EX-99.1 2 v082063_ex99-1.htm
WEYCO REPORTS SECOND QUARTER SALES AND EARNINGS

(Milwaukee, Wisconsin—July 26, 2007) Weyco Group, Inc. (NASDAQ:WEYS), today announced financial results for the quarter ended June 30, 2007.

Net earnings in the quarter grew 11% to $4.0 million, up from $3.6 million in 2006. Diluted earnings per share increased 13% to $.34 per diluted share in 2007 from $.30 per diluted share in 2006.

Second quarter net sales were $48.4 million, up from $45.1 million in 2006. Sales in the wholesale division, which include wholesale sales and licensing revenues, were $40.7 million compared with $38.4 million in 2006. Wholesale sales were $39.9 million in 2007, up from $37.5 million in 2006. Licensing revenues in 2007 were $835,000 compared with $930,000 in 2006.

In the wholesale division, net sales of the Company’s Florsheim and Nunn Bush brands were up 23% and 8%, respectively, while the Stacy Adams brand was down 12%. Approximately half of the increase in Florsheim sales was due to sales of product in Canada, which had previously been distributed by a third party licensee. The Company began distributing its Florsheim brand in Canada on January 1, 2007. Total Florsheim sales in Canada were $1.2 million in the second quarter and $2.3 million for the year. The Company expects Florsheim Canadian sales to be $4 -5 million in 2007. The remaining increase in Florsheim wholesale sales was driven by increased sales at department stores and national shoe chains. The increase in sales at Nunn Bush resulted from increased sales at department stores, primarily due to the success of the Nunn Bush Comfort Gel product. Second quarter sales of Stacy Adams were hurt because of an early Easter and the continued challenges faced by the independent shoe and clothing retailers.

Retail sales for the second quarter were $7.7 million, up 14% from $6.7 million in 2006. Same store sales were up 9%, with the remaining increase due to three additional stores. Same store sales for the six months ended June 30, 2007 were up 4.5%.

Operating earnings for the second quarter were $5.9 million, up from $5.5 million in 2006. Operating earnings as a percent of net sales remained flat at 12.2%.

“We are very pleased with our overall second quarter results,” stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group. “Our Florsheim and Nunn Bush brands both had very good results and we had a very strong performance in our retail division.”

Weyco Group will host a conference call on Friday, July 27, 2007, at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail. To participate in the call please dial 866-713-8307 or 617-597-5307, referencing passcode #38531002, five minutes before the start of the call. A replay will be available for one week beginning about one hour after the completion of the call by dialing 888-286-8010 or 617-801-6888, referencing passcode #42809660. Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group’s website at www.weycogroup.com.

 
 
 
 
Weyco Group, Inc., 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 and Stacy Adams. The Company also operates a small number of retail stores in the United States and Europe. 
 
This press release contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Various factors could cause the results of Weyco Group to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to the Company’s ability to: (i) successfully market and sell its products in a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) procure its products from independent manufacturers; and (iii) other factors, including those detailed from time to time in Weyco Group’s filings made with the SEC. Weyco Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

For more information contact:

John Wittkowske
Senior VP and CFO
Weyco Group, Inc.
414-908-1880

 
 
 
 

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
For the three and six months ended June 30, 2007 and 2006

   
Three Months ended June 30
 
Six Months ended June 30
 
 
 
2007
 
2006
 
2007
 
2006
  
                   
NET SALES
 
$
48,370,810
  
$
45,111,438
  
$
112,228,867
  
$
104,399,649
  
                           
COST OF SALES
    
29,677,190
    
27,651,564
    
70,484,108
    
65,906,885
  
Gross earnings
    
18,693,620
    
17,459,874
    
41,744,759
    
38,492,764
  
                           
SELLING AND ADMINISTRATIVE EXPENSES
    
12,786,598
    
11,975,701
    
27,159,425
    
24,802,329
  
Earnings from operations
    
5,907,022
    
5,484,173
    
14,585,334
    
13,690,435
  
                           
INTEREST INCOME
    
554,738
    
517,849
    
1,062,304
    
979,708
  
                           
INTEREST EXPENSE
    
(85,109
)
  
(118,472
)
  
(208,144
)
  
(297,294
)
                           
OTHER INCOME (EXPENSE), net
    
2,465
    
8,742
    
4,246
    
3,472
  
Earnings before provision for income taxes
   
6,379,116
    
5,892,292
    
15,443,740
    
14,376,321
  
                           
PROVISION FOR INCOME TAXES
    
2,330,000
    
2,250,000
    
5,700,000
    
5,425,000
  
                           
Net earnings
  
$
4,049,116
  
$
3,642,292
  
$
9,743,740
  
$
8,951,321
  
                           
WEIGHTED AVERAGE SHARES OUTSTANDING
                          
Basic
    
11,566,388
    
11,612,051
    
11,614,816
    
11,596,254
  
Diluted
    
12,015,212
    
12,054,041
    
12,067,695
    
12,032,359
  
                           
EARNINGS PER SHARE
                          
Basic
  
$
.35
  
$
.31
  
$
.84
  
$
.77
  
Diluted
  
$
.34
  
$
.30
  
$
.81
  
$
.74
  
                           
CASH DIVIDENDS PER SHARE
  
$
.11
  
$
.09
  
$
.20
  
$
.16
  
 
 
 
 
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
   
June 30
 
December 31
 
 
 
2007
 
2006
  
ASSETS
          
CURRENT ASSETS:
          
Cash and cash equivalents
  
$
18,194,616
  
$
15,314,140
  
Marketable securities, at amortized cost
   
2,635,225
    
1,600,871
  
Accounts receivable, net
    
27,972,690
    
30,641,632
  
Accrued income tax receivable
    
869,514
    
—
  
Inventories
    
39,761,617
    
51,000,849
  
Deferred income tax benefits
    
745,681
    
949,109
  
Prepaid expenses and other current assets
    
1,303,632
    
1,715,859
  
Total current assets
   
91,482,975
    
101,222,460
  
MARKETABLE SECURITIES, at amortized cost
    
42,071,175
    
40,361,296
  
OTHER ASSETS
   
8,975,148
    
8,725,346
  
PLANT AND EQUIPMENT, net
   
28,384,963
    
28,445,900
  
TRADEMARK
   
10,867,969
    
10,867,969
  
   
$
181,782,230
  
$
189,622,971
  
               
               
LIABILITIES & SHAREHOLDERS’ INVESTMENT
              
CURRENT LIABILITIES:
              
Short-term borrowings
 
$
5,552,381
  
$
10,957,518
  
Accounts payable
    
7,136,861
    
12,398,740
  
Dividend payable
    
1,276,442
    
1,054,354
  
Accrued liabilities
    
8,562,366
    
8,430,267
  
Accrued income taxes
    
—
    
72,907
  
Total current liabilities
    
22,528,050
    
32,913,786
  
LONG-TERM PENSION LIABILITY
    
6,883,315
    
6,620,842
  
DEFERRED INCOME TAX LIABILITIES
   
1,651,854
    
1,915,869
  
SHAREHOLDERS’ INVESTMENT:
              
Common stock
    
11,366,952
    
9,129,256
  
Class B common stock.
    
209,158
    
2,585,087
  
Capital in excess of par value
    
9,866,309
    
7,576,096
  
Reinvested earnings
    
134,715,775
    
134,264,076
  
Accumulated other comprehensive loss
    
(5,439,183
)
  
(5,382,041
)
Total shareholders investment
   
150,719,011
    
148,172,474
  
   
$
181,782,230
  
$
189,622,971
  
 
 
 
 
 
CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited)
For the six months ended June 30, 2007 and 2006

   
2007
 
2006
  
           
CASH FLOWS FROM OPERATING ACTIVITIES:
          
Net earnings
  
$
9,743,740
  
$
8,951,321
  
Adjustments to reconcile net earnings to net cash
              
provided by operating activities -
              
Depreciation
    
1,237,342
    
1,077,279
  
Amortization
   
42,453
    
34,164
  
Deferred income taxes
    
(179,587
)
  
(131,053
)
Stock-based compensation
    
148,394
    
—
  
Pension expense
   
670,338
    
596,502
  
Loss (Gain) on sale of assets
   
—
    
13
  
Increase in cash surrender value of life insurance
    
(259,260
)
  
(251,070
)
Changes in operating assets and liabilities -
              
Accounts receivable
   
2,668,942
    
1,760,135
  
Inventories
   
11,239,232
    
924,141
  
Prepaids and other current assets
   
421,685
    
507,841
  
Accounts payable
    
(5,261,879
)
  
(5,625,300
)
Accrued liabilities and other
    
(231,058
)
  
384,361
  
Accrued income taxes
   
(915,421
)
  
(2,233,078
)
Net cash provided by operating activities
    
19,324,921
    
5,995,256
  
               
CASH FLOWS FROM INVESTING ACTIVITIES:
              
Purchase of marketable securities
    
(2,962,712
)
  
(14,795,896
)
Proceeds from maturities of marketable securities
    
176,026
    
1,106,072
  
Purchase of plant and equipment
    
(1,221,255
)
  
(1,219,386
)
Proceeds from sales of plant and equipment
    
62,000
    
996
  
Net cash used for investing activities
   
(3,945,941
)
  
(14,908,214
)
               
CASH FLOWS FROM FINANCING ACTIVITIES:
              
Cash dividends paid
   
(2,108,429
)
  
(1,620,493
)
Shares purchased and retired
    
(7,271,213
)
  
(1,875,593
)
Proceeds from stock options exercised
    
1,390,242
    
1,195,489
  
Repayments under revolving credit agreement
    
(5,405,137
)
  
(34,428
)
Income tax benefit from the exercise of stock options
   
896,033
    
856,848
  
Net cash used for financing activities
    
(12,498,504
)
  
(1,478,177
)
               
Net increase (decrease) in cash and cash equivalents
    
2,880,476
    
(10,391,135
)
               
CASH AND CASH EQUIVALENTS at beginning of period
  
$
15,314,140
  
$
22,780,913
  
               
CASH AND CASH EQUIVALENTS at end of period
  
$
18,194,616
  
$
12,389,778
  
               
SUPPLEMENTAL CASH FLOW INFORMATION:
              
Income taxes paid, net of refunds
 
$
5,798,138
  
$
6,546,302
  
Interest paid
  
$
241,331
  
$
289,612