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Item 8. Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 
 
 
 Table of Contents 
 Consolidated Financial Statements 
 
 Consolidated Statements of Operations 36 
 
 Consolidated Statements of Comprehensive Income (Loss) 37 
 
 Consolidated Balance Sheets 38 
 
 Consolidated Statements of Cash Flows 39 
 
 Consolidated Statements of Stockholders' Equity 41 
 
 Note 1. Summary of Significant Accounting Policies 43 
 
 Note 2. New Accounting Standards 48 
 
 Note 3. Earnings Per Share 48 
 
 Note 4. Goodwill and Other Intangibles 49 
 
 Note 5. Accounts Receivable 50 
 
 Note 6. Revenue From Contracts With Customers 50 
 
 Note 7. Inventories 52 
 
 Note 8. Debt 52 
 
 Note 9. Property, Plant and Equipment 53 
 
 Note 10. Leases 53 
 
 Note 11. Derivative Financial Instruments 54 
 
 Note 12. Stock-Based Compensation 55 
 
 Note 13. Retirement Plans 57 
 
 Note 14. Income Taxes 60 
 
 Note 15. Accumulated Other Comprehensive Income (Loss) 63 
 
 Note 16. Fair Value Measurements 63 
 
 Note 17. Litigation and Contingencies 64 
 
 Note 18. Business Segments 66 
 
 Note 19. Business Acquisition 68 
 
 
 
 
 
 Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 
 71 
 

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 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Operations 
 
 Fiscal Year 
 (In millions, except per share data) 2021 2020 2019 
 Revenue $ 2,414.9 $ 1,791.1 $ 2,273.7 
 Cost of goods sold 1,385.0 1,055.5 1,349.9 
 
 
 Gross profit 1,029.9 735.6 923.8 
 Selling, general and administrative expenses 817.8 639.4 669.3 
 
 
 Impairment of intangible assets — 222.2 — 
 Environmental and other related costs, net of recoveries 56.4 11.1 83.5 
 Operating profit (loss) 155.7 ( 137.1 ) 171.0 
 Other expenses: 
 Interest expense, net 37.4 43.6 30.0 
 Debt extinguishment and other costs 34.3 5.5 — 
 Other expense (income), net 3.7 ( 2.1 ) ( 4.9 ) 
 Total other expenses 75.4 47.0 25.1 
 Earnings (loss) before income taxes 80.3 ( 184.1 ) 145.9 
 Income tax expense (benefit) 13.3 ( 45.5 ) 17.0 
 Net earnings (loss) 67.0 ( 138.6 ) 128.9 
 Less: net earnings (loss) attributable to noncontrolling interests ( 1.6 ) ( 1.7 ) 0.4 
 Net earnings (loss) attributable to Wolverine World Wide, Inc. $ 68.6 $ ( 136.9 ) $ 128.5 
 Net earnings (loss) per share (see Note 3): 
 Basic $ 0.82 $ ( 1.70 ) $ 1.48 
 Diluted $ 0.81 $ ( 1.70 ) $ 1.44 

 See accompanying notes to consolidated financial statements. 
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 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Comprehensive Income (Loss) 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Net earnings (loss) $ 67.0 $ ( 138.6 ) $ 128.9 
 Other comprehensive income (loss) net of tax: 
 Foreign currency translation adjustments ( 20.0 ) 10.6 5.4 
 Unrealized gain (loss) on derivative instruments: 
 Unrealized gain (loss) arising during the period, net of taxes of $ 3.0 , $( 5.2 ) and $ 0.2 
 7.7 ( 17.6 ) 0.9 
 Reclassification adjustments included in net earnings (loss), net of taxes of $ 1.4 , $ 0.4 and $( 2.2 ) 
 3.7 3.1 ( 7.6 ) 
 Pension adjustments: 
 
 Net actuarial gain (loss) arising during the period, net of taxes of $ 7.8 , $( 8.0 ) and $( 3.9 ) 
 29.5 ( 30.0 ) ( 14.6 ) 
 Amortization of prior actuarial losses, net of taxes of $ 3.0 , $ 1.4 and $ 0.5 
 10.8 5.2 2.1 
 
 
 
 Other comprehensive income (loss) 31.7 ( 28.7 ) ( 13.8 ) 
 Less: other comprehensive income (loss) attributable to noncontrolling interests — ( 0.2 ) — 
 Other comprehensive income (loss) attributable to Wolverine World Wide, Inc. 31.7 ( 28.5 ) ( 13.8 ) 
 
 Comprehensive income (loss) 98.7 ( 167.3 ) 115.1 
 Less: comprehensive income (loss) attributable to noncontrolling interests ( 1.6 ) ( 1.9 ) 0.4 
 Comprehensive income (loss) attributable to Wolverine World Wide, Inc. $ 100.3 $ ( 165.4 ) $ 114.7 

 See accompanying notes to consolidated financial statements. 
 
 
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 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Balance Sheets 
 
 (In millions, except share data) January 1,
2022 January 2,
2021 
 ASSETS 
 
 Current assets: 
 
 Cash and cash equivalents $ 161.7 $ 347.4 
 Accounts receivable, less allowances of $ 28.3 and $ 33.5 
 319.6 268.3 
 Finished products, net 354.1 237.9 
 Raw materials and work-in-process, net 11.4 5.2 
 Total inventories 365.5 243.1 
 Prepaid expenses and other current assets 56.9 45.4 
 Total current assets 903.7 904.2 
 Property, plant and equipment, net of accumulated depreciation of $ 219.1 and $ 197.2 
 129.0 124.6 
 Lease right-of-use assets 
 138.2 142.5 
 Goodwill 556.6 442.4 
 Indefinite-lived intangibles 718.1 382.3 
 Amortizable intangibles, net 74.6 73.0 
 Deferred income taxes 1.8 3.2 
 Other assets 64.4 65.2 
 Total assets $ 2,586.4 $ 2,137.4 
 
 LIABILITIES AND STOCKHOLDERS’ EQUITY 
 
 Current liabilities: 
 
 Accounts payable $ 222.1 $ 185.0 
 Accrued salaries and wages 41.7 27.0 
 Other accrued liabilities 222.5 150.0 
 Lease liabilities 38.3 34.0 
 Current maturities of long-term debt 10.0 10.0 
 Borrowings under revolving credit agreements 225.0 — 
 Total current liabilities 759.6 406.0 
 Long-term debt, less current maturities 
 731.8 712.5 
 Accrued pension liabilities 
 107.4 147.0 
 Deferred income taxes 
 118.9 35.5 
 Lease liabilities, noncurrent 
 118.2 130.3 
 Other liabilities 
 106.1 133.1 
 Stockholders’ equity 
 
 Common stock – par value $ 1 , authorized 320,000,000 shares; 111,632,094 , and 110,426,769 shares issued 
 111.6 110.4 
 Additional paid-in capital 298.9 252.6 
 Retained earnings 1,128.2 1,093.3 
 Accumulated other comprehensive loss ( 98.9 ) ( 130.6 ) 
 Cost of shares in treasury; 29,604,013 , and 28,285,274 shares 
 ( 810.2 ) ( 764.3 ) 
 Total Wolverine World Wide, Inc. stockholders’ equity 629.6 561.4 
 Noncontrolling interest 
 14.8 11.6 
 Total stockholders’ equity 644.4 573.0 
 Total liabilities and stockholders’ equity $ 2,586.4 $ 2,137.4 

 See accompanying notes to consolidated financial statements. 
 38 

 
 
 

 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Cash Flows 
 
 Fiscal Year 
 (In millions) 
 2021 2020 2019 
 OPERATING ACTIVITIES 
 
 Net earnings (loss) $ 67.0 $ ( 138.6 ) $ 128.9 
 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: 
 Depreciation and amortization 
 33.2 32.8 32.7 
 Deferred income taxes 
 ( 14.7 ) ( 56.9 ) ( 9.0 ) 
 Stock-based compensation expense 
 38.1 28.9 24.5 
 
 Pension and SERP expense 
 14.0 8.5 5.6 
 Debt extinguishment, interest rate swap termination, and other costs 5.8 5.5 — 
 
 
 Impairment of intangible assets — 222.2 — 
 Environmental and other related costs, net of cash payments and recoveries received 33.7 31.5 48.8 
 
 Other 
 ( 1.9 ) ( 12.7 ) ( 11.6 ) 
 Changes in operating assets and liabilities: 
 
 Accounts receivable 
 ( 49.2 ) 64.8 30.7 
 Inventories 
 ( 77.2 ) 107.2 ( 23.8 ) 
 Other operating assets 
 ( 2.3 ) 7.4 ( 5.4 ) 
 Accounts payable 
 23.0 ( 18.9 ) — 
 Income taxes 
 1.6 ( 0.5 ) 3.6 
 Other operating liabilities 
 15.7 27.9 ( 2.4 ) 
 Net cash provided by operating activities 86.8 309.1 222.6 
 INVESTING ACTIVITIES 
 
 Business acquisition, net of cash acquired 
 ( 417.4 ) ( 5.5 ) ( 15.1 ) 
 Additions to property, plant and equipment ( 17.6 ) ( 10.3 ) ( 34.4 ) 
 
 Investment in joint ventures 
 — ( 3.5 ) ( 8.5 ) 
 Proceeds from company-owned life insurance policies — 26.8 — 
 Other 
 ( 2.3 ) ( 1.4 ) ( 3.5 ) 
 Net cash provided by (used in) investing activities ( 437.3 ) 6.1 ( 61.5 ) 
 FINANCING ACTIVITIES 
 
 Payments under revolving credit agreements ( 435.0 ) ( 898.0 ) ( 469.3 ) 
 Borrowings under revolving credit agreements 660.0 538.0 704.3 
 Borrowings of long-term debt 
 750.0 471.0 — 
 Payments on long-term debt 
 ( 730.0 ) ( 183.5 ) ( 7.5 ) 
 Payments of debt issuance and debt extinguishment costs 
 ( 10.4 ) ( 6.4 ) ( 0.3 ) 
 Termination of interest rate swap — ( 7.3 ) — 
 Cash dividends paid 
 ( 33.5 ) ( 33.6 ) ( 33.6 ) 
 Purchase of common stock for treasury 
 ( 39.6 ) ( 21.0 ) ( 319.2 ) 
 Employee taxes paid under stock-based compensation plans 
 ( 14.1 ) ( 24.8 ) ( 16.9 ) 
 Proceeds from the exercise of stock options 
 17.1 9.8 12.2 
 Contributions from noncontrolling interests 
 4.8 1.8 5.7 
 
 
 Net cash provided by (used in) financing activities 169.3 ( 154.0 ) ( 124.6 ) 
 Effect of foreign exchange rate changes 
 ( 4.5 ) 5.6 1.0 
 Increase (decrease) in cash and cash equivalents ( 185.7 ) 166.8 37.5 
 Cash and cash equivalents at beginning of the year 
 347.4 180.6 143.1 
 Cash and cash equivalents at end of the year 
 $ 161.7 $ 347.4 $ 180.6 
 
 
 
 
 
 
 
 

 See accompanying notes to consolidated financial statements. 
 39 

 
 

 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Cash Flows – continued 
 
 Fiscal Year 
 (In millions) 
 2021 2020 2019 
 OTHER CASH FLOW INFORMATION 
 
 Interest paid 
 $ 34.6 $ 41.4 $ 32.4 
 Net income taxes paid 
 27.8 8.6 23.2 
 NON-CASH INVESTING AND FINANCING ACTIVITY 
 Additions to property, plant and equipment not yet paid 3.2 0.9 0.8 
 Business acquisition not yet paid — — 5.5 
 

 See accompanying notes to consolidated financial statements. 
 40 

 
 
 

 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Stockholders' Equity 
 
 Wolverine World Wide, Inc. Stockholders' Equity 
 (In millions, except share and per share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive
Loss Treasury Stock Non-controlling Interest Total 
 Balance at December 29, 2018 $ 107.6 $ 201.4 $ 1,169.7 $ ( 88.3 ) $ ( 404.4 ) $ 5.6 $ 991.6 
 Net earnings 128.5 0.4 128.9 
 Other comprehensive income (loss) ( 13.8 ) — ( 13.8 ) 
 Shares forfeited, net of shares issued under stock incentive plans ( 38,655 shares) 
 0.1 ( 4.2 ) ( 4.1 ) 
 Shares issued for stock options exercised, net ( 681,389 shares) 
 0.6 11.6 12.2 
 Stock-based compensation expense 
 24.5 24.5 
 Cash dividends declared ($ 0.40 per share) 
 ( 34.9 ) ( 34.9 ) 
 Issuance of treasury shares ( 7,460 shares) 
 0.1 0.2 0.3 
 Purchase of common stock for treasury ( 10,914,965 shares) 
 ( 319.2 ) ( 319.2 ) 
 Purchases of shares under stock-based compensation plans ( 368,326 shares) 
 ( 12.8 ) ( 12.8 ) 
 Capital contribution from noncontrolling interests 5.7 5.7 
 
 
 Balance at December 28, 2019 $ 108.3 $ 233.4 $ 1,263.3 $ ( 102.1 ) $ ( 736.2 ) $ 11.7 $ 778.4 
 Net loss ( 136.9 ) ( 1.7 ) ( 138.6 ) 
 Other comprehensive loss ( 28.5 ) ( 0.2 ) ( 28.7 ) 
 Shares issues, net of shares forfeited under stock incentive plans ( 1,497,478 shares) 
 1.5 ( 19.0 ) ( 17.5 ) 
 Shares issued for stock options exercised, net ( 600,041 shares) 
 0.6 9.3 9.9 
 Stock-based compensation expense 
 28.9 28.9 
 Cash dividends declared ($ 0.40 per share) 
 ( 33.1 ) ( 33.1 ) 
 Issuance of treasury shares ( 5,479 shares) 
 — 0.2 0.2 
 Purchase of common stock for treasury ( 877,624 shares) 
 ( 21.0 ) ( 21.0 ) 
 Purchases of shares under stock-based compensation plans ( 231,617 shares) 
 ( 7.3 ) ( 7.3 ) 
 Capital contribution from noncontrolling interests 1.8 1.8 
 
 
 Balance at January 2, 2021 $ 110.4 $ 252.6 $ 1,093.3 $ ( 130.6 ) $ ( 764.3 ) $ 11.6 $ 573.0 

 See accompanying notes to consolidated financial statements. 
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 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Consolidated Statements of Stockholders' Equity – continued 
 
 Wolverine World Wide, Inc. Stockholders' Equity 
 (In millions, except share and per share data) Common Stock Additional Paid-In Capital Retained Earnings Accumulated
Other
Comprehensive
Loss Treasury Stock Non-controlling Interest Total 
 Balance at January 2, 2021 $ 110.4 $ 252.6 $ 1,093.3 $ ( 130.6 ) $ ( 764.3 ) $ 11.6 $ 573.0 
 Net earnings (loss) 68.6 ( 1.6 ) 67.0 
 Other comprehensive income 31.7 — 31.7 
 Shares issued, net of shares forfeited under stock incentive plans ( 431,180 shares) 
 0.4 ( 8.2 ) ( 7.8 ) 
 Shares issued for stock options exercised, net ( 774,145 shares) 
 0.8 16.4 17.2 
 Stock-based compensation expense 
 38.1 38.1 
 Cash dividends declared ($ 0.40 per share) 
 ( 33.7 ) ( 33.7 ) 
 Issuance of treasury shares ( 4,005 shares) 
 — 0.1 0.1 
 Purchase of common stock for treasury ( 1,150,721 shares) 
 ( 39.6 ) ( 39.6 ) 
 Purchases of shares under stock-based compensation plans ( 172,023 shares) 
 ( 6.4 ) ( 6.4 ) 
 Capital contribution from noncontrolling interests 4.8 4.8 
 
 
 Balance at January 1, 2022 $ 111.6 $ 298.9 $ 1,128.2 $ ( 98.9 ) $ ( 810.2 ) $ 14.8 $ 644.4 

 See accompanying notes to consolidated financial statements. 
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 WOLVERINE WORLD WIDE, INC. AND SUBSIDIARIES 
 Notes to Consolidated Financial Statements 
 Fiscal Years 2021, 2020 and 2019 
 
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 
 Nature of Operations 
 Wolverine World Wide, Inc. (the “Company”) is a leading designer, marketer and licensor of a broad range of quality casual footwear and apparel; performance outdoor and athletic footwear and apparel; kids’ footwear; industrial work shoes, boots and apparel; and uniform shoes and boots. The Company’s portfolio of owned and licensed brands includes: Bates ® , Cat ® , Chaco ® , Harley-Davidson ® , Hush Puppies ® , Hytest ® , Keds ® , Merrell ® , Saucony ® , Sperry ® , Stride Rite ® , Sweaty Betty ® and Wolverine ® . The Company’s products are marketed worldwide through owned operations, through licensing and distribution arrangements with third parties, and through joint ventures. The Company also operates retail stores and eCommerce sites to market both its own brands and branded footwear and apparel from other manufacturers, and has a leathers division that markets Wolverine Performance Leathers™ . 
 On August 2, 2021, the Company completed the acquisition of Lady of Leisure InvestCo Limited (the “Acquired Company”) for $ 417.4 million, which is net of acquired cash of $ 7.4 million. The Acquired Company owns the Sweaty Betty ® brand and activewear business, a premium women’s activewear brand. See Note 19 for further discussion. 
 Principles of Consolidation and Basis of Presentation 
 The consolidated financial statements include the accounts of Wolverine World Wide, Inc. and its majority-owned subsidiaries (collectively, the “Company”). All intercompany accounts and transactions have been eliminated in consolidation. 
 The COVID-19 pandemic, the duration and severity of which is subject to uncertainty, has had and continues to have, an impact on the Company's business. Management's estimates and assumptions used in the preparation of the Company’s consolidated financial statements in accordance with U.S. GAAP take into account both current and expected potential future impacts of the COVID-19 pandemic on the Company’s business based on available information. Actual results may differ materially from management’s estimates. 
 Fiscal Year 
 The Company’s fiscal year is the 52- or 53-week period that ends on the Saturday nearest to December 31. Fiscal years 2021 and 2019 each had 52 weeks, and fiscal year 2020 had 53 weeks. 
 Use of Estimates 
 The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. 
 Revenue Recognition 
 The Company recognizes revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers . Revenue is recognized upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration to be received in exchange for those goods or services. The Company identifies the performance obligation in the contract, determines the transaction price, allocates the transaction price to the performance obligations and recognizes revenue upon completion of the performance obligation. 
 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 shipment or delivery of branded products 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 is recognized at time of sale. The shipment of goods, or point of purchase for retail store sales, 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. 
 Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Shipping and handling costs that are charged to and reimbursed by a customer are recognized as revenue, while the related 
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 expenses incurred by the Company are recorded as cost of goods sold. The Company has elected the practical expedient to treat shipping and handling activities that occur after control of the goods transfers to the customer as fulfillment activities. 
 Payment terms for the Company's revenue vary by sales channel. Standard credit terms apply to the Company's wholesale receivables, while payment is rendered at the time of sale within the consumer-direct channel. The timing of revenue recognition, billings and cash collections results in billed accounts receivable (contract assets), and customer advances (contract liabilities) on the consolidated balance sheets. Generally, billing occurs commensurate to revenue recognition resulting in contract assets. See Note 6 for additional information. 
 Cost of Goods Sold 
 Cost of goods sold includes the actual product costs, including inbound freight charges and certain outbound freight charges, purchasing, sourcing, inspection and receiving costs. Warehousing costs are included in selling, general and administrative expenses. 
 Advertising Costs 
 Advertising costs are expensed as incurred, except for certain materials that are expensed the first time that the advertising takes place. Advertising expenses were $ 195.4 million, $ 135.6 million and $ 119.4 million for fiscal years 2021, 2020 and 2019, respectively. Prepaid advertising totaled $ 3.6 million and $ 1.2 million as of January 1, 2022 and January 2, 2021, respectively. 
 Earnings Per Share 
 The Company calculates earnings per share in accordance with FASB ASC Topic 260, Earnings Per Share (“ASC 260”). ASC 260 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. Under the guidance in ASC 260, the Company’s unvested share-based payment awards that contain non-forfeitable rights to dividends, whether paid or unpaid, are participating securities and must be included in the computation of earnings per share pursuant to the two-class method. 
 Cash Equivalents 
 Cash equivalents include highly liquid investments with an original maturity of three months or less. Cash equivalents are stated at cost, which approximates fair value. 
 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. 
 Inventories 
 The Company values its inventory at the lower of cost or net realizable value. Cost is determined by the LIFO method for certain domestic finished goods inventories. Cost is determined using the FIFO method for all raw materials, work-in-process and finished goods inventories in foreign countries and certain domestic finished goods inventories. The average cost of inventory is used for finished goods inventories of the Company’s consumer-direct business and Sweaty Betty ® inventory. The Company has applied these inventory cost valuation methods consistently from year to year. 
 The Company reduces the carrying value of its inventories to the lower of cost or net realizable value for excess or obsolete inventories based upon assumptions about future demand and market conditions. If the Company were to determine that the estimated realizable value of its inventory is less than the carrying value of such inventory, the Company would provide a reserve for such difference as a charge to cost of sales. If actual market conditions are different from those projected, adjustments to those inventory reserves may be required. The adjustments would increase or decrease the Company’s cost of sales and net income in the period in which they were realized or recorded. Inventory quantities are verified at various times throughout the year by performing physical inventory counts and subsequently comparing those results to perpetual inventory balances. If the Company determines that adjustments to the inventory quantities are appropriate, an adjustment to the Company’s cost of goods sold and inventory is recorded in the period in which such determination was made. 
 Property, Plant and Equipment 
 Property, plant and equipment are stated on the basis of cost and include expenditures for buildings, leasehold improvements, furniture and fixtures, material handling systems, equipment and computer hardware and software. Normal repairs and maintenance are expensed as incurred. Depreciation of property, plant and equipment is computed using the straight-line 
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 method. The depreciable lives range from 14 to 20 years for buildings, from 5 to 15 years for leasehold improvements, from 3 to 10 years for furniture, fixtures and equipment and from 3 to 5 years for software. 
 Leases 
 The Company’s leases consist primarily of corporate offices, retail stores, distribution centers, showrooms, vehicles and office equipment. The Company leases assets in the normal course of business to meet its current and future needs while providing flexibility to its operations. The Company enters into contracts with third parties to lease specifically identified assets. Most of the Company’s leases have contractually specified renewal periods. Most retail store leases have early termination clauses that the Company can elect if stipulated sales amounts are not achieved. The Company determines the lease term for each lease based on the terms of each contract and factors in renewal and early termination options if such options are reasonably certain to be exercised. 
 Under FASB ASC Topic 842, Leases , the Company has elected the practical expedient to account for lease components and nonlease components associated with individual leases as a single lease component for all of its leases. In addition, the Company has elected to account for multiple lease components as a single lease component. The Company’s leases may include variable lease costs such as payments based on changes to an index, payments based on a percentage of retail store sales, and maintenance, utilities, shared marketing or other service costs that are paid directly to the lessor under terms of the lease. The Company recognizes variable lease payments when the amounts are incurred and determinable. The Company has elected to account for leases of less than one year as short-term leases and accordingly does not recognize a right-of-use asset or lease liability for these leases. The Company recognizes rent expense on a straight-line basis over the lease term. 
 The Company subleases certain portions of leased offices and distribution centers that exceed the Company’s current operational needs. Since the Company utilizes the majority of the leased space and retains the obligation to the lessor, the underlying leases continue to be accounted for as operating leases. Sublease income is recognized on a straight-line basis over the term of the sublease and is recognized in other expense (income), net on the consolidated statements of operations. 
 The Company recognizes a lease liability in current and noncurrent liabilities equal to the present value of the fixed future lease payments using an incremental borrowing rate as of the commencement date of each lease. The incremental borrowing rate is based on an interest rate that the Company would normally pay to borrow on a collateralized basis over a similar term and an amount equal to the lease payments. The Company also recognizes a right-of-use asset, which is equal to the lease liability as of January 1, 2022 adjusted for the remaining balance of accrued rent and unamortized lease incentives. 
 Deferred Financing Costs 
 Deferred financing costs represent commitment fees, legal and other third-party costs associated with obtaining commitments for financing that result in a closing of such financings for the Company. Deferred financing costs related to fixed term borrowings are recorded as a reduction of long-term debt in the consolidated balance sheet. Deferred financing costs related to revolving credit facilities are recorded as an other noncurrent asset in the consolidated balance sheet. These costs are amortized into earnings through interest expense over the terms of the respective agreements. 
 Derivatives 
 The Company follows FASB ASC Topic 815, Derivatives and Hedging ("ASC 815"), which requires that all derivative instruments be recorded on the consolidated balance sheets at fair value by establishing criteria for designation and effectiveness of hedging relationships. The Company does not hold or issue financial instruments for trading purposes. Refer to Note 11 for further discussion regarding the Company's derivative arrangements and derivative accounting. 
 Goodwill and Other Intangibles 
 Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets of acquired businesses. Indefinite-lived intangibles include trademarks and trade names. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to impairment tests at least annually. The Company reviews the carrying amounts of goodwill and indefinite-lived intangible assets by reporting unit at least annually, or when indicators of impairment are present, to determine if such assets may be impaired. The Company includes assumptions about expected future operating performance, such as forecasted growth rates and cost of capital, which are derived from internal projections and operating plans, as part of a discounted cash flow analysis to estimate fair value. If the carrying value of these assets is not recoverable, based on the discounted cash flow analysis, management compares the fair value of the assets to the carrying value. Goodwill and indefinite-lived intangibles are considered impaired if the recorded value exceeds the fair value. 
 The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of goodwill and indefinite-lived intangible asset are less than their carrying value. The Company would not be required to quantitatively 
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 determine the fair value 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 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. See Note 4 for information related to the results of the Company's annual test. 
 Impairment of Long-Lived Assets 
 The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or an asset group may not be recoverable. Each impairment test is based on a comparison of the carrying amount of the asset or asset group to the future undiscounted net cash flows expected to be generated by the asset or asset group. 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. 
 Fair Value of Financial Instruments 
 The Company follows FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which provides a consistent definition of fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-tier hierarchy for fair value measurements. ASC 820 requires fair value measurements to be classified and disclosed in one of the following three categories: 
 
 Level 1: Fair value is measured using quoted prices (unadjusted) in active markets for identical assets and liabilities. 
 
 Level 2: Fair value is measured using either direct or indirect inputs, other than quoted prices included within Level 1, which are observable for similar assets or liabilities. 
 
 Level 3: Fair value is measured using valuation techniques in which one or more significant inputs are unobservable. 

 Environmental 
 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. 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 realizable. Recoveries of covered losses under insurance policies are recognized only when realization of the claim is deemed probable. 
 The Company is subject to legal proceedings and claims related to the environmental matters described in Note 17. The Company routinely assesses the legal and factual circumstances of each matter and the likelihood of any adverse outcomes in these matters, as well as ranges of possible losses. Assessments of lawsuits and claims can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. The Company accrues an estimated liability for legal proceeding claims that are both probable and estimable and reserves may change in future periods due to new developments in each matter. For further discussion, refer to Note 17. 
 Retirement Benefits 
 The determination of the obligation and expense for retirement benefits is dependent on the selection of certain actuarial assumptions used in calculating such amounts. These assumptions include, among others, the discount rate, expected long-term rate of return on plan assets, mortality rates and rates of increase in compensation. 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. See Note 13 for additional information. The Company has elected to measure its defined benefit plan assets and obligations as of December 31 of each year, regardless of the Company's actual fiscal year end date, which is the Saturday nearest to December 31. 
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 Stock Based Compensation 
 The Company accounts for stock-based compensation in accordance with the fair value recognition provisions of ASC Topic 718, Compensation – Stock Compensation . The Company generally grants restricted stock or units (“Restricted Awards”), performance-based restricted stock or units (“Performance Awards”) and stock options under its stock-based compensation plans. All stock-based awards are accounted for based on their respective grant date fair values. Compensation cost for all awards expected to vest is recognized over the vesting period, including accelerated recognition for retirement-eligible employees. 
 Income Taxes 
 The provision for income taxes is based on the geographic dispersion of the earnings reported in the consolidated financial statements. A deferred income tax asset or liability is determined by applying currently-enacted tax laws and rates to the cumulative temporary differences between the carrying values of assets and liabilities for financial statement and income tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. In the event the Company determines it is more likely than not that the deferred tax assets will not be realized in the future, the valuation allowance adjustment to the deferred tax assets will be charged to earnings in the period in which the Company makes such a determination. 
 The Company records an increase in liabilities for income tax accruals associated with tax benefits claimed on tax returns but not recognized for financial statement purposes (unrecognized tax benefits). In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benef it is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. T he Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively. 
 Foreign Currency 
 For most of the Company’s international subsidiaries, the local currency is the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars at the year-end exchange rate. Operating statement amounts are translated at average exchange rates for each period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Transaction gains and losses are included in the consolidated statements of operations and were not material for fiscal years 2021, 2020 and 2019. 
 Business Combination 
 The Company accounts for business combinations using the acquisition method of accounting, which requires that once control is obtained, the consolidated financial statements reflect the operations of an acquired business starting from the acquisition date. 
 All assets acquired and liabilities assumed are recorded at fair value as of the acquisition date. The Company allocates the purchase price of an acquired business to the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, with any excess purchase price recorded as goodwill. Contingent consideration, if any, is included in the purchase price and is recognized at its fair value on the acquisition date. During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. 
 The determination of fair values of identifiable assets and liabilities requires estimates and the use of valuation techniques and requires management to make judgments that may involve the use of significant estimates. For intangible assets acquired in a business combination, the Company typically uses the income method. Significant estimates used in valuing certain intangible assets include, but are not limited to, the amount and timing of future cash flows, growth rates and discount rates, among other items. If the actual results differ from the estimates and judgments used, the amounts recorded in the Consolidated Financial Statements may be exposed to potential impairment of the intangible assets and goodwill as discussed in the "Goodwill and Indefinite-Lived Intangibles" accounting policy. For further discussion, refer to Note 19. 
 47 

 
 
 

 2. NEW ACCOUNTING STANDARDS 
 The FASB has issued the following Accounting Standards Update (“ASU”) that the Company has not yet adopted. The following is a summary of the new standard. 
 
 Standard Description Effect on the Financial Statements or Other Significant Matters 
 ASU 2020-04, Reference Rate Reform (Topic 848); Facilitation of the Effects of Reference Rate Reform on Financial Reporting (as amended by ASU 2021-01) Provides practical expedients for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued. This guidance is applicable for the Company’s borrowing instruments under the amended senior credit facility, which use LIBOR as a reference rate, and is available for adoption effective immediately but is only available through December 31, 2022. 
 The Company is evaluating the impact of the new standard on its Consolidated Financial Statements. 
 

 
 3. EARNINGS PER SHARE 
 The following table sets forth the computation of basic and diluted earnings per share: 
 
 Fiscal Year 
 (In millions, except per share data) 2021 2020 2019 
 Numerator: 
 
 Net earnings (loss) attributable to Wolverine World Wide, Inc. $ 68.6 $ ( 136.9 ) $ 128.5 
 Less: net earnings attributed to participating share-based awards 
 ( 1.1 ) ( 0.8 ) ( 2.6 ) 
 Net earnings (loss) used to calculate basic earnings per share 67.5 ( 137.7 ) 125.9 
 Adjustment for earnings reallocated to participating share-based awards — — 0.1 
 Net earnings (loss) used to calculate diluted earnings per share $ 67.5 $ ( 137.7 ) $ 126.0 
 Denominator: 
 
 Weighted average shares outstanding 
 82.4 81.8 85.7 
 Adjustment for unvested restricted common stock 
 ( 0.1 ) ( 0.8 ) ( 0.6 ) 
 Shares used to calculate basic earnings per share 
 82.3 81.0 85.1 
 Effect of dilutive share-based awards 
 1.0 — 2.1 
 Shares used to calculate diluted earnings per share 
 83.3 81.0 87.2 
 Net earnings (loss) per share: 
 Basic 
 $ 0.82 $ ( 1.70 ) $ 1.48 
 Diluted 
 $ 0.81 $ ( 1.70 ) $ 1.44 

 For fiscal years 2021, 2020 and 2019, 605,774 , 1,179,088 and 133,505 outstanding stock options, respectively, have not been included in the denominator for the computation of diluted earnings per share because they were anti-dilutive. 
 The Company has 2,000,000 authorized shares of $ 1 par value preferred stock, none of which was issued or outstanding as of January 1, 2022 or January 2, 2021. The Company has designated 150,000 shares of preferred stock as Series A junior participating preferred stock and 500,000 shares of preferred stock as Series B junior participating preferred stock for possible future issuance. 
 The Company repurchased $ 39.6 million, $ 21.0 million and $ 319.2 million of Company common stock in fiscal years 2021, 2020 and 2019, respectively, under stock repurchase plans. In addition to the stock repurchase program activity, the Company acquired $ 14.1 million, $ 24.8 million and $ 16.9 million of Company common stock in fiscal years 2021, 2020 and 2019, respectively, in connection with employee transactions related to stock incentive plans. 
 On February 11, 2019, the Company's Board of Directors approved a common stock repurchase program that authorizes the repurchase of an additional $ 400.0 million of common stock over a four year period incremental to amounts remaining under 
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 the previous repurchase program. The annual amount of stock repurchases is restricted under the terms of the Company's Credit Agreement. 
 
 4. GOODWILL AND OTHER INTANGIBLE ASSETS 
 The changes in the carrying amount of goodwill are as follows: 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Goodwill balance at beginning of the year $ 442.4 $ 438.9 
 Acquisition of a business (see Note 19) 118.9 — 
 
 
 Foreign currency translation effects ( 4.7 ) 3.5 
 Goodwill balance at end of the year $ 556.6 $ 442.4 

 The Company did not recognize any goodwill impairment charges during fiscal years 2021, 2020 and 2019. The annual impairment testing indicated, for all reporting units tested quantitatively, that the fair values exceeded the respective carrying values. For the reporting units that the Company elected to test qualitatively, the Company concluded it to be more likely than not that their estimated fair values are greater than their respective carrying values. 
 The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $ 718.1 million and $ 382.3 million as of January 1, 2022 and January 2, 2021, respectively. In the fourth quarter of fiscal 2020, after the completion of the annual impairment testing, the Company recognized a $ 222.2 million impairment charge for the Sperry ® trade name resulting from reductions in the future cash flow assumptions mainly due to the impact of the COVID-19 pandemic to the Sperry ® brand and an increase in the discount rate. The Sperry ® trade name was valued using the income approach, specifically the multi-period excess earnings method with the key assumptions used in the valuation being revenue growth, operating profit, and the discount rate. The risk of future impairment for the Sperry ® trade name is dependent on key assumptions used in the determination of the trade name's fair value, such as revenue growth, earnings before interest, taxes, depreciation and amortization ("EBITDA") margin, discount rate, and assumed tax rate, or macroeconomic conditions deteriorate due to the COVID-19 pandemic and adversely affect the value of the Company's Sperry ® trade name. T he Company continues to monitor the effects of the COVID-19 pandemic, and actions taken by governments, businesses and individuals in response to the pandemic, on the global economy to assess the outlook for demand for the Company's products and the impact on the Company's business and financial performance. The carrying value of the Company’s Sperry ® trade name indefinite-lived intangible asset was $ 296.0 million as of January 1, 2022. 
 Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives. The combined gross carrying values and accumulated amortization for these amortizable intangibles are as follows: 
 
 January 1, 2022 
 (In millions) Gross carrying
value Accumulated
amortization Net Average remaining life (years) 
 Customer relationships $ 119.9 $ 49.1 $ 70.8 11 
 Other 20.3 16.5 3.8 3 
 Total $ 140.2 $ 65.6 $ 74.6 

 
 January 2, 2021 
 (In millions) Gross carrying
value Accumulated
amortization Net Average remaining life (years) 
 Customer relationships $ 114.5 $ 44.9 $ 69.6 12 
 Other 18.7 15.3 3.4 3 
 Total $ 133.2 $ 60.2 $ 73.0 

 Amortization expense for these amortizable intangible assets was $ 8.4 million, $ 7.1 million and $ 8.6 million for fiscal years 2021, 2020 and 2019, respectively. Estimated aggregate amortization expense for such intangibles for the fiscal years subsequent to January 1, 2022 is as follows: 
 
 (In millions) 2022 2023 2024 2025 2026 
 Amortization expense $ 7.8 $ 7.4 $ 7.1 $ 6.7 $ 6.4 

 
 49 

 
 
 

 5. ACCOUNTS RECEIVABLE 
 The Company has an agreement with a financial institution to sell selected trade accounts receivable on a recurring, nonrecourse basis that expires in the fourth quarter of fiscal 2022. Under the agreement, up to $ 17.4 million of accounts receivable may be sold to the financial institution and remain outstanding at any point in time. After the sale, the Company does not retain any interests in the accounts receivable and removes them from its consolidated balance sheet, but continues to service and collect the outstanding accounts receivable on behalf of the financial institution. The Company recognizes a servicing asset or servicing liability, initially measured at fair value, each time it undertakes an obligation to service the accounts receivable under the agreement. The fair value of this obligation resulted in a nominal servicing liability for all periods presented. For receivables sold under the agreement, 90 % of the stated amount is paid for in cash to the Company at the time of sale, with the remainder paid to the Company at the completion of the collection process. 
 The following is a summary of the stated amount of accounts receivable that was sold as well as fees charged by the financial institution. 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Accounts receivable sold 
 $ — $ 14.1 $ 42.7 
 Fees charged 
 — 0.1 0.2 

 The fees are recorded in the other expense (income), net line item on the consolidated statements of operations. Net proceeds of this program are classified in operating activities in the consolidated statements of cash flows. There were no amounts outstanding under this program as of January 1, 2022 and January 2, 2021. 
 
 6. REVENUE FROM CONTRACTS WITH CUSTOMERS 
 Revenue Recognition and Performance Obligations 
 The Company provides disaggregated revenue for the wholesale and consumer-direct sales channels, which are reconciled to the Company’s reportable segments. The wholesale channel includes royalty revenues, which operates in a similar manner as other wholesale revenues due to similar oversight and management, customer base, the performance obligation (footwear and apparel goods) and point in time completion of the performance obligation. 
 
 Fiscal Year 
 (in millions) 2021 2020 2019 
 Wolverine Michigan Group: 
 Wholesale $ 1,016.8 $ 814.2 $ 1,134.9 
 Consumer-direct 282.1 236.8 164.8 
 Total 1,298.9 1,051.0 1,299.7 
 Wolverine Boston Group: 
 Wholesale 695.8 508.9 743.4 
 Consumer-direct 240.0 187.1 167.5 
 Total 935.8 696.0 910.9 
 Other: 
 Wholesale 74.6 40.5 57.9 
 Consumer-direct 105.6 3.6 5.2 
 Total 180.2 44.1 63.1 
 Total revenue $ 2,414.9 $ 1,791.1 $ 2,273.7 

 
 The Company has agreements to license symbolic intellectual property with minimum guarantees or fixed consideration. The Company is due $ 19.3 million of remaining fixed transaction price under its license agreements as of January 1, 2022, which it expects to recognize per the terms of its contracts over the course of time through December 2026 . The Company has elected to omit the remaining variable consideration under its license agreements given the Company recognizes revenue equal to what it 
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 has the right to invoice and that amount corresponds directly with the value to the customer of the Company’s performance to date. 
 Reserves for Variable Consideration 
 Revenue is recorded at the net sales price (“transaction price”), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, customer markdowns, customer rebates and other sales incentives relating to the sale of the Company’s products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales. These estimates take into consideration a range of possible outcomes, which are probability-weighted in accordance with the expected value method for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. 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 fiscal years 2021 and 2020 related to the Company’s contract liabilities was nominal. 
 The Company’s contract balances are as follows: 
 
 (In millions) January 1,
2022 January 2,
2021 
 Product returns reserve $ 16.6 $ 15.6 
 Customer markdowns reserve 2.3 3.7 
 Other sales incentives reserve 3.4 6.0 
 Customer rebates liability 17.0 13.4 
 Customer advances liability 6.8 8.2 

 The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Actual amounts of consideration ultimately received may differ from initial estimates. If actual results in the future vary from initial estimates, the Company subsequently adjusts these estimates, which would affect net revenue and earnings in the period such variances become known. 
 Product Returns 
 Consistent with industry practice, the Company offers limited product return rights for various return scenarios. The Company estimates the amount of product sales that may be returned by customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized, and a reduction to trade receivables, net on the consolidated balance sheets. The Company believes there is sufficient current and historical information to record an estimate of the expected value of product returns although actual returns could differ from recorded amounts. 
 Customer Markdowns 
 Markdowns represent the estimated reserve resulting from commitments to sell products to the Company’s customers at prices lower than the list prices charged to customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the end consumer. The reserve is established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and a reduction to trade receivables, net on the consolidated balance sheets. 
 Other Sales Incentives 
 The Company accrues for other customer allowances for certain customers that purchase required volumes or meet other criteria. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and a reduction to trade receivables, net on the consolidated balance sheets depending on the nature of the item. 
 Customer Rebates 
 The Company accrues for customer rebates related to customers who purchase required volumes or meet other criteria. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and an establishment of a current liability on the consolidated balance sheets. 
 Customer Advances 
 The Company recognizes a liability for amounts received from customers before revenue is recognized. Customer advances are recognized as a current liability on the consolidated balance sheets. 
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 7. INVENTORIES 
 The Company used the LIFO method to value inventories of $ 42.0 million and $ 35.6 million at January 1, 2022 and January 2, 2021, respectively. During fiscal years 2021 and 2020, changes in the LIFO reserve increased cost of goods sold by $ 0.5 million and decreased cost of goods sold $ 3.9 million, respectively. If the FIFO method had been used, inventories would have been $ 8.0 million and $ 7.5 million higher than reported at January 1, 2022 and January 2, 2021, respectively. 
 
 8. DEBT 
 Total debt consists of the following obligations: 
 
 (In millions) January 1,
2022 January 2,
2021 
 Term Facility, due October 21, 2026 $ 200.0 $ 180.0 
 Senior Notes, 5.000% interest, due September 1, 2026 — 250.0 
 Senior Notes, 6.375% interest, due May 15, 2025 — 300.0 
 Senior Notes, 4.000% interest, due August 15, 2029 550.0 — 
 Borrowings under revolving credit agreements 225.0 — 
 
 Unamortized deferred financing costs ( 8.2 ) ( 7.5 ) 
 Total debt $ 966.8 $ 722.5 

 On October 21, 2021, the Company entered into a 2021 Replacement Facility Amendment and Reaffirmation Agreement (the “Amendment”) to its Credit Facility (as amended and restated, the "Credit Agreement"). The Amendment amended and restated the Credit Agreement to, among other things: (i) provide for a term loan A facility (the “Term Facility”) in an aggregate principal amount of $ 200.0 million, which replaced the existing term loan A; (ii) provide for an increased revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Senior Credit Facilities”) with total commitments of $ 1.0 billion, an increase of $ 200.0 million from the existing Revolving Facility; and (iii) set the LIBOR floor to 0.000 %, a decrease of 0.750% from the existing Senior Credit Facilities. The maturity date of the loans under the Senior Credit Facilities was extended to October 21, 2026. The Amendment provides for a debt capacity of up to an aggregate debt amount (including outstanding term loan principal and revolver commitment amounts in addition to permitted incremental debt) not to exceed $ 2.0 billion unless certain specified conditions set forth in the Credit Agreement are met. 
 The Term Facility requires quarterly principal payments with a balloon payment due on October 21, 2026. The scheduled principal payments due over the next 12 months total $ 10.0 million as of January 1, 2022 and are recorded as current maturities of long-term debt on the consolidated balance sheets. 
 The Revolving Facility allows the Company to borrow up to an aggregate amount of $ 1.0 billion. The Revolving Facility also includes a $ 100.0 million swingline subfacility and a $ 50.0 million letter of credit subfacility. The Company also had outstanding letters of credit under the Revolving Facility of $ 5.8 million and $ 6.1 million as of January 1, 2022 and January 2, 2021, respectively. These outstanding borrowings and letters of credit reduce the borrowing capacity under the Revolving Facility. 
 The interest rates applicable to amounts outstanding under Term Facility and to U.S. dollar denominated amounts outstanding under the Revolving Facility will be, at the Company’s option, either (1) the Alternate Base Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 0.125 % to 1.000 %, or (2) the Eurocurrency Rate plus an Applicable Margin as determined by the Company’s Consolidated Leverage Ratio, within a range of 1.125 % to 2.000 % (all capitalized terms used in this sentence are as defined in the Credit Agreement). At January 1, 2022, Term Facility had weighted-average interest rate of 1.35 %. 
 The obligations of the Company pursuant to the Credit Agreement are guaranteed by substantially all of the Company’s material domestic subsidiaries and secured by substantially all of the personal and real property of the Company and its material domestic subsidiaries, subject to certain exceptions. 
 The Senior Credit Facilities also contain certain affirmative and negative covenants, including covenants that limit the ability of the Company and its Restricted Subsidiaries to, among other things: incur or guarantee indebtedness; incur liens; pay dividends or repurchase stock; enter into transactions with affiliates; consummate asset sales, acquisitions or mergers; prepay certain other indebtedness; or make investments, as well as covenants restricting the activities of certain foreign subsidiaries of the Company that hold intellectual property related assets. Further, the Senior Credit Facilities require compliance with the following financial covenants: a maximum Consolidated Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (all 
 52 

 
 

 capitalized terms used in this paragraph are as defined in the Credit Agreement). As of January 1, 2022, the Company was in compliance with all covenants and performance ratios under the Senior Credit Facilities. 
 On August 26, 2021, the Company issued $ 550.0 million aggregate principal debt amount of 4.000 % senior notes due on August 15, 2029. Related interest payments are due semi-annually beginning February 15, 2022. The senior notes are guaranteed by substantially all of the Company’s domestic subsidiaries. The proceeds from the senior notes were used to extinguish the Company’s $ 250.0 million senior notes due on September 1, 2026 and $ 300.0 million senior notes due on May 15, 2025. The Company incurred $ 34.0 million of debt extinguishment and other costs in connection with the senior notes extinguished, of which $ 28.4 million is related to redemption premiums and $ 5.6 million is related to write-off of capitalized financing fees. 
 The Company has a foreign revolving credit facility with aggregate available borrowing s of $ 4.0 million that are un committed and, therefore, each borrowing against the facility is subject to approval by the lender. As of January 1, 2022 and January 2, 2021, there were no borrowings against this credit facility. 
 The Company included in interest expense the amortization of deferred financing costs of $ 2.3 million, $ 2.7 million, and $ 1.6 million in fiscal years 2021, 2020 and 2019, respectively. 
 Annual maturities of debt for the fiscal years subsequent to January 1, 2022 are as follows: 
 
 (In millions) 2022 2023 2024 2025 2026 Thereafter 
 Annual maturities of debt 
 $ 235.0 $ 10.0 $ 10.0 $ 10.0 $ 160.0 $ 550.0 

 
 9. PROPERTY, PLANT AND EQUIPMENT 
 Property, plant and equipment consisted of the following: 
 
 (In millions) January 1,
2022 January 2, 2021 
 Land $ 3.9 $ 3.9 
 Buildings and leasehold improvements 122.2 119.6 
 Furniture, fixtures and equipment 144.7 135.1 
 Software 77.3 63.2 
 Gross cost 348.1 321.8 
 Less: accumulated depreciation 219.1 197.2 
 Property, plant and equipment, net $ 129.0 $ 124.6 

 Depreciation expense was $ 24.8 million, $ 25.7 million and $ 24.1 million for fiscal years 2021, 2020 and 2019, respectively. 
 
 10. LEASES 
 The following is a summary of the Company’s lease cost. 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Operating lease cost $ 34.5 $ 34.1 
 Variable lease cost 12.3 12.3 
 Short-term lease cost 1.3 1.2 
 Sublease income ( 6.5 ) ( 4.8 ) 
 Total lease cost $ 41.6 $ 42.8 

 The following is a summary of the Company’s supplemental cash flow information related to leases. 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Cash paid for operating lease liabilities $ 38.5 $ 28.6 
 Operating lease assets obtained in exchange for lease liabilities 14.6 6.0 

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 The weighted-average discount rate for operating leases as of January 1, 2022 is 5.0 %. The weighted-average remaining lease term for operating leases as of January 1, 2022 is 8.7 years. Future undiscounted cash flows for operating leases for the fiscal periods subsequent to January 1, 2022 are as follows: 
 
 (In millions) Operating Leases 
 2022 $ 35.9 
 2023 24.7 
 2024 20.2 
 2025 18.4 
 2026 17.4 
 Thereafter 76.6 
 Total future payments 193.2 
 Less: imputed interest 36.7 
 Recognized lease liability $ 156.5 

 
 The Company did not enter into any real estate leases with commencement dates subsequent to January 1, 2022. 
 
 11. DERIVATIVE FINANCIAL INSTRUMENTS 
 The Company utilizes foreign currency forward exchange contracts designated as cash flow hedges to manage the volatility associated primarily with U.S. dollar inventory purchases made by non-U.S. wholesale operations in the normal course of business. These foreign currency forward exchange hedge contracts extended out to a maximum of 538 days and 538 days as of January 1, 2022 and January 2, 2021, respectively. When foreign exchange contracts are determined not to be highly effective or are terminated before their contractual termination dates, the Company would remove the hedge designation from those contracts and reclassify into earnings the unrealized gains or losses that would otherwise be included in accumulated other comprehensive income (loss) within stockholders’ equity. During fiscal 2020, the Company reclassified $ 0.6 million to other income for foreign currency derivatives that were no longer deemed highly effective. 
 The Company also utilizes foreign currency forward exchange contracts that are not designated as hedging instruments to manage foreign currency transaction exposure. Foreign currency derivatives not designated as hedging instruments are offset by foreign exchange gains or losses resulting from the underlying exposures of foreign currency denominated assets and liabilities. 
 The Company has an interest rate swap arrangement, which unless otherwise terminated, will mature on May 30, 2025 . This agreement, which exchanges floating rate interest payments for fixed rate interest payments over the life of the agreement without the exchange of the underlying notional amounts, has been designated as a cash flow hedge of the underlying debt. The notional amount of the interest rate swap arrangement is used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. The differential paid or received on the interest rate swap arrangement is recognized as interest expense. In accordance with ASC 815, the Company has formally documented the relationship between the interest rate swap and the variable rate borrowing, as well as its risk management objective and strategy for undertaking the hedge transactions. This process included linking the derivative to the specific liability or asset on the balance sheet. The Company also assessed at the inception of the hedge, and continues to assess on an ongoing basis, whether the derivative used in the hedging transaction is highly effective in offsetting changes in the cash flows of the hedged item. 
 The Company had a cross currency swap to minimize the impact of exchange rate fluctuations which matured on September 1, 2021 . Changes in fair value related to movements in the foreign currency exchange spot rate were recorded in accumulated other comprehensive income (loss), offsetting the currency translation adjustment related to the underlying net investment that was also recorded in accumulated other comprehensive income (loss). All other changes in fair value were recorded in interest expense. 
 The notional amounts of the Company’s derivative instruments are as follows: 
 
 (Dollars in millions) January 1,
2022 January 2,
2021 
 
 Foreign exchange hedge contracts $ 296.7 $ 250.7 
 
 Interest rate swap 311.3 — 
 Cross currency swap — 79.8 

 54 

 
 

 The recorded fair values of the Company’s derivative instruments are as follows: 
 
 (In millions) January 1,
2022 January 2,
2021 
 Financial assets: 
 Foreign exchange hedge contracts $ 5.9 $ — 
 
 
 
 Financial liabilities: 
 Foreign exchange hedge contracts $ ( 1.0 ) $ ( 8.8 ) 
 
 Interest rate swap ( 0.1 ) — 
 Cross currency swap — ( 10.8 ) 

 
 12. STOCK-BASED COMPENSATION 
 The Company recognized stock-based compensation expense of $ 38.1 million, $ 28.9 million and $ 24.5 million and related income tax benefits of $ 7.5 million, $ 5.6 million and $ 4.8 million for grants under its stock-based compensation plans in the statements of operations for fiscal years 2021, 2020 and 2019, respectively. 
 As of January 1, 2022, the Company had 7,961,971 stock incentive units (stock options, stock appreciation rights, restricted stock, restricted stock units and common stock) available for issuance under the Stock Incentive Plan of 2016, as amended and restated ("Stock Plan"). Each stock option or stock appreciation right granted counts as 1.0 stock incentive unit. Stock options granted under the Stock Plan have an exercise price equal to the fair market value of the underlying stock on the grant date, expire no later than ten years from the grant date and generally vest over three years . All other awards granted, including Restricted Awards and Performance Awards, count as 2.6 stock incentive units for each share, restricted share or restricted stock unit granted. Restricted Awards issued under the Stock Plan are subject to certain restrictions, including a prohibition against any sale, transfer or other disposition by the officer or employee during the vesting period (except for certain transfers for estate planning purposes for certain officers), and a requirement to forfeit all or a certain portion of the award upon certain terminations of employment. These restrictions typically lapse over a three- to four-year period from the date of the award. The Company has elected to recognize expense for these stock-based incentive plans ratably over the vesting term on a straight-line basis. Certain option and restricted awards provide for accelerated vesting under various scenarios, including retirement, death and disability, and upon a change in control of the Company. Awards issued to employees that meet the specified retirement age and service requirements are vested upon the employee's retirement in accordance with plan provisions and the applicable award agreements issued under the Stock Plan. The Company issues shares to plan participants upon exercise or vesting of stock-based incentive awards from either authorized, but unissued shares or treasury shares. 
 The Board of Directors awards an annual grant of Performance Awards to certain plan participants. The number of Performance Awards that will be earned (and eligible to vest) during the performance period will depend on the Company’s level of success in achieving two specifically identified performance targets. Any portion of the Performance Awards that are not earned by the end of the three-year measurement period will be forfeited. The final determination of the number of Performance Awards to be issued in respect to an award is determined by the Compensation Committee of the Company’s Board of Directors. 
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 Restricted Awards and Performance Awards 
 A summary of the unvested Restricted Awards and Performance Awards is as follows: 
 
 Restricted
Awards Weighted-
Average
Grant Date
Fair Value Performance
Awards Weighted-
Average
Grant Date
Fair Value 
 Unvested at December 29, 2018 1,920,373 $ 24.38 1,631,018 $ 23.42 
 Granted 554,092 34.73 370,830 37.10 
 Vested ( 681,938 ) 24.63 ( 654,021 ) 17.46 
 Forfeited ( 173,611 ) 28.47 ( 220,725 ) 19.74 
 Unvested at December 28, 2019 1,618,916 $ 27.36 1,127,102 $ 31.94 
 Granted 1,416,117 22.59 455,207 34.00 
 Vested ( 1,122,811 ) 22.07 ( 451,334 ) 23.51 
 Forfeited ( 268,205 ) 29.67 ( 125,653 ) 35.91 
 Unvested at January 2, 2021 1,644,017 $ 26.39 1,005,322 $ 35.25 
 Granted 654,898 34.64 630,996 38.02 
 Vested ( 981,681 ) 22.78 ( 181,657 ) 35.03 
 Forfeited ( 109,234 ) 32.75 ( 690,246 ) 35.71 
 Unvested at January 1, 2022 1,208,000 $ 33.62 764,415 $ 35.69 

 As of January 1, 2022, there was $ 19.8 million of unrecognized compensation expense related to unvested Restricted Awards, which is expected to be recognized over a weighted-average period of 1.6 years. The total fair value of Restricted Awards vested during the year ended January 1, 2022 was $ 34.8 million. As of January 2, 2021, there was $ 18.5 million of unrecognized compensation expense related to unvested Restricted Awards, which was expected to be recognized over a weighted-average period of 1.5 years. The total fair value of Restricted Awards vested during the year ended January 2, 2021 was $ 35.0 million. As of December 28, 2019, there was $ 19.9 million of unrecognized compensation expense related to unvested Restricted Awards, which was expected to be recognized over a weighted-average period of 1.5 years. The total fair value of Restricted Awards vested during the year ended December 28, 2019 was $ 23.7 million. 
 As of January 1, 2022, there was $ 16.1 million of unrecognized compensation expense related to unvested Performance Awards, which is expected to be recognized over a weighted-average period of 1.4 years. The total fair value of Performance Awards vested during the year ended January 1, 2022 was $ 6.2 million. As of January 2, 2021, there was $ 1.4 million of unrecognized compensation expense related to unvested Performance Awards, which was expected to be recognized over a weighted-average period of 1.4 years. The total fair value of Performance Aw ards vested during the year ended January 2, 2021 was $ 28.0 million. As of December 28, 2019, there was $ 4.5 million of unrecognized compensation expense related to unvested Performance Awards, which was expected to be recognized over a weig hted-average period of 1.1 years. The total fair value of Performance Awards vested during the year ended December 28, 2019 was $ 22.8 million. 
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 Stock Options 
 The Company estimated the fair value of employee stock options on the date of grant using the Black-Scholes-Merton formula. The estimated weighted-average fair value for each option granted was $ 11.14 , $ 8.20 and $ 9.07 per share for fiscal years 2021, 2020 and 2019, respectively. 
 
 
 A summary of the stock option transactions is as follows: 
 
 Shares Under Option Weighted-Average Exercise Price Average Remaining Contractual Term (Years) 
 Aggregate Intrinsic Value 
 (In millions) 
 
 Outstanding at December 29, 2018 4,702,002 $ 20.83 5.2 $ 54.5 
 Granted 25,471 34.81 
 Exercised ( 681,389 ) 17.87 
 Canceled ( 12,977 ) 23.97 
 Outstanding at December 28, 2019 4,033,107 $ 21.41 4.4 $ 49.8 
 Granted 28,171 32.85 
 Exercised ( 788,883 ) 18.39 
 Canceled ( 12,990 ) 25.39 
 Outstanding at January 2, 2021 3,259,405 $ 22.22 3.9 $ 29.7 
 Granted 23,610 34.22 
 Exercised ( 776,850 ) 22.11 
 Canceled ( 17,353 ) 33.79 
 Outstanding at January 1, 2022 2,488,812 $ 22.29 3.2 $ 16.7 
 
 
 Unvested at January 1, 2022 ( 33,526 ) 
 Exercisable at January 1, 2022 2,455,286 $ 22.13 3.1 $ 16.7 

 The total pretax intrinsic value of stock options exercised during fiscal years 2021, 2020 and 2019 was $ 11.4 million, $ 9.3 million and $ 10.7 million, respectively. As of January 1, 2022, there was $ 0.2 million of unrecognized compensation expense related to stock option grants expected to be recognized over a weighted-average period of 1.3 years. As of January 2, 2021 and December 28, 2019, there was $ 0.1 million and $ 0.2 million, respectively, of unrecognized compensation expense related to stock option awards expected to be recognized over a weighted-average period of 0.9 years and 1.4 years, respectively. 
 The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price as of each fiscal year end, which would have been received by the option holders had all option holders exercised options, where the market price o f the Company's stock was above the strike price ("in-the-money"), as of that date. The total number of in-the-money options exercisable as of January 1, 2022, based on the Company’s closing stock price of $ 28.81 per share, was 2,247,575 and the weighted-average exercise price was $ 21.70 per share . As of January 2, 2021, 3,096,685 outstanding options were exercisable and in-the-money, with a weighted-average exercise price of $ 21.66 per share. 
 
 13. RETIREMENT PLANS 
 The Company has two non-contributory, defined benefit pension plans that provide retirement benefits to less than half of its domestic employees. The Company’s principal defined benefit pension plan, which is closed to new participants, provides benefits based on the employee’s years of service and final average earnings. The second plan is closed to new participants and no longer accrue future benefits. 
 The Company has a Supplemental Executive Retirement Plan (the “SERP”) for certain current and former employees that entitles a participating employee to receive payments from the Company following retirement based on the employee’s years of service and final average earnings (as defined in the SERP). Under the SERP, the employees can elect early retirement with a corresponding reduction in benefits. The Company also has individual deferred compensation agreements with certain former employees that entitle those employees to receive payments from the Company following retirement, generally for the duration of their lives. The Company maintains life insurance policies with a cash surrender value of $ 45.6 million at January 1, 2022 and $ 44.0 million at January 2, 2021 recognized as a other assets on the consolidated balance sheets that are intended to partially fund deferred compensation benefits under the SERP and deferred compensation agreements. 
 The Company has two defined contribution 401(k) plans covering substantially all domestic employees that provide for discretionary Company contributions based on the amount of participant deferrals. The Company recognized expense for its 
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 contributions to the defined contribution plans of $ 5.2 million, $ 4.2 million and $ 5.2 million in fiscal years 2021, 2020 and 2019, respectively. 
 The Company also has certain defined contribution plans at foreign subsidiaries. Contributions to these plans were $ 1.4 million, $ 1.3 million and $ 1.1 million in fiscal years 2021, 2020 and 2019, respectively. The Company also has a benefit plan at a foreign location that provides for retirement benefits based on years of service. The obligation recorded under this plan was $ 1.0 million at January 1, 2022 and $ 1.0 million at January 2, 2021 and was recognized as a deferred compensation liability on the consolidated balance sheets. 
 The following summarizes the status of and changes in the Company’s assets and related obligations for its pension plans (which include the Company’s defined benefit pension plans and the SERP) for the fiscal years 2021 and 2020: 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Change in projected benefit obligations: 
 
 Projected benefit obligations at beginning of the year 
 $ 455.8 $ 401.0 
 Service cost pertaining to benefits earned during the year 
 6.9 6.4 
 Interest cost on projected benefit obligations 
 12.8 14.2 
 Actuarial loss (gain) ( 26.6 ) 48.1 
 Benefits paid to plan participants 
 ( 14.6 ) ( 13.9 ) 
 
 
 Projected benefit obligations at end of the year 
 $ 434.3 $ 455.8 
 Change in fair value of pension assets: 
 
 Fair value of pension assets at beginning of the year 
 $ 305.0 $ 287.6 
 Actual return on plan assets 30.1 28.8 
 
 Company contributions - SERP 
 2.5 2.5 
 Benefits paid to plan participants 
 ( 14.6 ) ( 13.9 ) 
 
 Fair value of pension assets at end of the year 
 $ 323.0 $ 305.0 
 Funded status 
 $ ( 111.3 ) $ ( 150.8 ) 
 Amounts recognized in the consolidated balance sheets: 
 
 
 Current liabilities 
 $ ( 3.9 ) $ ( 3.8 ) 
 Accrued pension liabilities ( 107.4 ) ( 147.0 ) 
 Net amount recognized 
 $ ( 111.3 ) $ ( 150.8 ) 
 Funded status of pension plans and SERP (supplemental): 
 
 Funded status of qualified defined benefit plans and SERP 
 $ ( 111.3 ) $ ( 150.8 ) 
 Nonqualified trust assets (cash surrender value of life insurance) recorded in other assets and intended to satisfy the projected benefit obligation of unfunded SERP obligations 38.0 36.6 
 Net funded status of pension plans and SERP (supplemental) 
 $ ( 73.3 ) $ ( 114.2 ) 

 Unrecognized net actuarial loss recognized in accumulated other comprehensive income was $ 41.8 million and $ 92.8 million, and amounts net of tax were $ 33.2 million and $ 73.5 million, as of January 1, 2022 and January 2, 2021, respectively. The accumulated benefit obligations for all defined benefit pension plans and the SERP were $ 416.1 million at January 1, 2022 and $ 430.2 million at January 2, 2021 . The decrease in benefit obligation for fiscal 2021 was the result of actuarial gains caused by changes to the discount rate. The actuarial loss included in accumulated other comprehensive loss and expected to be recognized in net periodic pension expense during fiscal 2022 is $ 11.3 million. 
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 The following is a summary of net pension and SERP expense recognized by the Company: 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Service cost pertaining to benefits earned during the year $ 6.9 $ 6.4 $ 5.5 
 Interest cost on projected benefit obligations 12.8 14.2 15.2 
 Expected return on pension assets ( 19.5 ) ( 18.7 ) ( 17.7 ) 
 Net amortization loss 13.8 6.6 2.6 
 
 Net pension expense $ 14.0 $ 8.5 $ 5.6 
 Less: SERP expense 5.7 5.2 5.4 
 Qualified defined benefit pension plans expense $ 8.3 $ 3.3 $ 0.2 

 The non-service cost components of net pension expense is recorded in the Other expense (income), net line item on the consolidated statements of operations and comprehensive income. 
 The weighted-average actuarial assumptions used to determine the benefit obligation amounts and the net periodic benefit cost for the Company’s pension and post-retirement plans are as follows: 
 
 Fiscal Year 
 2021 2020 
 Weighted-average assumptions used to determine benefit obligations at fiscal year-end: 
 
 Discount rate 
 3.09 % 2.85 % 
 Rate of compensation increase - pension 
 4.18 % 4.18 % 
 Rate of compensation increase - SERP 
 7.00 % 7.00 % 
 Weighted average assumptions used to determine net periodic benefit cost for the years ended: 
 
 Discount rate 
 2.85 % 3.60 % 
 Expected long-term rate of return on plan assets 
 6.75 % 6.75 % 
 Rate of compensation increase - pension 
 4.18 % 4.23 % 
 Rate of compensation increase - SERP 
 7.00 % 7.00 % 

 Unrecognized net actuarial losses exceeding certain corridors are amortized over one of two amortization periods, based on each plan's election. The amortization period is either a five-year period, unless the minimum amortization method based on average remaining service periods produces a higher amortization; or, over the average remaining service period of participants expected to receive benefits. The Company utilizes a bond matching calculation to determine the discount rate. A hypothetical bond portfolio is created based on a presumed purchase of high-quality corporate bonds with maturities that match the plan’s expected future cash outflows. The discount rate is the resulting yield of the hypothetical bond portfolio. The discount rate is used in the calculation of the year-end pension liability and the service and interest cost for the subsequent year. 
 The long-term rate of return is based on overall market expectations for a balanced portfolio with an asset mix similar to the Company’s, utilizing historic returns for broad market and fixed income indices. The Company’s investment policy for plan assets uses a blended approach of U.S. and foreign equities combined with U.S. fixed income investments. The target investment allocations as of January 1, 2022 were 57 % in equity securities, 38 % in fixed income securities and 5 % in real estate investments. Within the equity and fixed income classifications, the investments are diversified. The Company’s asset allocations by asset category and fair value measurement are as follows: 
 
 January 1, 2022 January 2, 2021 
 (In millions) Total % of Total Total % of Total 
 Equity securities $ 181.3 1 
 56.1 % $ 173.3 1 
 56.8 % 
 Fixed income securities 118.9 1 
 36.8 % 112.7 1 
 37.0 % 
 Real estate investments 19.9 1 
 6.2 % 16.7 1 
 5.5 % 
 Other 2.9 2 
 0.9 % 2.3 2 
 0.7 % 
 Fair value of plan assets $ 323.0 100.0 % $ 305.0 100.0 % 

 1 In accordance with ASC 820, Fair Value Measurement (“ASC 820”), certain investments are measured at fair value using the net asset value per share as a practical expedient. These assets have not been classified in the fair value hierarchy. 
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 2 In accordance with ASC 820, investments have been measured using valuation techniques in which one or more significant inputs are unobservable (Level 3). See Note 1 for additional information. 
 The Company does not expect to make any contributions to its qualified defined benefit pension plans in fiscal 2022 and expects to make $ 3.9 million in contributions to the SERP in fiscal 2022. 
 Expected benefit payments for the fiscal years subsequent to January 1, 2022 are as follows: 
 
 (In millions) 2022 2023 2024 2025 2026 2027-2031 
 Expected benefit payments $ 17.4 $ 18.0 $ 18.8 $ 19.5 $ 20.0 $ 106.7 

 
 14. INCOME TAXES 
 The geographic components of earnings (loss) before income taxes are as follows: 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 United States $ 22.7 $ ( 218.6 ) $ 79.3 
 Foreign 57.6 34.5 66.6 
 Earnings (loss) before income taxes $ 80.3 $ ( 184.1 ) $ 145.9 

 The provisions for income tax expense (benefit) consist of the following: 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Current expense: 
 Federal $ 14.6 $ 0.7 $ 10.6 
 State 2.5 0.6 0.5 
 Foreign 15.0 8.3 12.5 
 Deferred expense (benefit): 
 Federal ( 17.1 ) ( 51.6 ) ( 5.8 ) 
 State ( 1.8 ) ( 4.4 ) ( 2.0 ) 
 Foreign 0.1 0.9 1.2 
 Income tax expense (benefit) $ 13.3 $ ( 45.5 ) $ 17.0 

 
 
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 A reconciliation of the Company’s total income tax expense and the amount computed by applying the statutory federal income tax rate to earnings before income taxes is as follows: 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Income taxes at U.S. statutory rate of 21% $ 16.9 $ ( 38.7 ) $ 30.6 
 State income taxes, net of federal income tax ( 1.1 ) ( 8.1 ) 0.5 
 
 
 
 
 
 Foreign earnings taxed at rates different from the U.S. statutory rate: 
 Hong Kong ( 7.2 ) ( 3.3 ) ( 8.5 ) 
 
 Other 3.1 1.2 2.8 
 Adjustments for uncertain tax positions ( 1.3 ) ( 1.4 ) ( 1.0 ) 
 Change in valuation allowance 2.2 4.7 ( 0.2 ) 
 Change in state tax rates — — ( 1.5 ) 
 
 
 Global Intangible Low Tax Income tax 3.2 2.5 2.1 
 Foreign Derived Intangible Income tax benefit ( 3.7 ) ( 1.6 ) ( 4.4 ) 
 Non-deductible executive compensation 5.2 1.6 2.0 
 Permanent adjustments related to employee share based compensation ( 3.7 ) ( 4.6 ) ( 5.1 ) 
 Deferred tax on future cash dividends ( 0.9 ) 1.0 0.6 
 Income tax audit adjustments 2.5 — — 
 Deferred adjustment for income tax audit ( 1.2 ) — — 
 Other Permanent adjustments and non-deductible expenses ( 0.3 ) 1.0 ( 0.6 ) 
 Other ( 0.4 ) 0.2 ( 0.3 ) 
 Income tax expense (benefit) $ 13.3 $ ( 45.5 ) $ 17.0 

 Significant components of the Company’s deferred income tax assets and liabilities are as follows: 
 
 (In millions) January 1,
2022 January 2,
2021 
 Deferred income tax assets: 
 Accounts receivable and inventory valuation allowances $ 5.2 $ 3.5 
 Deferred compensation accruals 7.2 4.5 
 Accrued pension expense 25.7 33.4 
 Stock-based compensation 8.2 9.1 
 Net operating loss and foreign tax credit carryforwards 18.5 21.0 
 Book over tax depreciation and amortization 0.4 0.4 
 Tenant lease expenses 4.0 4.4 
 Environmental reserve 33.7 24.9 
 Other 9.5 9.1 
 Total gross deferred income tax assets 112.4 110.3 
 Less valuation allowance ( 24.6 ) ( 22.3 ) 
 Net deferred income tax assets 87.8 88.0 
 Deferred income tax liabilities: 
 Intangible assets ( 190.6 ) ( 105.3 ) 
 Tax over book depreciation and amortization ( 9.3 ) ( 10.7 ) 
 Other ( 5.0 ) ( 4.3 ) 
 Total deferred income tax liabilities ( 204.9 ) ( 120.3 ) 
 Net deferred income tax liabilities $ ( 117.1 ) $ ( 32.3 ) 

 The valuation allowance for deferred income tax assets as of January 1, 2022 and January 2, 2021 was $ 24.6 million and $ 22.3 million, respectively. The net increase in the total valuation allowance during fiscal 2021 was $2.3 million. The valuation allowance for both years is primarily related to U.S. state and local net operating loss carryforwards as well as a valuation allowance against state deferred tax assets for certain U.S. legal entities, foreign net operating loss carryforwards and tax credit 
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 carryforwards in foreign jurisdictions. The ultimate realization of the deferred tax assets depends on the generation of future taxable income in foreign jurisdictions as well as state and local tax jurisdictions. The current year change in the valuation allowance results in an increase against the state deferred tax assets of $ 1.0 million, an increase related to state net operating loss carryforward of $ 0.5 million, and a net increase relating to the foreign net operating losses and foreign tax credits and other deferred tax assets of $ 0.8 million. 
 At January 1, 2022, the Company had foreign net operating loss carryforwards of $ 30.4 million, which have expirations ranging from 2022 to an unlimited term during which they are available to offset future foreign taxable income. The Company had U.S. federal net operating loss carryforwards, state net operating loss carryforwards and Internal Revenue Code section 163(j) interest expense carryforwards of $ 15.7 million, $ 234.4 million and $ 32.5 million respectively, which have expirations ranging from 2022 to an unlimited term during which they are available to offset future state taxable income. The Company also had tax credit carryforwards in foreign jurisdictions of $ 2.9 million, which are available for an unlimited carryforward period to offset future foreign taxes. 
 The following table summarizes the activity related to the Company’s unrecognized tax benefits: 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Unrecognized tax benefits at beginning of the year $ 5.5 $ 6.9 
 
 Increases related to current year tax positions 7.8 2.6 
 Decreases related to prior year positions ( 0.9 ) ( 1.3 ) 
 Decreases relating to settlements with taxing authorities ( 1.4 ) ( 2.4 ) 
 Decrease due to lapse of statute ( 0.1 ) ( 0.3 ) 
 Unrecognized tax benefits at end of the year $ 10.9 $ 5.5 

 The portion of the unrecognized tax benefits that, if recognized currently, would reduce the annual effective tax rate was $ 10.1 million and $ 5.0 million as of January 1, 2022 and January 2, 2021, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively. Interest accrued related to unrecognized tax benefits was $ 0.6 million and $ 0.6 million as of January 1, 2022 and January 2, 2021, respectively. 
 The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12 months as a result of the audits. However, any payment of tax is not expected to be material to the consolidated financial statements. For the majority of tax jurisdictions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2017. 
 The Company intends to repatriate cash held in foreign jurisdictions and as such has recorded a deferred tax liability related to additional state taxes and foreign withholding taxes on the future dividends received in the U.S. from the foreign subsidiaries of $ 1.4 million and $ 2.2 million for fiscal years 2021 and 2020, respectively. The Company intends to permanently reinvest all non-cash undistributed earnings outside of the U.S. and has, therefore, not established a deferred tax liability on the amount of non-cash foreign undistributed earnings of $ 199.1 million at January 1, 2022. However, if these non-cash undistributed earnings were repatriated, the Company would be required to accrue and pay applicable U.S. taxes and withholding taxes payable to various countries. It is not practicable to estimate the amount of the deferred tax liability associated with these non-cash unremitted earnings due to the complexity of the hypothetical calculation. 
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 15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) 
 Accumulated other comprehensive income represents net earnings and any revenue, expenses, gains and losses that, under U.S. GAAP, are excluded from net earnings and recognized directly as a component of stockholders’ equity. 
 The change in accumulated other comprehensive income (loss) during fiscal years 2021 and 2020 is as follows: 
 
 (In millions) Foreign
currency
translation Derivatives Pension Total 
 Balance at December 28, 2019 $ ( 47.6 ) $ ( 5.8 ) $ ( 48.7 ) $ ( 102.1 ) 
 Other comprehensive income (loss) before reclassifications (1) 
 10.8 ( 17.6 ) ( 30.0 ) ( 36.8 ) 
 Amounts reclassified from accumulated other comprehensive income (loss) — 3.5 (2) 
 6.6 (3) 
 10.1 
 Income tax (expense) benefit — ( 0.4 ) ( 1.4 ) ( 1.8 ) 
 Net reclassifications 
 — 3.1 5.2 8.3 
 Net current-period other comprehensive income (loss) (1) 
 10.8 ( 14.5 ) ( 24.8 ) ( 28.5 ) 
 
 
 
 Balance at January 2, 2021 $ ( 36.8 ) $ ( 20.3 ) $ ( 73.5 ) $ ( 130.6 ) 
 Other comprehensive income (loss) before reclassifications (1) 
 ( 20.0 ) 7.7 29.5 17.2 
 Amounts reclassified from accumulated other comprehensive income (loss) — 5.1 (2) 
 13.8 (3) 
 18.9 
 Income tax (expense) benefit — ( 1.4 ) ( 3.0 ) ( 4.4 ) 
 Net reclassifications 
 — 3.7 10.8 14.5 
 Net current-period other comprehensive income (loss) (1) 
 ( 20.0 ) 11.4 40.3 31.7 
 
 Balance at January 1, 2022 $ ( 56.8 ) $ ( 8.9 ) $ ( 33.2 ) $ ( 98.9 ) 

 (1) Other comprehensive income (loss) is reported net of taxes and noncontrolling interest. 
 (2) Amounts related to foreign currency derivatives deemed to be highly effective are included in cost of goods sold. Amounts related to foreign currency derivatives that are no longer deemed to be highly effective are included in other income. Amounts related to interest rate swaps and the cross currency swap are included in interest expense. 
 (3) Amounts reclassified are included in the computation of net pension expense. 
 
 16. FAIR VALUE MEASUREMENTS 
 Recurring Fair Value Measurements 
 The following table sets forth financial assets and liabilities measured at fair value in the consolidated balance sheets and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy. 
 
 Fair Value Measurements 
 Quoted Prices With Other Observable Inputs (Level 2) 
 (In millions) January 1, 2022 January 2, 2021 
 Financial assets: 
 Derivatives $ 5.9 $ — 
 Financial liabilities: 
 Derivatives $ ( 1.1 ) $ ( 19.6 ) 

 The fair value of foreign currency forward exchange contracts represents the estimated receipts or payments necessary to terminate the contracts. The fair value of the cross-currency swap is determined using the current forward rates and changes in the spot rate. 
 Nonrecurring Fair Value Measurements 
 Indefinite-lived intangible assets are tested annually, or if a triggering event occurs that indicates an impairment loss may have been incurred, using fair value measurements with unobservable inputs (Level 3). The Company recorded an impairment charge 
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 of $ 222.2 million on the Sperry ® indefinite-lived trade name in fiscal 2020. Refer to Note 4, “Goodwill and Other Intangibles” for additional discussion on the Sperry ® trade name impairment. 
 Fair Value Disclosures 
 The Company’s financial instruments that are not recorded at fair value consist of cash and cash equivalents, accounts and notes receivable, accounts payable, borrowings under revolving credit agreements and other short-term and long-term debt. The carrying amount of these financial instruments is historical cost, which approximates fair value, except for the debt. The carrying value and the fair value of the Company’s debt are as follows: 
 
 (In millions) January 1, 2022 January 2, 2021 
 Carrying value $ 966.8 $ 722.5 
 Fair value 960.6 765.4 

 
 The fair value of the fixed rate debt was based on third-party quotes (Level 2). The fair value of the variable rate debt was calculated by discounting the future cash flows to its present value using a discount rate based on the risk-free rate of the same maturity (Level 3). 
 
 17. LITIGATION AND CONTINGENCIES 
 Litigation 
 The Company operated a leather tannery in Rockford, Michigan from the early 1900s through 2009 (the “Tannery”). The Company also owns a parcel on House Street in Plainfield Township that the Company used for the disposal of Tannery byproducts until about 1970 (the "House Street" site). Beginning in the late 1950s, the Company used 3M Company’s Scotchgard™ in its processing of certain leathers at the Tannery. Until 2002 when 3M Company changed its Scotchgard™ formula, Tannery byproducts disposed of by the Company at the House Street site and other locations may have contained PFOA and/or PFOS, two chemicals in the family of compounds known as per- and polyfluoroalkyl substances (together, “PFAS”). PFOA and PFOS help provide non-stick, stain-resistant, and water-resistant qualities, and were used for many decades in commercial products like firefighting foams and metal plating, and in common consumer items like food wrappers, microwave popcorn bags, pizza boxes, Teflon™, carpets and Scotchgard™. 
 In May 2016, the Environmental Protection Agency (“EPA”) announced a lifetime health advisory level of 70 parts per trillion (“ppt”) combined for PFOA and PFOS. In January 2018, the Michigan Department of Environmental Quality (“MDEQ”, now known as the Michigan Department of Environment, Great Lakes, and Energy (“EGLE”)) enacted a drinking water criterion of 70 ppt combined for PFOA and PFOS, which set an official state standard for acceptable concentrations of these contaminants in groundwater used for drinking water purposes. On August 3, 2020, Michigan changed the standards for PFOA and PFOS in drinking water to 8 and 16 ppt, respectively, and set standards for four other PFAS substances. 
 Civil and Regulatory Actions of EGLE and EPA 
 On January 10, 2018, EGLE filed a civil action against the Company in the U.S. District Court for the Western District of Michigan under the federal Resource Conservation and Recovery Act of 1976 (“RCRA”) and Parts 201 and 31 of the Michigan Natural Resources and Environmental Protection Act (“NREPA”) alleging that the Company’s past and present handling, storage, treatment, transportation and/or disposal of solid waste at the Company’s properties has resulted in releases of PFAS at levels exceeding applicable Michigan cleanup criteria for PFOA and PFOS (the "EGLE Action"). Plainfield and Algoma Townships intervened in the EGLE Action alleging claims under RCRA, NREPA, the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and common law nuisance. 
 On February 3, 2020, the parties entered into a consent decree resolving the EGLE Action, which was approved by U.S. District Judge Janet T. Neff on February 19, 2020 (the “Consent Decree”). Under the Consent Decree, the Company agreed to pay for an extension of Plainfield Township’s municipal water system to more than 1,000 properties in Plainfield and Algoma Townships, subject to an aggregate cap of $69.5 million. The Company also agreed to continue maintaining water filters for certain homeowners, resample certain residential wells for PFAS, continue remediation at the Company’s Tannery property and House Street site, and conduct further investigations and monitoring to assess the presence of PFAS in area groundwater. The Company’s activities under the Consent Decree are not materially impacted by the drinking water standards that became effective on August 3, 2020. 
 On December 19, 2018, the Company filed a third-party complaint against 3M Company seeking, among other things, recovery of the Company’s remediation and other costs incurred in defense of the EGLE Action ("the 3M Action"). On June 20, 2019, the 3M Company filed a counterclaim against the Company in response to the 3M Action, seeking, among other things, contractual and common law indemnity and contribution under CERCLA and Part 201 of NREPA. On February 20, 2020, the 
 64 

 
 

 Company and 3M Company entered into a settlement agreement resolving the 3M Action, under which 3M Company paid the Company a lump sum amount of $ 55.0 million during the first quarter of 2020. 
 On January 10, 2018, the EPA entered a Unilateral Administrative Order (the “Order”) under Section 106(a) of CERCLA, 42 U.S.C. § 9606(a) with an effective date of February 1, 2018. The Order pertained to specified removal actions at the Company's Tannery and House Street sites, including certain time critical removal actions subsequently identified in an April 29, 2019 letter from the EPA, to abate the actual or threatened release of hazardous substances at or from the sites. On October 28, 2019, the EPA and the Company entered into an Administrative Settlement and Order on Consent (“AOC”) that supersedes the Order and addresses the agreed-upon removal actions outlined in the Order. The Company has completed on-site activities required by the AOC, and is awaiting the final review and determination from the EPA. 
 The Company discusses its reserve for remediation costs in the environmental liabilities section below. 
 Individual and Class Action Litigation 
 Beginning in late 2017, individual lawsuits and three putative class action lawsuits were filed against the Company that raise a variety of claims, including claims related to property, remediation, and human health effects. The three putative class action lawsuits were subsequently refiled in the U.S. District Court for the Western District of Michigan as a single consolidated putative class action lawsuit. 3M Company has been named as a co-defendant in the individual lawsuits and consolidated putative class action lawsuit. In addition, the current owner of a former landfill and gravel mining operation sued the Company seeking damages and cost recovery for property damage allegedly caused by the Company’s disposal of tannery waste containing PFAS (this suit collectively with the individual lawsuits and putative class action, the “Litigation Matters”). 
 On September 27, 2021, the Company and 3M Company entered into a non-binding term sheet outlining proposed settlement terms with the law firm representing certain of the plaintiffs in the individual lawsuits included in the Litigation Matters, and, on January 11, 2022, the parties entered into the agreement related to this proposed settlement (the “Master Settlement Agreement”). The plaintiffs’ law firm has until March 11, 2022 to obtain each of its individual clients’ agreement to participate in the proposed settlement under the Master Settlement Agreement and provide a related release. After the March 11, 2022 deadline, any party to the Master Settlement Agreement may, for a limited time, elect to opt out of the Master Settlement Agreement if: (a) too many individual plaintiffs do not sign releases and participate in the proposed settlement under the Master Settlement Agreement; or (b) any plaintiff asserting personal injury claims fails to participate in the proposed settlement under the Master Settlement Agreement. In the event any party opts out of the Master Settlement Agreement, it will be void. If the Master Settlement Agreement is voided, the Company intends to continue vigorously defending the individual lawsuits and other Litigation Matters. 
 On December 9, 2021, the Company and 3M Company reached a settlement in principle to resolve certain of the other remaining individual lawsuits included in the Litigation Matters. Upon completion of these settlements, only one private individual action will remain pending in Michigan state court. In addition, the parties to the putative class action have engaged in mediation. 
 Assessing potential liability with respect to the Litigation Matters at this time is difficult. Other than the individual lawsuits subject to the settlements described above, the Litigation Matters are in various stages of discovery and related motions. In addition, there is minimal direct and relevant precedent for these types of claims related to PFAS, and the science regarding the human health effects of PFAS exposure in the environment remains inconclusive and inconsistent, thereby creating additional uncertainties. For certain of the Litigation Matters described above, the Company has recorded an accrual in the amount of $ 50.7 million since January 2, 2021 and made related payments of $ 0.6 million. 
 In December 2018, the Company filed a lawsuit against certain of its historic liability insurers, seeking to compel them to provide a defense against the Litigation Matters on the Company's behalf and coverage for remediation efforts undertaken by, and indemnity provided by, the Company. The Company recognized certain recoveries from legacy insurance policies in 2021 and 2020, and continues pursing additional recoveries through the lawsuit. 
 Other Litigation 
 The Company is also involved in litigation incidental to its business and is a party to legal actions and claims, including, but not limited to, those related to employment, intellectual property, and other environmental matters. Some of the legal proceedings include claims for compensatory as well as punitive damages. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available to the Company and reserves for liabilities that the Company has recorded, along with applicable insurance, it is management’s opinion that the outcome of these items are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. 
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 Environmental Liabilities 
 The following is a summary of the activity with respect to the environmental remediation reserve established by the Company: 
 
 Fiscal Year 
 (In millions) 2021 2020 
 Remediation liability at beginning of the year 
 $ 101.8 $ 124.4 
 
 Amounts paid 
 ( 16.1 ) ( 22.6 ) 
 Remediation liability at the end of the year 
 $ 85.7 $ 101.8 

 The reserve balance as of January 1, 2022 includes $ 24.5 million that is expected to be paid within the next twelve months and is recorded as a current obligation in other accrued liabilities, with the remaining $ 61.2 million expected to be paid over the course of up to 25 years, recorded in other liabilities. 
 The Company's remediation activity at the Tannery property, House Street site and other relevant disposal sites is ongoing. Although the Consent Decree has made near-term costs more clear, it is difficult to estimate the long-term cost of environmental compliance and remediation given the uncertainties regarding the interpretation and enforcement of applicable environmental laws and regulations, the extent of environmental contamination and the existence of alternative cleanup methods. Future developments may occur that could materially change the Company’s current cost estimates, including, but not limited to: (i) changes in the information available regarding the environmental impact of the Company’s operations and products; (ii) changes in environmental regulations, changes in permissible levels of specific compounds in drinking water sources, or changes in enforcement theories and policies, including efforts to recover natural resource damages; (iii) new and evolving analytical and remediation techniques; (iv) changes to the form of remediation; (v) success in allocating liability to other potentially responsible parties; and (vi) the financial viability of other potentially responsible parties and third-party indemnitors. For locations at which remediation activity is largely ongoing, the Company cannot estimate a possible loss or range of loss in excess of the associated established reserves for the reasons described above. The Company adjusts recorded liabilities as further information develops or circumstances change. 
 Minimum Royalties and Advertising Commitments 
 The Company has future minimum royalty and advertising obligations due under the terms of certain licenses held by the Company. These minimum future obligations for the fiscal years subsequent to January 1, 2022 are as follows: 
 
 (In millions) 2022 2023 2024 2025 2026 Thereafter 
 Minimum royalties $ 1.8 $ — $ — $ — $ — $ — 
 Minimum advertising 3.8 3.9 4.1 — — — 

 
 Minimum royalties are based on both fixed obligations and assumptions regarding the Consumer Price Index. Royalty obligations in excess of minimum requirements are based upon future sales levels. In accordance with these agreements, the Company incurred royalty expense of $ 2.3 million, $ 1.9 million and $ 2.3 million for fiscal years 2021, 2020 and 2019, respectively. 
 The terms of certain license agreements also require the Company to make advertising expenditures based on the level of sales of the licensed products. In accordance with these agreements, the Company incurred advertising expense of $ 6.5 million, $ 2.5 million and $ 3.6 million for fiscal years 2021, 2020 and 2019, respectively. 
 
 18. BUSINESS 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; and 
 • 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 Sweaty Betty ® activewear business, the Company’s leather marketing operations, sourcing operations that include third-party commission revenues and multi-branded consumer-direct retail stores. The Corporate category consists of unallocated corporate expenses, such as 
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 corporate employee costs, costs related to the COVID-19 pandemic, impairment of intangible assets and environmental and other related costs. 
 The reportable segments are engaged in designing, manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Revenue for the reportable segments includes revenue from the sale of branded footwear, apparel and accessories to third-party customers; revenue from third-party licensees and distributors; and revenue from the Company’s consumer-direct businesses. The Company’s reportable segments are determined based on how the Company internally reports and evaluates financial information used to make operating decisions. 
 Company management uses various financial measures to evaluate the performance of the reportable segments. The following is a summary of certain key financial measures for the respective fiscal periods indicated. 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 Revenue: 
 Wolverine Michigan Group $ 1,298.9 $ 1,051.0 $ 1,299.7 
 Wolverine Boston Group 935.8 696.0 910.9 
 Other 180.2 44.1 63.1 
 Total $ 2,414.9 $ 1,791.1 $ 2,273.7 
 Operating profit (loss): 
 Wolverine Michigan Group $ 245.3 $ 179.9 $ 244.8 
 Wolverine Boston Group 149.3 88.1 153.8 
 Other 14.3 1.6 2.9 
 Corporate ( 253.2 ) ( 406.7 ) ( 230.5 ) 
 Total $ 155.7 $ ( 137.1 ) $ 171.0 
 Depreciation and amortization expense: 
 Wolverine Michigan Group $ 2.2 $ 2.7 $ 2.4 
 Wolverine Boston Group 2.6 3.4 3.3 
 Other 4.8 2.0 2.4 
 Corporate 23.6 24.7 24.6 
 Total $ 33.2 $ 32.8 $ 32.7 
 Capital expenditures: 
 Wolverine Michigan Group $ 0.8 $ 0.8 $ 2.2 
 Wolverine Boston Group 0.4 2.3 5.7 
 Other 6.0 0.9 2.2 
 Corporate 10.4 6.3 24.3 
 Total $ 17.6 $ 10.3 $ 34.4 

 
 
 
 (In millions) January 1,
2022 January 2,
2021 
 Total assets: 
 Wolverine Michigan Group $ 651.9 $ 626.9 
 Wolverine Boston Group 1,123.6 1,077.8 
 Other 606.2 31.4 
 Corporate 204.7 401.3 
 Total $ 2,586.4 $ 2,137.4 
 Goodwill: 
 Wolverine Michigan Group $ 145.1 $ 145.4 
 Wolverine Boston Group 296.2 297.0 
 Other 115.3 — 
 Total $ 556.6 $ 442.4 

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 Geographic dispersion of revenue from external customers, based on shipping destination is as follows: 
 
 Fiscal Year 
 (In millions) 2021 2020 2019 
 United States $ 1,573.9 $ 1,234.2 $ 1,507.9 
 Foreign: 
 Europe, Middle East and Africa 460.3 279.8 343.1 
 Asia Pacific 161.6 120.3 193.7 
 Canada 116.9 88.9 117.9 
 Latin America 102.2 67.9 111.1 
 Total from foreign territories 841.0 556.9 765.8 
 Total revenue $ 2,414.9 $ 1,791.1 $ 2,273.7 

 The location of the Company’s tangible long-lived assets, which comprises property, plant and equipment and lease right-of-use assets, is as follows: 
 
 (In millions) January 1,
2022 January 2,
2021 December 28,
2019 
 United States $ 205.8 $ 222.2 $ 247.2 
 Foreign countries 61.4 44.9 54.6 
 Total $ 267.2 $ 267.1 $ 301.8 

 The Company does not believe that it is dependent upon any single customer because no customer accounts for more than 10% of consolidated revenue in any year. 
 During fiscal 2021, the Company sourced 100 % of its footwear products and apparel and accessories from third-party suppliers, located primarily in the Asia Pacific region. While changes in suppliers could cause delays in manufacturing and a possible loss of sales, management believes that other suppliers could provide similar products on comparable terms. 
 
 19. BUSINESS ACQUISITIONS 
 Sweaty Betty ® 
 On July 31, 2021, the Company entered into a definitive agreement to acquire 100 % of the outstanding shares of Lady of Leisure InvestCo Limited. The acquisition was completed on August 2, 2021 for $ 417.4 million, which is net of acquired cash of $ 7.4 million. The Acquired Company owns the Sweaty Betty ® brand and activewear business. The acquisition was funded with cash on hand and borrowings under the Company’s Revolving Facility. 
 Sweaty Betty ® is a premium women’s activewear brand that distributes a wide array of innovative on-trend tops, bottoms, swimwear, outerwear and accessories around the world, mainly through direct-to-consumer channels. The Sweaty Betty ® acquisition is part of the Company’s strategic shift over the last several years from a traditional footwear wholesaler to a consumer-obsessed, digital-focused growth company. The acquisition also aligns with the Company’s strategic growth plan to focus on expanding the Company’s digital and international footprint, and building the brand portfolio beyond footwear. 
 Sweaty Betty ® contributed net revenue of $ 117.4 million and net earnings of $ 9.7 million to the Company for the period from the acquisition date to January 1, 2022. The Sweaty Betty ® operating results are included in the Other category for segment reporting purposes. 
 The Company recognized acquisition-related transaction costs of $ 7.5 million for 2021, in the selling, general and administrative expenses line item in the Consolidated Statement of Operations. These costs represent investment banking fees, legal and professional fees, transaction fees, and consulting fees associated with the acquisition. 
 The Company accounted for the acquisition following FASB ASC Topic 805, Business Combinations , and the related assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The aggregate purchase price was allocated to the major categories of assets acquired and liabilities assumed based upon their respective fair values at the acquisition date using primarily Level 2 and Level 3 inputs. The Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. The Sweaty Betty ® trademark, which is estimated to have an indefinite life, has been valued at $ 346.4 million using the multi-period excess earnings method. The multi-period excess earnings method requires the use of 
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 significant estimates and assumptions, including but not limited to, future revenues, growth rates, EBITDA margin, tax rates and a discount rate. 
 The purchase price allocation is preliminary and based upon valuation information available to determine the fair value of certain assets and liabilities, including goodwill, and is subject to change, primarily for income tax matters and final adjustments to net working capital as additional information is obtained about the facts and circumstances that existed at the valuation date. The Company expects to finalize the fair values of the assets acquired and liabilities assumed over the one-year measurement period. 
 The following table summarizes the preliminary purchase price allocation to the assets acquired and liabilities assumed at the acquisition date: 
 
 (In millions) Fair Value 
 Accounts receivable $ 3.6 
 Inventories 48.4 
 Prepaid expenses and other current assets 5.3 
 Property, plant and equipment 10.0 
 Lease right-of-use assets 7.0 
 Goodwill 118.9 
 Intangibles 355.0 
 Other assets 0.6 
 Total assets acquired 548.8 
 Accounts payable 13.1 
 Accrued salaries and wages 6.0 
 Other accrued liabilities 14.3 
 Lease liabilities 7.0 
 Deferred income taxes 91.0 
 Total liabilities assumed 131.4 
 Net assets acquired $ 417.4 
 
 
 
 

 Goodwill is the result of expected synergies and the Company’s ability to grow the Sweaty Betty ® brand, as well the acquired assembled workforce. All of the goodwill is presented within the Other category for segment reporting purposes and within the Sweaty Betty ® reporting unit and will not be deductible for income tax purposes. 
 Intangible assets acquired in the acquisition were valued as follows: 
 
 (In millions) Intangible Asset Useful life 
 Trade name and trademark $ 346.4 Indefinite 
 Customer relationship 7.2 18 years 
 Backlog 1.0 5 months 
 Customer list 0.4 3 years 
 Total intangible assets acquired $ 355.0 

 The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of the Sweaty Betty ® brand and activewear business occurred at the beginning of fiscal 2020. The pro forma information is not necessarily indicative of the results that would have actually been obtained if the acquisition had occurred at such date or that may be attained in the future. These pro forma amounts have been calculated after including the historical Sweaty Betty ® operating results in the Company’s consolidated results and reflecting the following adjustments: fair value adjustments for intangible assets and inventory acquired, timing adjustment to recognize acquisition related costs incurred in 2021 and in 2020, and adjustments reflecting historical interest expense. The adjustments have been applied with related tax effects. 
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 Fiscal Year 
 (In millions) 2021 2020 
 Net revenue $ 2,552.4 $ 1,954.7 
 Net earnings attributable to Wolverine World Wide, Inc. 83.9 ( 144.9 ) 

 
 Sportlab 
 On April 30, 2019, the Company acquired assets and assumed liabilities from Sportlab S.R.L. (“Sportlab”), the distributor of Saucony ® footwear in Italy. Total purchase consideration of $ 25.2 million includes cash paid, extinguishment of Sportlab’s accounts payable balance that was due to the Company at the time of acquisition and contingent consideration. The contingent consideration was based on sales activity from the date of the acquisition through the end of fiscal 2019 and was paid in the first quarter of fiscal 2020. The detailed amounts of each component of the purchase consideration are as follows: 
 
 (In millions) Purchase Consideration 
 Cash paid $ 15.1 
 Extinguishment of Sportlab’s accounts payable balance 4.6 
 Contingent consideration 5.5 
 Total purchase consideration $ 25.2 

 
 The Company accounted for the acquisition under the provisions of FASB ASC Topic 805, Business Combinations . The related assets acquired and liabilities assumed were recorded at fair value on the acquisition date. The operating results for the acquired Saucony ® distribution business are included in the Company’s consolidated results of operations beginning April 30, 2019, and are included in the Wolverine Boston Group reporting group for segment reporting purposes. 
 The final allocation of the purchase price as of December 28, 2019 was: 
 
 (In millions) Final Valuation 
 Accounts receivable $ 1.8 
 Inventories 6.2 
 Goodwill 12.0 
 Amortizable intangibles 12.9 
 Total assets acquired 32.9 
 Deferred income taxes 3.2 
 Other liabilities 4.5 
 Total liabilities assumed 7.7 
 Net assets acquired $ 25.2 
 
 
 
 

 The excess of the purchase price over the fair value of the net assets acquired, amounting to $ 12.0 million, was recorded as goodwill in the consolidated balance sheet and was assigned to the Wolverine Boston Group reportable segment. The goodwill that was recognized is attributable to the efficiencies to be gained by integrating operations with the Saucony ® distribution business purchased from Sportlab. Other intangible assets acquired include order backlog, valued at $ 1.7 million, and customer relationship assets, valued at $ 11.2 million, which had estimated useful lives at the acquisition date of 7 months and 14 years, respectively. 
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 Report of Independent Registered Public Accounting Firm 
 To the Shareholders and the Board of Directors of Wolverine World Wide, Inc. 
 
 
 Opinion on the Financial Statements 
 We have audited the accompanying consolidated balance sheets of Wolverine World Wide, Inc. and subsidiaries (the Company) as of January 1, 2022 and January 2, 2021, the related consolidated statements of operations, comprehensive income (loss) , stockholders' equity and cash flows for each of the three years in the period ended January 1, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2022, in conformity with U.S. generally accepted accounting principles. 
 
 
 We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2022 expressed an unqualified opinion thereon. 
 
 
 Basis for Opinion 
 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 
 
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 
 
 
 Critical Audit Matters 
 The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 
 
 
 
 Valuation of indefinite-lived intangibles 
 Description of the Matter At January 1, 2022, the Company’s indefinite-lived intangible assets were $718.1 million, which included $296.0 million for the Sperry trade name. As discussed in Notes 1 and 4 of the consolidated financial statements, indefinite-lived intangibles are tested for impairment at least annually. 
 
 
 Auditing management’s annual impairment test for the Sperry trade name was complex due to the significant estimation uncertainty required in determining the fair value of the Sperry trade name indefinite-lived intangible asset. The significant assumptions used to estimate the fair value of the Sperry trade name included the forecasted revenue growth, EBITDA margin, and discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. Changes in these assumptions could have a significant impact on the fair value of the Sperry trade name, the amount of any impairment charge, or both. 
 

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 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of Company’s controls over the Sperry trade name impairment review process. For example, we tested controls that address the risk of material misstatement relating to the valuation of the trade name, including management’s review of the significant assumptions described above and the completeness and accuracy of the data used to develop such estimates. 
 
 
 To test the estimated fair value of the Sperry trade name, our audit procedures included, among others, assessing the appropriateness of the valuation model used, evaluating the significant assumptions discussed above, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We compared the financial projections to current industry and economic trends and the historical accuracy of management’s estimates. We involved our valuation specialists to assist in our evaluation of the Company's model, valuation methodology and the discount rate. 
 
 
 
 Valuation of Sweaty Betty trade name and trademark intangible asset in the acquisition of Lady of Leisure InvestCo Limited 
 
 Description of the Matter As discussed in Note 19 to the consolidated financial statements, during the year ended January 1, 2022, the Company completed the acquisition of Lady of Leisure InvestCo Limited (which owns the Sweaty Betty brand and activewear business, referred to herein as “Sweaty Betty”) for a total purchase price of approximately $417.4 million. The acquisition was accounted for as a business combination. The consideration paid in the acquisition must be allocated to the acquired assets and liabilities assumed generally based on their fair value with the excess of the purchase price over those fair values allocated to goodwill. 
 
 
 Auditing the Company’s accounting for its acquisition of Sweaty Betty was complex due to the significant estimation uncertainty involved in estimating the fair value of the trade name and trademark intangible asset. The total fair value ascribed to the trade name and trademark intangible amounted to $346.4 million. The Company used the multi-period excess earnings method to value the trade name and trademark. The significant assumptions used to estimate the fair value of trade name and trademark included the forecasted revenue growth, EBITDA margin and discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. 
 
 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over its accounting for the acquisition of Sweaty Betty. For example, we tested controls that address the risks of material misstatement relating to the valuation of the trade name and trademark intangible asset, including management’s review of the methods and significant assumptions used to develop such estimates. 
 
 
 To test the estimated fair value of the acquired trade name and trademark intangible asset, our audit procedures included, among others, assessing the appropriateness of the valuation methodologies used, evaluating the significant assumptions discussed above, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We compared the financial projections to current industry and economic trends, the historic financial performance of the acquired business, and forecasted performance of guideline public companies. We also performed sensitivity analyses to evaluate the changes in the fair value of the intangible assets that would result from changes in the significant assumptions. We involved our valuation specialist to assist in evaluating the methodologies used to estimate the fair value of the trade name and trademark intangible asset and to test certain significant assumptions, including the discount rate. 
 

 
 
 /s/ Ernst & Young LLP 
 We have served as the Company’s auditor since at least 1933, but we are unable to determine the specific year. 
 Grand Rapids, Michigan 
 February 24, 2022 
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 Report of Independent Registered Public Accounting Firm 
 To the Shareholders and the Board of Directors of Wolverine World Wide, Inc. 
 
 
 Opinion on Internal Control over Financial Reporting 
 We have audited Wolverine World Wide, Inc. and subsidiaries’ internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Wolverine World Wide, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 1, 2022, based on the COSO criteria. 
 
 
 As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Lady of Leisure InvestCo Limited, which is included in the 2022 consolidated financial statements of the Company and constituted 4% of total assets as of January 1, 2022 and 5% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Lady of Leisure InvestCo Limited. 
 
 
 We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 1, 2022 and January 2, 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended January 1, 2022, and the related notes and financial statement schedule and our report dated February 24, 2022 expressed an unqualified opinion thereon. 
 
 
 Basis for Opinion 
 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 
 
 
 We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. 
 
 
 Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 
 
 
 Definition and Limitations of Internal Control Over Financial Reporting 
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 
 
 
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 
 /s/ Ernst & Young LLP 
 Grand Rapids, Michigan 
 February 24, 2022 
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 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 
 None.
WOLVERINE WORLD WIDE INC /DE/ 10-K

Item 8. Financial Statements and Supplementary Data
