Summary of WOLVERINE WORLD WIDE INC /DE/

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
BUSINESS OVERVIEW
Wolverine World Wide, Inc. (the "Company") is a leading global marketer of branded footwear, apparel and accessories. The Company's business strategy is to market a portfolio of lifestyle brands that will: "Excite Consumers Around the World with Innovative Footwear and Apparel that Bring Style to Purpose." The Company intends to pursue this strategy by offering innovative products and compelling brand propositions, delivering supply chain excellence and operating efficiency, complementing its footwear brands with strong apparel and accessories offerings, and building a more substantial global consumer-direct footprint.
The Company expects that 2009 will continue to be a difficult economic environment, with unpredictable consumer spending. Furthermore, foreign exchange volatility has had a negative impact on the Company's results thus far in 2009, and the Company cannot predict how the U.S. dollar will fare against the British pound, euro and Canadian dollar over the balance of 2009. In light of the current challenging economic conditions, the Company is taking actions through its strategic restructuring plan, its recent acquisitions and a thorough examination of all sources of profit growth. While 2009 will likely present challenges, the Company has planned for tough market conditions and believes that it has taken appropriate measures to combat global uncertainty. The Company remains focused on building strong global lifestyle brands that have a competitive advantage, even in a challenging worldwide economy.
FINANCIAL HIGHLIGHTS
The following represents selected financial performance measures for the second quarter of 2009:
• Revenue for the second quarter of 2009 was $246.4 million, a 7.8% decrease over second quarter 2008 revenue of $267.4 million, with the substantial strengthening of the U.S. dollar contributing to more than half of the revenue decline.

• Diluted earnings per share for the second quarter of 2009 were $0.16 per share compared to $0.33 per share for the same quarter in the prior year, with non-recurring restructuring and other transition costs reducing earnings by $0.11 per share.

• Accounts receivable decreased 6.5% in the second quarter of 2009 compared to the second quarter of 2008 on a 7.8% decrease in revenue.

• Inventory increased 6.9% in the second quarter of 2009 compared to the second quarter of 2008, driven by additional inventory from recently acquired brands, the strategic pre-buy of core products prior to anticipated cost increases, a planned increase in inventory for the Wolverine Leathers business as it transitioned to an outsource model, and higher product costs from third party factories.

• The Company ended the second quarter of 2009 with $79.2 million of cash on hand and interest-bearing debt of $36.4 million.

• The Company declared a quarterly cash dividend of $0.11 per share in the second quarter of 2009, payable on August 3, 2009 to stockholders of record on July 1, 2009.

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RECENT DEVELOPMENTS
Strategic Restructuring Plan
On January 8, 2009, the Company announced a strategic restructuring plan. This plan will allow the company to create significant operating efficiencies, improve its supply chain, and create a stronger global platform.
The Company incurred non-recurring restructuring and other transition costs of approximately $7.9 million, or $0.11 per diluted share, in the second quarter of 2009.
The total implementation costs to achieve the goals of the restructuring plan are estimated in the range of $33 million to $36 million. Approximately $8 million to $9 million of the total estimate represents non-cash charges. Year-to-date through the second quarter, $22.4 million of restructuring and other transition costs have been incurred. It is currently estimated that approximately $6 million to $7 million of restructuring and other transition costs will be incurred in the third quarter of 2009 and approximately $5 million to $6 million will be incurred in the fourth quarter of 2009. Continuing annualized pretax benefits once all initiatives are fully implemented are estimated to be $17 million to $19 million. The Company estimates that approximately $3.5 million of benefits relating to the strategic restructuring plan are reflected in the second quarter's results and $5.4 million have been realized year-to-date. The strategic restructuring plan is expected to be completed by the end of 2009.

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The following is a discussion of the Company's results of operations and liquidity and capital resources for the second quarter of 2009. This section should be read in conjunction with the consolidated condensed financial statements and notes.

RESULTS OF OPERATIONS - SECOND QUARTER 2009 COMPARED TO SECOND QUARTER 2008
FINANCIAL SUMMARY - SECOND QUARTER 2009 VERSUS SECOND QUARTER 2008

                                                       2009                     2008                   Change
                                                             % of                     % of
(Millions of dollars, except per share data)      $         Total          $         Total          $           %
Revenue
Branded footwear, apparel and licensing        $ 218.1         88.5 %   $ 236.4         88.4 %   $ (18.3 )      (7.7 %)
Other business units                              28.3         11.5 %      31.0         11.6 %      (2.7 )      (8.8 %)

Total Revenue                                  $ 246.4        100.0 %   $ 267.4        100.0 %   $ (21.0 )      (7.8 %)


                                                             % of                     % of
                                                  $        Revenue         $        Revenue         $           %
Gross Profit
Branded footwear, apparel and licensing        $  81.9         37.6 %   $  92.1         39.0 %   $ (10.2 )     (11.0 %)
Other business units                              10.1         35.7 %      10.3         33.2 %      (0.2 )      (1.8 %)

Total Gross Profit                             $  92.0         37.3 %   $ 102.4         38.3 %   $ (10.4 )     (10.1 %)


Selling, General and Administrative expenses   $  72.8         29.6 %   $  76.5         28.6 %   $  (3.7 )      (4.8 %)
Restructuring and other transition costs           6.9          2.8 %         -          0.0 %       6.9       100.0 %

Operating Expenses                             $  79.7         32.4 %   $  76.5         28.6 %   $   3.2         4.2 %


Interest expense - net                         $   0.1          0.0 %   $   0.3          0.1 %   $  (0.2 )     (60.6 %)
Other expense - net                                0.5          0.2 %       0.3          0.1 %       0.2        66.7 %
Earnings before income taxes                   $  11.7          4.7 %   $ $25.3          9.5 %   $ (13.6 )     (53.8 %)

Net earnings                                   $   7.9          3.2 %      16.8          6.3 %   $  (8.9 )     (53.0 %)

Diluted earnings per share                     $  0.16            -     $  0.33            -     $ (0.17 )     (51.5 %)

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The Company has one reportable segment that is engaged in manufacturing, sourcing, marketing, licensing and distributing branded footwear, apparel and accessories. Within the branded footwear, apparel and licensing segment, the Company has identified four primary operating units, consisting of the Outdoor Group (consisting of the Merrell®, Chaco® and Patagonia® Footwear brands), the Wolverine Footwear Group (consisting of the Wolverine®, HyTest®, Bates® and through June 30, 2008, Stanley® Footgear brands and certain private label branded products), the Heritage Brands Group (consisting of the Cat® Footwear, Harley-Davidson® Footwear and Sebago® brands) and The Hush Puppies Company (consisting of the Hush Puppies®, Soft Style®, and CusheTM brands). The Company's other business units, which do not collectively comprise a separate reportable segment, consist of Wolverine Retail and Wolverine Leathers (comprised of the leathers and procurement operations). The following is supplemental information on total revenue:

TOTAL REVENUE - SECOND QUARTER

                                   2009                      2008                     Change
                                         % of                      % of
 (Millions of dollars)        $          Total          $          Total          $            %
 Outdoor Group             $  92.8         37.7 %    $  87.5         32.7 %    $   5.3          6.1 %
 Wolverine Footwear
 Group                        49.7         20.2 %       60.9         22.8 %      (11.2 )      (18.4 %)
 Heritage Brands Group        45.0         18.3 %       52.3         19.5 %       (7.3 )      (13.8 %)
 The Hush Puppies
 Company                      27.1         11.0 %       33.1         12.4 %       (6.0 )      (18.3 %)
 Other                         3.5          1.3 %        2.6          1.0 %        0.9         34.0 %

 Total branded
 footwear, apparel and
 licensing revenue         $ 218.1         88.5 %    $ 236.4         88.4 %    $ (18.3 )       (7.7 %)
 Other business units         28.3         11.5 %       31.0         11.6 %       (2.7 )       (8.8 %)

 Total revenue             $ 246.4        100.0 %    $ 267.4        100.0 %    $ (21.0 )       (7.8 %)

REVENUE
Revenue for the second quarter of 2009 decreased $21.0 million from the second quarter of 2008 to $246.4 million. The impact of translating foreign denominated revenue to U.S. dollars decreased revenue by $12.7 million as a result of the substantial strengthening of the U.S. dollar against the British pound, euro and Canadian dollar since the second quarter of 2008. Declines in unit volume, partially offset by price increases in selected brands, for the branded footwear, apparel and licensing operations, as discussed below, caused revenue to decrease $5.6 million. Revenue from the other business units decreased $2.7 million. International revenue represented 37.4% of total revenue in the second quarter of 2009 compared to 42.1% in the second quarter of 2008, with the decline resulting primarily from the stronger U.S. dollar.
The Outdoor Group generated revenue of $92.8 million for the second quarter of 2009, a $5.3 million increase from the second quarter of 2008. The Merrell® brand's revenue in the second quarter of 2009 decreased at a mid single-digit rate compared to the second quarter of 2008, as strong growth in the U.S. market was more than offset by the strengthening of the U.S. dollar and soft retail conditions in many of the brand's other major markets. Patagonia® Footwear's revenue increased at a rate in the high thirties in the second quarter of 2009 compared to the second quarter of 2008, due primarily to strong sell-through of key product. Revenue from the recently acquired Chaco® brand contributed to the group's overall revenue growth in the quarter.
The Wolverine Footwear Group recorded $49.7 million in revenue for the second quarter of 2009, an $11.2 million decrease from the second quarter of 2008. Revenue for the Wolverine® brand declined at a rate in the low teens over the prior year due to negative economic conditions in the work boot industries. Revenue from the Bates® military and civilian uniform footwear business in the second quarter of 2009 declined from the second quarter of 2008 at a rate in the low twenties as a result of the expected reduction in purchases by the U.S. Department of Defense. HyTest®'s revenue for the second quarter of 2009 declined at a mid forties rate from the second quarter of 2008 due to continued difficulties in the U.S. manufacturing sector and related workforce reductions, resulting in decreased demand for safety footwear products.
The Heritage Brands Group had revenue of $45.0 million in the second quarter of 2009, a $7.3 million decrease compared to the second quarter of 2008. Cat® Footwear's revenue in the second quarter of 2009 decreased at a rate in the mid twenties versus the prior year, reflecting the impact of the stronger U.S. dollar on the reported results of the brand's extensive international operations. Harley-Davidson® Footwear's revenue grew in the second quarter of 2009 at a low single-digit rate compared to the second quarter of 2008 due primarily to strong performance in the U.S. market. The Sebago® brand's revenue also grew at a rate in the low single digits in the quarter due to increased sales in the international markets.
The Hush Puppies Company recorded revenue of $27.1 million in the second quarter of 2009, a $6.0 million decrease from the second quarter of 2008. Hush Puppies® revenue in the second quarter of 2009 decreased at a rate in the high teens due primarily to bankruptcies and consolidations of key retailers caused by weaker consumer spending and the strengthening of the U.S. dollar compared to the second quarter of 2008. Soft Style® experienced a revenue decline at a rate in the high forties in the quarter as a result of a weak retail environment. Revenue generated by the recently acquired CusheTM brand partially offset these revenue declines with a very modest contribution to the group's revenue for the second quarter of 2009.
Within the Company's other business units, Wolverine Retail's revenue increased in the second quarter of 2009 at a mid single-digit rate compared to the second quarter of 2008. Wolverine Retail operated 93 retail stores worldwide at the end of the second quarter of 2009 compared to 91 at the end of the second quarter of 2008. Revenue from the Wolverine Leathers operation decreased at a mid twenties rate in the second quarter of 2009 compared to the second quarter of 2008 due to a decline in demand for its proprietary products.

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GROSS MARGIN
The gross margin for the second quarter of 2009 of 37.3% was 100 basis points lower than gross margin for the second quarter of 2008. Non-recurring restructuring and other transition costs of $1.0 million included in cost of products sold in the second quarter of 2009 resulted in a 50 basis point decrease. The remainder of the decrease resulted from expected increases in product and freight costs during the quarter and increased sales of non-core, excess inventory at a reduced margin.
OPERATING EXPENSES
Operating expenses of $79.7 million for the second quarter of 2009 increased $3.2 million from $76.5 million for the second quarter of 2008. Non-recurring restructuring and other transition costs contributed $6.9 million to the increase, operating expenses associated with recently acquired brands contributed $2.4 million to the increase, and increased pension expense contributed $2.2 million to the increase. These increases were offset by the impact of foreign exchange of $3.7 million, lower general and administrative costs resulting from the Company's restructuring and cost-savings initiatives of $1.9 million, as well as significant decreases in certain operating expenses that vary with revenue, such as selling and distribution costs.
INTEREST, OTHER AND TAXES
The change in net interest expense reflected lower outstanding amounts as a result of the repayment in full of the Company's senior notes during the fourth quarter of 2008.
The change in other expense resulted primarily from the change in realized gains or losses on foreign denominated assets and liabilities.
The Company's effective tax rate for the second quarter of 2009 was 32.3% compared to 33.5% for the second quarter of 2008. The reduced rate reflects a higher portion of earnings from foreign jurisdictions with lower tax rates, tax benefits from the strategic restructuring plan and the extension of the Federal research and development tax credit by the U.S. Congress in the fourth quarter of 2008.
NET EARNINGS AND EARNINGS PER SHARE
As a result of the revenue, gross margin and expense changes discussed above, the Company had net earnings of $7.9 million for the second quarter of 2009, compared to $16.8 million in the second quarter of 2008, a decrease of $8.9 million.
Basic net earnings per share decreased 52.9% in the second quarter of 2009 to $0.16 from $0.34 in the second quarter of 2008, and diluted net earnings per share decreased 51.5% in the second quarter of 2009 to $0.16 from $0.33 in the second quarter of 2008. The decrease attributable to lower net earnings is partially offset by fewer average shares outstanding in the second quarter of 2009 compared to the second quarter of 2008 as a result of repurchases of the Company's common stock over the prior twelve months.

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RESULTS OF OPERATIONS - FIRST TWO QUARTERS OF 2009 COMPARED TO FIRST TWO
QUARTERS OF 2008
FINANCIAL SUMMARY - FIRST TWO QUARTERS OF 2009 VERSUS FIRST TWO QUARTERS OF 2008

                                                       2009                     2008                   Change
                                                             % of                     % of
(Millions of dollars, except per share data)      $         Total          $         Total          $           %
Revenue
Branded footwear, apparel and licensing        $ 453.2         90.3 %   $ 503.6         90.6 %   $ (50.4 )     (10.0 %)
Other business units                              48.6          9.7 %      52.0          9.4 %      (3.4 )      (6.6 %)

Total Revenue                                  $ 501.8        100.0 %   $ 555.6        100.0 %   $ (53.8 )      (9.7 %)


                                                             % of                     % of
                                                  $        Revenue         $        Revenue         $           %
Gross profit
Branded footwear, apparel and licensing        $ 179.8         39.7 %   $ 206.4         41.0 %   $ (26.6 )     (12.9 %)
Other business units                              15.2         31.2 %      17.6         33.8 %      (2.4 )     (13.8 %)

Total Gross Profit                             $ 195.0         38.9 %   $ 224.0         40.3 %   $ (29.0 )     (12.9 %)


Selling, General and Administrative expenses   $ 148.2         29.5 %   $ 161.8         29.1 %   $ (13.6 )      (8.4 %)
Restructuring and other transition costs          19.0          3.8 %         -          0.0 %      19.0       100.0 %

Operating Expenses                             $ 167.2         33.3 %   $ 161.8         29.1 %   $   5.4         3.3 %


Interest (income) expense - net                $   0.2          0.0 %   $   0.4          0.1 %   $  (0.2 )     (43.0 %)
Other expense - net                                0.4          0.1 %       0.9          0.2 %      (0.5 )     (53.1 %)
Earnings before income taxes                   $  27.2          5.4 %   $  60.9         11.0 %   $ (33.7 )     (55.4 %)

Net Earnings                                      18.4          3.7 %   $  40.5          7.3 %   $ (22.1 )     (54.6 %)

Diluted earnings per share                     $  0.37            -     $  0.79            -     $ (0.42 )     (53.2 %)

The following is supplemental information on total revenue:
Total Revenue - First Two Quarters

                                   2009                      2008                     Change
                                         % of                      % of
 (Millions of dollars)        $          Total          $          Total          $            %
 Outdoor Group             $ 190.9         38.0 %    $ 194.9         35.1 %    $  (4.0 )       (2.0 %)
 Wolverine Footwear
 Group                       103.1         20.6 %      118.3         21.3 %      (15.2 )      (12.9 %)
 Heritage Brands Group        91.3         18.2 %      109.7         19.7 %      (18.4 )      (16.8 %)
 The Hush Puppies
 Company                      61.8         12.3 %       75.1         13.5 %      (13.3 )      (17.7 %)
 Other                         6.1          1.2 %        5.6          1.0 %        0.5          8.5 %

 Total branded
 footwear, apparel and
 licensing revenue         $ 453.2         90.3 %    $ 503.6         90.6 %    $ (50.4 )      (10.0 %)
 Other business units         48.6          9.7 %       52.0          9.4 %       (3.4 )       (6.7 %)

 Total revenue             $ 501.8        100.0 %    $ 555.6        100.0 %    $ (53.8 )       (9.7 %)

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REVENUE
Revenue for the first two quarters for 2009 decreased $53.8 million from the first two quarters of 2008 to $501.8 million. The impact of translating foreign-denominated revenue to U.S. dollars decreased revenue by $30.7 million. Declines in unit volume for the branded footwear, apparel and licensing operations, partially offset by price increases for selected brands, as discussed below, caused revenue to decrease $19.7 million. Revenue from the other business units decreased $3.4 million.
The Outdoor Group recorded revenue of $190.9 million for the first two quarters of 2009, a $4.0 million decrease over the first two quarters of the prior year. The Merrell® brand's revenue decreased at a high single-digit rate compared to the first two quarters of 2008, primarily as a result of the strengthening of the U.S. dollar and soft retail conditions in many of the brand's major markets. This decline was partially offset by Patagonia® Footwear's mid teen revenue increase and revenue from the recently acquired Chaco® brand.
The Wolverine Footwear Group earned revenue of $103.1 million during the first two quarters of 2009, a $15.2 million decrease from the first two quarters of 2008. The Wolverine® brand realized a mid single-digit rate decrease in revenue during the first two quarters of 2009 compared to the first two quarters of 2008 due primarily to a challenging retail environment. The Bates® uniform footwear business realized a decrease in revenue at a rate in the high teens due primarily to planned reduction in purchases by the U.S. Department of Defense. HyTest®'s revenue declined at a rate in the high twenties due to negative economic conditions in the U.S. market and related workforce reductions, resulting in decreased demand for safety footwear products.
The Heritage Brands Group recorded revenue of $91.3 million for the first two quarters of 2009, an $18.4 million decrease over the first two quarters of the prior year. Cat® Footwear's revenue decreased at a rate in the low twenties compared to the first two quarters of 2008, reflecting the impact of the stronger U.S. dollar on the reported results of the brand's extensive international operations. Harley-Davidson® Footwear revenue decreased at a mid single-digit rate due primarily to a weak retail environment and the continued impact of the modification of the brand's distribution strategy in the U.S. market that started in 2008. The Sebago® brand experienced a decline in revenue at a rate in the mid teens for the first two quarters of 2009, compared to the first two quarters of 2008 as a result of tough economic conditions in many of the brand's most important markets.
The Hush Puppies Company recorded revenue of $61.8 million in the first two quarters of 2009, a $13.3 million decrease from the first two quarters of 2008. Hush Puppies® revenue decreased at a rate in the high teens due primarily to bankruptcies and consolidations of key retailers caused by weaker consumer spending, as well as the strengthening of the U.S. dollar compared to the first two quarters of 2008. The Soft Style® brand experienced a decline in revenue at a rate in the high twenties as a result of a weak retail environment. Revenue generated by the recently acquired CusheTM brand partially offset these revenue declines with its contribution to the group's revenue for the first two quarters of 2009.
Within the Company's other business units, Wolverine Retail's revenue increased in the first two quarters of 2009 at a low single-digit rate compared to the first two quarters of 2008. Wolverine Retail operated 93 retail stores worldwide at the end of the second quarter of 2009 compared to 91 at the end of the second quarter of 2008 Revenue from the Wolverine® Leathers operation decreased at a rate in the mid teens in the first two quarters of 2009 as compared to the first two quarters of 2008 due to a decline in demand for its proprietary products.
GROSS MARGIN
The gross margin for the first two quarters of 2009 was 38.9%, a 140 basis point decrease from the first two quarters of 2008. Non-recurring restructuring and other transition costs of $3.3 million included in cost of products sold in the first two quarters of 2009 resulted in a 60 basis point decrease, with the remainder of the decrease resulting from expected increases in product and freight costs and increased sales of low margin product during the first two quarters.

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OPERATING EXPENSES
Operating expenses of $167.2 million for the first two quarters of 2009 increased $5.4 million from $161.8 million for the first two quarters of 2008. Non-recurring restructuring and other transition costs contributed $19.0 million to the increase, operating expenses associated with recently acquired brands contributed $4.7 million to the increase and increased pension expense contributed $4.4 million to the increase. These increases were offset by the impact of foreign exchange of $8.1 million, lower general and administrative costs as a result of the Company's restructuring and cost-savings initiatives of $3.1 million, as well as significant decreases in certain operating expenses that vary with revenue, such as selling and distribution costs.
INTEREST, OTHER & TAXES
The change in net interest expense reflected lower outstanding amounts as a result of the repayment in full of the Company's senior notes during the fourth quarter of 2008.
The change in other expense primarily related to the change in realized gains or losses on foreign denominated assets and liabilities.
The Company's effective tax rate for the first two quarters of 2009 was 32.3% compared to 33.5% for the first two quarter of 2008. The reduced rate reflects a higher portion of earnings from foreign jurisdictions with lower tax rates, tax benefits from the strategic restructuring plan and the extension of the Federal research and development tax credit by the U.S. Congress in the fourth quarter of 2008.
NET EARNINGS AND EARNINGS PER SHARE
As a result of the revenue, gross margin and expense changes discussed above, the Company had net earnings of $18.4 million for the first two quarters of 2009, compared to $40.5 million in the first two quarters of 2008, a decrease of $22.1 million.
Basic net earnings per share decreased 53.1% in the first two quarters of 2009 to $0.38 from $0.81 in the first two quarters of 2008, and diluted net earnings per share decreased 53.2% in the first two quarters of 2009 to $0.37 from $0.79 in the first two quarters of 2008. The decrease attributable to lower net earnings was partially offset by fewer average shares outstanding in the second quarter of 2009 compared to the second quarter of 2008, due to repurchases of the Company's common stock.

LIQUIDITY AND CAPITAL RESOURCES

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