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Item 7. Management’s Discussion and Analysis

2021-02-26 compared with 2020-02-26 · 187 added, 196 removed, 147 unchanged (72% of the section changed)

6 unchanged sentences

and delivering supply chain excellence.

The Company’s brands are marketed in approximately 170 countries and territories at December 28, 2019 , including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.

The Company’s brands are marketed in approximately 170 countries and territories at January 2, 2021, including through owned operations in the U.S., Canada, the United Kingdom and certain countries in continental Europe and Asia Pacific.

In other regions (Latin America, portions of Europe and Asia Pacific, the Middle East and Africa), the Company relies on a network of third-party distributors, licensees and joint ventures.

At December 28, 2019 , the Company operated 96 retail stores in the U.S.

and Canada and 41 consumer-direct eCommerce sites.

At January 2, 2021, the Company oper ated 97 re tail stores in the U.S.

and Canada an d 37 co nsumer-direct eCommerce sites.

The following discussion includes a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2020 and 2019.

A discussion of a comparison of the Company's results of operations and liquidity and capital resources for fiscal 2019 and 2018 has been omitted from this Form 10-K but may be found in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended December 28, 2019, filed with the SEC on February 26, 2020.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.

COVID-19 has had a negative effect on the global economy and on the Company’s 2020 operating and financial results.

The full financial effects of the COVID-19 pandemic cannot be reasonably estimated at this time due to uncertainty as to its severity and duration.

The Company has taken the following proactive and precautionary measures to mitigate known areas of risk and navigate the future environment:

• To increase liquidity and flexibility of the Company’s capital structure, the Company borrowed $171 million in incremental 364-day term loan under its senior credit facility and by the end of the fourth quarter the amount had been repaid, and sold $300 million of 6.375% senior notes (refer to Note 7, “Debt”), delayed most capital projects, suspended share repurchases, implemented select employee furloughs and organizational changes, compensation changes for the Company's management team and Board of Directors, delayed or canceled certain future product purchases across its portfolio of brands, took additional steps to reduce discretionary spending and other expenditures, and initiated conversations with landlords to seek lease concessions.

Lease concessions have been received for some of the Company’s leased properties and other discussions are still ongoing.

• The Company temporarily closed all U.S.

and Canada retail stores on March 17, 2020.

Stores began reopening in May under a phased approach and during the second quarter all stores had reopened with newly instituted health and safety protocols for customers and employees following regulatory guidance and protocols promulgated by health authorities and government officials.

During the period stores were closed, the Company’s distribution centers remained open and the Company’s direct on-line channels continued to serve customer demand.

The COVID-19 pandemic has had, and is expected to continue to have, a material adverse impact on the Company’s financial results.

Expenses related to the COVID-19 pandemic in fiscal year 2020 include $10.9 million of severance expenses, $8.5 million of credit loss expenses related to accounts receivable, $5.5 million of expenses in connection with the Company's credit facility refinance and an interest rate swap termination, $4.4 million of inventory charges, $3.9 million of air freight charges related to production delays, $3.6 million in connection with facility exit costs and $6.4 million for other costs.

The full nature and extent of the impact of the pandemic on the Company's business will depend on future developments, including, among other things;

the continued spread and duration of the pandemic;

the negative impact on global and regional economies and economic activity;

actions governments, businesses and individuals take in response to the pandemic;

the effects of the pandemic, including all of the foregoing, on the Company’s manufacturers, distributors, suppliers, joint venture partners, wholesale customers and other counterparties, and how quickly the global economy and demand for the Company's products recovers after the pandemic subsides.

The Company continues to monitor the situation closely .

2020 FINANCIAL OVERVIEW

Revenue was $ 2,273.7 million for fiscal 2019 , representing an increase of 1.5 % compared to the prior year's revenue of $ 2,239.2 million .

The increase reflects a 2.2% increase from the Michigan Group and a 1.7% increase from the Boston Group.

Changes in foreign exchange rates decreased revenue by $16.7 million during fiscal 2019 .

Gross margin for fiscal 2019 was 40.6 %, a decrease of 50 basis points from fiscal 2018 .

The effective tax rate in fiscal 2019 was 11.7 %, compared to 11.9 % in fiscal 2018 .

Diluted earnings per share for fiscal 2019 was $ 1.44 , compared to $ 2.05 for fiscal 2018.

The Company declared cash dividends of $ 0.40 per share in fiscal 2019 and $ 0.32 per share in fiscal 2018 .

Net cash provided by operating activities was $ 222.6 million in fiscal 2019 .

The Company executed $ 319.2 million of share repurchases in fiscal 2019 at an average price of $29.24 per share.

• Revenue was $1,791.1 million for 2020, representing a decrease of 21.2% compared to the prior year's revenue of $2,273.7 million.

The decrease reflects a 19.1% decline from the Michigan Group and a 23.6% decline from the Boston Group.

Changes in foreign exchange rates decreased revenue by $0.5 million du ring 2020.

Owned eCommerce revenue increased 49.9% during 2020 compared to 2019.

• Gross margin for 2020 was 41.1%, an increase of 50 basis points from 2019.

• The effective tax rate in 2020 was 24.7%, compared to 11.7% in 2019.

• Diluted loss per share for 2020 was $1.70, compared to a diluted earnings per share $1.44 for 2019.

• The Company declared cash dividends of $0.40 per share in 2020 and 2019.

• Cash flow provided by operating activities was $309.1 million and $222.6 million for 2020 and 2019, respectively.

• Compared to the prior year, inventory decreased $105.1 million, or 30.2%.

RESULTS OF OPERATIONS

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This section should be read in conjunction with the Company’s consolidated financial statements and related notes, which are included in Item 8 of this Annual Report on Form 10-K.

Percent Change vs.

(In millions, except per share data)

(In millions, except per share data) 2020 2019 Percent Change

$ 1,791.1 $ 2,273.7 (21.2) %

Cost of goods sold

Restructuring costs

1,055.5 1,349.9 (21.8) %

735.6 923.8 (20.4) %

Selling, general and administrative expenses

Restructuring and other related costs

639.4 669.3 (4.5) %

Impairment of intangible assets 222.2 — —

Environmental and other related costs

Operating profit

Environmental and other related costs, net of recoveries 11.1 83.5 (86.7) %

Operating profit (loss) (137.1) 171.0 (180.2) %

Interest expense, net

Debt extinguishment and other costs

Other expense (income), net

43.6 30.0 45.3 %

Debt extinguishment, interest rate swap termination, and other costs 5.5 — —

Other income, net (2.1) (4.9) (57.1) %

Earnings (loss) before income taxes (184.1) 145.9 (226.2) %

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net earnings (loss) attributable to noncontrolling interests (1.7) 0.4 (525.0) %

Net earnings attributable to Wolverine World Wide, Inc.

Diluted earnings per share

*Percentage change not meaningful

Revenue was $ 2,273.7 million for fiscal 2019 , representing an increase of 1.5% compared to the prior year's revenue of $ 2,239.2 million .

The increase reflected a 2.2% increase from the Michigan Group and a 1.7% increase from the Boston Group.

The Michigan Group's revenue increase was driven by a high-single digit increase from Merrell ® and a low-teens increase from Cat ® , partially offset by low-teens decreases from Chaco ® and Hush Puppies ® .

The Boston Group's revenue increase was due to a mid-single digit increase for Sperry ® and a low-teens increase from Keds ® , partially offset by a mid-single digit decline for Saucony ® .

International revenue represented 33.7 %, 32.8 % and 31.5 % of total reported revenues in fiscal years 2019 , 2018 and 2017 , respectively.

Changes in foreign exchange rates decreased revenue by $16.7 million during fiscal 2019 .

Revenue was $2,239.2 million for fiscal 2018, representing a decrease of 4.7% compared $2,350.0 million in fiscal 2017.

The decrease reflects the closure of retail stores ($66.0 million), the change in business model for Stride Rite ® ($47.5 million), the divestiture of the Sebago ® brand ($26.0 million) and the sale of the Department of Defense contract business for Bates ® ($26.1 million), partially offset by significant growth in eCommerce across all brands ($43.0 million).

Changes in foreign exchange rates increased revenues by $4.1 million in fiscal 2018.

For fiscal 2019 , the Company’s gross margin was 40.6 %, compared to 41.1 % in fiscal 2018 .

The gross margin decrease was driven by unfavorable product mix (35 basis points), business model changes for certain international wholesale customers (60 basis points) and additional close-out sales (35 basis points), partially offset by the acquisition of the Saucony ® distributor in Italy (35 basis points), a higher mix of higher gross margin consumer-direct revenue (35 basis points) and reduced markdowns (15 basis points).

For fiscal 2018, the Company’s gross margin was 41.1%, compared to 38.9% in fiscal 2017.

The gross margin increase was driven by favorable product mix (70 basis points), divestitures and portfolio changes (75 basis points), store closures (20 basis points), lower restructuring and other related costs (40 basis points) and the favorable impact of foreign exchange (15 basis points).

Net earnings (loss) attributable to Wolverine World Wide, Inc.

$ (136.9) $ 128.5 (206.5) %

Diluted earnings (loss) per share $ (1.70) $ 1.44 (218.1) %

Revenue was $1,791.1 million for 2020, representing a decline of 21.2% compared to the prior year's revenue of $2,273.7 million.

The change in revenue reflected a 19.1% decline from the Michigan Group and a 23.6% decline from the Boston Group.

The Michigan Group's revenue decline was driven by mid-teens decline from Merrell ® , low-thirties decline from Cat ® , low-teens decline from each of Wolverine ® and Chaco ® , low-twenties decline from Bates ® , mid-thirties decline from Hytest ® , and mid-forties decline from Hush Puppies ® .

The Boston Group’s revenue decline was driven by high-thirties decline from Sperry ® and high-twenties decline from each of Keds ® and Kids’.

International revenue represented 31.1%, an d 33.7% of total reported revenues in 2020 and 2019 respectively.

Changes in foreign exchange rates decreased revenue by $ 0.5 million during 2020.

Owned eCommerce revenue increased during 2020 by 49.9% compared to 2019.

For 2020 , the Company’s gross margin was 41.1%, compared to 40.6% in 2019.

The gross margin increase was driven by favorable product mix including higher margin eCommerce revenue (180 basis points) and favorable LIFO adjustment resulting from liquidation of historical LIFO layers from the decline in inventory (15 basis points), partially offset by lower international royalties (75 basis points), incremental tariffs (50 basis points), and higher non-operating costs due to the COVID-19 pandemic (35 basis points).

OPERATING EXPENSES

Operating expenses increase d $ 83.4 million in fiscal 2019 , to $ 752.8 million .

The increase was driven by higher environmental and other related costs ($ 68.2 million ), higher general and administration costs ($15.7 million), higher distribution costs ($7.5 million), higher reorganization costs ($ 7.1 million ) and higher selling expenses ($4.6 million).

These increases were partially offset by lower incentive compensation costs of $ 16.7 million .

Operating expenses decreased $213.4 million in fiscal 2018, to $669.4 million.

The decrease was driven by lower restructuring and other related costs ($72.9 million), lower impairment of intangible assets ($68.6 million), lower environmental and other related costs ($20.0 million), lower transformation costs ($37.7 million) and lower selling expenses ($29.1 million) due to the closure of certain retail stores in fiscal 2017, partially offset by a higher investment in advertising ($13.7 million) as part of the Company's growth agenda.

Operating expenses increased $119.9 million in 2020, to $872.7 million.

The increase was driven by the impairment of intangible assets ($222.2 million), higher non-operating costs incurred due to the COVID-19 pandemic ($21.8 million), higher advertising costs ($16.2 million), and higher incentive compensation costs ($7.4 million).

These increases were partially offset by lower environmental and other related costs, net of recoveries ($72.4 million), lower selling costs ($35.1 million), lower general and administrative costs ($24.4 million), lower product development costs ($10.3 million), and lower distribution costs ($5.5 million).

INTEREST, OTHER AND TAXES

Net interest expense was $ 30.0 million in fiscal 2019 compared to $ 24.5 million in fiscal 2018 .

The increase was driven by higher average debt principal balances due primarily to repurchases of the Company's stock and lower interest income.

Net interest expense decreased from $ 32.1 million in fiscal 2017 to $ 24.5 million in fiscal 2018 due to a lower effective interest rate on the Company's debt, lower average debt principal balances and higher interest income.

The Company incurred $0.6 million of debt extinguishment and other costs in connection with the refinancing of the Company's debt in the fourth quarter of fiscal 2018.

The effective tax rate in fiscal 2019 was 11.7 %, compared to 11.9 % in fiscal 2018 .

The lower effective tax rate in fiscal 2019 reflects the positive net impact from one-time discrete items combined with a shift in income between tax jurisdictions with differing tax rates, primarily associated with a decrease in U.S.

income compared to the prior year due primarily to higher reorganization costs and environmental and other related costs.

The effective tax rate in fiscal 2018 was 11.9%, compared to 93.7% in fiscal 2017.

The lower effective tax rate in fiscal 2018 reflects the positive net impact from one-time discrete items, primarily a voluntary pension contribution of $60.0 million and a lower U.S.

corporate tax rate following enactment of the Tax Cuts and Jobs Act ("TCJA").

These benefits were partially offset by a shift in income between tax jurisdictions with differing tax rates, primarily associated with an increase in U.S.

income compared to the prior year due primarily to lower restructuring and other related costs, impairment of intangible assets and organizational transformation costs.

Other income was $4.9 million in fiscal 2019 compared to $0.6 million in fiscal 2018 .

The increase was driven by the inclusion of sublease income in 2019 due to the implementation of ASU 2016-02 during the first quarter of 2019 ($ 4.0 million ), the reclassification of the ineffective portion of unrealized gains on foreign currency hedges ($1.2 million) in fiscal 2019 and a pension settlement loss recognized in fiscal 2018 ($ 7.2 million ), partially offset by a foreign currency remeasurement gain in fiscal 2018 ($5.9 million).

REPORTABLE OPERATING SEGMENTS

The Company’s portfolio of brands is organized into the following two operating segments, which the Company has determined to be reportable operating segments.

During the first quarter of 2019, the brands that were formerly aligned with the Wolverine Outdoor & Lifestyle Group and Wolverine Heritage Group were realigned into a new operating segment, the Wolverine Michigan Group.

The change was to align our brands under key leadership to best support innovation and efficiency.

All prior period disclosures have been retrospectively adjusted to reflect these new reportable operating segments.

Net interest expense was $43.6 million in 2020 compared to $30.0 million in 2019.

Interest expense increased in the current year due to higher average debt balances in 2020.

The Company incurred a $4.9 million expense in connection with the termination of the interest rate swap and $0.6 million expense in connection with the Company's refinancing activities.

The effective tax rate in 2020 was 24.7%, compared to 11.7% in 2019.

The higher effective tax rate in 2020 reflects the positive net impact from one-time discrete items combined with a shift in income between tax jurisdictions with differing tax rates.

Other income was $2.1 million in 2020 compared to $4.9 million in 2019.

The decrease was driven by higher non-service pension costs ($2.0 million) and higher losses from equity method investments ($1.3 million), partially offset by higher sublease income ($0.8 million).

REPORTABLE SEGMENTS

The Company’s portfolio of brands is organized into the following two operating segments, which the Company has determined to be reportable segments.

• Wolverine Michigan Group , consisting of Merrell ® footwear and apparel, Cat ® footwear, Wolverine ® footwear and apparel, Chaco ® footwear, Hush Puppies ® footwear and apparel, Bates ® uniform footwear, Harley-Davidson ® footwear and Hytest ® safety footwear;

Wolverine Boston Group , consisting of Sperry ® footwear and apparel, Saucony ® footwear and apparel, Keds ® footwear and apparel, and the Kids footwear business, which includes the Stride Rite ® licensed business, as well as kids' footwear offerings from Saucony ® , Sperry ® , Keds ® , Merrell ® , Hush Puppies ® and Cat ® .

• Wolverine Boston Group , consisting of Sperry ® footwear, Saucony ® footwear and apparel, Keds ® footwear and the Kids' footwear business, which includes the Stride Rite ® licensed business, as well as Kids' footwear offerings from Saucony ® , Sperry ® , Keds ® , Merrell ® , Hush Puppies ® and Cat ® .

The Company also reports “Other” and “Corporate” categories.

The Other category consists of the Company’s leather marketing operations, sourcing operations and multi-branded consumer-direct retail stores.

The Corporate category consists of unallocated corporate expenses, organizational transformation costs, reorganization costs, restructuring and other related costs, impairment of intangible assets, environmental and other related costs, a foreign currency remeasurement gain recorded in the second quarter of fiscal 2018 and a pension settlement loss related to the Company's purchase of pension annuity contracts in the fourth quarter of fiscal 2018 .

The reportable operating segment results for fiscal years 2019 , 2018 and 2017 are as follows:

Percent Change

(In millions)

The Corporate category consists of unallocated corporate expenses such as costs related to the COVID-19 pandemic, impairment of intangible assets and environmental and other related costs.

The reportable segment results for years 2020 and 2019 are as follows:

(In millions) 2020 2019 Change Percent Change

Wolverine Michigan Group $ 1,051.0 $ 1,299.7 $ (248.7) (19.1) %

Wolverine Boston Group 696.0 910.9 (214.9) (23.6) %

44.1 63.1 (19.0) (30.1) %

$ 1,791.1 $ 2,273.7 $ (482.6) (21.2) %

OPERATING PROFIT (LOSS)

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Wolverine Boston Group 88.1 153.8 (65.7) (42.7) %

Further information regarding the reportable operating segments can be found in Note 18 to the consolidated financial statements.

1.6 2.9 (1.3) (44.8) %

(406.7) (230.5) (176.2) 76.4 %

$ (137.1) $ 171.0 $ (308.1) (180.2) %

Further information regarding the reportable segments can be found in Note 18 to the consolidated financial statements.

Wolverine Michigan Group

The Michigan Group’s revenue increase d $ 27.5 million , or 2.2 %, in fiscal 2019 compared to fiscal 2018 .

The increase was due to a high-single digit increase from Merrell ® and a low-teens increase from Cat ® , partially offset by low-teens decreases from Chaco ® and Hush Puppies ® .

The Merrell ® increase was due to growth in Asia Pacific, Europe and Latin America and strong eCommerce growth in the mid-twenties.

The Cat ® increase was due to strength in the Work category and business model changes for certain international customers.

The Chaco ® decline was due to high inventory levels at retailers and competitive pricing pressure on certain key sandal offerings.

The Hush Puppies ® decline was due to late deliveries of product and lower demand in the U.S.

due to slow sell through at retail and declines in Canada, Europe and Latin America.

The Michigan Group’s operating profit decrease d $ 12.8 million , or 5.0 %, in fiscal 2019 compared to fiscal 2018 .

The decrease was due to a 140 basis point decline in gross margin and a $6.5 million increase in selling, general and administrative costs.

The gross margin decline was due to the bankruptcy of an international distributor, product mix, higher close-out sales and business model changes for certain international distributors.

The increase in selling, general and administrative expenses was due to investments in eCommerce growth and new Merrell ® stores.

The Michigan Group’s revenue increased $4.4 million, or 0.3%, in fiscal 2018 compared to fiscal 2017.

The increase was due to mid-single digit growth in Merrell ® , high-single digit growth from Wolverine ® and mid-single digit growth in Cat ® , partially offset by the divestiture of the Sebago ® brand ($26.0 million) and the sale of the Department of Defense contract business ($26.1 million).

The Merrell ® revenue increase is the result of new product introductions, a strong at-once business, strength in the Hike, Work and Outdoor Life categories, and strong eCommerce growth that was partially offset by a $9.2 million decline due to store closures in 2017.

The Wolverine ® increase was driven by a mid-forties increase in eCommerce and a mid-single digit increase in U.S.

wholesale channel resulting from strength in the Work category.

The Cat ® increase is due to a business model change in certain international markets, as well as growth in the U.S.

The Michigan Group’s operating profit increased $13.9 million, or 5.7%, in fiscal 2018 compared to fiscal 2017.

The operating profit increase was due to the revenue growth and improved operating margin from Merrell ® , Wolverine ® and Cat ® .

The Merrell ® improvement resulted from better product mix and retail store closures in 2017, partially offset by planned investments in growth.

The Wolverine ® and Cat ® improvements are due to lower product costs.

The Michigan Group’s revenue decreased $248.7 million, or 19.1%, in 2020 compared to 2019.

The decline as driven by mid-teens decline from Merrell ® , low-thirties decline from Cat ® , low-teens decline from each of Wolverine ® and Chaco ® , low-twenties decline from Bates ® , mid-thirties decline from Hytest ® , and mid-forties decline from Hush Puppies ® .

The decline across all brands is due to the COVID-19 pandemic, partially offset by eCommerce growth.

The Michigan Group’s operating profit decreased $64.9 million, or 26.5%, in 2020 compared to 2019.

The operating profit decline was due to the revenue declines, partially offset by a 70 basis point increase in gross margin and a $30.0 million decrease in selling, general and administrative costs.

The increase in gross margin in the current year period was due improved product mix including higher margin eCommerce sales, partially offset by increased tariffs.

The decrease in selling, general and administrative expenses in the current year period was due to reductions in employee costs and other discretionary spending in response to the COVID-19 pandemic.

Wolverine Boston Group

The Boston Group’s revenue increase d $ 15.4 million , or 1.7% , in fiscal 2019 compared to fiscal 2018 .

The increase was driven by a mid-single digit increase for Sperry ® and a low-teens increase from Keds ® , partially offset by a mid-single digit decline for Saucony ® .

The Sperry ® increase was due to strong low-twenties eCommerce growth and new retail store openings, partially offset by a low-single digit decline in the U.S.

wholesale market due to a decline in the Boat shoe category partially offset by increases in the Boot category.

The Keds ® increase was due to growth in the U.S.

wholesale business and strong eCommerce growth in the thirties.

The decrease for Saucony ® was due to lower demand for products in the U.S.

wholesale channel and in certain international third-party markets, partially offset by the acquisition of the Saucony ® distributor in Italy and strong thirties eCommerce growth.

The Boston Group’s operating profit decrease d $ 3.7 million , or 2.3 %, in fiscal 2019 compared to fiscal 2018 .

The decrease was due to higher selling, general and administrative expense of $13.5 million due to the acquisition of the Saucony ® distributor in

Italy, new Sperry ® stores and higher distribution and advertising costs related to eCommerce, partially offset by the group’s higher revenue and gross margin improvement of 40 basis points.

The Boston Group’s revenue decreased $93.3 million, or 9.4%, in fiscal 2018 compared to fiscal 2017.

The decrease was driven by the transition of the Stride Rite ® brand to a licensing model ($47.5 million) and the closure of retail stores ($47.5 million) and a high-single digit decline for Saucony ® .

This was partially offset by a low-single digit increase for Sperry ® wholesale and eCommerce channels and a mid-single digit increase for Keds ® due to eCommerce growth.

The Saucony ® decrease was due to lower demand for products in the U.S.

wholesale channel, partially offset by growth in Europe.

The Boston Group’s operating profit increased $3.9 million, or 2.5%, in fiscal 2018 compared to fiscal 2017.

The increase was due to the closure of retail stores, higher operating profit for Keds ® due to the higher revenue and higher gross margin and higher operating profit for Sperry ® due to higher wholesale revenue.

This was partially offset by lower operating profit from Saucony ® due to lower revenues.

The Other category's revenue decrease d $ 8.4 million , or 11.7 %, in fiscal 2019 compared to fiscal 2018 .

The revenue decrease is due to lower third-party sourcing commission revenue, a high-twenties decline in multi-brand retail stores revenue due to conversions to a mono-brand format and a low-single digit decline in the performance leathers business.

The Other category's revenue decreased $21.9 million, or 23.4%, in fiscal 2018 compared to fiscal 2017.

The revenue decrease is due to a high-teens decline in the performance leathers business due to lower demand and the closure of multi-brand retail stores ($9.3 million).

The Other category's operating profit decreased $2.1 million, or 40.4%, in fiscal 2018 compared to fiscal 2017, due to the performance leathers revenue decline.

Corporate expenses increase d $ 64.2 million in fiscal 2019 compared to fiscal 2018 due to higher environmental and other related costs ($ 68.2 million ) and reorganization costs ($ 7.1 million ), partially offset by lower incentive compensation costs ($ 16.7 million ).

Corporate expenses decreased $204.6 million in fiscal 2018 compared to fiscal 2017.

Corporate expenses were impacted by the decrease in restructuring and other related costs ($72.9 million), lower impairment of intangible assets ($68.6 million), lower organizational transformation costs ($37.7 million) and lower environmental and other related costs ($20.0 million).

The Boston Group’s revenue decreased $214.9 million, or 23.6% , in 2020 compared to 2019.

The decline was driven by high-thirties decline from Sperry ® and high-twenties decline from each of Keds ® and Kids’.

The decline across all brands is due to the COVID-19 pandemic, partially offset by eCommerce growth.

The Boston Group’s operating profit decreased $65.7 million, or 42.7%, in 2020 compared to 2019.

The operating profit decline was due to the revenue declines, partially offset by a 150 basis point increase in gross margin and a $13.2 million decrease in selling, general and administrative costs.

The increase in gross margin in the current year period was due improved product mix including higher margin eCommerce sales, partially offset by increased tariffs.

The decrease in selling, general and administrative expenses in the current year period was due to reductions in employee costs and other discretionary spending in response to the COVID-19 pandemic.

The Other category's revenue decreased $19.0 million, or 30.1%, in 2020 compared to 2019.

The decline is due to high-twenties decline in the performance leathers business due to the COVID-19 pandemic.

Corporate expens es increased $176.2 million in 2020 compared to 2019 due to the impairment of the Sperry trade name ($222.2 million) and higher non-operating costs due to the COVID-19 pandemic ($29.3 million), partially offset by lower environmental and other related costs ($72.4 million).

Refer to Note 4, “Goodwill and Other Intangibles” for additional discussion on the Sperry trade name impairment.

LIQUIDITY AND CAPITAL RESOURCES

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Cash and cash equivalents $ 347.4 $ 180.6

Debt 722.5 798.4

Available Revolving Credit Facility (1)

Net cash provided by operating activities 309.1 222.6

Net cash used in investing activities

Net cash provided by (used in) investing activities 6.1 (61.5)

Net cash used in financing activities (154.0) (124.6)

1 unchanged sentence

Depreciation and amortization 32.8 32.7

Prior to 2019, Debt included capital lease obligations.

(1) Amounts are net of both borrowings, if any, and outstanding standby letters of credit issued in accordance with the terms of the Revolving Credit Facility.

Cash and cash equivalents of $ 180.6 million as of December 28, 2019 were $ 37.5 million higher compared to December 29, 2018 .

The increase is due primarily to increased net borrowings under the Credit Agreement of $ 227.5 million and cash provided by operating activities of $ 222.6 million , partially offset by share repurchases of $ 319.2 million , capital expenditures of $ 34.4 million , cash dividends paid of $ 33.6 million , a business acquisition of $ 15.1 million , and investments in joint ventures of $ 8.5 million .

The Company had $ 434.3 million of borrowing capacity available under the Revolving Credit Facility as of December 28, 2019 .

Cash and cash equivalents located in foreign jurisdictions totaled $ 113.0 million as of December 28, 2019 .

Cash flow from operating activities, along with additional borrowings on the Revolving Credit Facility, if any, are expected to be sufficient to meet the Company’s working capital needs for the foreseeable future.

Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, pay dividends, repurchase the Company’s common stock and pursue acquisitions.

A detailed discussion of environmental remediation costs is found in Note 17 to our Consolidated Financial Statements.

The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts, including the Consent Decree approved on February 19, 2020 discussed in Note 17, with respect to each individual site.

As of December 28, 2019 , the Company has a reserve of $ 124.4 million , of which $ 41.5 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $ 82.9 million recorded in other liabilities and expected to be paid over the course of up to 25 years.

Separately, as result of a settlement with 3M Company, the Company will receive a $55.0 million payment from 3M Company in fiscal 2020 as a partial recovery of these costs.

Cash and cash equivalents of $347.4 million as of January 2, 2021 were $166.8 million higher compared to December 28, 2019.

The increase is due primarily to cash provided by operating activities of $309.1 million, cash provided by investing activities of $6.1 million, partially offset by net repayments of debt of $72.5 million, cash dividends paid of $33.6 million, share repurchases of $21.0 million, and shares acquired related to employee stock plans of $24.8 million.

The Company had $793.9 million of borrowing capacity available under the Revolving Credit Facility as of January 2, 2021.

Cash and cash equivalents located in foreign jurisdictions totaled $125.7 million as of January 2, 2021.

Cash flow from operating activities, along with the Revolving Credit Facility capacity, are expected to be sufficient to meet the Company’s working capital needs for the foreseeable future.

Any excess cash flow from operating activities is expected to be used to fund organic growth initiatives, reduce debt, and pay dividends.

A detailed discussion of environmental remediation costs is found in Note 17 to the Company's Consolidated Financial Statements.

The Company has established a reserve for estimated environmental remediation costs based upon an evaluation of currently available facts with respect to each individual affected site.

As of January 2, 2021, the Company has a reserve of $101.8 million, of which $23.6 million is expected to be paid in the next 12 months and is recorded as a current obligation in other accrued liabilities, with the remaining $78.2 million recorded in other liabilities and expected to be paid over the course of up to 25 years.

The Company's remediation activity at its former Tannery site and sites where the Company disposed of Tannery byproducts is ongoing.

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The principal source of the Company’s operating cash flow is net earnings, including cash receipts from the sale of the Company’s products, net of costs of goods sold.

Cash from operations during fiscal 2019 was higher compared to fiscal 2018, due primarily to lower contributions to the Company's pension plans and increased collections of receivable accounts, offset partially by increased inventory investments during 2019 to support organic sales growth.

During 2019, working capital drove a source of cash of $ 2.7 million , which was driven by a decrease in accounts receivable of $30.7 million and an increase in income taxes payable of $3.6 million , partially offset by increases in inventories of $23.8 million and other operating assets of $5.4 million and a decrease in other operating liabilities of $2.4 million .

Cash from operations during fiscal 2018 was lower compared to fiscal 2017, due primarily to the wind-down of an accounts receivable financing program, inventory investments at the end of 2018 to support organic sales growth and an increase in contributions to its pension plans.

The Company made contributions to its pension plans of $60.7 million and $11.3 million in fiscal years 2018 and 2017 respectively.

During 2018, working capital drove a use of cash of $137.9 million, which was driven by increases in accounts receivable of $95.0 million, inventories of $44.5 million and other operating assets of $17.8 million and a decrease in other operating liabilities of $19.3 million.

These changes were partially offset by an increase in accounts payable of $40.6 million.

Cash from operations during 2020 was higher compared to 2019, due primarily to a decrease in net working capital representing a source of cash of $187.9 million.

Working capital balances were favorably impacted by a decrease in inventories of $107.2 million, a decrease in accounts receivable of $64.8 million, an increase in other operating liabilities of $27.9 million, and a decrease in other operating assets of $7.4 million, partially offset by a decrease in accounts payable of $18.9 million.

Operating cash flows were favorably impacted by Environmental and other related costs, net of cash payments and recoveries received, of $31.5 million, which included $55.0 million paid by 3M Company during the first quarter of 2020.

See Note 17 for additional information regarding this settlement payment.

Investing Activities

The Company made capital expenditures of $ 34.4 million , $ 21.7 million and $ 32.4 million in fiscal years 2019 , 2018 and 2017 , respectively.

The increase in capital expenditures during fiscal 2019 compared to fiscal 2018 were due to office enhancements and new retail stores.

During fiscal 2019, the Company paid $15.1 million related to a business acquisition and $8.5 million related to investments in joint ventures.

See Note 19 to our Consolidated Financial Statements for additional information regarding the acquisition.

During fiscal 2017, the Company received proceeds of $38.6 million related to the sale of a business and other assets.

The Company made capital expenditures of $10.3 million and $34.4 million in years 2020 and 2019 respectively, for building improvements, new retail stores and information system enhancements.

Capital expenditures were lower in 2020 compared to 2019 due to reductions in non-essential capital spending in response to the COVID-19 pandemic.

The Company made a cash investment of $3.5 million and $8.5 million in joint ventures in years 2020 and 2019 respectively.

The Company made a contingent consideration payment of $5.5 million during 2020 related to the Saucony ® Italy distributor acquisition.

The Company's initial cash payment for the business acquisition was $15.1 million paid in 2019.

See Note 19 for additional information regarding the acquisition.

The Company received proceeds of $26.8 million from company-owned life insurance policy liquidations.

Financing Activities

On December 6, 2018, the Company amended its credit agreement (as amended, the "Credit Agreement").

The Credit Agreement includes a $ 200.0 million term loan facility (“Term Loan A”) and a $ 800.0 million Revolving Credit Facility, both with maturity dates of December 6, 2023.

The Credit Agreement’s debt capacity is limited to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $ 1,750.0 million , unless certain specified conditions set forth in the Credit Agreement are met.

On May 5, 2020, the Company entered into a Second Amendment to its senior credit facility.

In connection with the Second Amendment, the Company borrowed an incremental $171.0 million in aggregate principal in Incremental Term Loan.

The Incremental Term Loan was repaid in full by the end of fiscal 2020.

The Amended Senior Credit Facility also includes a $200.0 million term loan facility and a $800.0 million Revolving Credit Facility, both with maturity dates of December 6, 2023, that remain unchanged as a result of the Second Amendment.

The Amended Senior Credit Facility’s debt capacity is limited to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $1,750.0 million, unless certain specified conditions set forth in the Amended Senior Credit Facility are met.

Term Loan A requires quarterly principal payments with a balloon payment due on December 6, 2023

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The Revolving Credit Facility also includes a $50.0 million swingline subfacility and a $50.0 million letter of credit subfacility.

The Company had outstanding borrowings under the Revolving Credit Facility of $ 360.0

million and outstanding letters of credit under the Revolving Credit Facility of $ 5.7 million as of December 28, 2019 .

The Company had no outstanding borrowings under the Revolving Credit Facility and outstanding letters of credit under the Revolving Credit Facility of $6.1 million as of January 2, 2021.

The outstanding letters of credit reduce the borrowing capacity under the Revolving Credit Facility.

As of December 28, 2019 , the Company was in compliance with all covenants and performance ratios under the Credit Agreement.

The Company has $ 250.0 million of senior notes outstanding that are due on September 1, 2026 (the “Senior Notes”).

The Senior Notes bear interest at 5.00% with the related interest payments due semi-annually.

The Senior Notes are guaranteed by substantially all of the Company’s domestic subsidiaries.

The Company’s debt at December 28, 2019 totaled $ 798.4 million , compared to $ 570.5 million at December 29, 2018 .

The increase was due to borrowings on the Revolving Credit Facility of $ 235.0 million less scheduled principal payments on Term Loan A of $ 7.5 million .

The Company has a foreign revolving credit facility with aggregate available borrowings of $ 4.0 million that are uncommitted and, therefore, each borrowing against the applicable facility is subject to approval by the lender.

There were no borrowings against this facility at December 28, 2019 .

The Company repurchased $ 319.2 million , $ 174.7 million and $ 42.3 million of Company common stock in fiscal years 2019 , 2018 and 2017 , respectively, under stock repurchase plans.

On September 11, 2019, the Company's Board of Directors approved a common stock repurchase program that authorized the repurchase of an additional $ 400.0 million of common stock over a four year period.

The Company has $ 513.4 million available under its common stock repurchase program at December 28, 2019 .

In addition to the stock repurchase program activity, the Company acquired $ 16.9 million , $ 8.8 million and $ 5.5 million of shares in fiscal years 2019 , 2018 and 2017 , respectively, in connection with shares or units withheld to pay employee taxes related to stock-based compensation plans.

The Company declared cash dividends of $ 0.40 per share, $ 0.32 per share, and $ 0.24 per share in fiscal years 2019 , 2018 and 2017 respectively.

Dividends paid totaled $ 33.6 million , $ 28.6 million and $ 23.0 million , for fiscal years 2019 , 2018 and 2017 , respectively.

On May 11, 2020, the Company issued $300.0 million aggregate principal amount of 6.375% senior notes due on May 15, 2025 related interest payments are due semi-annually beginning on November 15, 2020.

These senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries.

As of January 2, 2021, the Company was in compliance with all covenants and performance ratios under the Credit Agreement.

The Company’s debt at January 2, 2021 totaled $722.5 million, compared to $798.4 million at December 28, 2019.

The decrease was due to repayments on the Revolving Credit Facility of $360.0 million and scheduled principal payments on Term Loan A of $12.5 million, partially offset by the $300.0 million 6.375% senior notes issued.

The Company has a foreign revolving credit facility with aggregate available borrowin gs of $4.0 million that are uncommitted and, therefore, each borrowing against the applicable facility is subject to approval by the lender.

There were no borrowings against this facility at January 2, 2021.

The Company repurchased $21.0 million and $319.2 million of Company common stock in years 2020 and 2019 respectively, under stock repurchase plans.

The Company may purchase up to an additional $487.4 million of shares under its existing stock repurchase program which expires in 2023.

As part of its strategy to increase liquidity and the flexibility of the Company’s capital structure as a result of the COVID-19 pandemic, the Company temporarily suspended share repurchases in March 2020.

In addition to the stock repurchase program activity, the Company acquired $24.8 million and $16.9 million of shares in years

2020 and 2019 respectively, in connection with shares or units withheld to pay employee taxes related to stock-based compensation plans.

The Company declared cash dividends of $0.40 per share for each of fiscal 2020 and 2019.

Dividends paid totaled $33.6 million and $33.6 million for 2020 and 2019, respectively.

A quarterly dividend of $0.10 per share was declared on February 9, 2021 to shareholders of record on April 1, 2021.

NEW ACCOUNTING STANDARDS

See Note 2 to our Consolidated Financial Statements for information related to new accounting standards.

See Note 2 to the Company's Consolidated Financial Statements for information related to new accounting standards.

CRITICAL ACCOUNTING POLICIES

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Revenue is recognized net of variable consideration and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Control of the Company's goods and services, and associated fixed revenue, are transferred to customers at a point in time.

Control of the Company's goods and services, and associated revenue, are transferred to customers at a point in time.

The Company’s contract revenue consist of wholesale revenue and consumer-direct revenue.

Wholesale revenue is recognized for products sourced by the Company when control transfers to the customer generally occurring upon the purchase, shipment or delivery of branded products by or to the customer.

Consumer-direct includes eCommerce revenue that is recognized for products sourced by the Company when control transfers to the customer once the related goods have been shipped and retail store revenue recognized at time of sale.

The point of purchase or shipment was evaluated to best represent when control transfers based on the Company’s right of payment for the goods, the customer’s legal title to the asset, the transfer of physical possession and the

customer having the risks and rewards of the goods.

Payment terms for the Company's revenue vary by sales channel.

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Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

Revenue recognized during the fiscal year ended December 28, 2019 , related to the Company’s contract liabilities, was nominal.

Allowance for Uncollectible Accounts

The Company maintains an allowance for uncollectible accounts receivable for estimated losses resulting from its customers’ failure to make required payments.

Company management evaluates the allowance for uncollectible accounts receivable based on a review of current customer status and historical collection experience.

Revenue recognized during the year ended January 2, 2021, related to the Company’s contract liabilities, was nominal.

Allowance for Credit Losses

The Company maintains an allowance for credit losses on accounts receivable that represents estimated losses resulting from its customers’ failure to make required payments.

Company management evaluates the allowance for credit losses based on a review of current customer status and historical collection experience along with current and reasonable supportable forecasts of future economic conditions.

The Company values its inventory at the lower of cost or net realizable value.

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For goodwill, if the estimated fair value of the reporting unit exceeds its carrying value, no further review is required.

However, if the estimated fair value of the reporting unit is less than its carrying value, the Company performs the second step of the goodwill impairment test to determine the impairment charge, if any.

The second step involves a hypothetical allocation of the estimated fair value of the reporting unit to its net tangible and intangible assets (excluding goodwill) as if the reporting unit were newly acquired, which results in an implied fair value of the goodwill.

The amount of the impairment charge is the excess of the recorded goodwill over the implied fair value of the goodwill.

However, if the estimated fair value of the reporting unit is less than its carrying value, the Company records an impairment charge equal to the excess of the recorded goodwill over the fair value of the goodwill.

The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value.

The Company would not be required to quantitatively determine the fair value of the indefinite-lived intangible unless the Company determines, based on the qualitative assessment, that it is more likely than not that its fair value is less than the carrying value.

The Company may skip the qualitative assessment and quantitatively test indefinite-lived intangibles by comparison of the individual carrying values to the fair value.

Future cash flows of the individual indefinite-lived intangible assets are used to measure their fair value after consideration by management of certain assumptions, such as forecasted growth rates and cost of capital, which are derived from internal projections and operating plans.

The Company performs its annual testing for goodwill and indefinite-lived intangible asset impairment at the beginning of the fourth quarter of the fiscal year for all reporting units.

The Company did not recognize any impairment charges for goodwill during fiscal years 2019 , 2018 and 2017 .

No impairment charges were recognized for the Company's intangible assets during fiscal years 2019 and 2018.

In the fourth quarter of fiscal 2017, as a result of its annual impairment testing, the Company recorded a $68.8 million impairment charge for the Sperry ® trade name.

The Company performs its annual testing for goodwill and indefinite-lived intangible asset impairment at the beginning of the fourth quarter of the year for all reporting units.

The Company did not recognize any impairment charges for goodwill during years 2020, 2019 and 2018.

No impairment charges were recognized for the Company's intangible assets during years 2019 and 2018.

In the fourth quarter of 2020, after the completion of the annual impairment testing, the Company recorded a $222.2 million impairment charge for the Sperry trade name.

Refer to Note 4, “Goodwill and Other Intangibles” for additional discussion on the Sperry trade name impairment.

Impairment of Long-Lived Assets

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If such assets are considered to be impaired, the impairment amount to be recognized is the amount by which the carrying value of the assets exceeds their fair value.

No impairment charges were recognized for the Company's long-lived assets during fiscal years 2019 and 2018.

The Company recorded impairment charges of $12.2 million during fiscal 2017, related to certain retail store assets where the estimated future cash flows did not support the net book value of the assets.

No impairment charges were recognized for the Company's long-lived assets during years 2020, 2019 and 2018.

Environmental

The Company establishes a reserve for estimated environmental remediation costs based upon the evaluation of currently-available facts with respect to each individual site.

The Company establishes a reserve for estimated environmental remediation costs based upon the evaluation of currently-available facts with respect to each individual affected site.

The costs are recorded on an undiscounted basis when they are probable and reasonably estimable, generally no later than the completion of feasibility studies, the Company’s commitment to a plan of action, or approval by regulatory agencies.

Liabilities for estimated costs of environmental remediation are based primarily upon third-party environmental studies, other internal analysis and the extent of the contamination and the nature of required remedial actions at each site.

The Company records adjustments to the estimated costs if there are changes in the scope of the required remediation activity, extent of contamination, governmental regulations or remediation technologies.

The Company records adjustments to the estimated costs if there are changes in the scope

of the required remediation activity, extent of contamination, governmental regulations or remediation technologies.

Environmental costs relating to existing conditions caused by past operations that do not contribute to current or future revenues are expensed as incurred.

Assets related to potential recoveries from other responsible parties are recognized when a definitive agreement is reached and collection of cash is reasonably certain.

Recoveries of covered losses under insurance policies are recognized only when realization of the claim is deemed probable.

Refer to Note 17, “Litigation and Contingencies” for additional discussion on estimated environmental remediation costs.

Assets related to potential recoveries from other responsible parties are recognized when a definitive agreement is reached and collection of cash is realizable.

Recoveries of covered losses under insurance policies are recognized only when realization of the claim is deemed realized or realizable.

Retirement Benefits

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These assumptions are reviewed with the Company’s actuaries and updated annually based on relevant external and internal factors and information, including, but not limited to, long-term expected asset returns, rates of termination, regulatory requirements and plan changes.

The Company utilizes a bond matching calculation to determine the discount rate used to calculate its year-end pension liability and subsequent fiscal year pension expense.

The Company utilizes a bond matching calculation to determine the discount rate used to calculate its year-end pension liability and subsequent year pension expense.

A hypothetical bond portfolio is created based on a presumed purchase of individual bonds to settle the plans' expected future benefit payments.

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The bonds selected are listed as high grade by at least two recognized ratings agency and are non-callable, currently purchasable and non-prepayable.

The calculated discount rate was 3.60 % at December 28, 2019 , compared to 4.46 % at December 29, 2018 .

Pension expense is also impacted by the expected long-term rate of return on plan assets, which the Company has determined to be 6.75% for fiscal 2020.

The calculated discount rate was 2.85% at January 2, 2021, compared to 3.60% at December 28, 2019.

Pension expense is also impacted by the expected long-term rate of return on plan assets, which the Company has determined to be 6.75% for both fiscal 2020 and 2019.

This rate is based on both actual historical rates of return experienced by the pension assets and the long-term rate of return of a composite portfolio of equity and fixed income securities that reflects the approximate diversification of the pension assets.

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The carrying value of the Company’s deferred tax assets assumes that the Company will be able to generate sufficient taxable income in future years to utilize these deferred tax assets.

If these assumptions change, the Company may be required to record valuation allowances against its gross deferred tax assets in future years, which would cause the Company to record additional income tax expense in its

consolidated statements of operations.

Management evaluates the potential that the Company will be able to realize its gross deferred tax assets and assesses the need for valuation allowances on a quarterly basis.

On a periodic basis, the Company estimates the full year effective tax rate and records a quarterly income tax provision in accordance with the projected full year rate.

As the fiscal year progresses, that estimate is refined based upon actual events and the distribution of earnings in each tax jurisdiction during the year.

This continual estimation process periodically results in a change to the expected effective tax rate for the fiscal year.

As the year progresses, that estimate is refined based upon actual events and the distribution of earnings in each tax jurisdiction during the year.

This continual estimation process periodically results in a change to the expected effective tax rate for the year.

When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the revised anticipated annual rate.

As a result of the TCJA, the Company now intends to repatriate cash held in foreign jurisdictions and has recorded a deferred tax liability related to estimated state taxes and foreign withholding taxes on the future dividends received in the U.S.

The Company intends to repatriate cash held in foreign jurisdictions and has recorded a deferred tax liability related to estimated state taxes and foreign withholding taxes on the future dividends received in the U.S.

from the foreign subsidiaries.

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OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements as of December 28, 2019 .

The Company has no off-balance sheet arrangements as of January 2, 2021.

CONTRACTUAL OBLIGATIONS

As of December 28, 2019 , the Company had the following payments under contractual obligations due by period:

(In millions)

As of January 2, 2021, the Company had the following payments under contractual obligations due by period:

(In millions) Total Less than

1 year 1-3 years 3-5 years More than

Long-term debt obligations (1)

$ 899.6 $ 46.9 $ 242.9 $ 351.5 $ 258.3

Operating lease obligations

211.1 33.9 51.2 35.8 90.2

Purchase obligations (2)

550.6 550.6 — — —

Supplemental Executive Retirement Plan

42.2 3.8 8.0 8.3 22.1

Deferred compensation

1.6 0.4 0.8 0.3 0.1

Dividends declared

8.3 8.3 — — —

Municipal water improvements (3)

59.8 13.2 46.6 — —

TCJA transition obligation

27.9 0.2 16.1 11.6 —

Minimum royalties

3.5 1.7 1.8 — —

Minimum advertising

Includes principal and interest payments on the Company’s long-term debt, net of the impact of interest rate swaps.

Estimated future interest payments on outstanding debt obligations are based on interest rates as of December 28, 2019 .

13.8 3.3 6.9 3.6 —

$ 1,818.4 $ 662.3 $ 374.3 $ 411.1 $ 370.7

(1) Includes principal and interest payments on the Company’s long-term debt.

Estimated future interest payments on outstanding debt obligations are based on interest rates as of January 2, 2021.

Actual cash outflows may differ significantly due to changes in underlying interest rates.

See Note 11 to our Consolidated Financial Statements for additional information on the Company's interest rate swaps.

(2) Purchase obligations related primarily to inventory and capital expenditure commitments.

(3) Under the terms of the approved Consent Decree, the Company is obligated to contribute towards the costs of extending municipal water lines, developing a replacement wellfield and making certain improvements to Plainfield Township’s existing water treatment plant, all subject to an aggregate cap of $69.5 million.

During 2020, the Company made payments of $9.7 million towards the total cap.

Due to the uncertainty of the timing and amounts related to the Company's other environmental remediation costs, they have been excluded from this table.

See Note 17 to our Consolidated Financial Statements for additional information.

The total amount of unrecognized tax benefits on the consolidated balance sheet at December 28, 2019 is $ 6.9 million .

See Note 17 to the Company's Consolidated Financial Statements for additional information.

(4) The total amount of unrecognized tax benefits on the consolidated balance sheet at January 2, 2021 is $5.5 million.

At this time, the Company is unable to make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the timing of tax audit outcomes.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis