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Business Combinations (Notes) | 12 Months Ended
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Jan. 01, 2022
Business Combinations [Abstract] |
Business Acquisitions | 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 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.
| 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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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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