OVERVIEW
BUSINESS OVERVIEW
Wolverine World Wide, Inc. (the "Company") continues to evolve from a leading global marketer of branded footwear into a multi-brand global marketer of 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, the Company is projecting that the U.S. dollar will moderately strengthen against the British pound, euro and Canadian dollar in 2009 versus current exchange rates, and that average rates for 2009 will reflect a significant strengthening of the U.S. dollar versus 2008. 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 dominant 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 first quarter of 2009:
• Revenue for the first quarter of 2009 was $255.3 million, an 11.4% decrease over first quarter 2008 revenue of $288.2 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 first quarter of 2009 were $0.21 per share compared to $0.46 per share for the same quarter in the prior year, with non-recurring restructuring and other transition costs reducing earnings by $0.20 per share.

• Accounts receivable decreased 11.1% in the first quarter of 2009 compared to the first quarter of 2008 on an 11.4% decrease in revenue.

• Inventory increased 15.6% in the first quarter of 2009 compared to the first quarter of 2008, driven by increases in product and freight costs, the strategic pre-buy of core products prior to anticipated cost increases, additional inventory from newly-acquired brands and build up of buffer inventory in the Wolverine Leathers business prior to the closure of the Company's tannery operations in April 2009.

• The Company ended the first quarter of 2009 with $56.8 million of cash on hand and interest- bearing debt of $94.4 million.

• During the first quarter of 2009, the Company repurchased 406,200 shares of its common stock at an average cost of $13.77 per share.

• The Company declared a quarterly cash dividend of $0.11 per share in the first quarter of 2009, payable May 1, 2009 to stockholders of record on April 1, 2009.

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 brand platform. The Company incurred non-recurring restructuring and other transition costs of approximately $14.5 million, or $0.20 per diluted share, in the first quarter of 2009.
The total implementation costs to achieve the goals of the restructuring plan are estimated in the range of $31.0 million to $36.0 million. Approximately $9.0 million to $10.0 million of this estimate represents non-cash charges. Continuing annualized pretax benefits, once all initiatives are fully implemented, are estimated to be $17.0 million to $19.0 million. The strategic restructuring plan is expected to be completed by the end of 2009. CusheTM Footwear Brand
On January 8, 2009, the Company announced the acquisition of the CusheTM footwear brand, an acquisition that is expected to leverage the strength of the Company's business model and operating infrastructure. CusheTM is reported as part of The Hush Puppies Company.
Chaco® Footwear Brand
On January 22, 2009, the Company announced the acquisition of Chaco®, a performance outdoor footwear brand with a unique heritage and strong consumer following. This acquisition represents an excellent opportunity for the Company to leverage its world-class sourcing and logistics infrastructure, building upon Chaco®'s leadership in the U.S. market while expanding its business internationally. Chaco® is reported as part of the Outdoor Group.

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

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

                                                       2009                      2008                    Change
                                                             % of                      % of
(Millions of dollars, except per share data)      $         Total           $         Total          $           %
Revenue
Branded footwear, apparel and licensing        $ 235.1         92.1 %    $ 267.2         92.7 %   $ (32.1 )      (12.0 %)
Other business units                              20.2          7.9 %       21.0          7.3 %      (0.8 )       (3.6 %)

Total Revenue                                  $ 255.3        100.0 %    $ 288.2        100.0 %   $ (32.9 )      (11.4 %)


                                                             % of                      % of
                                                  $        Revenue          $        Revenue         $           %
Gross Profit
Branded footwear, apparel and licensing        $  97.9         41.6 %    $ 114.3         42.8 %   $ (16.4 )      (14.3 %)
Other business units                               5.0         24.9 %        7.3         34.7 %      (2.3 )      (30.8 %)

Total Gross Profit                             $ 102.9         40.3 %    $ 121.6         42.2 %   $ (18.7 )      (15.3 %)


Selling, General and Administrative expenses   $  75.3         29.5 %    $  85.3         29.6 %   $ (10.0 )      (11.7 %)
Restructuring and other transition costs          12.1          4.8 %          -          0.0 %      12.1          100 %

Operating Expenses                             $  87.4         34.3 %    $  85.3         29.6 %   $   2.1          2.5 %


Interest expense - net                         $   0.1          0.0 %    $   0.1          0.0 %   $     -         41.3 %
Other (income) expense - net                      (0.1 )       (0.0 %)       0.6          0.2 %      (0.7 )     (119.0 %)
Earnings before income taxes                   $  15.5          6.1 %    $  35.6         12.4 %   $ (20.1 )      (56.5 %)

Net Earnings                                   $  10.5          4.1 %    $  23.7          8.2 %   $ (13.2 )      (55.7 %)

Diluted earnings per share                     $  0.21            -      $  0.46            -     $ (0.25 )      (54.3 %)

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 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® and CusheTM brands). The Company's other business units, which do not collectively comprise a second 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 - FIRST QUARTER

                                   2009                      2008                     Change
 (Millions of dollars)        $            %            $            %            $            %
 Outdoor Group             $  98.1         38.4 %    $ 107.4         37.3 %    $  (9.3 )       (8.7 %)
 Wolverine Footwear
 Group                        53.4         20.9 %       57.4         19.9 %       (4.0 )       (7.0 %)
 Heritage Brands Group        46.2         18.1 %       57.4         19.9 %      (11.2 )      (19.5 %)
 The Hush Puppies
 Company                      34.7         13.6 %       42.0         14.5 %       (7.3 )      (17.2 %)
 Other                         2.7          1.0 %        3.0          1.1 %       (0.3 )      (12.9 %)

 Total branded
 footwear, apparel and
 licensing revenue         $ 235.1         92.1 %    $ 267.2         92.7 %    $ (32.1 )      (12.0 %)
 Other business units         20.2          7.9 %       21.0          7.3 %       (0.8 )       (3.6 %)

 Total Revenue             $ 255.3        100.0 %    $ 288.2        100.0 %    $ (32.9 )      (11.4 %)

REVENUE
Revenue for the first quarter of 2009 decreased $32.9 million from the first quarter of 2008 to $255.3 million. The impact of translating foreign denominated revenue to U.S. dollars decreased revenue by $18.0 million as a result of the substantial strengthening of the U.S. dollar against the British pound, euro and Canadian dollar since the first 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 $14.1 million. Revenue from the other business units decreased $0.8 million, driven primarily by negative same store sales growth from retail operations. International revenue represented 38.0% of total revenue in the first quarter of 2009 compared to 40.9% in the first quarter of 2008, with the decline resulting primarily from the stronger U.S. dollar.
The Outdoor Group generated revenue of $98.1 million for the first quarter of 2009, a $9.3 million decrease from the first quarter of 2008. The Merrell® brand's revenue in the first quarter of 2009 declined at a rate in the mid teens compared to the first quarter 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. Patagonia® Footwear's revenue declined at a mid single-digit rate in the first quarter of 2009 compared to the first quarter of 2008, due primarily to the impact of foreign exchange rate changes. Revenue from the newly-acquired Chaco® brand partially offset these revenue declines with its contribution to the group's revenue for the first quarter of 2009. The Wolverine Footwear Group recorded $53.4 million in revenue for the first quarter of 2009, a $4.0 million decrease from the first quarter of 2008. The Wolverine® brand grew revenue at a low single-digit rate over the prior year, despite the challenging retail environment, due primarily to the success of the Contour WeltTM collection in the U.S. market. Revenue from the Bates® military and civilian uniform footwear business in the first quarter of 2009 declined from the first quarter of 2008 at a rate in the mid teens as a result of the planned reduction in contracts with the U.S. Department of Defense, as well as timing of U.S. Department of Defense contract shipments compared to the first quarter of 2008. HyTest®'s revenue for the first quarter of 2009 declined at a mid single-digit rate from the first quarter of 2008 due to negative economic conditions and related workforce reductions, resulting in decreased demand for safety footwear products.
The Heritage Brands Group had revenue of $46.2 million in the first quarter of 2009, an $11.2 million decrease compared to the first quarter of 2008. Cat® Footwear's revenue in the first quarter of 2009 decreased at a rate in the high teens 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 declined in the first quarter of 2009 at a rate in the mid teens compared to the first quarter of 2008 as a result of the 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's revenue decreased at a rate in the mid twenties in the first quarter of 2009 compared to the prior year due primarily to the tough economic conditions and resulting reductions in consumer spending.
The Hush Puppies Company recorded revenue of $34.7 million in the first quarter of 2009, a $7.3 million decrease from the first quarter of 2008. Hush Puppies® revenue in the first quarter of 2009 decreased at a rate in the high teens from the first quarter of 2008 as growth in the international licensing business and Canada was more than offset by declines in the United States and Europe. These decreases were primarily attributable 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 quarter of 2008. Revenue generated by the newly-acquired CusheTMbrand partially offset these revenue declines with its contribution to the group's revenue for the first quarter of 2009.
Within the Company's other business units, Wolverine Retail's revenue decreased in the first quarter of 2009 at a low single-digit rate compared to the first quarter of 2008 as a result of weakened economic conditions and reduced consumer spending. Wolverine Retail operated 92 retail stores worldwide at the end of the first quarter of 2009 compared to 91 at the end of the first quarter of 2008. Revenue from the Wolverine Leathers operation decreased at a low single-digit rate in the first quarter of 2009 compared to the first quarter of 2008.
GROSS MARGIN
The gross margin for the first quarter of 2009 of 40.3% was 190 basis points lower than the first quarter of 2008. Non-recurring restructuring and other transition costs of $2.3 million included in cost of products sold in the first quarter of 2009 drove 90 basis points of the decrease, with the remainder of the decrease driven by expected increases in product and freight costs during the quarter.

OPERATING EXPENSES
Operating expenses of $87.4 million for the first quarter of 2009 increased $2.1 million from $85.3 million for the first quarter of 2008. Non-recurring restructuring and other transition costs contributed $12.1 million to the increase, and increased pension expense contributed $2.2 million. These increases were offset by significant decreases in certain operating expenses that vary with revenue, such as selling and distribution costs, as well as lower general and administrative costs as a result of the Company's restructuring and cost-savings initiatives.
INTEREST, OTHER AND TAXES
The increase in net interest expense reflected increased borrowings to fund working capital needs during the quarter.
The change in other (income) 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 quarter of 2009 was 32.3% compared to 33.5% for the first quarter of 2008. The reduced rate reflects a higher portion of earnings from lower-taxed foreign jurisdictions 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 achieved net earnings of $10.5 million for the first quarter of 2009 compared to $23.7 million in the first quarter of 2008, a decrease of $13.2 million.
Basic net earnings per share decreased 55.3% in the first quarter of 2009 to $0.21 from $0.47 in the first quarter of 2008, and diluted net earnings per share decreased 54.3% in the first quarter of 2009 to $0.21 from $0.46 in the first quarter of 2008. Partially offsetting the decrease attributable to lower net earnings are fewer average shares outstanding in the first quarter of 2009 compared to the first quarter of 2008 as a result of repurchases of the Company's common stock.

LIQUIDITY AND CAPITAL RESOURCES

                                                                                         Change from
                             March 28,        January 3,        March 22,        January 3,        March 22,
(Millions of dollars)          2009              2009             2008              2009             2008
Cash and cash
equivalents                 $      56.8      $       89.5      $      47.5      $      (32.7 )    $       9.3
Accounts receivable               198.5             167.9            223.3              30.6            (24.8 )
Inventories                       217.6             196.8            188.2              20.8             29.4
Accounts payable                   28.4              45.3             45.4             (16.9 )          (17.0 )
Accrued salaries and
wages                              14.0              22.7             13.1              (8.7 )            0.9
Accrued pension
liabilities                         2.8              28.1              1.8             (25.3 )            1.0
Restructuring reserve               5.6                 -                -               5.6              5.6
Other accrued
liabilities                        47.5              35.7             55.3              11.8             (7.8 )
Debt                               94.4              59.5             70.8              34.9             23.6

Cash used in operating
activities                  $     (41.0 )                      $     (33.8 )                      $      (7.2 )
Additions to property,
plant and equipment                 2.9                                4.2                               (1.3 )
Depreciation and
amortization                        4.3                                4.6                               (0.3 )

Cash of $70.4 million was used to fund working capital investments in the first quarter of 2009 compared to $65.7 million used in the first quarter of 2008. Accounts receivable decreased 11.1% compared to the first quarter of 2008 on an 11.4% decrease in revenue. No single customer accounted for more than 10% of the outstanding accounts receivable balance at March 28, 2009. Inventory levels increased 15.6% from the same quarter last year. The increase in inventory levels was primarily driven by higher product costs, the strategic decision to make pre-buys of core product prior to anticipated factory cost increases, additional inventory from newly-acquired brands and a build of buffer inventory in the Wolverine Leathers business prior to the closure of the Company's tannery operations in April 2009.
The decrease in accounts payable in the first quarter of 2009 compared to the first quarter of 2008 was primarily attributable to decreases in inventory purchases from contract suppliers as a result of the inventory pre-buys in the fourth quarter of 2008. The decrease in other accrued liabilities was due primarily to reduced taxes payable as a result of lower earnings in the first quarter of 2009 compared to first quarter 2008.

The restructuring reserve was established in the first quarter of 2009 in connection with the strategic restructuring initiative implemented by the Company in January 2009. The restructuring reserve recorded at March 28, 2009 related primarily to severance and employee-related costs.
The majority of capital expenditures in the quarter were for information system enhancements, manufacturing equipment and building improvements. The Company leases machinery, equipment and certain warehouse, office and retail store space under operating lease agreements that expire at various dates through 2023. The Company has a revolving credit agreement that expires in July 2010 and allows for borrowings up to $150.0 million. The revolving credit facility is used to support working capital requirements and other business needs. The amounts outstanding under the revolving credit facility were $93.0 million and $60.1 million at March 28, 2009 and March 22, 2008, respectively. The Company considers these balances to be short-term in nature. The Company was in compliance with all debt covenant requirements at March 28, 2009 and March 22, 2008. Proceeds from the existing credit facility along with cash flows from operations are expected to be sufficient to meet capital needs in the foreseeable future. Any excess cash flows from operating activities are expected to be used to purchase property, plant and equipment, pay down existing debt, fund internal and external growth initiatives, pay dividends or repurchase the Company's common stock.
The increase in debt at March 28, 2009 as compared to March 22, 2008 was primarily due to the funding of the acquisitions of the Chaco® and CusheTM brands, the inventory pre-buy and the repurchase of the Company's stock over the past twelve months. The Company had commercial letter-of-credit facilities outstanding of $1.1 million and $1.0 million at March 28, 2009 and March 22, 2008, respectively. The total debt to total capital ratio for the Company was 18.1% at the end of the first quarter of 2009, 13.5% at the end of the first quarter of 2008 and 12.2% for the fiscal year ended January 3, 2009. The Company's Board of Directors approved a common stock repurchase program on April 19, 2007. The program authorized the repurchase of 7.0 million shares of common stock over a 36-month period beginning on the effective date of the program. The Company repurchased 406,200 shares at an average price of $13.77 per share during the first quarter of 2009 under the program. As of March 28, 2009, the Company was authorized to repurchase an additional 199,996 shares under the April 19, 2007 program. The primary purpose of the stock repurchase program is to increase stockholder value. The Company intends to continue to repurchase shares of its common stock in open market or privately negotiated transactions, from time to time, depending upon market conditions and other factors. Additional information about stock repurchases is included in Part II, Item 2 of this Form 10-Q.
The Company declared dividends of $5.3 million in the first quarter of 2009, or $0.11 per share. This is comparable to the $0.11 per share declared in the first quarter of 2008. The quarterly dividend is payable on May 1, 2009 to stockholders of record on April 1, 2009.
CRITICAL ACCOUNTING POLICIES
The preparation of the Company's consolidated condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Historically, actual results have not been materially different from the Company's estimates. However, actual results may differ from these estimates under different assumptions or conditions.
The Company has identified the critical accounting policies used in determining estimates and assumptions in the amounts reported in its Management's Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended January 3, 2009. Management believes there have been no changes in those critical accounting policies. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The information concerning quantitative and qualitative disclosures about market risk contained in the Company's Annual Report on Form 10-K for its fiscal year ended January 3, 2009 is incorporated herein by reference.
The Company faces market risk to the extent that changes in foreign currency exchange rates affect the Company's foreign assets, liabilities, and inventory purchase commitments and to the extent that its long-term debt requirements are affected by changes in interest rates. The Company manages these risks by attempting to denominate

contractual and other foreign arrangements in U.S. dollars. The Company does not believe that there has been a material change in the nature of the Company's primary market risk exposures, including the categories of market risk to which the Company is exposed and the particular markets that present the primary risk of loss to the Company. As of the date of this Quarterly Report on Form 10-Q, the Company does not know of or expect there to be any material change in the general nature of its primary market risk exposure in the near term. Under the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS Nos. 137 and 138, the Company is required to recognize all derivatives on the balance sheet at fair value. Derivatives that are not qualifying hedges must be adjusted to fair value through earnings. If a derivative is a qualifying hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or recognized in accumulated other comprehensive income until the hedged item is recognized in earnings.
The Company conducts wholesale operations outside of the United States in the United Kingdom, continental Europe and Canada, where the functional currencies are primarily the British pound, euro and Canadian dollar, respectively. The Company utilizes foreign currency forward exchange contracts to manage the volatility associated with inventory purchases made by non-U.S. wholesale operations in U.S. dollars in the normal course of business. At March 28, 2009 and March 22, 2008, the Company had outstanding forward currency exchange contracts to purchase $50.8 million and $51.7 million, respectively, of U.S. dollars with maturities ranging up to 280 days.
The Company also has production facilities in the Dominican Republic and sourcing locations in Asia, where financial statements reflect U.S. dollars as the functional currency. However, operating costs are paid in the local currency. Royalty revenue generated by the Company from third-party foreign licensees is calculated in the licensees' local currencies, but paid in U.S. dollars. Accordingly, the Company is subject to related foreign currency remeasurement gains and losses in 2009 and beyond. . . .