10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)

x Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for fiscal year ended December 31, 2007, or

o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For 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 incorporation or organization)	(I.R.S. Employer Identification No.)

333 W. Estabrook Boulevard, P. O. Box 1188, Milwaukee, WI	53201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, include area code (414) 908-1600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock - $1.00 par value per share	NASDAQ

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

_________________________________

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o No x

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in any definitive proxy of information statements incorporated by reference or in any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The aggregate market value of the registrant’s Common Stock and Class B Common Stock held by non-affiliates of the registrant as of the close of business on June 30, 2007 was $196,263,578. This was based on the closing price of $26.93 per share as reported by NASDAQ on June 29, 2007, the last business day of the registrant’s most recently completed second fiscal quarter.

As of February 19, 2008, there were outstanding 11,503,834 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2007, are incorporated by reference in Part II and Part IV of this report.

Portions of the Corporation’s Proxy Statement for its Annual Meeting of Shareholders scheduled for April 29, 2008, are incorporated by reference in Part III of this report.

PART I

Item 1. Business

The Company is a Wisconsin corporation incorporated in the year 1906 as Weyenberg Shoe Manufacturing Company. Effective April 25, 1990, the name of the corporation was changed to Weyco Group, Inc.

The Company and its subsidiaries engage in one line of business, the distribution of men’s footwear.

The principal brands of shoes sold by the Company are “ Florsheim,” “Nunn Bush,” and “Stacy Adams.” The Company also has other brands, including “Brass Boot” and “Nunn Bush NXXT,” which are included within Nunn Bush sales figures, and “SAO by Stacy Adams,” which is included within Stacy Adams sales. Trademarks maintained by the Company on these names are important to the business. The Company’s products consist of both mid-priced quality leather dress shoes which would be worn as a part of more formal and traditional attire and quality casual footwear of man-made materials or leather which would be appropriate for leisure or less formal occasions. The Company’s footwear, and that of the industry in general, is available in a broad range of sizes and widths, primarily purchased to meet the needs and desires of the American male population.

The Company purchases finished shoes from outside suppliers, primarily located in China, India and Brazil. Almost all of these foreign-sourced purchases are denominated in U. S. dollars. Historically, there have been few inflationary pressures in the shoe industry and leather and other component prices have been stable. However, since the latter part of 2006, there has been some upward movement in leather prices. This, along with the decline of the U.S. dollar, has caused some inflationary pressure in the cost of the Company’s products. In certain circumstances, the Company is able to increase prices to offset the effect of these increases in costs. The Company previously assembled a small portion of its footwear at one plant in Beaver Dam, Wisconsin. In December 2003, the Company ceased its manufacturing operations. All inventory is now purchased from foreign suppliers. Through the first half of 2007, the Beaver Dam facility still operated as the Company’s reconditioning and rework department and processed some returned goods. The Company’s lease for its Beaver Dam, Wisconsin facility expired on June 30, 2007, and it was not renewed. Some functions are now outsourced, and the remaining operations were moved to the Company’s main distribution center in Glendale, Wisconsin.

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The Company’s business is separated into two segments - wholesale distribution and retail sales of men’s footwear. Wholesale distribution sales, which include both wholesale sales and licensing revenues, constituted approximately 87% of total sales in 2007, 2006 and 2005. At wholesale, shoes are marketed nationwide through more than 10,000 shoe, clothing and department stores. Sales are to unaffiliated customers, primarily in North America, with some distribution in Europe. In 2007 and 2006, sales to the Company’s largest customer, JCPenney, were 12% and 10%, respectively, of total sales. There were no customers with sales above 10% in 2005. Net sales to foreign customers were $18.1 million, $12.8 million and $11.8 million in 2007, 2006 and 2005, respectively. The Company employs traveling salespeople who sell the Company’s products to retail outlets. Shoes are shipped to these retailers primarily from the Company’s distribution center in Glendale, Wisconsin. Although there is no clearly identifiable seasonality in the men’s footwear business, new styles are historically developed and shown twice each year, in spring and fall. In accordance with industry practices, the Company is required to carry significant amounts of inventory to meet customer delivery requirements and periodically provides extended payment terms to customers. The Company 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. Licensing revenues were approximately 2% of total net sales in 2007, 2006 and 2005.

Retail sales constituted approximately 13% of total sales in 2007, 2006 and 2005. In the retail division at December 31, 2007, there were 39 company-operated stores in the United States, two retail stores in major cities in Europe and an Internet business. Sales in retail stores are made directly to the consumer by Company employees. In addition to the sale of the Company’s brands of footwear in these retail stores, other branded footwear and accessories are also sold in order to provide the consumer with as complete a selection as practically possible.

As of December 31, 2007, the Company had a backlog of $30 million of confirmed orders compared with $28 million as of December 31, 2006. This does not include unconfirmed blanket orders from customers. All orders are expected to be filled within one year.

As of December 31, 2007, the Company employed 414 persons, of which 19 were members of collective bargaining units. The Company ratified new contracts covering the majority of these employees during 2005 and in early 2006. Future wage and benefit increases under the contracts are not expected to have a significant impact on the future operations or financial position of the Company.

Price, quality, service and brand recognition are all important competitive factors in the shoe industry and the Company has been recognized as a leader in all of them. The Company does not engage in any specific research and development activities. However, the Company does have a design department that is continually reviewing and updating product designs. Compliance with environmental regulations historically has not had, and is not expected to have, a material adverse effect on the Company’s results of operations or cash flows.

The Company makes available, free of charge, copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports upon written or telephone request. Investors can also access these reports through the Company’s website, www.weycogroup.com, as soon as reasonably practical after we file or furnish those reports to the SEC. The information on the Company’s website is not a part of this filing.

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Item 1A. Risk Factors

There are many factors that affect the Company’s business, many of which are beyond the Company’s control. The following is a description of the most significant factors that might materially and adversely affect the Company’s business, results of operations and financial condition.

The Company is subject to risks related to the retail environment that could adversely impact the Company’s business.

The Company is subject to risks associated with doing business in the retail environment, primarily in the United States. Recently, the U.S. retail industry has experienced a growing trend toward consolidation of large retailers. The merger of major retailers could result in the Company losing sales volume or increasing its concentration of business with a few large accounts, resulting in reduced bargaining power on the part of the Company, which could increase pricing pressures and lower the Company’s margins. The acquisition of one of the Company’s major customers in 2005 adversely impacted the Company’s sales in 2006, with a smaller residual impact in 2007.

Changes in consumer preferences could negatively impact the Company.

The Company’s success is dependent upon its ability to accurately anticipate and respond to rapidly changing fashion trends and consumer preferences. Failure to predict or respond to current trends or preferences could have an adverse impact on the Company’s sales volume and overall performance.

The Company relies on independent foreign sources of production and the availability of leather and other raw materials which could have unfavorable effects on the Company’s business.

The Company purchases its products entirely from independent foreign manufacturers primarily in China, India and Brazil. Although the Company has good working relationships with its manufacturers, the Company does not have long-term contracts with them. Thus, the Company could experience increases in manufacturing costs, disruptions in the timely supply of products or unanticipated reductions in manufacturing capacity, any of which could negatively impact the Company’s business, results of operations and financial condition. The Company has the ability to move product to different suppliers; however, the transition may not occur smoothly and/or quickly and the Company could miss customer delivery date requirements and, consequently, could lose orders. Additional risks associated with foreign sourcing that could negatively impact the Company’s business include adverse changes in foreign economic conditions, import regulations, restrictions on the transfer of funds, duties, tariffs, quotas and political or labor interruptions, disruptions at U.S. or foreign ports or other transportation facilities, foreign currency fluctuations, expropriation and nationalization.

The Company’s use of foreign sources of production results in long production and delivery lead times. Therefore, the Company needs to forecast demand at least five months in advance. If forecasts are wrong, it could result in the loss of sales if there is not enough product, or in reduced margins if there is excess inventory that needs to be sold at discounted prices.

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Additionally, the Company’s products depend on the availability of raw materials, especially leather. Any significant shortages of quantities or increases in the cost of leather could have a material adverse effect on the Company’s business and results of operations.

The Company operates in a highly competitive environment, which may result in lower prices and reduce its profits.

The men’s footwear market is extremely competitive. The Company competes with manufacturers, distributors and retailers of men’s shoes, certain of which are larger and have substantially greater resources than the Company has. The Company competes with these companies primarily on the basis of price, quality, service and brand recognition, all of which are important competitive factors in the shoe industry. The Company’s ability to maintain its competitive edge depends upon these factors, as well as its ability to deliver new products at the best value for the consumer, maintain positive brand recognition, and obtain sufficient retail floor space and effective product presentation at retail. If the Company does not remain competitive, the Company’s future results of operations and financial condition could decline.

Changes in the U.S. economy may adversely affect the Company.

Spending patterns in the footwear market, and particularly in the moderate market in which a good portion of the Company’s products compete, have historically been impacted by consumers’ disposable income. As a result, the success of the Company is impacted by changes in the general economic conditions of the U.S. Factors affectingdiscretionary income for the moderate consumer include, among others, general business conditions, gas and energy costs, employment, consumer confidence, interest rates and taxation.

The Company’s business is dependent on information and communication systems, and significant interruptions could disrupt its business.

The Company accepts and fills the majority of its larger customers’ orders through the use of Electronic Data Interchange (EDI). It relies on its warehouse management system to efficiently process orders. The corporate office relies on computer systems to efficiently process and record transactions. Significant interruptions in its information and communication systems from power loss, telecommunications failure or computer system failure could significantly disrupt the Company’s business and operations.

The Company may not be able to successfully integrate new brands and businesses.

The Company intends to continue to look for new acquisition opportunities. That search could be unsuccessful and costs could be incurred in failed search efforts. If an acquisition does occur, the Company cannot guarantee that it would be able to successfully integrate the brand into its current operations, or that any acquired brand would achieve results in line with the Company’s historical performance or its specific expectations for the brand.

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Loss of the services of the Company’s top executives could adversely affect the business.

Thomas W. Florsheim, Jr., the Company’s Chairman and Chief Executive Officer, and John W. Florsheim, the Company’s President and Chief Operating Officer, have a strong heritage within the Company and the footwear industry. They possess knowledge, relationships and reputations based on their lifetime exposure to and experience in the Company and the industry. The loss of either one or both of the Company’s top executives could have an adverse impact on the Company’s performance.

The limited public float and trading volume for the Company’s stock may have an adverse impact on the stock price or make it difficult to liquidate.

The Company’s common stock is held by a relatively small number of shareholders. The Florsheim family owns over 30% of the stock and one other institutional shareholder holds a significant block. Other officers, directors, and members of management own stock or have the potential to own stock through previously granted stock options. Consequently, the Company has a small float and low average daily trading volume. Future sales of substantial amounts of the Company’s common stock in the public market, or the perception that these sales could occur, may adversely impact the market price of the stock and the stock could be difficult to liquidate.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

The following facilities are operated by the Company and its subsidiaries:

Location	Character	Owned/Leased	Square Footage		% Utilized
Glendale, Wisconsin	One story office and distribution center	Owned		780,000		90	%
Montreal, Canada	Multistory office and distribution center	Leased (1)		42,400		100	%
Florence, Italy	One story office, warehouse and distribution facility	Leased (1)		15,000		100	%

(1) Not material leases.

In addition to the above-described office, distribution and warehouse facilities, the Company operates 39 retail stores throughout the United States and two in Europe under various rental agreements. All of these facilities are suitable and adequate for the Company’s current operations. See Note 11 to Consolidated Financial Statements and Item 1. Business above.

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Item 3. Legal Proceedings

Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not Applicable

Executive Officers of the Registrant

Officer	Age	Office(s)	Served Since	Business Experience
Thomas W. Florsheim, Jr.	49	Chairman and Chief Executive Officer	1996	Chairman and Chief Executive Officer of the Company - 2002 to present; President and Chief Executive Officer of the Company - 1999 to 2002; President and Chief Operating Officer of the Company - 1996 to 1999; Vice President of the Company - 1988 to 1996
John W. Florsheim	44	President, Chief Operating Officer and Assistant Secretary	1996	President, Chief Operating Officer and Assistant Secretary of the Company – 2002 to present; Executive Vice President, Chief Operating Officer and Assistant Secretary of the Company – 1999 to 2002; Executive Vice President of the Company –-1996 to 1999; Vice President of the Company – 1994 to 1996
Peter S. Grossman	64	Senior Vice President President, Nunn Bush Brand and Retail Division	1971	Senior Vice President of the Company - 2002 to present; Vice President of the Company – 1971 to 2002
John F. Wittkowske	48	Senior Vice President, Chief Financial Officer and Secretary	1993	Senior Vice President, Chief Financial Officer and Secretary of the Company - 2002 to present; Vice President, Chief Financial Officer and Secretary of the Company – 1995 to 2002; Secretary/Treasurer of the Company – 1993 to 1995

Thomas W. Florsheim, Jr. and John W. Florsheim are brothers, and

Chairman Emeritus Thomas W. Florsheim is their father.

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PART II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Information required by this Item is set forth on pages 1, 30 and 39 of the Annual Report to Shareholders for the year ended December 31, 2007, and is incorporated herein by reference.

Stock Performance

The following line graph compares the cumulative total shareholder return onthe Company’s common stock during the five years ended December 31, 2007 with the cumulative return on the NASDAQ Non-Financial StockIndex and the Russell 3000-Shoes Index. The comparison assumes $100was invested on December 31, 2002 in the Company’s common stock and  in each of the foregoing indices and assumes reinvestment of dividends.

	2002		2003		2004		2005		2006		2007
Weyco Group, Inc.		100		153		200		178		234		261
NASDAQ Non-Financial Stock Index		100		153		165		169		185		210
Russell 3000 - Shoes Index		100		156		204		209		247		279

In April 1998, the Company first authorized a stock repurchase program to purchase 1,500,000 shares of its common stock in open market transactions at prevailing prices. In April 2000 and again in May 2001, the Company’s Board of Directors extended the stock repurchase program to cover the repurchase of 1,500,000 additional shares. Therefore, 4,500,000 shares have been authorized for repurchase since the program began. The table below presents information pursuant to Item 703(a) of Regulation S-K regarding the repurchase of the Company’s Common Stock by the Company in the three-month period ended December 31, 2007.

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Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of the Publicly Announced Program		Maximum Number of Shares that May Yet Be Purchased Under the Program
10/01/07 - 10/31/07		500	$	32.07		500		956,948
11/01/07 - 11/30/07		26,266	$	26.75		26,266		956,448
12/01/07 - 12/31/07		13,275	$	26.28		13,275		930,182
Total		40,041	$	26.66		40,041		916,907

Item 6. Selected Financial Data

Information required by this Item is set forth on page 1 of the Annual Report to Shareholders for the year ended December 31, 2007, and is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information required by this Item is set forth on pages 13 through 18 of the Annual Report to Shareholders for the year ended December 31, 2007 and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Information required by this Item is set forth on page 18 of the Annual Report to Shareholders for the year ended December 31, 2007 and is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

Information required by this Item is set forth on pages 19 through 35 of the Annual Report to Shareholders for the year ended December 31, 2007 and is incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None

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Item 9A. Controls and Procedures

Evaluation of Disclosure 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 principal executive officer and principal 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.

Management’s Report on Internal Control Over Financial Reporting -The Company’s Management Report on Internal Control Over Financial Reporting is set forth on page 38 of the Annual Report to Shareholders for the year ended December 31, 2007 and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting - 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 have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information required by this Item is set forth on page 6 of this Form 10-K and within the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 29, 2008, and is incorporated herein by reference.

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Item 11. Executive Compensation

Information required by this Item is set forth in the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 29, 2008, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Information required by this Item is set forth on page 7 of this Form 10-K and within the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 29, 2008, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this Item is set forth in the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 29, 2008, and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information required by this Item is set forth in the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 29, 2008, and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as a part of this report:

		Page Reference to Annual Report
1.	Financial Statements -
	Consolidated Statements of Earnings for the years ended December 31, 2007, 2006 and 2005	19
	Consolidated Balance Sheets - December 31, 2007 and 2006	20
	Consolidated Statements of Shareholders’ Investment for the years ended December 31, 2007, 2006 and 2005	21
	Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005	22
	Notes to Consolidated Financial Statements for the years ended December 31, 2007, 2006 and 2005	23 - 35
	Reports of Independent Registered Public Accounting Firm	36 - 37
		Page Reference to Form 10-K
2.	Financial Statement Schedules for the years ended December 31, 2007, 2006 and 2005 -
	Schedule II - Valuation and Qualifying Accounts	12
	Report of Independent Registered Public Accounting Firm	13
	All other schedules have been omitted because of the absence of the conditions under which they are required.
3.	Exhibits and Exhibit Index. See the Exhibit Index included as the last part of this report, which is incorporated herein by reference. Each management contract and compensatory plan or arrangement required to be filed as an exhibit to this report is identified in the Exhibit Index by an asterisk following its exhibit number.

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SCHEDULE II

WEYCO GROUP, INC.

VALUATION AND QUALIFYING ACCOUNTS

	Deducted from Assets
	Doubtful Accounts			Returns and Allowances			Total
BALANCE, DECEMBER 31, 2004	$	2,315,000		$	2,565,000		$	4,880,000
Add - (Reductions)/additions charged to earnings		(528,969	)		3,964,833			3,435,864
Deduct - Charges for purposes for which reserves were established		(314,031	)		(4,178,833	)		(4,492,864	)
BALANCE, DECEMBER 31, 2005	$	1,472,000		$	2,351,000		$	3,823,000
Add - Additions charged to earnings		6,692			4,209,010			4,215,702
Deduct - Charges for purposes for which reserves were established		(85,692	)		(4,239,010	)		(4,324,702	)
BALANCE, DECEMBER 31, 2006	$	1,393,000		$	2,321,000		$	3,714,000
Add - (Reductions)/Additions charged to earnings		(16,260	)		3,794,390			3,778,130
Deduct - Charges for purposes for which reserves were established		(194,740	)		(4,121,390	)		(4,316,130	)
BALANCE, DECEMBER 31, 2007	$	1,182,000		$	1,994,000		$	3,176,000

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Weyco Group, Inc.:

We have audited the consolidated financial statements of Weyco Group, Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and for each of the three years in the period ended December 31, 2007, and the Company's internal control over financial reporting as of December 31, 2007, and have issued our reports thereon dated March 3, 2008 (which report on the audit of the consolidated financial statements expresses an unqualified opinion and includes an explanatory paragraph concerning the adoption of Statement of Financial Accounting Standards No. 158, “Employers Accounting for Defined Benefit Pension and Other Postretirement Plans”); such reports are incorporated by reference elsewhere in this Form 10-K.  Our audits also included the consolidated financial statement schedule of the Company listed in Item 15.  The consolidated financial statement schedule is the responsibility of the Company's management.  Our responsibility is to express an opinion based on our audits.  In our opinion, this consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

Milwaukee, Wisconsin

March 3, 2008

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EXHIBIT INDEX

Exhibit	Description	Incorporated Herein By Reference To
3.1	Articles of Incorporation as Restated August 29, 1961, and Last Amended February 16, 2005	Exhibit 3.1 to Form 10-K for Year Ended December 31, 2004
3.2	Bylaws as Revised January 21, 1991 and Last Amended July 26, 2007	Exhibit 3 to Form 8-K dated July 26, 2007
10.1*	Consulting Agreement - Thomas W. Florsheim, dated December 28, 2000	Exhibit 10.1 to Form 10-K for Year Ended December 31, 2001
10.2*	Employment Agreement - Thomas W. Florsheim, Jr., dated January 1, 2008
10.3*	Employment Agreement - John W. Florsheim, dated January 1, 2008
10.6*	Excess Benefits Plan - Amended Effective as of July 1, 2004	Exhibit 10.6 to Form 10-K for Year Ended December 31, 2005
10.7*	Pension Plan - Amended and Restated Effective January 1, 2006	Exhibit 10.7 to Form 10-K for Year Ended December 31, 2006
10.8*	Deferred Compensation Plan - Amended Effective as of July 1, 2004	Exhibit 10.8 to Form 10-K for Year Ended December 31, 2005
10.13*	1997 Stock Option Plan	Exhibit 10.13 to Form 10-K for Year Ended December 31, 1997
10.14*	Change of Control Agreement John Wittkowske, dated January 26, 1998	Exhibit 10.14 to Form 10-K for Year Ended December 31, 1997

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EXHIBIT INDEX (cont.)

Exhibit	Description	Incorporated Herein By Reference To
10.15*	Change of Control Agreement Peter S. Grossman, dated January 26, 1998	Exhibit 10.15 to Form 10-K for Year Ended December 31, 1997
10.19*	Weyco Group, Inc. Director Nonqualified Stock Option Agreement Robert Feitler, dated May 19, 2003	Exhibit 10.19 to Form 10-K for Year Ended December 31, 2004
10.20*	Weyco Group, Inc. Director Nonqualified Stock Option Agreement Thomas W. Florsheim, Sr., dated May 19, 2003	Exhibit 10.20 to Form 10-K for Year Ended December 31, 2004
10.22*	Weyco Group, Inc. Director Nonqualified Stock Option Agreement Frederick P. Stratton, Jr., dated May 19, 2003	Exhibit 10.22 to Form 10-K for Year Ended December 31, 2004
10.23*	Weyco Group, Inc. 2005 Equity Incentive Plan	Appendix C to the Registrant’s Proxy Statement Schedule 14A for the Annual Meeting of Shareholders held on April 26, 2005
13	Annual Report to Shareholders
21	Subsidiaries of the Registrant
23.1	Independent Registered Public Accounting Firm’s Consent Dated March 3, 2008
31.1	Certification of Principal Executive Officer
31.2	Certification of Principal Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer

*Management contract or compensatory plan or arrangement

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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. (Registrant)
By	/s/ John Wittkowske	March 13, 2008
	John Wittkowske,
	Senior Vice President - Chief Financial Officer

Power of Attorney

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Thomas W. Florsheim, Jr., John W. Florsheim, and John Wittkowske, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signatures and Titles	Date
/s/ Thomas W. Florsheim	March 13, 2008
Thomas W. Florsheim, Chairman Emeritus
/s/ Thomas W. Florsheim, Jr.	March 13, 2008
Thomas W. Florsheim, Jr., Chairman of the Board
and Chief Executive Officer
/s/ John W. Florsheim	March 13, 2008
John W. Florsheim, President and Chief Operating Officer,
Assistant Secretary and Director
/s/ John Wittkowske	March 13, 2008
John Wittkowske, Senior Vice President,
Chief Financial Officer and Secretary
(Principal Accounting Officer)
/s/ Tina Chang	March 13, 2008
Tina Chang, Director
/s/ Robert Feitler	March 13, 2008
Robert Feitler, Director
/s/ Cory L. Nettles	March 13, 2008
Cory L. Nettles, Director
/s/ Frederick P. Stratton, Jr.	March 13, 2008
Frederick P. Stratton, Jr., Director

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EX-10.2

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), dated as of January 1, 2008, by and between WEYCO GROUP INC., a Wisconsin corporation (the “Company”), and THOMAS W. FLORSHEIM, JR. of Milwaukee, Wisconsin (“Florsheim”).

WITNESSETH

WHEREAS, Florsheim is the Chairman and Chief Executive Officer of the Company, and is familiar with the methods developed by the Company and the products supplied by the Company to its customers; and

WHEREAS, the Company desires to extend the period of its exclusive right to Florsheim’s services for the period commencing with the date hereof and ending on December 31, 2010, in order to assure to itself the successful management of its business, and

WHEREAS, Florsheim is willing to so extend the period of his employment, all on the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows:

1.Employment. The Company hereby employs Florsheim, during the term of this Agreement, in an executive and managerial capacity, to supervise and direct the operations of the Company as they are now or may hereafter be constituted. Florsheim shall have such title and responsibilities as the Company’s Corporate Governance and Compensation Committee of the Board of Directors shall from time to time assign to him, but the duties which he shall be called upon to render hereunder shall not be of a nature substantially inconsistent with those he has rendered and is currently rendering to the Company as its Chairman and Chief Executive Officer. During the term of this Agreement, Florsheim shall serve also, without additional compensation, in such offices of the Company to which he may be elected or appointed by the Company’s Board of Directors. The Company shall not require Florsheim, without his consent, to serve principally at a place other than Milwaukee, Wisconsin or its immediate suburban area, and shall exert its best efforts so as not to require him in the performance of his duties hereunder to be absent, without his consent, from said city or its immediate suburban area during any weekend or legal holiday nor for more than ten (10) days in any calendar month. Florsheim hereby accepts such employment and agrees to devote his full time, attention, knowledge and skill to the business and interest of the Company throughout the period of his employment hereunder. Florsheim shall be entitled to take vacations in the same manner and for the same periods of time as has been his custom during the previous three years.

2.Compensation.

(a)As compensation for his services to the Company during the term of this Agreement in whatever capacity or capacities rendered, the Company shall, subject to the provisions of Section 3 hereof, pay Florsheim a salary of $524,000.00 (Five Hundred, Twenty-four Thousand Dollars) per annum, or such greater amount per annum as the Corporate Governance and Compensation Committee of the Board of Directors of the Company may, in its discretion, fix; said salary is to be payable in equal, or approximately equal, bi-weekly installments.

(b)Nothing herein shall preclude Florsheim from receiving any additional compensation, whether in the form of bonus or otherwise, or from participating in any present or future profit-sharing, pension or retirement plan, insurance, sickness or disability plan, stock option plan or other plan for the benefits of Florsheim or the employees of the Company, in each case to the extent and in the manner approved or determined by the Company’s Board of Directors. The Company shall continue to provide Florsheim the use of an automobile, and other benefits at least equal to those provided to him under his previous contract of employment. These benefits are set forth in Schedule A hereto.

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3.Term. The term of this Agreement shall be from the date hereof to and including December 31, 2010. Florsheim’s employment hereunder shall be subject to the following:

(a)If, during the period of his employment hereunder, Florsheim is dismissed by the Company for cause, thereupon his employment shall terminate. “Cause”, for purposes of this subparagraph, shall mean conduct or activities that cause a substantial demonstrable detriment to the Company.

(b)If Florsheim’s employment terminates pursuant to Section 3(a) above, the Company shall be obligated to pay him his salary and other payments due to be paid hereunder, on or prior to the date of termination; provided, that nothing herein shall be deemed to entitle Florsheim to amounts accrued but not due to be paid, or to accelerate the date on which any payment of salary or bonus is due.

(c)(i)If, during the term of this Agreement, the Company for any reason other than that contained in Section 3(a) terminates the employment of Florsheim, or in the event that he terminates his employment following an event described in Section 6 hereof, the Company shall pay to Florsheim as severance pay, on the first day of the seventh month which begins after the date of such termination, a lump sum amount that, when added to any other payments or benefits which constitute “parachute payments”, will be equal to 299% of Florsheim’s “base amount”, as those terms are defined in Section 280G of the Internal Revenue Code of 1986 (the “Code”) and regulations promulgated by the Internal Revenue Service thereunder. The determination of Florsheim’s base amount shall be made by the Company’s independent auditors.

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(ii)All or a portion of the payment otherwise required to be made pursuant to the provisions of subparagraph (i) above shall be delayed to the extent the Company reasonably anticipates that the Company’s deduction with respect to such payment would be limited or eliminated by application of Code Section 162(m); provided, however that such payment shall be made on the earliest date on which the Company anticipates that the deduction for payment of the amount will not be limited or eliminated by application of Code Section 162(m). In any event, such payment shall be made no later than the last day of the calendar year in which occurs the six (6) month anniversary of Florsheim’s termination of employment. Any deferred amounts shall earn interest at the rate of 7% per annum until paid.

(d)In the event Florsheim is prevented from performing his duties by reason of disability, the salary provided by Section 2(a) of this Agreement shall cease as of the date he becomes permanently disabled, except that the Company shall pay to Florsheim from the date such salary ceases to December 31, 2010, inclusive, a salary at the rate equal to 75% of his then current salary, less any amount received by Florsheim pursuant to a salary continuation insurance plan, the premiums for which are paid in whole or in part by the Company. Florsheim shall be considered to be suffering from a “disability” if he is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, either (i) receiving income replacement benefits for a period of not less than three months under a welfare plan covering employees of the Company or (ii) unable to engage in any substantial gainful activity.

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(e)In the event Florsheim dies prior to the termination of his employment hereunder (for purposes of this Section 3(e), such employment shall not be deemed terminated if, at the time of his death, the Company was making payments pursuant to Section 3(d) above), the salary provided by Section 2(a) (or Section 3(d), as the case may be) shall cease as of the date of his death (prorated for part of any month), and the Company shall pay to the beneficiary or beneficiaries of Florsheim, as designated by him pursuant to written direction given by him to the Company (or in the absence of such writing or in the event the last such writing filed by him shall designate one or more persons who are not living at the time of his death or shall for any other reason be wholly or partially ineffective, to the personal representatives of his estate) a death benefit equal to his salary hereunder (at the annual rate which was being paid to him at the date of his death) for a three-year period. Such death benefits shall be payable in thirty-six equal monthly installments, the first of which shall be paid within sixty days next following the date of his death and the remaining of which shall be made on the date during each of the thirty-five next succeeding calendar months corresponding to the date of such first payment. If any payments are required to be made under this Section 3(e) to a beneficiary of Florsheim who shall have died after having commenced receiving payments hereunder, such payment shall be made to the personal representative of said beneficiary’s estate.

4.Restrictive Covenants. During the term of this Agreement, Florsheim shall not, without the prior written consent of the Company, be engaged in or connected or concerned with any business or activity which directly or indirectly competes with the business conducted by the Company; nor will he take part in any activities detrimental to the best interest of the Company.

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5.Remedy for Breach. In the event of the breach by Florsheim of any of the terms and conditions of this Agreement to be performed by him (including, but not limited to, leaving the Company’s employment or performing services for any person, firm or corporation engaged in a competing or similar line of business with the Company without the written consent of the Company), the Company shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to obtain damages for any breach of this Agreement, and to enjoin him (without the necessity of proving actual damage to the Company) from performing services for any such other person, firm or corporation in violation of the terms of this Agreement, or both. The Company shall not be so entitled, however, in the event Florsheim should voluntarily leave the Company’s employment after the happening of any of the events specified in Section 6 hereof during the term of this Agreement. The remedies provided herein shall be cumulative and in addition to any and all other remedies which the Company may have at law or in equity.

6.Specific Events. The following specific events will affect the rights and obligations of the parties in the event of Florsheim’s leaving the employ of the Company as set forth at Sections 3(c) and 5.

(a)The replacement of two or more of the existing members of the Company’s Board of Directors by persons not nominated by the Board of Directors; or

(b)Any amendment to Section 2 of Article III of the Company’s By-Laws to enlarge the number of directors of the Company if the change was not supported by the existing Board of Directors; or

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(c)Any change in Florsheim’s duties or powers such that his duties or powers, as changed, would be of a nature substantially inconsistent with those he has rendered in the past and is currently rendering to the Company as its chief executive officer; or

(d)A successful tender offer for 15% or more of the shares or merger or consolidation or transfer of assets of the Company; or

(e)A change in control of more than 15% of the shares in the Company, such that Florsheim decides in good faith that he can no longer effectively discharge his duties.

7.Non-Disclosure of Secret or Confidential Information, etc. Anything herein to the contrary notwithstanding, Florsheim, shall hold in a fiduciary capacity for the benefit of the Company all knowledge of customer or trade lists and all other secret or confidential information, knowledge or data of the Company obtained by him during his employment by the Company, which shall not be generally known to the public or to the Company’s industry (whether or not developed by Florsheim) and shall not, during his employment hereunder or after the termination of such employment, communicate or divulge any such information, knowledge or data to any person, firm or corporation other than the Company or persons, firms or corporation designated by the Company.

8.Reimbursement for Expenses. Florsheim shall be reimbursed by the Company, upon his submission of appropriate vouchers, for all items of traveling, entertainment and miscellaneous expenses, including membership dues at clubs used primarily for business purposes, reasonably incurred by him on behalf of the Company within the scope of and during his employment hereunder.

9.Assignment. This Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, including any company or corporation with which the Company may merge or consolidate or to which the Company may transfer substantially all of its assets. Florsheim shall have no power, without the prior written consent of the Company, to transfer, assign, anticipate, mortgage or otherwise encumber in advance any of the payments provided for herein nor shall said payments be subject to levy, seizure, or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by Florsheim nor shall they be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

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10.Notices. Any notice required or permitted hereunder shall be sufficiently given if sent by registered mail, with postage and registration fee prepaid, to the party to be notified at his or its last known address as determined by due diligence by the party sending such notice.

11.Severability. Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there may be any conflict between any provision of this Agreement and any contrary material statute, ordinance, regulation, or other rule of law pursuant to which the parties have no legal right to contract, the latter shall prevail; but in such event the provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of such law. In no event shall such illegality or invalidity affect the remaining parts of this Agreement.

12.Prior Employment Agreements. This Agreement supersedes all oral or written employment agreements heretofore made by and between the parties with respect to the subject matter hereof, and any and all such agreements are hereby canceled and terminated in their entirety.

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13.Applicable Law. This Agreement, executed in the State of Wisconsin, shall be construed in accordance with and governed in all respects by the laws of the State of Wisconsin to the extent not governed by federal law.

14.Waiver, etc. No amendment or modification of this Agreement shall be valid or binding on the Company unless made in writing and signed by a duly authorized officer of the Company or upon Florsheim unless made in writing and signed by him. The waiver of a breach of any provision of this Agreement by either party or the failure of either party to otherwise insist upon strict performance of any provision hereof shall not constitute a waiver of any subsequent breach of any subsequent failure to strictly perform.

15.Headings, etc. Section headings and numbers herein are included for convenience of reference only, and this Agreement is not to be construed with reference thereto. If there shall be any conflict between such numbers and headings and the text of this Agreement, the text shall control.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

17.Section 409A.

(a)In order to facilitate compliance with Section 409A of the Internal Revenue Code, the Company and Florsheim agree that they shall neither accelerate nor defer or otherwise change the time at which any payment due hereunder is to be made, except as may otherwise be permitted under Code Section 409A of the Internal Revenue Code and regulations thereunder.

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(b)Whether a termination of employment has occurred will be construed in a manner consistent with the requirements described in IRS regulations under Code Section 409A. Termination of employment by the Company on the one hand or by Florsheim on the other hand (other than by death of Florsheim) shall be communicated by a written notice of termination to the other. That notice shall indicate the specific termination provision in this Agreement relied upon and, to the extent applicable, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provisions so indicated and the termination date. The termination date shall be no later than thirty (30) days after the date such written notice is provided but may be earlier if so specified in the notice.

18.Termination of Certain Benefits. Coverage under the arrangements described in Section 2(b) shall end upon the Florsheim’s date of termination of employment (or earlier death described in Section 3(e) or earlier disability described in Section 3(d)); provided, however, that Florsheim (or his beneficiaries) shall be permitted to elect COBRA continuing health benefits coverage in accordance with the usual rules of the Company’s health plan and such coverage shall be continued in accordance with those rules so long as Florsheim or his beneficiaries pays the full COBRA premium generally applicable to other terminating employees (and their beneficiaries).

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IN WITNESS WHEREOF, Florsheim has duly executed this Agreement and the Company has caused this Agreement to be executed by its duly authorized officers and its corporate seal to be affixed hereunto, all as of the day and year first above written.

WEYCO GROUP, INC. a Wisconsin corporation,
By	/s/ John W. Florsheim
	ItsPresident

Attest:    /s/ John Wittkowske

    Its Secretary

/s/ Thomas W. Florsheim, Jr.

Thomas W. Florsheim, Jr.

(SEAL)

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SCHEDULE A

Life and Accidental Death and Dismemberment Insurance

Health Insurance

Weyco Group, Inc. Pension Plan

Deferred Compensation Agreement

Weyco Group, Inc. Deferred Compensation Plan

Weyco Group, Inc. Excess Benefits Plan

-12-

February 6, 2008

TO:WEYCO GROUP, INC.

Pursuant to Section 3(e) of the Employment Agreement dated as of January 1, 2008, by and between Weyco Group, Inc., a Wisconsin corporation, and Thomas W. Florsheim, Jr. of Milwaukee, Wisconsin, I hereby designate _______________ as beneficiary of the death benefits equal to my salary hereunder for a three-year period.

/s/ Thomas W. Florsheim, Jr.

Thomas W. Florsheim, Jr.

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EX-10.3

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), dated as of January 1, 2008, by and between WEYCO GROUP INC., a Wisconsin corporation (the “Company”), and JOHN W. FLORSHEIM of Milwaukee, Wisconsin (“Florsheim”).

WITNESSETH

WHEREAS, Florsheim is the President and Chief Operating Officer of the Company, and is familiar with the methods developed by the Company and the products supplied by the Company to its customers; and

WHEREAS, the Company desires to extend the period of its exclusive right to Florsheim’s services for the period commencing with the date hereof and ending on December 31, 2010, in order to assure to itself the successful management of its business, and

WHEREAS, Florsheim is willing to so extend the period of his employment, all on the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows:

1.Employment. The Company hereby employs Florsheim, during the term of this Agreement, in an executive and managerial capacity, to help supervise and direct the operations of the Company as they are now or may hereafter be constituted. Florsheim shall have such title and responsibilities as the Company’s Corporate Governance and Compensation Committee of the Board of Directors shall from time to time assign to him, but the duties which he shall be called upon to render hereunder shall not be of a nature substantially inconsistent with those he has rendered and is currently rendering to the Company as its President and Chief Operating Officer. During the term of this Agreement, Florsheim shall serve also, without additional compensation, in such offices of the Company to which he may be elected or appointed by the Company’s Board of Directors. The Company shall not require Florsheim, without his consent, to serve principally at a place other than Milwaukee, Wisconsin or its immediate suburban area, and shall exert its best efforts so as not to require him in the performance of his duties hereunder to be absent, without his consent, from said city or its immediate suburban area during any weekend or legal holiday nor for more than ten (10) days in any calendar month. Florsheim hereby accepts such employment and agrees to devote his full time, attention, knowledge and skill to the business and interest of the Company throughout the period of his employment hereunder. Florsheim shall be entitled to take vacations in the same manner and for the same periods of time as has been his custom during the previous three years.

2.Compensation.

(a)As compensation for his services to the Company during the term of this Agreement in whatever capacity or capacities rendered, the Company shall, subject to the provisions of Section 3 hereof, pay Florsheim a salary of $468,000.00 (Four Hundred, Sixty-eight Thousand Dollars) per annum, or such greater amount per annum as the Corporate Governance and Compensation Committee of the Board of Directors of the Company may, in its discretion, fix; said salary is to be payable in equal, or approximately equal, bi-weekly installments.

(b)Nothing herein shall preclude Florsheim from receiving any additional compensation, whether in the form of bonus or otherwise, or from participating in any present or future profit-sharing, pension or retirement plan, insurance, sickness or disability plan, stock option plan or other plan for the benefits of Florsheim or the employees of the Company, in each case to the extent and in the manner approved or determined by the Company’s Board of Directors. The Company shall provide Florsheim the use of an automobile. The current benefits are set forth in Schedule A hereto.

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3.Term. The term of this Agreement shall be from the date hereof to and including December 31, 2010. Florsheim’s employment hereunder shall be subject to the following:

(a)If, during the period of his employment hereunder, Florsheim is dismissed by the Company for cause, thereupon his employment shall terminate. “Cause”, for purposes of this subparagraph, shall mean conduct or activities that cause a substantial demonstrable detriment to the Company.

(b)If Florsheim’s employment terminates pursuant to Section 3(a) above, the Company shall be obligated to pay him his salary and other payments due to be paid hereunder, on or prior to the date of termination; provided, that nothing herein shall be deemed to entitle Florsheim to amounts accrued but not due to be paid, or to accelerate the date on which any payment of salary or bonus is due.

(c)(i)If, during the term of this Agreement, the Company for any reason other than that contained in Section 3(a) terminates the employment of Florsheim, or in the event that he terminates his employment following an event described in Section 6 hereof, the Company shall pay to Florsheim as severance pay, on the first day of the seventh month which beings after the date of such termination, a lump sum amount that, when added to any other payments or benefits which constitute “parachute payments”, will be equal to 299% of Florsheim’s “base amount”, as those terms are defined in Section 280G of the Internal Revenue Code of 1986 (the “Code”) and regulations promulgated by the Internal Revenue Service thereunder. The determination of Florsheim’s base amount shall be made by the Company’s auditors.

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(ii)All or a portion of the payment otherwise required to be made pursuant to the provisions of subparagraph (i) above shall be delayed to the extent the Company reasonably anticipates that the Company’s deduction with respect to such payment would be limited or eliminated by application of Code Section 162(m); provided, however that such payment shall be made on the earliest date on which the Company anticipates that the deduction for the payment of the amount will not be limited or eliminated by application of Code Section 162(m). In any event, such payment shall be made no later than the last day of the calendar year in which occurs the six (6) month anniversary of Florsheim’s termination of employment. Any deferred amounts shall earn interest at the rate of 7% per annum until paid.

(d)In the event Florsheim is prevented from performing his duties by reason of disability, the salary provided by Section 2(a) of this Agreement shall cease as of the date he becomes permanently disabled, except that the Company shall pay to Florsheim from the date such salary ceases to December 31, 2010, inclusive, a salary at the rate equal to 75% of his then current salary, less any amount received by Florsheim pursuant to a salary continuation insurance plan, the premiums for which are paid in whole or in part by the Company. Florsheim shall be considered to be suffering from a “disability” if he is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, either (i) receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or (ii) unable to engage in any substantial gainful activity.

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(e)In the event Florsheim dies prior to the termination of his employment hereunder (for purposes of this subparagraph, such employment shall not be deemed terminated if, at the time of his death, the Company was making payments pursuant to Section 3(d) above), the salary provided by Section 2(a) (or Section 3(d), as the case may be) shall cease as of the date of his death (prorated for part of any month), and the Company shall pay to the beneficiary or beneficiaries of Florsheim, as designated by him pursuant to written direction given by him to the Company (or in the absence of such writing or in the event the last such writing filed by him shall designate one or more persons who are not living at the time of his death or shall for any other reason be wholly or partially ineffective, to the personal representatives of his estate) a death benefit equal to his salary hereunder (at the annual rate which was being paid to him at the date of his death) for a three-year period. Such death benefits shall be payable in thirty-six equal monthly installments, the first of which shall be paid within sixty days next following the date of his death and the remaining of which shall be made on the date during each of the thirty-five next succeeding calendar months corresponding to the date of such first payment. If any payments are required to be made under this Section 3(e) to a beneficiary of Florsheim who shall have died after having commenced receiving payments hereunder, such payment shall be made to the personal representative of said beneficiary’s estate.

4.Restrictive Covenants. During the term of this Agreement, Florsheim shall not, without the prior written consent of the Company, be engaged in or connected or concerned with any business or activity which directly or indirectly competes with the business conducted by the Company; nor will he take part in any activities detrimental to the best interest of the Company.

5.Remedy for Breach. In the event of the breach by Florsheim of any of the terms and conditions of this Agreement to be performed by him (including, but not limited to, leaving the Company’s employment or performing services for any person, firm or corporation engaged in a competing or similar line of business with the Company without the written consent of the Company), the Company shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to obtain damages for any breach of this Agreement, and to enjoin him (without the necessity of proving actual damage to the Company) from performing services for any such other person, firm or corporation in violation of the terms of this Agreement, or both. The Company shall not be so entitled, however, in the event Florsheim should voluntarily leave the Company’s employment after the happening of any of the events specified in Section 6 hereof during the term of this Agreement. The remedies provided herein shall be cumulative and in addition to any and all other remedies which the Company may have at law or in equity.

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6.Specific Events. The following specific events will affect the rights and obligations of the parties in the event of Florsheim’s leaving the employ of the Company as set forth at Sections 3(c) and 5.

(a)The replacement of two or more of the existing members of the Company’s Board of Directors by persons not nominated by the Board of Directors; or

(b)Any amendment to Section 2 of Article III of the Company’s By-Laws to enlarge the number of directors of the Company if the change was not supported by the existing Board of Directors; or

(c)Any change in Florsheim’s duties or powers such that his duties or powers, as changed, would be of a nature substantially inconsistent with those he has rendered in the past and is currently rendering to the Company as its chief executive officer; or

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(d)A successful tender offer for 15% or more of the shares or merger or consolidation or transfer of assets of the Company; or

(e)A change in control of more than 15% of the shares in the Company, such that Florsheim decides in good faith that he can no longer effectively discharge his duties.

7.Non-Disclosure of Secret or Confidential Information, etc. Anything herein to the contrary notwithstanding, Florsheim, shall hold in a fiduciary capacity for the benefit of the Company all knowledge of customer or trade lists and all other secret or confidential information, knowledge or data of the Company obtained by him during his employment by the Company, which shall not be generally known to the public or to the Company’s industry (whether or not developed by Florsheim) and shall not, during his employment hereunder or after the termination of such employment, communicate or divulge any such information, knowledge or data to any person, firm or corporation other than the Company or persons, firms or corporation designated by the Company.

8.Reimbursement for Expenses. Florsheim shall be reimbursed by the Company, upon his submission of appropriate vouchers, for all items of traveling, entertainment and miscellaneous expenses, including membership dues at clubs used primarily for business purposes, reasonably incurred by him on behalf of the Company within the scope of and during his employment hereunder.

9.Assignment. This Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, including any company or corporation with which the Company may merge or consolidate or to which the Company may transfer substantially all of its assets. Florsheim shall have no power, without the prior written consent of the Company, to transfer, assign, anticipate, mortgage or otherwise encumber in advance any of the payments provided for herein nor shall said payments be subject to levy, seizure, or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by Florsheim nor shall they be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

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10.Notices. Any notice required or permitted hereunder shall be sufficiently given if sent by registered mail, with postage and registration fee prepaid, to the party to be notified at his or its last known address as determined by due diligence by the party sending such notice.

11.Severability. Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there may be any conflict between any provision of this Agreement and any contrary material statute, ordinance, regulation, or other rule of law pursuant to which the parties have no legal right to contract, the latter shall prevail; but in such event the provision of this Agreement so affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of such law. In no event shall such illegality or invalidity affect the remaining parts of this Agreement.

12.Prior Employment Agreements. This Agreement supersedes all oral or written employment agreements heretofore made by and between the parties with respect to the subject matter hereof, and any and all such agreements are hereby canceled and terminated in their entirety.

13.Applicable Law. This Agreement, executed in the State of Wisconsin, shall be construed in accordance with and governed in all respects by the laws of the State of Wisconsin to the extent not governed by federal law.

14.Waiver, etc. No amendment or modification of this Agreement shall be valid or binding on the Company unless made in writing and signed by a duly authorized officer of the Company or upon Florsheim unless made in writing and signed by him. The waiver of a breach of any provision of this Agreement by either party or the failure of either party to otherwise insist upon strict performance of any provision hereof shall not constitute a waiver of any subsequent breach of any subsequent failure to strictly perform.

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15.Headings, etc. Section headings and numbers herein are included for convenience of reference only, and this Agreement is not to be construed with reference thereto. If there shall be any conflict between such numbers and headings and the text of this Agreement, the text shall control.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

17.Section 409A.

(a)In order to facilitate compliance with Section 409A of the Internal Revenue Code, the Company and Florsheim agree that they shall neither accelerate nor defer or otherwise change the time at which any payment due hereunder is to be made, except as may otherwise be permitted under Code Section 409A of the Internal Revenue Code and regulations thereunder.

(b)Whether a termination of employment has occurred will be construed in a manner consistent with the requirements described in IRS regulations under Code Section 409A. Termination of employment by the Company on the one hand or by Florsheim on the other hand (other than by death of Florsheim) shall be communicated by a written notice of termination to the other. That notice shall indicate the specific termination provision in this agreement relied upon, to the extent applicable, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provisions so indicated and the termination date. The termination date shall be no later than thirty (30) days after the date such written notice is provided but may be earlier if so specified in the notice.

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18.Termination of Certain Benefits. Coverage under the arrangements described in Section 2(b) shall end upon Florsheim’s date of termination of employment (or earlier death described in Section 3(e) or earlier disability described in Section 3(d)); provided, however, that Florsheim (or his beneficiaries) shall be permitted to elect COBRA continuing health benefits coverage in accordance with the usual rules of the Company’s health plan and such coverage shall be continued in accordance with those rules so long as Florsheim (or his beneficiaries) pays the full COBRA premium generally applicable to other terminating employees (and their beneficiaries).

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IN WITNESS WHEREOF, Florsheim has duly executed this Agreement and the Company has caused this Agreement to be executed by its duly authorized officers and its corporate seal to be affixed hereunto, all as of the day and year first above written.

WEYCO GROUP, INC.
a Wisconsin corporation,
By	/s/ Thomas W. Florsheim, Jr.
	Its Chairman of the Board

Attest:

/s/ John Wittkowske

Its Secretary

	/s/ John W. Florsheim
	John W. Florsheim
(SEAL)

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SCHEDULE A

Life and Accidental Death and Dismemberment Insurance

Health Insurance

Weyco Group, Inc. Pension Plan

Deferred Compensation Agreement

Weyco Group, Inc. Deferred Compensation Plan

Weyco Group, Inc. Excess Benefits Plan

-12-

February 6, 2008

TO: WEYCO GROUP, INC.

Pursuant to Section 3(e) of the Employment Agreement dated as of January 1, 2008, by and between Weyco Group, Inc., a Wisconsin corporation, and John W. Florsheim of Milwaukee, Wisconsin, I hereby designate __________________ as beneficiary of the death benefits equal to my salary hereunder for a three-year period.

/s/ John W. Florsheim

John W. Florsheim

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EX-13

Exhibit 13

2007 ANNUAL REPORT

WEYCO Group, Inc.

To Our Shareholders:

2007 was a record year for our Company in both sales and earnings. Net sales for the year were $233 million, up 5% from $221 million last year. Net earnings were a record $22.9 million, up 5% compared with $21.9 million last year. Diluted earnings per share were $1.91, up from $1.81 in 2006. We are pleased with these results, as we believe our brands fared well this year relative to the industry.

Our success in 2007 was in part due to a change in how we distribute our Florsheim brand in Canada. Prior to 2007, Florsheim footwear was distributed in Canada by a third party licensee. That license arrangement terminated December 31, 2006, and since then we have been operating our own wholesale business in Canada. This year net sales of the Florsheim brand in Canada were $5.7 million. The positive effect of operating our own Florsheim business in Canada was partially offset by the residual impact of a 2005 acquisition of one of our customers by another major retailer. The combined company decided not to go forward with either our Nunn Bush or Florsheim brands in its stores. This resulted in a total loss of $12 million of sales to this customer, with $9.1 million occurring in 2006, and $2.9 million in 2007.

In our wholesale division, sales of our Florsheim brand increased 14%, primarily due to the change in Canadian distribution noted above, but also due to a 4% increase in Florsheim sales in the United States. In the United States, our business with department stores was up while sales to independent footwear and clothing stores lagged this year due to a difficult retail environment for this sector.

Nunn Bush sales were down 2% in 2007, as compared with 2006. The decrease was driven by soft sales of the Nunn Bush brand in Canada this year. Sales of this brand in the United States were flat. Fortunately, we were able to replace the volume from the lost customer described above with additional business with other department stores.

Net sales of Stacy Adams increased 5%. Despite a decline in business with independent footwear and clothing retailers, Stacy Adams produced a gain this year due to its good performance in national shoe chains and department stores.

Our royalty income was $4.1 million in 2007, which was flat in comparison to the prior year. During 2007, we experienced decreases in our royalty income in the Stacy Adams division, as independent clothing retailers, who are an important distribution channel for Stacy Adams clothing and accessories, were challenged in the current retail environment. In addition, Florsheim royalties were impacted by the absence this year of Canadian royalties due to the previously mentioned change in distribution in Canada. We were able to offset that loss with increases in royalty income from other Florsheim licensees.

Sales in our retail division increased 5%, with same store sales up 1.5%. During 2007, we opened five new stores in the United States and closed one. In Europe, we closed two stores. At December 31, 2007, we had 39 locations in the United States and two in Europe. During 2007, we invested in remodeling our stores to a new, more contemporary design. As of December 31, 2007, approximately 70% of our stores reflect this new design.

2

Our operating earnings grew 2%. As a percent of sales, however, they were down from 15.1% in 2006 to 14.7% in 2007. This decrease was caused by a combination of slightly lower wholesale gross margins and higher operating costs at our retail stores. We continue to feel cost pressures from our overseas suppliers due to the weakening U. S. dollar and higher labor and material costs.

Higher interest income, lower interest expense due to reduced debt balances, and a lower effective tax rate resulting from our increased investments in municipal bonds this year, contributed to our 5% increase in net earnings for 2007.

Our balance sheet remains strong, with cash and marketable securities of $57 million and only $550,000 of debt as of the end of the year. This net cash position of $56 million is up from $46 million at December 31, 2006. As our net cash position grows, we will continue to evaluate how to best use the cash, including continued repurchases of common stock, increased dividends and acquisitions.

While we are very pleased that 2007 was a record year for sales and net income, we are also mindful of the challenging nature of the current retail environment. Our focus remains on the long term. We are committed to making the necessary investment in our brands and business to secure profitable growth in 2008 and beyond.

Thomas W. Florsheim, Jr. Chairman and Chief Executive Officer John W. Florsheim President and Chief Operating Officer

3

SELECTED FINANCIAL DATA

	Years Ended December 31
	2007		2006		2005		2004		2003
Net sales	$	232,617,000	$	221,048,000	$	209,469,000	$	223,013,000	$	215,761,000
Net earnings	$	22,901,000	$	21,856,000	$	19,401,000	$	20,278,000	$	17,135,000
Diluted earnings per share*	$	1.91	$	1.81	$	1.62	$	1.72	$	1.46
Weighted average diluted shares
outstanding*		12,012,915		12,094,462		11,965,928		11,762,278		11,756,574
Cash dividends per share*	$	.42	$	.34	$	.26 1/2	$	.21 1/2	$	.19
Total assets	$	190,152,000	$	189,623,000	$	175,498,000	$	156,356,000	$	151,186,000
Bank borrowings	$	550,000	$	10,958,000	$	9,553,000	$	11,360,000	$	27,945,000

*All share and per share amounts have been adjusted to reflect the two-for-one stock split distributed to shareholders

on April 1, 2005. See Note 12 of the Notes to Consolidated Financial Statements.

COMMON STOCK DATA

	2007						2006
					Cash						Cash
	Price Range				Dividends		Price Range				Dividends
Quarter:	High		Low		Declared		High		Low		Declared
First	$	27.08	$	22.69	$	.09	$	22.89	$	19.03	$	.07
Second	$	28.09	$	23.84		.11		23.46		18.76		.09
Third	$	34.31	$	23.70		.11		24.21		19.99		.09
Fourth	$	33.46	$	24.66		.11		25.72		21.49		.09
					$	.42					$	.34

There are 254 holders of record of the Company’s common stock as of February 19, 2008.

The stock prices shown above are the high and low actual trades for the calendar periods indicated.

4

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

OVERVIEW

The Company is a distributor of men’s casual, dress and fashion shoes. The principal brands of shoes sold by the Company are “Florsheim,” “Nunn Bush,” and “Stacy Adams.” The Company also has other brands, including “Brass Boot” and “Nunn Bush NXXT,” which are included within Nunn Bush net sales figures, and “SAO by Stacy Adams,” which is included within Stacy Adams net sales. Inventory is purchased from third-party overseas manufacturers. Almost all foreign-sourced purchases are denominated in U.S. dollars. In the wholesale division, the Company’s products are sold to shoe specialty stores, department stores and clothing retailers primarily in North America, with some distribution in Europe. The Company also has a retail division, which as of December 31, 2007, consisted of 39Company-owned retail stores in the United States, two in Europe, and an Internet business. 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 affected by the economic conditions and the retail environment in the United States.

The Company achieved record results in 2007. Consolidated net sales in 2007 were a record $232.6 million compared with $221.0 million and $209.5 million in 2006 and 2005, respectively. Net earnings in 2007 were a record $22.9 million compared with $21.9 million and $19.4 million in 2006 and 2005, respectively. Diluted earnings per share in 2007 were a record $1.91 compared with $1.81 and $1.62 in 2006 and 2005, respectively. The sales growth in 2007 was largely due to the new Florsheim wholesale business in Canada. Prior to January 1, 2007, Florsheim footwear was distributed in Canada by a third party licensee. That license arrangement terminated December 31, 2006, and since then the Company has been operating its own wholesale business in Canada, consolidating it with the Company’s Nunn Bush Canadian business. Conversely, the acquisition of one of the Company’s significant customers by another retailer in 2005 negatively impacted sales volume at Nunn Bush and Florsheim in 2007 and 2006, as the acquiring Company decided not to go forward with either the Nunn Bush or Florsheim product lines in its stores. In 2007 and 2006, sales to this customer were down $2.9 million and $9.1 million as compared to the previous year, respectively.

Overall, the Company’s brands performed well in 2007 considering the challenging retail environment in the footwear and apparel industries. Management believes the Company’s solid performance resulted from its large range of styles and price points, along with the quality and value of its brands. Management continues to focus on positioning each of its brands, as well as its retail business, for long-term success.

The Company’s balance sheet remains strong. Cash and marketable securities were $56.8 million at the end of 2007 compared with $57.3 million at the end of 2006. Borrowings under the Company’s revolving line of credit were just $550,000 at December 31, 2007, compared with $11.0 million at December 31, 2006. The Company’s excess of cash and marketable securities over borrowings of $56.2 million at December 31, 2007 was up from $46.3 million at December 31, 2006.

5

RESULTS OF OPERATIONS

2007 vs. 2006

Consolidated net sales in 2007 rose 5% to $232.6 million from $221.0 million in 2006. Net sales in the Company’s wholesale division, which includes both wholesale sales and licensing revenues, were $201.5 million in 2007 compared with $191.3 million in the prior year. Wholesale sales were $197.4 million in 2007, up 5% from $187.2 million in 2006. Licensing revenues were approximately $4.1 million in both years.

Licensing revenues for Stacy Adams apparel and accessories were down for the year as independent clothing retailers who sell these products have struggled in the current retail environment. Licensing revenues for Florsheim footwear and accessories were negatively impacted by the absence this year of Canadian royalties due to the previously mentioned change in distribution in Canada. These items were offset, however, by increases in royalty income from other Florsheim licensees.

Retail net sales in 2007 climbed 5% to $31.1 million from $29.8 million in 2006. The increase was primarily attributable to five new stores in 2007 and four that were opened in the second half of 2006. The Company closed one store in the United States and two in Europe in 2007 and none in 2006. In the current year, same store sales increased 1.5% over 2006. Stores are included in same store sales beginning in the store’s 13^th month of operations after its grand opening.

Sales in the Company’s wholesale division for the years ended December 31, 2007 and 2006 were as follows:

	Wholesale Division Sales
	Years ended December 31,
	2007		2006		% change
North American Sales
Stacy Adams	$	57,444,374	$	54,540,020		5.3	%
Nunn Bush		68,643,431		70,148,095		-2.1	%
Florsheim		66,232,054		58,017,409		14.2	%
Foreign Sales		5,061,990		4,443,626		13.9	%
Total Wholesale	$	197,381,849	$	187,149,150		5.5	%
Licensing		4,087,029		4,134,988		-1.2	%
Total Wholesale Division	$	201,468,878	$	191,284,138		5.3	%

The increase in the Stacy Adams brand was attributable to good performance in the national shoe chain and department store sectors. The decrease in Nunn Bush sales was due to soft sales in Canada. Sales in the United States were flat in 2007, despite the residual impact of the loss of business with one of the Company’s significant customers following its acquisition by another retailer, discussed above. The Company was able to replace this business through increased sales to other department stores. Sales of Florsheim in 2007 included $5.7 million of Florsheim sales in Canada. As discussed above, the Company began to operate its own wholesale business in Canada on January 1, 2007. In the United States, Florsheim net sales were up 4%.

6

Overall gross earnings as a percent of net sales were 38.4% in 2007 and 38.6% in 2006. Wholesale gross earnings as a percent of net sales this year were down 20 basis points compared with last year while retail margins were flat between years.

The Company’s cost of sales does not include distribution costs (e.g., receiving, inspection or warehousing costs). The Company’s distribution costs for the years ended December 31, 2007 and 2006 were $6.8 million and $6.5 million, respectively. These costs were included in selling and administrative expenses. Therefore, the Company’s gross earnings may not be comparable to other companies, as some companies may include distribution costs in cost of sales.

The Company’s selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs, rent and depreciation. In 2007, the Company’s overall selling and administrative expenses were 23.8% of net sales compared with 23.5% in 2006. Wholesale selling and administrative expenses as a percent of net wholesale sales were flat in comparison to the prior year at 19.9%. Retail selling and administrative expenses were 51.7% of net sales in 2007 compared with 49.2% in 2006. The increase in retail expenses as a percent of sales continues to be caused by higher expenses in relation to sales in new stores and increased costs associated with lease renewals at existing stores.

Interest income in 2007 was up $218,000 from 2006 due to increased investments in marketable securities and higher interest rates. Interest expense was down $256,000 in 2007 compared with 2006. The decrease was the result of lower short-term borrowings in 2007 compared with 2006.

The effective tax rate for 2007 was 36.3% as compared with 37.2% in 2006. The lower rate in 2007 resulted from higher interest income earned on municipal bonds and lower state taxes, which decreased the Company’s effective tax rate.

2006 vs. 2005

Consolidated net sales for the year ended December 31, 2006 were $221.0 million, rising 5.5% above 2005 sales of $209.5 million. Net sales in the Company’s wholesale division, which includes both wholesale sales and licensing revenues, were $191.3 million in 2006 compared with $182.0 million in 2005. Wholesale sales were $187.2 million in 2006 and $177.6 million in 2005. Licensing revenues in 2006 were $4.1 million and $4.4 million in 2005.

Licensing revenues for Stacy Adams apparel and accessories were up 8% in 2006. Licensing revenues for Florsheim footwear and accessories were down due to the loss of a major customer by one Florsheim domestic accessory licensee and also due to the transition out of the Florsheim Canadian footwear license, as discussed above.

Retail net sales in 2006 climbed 8% to $29.8 million from $27.5 million in 2005. The increase was primarily attributable to three new stores in the United States and one in Europe at December 31, 2006 compared with December 31, 2005. No stores were closed in 2006. In 2006, same store sales increased 4% over 2005. Stores are included in same store sales beginning in the store’s 13^th month of operations after its grand opening.

7

Sales in the Company’s wholesale division for the years ended December 31, 2006 and 2005 were as follows:

	Wholesale Division Sales
	Years ended December 31,
	2006		2005		% change
North American Sales
Stacy Adams	$	54,540,020	$	53,779,842		1.4	%
Nunn Bush		70,148,095		69,520,709		0.9	%
Florsheim		58,017,409		50,616,255		14.6	%
Foreign Sales		4,443,626		3,657,278		21.5	%
Total Wholesale	$	187,149,150	$	177,574,084		5.4	%
Licensing		4,134,988		4,367,053		-5.3	%
Total Wholesale Division	$	191,284,138	$	181,941,137		5.1	%

Sales of the Company’s Stacy Adams and Nunn Bush brands were relatively flat in 2006 compared with 2005. The Stacy Adams brand had solid sales through the end of the third quarter, followed by a decline in the fourth quarter, as business slowed with its independent footwear and clothing stores due to a trend in favor of larger department stores and shoe chains. Nunn Bush sales in 2006 were adversely impacted by lost sales of $5.7 million with one of the Company’s significant customers following its acquisition by another retailer, discussed above, however, the lost business was made up with other accounts. Sales of Florsheim increased 14.6% despite lost sales of $3.4 million to the customer previously mentioned. At Florsheim, the increase was primarily driven by new programs rolled out at several large customers during 2006.

Overall gross earnings as a percent of net sales were 38.6% in 2006 and 36.6% in 2005. Wholesale gross earnings as a percent of net sales were 33.0% in 2006 compared with 30.7% in 2005. This increase was primarily due to changes in product mix and also due to fewer markdowns in 2006 due to solid sales of the Company’s products at retail. Retail gross earnings as a percent of net sales increased to 65.1% in 2006 from 64.8% in 2005.

The Company’s cost of sales does not include distribution costs (e.g., receiving, inspection or warehousing costs). The Company’s distribution costs for the years ended December 31, 2006 and 2005 were $6.5 million and $5.9 million, respectively. These costs were included in selling and administrative expenses. Therefore, the Company’s gross earnings may not be comparable to other companies, as some companies may include distribution costs in cost of sales.

The Company’s selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs, rent and depreciation. In 2006, the Company’s overall selling and administrative expenses as a percent of net sales increased to 23.5% compared with 22.0% in 2005. Wholesale selling and administrative expenses as a percent of net wholesale sales increased to 19.9% in 2006 from 18.9% in 2005. Retail selling and administrative expenses as a percent of net sales were 49.2% in 2006 compared with 45.6% in 2005.

8

At wholesale, higher performance bonuses earned during 2006 contributed to the increased selling and administrative expenses. The increase in retail expenses as a percent of sales was due to higher expenses in relation to sales in the new stores, as well as increased costs associated with lease renewals at some existing stores.

Interest income in 2006 was up $903,000 from 2005 due to higher interest earned on marketable securities and cash. Interest expense was $608,000 in 2006 and $340,000 in 2005. The increase was the result of higher interest rates on commercial paper in 2006 compared with 2005.

The effective tax rate for 2006 was 37.2% as compared with 38.1% in 2005. The lower rate in 2006 resulted from higher interest income earned on municipal bonds, which decreased the Company’s effective tax rate.

LIQUIDITY & CAPITAL RESOURCES

The Company’s primary source of liquidity is its cash and short-term marketable securities, which aggregated $13.5 million at December 31, 2007 and $16.9 million as of December 31, 2006. During 2007, the Company’s primary source of cash was from operations while its primary uses of cash were the repayment of short-term borrowings, purchases of the Company’s common stock, dividend payments and investments in marketable securities.

The Company generated $24.2 million in cash from operating activities in 2007, compared with $9.6 million and $38.7 million in 2006 and 2005, respectively. Fluctuations in net cash from operating activities have resulted mainly from changes in year end inventory balances, as the Company carefully manages inventory levels based on requirements and projections. The Company’s capital expenditures were $2.7 million, $3.2 million and $1.8 million in 2007, 2006 and 2005, respectively. Capital expenditures are expected to be approximately $2 million in 2008.

Cash dividends paid were $4.7 million, $3.7 million and $2.9 million in 2007, 2006 and 2005, respectively, as the Company’s board of directors has consistently increased dividends per share each year.

The Company continues to repurchase its common stock under its share repurchase program when the Company believes market conditions are favorable. In 2007, the Company repurchased 378,740 shares for a total cost of $9.9 million.

In 2007, the Company used $10.4 million to pay down short-term borrowings. As of December 31, 2007, the Company had a total of $50 million available under its existing borrowing facility, of which total borrowings were only $550,000. This facility includes a minimum net worth covenant, with which the Company was in compliance at December 31, 2007. The facility expires April 30, 2008, and the Company intends to extend it an additional year at that time.

On July 1, 2007, all of the Company’s Class B Common Stock converted, one-for-one, into the Company’s Common Stock.

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 2008.

9

Off-Balance Sheet Arrangements

The Company does not utilize any special purpose entities or other off-balance sheet arrangements.

Commitments

The Company’s significant contractual obligations are its bank borrowings, qualified and supplemental pension plans, and its operating leases, which are discussed further in the Notes to Consolidated Financial Statements. The Company also has significant obligations to purchase inventory. The bank borrowings and pension obligations are recorded on the Company’s Consolidated Balance Sheets. Future obligations under operating leases are disclosed in Note 11 of the Notes to Consolidated Financial Statements. The table below provides summary information about these obligations.

	Payments Due by Period (in 000’s)
			Less						More
			Than a		1 - 3		3 - 5		Than 5
	Total		Year		Years		Years		Years
Bank borrowings	$	550	$	550	$	—	$	—	$	—
Pension obligations		6,306		326		639		624		4,717
Operating leases		31,465		3,728		7,306		6,941		13,490
Purchase obligations *		43,976		43,976		—		—		—
Total	$	82,297	$	48,580	$	7,945	$	7,565	$	18,207

* - Purchase obligations relate entirely to commitments to purchase inventory.

Future interest payments on bank borrowings have not been included in the above table as they have variable rates of interest. Related interest payments in 2007 were $399,000.

OTHER

Critical Accounting Policies

The Company’s accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements. As disclosed in Note 2, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The following policies are considered by management to be the most critical in understanding the significant accounting estimates inherent in the preparation of the Company’s financial statements and the uncertainties that could impact the Company’s results of operations, financial position and cash flows.

10

Sales Returns, Sale Allowances and Doubtful Accounts

The Company records reserves for sales returns, sales allowances and doubtful accounts for losses resulting from accounts receivable balances that will ultimately not be collected. The reserves are based on such factors as specific customer situations, historical experience, a review of the current aging status of customer receivables and current and expected economic conditions. The reserve for doubtful accounts includes a specific reserve for accounts identified as potentially uncollectible, plus an additional reserve for the balance of accounts. The Company evaluates the reserves and the estimation process on at least a quarterly basis and makes adjustments when appropriate. Historically, losses have been within the Company’s expectations. Changes in these reserves may be required if actual returns, discounts and bad debt activity varies from the original estimates. These changes could impact the Company’s results of operations, financial position and cash flows.

Pension Plan Accounting

The Company’s pension expense and corresponding obligation are determined on an actuarial basis and require certain actuarial assumptions. Management believes the two most critical of these assumptions are the discount rate and the expected rate of return on plan assets. The Company evaluates its actuarial assumptions annually on the measurement date (December 31) and makes modifications based on such factors as market interest rates and historical asset performance. Changes in these assumptions can result in different expense and liability amounts, and future actual experience can differ from these assumptions.

Discount Rate - Pension expense and projected benefit obligation both increase as the discount rate is reduced. The actuarial valuation used a discount rate of 6.55% at December 31, 2007, 5.90% at December 31, 2006, and 5.65% at December 31, 2005. This rate was based on the plan’s projected cash flows. This method, known as the cash flow matching method, discounts each year’s projected cash flows at the associated spot interest rate back to the measurement date. A 0.5% decrease in the discount rate would increase annual pension expense and the projected benefit obligation by approximately $235,000 and $2.1 million, respectively.

Expected Rate of Return - Pension expense increases as the expected rate of return on pension plan assets decreases. In estimating the expected return on plan assets, the Company considers the historical returns on plan assets and future expectations of asset returns. The Company utilized an expected rate of return on plan assets of 8.0% in 2007, 2006 and 2005. These rates were based on the Company’s long-term investment policy of equity securities: 20% - 80%; fixed income securities: 20% - 80%; and other, principally cash: 0% - 20%. A 0.5% decrease in the expected return on plan assets would increase annual pension expense by approximately $126,000.

11

Future Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles, and expand disclosures about fair value measurements.  See Note 2 to the Consolidated Financial Statements.

Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to market risk from changes in foreign exchange and interest rates. To reduce the risk from changes in foreign exchange rates, the Company selectively uses forward exchange contracts. The Company does not hold or issue financial instruments for trading purposes. The Company does not have significant market risk on its marketable securities as those investments consist of high-grade securities and are held to maturity.

Foreign Currency

The Company’s earnings are affected by fluctuations in the value of the U.S. dollar against foreign currencies, primarily as a result of the sale of product to Canadian customers. Forward exchange contracts are used to partially hedge against the earnings effects of such fluctuations. Based on the Company’s derivative instruments outstanding as of December 31, 2007, a 10% change in foreign currency exchange rates would not have a material effect on the Company’s financial position, results of operations or cash flows.

Interest Rates

The Company is exposed to interest rate fluctuations on borrowings under its revolving line of credit. As of December 31, 2007, $550,000 of commercial paper was outstanding at an average interest rate of 5.17%. The interest expense related to commercial paper for 2007 was $351,000. Assuming a 10% increase in the Company’s weighted average interest rate on borrowings, interest expense in 2007 would have increased by $35,000.

Forward-Looking Statements

This report contains certain forward-looking statements with respect to the Company’s outlook for the future. These statements represent the Company's reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially.The reader is cautioned that these forward-looking statements are subject to a number of risks, uncertainties, or other factors that may cause (and in some cases have caused) actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risk factors described under Item 1A, “Risk Factors,” of the Company’s Form 10-K.

12

CONSOLIDATED

STATEMENTS OF EARNINGS

For the years ended December 31, 2007, 2006 and 2005

	2007			2006			2005
NET SALES	$	232,616,656		$	221,047,487		$	209,469,303
COST OF SALES		143,199,303			135,734,547			132,726,939
Gross earnings		89,417,353			85,312,940			76,742,364
SELLING AND ADMINISTRATIVE EXPENSES		55,285,340			51,868,545			46,063,389
Earnings from operations		34,132,013			33,444,395			30,678,975
INTEREST INCOME		2,158,983			1,940,976			1,037,530
INTEREST EXPENSE		(352,905	)		(608,447	)		(339,670	)
OTHER INCOME AND EXPENSE, net		24,891			13,627			(26,070	)
Earnings before provision for income taxes		35,962,982			34,790,551			31,350,765
PROVISION FOR INCOME TAXES		13,062,000			12,935,000			11,950,000
Net earnings	$	22,900,982		$	21,855,551		$	19,400,765
BASIC EARNINGS PER SHARE	$	1.98		$	1.88		$	1.68
DILUTED EARNINGS PER SHARE	$	1.91		$	1.81		$	1.62

The accompanying notes to consolidated financial statements are an integral part of these statements.

13

CONSOLIDATED BALANCE SHEETS

December 31, 2007 and 2006

	2007			2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,858,677		$	15,314,140
Marketable securities, at amortized cost		5,603,858			1,600,871
Accounts receivable, less reserves of $3,171,574 and
$3,713,896, respectively		35,964,696			30,641,632
Inventories		44,632,321			51,000,849
Deferred income tax benefits		475,162			949,109
Prepaid expenses and other current assets		3,301,054			1,715,859
Total current assets		97,835,768			101,222,460
MARKETABLE SECURITIES, at amortized cost		43,330,715			40,361,296
OTHER ASSETS		9,440,367			8,725,346
PROPERTY, PLANT AND EQUIPMENT, net		28,676,728			28,445,900
TRADEMARK		10,867,969			10,867,969
	$	190,151,547		$	189,622,971
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Short-term borrowings	$	550,000		$	10,957,518
Accounts payable		10,541,233			12,398,740
Dividend payable		1,270,207			1,054,354
Accrued liabilities:
Wages, salaries and commissions		2,254,045			1,852,305
Taxes other than income taxes		724,993			858,294
Other		5,047,335			5,719,668
Accrued income taxes		715,484			72,907
Total current liabilities		21,103,297			32,913,786
LONG-TERM PENSION LIABILITY		6,042,961			6,620,842
DEFERRED INCOME TAX LIABILITIES		2,247,701			1,915,869
SHAREHOLDERS’ INVESTMENT:
Common Stock, $1.00 par value, authorized 20,000,000 in 2007 and 2006,
issued and outstanding 11,534,059 in 2007 and 9,129,256 shares in 2006.		11,534,059			9,129,256
Class B Common Stock, $1.00 par value, authorized 4,000,000 in 2006,
issued and outstanding 2,585,087 shares in 2006		—			2,585,087
Capital in excess of par value		10,787,927			7,576,096
Reinvested earnings		142,774,698			134,264,076
Accumulated other comprehensive loss		(4,339,096	)		(5,382,041	)
Total shareholders’ investment		160,757,588			148,172,474
	$	190,151,547		$	189,622,971

The accompanying notes to consolidated financial statements are an integral part of these statements.

14

CONSOLIDATED STATEMENTS

OF SHAREHOLDERS’ INVESTMENT

For the years ended December 31, 2007, 2006 and 2005

													Accumulated
				Class B			Capital						Other
	Common			Common			in Excess of			Reinvested			Comprehensive			Comprehensive
	Stock			Stock			Par Value			Earnings			Income/(Loss)			Income
Balance, December 31, 2004	$	4,440,565		$	1,302,110		$	6,820,136		$	106,747,060		$	438,050
Comprehensive Income:
Net earnings		—			—			—			19,400,765			—			19,400,765
Foreign currency translation adjustments		—			—			—			—			(216,542	)		(216,542	)
Total Comprehensive Income		—			—			—			—			—		$	19,184,223
Cash dividends declared ($.26 ½ per share)*		—			—			—			(3,063,817	)
Common Stock split		4,455,965			1,300,310			(5,756,275	)
Conversions of Class B Common Stock to Common Stock		7,389			(7,389	)		—			—			—
Stock options exercised		172,188			—			1,688,621			—			—
Income tax benefit from stock options exercised		—			—			685,215			—			—
Shares purchased and retired		(96,864	)		—			—			(1,749,286	)		—
Balance, December 31, 2005	$	8,979,243		$	2,595,031		$	3,437,697		$	121,334,722		$	221,508
Comprehensive Income:
Net earnings		—			—			—			21,855,551			—		$	21,855,551
Foreign currency translation adjustments		—			—			—			—			216,743			216,743
Minimum pension liability (net of tax of $92,505)		—			—			—			—			(144,688	)		(144,688	)
Total Comprehensive Income		—			—			—			—			—		$	21,927,606
Cash dividends declared ($.34 per share)		—			—			—			(3,962,011	)		—
Conversions of Class B Common Stock to Common Stock		9,944			(9,944	)		—			—			—
Stock options exercised		332,758			—			2,605,130			—			—
Issuance of restricted stock		41,000			—			(41,000	)		—			—
Stock-based compensation expense		—			—			25,213			—			—
Income tax benefit from stock options exercised		—			—			1,549,056			—			—
Shares purchased and retired		(233,689	)		—			—			(4,964,186	)		—
Adjustment to initially apply SFAS No. 158, net of tax		—			—			—			—			(5,675,604	)
Balance, December 31, 2006	$	9,129,256		$	2,585,087		$	7,576,096		$	134,264,076		$	(5,382,041	)
Comprehensive Income:
Net earnings		—			—			—			22,900,982			—		$	22,900,982
Foreign currency translation adjustments		—			—			—			—			(91,865	)		(91,865	)
Pension liability adjustment(net of tax of $726,045)		—			—			—			—			1,134,810			1,134,810
Total Comprehensive Income		—			—			—			—			—		$	23,943,927
Cash dividends declared ($.42 per share)		—			—			—			(4,871,598	)		—
Conversions of Class B Common Stock to Common Stock		2,585,087			(2,585,087	)		—			—			—
Stock options exercised		181,466			—			1,671,784			—			—
Issuance of restricted stock		20,190			—			(20,190	)		—			—
Restricted stock forfeited		(3,200	)		—			3,200			—			—
Stock-based compensation expense		—			—			316,511			—			—
Income tax benefit from stock options exercised and vesting of restricted stock.		—			—			1,240,526			—			—
Shares purchased and retired		(378,740	)		—			—			(9,545,762	)		—
Adjustment to initially apply FIN 48		—			—			—			27,000			—
Balance, December 31, 2007	$	11,534,059		$	—		$	10,787,927		$	142,774,698		$	( 4,339,096	)

* Cash dividends declared have been adjusted to reflect the two-for-one stock split distributed to shareholders

on April 1, 2005.

The accompanying notes to consolidated financial statements are an integral part of these statements.

15

CONSOLIDATED STATEMENTS

OF CASH FLOWS

For the years ended December 31, 2007, 2006 and 2005

	2007			2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	22,900,982		$	21,855,551		$	19,400,765
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		2,484,414			2,205,979			2,263,187
Amortization		90,010			75,065			48,537
Deferred income taxes		79,734			517,973			457,086
Stock-based compensation		316,511			25,213			—
Pension contribution		—			(1,000,000	)		—
Pension expense		1,359,123			1,185,822			884,010
Loss on sale of assets		(14,632	)		(728	)		(1,642	)
Increase in cash surrender value of life insurance		(681,356	)		(643,291	)		(599,699	)
Changes in operating assets and liabilities:
Accounts receivable		(5,323,064	)		(2,798,584	)		2,931,289
Inventories		6,368,528			(12,452,247	)		9,071,618
Prepaids and other assets		(1,555,538	)		(293,982	)		298,279
Accounts payable		(1,857,507	)		175,833			5,561,666
Accrued liabilities and other		(685,110	)		1,908,906			(2,785,877	)
Accrued income taxes		669,577			(1,148,516	)		1,155,015
Net cash provided by operating activities		24,151,672			9,612,994			38,684,234
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities		(8,405,737	)		(17,813,940	)		(25,188,918	)
Proceeds from maturities of marketable securities		1,343,321			6,942,114			5,278,770
Purchase of property, plant and equipment		(2,727,362	)		(3,185,862	)		(1,835,167	)
Proceeds from sales of property, plant and equipment		76,632			1,737			4,587
Net cash used for investing activities		(9,713,146	)		(14,055,951	)		(21,740,728	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(4,655,745	)		(3,717,899	)		(2,884,927	)
Shares purchased and retired		(9,924,502	)		(5,197,875	)		(1,846,150	)
Proceeds from stock options exercised		1,853,250			2,937,888			1,860,809
Net (repayments) borrowings under revolving credit facilities		(10,407,518	)		1,405,014			(1,807,032	)
Income tax benefits from share-based compensation		1,240,526			1,549,056			—
Net cash used for financing activities		(21,893,989	)		(3,023,816	)		(4,677,300	)
Net (decrease) increase in cash and cash equivalents		(7,455,463	)		(7,466,773	)		12,266,206
CASH AND CASH EQUIVALENTS, at beginning of year	$	15,314,140		$	22,780,913		$	10,514,707
CASH AND CASH EQUIVALENTS, at end of year	$	7,858,677		$	15,314,140		$	22,780,913
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	10,901,122		$	11,796,993		$	10,150,856
Interest paid	$	399,770		$	576,004		$	337,038

The accompanying notes to consolidated financial statements are an integral part of these statements.

16

NOTES TO

CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2007, 2006 and 2005

1. NATURE OF OPERATIONS

Weyco Group, Inc. is a U.S.-based distributor of men’s branded footwear. The Company’s principal brands include Florsheim, Nunn Bush and Stacy Adams. The Company also has other brands including Nunn Bush NXXT, Brass Boot and SAO by Stacy Adams. The Company’s products are primarily sold to unaffiliated retailers throughout the United States. The Company also has a wholesale operation in Europe and has licensing agreements with third parties to sell its products internationally. In addition, the Company also operates a retail division. At December 31, 2007 the retail division was comprised of 39 retail stores in the United States, two in Europe, and an Internet business.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include all of the Company’s subsidiaries, all of which are wholly owned.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. At December 31, 2007 and 2006, approximately $4.7 million and $9.6 million, respectively, of the Company’s cash and cash equivalents were held at one bank.

Inventories - Inventories are valued at cost, which is not in excess of market. Substantially all inventories are determined on a last-in, first-out (LIFO) basis. Inventory costs include the cost of shoes purchased from third-party manufacturers, as well as related freight and duty. The Company takes title to product at the time of shipping. See Note 5.

Property, Plant and Equipment and Depreciation - Property, plant and equipment are stated at cost. Plant and equipment are depreciated using primarily the straight-line method over their estimated useful lives as follows: buildings and improvements, 10 to 39 years; machinery and equipment, 3 to 10 years; furniture and fixtures, 5 to 7 years.

Impairment of Long-Lived Assets - Property, plant and equipment and other long-term assets are reviewed for impairment at least annually or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. There were no adjustments to the carrying value of long-lived assets in fiscal 2007, 2006, or 2005.

17

Income Taxes - Deferred income taxes are provided on temporary differences arising from differences in the basis of assets and liabilities for income tax and financial reporting purposes. See Note 10.

Revenue Recognition - Revenue from the sale of product is recognized when title and risk of loss transfers to the customer and the customer is obligated to pay the Company. Sales to independent dealers are recorded at the time of shipment to those dealers. Sales through Company-owned retail outlets are recorded at the time of delivery to retail customers. All product sales are recorded net of estimated allowances for returns and discounts. Revenue from third-party licensing agreements is recognized in the period earned. For December 31, 2007, 2006 and 2005, licensing revenues were $4,087,000, $4,135,000 and $4,367,000, respectively.

Shipping and Handling Fees - The Company classifies shipping and handling fees billed to customers as revenues. The related shipping and handling expenses incurred by the Company are included in selling and administrative expenses and totaled $1,371,000, $1,085,000 and $954,000 for 2007, 2006 and 2005, respectively.

Cost of Sales - The Company’s cost of sales includes the cost of products and inbound freight and duty costs.

Selling and Administrative Expenses - Selling and administrative expenses primarily include salaries and commissions, advertising costs, employee benefit costs, distribution costs (e.g., receiving, inspection and warehousing costs), rent and depreciation. Distribution costs included in selling and administrative expenses in 2007, 2006 and 2005 were $6,760,000, $6,457,000 and $5,921,000, respectively.

Advertising Costs - Advertising costs are expensed as incurred. Total advertising costs were $7,616,000, $7,744,000 and $7,892,000 in 2007, 2006 and 2005, respectively. All advertising expenses are included in selling and administrative expenses with the exception of co-op advertising expenses which are recorded as a reduction of net sales. Co-op advertising expenses, which are included in the above totals, reduced net sales by $3,015,000, $3,269,000 and $3,872,000 for 2007, 2006 and 2005, respectively.

Foreign Currency Translation - Foreign currency balance sheet accounts are translated into U.S. dollars at the rates of exchange in effect at fiscal year end. Income and expenses are translated at the average rates of exchange in effect during the year. The related translation adjustments are made directly to a separate component of Shareholders’ Investment.

Earnings Per Share - Basic earnings per share excludes any dilutive effects of common stock options. Diluted earnings per share includes any dilutive effects of common stock options. See Note 14.

Comprehensive Income - Comprehensive Income includes net earnings and changes in Accumulated Other Comprehensive Income (Loss). The Company has chosen to report Comprehensive Income and Accumulated Other Comprehensive Income (Loss) in the Consolidated Statements of Shareholders’ Investment. At December 31, 2007 and 2006, Accumulated Other Comprehensive Income (Loss) included cumulative translation adjustments and a pension liability adjustment.

18

Stock-Based Compensation - At December 31, 2007, the Company has two stock-based employee compensation plans, which are described more fully in Note 16. The Company accounts for these plans under the recognition and measurement principles of Statement of Financial Accounting Standards (SFAS) No. 123(R), “Accounting for Stock-Based Compensation.”

Future Accounting Pronouncements - In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles, and expand disclosures about fair value measurements.  SFAS No. 157 will be effective for fiscal years beginning after November 14, 2007, the Company’s 2008 fiscal year.  The Company is assessing the impact the adoption of SFAS No. 157 will have on its consolidated financial statements.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of all short-term financial instruments, except marketable securities, approximate fair value due to the short-term nature of those instruments. Marketable securities are carried at amortized cost. The fair value of marketable securities is estimated based upon quoted market rates. See Note 4. The carrying amount of short-term borrowings approximates fair value as it bears interest at current market rates.

4. INVESTMENTS

All of the Company’s investments are classified as held-to-maturity securities and reported at amortized cost pursuant to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” as the Company has the intent and ability to hold all security investments to maturity.

A summary of the amortized cost and estimated market values of investment securities at December 31, 2007 and 2006 is as follows:

	2007				2006
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Municipal bonds :
Current	$	5,603,858	$	5,615,064	$	1,600,871	$	1,604,441
Due from one through five years		20,554,070		20,731,973		12,969,646		12,941,379
Due from five through ten years		22,776,645		23,081,853		27,391,650		27,711,253
Total	$	48,934,573	$	49,428,890	$	41,962,167	$	42,257,073

The unrealized gains and losses on investment securities at December 31, 2007 and 2006 were:

	2007				2006
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
Municipal bonds	$	531,741	$	37,424	$	408,564	$	113,658

19

5. INVENTORIES

At December 31, 2007 and 2006, inventories consisted of:

	2007			2006
Finished shoes	$	57,826,178		$	63,764,455
LIFO reserve		(13,193,857	)		(12,763,606	)
Total inventories	$	44,632,321		$	51,000,849

Finished shoes included inventory in-transit of $14,608,411 and $16,417,291 as of December 31, 2007 and 2006, respectively.

6. PROPERTY, PLANT AND EQUIPMENT

At December 31, 2007 and 2006, property, plant and equipment consisted of:

	2007			2006
Land	$	2,683,630		$	2,672,152
Buildings and improvements		19,719,135			19,831,247
Machinery and equipment		16,031,031			15,939,233
Retail fixtures and leasehold improvements		8,452,962			6,470,248
Construction in progress		508,385			638,503
Property, plant and equipment		47,395,143			45,551,383
Less: Accumulated depreciation		(18,718,415	)		(17,105,483	)
Property, plant and equipment, net	$	28,676,728		$	28,445,900

7. OTHER ASSETS

Other assets included the following amounts at December 31, 2007 and 2006:

	2007		2006
Pension asset (See Note 9)	$	63,322	$	—
Cash surrender value of life insurance		9,317,469		8,636,113
Other		59,576		89,233
Total other assets	$	9,440,367	$	8,725,346

8. SHORT-TERM BORROWINGS

At December 31, 2007, the Company had a 364-day $50 million unsecured revolving line of credit with a bank expiring April 30, 2008. The line of credit allows for the issuance of up to $25 million in non-rated commercial paper at market interest rates and additional bank borrowings at a rate of LIBOR plus 150 basis points. The line of credit includes a minimum net worth covenant. As of December 31, 2007, the Company was in compliance with the covenant. Outstanding borrowings under the line of credit at December 31, 2007 consisted of $550,000 of commercial paper with an average interest rate of 5.17%. At December 31, 2006, outstanding borrowings under a prior $50 million line of credit were $11.0 million with an average interest rate of 5.45%.

20

9. EMPLOYEE RETIREMENT PLANS

The Company has a defined benefit pension plan covering substantially all employees, as well as an unfunded supplemental pension plan for key executives. Retirement benefits are provided based on employees’ years of credited service and average earnings or stated amounts for years of service. Normal retirement age is 65 with provisions for earlier retirement. The plan also has provisions for disability and death benefits. The Company’s funding policy for the defined benefit pension plan is to make contributions to the plan such that all employees’ benefits will be fully provided by the time they retire. Plan assets are stated at market value and consist primarily of equity securities and fixed income securities, mainly U.S. government and corporate obligations.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” (SFAS No. 158), which requires employers to recognize the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability in its statement of financial position and to recognize changes in the funded status in the year in which the changes occur as a component of comprehensive income. In addition, SFAS No. 158 requires employers to measure the funded status of its plans as of the date of its year-end statement of financial position. SFAS No. 158 also requires additional disclosures regarding amounts included in accumulated other comprehensive income (loss).

Effective December 31, 2006, the Company adopted SFAS No. 158. The Company has historically and will continue to use a year-end measurement date for all of its pension plans.

The Company’s pension plan weighted average asset allocation at December 31, 2007 and 2006, by asset category, was as follows:

	Plan Assets at December 31
	2007			2006
Asset Category:
Equity Securities		52	%		54	%
Fixed Income Securities		42	%		40	%
Other		6	%		6	%
Total		100	%		100	%

The Company has a Retirement Plan Committee, consisting of the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, to manage the operations and administration of all benefit plans and related trusts. The committee has an investment policy for the pension plan assets that establishes target asset allocation ranges for the above listed asset classes as follows: equity securities: 20% - 80%; fixed income securities: 20% - 80%; other, principally cash: 0% - 20%. On a semi-annual basis, the committee reviews progress towards achieving the pension plan’s performance objectives.

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 8.0% long-term rate of return on assets assumption.

Assumptions used in determining the funded status at December 31, 2007 and 2006 were:

	2007			2006
Discount rate		6.55	%		5.90	%
Rate of compensation increase		4.5	%		4.5	%

21

The following is a reconciliation of the change in benefit obligation and plan assets of both the defined benefit pension plan and the unfunded supplemental pension plan for the years ended December 31, 2007 and 2006:

	Defined Benefit Pension Plan						Supplemental Pension Plan
	2007			2006			2007			2006
Change in projected benefit obligation
Projected benefit obligation, beginning of year	$	27,664,000		$	26,325,000		$	5,527,000		$	4,586,000
Service cost		777,000			741,000			104,000			123,000
Interest cost		1,588,000			1,449,000			315,000			253,000
Actuarial (gain) loss		(2,666,000	)		470,000			627,000			781,000
Benefits paid		(1,419,000	)		(1,321,000	)		(204,000	)		(216,000	)
Projected benefit obligation, end of year	$	25,944,000		$	27,664,000		$	6,369,000		$	5,527,000
Change in plan assets
Fair value of plan assets, beginning of year	$	26,180,000		$	24,630,000		$	—		$	—
Actual return on plan assets		1,296,000			1,921,000			—			—
Administrative expenses		(50,000	)		(50,000	)		—			—
Contributions		—			1,000,000			204,000			216,000
Benefits paid		(1,419,000	)		(1,321,000	)		(204,000	)		(216,000	)
Fair value of plan assets, end of year	$	26,007,000		$	26,180,000		$	—		$	—
Funded status of plan	$	63,000		$	(1,484,000	)	$	(6,369,000	)	$	(5,527,000	)
Unrecognized net actuarial loss		—			—			—			—
Unrecognized prior service cost		—			—			—			—
Net amount recognized	$	63,000		$	(1,484,000	)	$	(6,369,000	)	$	(5,527,000	)
Amounts recognized in the balance sheets consist of:
Other assets	$	63,000		$	—		$	—		$	—
Accrued liabilities - other		—			—			(326,000	)		(390,000	)
Long-term pension liability		—			(1,484,000	)		(6,043,000	)		(5,137,000	)
Net amount recognized	$	63,000		$	(1,484,000	)	$	(6,369,000	)	$	(5,527,000	)

Amounts recognized in accumulated other comprehensive loss consist of:
Accumulated loss, net of income tax benefit of $2,056,000, $2,962,000, $691,000 and $472,000, respectively	$	3,216,000	$	4,634,000	$	1,082,000	$	738,000
Prior service cost, net of income tax benefit of $43,000, $58,000, $205,000 and $229,000, respectively		68,000		90,000		319,000		358,000
Net amount recognized	$	3,284,000	$	4,724,000	$	1,401,000	$	1,096,000

The accumulated benefit obligation for the defined benefit pension plan and the supplemental pension plan was $23,305,000 and $5,322,000 respectively, at December 31, 2007 and $24,655,000 and $4,554,000, respectively, at December 31, 2006.

Assumptions used in determining net periodic pension cost for the years ended December 31, 2007, 2006 and 2005 were:

	2007			2006			2005
Discount rate		5.90	%		5.65	%		5.75	%
Rate of compensation increase		4.5	%		4.5	%		4.5	%
Long-term rate of return on plan assets		8.0	%		8.0	%		8.0	%

22

The components of net periodic pension cost for the years ended December 31, 2007, 2006 and 2005, were:

	2007			2006			2005
Benefits earned during the period	$	882,000		$	864,000		$	783,000
Interest cost on projected benefit obligation		1,902,000			1,702,000			1,584,000
Expected return on plan assets		(2,053,000	)		(1,912,000	)		(1,915,000	)
Net amortization and deferral		628,000			532,000			432,000
Net pension expense	$	1,359,000		$	1,186,000		$	884,000

The Company expects to recognize $378,000 of amortization of unrecognized loss and $100,000 of amortization of prior service cost as components of net periodic benefit cost in 2008 which are included in accumulated other comprehensive loss at December 31, 2007.

The Company does not expect to make a contribution to its defined benefit retirement plan in 2008.

Projected benefit payments for the plans as of December 31, 2007 were estimated as follows:

	Defined Benefit Pension Plan		Supplemental Pension Plan
2008	$	1,647,000	$	326,000
2009	$	1,652,000	$	321,000
2010	$	1,654,000	$	318,000
2011	$	1,706,000	$	314,000
2012	$	1,731,000	$	310,000
2013-2017	$	9,347,000	$	1,584,000

The Company also has a defined contribution plan covering substantially all employees. The Company contributed approximately $230,000, $195,000 and $167,000 to the plan in 2007, 2006 and 2005, respectively.

10. INCOME TAXES

The provision for income taxes included the following components at December 31, 2007, 2006 and 2005:

	2007		2006			2005
Current:
Federal	$	10,640,000	$	11,248,000		$	9,450,000
State		1,700,000		1,848,000			1,566,000
Foreign		642,000		357,000			477,000
Total		12,982,000		13,453,000			11,493,000
Deferred		80,000		(518,000	)		457,000
Total provision	$	13,062,000	$	12,935,000		$	11,950,000

The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2007, 2006 and 2005:

	2007			2006			2005
U. S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		3.0			3.5			3.2
Non-taxable municipal bond interest		(1.8	)		(1.6	)		(0.9	)
Other		0.1			.3			0.8
Effective tax rate		36.3	%		37.2	%		38.1	%

23

The foreign component of pretax net earnings was $2,555,000, $983,000 and $1,242,000 for 2007, 2006 and 2005, respectively.

The components of deferred taxes as of December 31, 2007 and 2006, were as follows:

	2007			2006
Deferred tax assets:
Accounts receivable reserves	$	448,000		$	526,000
Pension liability		2,484,000			2,734,000
Accrued liabilities		1,535,000			1,743,000
		4,467,000			5,003,000
Deferred tax liabilities:
Inventory and related reserves		(1,187,000	)		(1,102,000	)
Pension asset		(25,000	)		—
Cash value of life insurance		(2,066,000	)		(1,860,000	)
Depreciation		(1,366,000	)		(1,649,000	)
Trademark		(1,350,000	)		(1,107,000	)
Prepaid and other assets		(246,000	)		(252,000	)
		(6,240,000	)		(5,970,000	)
Net deferred tax liability	$	(1,773,000	)	$	(967,000	)

The net deferred tax liability is classified in the Consolidated Balance Sheets as follows:

	2007			2006
Current deferred income tax benefits	$	475,000		$	949,000
Noncurrent deferred income tax liabilities		(2,248,000	)		(1,916,000	)
	$	(1,773,000	)	$	(967,000	)

Uncertainty in Tax Positions

On January 1, 2007 the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (FIN 48). This Interpretation clarifies the accounting and disclosures for uncertainty in tax positions. FIN 48 provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. As a result of applying the provisions of FIN 48, the Company recognized a decrease of $27,000 in Accrued Income Taxes and a corresponding adjustment to the beginning balance of retained earnings on the balance sheet as of January 1, 2007.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (on a pretax basis):

Balance at January 1, 2007	$	212,000
Increases related to current year tax positions		124,700
Expiration of the statute of limitations for the assessment of taxes		(15,900	)
Balance at December 31, 2007	$	320,800

24

The Company had unrecognized tax benefits of $320,800 at December 31, 2007, all of which, if recognized, would reduce the Company’s annual effective tax rate. The Company also accrued potential penalties and interest of $8,000 and $15,000, respectively, related to these unrecognized tax benefits during 2007. Included in the Company’s balance sheet at December 31, 2007, is a liability for potential penalties and interest of $13,500 and $22,000, respectively. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

The Company files a U.S. income tax return and various state income tax returns. In general, the 2004 through 2007 tax years remain subject to examination by those taxing authorities.

11. OPERATING LEASES

The Company operates retail shoe stores under both short-term and long-term leases. Leases provide for a minimum rental plus percentage rentals based upon sales in excess of a specified amount. The Company also leases its distribution facilities in Canada and Europe. Total minimum rents were $4,212,000 in 2007, $3,237,000 in 2006, and $2,886,000 in 2005. Percentage rentals were $9,300 in 2007, $26,500 in 2006, and $16,000 in 2005.

Future fixed and minimum rental commitments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2007, are shown below. Renewal options exist for many long-term leases.

2008	$	3,728,000
2009		3,690,000
2010		3,616,000
2011		3,497,000
2012		3,444,000
Thereafter		13,490,000
Total	$	31,465,000

12. STOCK SPLIT

On January 31, 2005, the Company’s board of directors approved a two-for-one split of the Company’s common stock and Class B common stock without a change in par value of either class. The stock split was distributed on April 1, 2005 to shareholders of record on February 16, 2005. The stock split resulted in the issuance of approximately 4.5 million additional shares of common stock and approximately 1.3 million additional shares of Class B common stock. Certain share and all per share amounts disclosed in this document have been adjusted to reflect the split. On July 1, 2007, all outstanding shares of Class B common stock converted into common stock. See Note 13.

13. SHAREHOLDERS’ INVESTMENT

Prior to July 1, 2007, the Company had common stock and Class B common stock outstanding. Each share of Class B common stock had 10 votes, could only be transferred to certain permitted transferees, was convertible to one share of common stock at the holder’s option and shared equally with the common stock in cash dividends and liquidation rights. All outstanding shares of Class B common stock converted into common stock on July 1, 2007.

25

In April 1998, the Company’s board of directors first authorized a stock repurchase program to purchase shares of its common stock in open market transactions at prevailing prices. During 2005, the Company purchased 96,864 shares at a total cost of $1,846,150, in 2006, the Company purchased 233,689 shares at a total cost of $5,197,875 and in 2007, the Company purchased 378,740 shares at a total cost of $9,924,502. At December 31, 2007, the Company is authorized to buy back an additional 916,907 shares under the program.

Shares acquired before February 16, 2005 have not been adjusted to reflect the two-for-one stock split distributed to shareholders on April 1, 2005. See Note 12.

14.EARNINGS PER SHARE

The following table sets forth the computations of basic and diluted earnings per share for the years ended December 31, 2007, 2006 and 2005:

	2007		2006		2005
Numerator:
Net earnings	$	22,900,982	$	21,855,551	$	19,400,765
Denominator:
Basic weighted average shares outstanding		11,565,552		11,633,448		11,559,326
Effect of dilutive securities :
Employee stock options		447,363		461,014		406,602
Diluted weighted average shares outstanding		12,012,915		12,094,462		11,965,928
Basic earnings per share	$	1.98	$	1.88	$	1.68
Diluted earnings per share	$	1.91	$	1.81	$	1.62

Diluted weighted average shares outstanding for 2007, 2006 and 2005 include all outstanding options to purchase common stock.

15. SEGMENT INFORMATION

The Company determines its operating segments based on the information utilized by the chief operating decision maker, the Company’s Chief Executive Officer, to allocate resources and assess performance. Based upon this criteria, the Company has determined that it operates in two operating segments, wholesale distribution and retail sales of men’s footwear, which also constitute its reportable segments. None of the Company’s operating segments were aggregated in determining the Company’s reportable segments.

In the wholesale segment, shoes are marketed through more than 10,000 shoe, clothing and department stores. Most sales are to unaffiliated customers in North America, with some distribution in Europe. In 2007 and 2006, sales to the Company’s largest customer were 12% and 10%, respectively, of total sales. There were no customers with sales above 10% in 2005.

In the retail division, the Company operated 39 Company-owned stores in principal cities in the United States, two stores in Europe, and an Internet business as of December 31, 2007. Sales in retail outlets are made directly to the consumer by Company employees. In addition to the sale of the Company’s brands of footwear in these retail outlets, other branded footwear and accessories are also sold in order to provide the consumer with as complete a selection as practically possible.

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The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies. The Company evaluates performance based on earnings from operations. Summarized segment data for the years ended December 31, 2007, 2006 and 2005 was as follows:

	Wholesale Distribution		Retail		Total
2007
Product sales	$	197,382,000	$	31,148,000	$	228,530,000
Licensing revenues		4,087,000		—		4,087,000
Net sales		201,469,000		31,148,000		232,617,000
Depreciation		1,797,000		687,000		2,484,000
Earnings from operations		29,550,000		4,582,000		34,132,000
Total assets		178,269,000		11,883,000		190,152,000
Capital expenditures		661,000		2,066,000		2,727,000
2006
Product sales	$	187,149,000	$	29,763,000	$	216,912,000
Licensing revenues		4,135,000		—		4,135,000
Net sales		191,284,000		29,763,000		221,047,000
Depreciation		1,630,000		576,000		2,206,000
Earnings from operations		28,727,000		4,717,000		33,444,000
Total assets		179,299,000		10,324,000		189,623,000
Capital expenditures		1,237,000		1,949,000		3,186,000
2005
Product sales	$	177,574,000	$	27,528,000	$	205,102,000
Licensing revenues		4,367,000		—		4,367,000
Net sales		181,941,000		27,528,000		209,469,000
Depreciation		1,705,000		558,000		2,263,000
Earnings from operations		25,402,000		5,277,000		30,679,000
Total assets		167,332,000		8,166,000		175,498,000
Capital expenditures		628,000		1,207,000		1,835,000

All corporate assets are included in the wholesale distribution segment. Net sales above exclude intersegment sales.

Sales by geographic region based on product shipment destination were as follows for the years ended December 31, 2007, 2006 and 2005:

	2007		2006		2005
United States	$	214,524,185	$	208,245,676	$	197,638,791
Canada		10,519,864		6,015,629		6,002,766
Europe		7,572,607		6,786,182		5,827,746
Total	$	232,616,656	$	221,047,487	$	209,469,303

16. STOCK-BASED COMPENSATION PLANS

At December 31, 2007, the Company has two stock-based compensation plans: the 1997 Stock Option Plan and the 2005 Equity Incentive Plan. Under the plans, options to purchase common stock were granted to officers and key employees at exercise prices not less than the fair market value of the Company’s common stock on the date of the grant. The Company issues new common stock to satisfy stock option exercises and the issuance of restricted stock awards.

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Stock options and restricted stock awards were granted on November 30, 2007 and December 1, 2006, for 2007 and 2006, respectively. Stock options were granted at the fair market value of the Company’s stock price on the date of grant. The stock options and restricted stock awarded in 2007 and 2006 vest ratably over four years. Stock options expire in five years. These awards became effective on the date the board of directors approved them. One-fourth of the restricted stock awards and stock option grants vest annually on the anniversary of the grant date. Options granted prior to 2006 expire ten years from the grant date, with the exception of certain incentive stock options, which expire five years from the grant date. As of December 31, 2007, there were 573,660 shares remaining available for stock-based awards under the 2005 Equity Incentive Plan.

Effective January 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based Payment,” (SFAS 123(R)) using the modified prospective method. This method requires that companies recognize compensation expense for new grants and the unvested portion of prior grants at their fair value on the grant date and recognize this expense over the requisite service period for awards expected to vest. The results for 2005 have not been restated. In fiscal years prior to the adoption of SFAS 123(R), no compensation expense was recognized, as the exercise price of all options granted under the plans was equal to the fair market value of common stock on the date of grant. Additionally, all of the Company’s stock options granted prior to the effective date were 100% vested at the effective date and, therefore, no stock-based employee compensation related to those grants was charged against income in 2007or 2006.

The Company’s policy is to estimate the fair market value of each option granted on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the table below. The Company estimates the fair value of each restricted stock award based on the fair market value of the Company’s stock price on the grant date. The resulting compensation cost is amortized on a straight-line basis over the vesting period of the respective awards.

In accordance with SFAS 123(R), stock-based compensation was recognized in the 2007 and 2006 consolidated financial statements for stock options and restricted stock awards granted in 2007 and 2006. An estimate of forfeitures, based on historical data, was included in the calculation of stock-based compensation, and the estimate is adjusted quarterly to the extent that actual forfeitures differ, or are expected to materially differ, from such estimates. The effect of applying the expense recognition provisions of SFAS 123(R) in 2007 and 2006 decreased Earnings Before Provision For Income Taxes by approximately $317,000 and $25,000, respectively.

As of December 31, 2007, there was $907,000 of total unrecognized compensation cost related to non-vested stock options granted in 2007 and 2006, which is expected to be recognized over the remaining vesting period of 3.9 years. As of December 31, 2007, there was $1.2 million of total unrecognized compensation cost related to non-vested restricted stock awards granted in 2007 and 2006, which is also expected to be recognized over the remaining vesting period of 3.9 years.

The following weighted-average assumptions were used to determine compensation expense related to stock options in 2007 and 2006 and the pro forma impact in 2005:

	2007			2006			2005
Risk-free interest rate		3.00	%		4.37	%		4.24	%
Expected dividend yield		1.6	%		1.6	%		1.4	%
Expected term		3.6 years			3.5 years			7.4 years
Expected volatility.		28.7	%		31.7	%		27.0	%

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The risk-free interest rate is based on U. S. Treasury bonds with a remaining term equal to the expected term of the award. The expected dividend yield is based on the Company’s expected annual dividend as a percentage of the market value of the Company’s common stock in the year of grant. The expected term of the stock options is determined using historical experience. The expected volatility is based upon historical stock prices over the most recent period equal to the expected term of the award.

The following table illustrates the effect on net earnings per share for the year ended December 31, 2005, as if the fair value based method of SFAS No. 123, “Accounting for Stock-Based Compensation,” had been applied for all outstanding unvested awards for the period prior to the adoption of SFAS 123(R):

	2005
Net earnings, as reported	$	19,400,765
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects		723,742
Pro forma net income	$	18,677,023
Earnings per share
Basic - as reported	$	1.68
Basic - pro forma	$	1.62
Diluted - as reported	$	1.62
Diluted - pro forma.	$	1.56

The following tables summarize stock option activity under the Company’s plans:

Stock Options

	Year ended December 31
	2007					2006					2005
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of year		1,252,190		$	12.62		1,537,048		$	11.44		1,525,586		$	10.41
Granted		123,300			27.52		47,900			24.09		201,250			18.12
Exercised		(181,466	)		10.21		(332,758	)		8.83		(185,788	)		10.02
Forfeited		(4,100	)		24.09		—			—		(4,000	)		18.03
Outstanding at end of year		1,189,924		$	14.49		1,252,190		$	12.62		1,537,048		$	11.44
Exercisable at end of year		1,033,774		$	12.63		1,204,290		$	12.16		1,537,048		$	11.44
Weighted average fair market
value of options granted	$	5.96				$	6.15				$	5.85

	Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding - December 31, 2007		4.36	$	15,480,117
Exercisable - December 31, 2007		4.31	$	15,353,302

 

The aggregate intrinsic value for outstanding and exercisable stock options is defined as the difference between the market value at December 31, 2007 of $27.50 and the grant price.

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Unvested Stock Options

	Number of Unvested Options			Weighted  Average Exercise Price		Weighted Average Fair Value
Non-vested - December 31, 2005		—		$	—	$	—
Granted		47,900			24.09		6.15
Vested		—			—		—
Non-vested - December 31, 2006		47,900		$	24.09	$	6.15
Granted		123,300			27.53		5.96
Vested		(10,950	)		24.09		6.15
Forfeited		(4,100	)		24.09		6.15
Non-vested - December 31, 2007		156,150		$	26.80	$	6.00

The following table summarizes information about outstanding and exercisable stock options at December 31, 2007:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number of Options		Weighted Average Exercise Price
$7.25 to $8.62		428,578		2.44	$	8.02		428,578	$	8.02
$12.04 to $15.46		212,746		4.95		12.76		212,746		12.76
$16.79 to $30.12		548,600		5.63		20.22		392,450		17.60
		1,189,924		4.36	$	14.49		1,033,774	$	12.63

The following table summarizes stock option activity for the years ended December 31:

	2007		2006		2005
Total intrinsic value of stock options exercised	$	2,884,621	$	4,041,578	$	2,080,960
Cash received from stock option exercises	$	1,853,250	$	2,937,888	$	1,860,809
Income tax benefit from the exercise of stock options	$	1,125,003	$	1,549,056	$	832,384
Total fair value of stock options vested	$	67,343	$	—	$	1,178,080

Restricted Stock

The following table summarizes restricted stock award activity during the years ended December 31:

	Shares of Restricted Stock			Weighted Average Grant Date Fair Value
Non Vested - December 31, 2005		—		$	—
Issued		41,000			24.09
Vested		—			—
Non Vested - December 31, 2006		41,000		$	24.09
Issued		20,190			27.38
Vested		(9,450	)		24.09
Forfeited		(3,200	)		24.09
Non-vested - December 31, 2007		48,540		$	25.46

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At December 31, 2007, the Company expected 48,540 shares of restricted stock to vest over a weighted-average remaining contractual term of 3.3 years. These shares had an aggregate intrinsic value of $1.3 million at December 31, 2007. The aggregate intrinsic value is calculated using the market value at December 31, 2007 multiplied by the number of non-vested restricted shares outstanding. The income tax benefit from the vesting of restricted stock for the year ended December 31, 2007 was $115,523.

17.QUARTERLY FINANCIAL DATA (Unaudited)

2007	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
Net sales	$	63,858,057	$	48,370,810	$	58,162,778	$	62,225,011	$	232,616,656
Gross earnings	$	23,051,139	$	18,693,620	$	21,816,801	$	25,855,793	$	89,417,353
Net earnings	$	5,694,624	$	4,049,116	$	5,334,088	$	7,823,154	$	22,900,982
Net earnings per share:
Basic	$	.49	$	.35	$	.46	$	.68	$	1.98
Diluted	$	.47	$	.34	$	.45	$	.66	$	1.91

2006	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
Net sales	$	59,288,211	$	45,111,438	$	56,084,718	$	60,563,120	$	221,047,487
Gross earnings	$	21,032,890	$	17,459,874	$	20,600,393	$	26,219,783	$	85,312,940
Net earnings	$	5,309,029	$	3,642,292	$	5,168,138	$	7,736,092	$	21,855,551
Net earnings per share:
Basic	$	.46	$	.31	$	.44	$	.66	$	1.88
Diluted	$	.44	$	.30	$	.43	$	.64	$	1.81

31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Weyco Group, Inc.:

We have audited the accompanying consolidated balance sheets of Weyco Group, Inc. and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of earnings, shareholders’ investment, and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Weyco Group, Inc. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

As described in Note 9 to the consolidated financial statements, on December 31, 2006, the Company adopted Statement of Financial Accounting Standards No. 158, “Employers Accounting for Defined Benefit Pension and Other Postretirement Plans.”

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 3, 2008

32

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Weyco Group, Inc.:

We have audited the internal control over financial reporting of Weyco Group, Inc. and subsidiaries (the "Company") as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting.”  Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

33

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.  Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2007 of the Company and our report dated March 3, 2008, expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 3, 2008

34

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

Management of Weyco Group, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. Based on our assessment we believe that, as of December 31, 2007, the Company’s internal control over financial reporting is effective based on those criteria.

The Company’s independent registered public accounting firm has issued an audit report on the effectiveness of the Company’s internal control over financial reporting, as stated in their report which is included herein.

/s/ Thomas W. Florsheim, Jr.

Chairman and Chief Executive Officer

March 3, 2008

/s/ John Wittkowske

Senior Vice President and

Chief Financial Officer

March 3, 2008

35

DIRECTORS

Thomas W. Florsheim	Thomas W. Florsheim, Jr.	John W. Florsheim
Chairman Emeritus	Chairman and Chief Executive Officer	President, Chief Operating Officer and Assistant Secretary
Robert Feitler	Tina Chang	Cory L. Nettles
Chairman, Executive Committee	Chairman of the Board and Chief Executive Officer, SysLogic, Inc.	Managing Director, Generation Growth Capital, Inc.
Frederick P. Stratton, Jr.
Chairman Emeritus Briggs & Stratton Corporation, Manufacturer of Gasoline Engines
EXECUTIVE OFFICERS
Thomas W. Florsheim, Jr.	John W. Florsheim	Peter S. Grossman
Chairman and Chief Executive Officer	President, Chief Operating Officer and Assistant Secretary	Senior Vice President, and President Nunn Bush Brand and Retail Division
John F. Wittkowske
Senior Vice President, Chief Financial Officer and Secretary
OFFICERS
Judy Anderson	Steele Davidoff	Matthew J. Engerman
Vice President, Finance and Treasurer	Vice President, Licensing	Vice President Sales, Nunn Bush Brand
Brian Flannery	Beverly Goldberg	James G. Kehoe
Vice President, and President Stacy Adams Brand	Vice President Sales, Florsheim Brand	Vice President, Distribution
David McGinnis	Kevin Schiff	George Sotiros
Vice President, and President Florsheim Brand	Vice President Sales, Stacy Adams Brand	Vice President, Information Technology
Tim Then	Allison Woss
Vice President, Retail Division	Vice President, Purchasing

36

SUPPLEMENTAL INFORMATION

Annual Meeting

Shareholders are invited to attend Weyco Group, Inc.’s 2008 Annual Meeting at 10:00 a.m. on April 29, 2008, at the general offices of the Company, 333 W. Estabrook Boulevard, Glendale, Wisconsin.

Stock Exchange

The Company’s Common Stock (symbol WEYS) is listed on the NASDAQ Market System (NMS).

Transfer Agent and Registrar

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10038

Company Headquarters

Weyco Group, Inc.

333 W. Estabrook Boulevard

Glendale, WI 53212

414-908-1600

www.weycogroup.com

Other Information

Copies of the Company’s Annual Report to the Securities and Exchange Commission (Form 10-K), its Quarterly Reports to the Securities and Exchange Commission (Form 10-Q’s) and its Code of Business Ethics are available on the Company’s website at www.weycogroup.com. Copies will be furnished without charge to any shareholder (including beneficial owners) upon written or telephone request. Written requests should be sent to Investor Relations, Weyco Group, Inc., P. O. Box 1188, Milwaukee, Wisconsin 53201 or

e-mailed to Investor.Relations@weycogroup.com. Telephone inquiries should be made to (414) 908-1600.

37

EX-21

EXHIBIT 21

WEYCO GROUP, INC.

SUBSIDIARIES OF THE REGISTRANT

Name of Company	Incorporated In	Subsidiary Of
Weyco Investments, Inc.	Nevada	Weyco Group, Inc.
Weyco Merger, Inc.	Wisconsin	Weyco Group, Inc.
Weyco Sales, LLC	Wisconsin	Weyco Group, Inc.
Weyco Retail Corp.	Wisconsin	Weyco Group, Inc.
Florsheim Shoes Europe S.r.l.	Florence, Italy	Weyco Group, Inc.
Weyco France SARL	Paris, France	Weyco Group, Inc.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-03025 and 333-56035 and 333-129881 on Form S-8 of our reports dated March 3, 2008, relating to the financial statements (which report expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans), and financial statement schedule and internal control over financial reporting appearing in and incorporated by reference in the Annual Report on Form 10-K of Weyco Group, Inc. for the year ended December 31, 2007.

Milwaukee, Wisconsin

March 3, 2008

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Thomas W. Florsheim, Jr., certify that:

1. I have reviewed this annual report on Form 10-K 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures 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 report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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, as of the end of the period covered by this report based on such evaluation; and

d) 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: March 13, 2008
	/s/ Thomas W. Florsheim, Jr.
	Thomas W. Florsheim, Jr.
	Chairman and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, John F. Wittkowske, certify that:

1. I have reviewed this annual report on Form 10-K 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures 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 report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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, as of the end of the period covered by this report based on such evaluation; and

d) 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: March 13, 2008
	/s/ John F. Wittkowske
	John F. Wittkowske
	Senior Vice President and Chief Financial Officer

EX-32.1

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 Annual Report of Weyco Group, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2007 as filed with the Securities & Exchange Commission on the date hereof (the “Report”), I, Thomas W. Florsheim, Jr., 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.

Chief Executive Officer

March 13, 2008

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

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 Annual Report of Weyco Group, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2007 as filed with the Securities & Exchange Commission on the date hereof (the “Report”), I, John F. Wittkowske, 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

Chief Financial Officer

March 13, 2008

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.