-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ETY6DFoZo8P024Zmbd+CQ6XmNwO1Dw92SjeljZQ0nzA7aLZjLdZ/GjP5+OG6XFbU Lz92I6mpZKB04luPza7O0Q== 0000950124-98-002725.txt : 19980513 0000950124-98-002725.hdr.sgml : 19980513 ACCESSION NUMBER: 0000950124-98-002725 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEYCO GROUP INC CENTRAL INDEX KEY: 0000106532 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 390702200 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09068 FILM NUMBER: 98616234 BUSINESS ADDRESS: STREET 1: 234 E RESERVOIR AVE STREET 2: PO BOX 1188 CITY: MILWAUKEE STATE: WI ZIP: 53201 BUSINESS PHONE: 4142638800 MAIL ADDRESS: STREET 1: 234 EAST RESERVOIR AVENUE STREET 2: 234 EAST RESERVOIR AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53212 FORMER COMPANY: FORMER CONFORMED NAME: WEYENBERG SHOE MANUFACTURING CO DATE OF NAME CHANGE: 19900514 10-Q 1 FORM 10-Q 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, 1998 ------------------ 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 April 28, 1998 the following shares were outstanding. Common Stock, $1.00 par value 3,829,369 Shares Class B Common Stock, $1.00 par value 965,056 Shares 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
March 31 December 31 1998 1997 ------------ --------------- CURRENT ASSETS: Cash and cash equivalents $ 4,510,936 $ 3,323,035 Marketable securities 9,023,018 7,360,953 Accounts receivable, net 24,287,652 17,672,176 Inventories - Finished shoes 8,274,988 10,713,099 Shoes in process 133,739 347,189 Raw materials and supplies 28,420 101,165 ------------ ------------ Total inventories 8,437,147 11,161,453 ------------ ------------ Deferred income tax benefits 3,302,000 3,357,000 Prepaids and other current assets 41,435 37,447 ------------ ------------ Total current assets 49,602,188 42,912,064 ------------ ------------ MARKETABLE SECURITIES 30,107,041 30,105,090 OTHER ASSETS 6,996,731 6,874,191 PLANT AND EQUIPMENT 10,042,471 8,608,049 Less - Accumulated depreciation (6,460,119) (6,295,279) ------------ ------------ 3,582,352 2,312,770 ------------ ------------ $ 90,288,312 $ 82,204,115 ============ ============ LIABILITIES & SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Short-term borrowings $ 3,060,000 $ -- Accounts payable 6,910,501 6,275,563 Dividend payable 383,954 381,954 Accrued liabilities 7,924,523 7,006,168 Accrued income taxes 2,183,727 979,024 ------------ ------------ Total current liabilities 20,462,705 14,642,709 DEFERRED INCOME TAX LIABILITIES 864,000 884,000 SHAREHOLDERS' INVESTMENT: Common stock 4,794,425 4,774,925 Other shareholders' investment 64,167,182 61,902,481 ------------ ------------ $ 90,288,312 $ 82,204,115 ============ ============
-1- 3 WEYCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
1998 1997 ------------- ------------ NET SALES $ 36,055,262 $ 34,153,469 COST OF SALES 26,254,325 24,871,844 ------------ ------------ Gross earnings 9,800,937 9,281,625 SELLING AND ADMINISTRATIVE EXPENSES 6,017,306 5,572,783 ------------ ------------ Earnings from operations 3,783,631 3,708,842 INTEREST INCOME 433,372 212,044 OTHER INCOME AND EXPENSE 8,750 (84,642) ------------ ------------ Earnings before provision for income taxes 4,225,753 3,836,244 PROVISION FOR INCOME TAXES 1,550,000 1,450,000 ------------ ------------ Net earnings $ 2,675,753 $ 2,386,244 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING (Note 2) Basic 4,792,050 4,762,425 Diluted 4,860,847 4,793,341 EARNINGS PER SHARE (Note 2) Basic $ .56 $ .50 ============ ============ Diluted $ .55 $ .50 ============ ============ Cash dividends $ .08 $ .07 ============ ============
-2- 4 WEYCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
1998 1997 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by operating activities $ 1,615,991 $ 1,523,675 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of marketable securities (3,926,549) (7,972,422) Proceeds from sales of marketable securities 2,262,533 2,229,736 Purchase of plant and equipment (1,434,522) (23,234) Other -- (61,000) ----------- ----------- Net cash used for investing activities (3,098,538) (5,826,920) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (381,954) (349,245) Shares purchased and retired (399,625) -- Proceeds from stock options exercised 392,027 -- Short-term borrowings 3,060,000 -- ----------- ----------- Net cash (used for) provided by financing activities 2,670,448 (349,245) ----------- ----------- Net increase (decrease) in cash and cash equivalents 1,187,901 (4,652,490) CASH AND CASH EQUIVALENTS at beginning of period 3,323,035 6,837,765 ----------- ----------- CASH AND CASH EQUIVALENTS at end of period $ 4,510,936 $ 2,185,275 =========== =========== SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid $ 225,828 $ 301,000 =========== ===========
-3- 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 ended March 31, 1998, 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. The Company adopted Statement of Accounting Standards No. 128, "Earnings Per Share," as of December 31, 1997 and has restated prior period earnings per share as required. (3) The Company has entered into forward exchange contracts for the purpose of hedging firmly committed inventory purchases with outside vendors. The Company accounts for these contracts under the deferral method. Accordingly, gains and losses are recorded in inventory when the inventory is purchased. (4) During the first quarter of 1998, the Company adopted Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards for reporting and displaying comprehensive income and its components in a full set of general-purpose financial statements, either in the statement of operations or a separate statement. Additionally, SFAS 130 requires the display of the accumulated balance of other comprehensive income. The adoption of this standard did not impact the financial statements of the Company. 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 $43,641,000 at March 31, 1998, compared with $40,789,000 at December 31, 1997. The Company also 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. In addition, the Company entered into a 3 year $10,000,000 revolving credit agreement during the first quarter of 1998. The Company did not make any borrowings under these facilities during the first quarter. -4- 6 In December 1997, the Company broke ground on a new 346,000 square foot office and distribution center. Management estimates that the building will be completed in the fall of 1998 with installation of equipment and systems to follow. Operations are expected to begin in the new facility in the second quarter of 1999. Management believes that this facility, coupled with system improvements, will greatly enhance the distribution process, enabling the Company to better serve customers and continue to grow. The entire project is expected to cost $12 million. During the first quarter of 1998, the Company began issuing commercial paper with 30 to 90 day maturities to finance the construction project. As of March 31, 1998, $3,060,000 of commercial paper was outstanding. 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 6%, from $34,153,000 for the first quarter of 1997 to $36,055,000 for the first quarter of 1998. Net sales in the wholesale division increased $2,350,000 (7%) from $31,952,000 in 1997 to $34,302,000 in 1998. The increase in sales resulted from both an increase in the number of pairs of shoes shipped and the average selling price per pair, attributable to a change in product mix. Retail net sales decreased 20% from $2,201,000 in the first quarter of 1997 to $1,753,000 in the first quarter of 1998, primarily as a result of the closing of 4 retail units during 1997. Same store retail sales were down 6% between the first quarter of 1997 and 1998 principally due to a later Easter in 1998. Gross earnings as a percent of net sales was consistent between the first quarter of 1997 and 1998 at 27%. This reflects the consistency of wholesale gross earnings as a percent of wholesale net sales of 26% for the first quarters of 1997 and 1998, as well as retail gross earnings as a percent of retail net sales of 52% for the first quarters of 1997 and 1998. For the first quarter, selling and administrative expenses increased $444,000 between 1997 and 1998. As a percent of net sales, selling and administrative expenses increased from 16% in 1997 to 17% in 1998. This increase reflects fees incurred in the first quarter of 1998 relating to enhancements of our information systems, including costs related to ensuring our systems will be year 2000 compliant. -5- 7 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders was held April 28, 1998 to 1) elect two members to the Board of Directors, 2) vote on a proposal to approve the Weyco Group, Inc. 1997 Stock Option Plan, and 3) vote on a proposal to amend the Company's Restated Articles of Incorporation to increase the number of authorized shares of Common Stock of the Company, $1.00 par value, from 4,000,000 to 10,000,000 shares. Thomas W. Florsheim and Frank W. Norris were nominated for election to the Board of Directors for terms of three years. A total of 10,950,936 votes were cast for each nominee, and 64,254 votes were withheld for Mr. Florsheim and 27,750 votes were withheld for Mr. Norris. The Weyco Group, Inc. 1997 Stock Option Plan was voted on and approved. A total of 9,936,732 votes were cast for the proposal, 429,150 votes against the proposal, 86,293 votes abstained, and there were 498,761 nonbroker votes. The amendment to the Company's Restated Articles of Incorporation was voted on and approved. A total of 10,642,580 votes were cast for the amendment, 271,524 votes against the amendment, and 36,832 votes abstained. 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. May 12, 1998 /s/ John Wittkowske ---------------------- ---------------------------- Date John Wittkowske Vice President-Finance Chief Financial Officer -6- EX-27.1 2 EX-27.1
5 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 4,511 9,023 26,758 2,470 8,437 49,602 10,042 6,460 90,288 20,463 0 0 0 4,794 64,167 90,288 36,055 36,055 26,254 32,271 (442) 0 8 4,226 1,550 2,676 0 0 0 2,676 .56 .55
EX-27.2 3 EX-27.2
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 2,185 7,077 27,197 2,292 6,440 42,966 8,431 6,047 75,075 13,934 0 0 0 1,587 59,554 75,075 34,153 34,153 24,872 30,444 (127) 36 50 3,836 1,450 2,386 0 0 0 2,386 .50 .50
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