WOLVERINE WORLD WIDE INC /DE/WWW
WOLVERINE WORLD WIDE INC /DE/ Income Taxes Disclosure
INCOME TAXES
1 Disaggregated in accordance with ASU 2023-09, which the Company adopted prospectively in 2025.
The geographic components of earnings (loss) before income taxes are as follows:
| Fiscal Year | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| United States | $ | 71.7 | $ | 10.3 | $ | (113.8) | |||||||||||
| Foreign | 49.8 | 47.8 | (19.0) | ||||||||||||||
| Earnings (loss) before income taxes | $ | 121.5 | $ | 58.1 | $ | (132.8) | |||||||||||
The provisions for income tax expense (benefit) consist of the following:
| Fiscal Year | |||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current expense: | |||||||||||||||||
| Federal | $ | 6.6 | $ | 10.1 | $ | (0.6) | |||||||||||
| State | 0.7 | 0.2 | (1.7) | ||||||||||||||
| Foreign | 3.4 | 3.4 | 1.3 | ||||||||||||||
| Deferred expense (benefit): | |||||||||||||||||
| Federal | 7.3 | (4.7) | (88.2) | ||||||||||||||
| State | 0.8 | 0.2 | 0.1 | ||||||||||||||
| Foreign | 1.7 | 0.1 | (5.6) | ||||||||||||||
| Income tax expense (benefit) | $ | 20.5 | $ | 9.3 | $ | (94.7) | |||||||||||
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 | ||||||||
| 2025 | ||||||||
(In millions) 1 | Amount | Percent | ||||||
| Income taxes at U.S. statutory rate of 21% | $ | 25.5 | 21.0 | % | ||||
State and local income taxes, net of federal income tax 2 | 1.5 | 1.2 | % | |||||
| Foreign tax effects | ||||||||
| Hong Kong | ||||||||
| Statutory tax rate difference between Hong Kong and United States | (1.7) | (1.4) | % | |||||
| Nontaxable foreign source income exemption regime | (5.4) | (4.5) | % | |||||
| Other | (0.2) | (0.1) | % | |||||
| United Kingdom | ||||||||
| Changes in valuation allowances | 1.4 | 1.2 | % | |||||
| Other | (0.1) | (0.1) | % | |||||
| China | ||||||||
| Withholding taxes | 1.7 | 1.4 | % | |||||
| Changes in valuation allowances | (0.3) | (0.2) | % | |||||
| Other | 0.3 | 0.2 | % | |||||
| Other | 5.5 | 4.6 | % | |||||
| Effect of Cross-Border Tax Laws | ||||||||
| Foreign-derived intangible income | (2.5) | (2.1) | % | |||||
| Other | 1.5 | 1.2 | % | |||||
| Tax Credits | ||||||||
| Foreign withholding tax credit | (6.6) | (5.4) | % | |||||
| Other | (0.5) | (0.4) | % | |||||
| Nontaxable or Nondeductible Items | ||||||||
| Share-based payment awards | (2.3) | (1.9) | % | |||||
| Non-deductible executive compensation | 3.3 | 2.8 | % | |||||
| Other | (1.0) | (0.9) | % | |||||
| Changes in Unrecognized Tax Benefits | (0.1) | (0.1) | % | |||||
| Other | 0.5 | 0.4 | % | |||||
| Income tax expense (benefit) | 20.5 | 16.9 | % | |||||
2 State taxes in California, Tennessee, Texas, and New York made up the majority (greater than 50% of the tax effect in this category.)
| Fiscal Year | |||||||||||
| (In millions) | 2024 | 2023 | |||||||||
| Income taxes at U.S. statutory rate of 21% | $ | 12.2 | $ | (27.9) | |||||||
| State income taxes, net of federal income tax | (3.1) | (2.0) | |||||||||
| Foreign earnings taxed at rates different from the U.S. statutory rate: | |||||||||||
| Hong Kong | (6.3) | (7.3) | |||||||||
| Italy | 0.1 | (2.5) | |||||||||
| United Kingdom | 0.2 | 2.3 | |||||||||
| Other | 2.1 | 3.9 | |||||||||
| Adjustments for uncertain tax positions | (0.8) | (1.3) | |||||||||
| Change in valuation allowance | 0.5 | 29.0 | |||||||||
| Global Intangible Low Tax Income tax | — | 1.5 | |||||||||
| Non-deductible executive compensation | 1.4 | (0.8) | |||||||||
| Permanent adjustments related to employee share based compensation | 2.2 | 4.2 | |||||||||
| Permanent adjustment related to goodwill divested | — | 4.3 | |||||||||
| Capital loss from sale of subsidiary and changes to capital loss | 1.6 | (95.7) | |||||||||
| Permanent adjustments and non-deductible expenses | (0.1) | (1.2) | |||||||||
| Other | (0.7) | (1.2) | |||||||||
| Income tax expense (benefit) | $ | 9.3 | $ | (94.7) | |||||||
Significant components of the Company’s deferred income tax assets and liabilities are as follows:
| (In millions) | January 3, 2026 | December 28, 2024 | |||||||||
| Deferred income tax assets: | |||||||||||
| Accounts receivable and inventory valuation allowances | $ | 5.2 | $ | 2.0 | |||||||
| Deferred compensation accruals | 7.8 | 6.0 | |||||||||
| Accrued pension expense | 14.6 | 17.9 | |||||||||
| Stock-based compensation | 4.6 | 5.8 | |||||||||
| Net operating loss and foreign tax credit carryforwards | 71.6 | 75.8 | |||||||||
| Capital loss carryforwards | 23.7 | 23.7 | |||||||||
| Tenant lease expenses | 8.2 | 9.3 | |||||||||
| Environmental reserve | 7.0 | 10.9 | |||||||||
| Other | 11.9 | 9.3 | |||||||||
| Total gross deferred income tax assets | 154.6 | 160.7 | |||||||||
| Less valuation allowance | (61.6) | (56.2) | |||||||||
| Net deferred income tax assets | 93.0 | 104.5 | |||||||||
| Deferred income tax liabilities: | |||||||||||
| Intangible assets | (31.2) | (30.5) | |||||||||
| Tax over book depreciation and amortization | (1.7) | (3.2) | |||||||||
| Other | (4.6) | (6.2) | |||||||||
| Total deferred income tax liabilities | (37.5) | (39.9) | |||||||||
| Net deferred income tax asset (liabilities) | $ | 55.5 | $ | 64.6 | |||||||
The valuation allowance for deferred income tax assets as of January 3, 2026 and December 28, 2024 was $61.6 million and $56.2 million, respectively. The net increase in the total valuation allowance during fiscal 2025 was $5.4 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, U.S. federal capital loss carryforwards, foreign net operating loss carryforwards and tax credit 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, and capital gains in the U.S. tax jurisdiction. The current year change in the valuation allowance results in a decrease against the
state deferred tax assets of $0.4 million, an increase related to the state net operating loss carryforward of $1.0 million, and a net increase relating to the foreign net operating losses and foreign tax credits and other deferred tax assets of $4.8 million.
At January 3, 2026, the Company had foreign net operating loss carryforwards of $41.8 million, which have expirations ranging from 2026 to an unlimited term during which they are available to offset future foreign taxable income. The Company had U.S. federal capital loss carryforwards and Internal Revenue Code section 163(j) interest expense carryforwards of $103.4 million and $105.9 million respectively, which have expirations ranging from 2029 to an unlimited term during which they are available to offset future U.S. federal taxable income. The Company had state net operating loss carryforwards and Internal Revenue Code section 163(j) interest expense carryforwards of $308.5 million and $113.4 million respectively, which have expirations ranging from 2026 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 $3.0 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) | 2025 | 2024 | |||||||||
| Unrecognized tax benefits at beginning of the year | $ | 1.6 | $ | 2.6 | |||||||
| Increases related to current year tax positions | 0.3 | 0.2 | |||||||||
| Decreases related to prior year positions | — | — | |||||||||
| Decreases relating to settlements with taxing authorities | — | (0.7) | |||||||||
| Decrease due to lapse of statute | (0.5) | (0.5) | |||||||||
| Unrecognized tax benefits at end of the year | $ | 1.4 | $ | 1.6 | |||||||
The portion of the unrecognized tax benefits that, if recognized currently, would reduce the annual effective tax rate was $1.4 million and $1.6 million as of January 3, 2026 and December 28, 2024, 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 $0.3 million and $0.3 million as of January 3, 2026 and December 28, 2024, 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 2020.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company does not expect these provisions and modifications to have a material impact on the consolidated financial statements.
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 $2.0 million and $1.5 million for fiscal years 2025 and 2024. 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 $0.5 million at January 3, 2026. 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Feb 27, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 26, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 28, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.