EX-99.1 2 v141017_ex99-1.htm

WEYCO REPORTS FOURTH QUARTER AND FULL YEAR 2008 RESULTS

(Milwaukee, WI — February 23, 2009)  Weyco Group, Inc. (NASDAQ: WEYS) today announced financial results for the fourth quarter and full year 2008.

FOURTH QUARTER

Net sales for the fourth quarter were $50.0 million, down from $62.2 million in 2007.  Net earnings for the quarter were $3.5 million, down from $7.8 million in 2007.  Diluted earnings per share were $.30 in 2008, as compared with $.66 for the fourth quarter of 2007.

Net sales in the wholesale division, which include wholesale net sales and licensing revenues, were $42.4 million in the fourth quarter of 2008, compared with $52.9 million in 2007.  Wholesale net sales were $41.1 million in 2008, down from $51.5 million in 2007.  Licensing revenues in 2008 were $1.3 million, compared with $1.4 million in 2007.  Fourth quarter wholesale net sales of the Company’s Stacy Adams, Nunn Bush and Florsheim brands were down 17%, 11% and 31%, respectively.

Retail net sales for the fourth quarter were $7.6 million, down from $9.4 million in 2007.  Same store sales were down 19%.

Earnings from operations for the fourth quarter of 2008 were $4.7 million, down from $11.6 million in 2007.  This resulted from sales volume decreases in both the wholesale and retail divisions.  In the wholesale division, in addition to decreases in sales volume, the Company experienced lower gross margins.  The lower gross margins resulted from cost increases from its foreign suppliers and refinements to management’s estimates in response to current economic conditions related to sales returns and allowances and coop advertising accruals, which resulted in more expense in the fourth quarter of 2008 than 2007.

FULL YEAR 2008

Overall net sales in 2008 of $221.4 million were down 5% compared with $232.6 million in the prior year. Net earnings were $17.0 million, down from $22.9 million in 2007.  Diluted earnings per share were $1.45 in 2008 and $1.91 last year.

Net sales in the wholesale division, which include wholesale net sales and licensing revenues, were $192.5 million compared with $201.5 million in 2007.  Wholesale net sales were $188.2 million, down 5% from $197.4 million in 2007.  Licensing revenues were $4.3 million in 2008 and $4.1 million in 2007.  Sales of the Company’s Stacy Adams and Florsheim brands were down 3% and 12% respectively, while Nunn Bush sales were up 1% for the year.

Retail net sales for 2008 were $28.9 million, down 7% from $31.1 million in 2007.  Same store sales were down 8%.

Earnings from operations were $24.5 million in 2008, down from $34.1 million in the prior year.  Operating earnings as a percent of net sales were 11.1% in 2008 and 14.7% in 2007.  The decrease was caused principally by lower sales and lower gross margins.

The Company’s balance sheet remains strong at December 31, 2008.  The Company’s cash and marketable securities totaled $57.6 million at the end of 2008, as compared to $56.8 million in 2007.  The Company’s borrowings under its revolving line of credit were $1.3 million compared with $550,000 last year.  The Company’s excess cash and marketable securities over borrowings was $56.3 million in 2008, compared to $56.2 million in 2007.

 
 
 

“Across all of our brands and in our retail business, our sales volumes suffered in the fourth quarter due to the pullback in spending by consumers and the efforts of retailers to reduce their inventory positions,” stated Tom Florsheim Jr., Chairman and CEO of Weyco Group.  “We anticipate that these challenges will continue into 2009, and we are carefully watching our costs as we go forward.  Our strong balance sheet, however, allows us to continue to make the necessary long-term investment in our brands so they will be well-positioned when economic conditions improve.”

The Company’s Board of Directors declared a cash dividend on February 2, 2009 of $.14 per share to all shareholders of record on March 2, 2009, payable April 1, 2009.  
 
On February 23, 2009, the Company's Board of Directors authorized the Company to repurchase up to an additional 1,000,000 shares of its common stock under its stock repurchase program, bringing the total available to purchase to approximately 1,500,000 shares.
 
Weyco Group will host a conference call on Tuesday, February 24, 2009, at 11:00 a.m. Eastern Time to discuss the fourth quarter and full year 2008 financial results in more detail.  To participate in the call, please dial 888-680-0894 or 617-213-4860, referencing passcode #46907140, five minutes before the start of the call.  A replay will be available for one week beginning about one hour after the completion of the call by dialing 888-286-8010 or 617-801-6888, referencing passcode #66903717.  Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group’s website at www.weycogroup.com.

About Weyco Group:
Weyco Group, Inc. designs and markets moderately priced and better-grade men’s branded footwear for casual, fashion, and dress lifestyles.  The principal brands of shoes sold by the Company are Florsheim, Nunn Bush, and Stacy Adams.  The Company also operates a small number of retail stores in the United States and Europe.

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

For more information, contact:

John Wittkowske
Senior Vice President and Chief Financial Officer
414-908-1880

 
 
 


WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007 (UNAUDITED)

   
For the Quarter Ended December 31,
    
For the Year Ended December 31,
  
   
2008
    
2007
    
2008
    
2007
  
   
(In thousands, except per share amounts)
  
                         
Net sales
   $ 49,965     $ 62,225     $ 221,432     $ 232,616  
Cost of sales
     31,732       36,369       140,294       143,199  
Gross earnings
     18,233       25,856       81,138       89,417  
                                 
Selling and administrative expenses
     13,541       14,228       56,639       55,285  
Earnings from operations
     4,692       11,628       24,499       34,132  
                                 
Interest income
     520       530       2,016       2,159  
Interest expense
     (17 )     (65 )     (62 )     (353 )
Other income and expense, net
     (32 )     17       (21 )     25  
                                 
Earnings before provision for income taxes
     5,163       12,110       26,432       35,963  
                                 
Provision for income taxes
     1,662       4,287       9,407       13,062  
                                 
Net earnings
   $ 3,501     $ 7,823     $ 17,025     $ 22,901  
                                 
Weighted average shares outstanding
                                
Basic
     11,335       11,510       11,397       11,566  
Diluted
     11,654       11,943       11,757       12,013  
                                 
Earnings per share
                                
Basic
   $ 0.31     $ 0.68     $ 1.49     $ 1.98  
Diluted
   $ 0.30     $ 0.66     $ 1.45     $ 1.91  
                                 
Cash dividends per share
   $ 0.14     $ 0.11     $ 0.53     $ 0.42  
 
 
 
 

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2008 AND 2007
(UNAUDITED)

   
December 31,
    
December 31,
  
   
2008
    
2007
  
   
(Dollars in thousands)
  
ASSETS:
            
Cash and cash equivalents
   $ 11,486     $ 7,859  
Marketable securities, at amortized cost
     6,623       5,604  
Accounts receivable, net
     29,873       35,965  
Accrued income tax receivable
     2,226       -  
Inventories
     47,012       44,632  
Deferred income tax benefits
     579       475  
Prepaid expenses and other current assets
     3,678       3,301  
Total current assets
     101,477       97,836  
                 
Marketable securities, at amortized cost
     39,447       43,331  
Deferred income tax benefits
     736       -  
Other assets
     10,069       9,440  
Property, plant and equipment, net
     28,043       28,677  
Trademark
     10,868       10,868  
Total assets
   $ 190,640     $ 190,152  
                 
LIABILITIES & SHAREHOLDERS' INVESTMENT:
                
Short-term borrowings
   $ 1,250     $ 550  
Accounts payable
     7,494       10,541  
Dividend payable
     1,589       1,270  
Accrued liabilities
     6,490       8,026  
Accrued income taxes
     -       716  
Total current liabilities
     16,823       21,103  
                 
Long-term pension liability
     15,160       6,043  
Deferred income tax liabilities
     -       2,248  
                 
Common stock
     11,353       11,534  
Capital in excess of par value
     15,203       10,788  
Reinvested earnings
     142,617       142,775  
Accumulated other comprehensive loss
     (10,516 )     (4,339 )
Total shareholders' investment
     158,657       160,758  
                 
Total liabilities and shareholders' investment
   $ 190,640     $ 190,152  
 
 
 
 

WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (UNAUDITED)

   
2008
    
2007
  
   
(Dollars in thousands)
  
CASH FLOWS FROM OPERATING ACTIVITIES:
        
Net earnings
   $ 17,025     $ 22,901  
Adjustments to reconcile net earnings to net cash provided by operating activities -
                
Depreciation
     2,631       2,484  
Amortization
     114       90  
Deferred income taxes
     436       80  
Stock-based compensation
     609       316  
Pension contribution
     (1,000 )     -  
Pension expense
     1,378       1,359  
Loss (gain) on disposal of fixed assets
     141       (15 )
Increase in cash surrender value of life insurance
     (566 )     (681 )
Change in operating assets and liabilities -
                
Accounts receivable
     6,092       (5,323 )
Inventories
     (2,380 )     6,369  
Prepaids and other current assets
     (348 )     (1,555 )
Accounts payable
     (3,047 )     (1,858 )
Accrued liabilities and other
     (2,400 )     (685 )
Accrued income taxes
     (2,941 )     670  
Net cash provided by operating activities
     15,744       24,152  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Life insurance premiums paid
     (155 )     -  
Purchase of marketable securities
     (3,069 )     (8,406 )
Proceeds from maturities of marketable securities
     5,820       1,343  
Purchase of property, plant and equipment
     (2,178 )     (2,727 )
Proceeds from sales of property, plant and equipment
     4       77  
Net cash provided by (used for) investing activities
     422       (9,713 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Cash dividends paid
     (5,738 )     (4,656 )
Shares purchased and retired
     (11,539 )     (9,924 )
Proceeds from stock options exercised
     2,191       1,853  
Borrowings (repayments) under revolving credit agreement
     700       (10,408 )
Income tax benefits from share-based compensation
     1,847       1,241  
Net cash used for financing activities
     (12,539 )     (21,894 )
                 
Net increase (decrease) in cash and cash equivalents
     3,627       (7,455 )
                 
CASH AND CASH EQUIVALENTS at beginning of period
   $ 7,859     $ 15,314  
                 
CASH AND CASH EQUIVALENTS at end of period
   $ 11,486     $ 7,859  
                 
SUPPLEMENTAL CASH FLOW INFORMATION:
                
Income taxes paid, net of refunds
   $ 9,996     $ 10,901  
Interest paid
   $ 62     $ 400