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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, 1997
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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 28, 1997 the following shares were outstanding.
Common Stock, $1.00 par value 1,260,783 Shares
Class B Common Stock, $1.00 par value 326,692 Shares
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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
1997 1996
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,185,275 $ 6,837,765
Marketable securities 7,076,991 8,179,263
Accounts receivable, net 24,905,215 18,235,404
Inventories -
Finished shoes 6,302,669 11,984,639
Shoes in process 85,986 331,718
Raw materials and supplies 51,095 83,087
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Total inventories 6,439,750 12,399,444
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Deferred income tax benefits 2,326,000 2,161,000
Prepaids and other current assets 32,530 --
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Total current assets 42,965,761 47,812,876
MARKETABLE SECURITIES 23,285,159 16,440,201
DEFERRED INCOME TAX BENEFIT 199,000 33,000
OTHER ASSETS 6,240,295 6,138,205
PLANT AND EQUIPMENT 8,431,288 8,679,517
Less - Accumulated depreciation (6,046,590) (6,026,644)
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2,384,698 2,652,873
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$75,074,913 $73,077,155
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LIABILITIES & SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 4,256,533 $ 6,793,555
Dividend payable 349,245 349,354
Accrued liabilities 6,855,194 5,837,753
Accrued income taxes 2,472,690 992,241
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Total current liabilities 13,933,662 13,972,903
SHAREHOLDERS' INVESTMENT:
Common stock 1,587,475 1,587,475
Other shareholders' investment 59,553,776 57,516,777
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$75,074,913 $73,077,155
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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, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
NET SALES $34,153,469 $34,171,997
COST OF SALES 24,871,844 25,501,400
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Gross earnings 9,281,625 8,670,597
SELLING AND ADMINISTRATIVE EXPENSES 5,572,783 6,022,804
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Earnings from operations 3,708,842 2,647,793
INTEREST AND OTHER INCOME, Net 127,402 301,177
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Earnings before provision for
income taxes 3,836,244 2,948,970
PROVISION FOR INCOME TAXES 1,450,000 1,091,000
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Net earnings $ 2,386,244 $ 1,857,970
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WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING (Note 2) 1,587,475 1,689,875
PER SHARE (Note 2)
Net earnings $1.50 $1.10
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Cash dividends $ .22 $ .21
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</TABLE>
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WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 1,523,675 $ 939,017
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (7,972,422) (2,548,374)
Proceeds from sales of marketable securities 2,229,736 5,141,669
Purchase of plant and equipment (23,234) (123,593)
Other (61,000) (109,844)
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Net cash (used for) provided by
investing activities (5,826,920) 2,359,858
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (349,245) (397,113)
Shares purchased and retired -- (10,412,611)
Proceeds from stock options exercised -- 14,500
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Net cash used for financing activities (349,245) (10,795,224)
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Net decrease in cash and cash equivalents (4,652,490) (7,496,349)
CASH AND CASH EQUIVALENTS at beginning
of period 6,837,765 11,247,137
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CASH AND CASH EQUIVALENTS at end
of period $ 2,185,275 $ 3,750,788
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SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 301,000 $ 245,281
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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, 1997, 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.
The Company intends to adopt Statement of Accounting Standards No. 128,
"Earnings Per Share," for the year ended December 31, 1997 and will
restate prior period earnings per share as required. The adoption of
this standard is not expected to have a material impact on previously
reported earnings per share.
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 $32,547,000 at March 31, 1997,
compared with $31,457,000 at December 31, 1996. 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 1997.
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.
In April 1997, the Company announced its plan to build a 370,000 square
foot building in Glendale, Wisconsin, to house its corporate offices and
warehouse and distribution facilities. The building is scheduled to
open July 1, 1998. The estimated cost of the building and related
equipment is $12 million.
Results of Operations
Total net sales were flat for the three months ended March 31, 1997
compared with the same period in 1996. Net sales in the wholesale
division increased $659,000 (2%) from $31,293,000 in 1996 to $31,952,000
in 1997. Retail net sales decreased 23% from $2,879,000 in the first
quarter of 1996 to $2,201,000 in the first quarter of 1997 as a result
of the closing of 13 leased departments in 1996.
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For the first quarter, gross earnings as a percent of net sales was
27.2%, up from 25.4% in 1996. Gross earnings in 1996 included a $600,000
loss reserve for the closing of the 13 leased departments which occurred
in 1996. Excluding this reserve, gross earnings would have been 27.1% in
1996.
For the first quarter, selling and administrative expenses decreased
$450,000 between 1996 and 1997. As a percent of sales, selling and
administrative expenses decreased from 17.6% in 1996 to 16.3% in 1997.
This decrease also resulted from the closing of the 13 leased departments
in 1996.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held April 22, 1997 to elect two
members to the Board of Directors.
John W. Florsheim and Frederick P. Stratton, Jr. were nominated for
election to the Board of Directors for terms of three years. A total of
3,538,165 votes were cast for each nominee, and 12,410 votes were
withheld for Mr. Florsheim and 9,550 shares were withheld for Mr.
Stratton.
Item 6. Exhibits and Reports on Form 8-K
None
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.
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Date John Wittkowske
Vice President-Finance
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,185
<SECURITIES> 7,077
<RECEIVABLES> 27,197
<ALLOWANCES> 2,292
<INVENTORY> 6,440
<CURRENT-ASSETS> 42,966
<PP&E> 8,431
<DEPRECIATION> 6,047
<TOTAL-ASSETS> 75,075
<CURRENT-LIABILITIES> 13,934
<BONDS> 0
0
0
<COMMON> 1,587
<OTHER-SE> 59,554
<TOTAL-LIABILITY-AND-EQUITY> 75,075
<SALES> 34,153
<TOTAL-REVENUES> 34,153
<CGS> 24,872
<TOTAL-COSTS> 30,444
<OTHER-EXPENSES> (127)
<LOSS-PROVISION> 36
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> 3,836
<INCOME-TAX> 1,450
<INCOME-CONTINUING> 2,386
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,386
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
</TABLE>
