-----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, QNRzn/Oe1ypFOeyqpJ5hMuMMyMl9Y/HFCdFkHFqr4LI5j0SKpv2A+drZ5VYBaTx/ DQCYdjEEOsB4dgFExwmzLw== 0000950137-04-009455.txt : 20041105 0000950137-04-009455.hdr.sgml : 20041105 20041105094703 ACCESSION NUMBER: 0000950137-04-009455 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041105 DATE AS OF CHANGE: 20041105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEYCO GROUP INC CENTRAL INDEX KEY: 0000106532 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-APPAREL, PIECE GOODS & NOTIONS [5130] IRS NUMBER: 390702200 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09068 FILM NUMBER: 041121255 BUSINESS ADDRESS: STREET 1: 333 W ESTABROOK BOULEVARD CITY: GLENDALE STATE: WI ZIP: 43312 BUSINESS PHONE: 4149081600 MAIL ADDRESS: STREET 1: 333 W ESTABROOK BOULEVARD CITY: GLENDALE STATE: WI ZIP: 43312 FORMER COMPANY: FORMER CONFORMED NAME: WEYENBERG SHOE MANUFACTURING CO DATE OF NAME CHANGE: 19900514 10-Q 1 c89362e10vq.txt QUARTERLY REPORT 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 September 30, 2004 -------------------------------------------------- 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.) 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) 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 ------- ------ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ------- ------ As of November 1, 2004 the following shares were outstanding: Common Stock, $1.00 par value 4,430,407 Shares Class B Common Stock, $1.00 par value 1,303,343 Shares PART I. FINANCIAL INFORMATION Item 1. Financial Statements. The consolidated 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 (UNAUDITED)
ASSETS September 30 December 31 2004 2003 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 5,865,563 $ 9,091,567 Marketable securities 940,560 4,206,100 Accounts receivable, net 38,145,332 29,900,197 Accrued income tax receivable -- 228,074 Inventories - finished shoes 52,234,327 43,727,578 Deferred income tax benefits 2,162,417 2,483,037 Prepaid expenses and other current assets 1,109,380 968,264 ------------ ------------ Total current assets 100,457,579 90,604,817 MARKETABLE SECURITIES 9,835,260 6,273,638 OTHER ASSETS 13,728,082 13,750,574 PLANT AND EQUIPMENT 40,177,966 40,914,250 Less - Accumulated depreciation 11,840,007 11,224,993 ------------ ------------ 28,337,959 29,689,257 TRADEMARK 10,867,969 10,867,969 ------------ ------------ $163,226,849 $151,186,255 ============ ============ LIABILITIES & SHAREHOLDERS' INVESTMENT CURRENT LIABILITIES: Short-term borrowings $ 26,956,972 $ 27,944,830 Accounts payable 6,449,669 7,465,606 Dividend payable 630,022 563,642 Accrued liabilities 7,289,485 8,279,846 Accrued income taxes 1,480,526 -- ------------ ------------ Total current liabilities 42,806,674 44,253,924 LONG-TERM PENSION LIABILITY 3,242,128 3,077,285 DEFERRED INCOME TAX LIABILITIES 4,904,789 5,009,158 SHAREHOLDERS' INVESTMENT: Common stock 5,728,225 5,630,418 Other shareholders' investment 106,545,033 93,215,470 ------------ ------------ $163,226,849 $151,186,255 ============ ============
The accompanying notes to consolidated condensed financial statements are an integral part of these financial statements. -1- WEYCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS FOR THE PERIODS ENDED SEPTEMBER 30, 2004 AND 2003 (UNAUDITED)
Three Months ended September 30 Nine Months ended September 30 -------------------------------- -------------------------------- 2004 2003 2004 2003 ------------- ------------- ------------- ------------- NET SALES $ 55,841,100 $ 49,817,256 $ 167,370,829 $ 161,197,464 COST OF SALES 35,866,719 32,774,309 107,967,795 106,355,797 ------------- ------------- ------------- ------------- Gross earnings 19,974,381 17,042,947 59,403,034 54,841,667 SELLING AND ADMINISTRATIVE EXPENSES 12,919,417 11,887,045 37,502,695 36,128,815 ------------- ------------- ------------- ------------- Earnings from operations 7,054,964 5,155,902 21,900,339 18,712,852 INTEREST INCOME 119,460 131,378 360,466 403,346 INTEREST EXPENSE (101,923) (421,998) (368,261) (1,084,350) OTHER INCOME AND EXPENSE, net (2,268) 43,692 (45,401) 241,764 ------------- ------------- ------------- ------------- Earnings before provision for income taxes 7,070,233 4,908,974 21,847,143 18,273,612 PROVISION FOR INCOME TAXES 2,700,000 1,400,000 8,350,000 6,500,000 ------------- ------------- ------------- ------------- Net earnings $ 4,370,233 $ 3,508,974 $ 13,497,143 $ 11,773,612 ============= ============= ============= ============= WEIGHTED AVERAGE SHARES OUTSTANDING (Note 2) Basic 5,725,533 5,700,959 5,675,568 5,693,346 Diluted 5,903,247 5,903,141 5,856,138 5,881,725 EARNINGS PER SHARE (Note 2) Basic $ .76 $ .62 $ 2.38 $ 2.07 ============= ============= ============= ============= Diluted $ .74 $ .59 $ 2.30 $ 2.00 ============= ============= ============= ============= CASH DIVIDENDS PER SHARE $ .11 $ .10 $ .32 $ .28 ============= ============= ============= =============
The accompanying notes to consolidated condensed financial statements are an integral part of these financial statements. -2- WEYCO GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 (UNAUDITED)
2004 2003 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 13,497,143 $ 11,773,612 Adjustments to reconcile net earnings to net cash provided by operating activities - Depreciation 2,003,050 1,643,335 Amortization 66,962 140,265 Deferred income taxes 216,251 (443,000) Deferred compensation expense 37,800 147,969 Pension expense 534,720 610,000 Loss (Gain) on sale of assets 116,174 (25,819) Increase in cash surrender vale of life insurance (306,000) (279,000) Changes in operating assets and liabilities - Accounts receivable (8,245,135) (2,196,389) Inventories (8,506,749) 6,424,915 Prepaids and other current assets (141,116) 244,696 Accounts payable (1,015,937) (5,515,193) Accrued liabilities and other (1,287,958) 634,247 Accrued income taxes 1,708,600 770,838 ------------ ------------ Net cash (used for) provided by operating activities (1,322,195) 13,930,476 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of marketable securities (4,260,081) (3,400,000) Proceeds from maturities of marketable securities 3,957,915 4,499,248 Purchase of plant and equipment (928,955) (8,379,073) Proceeds from sales of plant and equipment 230,706 37,623 ------------ ------------ Net cash used for investing activities (1,000,415) (7,242,202) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (1,750,137) (1,594,878) Shares purchased and retired -- (212,102) Proceeds from stock options exercised 1,834,601 449,363 Net (repayments) borrowings under revolving credit agreement (987,858) (2,839,719) ------------ ------------ Net cash used for financing activities (903,394) (4,197,336) ------------ ------------ Net (decrease) increase in cash and cash equivalents (3,226,004) 2,490,938 CASH AND CASH EQUIVALENTS at beginning of period $ 9,091,567 $ 7,301,104 CASH AND CASH EQUIVALENTS at end of period $ 5,865,563 $ 9,792,042 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid, net of refunds $ 6,413,534 $ 5,694,925 ============ ============ Interest paid $ 335,763 $ 916,603 ============ ============
The accompanying notes to consolidated condensed financial statements are an integral part of these financial statements. -3- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS: (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 or nine months ended September 30, 2004, are not necessarily indicative of results for the full year. (2) The following table sets forth the computation of net earnings per share and diluted net earnings per share:
Three Months Ended September 30 Nine Months Ended September 30 ------------------------------- ------------------------------ 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Numerator: Net Earnings .......................... $ 4,370,233 $ 3,508,974 $13,497,143 $11,773,612 =========== =========== =========== =========== Denominator: Basic weighted average shares ......... 5,725,533 5,700,959 5,675,568 5,693,346 Effect of dilutive securities: Employee stock options .............. 177,714 202,182 180,570 188,379 ----------- ----------- ----------- ----------- Diluted weighted average shares ....... 5,903,247 5,903,141 5,856,138 5,881,725 =========== =========== =========== =========== Basic earnings per share ................ $ .76 $ .62 $ 2.38 $ 2.07 =========== =========== =========== =========== Diluted earnings per share .............. $ .74 $ .59 $ 2.30 $ 2.00 =========== =========== =========== ===========
Diluted weighted average shares outstanding for the three and nine months ended September 30, 2004 exclude outstanding options to purchase 155,250 shares at a weighted-average price of $33.70 and 5,412 shares at a weighted-average price of $36.94, respectively, because they are antidilutive. Diluted weighted average shares outstanding for the three and nine months ended September 30, 2003 exclude outstanding options to purchase 155,625 shares of common stock at a weighted-average price of $33.70 because they are antidilutive. (3) The components of the Company's net periodic pension cost are:
Three Months Ended Sept. 30 Nine Months Ended Sept. 30 ---------------------------- ---------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Benefits earned during the period ................ $ 196,000 $ 143,000 $ 588,000 $ 429,000 Interest cost on projected benefit obligation .... 396,000 366,000 1,188,000 1,098,000 Expected return on plan assets ................... (498,000) (418,000) (1,494,000) (1,254,000) Net amortization and deferral .................... 85,000 219,000 253,000 337,000 ----------- ----------- ----------- ----------- Net pension expense ........................... $ 179,000 $ 310,000 $ 535,000 $ 610,000
The Company has not and does not expect to make any contributions to its defined benefit pension plan in 2004. -4- (4) The Company continues to operate in two business segments: wholesale distribution and retail sales of men's footwear. Summarized segment data for the periods ended September 30, 2004 and 2003 is:
Wholesale Distribution Retail Total ------------ ------------ ------------ THREE MONTHS ENDED SEPTEMBER 30 ------------------------------- 2004 ---- Product sales .......................... $ 49,333,000 $ 5,628,000 $ 54,961,000 Licensing revenues ..................... 880,000 -- 880,000 ------------ ------------ ------------ Net sales ............................ $ 50,213,000 $ 5,628,000 $ 55,841,000 Earnings from operations ............... 6,521,000 534,000 7,055,000 2003 ---- Product sales .......................... $ 43,147,000 $ 5,874,000 $ 49,021,000 Licensing revenues ..................... 796,000 -- 796,000 ------------ ------------ ------------ Net sales ............................ $ 43,943,000 $ 5,874,000 $ 49,817,000 Earnings from operations ............... 4,338,000 818,000 5,156,000 NINE MONTHS ENDED SEPTEMBER 30 ------------------------------ 2004 ---- Product sales .......................... $146,188,000 $ 18,600,000 $164,788,000 Licensing revenues ..................... 2,583,000 -- 2,583,000 ------------ ------------ ------------ Net sales ............................ $148,771,000 $ 18,600,000 $167,371,000 Earnings from operations ............... 19,441,000 2,459,000 21,900,000 2003 ---- Product sales .......................... $141,185,000 $ 17,703,000 $158,888,000 Licensing revenues ..................... 2,309,000 -- 2,309,000 ------------ ------------ ------------ Net sales ............................ $143,494,000 $ 17,703,000 $161,197,000 Earnings from operations ............... 16,277,000 2,436,000 18,713,000
(5) The Company has stock option plans under which options to purchase Common Stock are granted to officers and key employees at prices not less than the fair market value of the Common Stock on the date of the grant. The Company accounts for such stock option grants under the provisions of APB Opinion #25, "Accounting for Stock Issued to Employees." No stock-based employee compensation expense has been reflected in net income, as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying Common Stock on the date of grant. -5- The following table illustrates the effect on net earnings per share as if the Company had applied the fair value recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based Compensation", as amended by SFAS No.148, to stock-based employee compensation.
Three Months ended September 30 Nine Months ended September 30 2004 2003 2004 2003 ----------- ----------- ------------ ------------ Net earnings, as reported ...................... $ 4,370,233 $ 3,508,974 $ 13,497,143 $ 11,773,612 Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects ..... 155,983 558,563 220,109 906,892 ----------- ----------- ------------ ------------ Pro forma net income ........................... $ 4,214,250 $ 2,950,411 $ 13,277,034 $ 10,866,720 =========== =========== ============ ============ Earnings per share Basic - as reported .......................... $ .76 $ .62 $ 2.38 $ 2.07 =========== =========== ============ ============ Basic - pro forma ............................ $ .74 $ .52 $ 2.34 $ 1.91 =========== =========== ============ ============ Diluted - as reported ........................ $ .74 $ .59 $ 2.30 $ 2.00 =========== =========== ============ ============ Diluted - pro forma .......................... $ .71 $ .50 $ 2.27 $ 1.85 =========== =========== ============ ============
(6) Comprehensive income for the periods ended September 30, 2004 and 2003 is as follows (in thousands):
Three Months Ended September 30 Nine Months ended September 30 2004 2003 2004 2003 -------- -------- -------- -------- Net earnings $ 4,370 $ 3,509 $ 13,497 $ 11,774 Foreign currency translation adjustments 55 (35) (88) 403 -------- -------- -------- -------- Total comprehensive income $ 4,425 $ 3,474 $ 13,409 $ 12,177
The components of Accumulated Other Comprehensive Loss as recorded on the accompanying balance sheets are as follows (in thousands):
September 30, 2004 December 31, 2003 ------------------ ----------------- Foreign currency translation adjustments $21 $109
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW The Company designs and markets moderately priced and better-grade men's branded footwear for casual, fashion and dress lifestyles. The principal brands of shoes sold by the Company are Florsheim, Nunn Bush, Nunn Bush NXXT, Brass Boot, Stacy Adams and SAO by Stacy Adams. Inventory is purchased from third party overseas manufacturers. The majority of foreign-sourced purchases are denominated in U.S. dollars. The Company's products are sold to department store chains, shoe store chains, specialty shoe stores and shoe boutiques primarily in North America, with some distribution in Europe. The Company also has a retail division, which consists of 28 -6- Company-owned retail stores in the United States and three in Europe. Sales in retail outlets are made directly to consumers by Company employees. The Company also has licensing agreements with third parties who sell its branded shoes overseas, as well as licensing agreements with apparel and accessory manufacturers in the United States. As such, the Company's results are primarily impacted by the economic conditions and the retail environment in the United States. Overall, net earnings increased from $3.5 million, or $.59 per diluted share for the third quarter of 2003, to $4.4 million, or $.74 per diluted share for the third quarter of 2004. For the nine months ended September 30, net earnings increased from $11.8 million, or $2.00 per diluted share in 2003, to $13.5 million or $2.30 per diluted share in 2004. A detailed analysis of operating results follows. RESULTS OF OPERATIONS Overall net sales for the third quarter ended September 30, 2004 of $55.8 million have increased 12.1% compared with $49.8 million for the third quarter of 2003. The higher results were primarily driven by growth in the Company's wholesale division. Wholesale net sales for the current quarter were $49.3 million, as compared with $43.1 million for the same period in 2003. Retail net sales for the quarter ended September 30, 2004 were $5.6 million, down slightly from $5.9 million in 2003. Licensing revenues were $881,000 for the quarter ended September 30, 2004 as compared with $796,000 in 2003. The current quarter net sales growth in the wholesale division was attributable to increases at all three of the Company's major brands. Florsheim net sales were up 24% due to the addition of a major new department store group and significant increases in business with several existing customers. Current quarter net sales of the Company's Stacy Adams brand increased 19%. Net sales in the Stacy Adams SAO casual business were down, but were more than offset by an increase in net sales in its dress shoe business which benefited from the overall market trend towards dressing up and the recent interest from department stores in carrying a lifestyle brand targeted at urban consumers. The Company's Nunn Bush brand continued to strengthen its market position in the quarter, with net sales rising 5% above the prior year quarter. The decrease in the Company's retail net sales in the three months ended September 30, 2004 in comparison to the prior year reflects the closing of three stores in 2004, partially offset by the opening of one new store on July 31, 2004 and a 1% decline in same store sales. The decline in same store sales resulted from lower sales at the Company's seven Florida stores, which were adversely impacted by the hurricanes that hit Florida during the quarter. The Company's other same store net sales were slightly above the prior year period. For the nine months ended September 30, 2004, net sales were $167.4 million, as compared to $161.2 million for the same period in 2003. Wholesale net sales through September 30, 2004 were $146.2 million as compared to $141.2 million for -7- the same period of 2003. The Company's Stacy Adams and Nunn Bush brands were up over the prior year 8.3% and 2.4%, respectively. The growth in Stacy Adams was attributable to the strengthening of its dress shoe business in general, and more specifically, in department stores that are seeking a moderately priced fashion brand that targets contemporary dress as well as urban consumers. The current year increase in Nunn Bush reflects the consistent nature of the brand. Florsheim net sales were flat in comparison to the prior year, due primarily to increases in the current quarter, offset by the decline in the FLS by Florsheim sub-brand, which is consistent with management's strategy to reposition the Florsheim brand and align it with department stores and "better" shoe and clothing stores that provide an environment and image that properly represent the brand. Sales of the other Florsheim brands were up 12.5% over the prior year. Retail net sales to date in 2004 were 5% above the prior year period, reaching $18.6 million. This growth reflects the 7.5% increase in same store sales for the nine months ended September 30, 2004 slightly offset by the effects of the store closings discussed above. Licensing revenues to date in 2004 were $2.6 million, up 11.9% from $2.3 million in the same period one year ago. Gross earnings as a percent of net sales for the third quarter increased from 34.2% in 2003 to 35.8% in 2004. Gross earnings as a percent of net sales for the nine months ended September 30 increased from 34.0% in 2003 to 35.5% in 2004. Wholesale gross earnings as a percent of net sales increased from 29.0% for the third quarter of 2003 to 31.4% for the third quarter of 2004, and from 29.3% for the nine months ended September 30, 2003 to 30.8% for the same period of 2004. Retail gross earnings as a percent of net sales increased from 63.6% for the third quarter of 2003 to 64.2% for the third quarter of 2004, and from 63.2% for the nine months ended September 30, 2003 to 63.3% for the same period of 2004. The increases in gross earnings as a percent of net sales for the quarter and nine months ended September 30, 2004 as compared with 2003 was principally due to changes in product mix. Selling and administrative expenses as a percent of net sales for the third quarter decreased from 23.9% in 2003 to 23.1% in 2004, reflecting the Company's efforts in leveraging fixed costs on higher volumes. For the nine months ended September 30, 2004 and 2003, selling and administrative expenses as a percent of net sales were 22.4%. Wholesale selling and administrative expenses as a percent of net sales decreased from 20.8% for the quarter ended September 30, 2003 to 20.0% for the quarter ended September 30, 2004, and decreased from 19.4% for the nine months ended September 30, 2003 to 19.3% for the same period in 2004. Retail selling and administrative expenses as a percent of net sales increased from 49.7% for the quarter ended September 30, 2003 to 54.7% for the quarter ended September 30, 2004, and from 49.4% for the nine months ended September 30, 2003 to 50.1% for the nine months ended September 30, 2004. The increase in retail selling and administrative expenses as a percent of net sales was primarily due to an $82,000 fixed asset write-off in the current quarter associated with the closing of a store. -8- Interest expense for the quarter ended September 30, 2004 was $102,000 as compared to $422,000 for the same period in 2003. For the nine months ended September 30, 2004, interest expense was $368,000 as compared to $1,084,000 for the nine months ended September 30, 2003. This decrease is primarily due to a reduction in the average balance of borrowings. The effective tax rate was 38.2% for the quarter ended September 30, 2004, as compared with 28.5% for the same period of 2003 and 38.2% for the nine months ended September 30, 2004 as compared with 35.6% for the same period of 2003. The lower tax rate in the prior year was due to the impact of a favorable tax settlement in the third quarter of 2003. LIQUIDITY & CAPITAL RESOURCES The Company's primary source of liquidity is its cash and short-term marketable securities, which aggregated approximately $6.8 million at September 30, 2004 as compared with $13.3 million at December 31, 2003. To date in 2004, cash and cash equivalents has decreased approximately $3.2 million, primarily to fund higher accounts receivable and inventory in comparison to year-end. The change in short-term marketable securities is due to a shift toward longer term investments upon maturity. Net cash from operating activities for the nine months ended September 30, 2004 decreased $15.3 million in comparison to the same period in the prior year. This use of cash was largely due to an $8.2 million increase in accounts receivable and an $8.5 million buildup of inventory from December 31, 2003. The increase in accounts receivable was the result of timing and the current year sales growth, while the increase in inventory was attributable to the Company's efforts to buildup inventory from unusually low levels at December 31, 2003. Cash flows used for investing activities decreased, as the Company had $8.4 million of capital expenditures in 2003 related to the construction project to expand and reconfigure its distribution center. In 2004, capital expenditures have returned to normal levels. Cash flows used for financing activities decreased in 2004, primarily due to decreased repayments on borrowings compared to the same period last year, as well as higher proceeds from the exercise of stock options to date this year. As of September 30, 2004, the Company had a total of $50 million available under its existing borrowing facility, of which total borrowings were $27 million. This facility includes certain financial covenants, including minimum net worth levels, minimum levels of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and a maximum ratio of funded debt to EBITDA. As of September 30, 2004 the Company was in compliance with all covenants. The Company believes that available cash and marketable securities, cash provided by operations, and available borrowing facilities will provide adequate support for the cash needs of the business in 2004. -9- Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes from those reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Item 4. Controls and Procedures The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. The Company's Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company required to be included in the Company's periodic filings under the Exchange Act. There have not been any changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 6. Exhibits See the Exhibit Index included herewith for a listing of Exhibits. 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. November 5, 2004 /s/ John Wittkowske - -------------------------- ------------------- Date John Wittkowske Senior Vice President and Chief Financial Officer -10- WEYCO GROUP, INC. (THE "REGISTRANT") (COMMISSION FILE NO. 0-9068) EXHIBIT INDEX TO CURRENT REPORT ON FORM 10-Q DATE OF September 30, 2004
INCORPORATED EXHIBIT HEREIN BY FILED NUMBER DESCRIPTION REFERENCE TO HEREWITH - ------- ---------------------------------------------------- ------------ -------- 31.1 Section 302 Certification of Chief Executive Officer X 31.2 Section 302 Certification of Chief Financial Officer X 32.1 Section 906 Certification of Chief Executive Officer X 32.2 Section 906 Certification of Chief Financial Officer X
EX-31.1 2 c89362exv31w1.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 31.1 I, Thomas W. Florsheim, Jr., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Weyco Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 5, 2004 /s/ Thomas W. Florsheim, Jr. ---------------------------- Thomas W. Florsheim, Jr. Chairman and Chief Executive Officer EX-31.2 3 c89362exv31w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 31.2 I, John F. Wittkowske, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Weyco Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures or caused such disclosure controls to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 5, 2004 /s/ John F. Wittkowske --------------------------- John F. Wittkowske Senior Vice President and Chief Financial Officer EX-32.1 4 c89362exv32w1.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 32.1 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Weyco Group, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2004 as filed with the Securities & Exchange Commission on the date hereof (the "Report"), I, Thomas W. Florsheim, Jr., Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Thomas W. Florsheim, Jr. - ------------------------------------- Thomas W. Florsheim, Jr. Chairman and Chief Executive Officer November 5, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in type form within the electronic version of this written statement required by Section 906, has been provided to Weyco Group, Inc. and will be retained by Weyco Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 c89362exv32w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 32.2 CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Weyco Group, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2004 as filed with the Securities & Exchange Commission on the date hereof (the "Report"), I, John F. Wittkowske, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John F. Wittkowske - ------------------------------------------------- John F. Wittkowske Senior Vice President and Chief Financial Officer November 5, 2004 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in type form within the electronic version of this written statement required by Section 906, has been provided to Weyco Group, Inc. and will be retained by Weyco Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----