<PAGE> 1
FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-9068
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WEYCO GROUP, INC.
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0702200
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
234 East Reservoir Avenue
P.O. Box 1188
Milwaukee, Wisconsin 53201
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(Address of principal executive offices)
(Zip Code)
(414) 263-8800
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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As of April 30, 1996 the following shares were outstanding.
<TABLE>
<S> <C>
Common Stock, $1.00 par value 1,270,319 Shares
Class B Common Stock, $1.00 par value 332,656 Shares
</TABLE>
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is
suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest
annual report on Form 10-K.
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,750,788 $11,247,137
Marketable securities 10,522,655 12,677,712
Accounts receivable, net 23,069,458 18,867,506
Inventories -
Finished shoes 10,118,275 14,188,733
Shoes in process 103,315 618,671
Raw materials and supplies 150,270 138,303
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Total inventories 10,371,860 14,945,707
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Deferred income tax benefits 1,577,000 1,746,000
Prepaids and other current assets 76,483 10,211
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Total current assets 49,368,244 59,494,273
MARKETABLE SECURITIES 10,032,024 10,470,262
DEFERRED INCOME TAX BENEFITS 566,000 519,000
OTHER ASSETS 5,441,158 5,331,314
PLANT AND EQUIPMENT 8,905,400 8,782,806
Less - Accumulated depreciation (5,537,056) (5,269,369)
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3,368,344 3,513,437
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$68,775,770 $79,328,286
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LIABILITIES & SHAREHOLDERS' INVESTMENT
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CURRENT LIABILITIES:
Accounts payable $ 5,971,276 $ 9,181,933
Dividend payable 342,467 397,113
Accrued liabilities 6,788,874 3,918,479
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Total current liabilities 13,102,617 13,497,525
DEFERRED COMPENSATION 472,764 1,747,764
SHAREHOLDERS' INVESTMENT:
Common stock 1,618,995 1,884,015
Other shareholders' investment 53,581,394 62,198,982
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$68,775,770 $79,328,286
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</TABLE>
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WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
NET SALES $34,171,997 $29,285,888
COST OF SALES 25,501,400 20,929,890
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Gross earnings 8,670,597 8,355,998
SELLING AND ADMINISTRATIVE EXPENSES 6,022,804 6,236,083
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Earnings from operations 2,647,793 2,119,915
INTEREST AND OTHER INCOME, Net 301,177 336,150
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Earnings before provision for
income taxes 2,948,970 2,456,065
PROVISION FOR INCOME TAXES 1,091,000 885,000
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Net earnings $ 1,857,970 $ 1,571,065
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WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING (Note 2) 1,689,875 1,887,701
PER SHARE (Note 2)
Net earnings $1.10 $.83
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Cash dividends $.21 $.20
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</TABLE>
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WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 2,114,017 $ 2,741,984
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (2,548,374) (9,116,326)
Proceeds from sales of marketable securities 5,141,669 6,358,475
Purchase of plant and equipment (123,593) (21,784)
Other (109,844) (110,069)
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Net cash (used for) provided by
investing activities 2,359,858 (2,889,704)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred compensation payments (1,175,000) --
Cash dividends paid (397,113) (380,223)
Shares purchased and retired (10,412,611) (631,709)
Proceeds from stock options exercised 14,500 197,000
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Net cash used for financing activities (11,970,224) (814,932)
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Net decrease in cash and cash equivalents (7,496,349) (962,652)
CASH AND CASH EQUIVALENTS at beginning
of period 11,247,137 3,648,361
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CASH AND CASH EQUIVALENTS at end
of period $ 3,750,788 $ 2,685,709
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SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 245,281 $ 844,980
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</TABLE>
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NOTES:
(1) In the opinion of management, all adjustments (which include only normal
recurring accruals) necessary to present fairly the financial
information have been made. The results of operations for the three
months ended March 31, 1996, are not necessarily indicative of results
for the full year.
(2) Earnings per share are computed based on the weighted average number of
common and common equivalent shares outstanding. Common equivalent
shares consist of stock options which have a dilutive effect when
applying the treasury stock method and are considered when material.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity
The Company's primary source of liquidity is its cash and marketable
securities which aggregated approximately $24,305,000 at March 31, 1996,
compared with $34,395,000 at December 31, 1995. In addition, the Company
maintains a $7,500,000 bank line of credit and has banker acceptance loan
facilities to provide funds on a short-term basis when necessary. The
Company did not make any borrowings under these facilities during the
first three months of 1996. On January 3, 1996, the Company paid
$9,938,885 for the purchase of 146,860 shares of Common Stock and 106,360
shares of Class B Common Stock. On February 1, 1996, the Company paid
$1,175,000 under deferred compensation agreements.
The Company has historically generated adequate cash flow from operations
to meet working capital requirements. The Company believes that available
cash and marketable securities, cash provided from operations and
available borrowing facilities will provide adequate support for the cash
needs of the business.
Results of Operations
Total net sales increased $4,886,000 (16.7%) during the three months ended
March 31, 1996 compared with the same period in 1995. Net sales in the
wholesale division increased $5,613,000 (22%) from $25,680,000 in 1995 to
$31,293,000 in 1996. The increase in sales resulted from an increase of
16% in the number of pairs of shoes shipped as compared with 1995, as well
as an increase in the average selling price per pair, attributed to a
change in product mix.
Retail net sales decreased 20% from $3,606,000 in the first quarter of
1995 to $2,879,000 in the first quarter of 1996. The decrease resulted
from the closing of 10 retail units during 1995, as well as a slight
decrease in same store net sales, which were down 2.5% compared to the
first quarter of 1995.
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For the first quarter, gross earnings as a percent of net sales was 25.4%,
down from 28.5% in 1995. Gross earnings in 1996 included a $600,000 loss
reserve for the closing of 13 retail stores anticipated to occur in July
of 1996. Excluding this loss reserve, first quarter gross earnings as a
percent of net sales would have been 27.1%.
For the first quarter, selling and administrative expenses decreased
$213,000. As a percent of sales, selling and administrative expenses
decreased from 21.3% in 1995 to 17.6% in 1996. This decrease, both in
dollars and as a percent of sales was caused primarily by the closing of
the retail units during 1995.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held April 23, 1996 to 1) elect
four members to the Board of Directors and 2) vote on a proposal to
approve the Weyco Group, Inc. 1996 Nonqualified Stock Option Plan.
John W. Florsheim, Thomas W. Florsheim, Jr., Robert Feitler and Leonard J.
Goldstein were nominated for election to the Board of Directors for terms
of one year for John W. Florsheim and three years for the others. A total
of 4,063,084 votes were cast for each of the nominees, and 78,673 votes
were withheld for Mr. Feitler, 75,273 votes withheld for Mr. Thomas W.
Florsheim, Jr. and Mr. John W. Florsheim, and 77,173 votes withheld for
Mr. Goldstein.
The Weyco Group, Inc. 1996 Nonqualified Stock Option Plan was also voted
on and approved. A total 3,512,927 votes were cast for the proposal,
251,402 against the proposal, 194,817 votes abstained, and there were
103,938 nonbroker votes.
Item 6. Exhibits and Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEYCO GROUP, INC.
___________________ ________________________________
Date John Wittkowske
Vice President-Finance
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,751
<SECURITIES> 10,523
<RECEIVABLES> 25,194
<ALLOWANCES> 2,124
<INVENTORY> 10,372
<CURRENT-ASSETS> 49,368
<PP&E> 8,905
<DEPRECIATION> 5,537
<TOTAL-ASSETS> 68,776
<CURRENT-LIABILITIES> 13,103
<BONDS> 0
0
0
<COMMON> 1,619
<OTHER-SE> 53,581
<TOTAL-LIABILITY-AND-EQUITY> 68,776
<SALES> 34,172
<TOTAL-REVENUES> 34,172
<CGS> 25,501
<TOTAL-COSTS> 31,524
<OTHER-EXPENSES> 301
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 2,949
<INCOME-TAX> 1,091
<INCOME-CONTINUING> 1,858
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,858
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.10
</TABLE>
