<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 June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------
Commission file number 0-9068
WEYCO GROUP, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-0702200
(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
(Address of principal executive offices)
(Zip Code)
(414) 263-8800
(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
--- ---
As of August 1, 1996 the following shares were outstanding.
Common Stock, $1.00 par value 1,263,043 Shares
Class B Common Stock, $1.00 par value 329,932 Shares
<PAGE> 2
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>
June 30 December 31
1996 1995
--------------- -------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,715,440 $11,247,137
Marketable securities 10,797,826 12,677,712
Accounts receivable, net 20,699,601 18,867,506
Inventories -
Finished shoes 7,155,974 14,188,733
Shoes in process 99,534 618,671
Raw materials and supplies 429,397 138,303
------------- -------------
Total inventories 7,684,905 14,945,707
------------ -----------
Deferred income tax benefits 1,558,000 1,746,000
Prepaids and other current assets 83,894 10,211
-------------- --------------
Total current assets 43,539,666 59,494,273
MARKETABLE SECURITIES 14,183,153 10,470,262
DEFERRED INCOME TAX BENEFITS 566,000 519,000
OTHER ASSETS 5,551,002 5,331,314
PLANT AND EQUIPMENT 8,704,485 8,782,806
Less - Accumulated depreciation (5,547,225) (5,269,369)
------------ -----------
3,157,260 3,513,437
------------ -----------
$66,997,081 $79,328,286
=========== ===========
</TABLE>
LIABILITIES & SHAREHOLDERS' INVESTMENT
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 3,342,815 $ 9,181,933
Dividend payable 352,655 397,113
Deferred compensation 1,816,185 1,175,000
Accrued liabilities 5,714,428 2,743,479
------------ ------------
Total current liabilities 11,226,083 13,497,525
DEFERRED COMPENSATION -- 1,747,764
SHAREHOLDERS' INVESTMENT:
Common stock 1,602,975 1,884,015
Other shareholders' investment 54,168,023 62,198,982
----------- ------------
$66,997,081 $79,328,286
=========== ===========
</TABLE>
-1-
<PAGE> 3
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
Three Months ended June 30 Six Months ended June 30
------------------------------- ----------------------------
1996 1995 1996 1995
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
NET SALES $31,135,723 $28,798,989 $65,307,720 $58,084,877
COST OF SALES 22,830,181 21,321,687 48,331,581 42,251,577
----------- ---------- ---------- -----------
Gross earnings 8,305,542 7,477,302 16,976,139 15,833,300
SELLING AND ADMINISTRATIVE EXPENSES 6,084,107 5,790,593 12,106,911 12,026,676
----------- ----------- ----------- -----------
Earnings from operations 2,221,435 1,686,709 4,869,228 3,806,624
INTEREST AND OTHER INCOME, Net 225,723 349,246 526,900 685,396
----------- ----------- ----------- -----------
Earnings before provision for
income taxes 2,447,158 2,035,955 5,396,128 4,492,020
PROVISION FOR INCOME TAXES 909,000 734,000 2,000,000 1,619,000
----------- ----------- ----------- -----------
Net earnings $ 1,538,158 $ 1,301,955 $ 3,396,128 $ 2,873,020
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
(Note 2) 1,606,980 1,879,915 1,652,632 1,883,986
PER SHARE (Note 2):
Net earnings $.95 $.69 $2.05 $1.52
==== ==== ===== =====
Cash dividends $.22 $.21 $ .43 $ .41
==== ==== ===== =====
</TABLE>
-2-
<PAGE> 4
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: $ 6,656,284 $ 2,578,222
----------- -----------
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (8,406,795) (21,209,376)
Proceeds from sales of marketable securities 6,573,790 20,581,434
Purchase of plant and equipment (209,039) (58,755)
Other (218,340) (207,062)
----------- -----------
Net cash used for
investing activities (2,260,384) (893,759)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred compensation payments (1,175,000) --
Cash dividends paid (739,580) (772,781)
Shares purchased and retired (11,027,517) (865,293)
Proceeds from stock options exercised 14,500 197,000
---------- -----------
Net cash used for financing activities (12,927,597) (1,441,074)
----------- -----------
Net (decrease) increase in cash and
cash equivalents (8,531,697) 243,389
CASH AND CASH EQUIVALENTS at beginning
of period 11,247,137 3,648,361
----------- -----------
CASH AND CASH EQUIVALENTS at end
of period $ 2,715,440 $ 3,891,750
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 1,560,973 $ 1,718,796
=========== ===========
</TABLE>
-3-
<PAGE> 5
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 or six
months ended June 30, 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 $27,696,000 at June 30, 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 six 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 $2,337,000 (8%) during the three months ended
June 30, 1996 compared with the same period in 1995. Net sales in the
wholesale division increased $2,938,000 (12%) from $24,680,000 in 1995 to
$27,618,000 in 1996. The increase in sales resulted from an increase of
5% 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 15% from $4,119,000 in the second quarter of
1995 to $3,518,000 in the second quarter of 1996. The decrease resulted
primarily from the closing of 10 retail units during 1995.
-4-
<PAGE> 6
For the six months ended June 30, 1996, net sales increased $7,223,000
(12%) as compared with the same period in 1995. Wholesale sales increased
$8,550,000 or 17% from $50,361,000 in 1995 to $58,911,000 in 1996. This
increase resulted from an increase of 11% in the number of pairs shipped
compared to 1995, as well as an increase in the average selling price per
pair, attributed to a change in product mix.
Retail net sales decreased $1,327,000 (17%) from $7,724,000 in 1995 to
$6,397,000 in 1996, as a result of the previously discussed store closings.
Same store net sales were flat as compared with the same period in 1995.
Gross earnings as a percent of net sales for the second quarter and the
six months ended June 30 were consistent between 1995 and 1996 at
approximately 26 - 27%. 1996 gross earnings, however, included a $600,000
loss reserve recorded in the first quarter of 1996 for the closing of 13
retail stores. The last of the closings occurred in July 1996.
Management believes that the reserve recorded in the first quarter is
adequate to cover the full amount of the related costs incurred or
expected to be incurred from the closing of these stores. Excluding this
loss reserve, gross earnings as a percent of net sales would have
increased 1%.
Selling and administrative expenses for the second quarter and six months
ended June 30, were consistent between 1996 and 1995, after considering
decreases in these expenses related to the closing of retail units during
1995, offset by increases due to increased wholesale volume in 1996.
Interest and other income is comprised principally of municipal bond
interest. The decrease in both the three and six month amounts is due to a
decrease in marketable securities.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
None
-5-
<PAGE> 7
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
-6-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,715
<SECURITIES> 10,798
<RECEIVABLES> 22,749
<ALLOWANCES> 2,049
<INVENTORY> 7,685
<CURRENT-ASSETS> 43,540
<PP&E> 8,704
<DEPRECIATION> 3,157
<TOTAL-ASSETS> 66,997
<CURRENT-LIABILITIES> 11,226
<BONDS> 0
0
0
<COMMON> 1,603
<OTHER-SE> 54,168
<TOTAL-LIABILITY-AND-EQUITY> 66,997
<SALES> 31,136
<TOTAL-REVENUES> 31,136
<CGS> 22,830
<TOTAL-COSTS> 6,084
<OTHER-EXPENSES> 226
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20
<INCOME-PRETAX> 2,447
<INCOME-TAX> 909
<INCOME-CONTINUING> 1,538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,538
<EPS-PRIMARY> 0.95
<EPS-DILUTED> 0.95
</TABLE>
