x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
WEYCO
GROUP, INC.
|
(Exact
name of registrant as specified in its
charter)
|
WISCONSIN
|
39-0702200
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
333
W. Estabrook Boulevard
P.
O. Box 1188
Milwaukee,
Wisconsin 53201
|
(Address
of principal executive offices)
(Zip
Code)
|
(414)
908-1600
|
(Registrant’s
telephone number, including area
code)
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
7,423,770
|
$
|
15,314,140
|
|||
Marketable
securities, at amortized cost
|
2,499,012
|
1,600,871
|
|||||
Accounts
receivable, net
|
38,089,137
|
30,641,632
|
|||||
Inventories
|
45,307,078
|
51,000,849
|
|||||
Deferred
income tax benefits
|
705,027
|
949,109
|
|||||
Prepaid
expenses and other current assets
|
1,166,362
|
1,715,859
|
|||||
Total
current assets
|
95,190,386
|
101,222,460
|
|||||
MARKETABLE
SECURITIES, at amortized cost
|
44,759,685
|
40,361,296
|
|||||
OTHER
ASSETS
|
9,094,678
|
8,725,346
|
|||||
PLANT
AND EQUIPMENT, net
|
28,730,355
|
28,445,900
|
|||||
TRADEMARK
|
10,867,969
|
10,867,969
|
|||||
$
|
188,643,073
|
$
|
189,622,971
|
||||
LIABILITIES
& SHAREHOLDERS’ INVESTMENT
|
|||||||
CURRENT LIABILITIES: | |||||||
Short-term
borrowings
|
$
|
5,528,380
|
$
|
10,957,518
|
|||
Accounts
payable
|
8,768,857
|
12,398,740
|
|||||
Dividend
payable
|
1,270,875
|
1,054,354
|
|||||
Accrued
liabilities
|
9,310,892
|
8,430,267
|
|||||
Accrued
income taxes
|
849,330
|
72,907
|
|||||
Total
current liabilities
|
25,728,334
|
32,913,786
|
|||||
LONG-TERM
PENSION LIABILITY
|
7,015,883
|
6,620,842
|
|||||
DEFERRED
INCOME TAX LIABILITIES
|
1,834,695
|
1,915,869
|
|||||
SHAREHOLDERS’
INVESTMENT:
|
|||||||
Common
stock
|
11,553,410
|
9,129,256
|
|||||
Class
B common stock
|
—
|
2,585,087
|
|||||
Capital
in excess of par value
|
10,584,871
|
7,576,096
|
|||||
Reinvested
earnings
|
137,249,323
|
134,264,076
|
|||||
Accumulated
other comprehensive loss
|
(5,323,443
|
)
|
(5,382,041
|
)
|
|||
Total
shareholders investment
|
154,064,161
|
148,172,474
|
|||||
$
|
188,643,073
|
$
|
189,622,971
|
Three Months ended September 30,
|
Nine Months ended September 30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
NET
SALES
|
$
|
58,162,778
|
$
|
56,084,718
|
$
|
170,391,645
|
$
|
160,484,367
|
|||||
COST
OF SALES
|
36,345,977
|
35,484,325
|
106,830,085
|
101,391,210
|
|||||||||
Gross
earnings
|
21,816,801
|
20,600,393
|
63,561,560
|
59,093,157
|
|||||||||
SELLING
AND ADMINISTRATIVE EXPENSES
|
13,897,896
|
12,744,934
|
41,057,321
|
37,547,263
|
|||||||||
Earnings
from operations
|
7,918,905
|
7,855,459
|
22,504,239
|
21,545,894
|
|||||||||
INTEREST
INCOME
|
566,611
|
488,670
|
1,628,915
|
1,468,378
|
|||||||||
INTEREST
EXPENSE
|
(79,546
|
)
|
(145,271
|
)
|
(287,690
|
)
|
(442,565
|
)
|
|||||
OTHER
INCOME (EXPENSE), net
|
3,118
|
(5,720
|
)
|
7,364
|
(2,248
|
)
|
|||||||
Earnings
before provision for income taxes
|
8,409,088
|
8,193,138
|
23,852,828
|
22,569,459
|
|||||||||
PROVISION
FOR INCOME TAXES
|
3,075,000
|
3,025,000
|
8,775,000
|
8,450,000
|
|||||||||
Net
earnings
|
$
|
5,334,088
|
$
|
5,168,138
|
$
|
15,077,828
|
$
|
14,119,459
|
|||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
|||||||||||||
Basic
|
11,521,515
|
11,675,238
|
11,583,700
|
11,621,084
|
|||||||||
Diluted
|
11,973,467
|
12,098,045
|
12,036,286
|
12,031,126
|
|||||||||
EARNINGS
PER SHARE
|
|||||||||||||
Basic
|
$
|
.46
|
$
|
.44
|
$
|
1.30
|
$
|
1.21
|
|||||
Diluted
|
$
|
.45
|
$
|
.43
|
$
|
1.25
|
$
|
1.17
|
|||||
CASH
DIVIDENDS PER SHARE
|
$
|
.11
|
$
|
.09
|
$
|
.31
|
$
|
.25
|
2007
|
2006
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
earnings
|
$
|
15,077,828
|
$
|
14,119,459
|
|||
Adjustments
to reconcile net earnings to net cash provided by operating activities
–
|
|||||||
Depreciation
|
1,856,953
|
1,604,725
|
|||||
Amortization
|
65,185
|
54,613
|
|||||
Deferred
income taxes
|
(16,092
|
)
|
147,891
|
||||
Stock-based
compensation
|
218,214
|
—
|
|||||
Pension
contribution
|
—
|
(1,000,000
|
)
|
||||
Pension
expense
|
1,008,339
|
894,753
|
|||||
Gain
on sale of assets
|
—
|
13
|
|||||
Increase
in cash surrender value of life insurance
|
(388,890
|
)
|
(376,605
|
)
|
|||
Changes
in operating assets and liabilities -
|
|||||||
Accounts
receivable
|
(7,447,505
|
)
|
(7,142,029
|
)
|
|||
Inventories
|
5,693,771
|
(8,491,320
|
)
|
||||
Prepaids
and other current assets
|
569,055
|
617,670
|
|||||
Accounts
payable
|
(3,629,883
|
)
|
(3,934,596
|
)
|
|||
Accrued
liabilities and other
|
464,053
|
1,333,778
|
|||||
Accrued
income taxes
|
803,423
|
(650,978
|
)
|
||||
Net
cash provided by (used for) operating activities
|
14,274,451
|
(2,822,626
|
)
|
||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchase
of marketable securities
|
(6,243,754
|
)
|
(17,813,020
|
)
|
|||
Proceeds
from maturities of marketable securities
|
882,039
|
6,112,114
|
|||||
Purchase
of plant and equipment
|
(2,162,536
|
)
|
(2,245,677
|
)
|
|||
Proceeds
from sales of plant and equipment
|
62,000
|
996
|
|||||
Net
cash used for investing activities
|
(7,462,251
|
)
|
(13,945,587
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Cash
dividends paid
|
(3,384,870
|
)
|
(2,665,206
|
)
|
|||
Shares
purchased and retired
|
(8,856,879
|
)
|
(3,124,644
|
)
|
|||
Proceeds
from stock options exercised
|
1,847,220
|
1,828,579
|
|||||
Net
(repayments) draws under revolving credit agreement
|
(5,429,138
|
)
|
2,050,062
|
||||
Income
tax benefit from the exercise of stock options
|
1,121,097
|
1,198,462
|
|||||
Net
cash used for financing activities
|
(14,702,570
|
)
|
(712,747
|
)
|
|||
Net
decrease in cash and cash equivalents
|
(7,890,370
|
)
|
(17,480,960
|
)
|
|||
CASH
AND CASH EQUIVALENTS at beginning of period
|
$
|
15,314,140
|
$
|
22,780,913
|
|||
CASH
AND CASH EQUIVALENTS at end of period
|
$
|
7,423,770
|
$
|
5,299,953
|
|||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|||||||
Income
taxes paid, net of refunds
|
$
|
6,897,595
|
$
|
7,638,064
|
|||
Interest
paid
|
$
|
319,649
|
$
|
443,781
|
1. |
Financial
Statements
|
2. |
Earnings
Per Share
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
Numerator:
|
|||||||||||||
Net
Earnings
|
$
|
5,334,088
|
$
|
5,168,138
|
$
|
15,077,828
|
$
|
14,119,459
|
|||||
Denominator:
|
|||||||||||||
Basic
weighted average shares
|
11,521,515
|
11,675,238
|
11,583,700
|
11,621,084
|
|||||||||
Effect
of dilutive securities:
|
|||||||||||||
Employee
stock options
|
451,952
|
422,807
|
452,586
|
410,042
|
|||||||||
Diluted
weighted average shares
|
11,973,467
|
12,098,045
|
12,036,286
|
12,031,126
|
|||||||||
Basic
earnings per share
|
$
|
.46
|
$
|
.44
|
$
|
1.30
|
$
|
1.21
|
|||||
Diluted
earnings per share
|
$
|
.45
|
$
|
.43
|
$
|
1.25
|
$
|
1.17
|
3. |
Segment
Information
|
Wholesale
Distribution
|
Retail
|
Total
|
||||||||
Three Months
Ended September 30,
|
||||||||||
2007
|
||||||||||
Product
sales
|
$
|
50,504,000
|
$
|
6,852,000
|
$
|
57,356,000
|
||||
Licensing
revenues
|
807,000
|
—
|
807,000
|
|||||||
Net
sales
|
51,311,000
|
6,852,000
|
58,163,000
|
|||||||
Earnings
from operations
|
7,314,000
|
605,000
|
7,919,000
|
|||||||
2006
|
||||||||||
Product
sales
|
$
|
48,472,000
|
$
|
6,697,000
|
$
|
55,169,000
|
||||
Licensing
revenues
|
916,000
|
—
|
916,000
|
|||||||
Net
sales
|
49,388,000
|
6,697,000
|
56,085,000
|
|||||||
Earnings
from operations
|
7,086,000
|
769,000
|
7,855,000
|
|||||||
Nine
Months Ended September 30,
|
||||||||||
2007
|
||||||||||
Product
sales
|
$
|
145,892,000
|
$
|
21,771,000
|
$
|
167,663,000
|
||||
Licensing
revenues
|
2,729,000
|
—
|
2,729,000
|
|||||||
Net
sales
|
148,621,000
|
21,771,000
|
170,392,000
|
|||||||
Earnings
from operations
|
19,866,000
|
2,638,000
|
22,504,000
|
|||||||
2006
|
||||||||||
Product
sales
|
$
|
137,143,000
|
$
|
20,416,000
|
$
|
157,559,000
|
||||
Licensing
revenues
|
2,925,000
|
—
|
2,925,000
|
|||||||
Net
sales
|
140,068,000
|
20,416,000
|
160,484,000
|
|||||||
Earnings
from operations
|
18,763,000
|
2,783,000
|
21,546,000
|
4. |
Share-Based
Compensation Plans
|
Shares
|
Weighted
Average
Exercise
Price
|
Wtd. Average
Remaining
Contractual
Term (Years)
|
Aggregate
Intrinsic
Value*
|
||||||||||
Outstanding
at December 31, 2006
|
1,252,190
|
$
|
12.62
|
||||||||||
Exercised
|
(180,966
|
)
|
$
|
10.21
|
|||||||||
Forfeited
|
(3,700
|
)
|
$
|
—
|
|||||||||
Outstanding
at September 30, 2007
|
1,067,524
|
$
|
12.99
|
4.55
|
$
|
19,663,230
|
|||||||
Exercisable
at September 30, 2007
|
1,023,324
|
$
|
12.51
|
4.56
|
$
|
19,339,686
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||
|
|||||||||||||
Total
intrinsic value of stock options exercised
|
$
|
577,087
|
$
|
875,935
|
$
|
2,864,606
|
$
|
3,072,980
|
|||||
Cash
received from stock option exercises
|
$
|
456,978
|
$
|
633,090
|
$
|
1,847,220
|
$
|
1,828,579
|
|||||
Income
tax benefit from the exercise of stock options
|
$
|
225,064
|
$
|
341,614
|
$
|
1,121,097
|
$
|
1,198,462
|
|||||
Total
fair value of stock options vested
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
5. |
Shareholders’
Investment
|
6. |
ComprehensiveIncome
|
Three Months Ended September 30,
|
Nine Months ended September 30,
|
||||||||||||
2007
|
|
2006
|
|
2007
|
|
2006
|
|
||||||
Net
earnings
|
$
|
5,334,088
|
$
|
5,168,138
|
$
|
15,077,828
|
$
|
14,119,459
|
|||||
Foreign
currency translation adjustments
|
20,740
|
31,664
|
(224,102
|
)
|
135,890
|
||||||||
Change
in unrecognized pension plan liabilities, net of tax
|
95,000
|
—
|
283,000
|
—
|
|||||||||
Total
comprehensive income
|
$
|
5,449,828
|
$
|
5,199,802
|
$
|
15,136,726
|
$
|
14,255,349
|
September
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|
||
Foreign
currency translation adjustments
|
$
|
213,849
|
$
|
438,251
|
|||
Unrecognized
pension plan liabilities, net of tax
|
(5,537,292
|
)
|
(5,820,292
|
)
|
|||
Total
accumulated other comprehensive loss
|
$
|
(5,323,443
|
)
|
$
|
(5,382,041
|
)
|
7. |
NewAccounting
Pronouncements
|
Wholesale Division Sales
|
|||||||||||||||||||
Three Months ended September 30,
|
Nine Months ended September 30,
|
||||||||||||||||||
2007
|
|
2006
|
|
%
change
|
|
2007
|
|
2006
|
|
%
change
|
|
||||||||
Stacy
Adams
|
$
|
15,716,069
|
$
|
14,479,080
|
8.5
|
%
|
$
|
44,031,120
|
$
|
42,410,963
|
3.8
|
%
|
|||||||
Nunn
Bush
|
16,012,584
|
17,332,096
|
(7.6
|
)%
|
49,587,557
|
50,423,995
|
(1.7
|
)%
|
|||||||||||
Florsheim
|
17,396,821
|
15,272,440
|
13.9
|
%
|
47,945,474
|
40,562,138
|
18.2
|
%
|
|||||||||||
Foreign
|
1,377,931
|
1,387,974
|
(0.7
|
)%
|
4,328,108
|
3,746,322
|
15.5
|
%
|
|||||||||||
Total
Wholesale
|
$
|
50,503,405
|
$
|
48,471,590
|
4.2
|
%
|
$
|
145,892,259
|
$
|
137,143,418
|
6.4
|
%
|
|||||||
807,086
|
916,198
|
(11.9
|
)%
|
2,728,720
|
2,925,071
|
(6.7
|
)%
|
||||||||||||
Total
Wholesale Division
|
$
|
51,310,491
|
$
|
49,387,788
|
3.9
|
%
|
$
|
148,620,979
|
$
|
140,068,489
|
6.1
|
%
|
Total Number of
|
Maximum Number
|
||||||||||||
Total
|
Average
|
Shares Purchased as
|
of Shares
|
||||||||||
Number
|
Price
|
Part of the Publicly
|
that May Yet Be
|
||||||||||
of Shares
|
Paid
|
Announced
|
Purchased Under
|
||||||||||
Period
|
Purchased
|
Per Share
|
Program
|
the Program
|
|||||||||
07/01/07
- 07/31/07
|
19,800
|
$
|
25.16
|
19,800
|
1,012,948
|
||||||||
08/01/07
- 08/31/07
|
28,450
|
$
|
29.21
|
28,450
|
993,148
|
||||||||
09/01/07
- 09/30/07
|
7,750
|
$
|
33.10
|
7,750
|
964,698
|
||||||||
Total
|
56,000
|
$
|
28.32
|
56,000
|
956,948
|
WEYCO
GROUP, INC.
|
|||
November
8, 2007
|
/s/
John F. Wittkowske
|
||
Date
|
John
F. Wittkowske
|
||
Senior
Vice President and
|
|||
Chief
Financial Officer
|
INCORPORATED
|
||||||
EXHIBIT
|
HEREIN
BY
|
FILED
|
||||
NUMBER
|
DESCRIPTION
|
REFERENCE
TO
|
HEREWITH
|
|||
31.1
|
Certification
of Chief Executive Officer
|
X
|
||||
31.2
|
Certification
of Chief Financial Officer
|
X
|
||||
32.
1
|
Section
906 Certification of Chief Executive
Officer
|
|
X
|
|||
Section
906 Certification of Chief Financial
Officer
|
|
X
|