 2004.
+-19-
+In March 2004, the Company entered into a commission agreement between the
+Steven Madden Mens Wholesale Division and Hev Sales, Inc. Mr. Andrew Shames is
+the President of Hev Sales Inc. Under the agreement, Hev Sales serves as sales
+organization for the Steven Madden Mens Wholesale Division and receives an
+annual guaranteed commission of $450,000. Hev Sales, Inc. received commissions
+in the amount of $513,468 in 2004.
+The Company has an agreement with Steven Madden, a beneficial holder of
+more than 10% of the Company's outstanding shares of common stock. See
+"Agreement with Steven Madden."