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, 2005, 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
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 par value per share
(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, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.    

Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer 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, 2005 was $145,320,000.

As of February 15, 2006, there were outstanding 8,980,533 shares of Common Stock and 2,594,491 shares of Class B Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Corporation’s Annual Report to Shareholders for the year ended December 31, 2005, 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 25, 2006, 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. 

                    In 2002, the Company acquired certain assets of Florsheim Group, Inc.’s domestic wholesale and retail operations.  In addition, the Company also acquired certain assets and assumed the operating liabilities of Florsheim Europe S.r.l. and Florsheim  France SARL.  The total purchase price of the acquisition was $48.5 million. 

                    The principal brands of shoes sold by the Company are “ Florsheim,” “Nunn Bush,” “Nunn Bush NXXT,” “Brass Boot,”  “Stacy Adams,” and “SAO by Stacy Adams.”   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 around the world.  The majority of these foreign-sourced purchases are denominated in U. S. dollars.  There have been few inflationary pressures in the shoe industry in recent years and leather and other component prices have been stable.  It is anticipated that, when necessary, selling price increases could be initiated to offset periodic increases in costs of purchased shoes.  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. The Beaver Dam facility still operates the Company’s reconditioning, rework and returned goods departments.

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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 2005 and 88% in both 2004 and 2003.  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. There were no individually significant customers in 2005.  In 2004 and 2003, sales to the Company’s largest customer, JCPenney, were 12% of total sales.  Net sales to foreign customers were $11.8 million, $10.8 million and $9.1 million in 2005, 2004 and 2003, respectively.  The Company employs traveling salesmen who sell the Company’s products to retail outlets. Shoes are shipped to these retailers primarily from the Company’s distribution center maintained 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 2005, 2004 and 2003.

                    Retail sales constituted approximately 13% of total sales in 2005, and 12% in  both 2004 and 2003.  In the retail division at December 31, 2005, there were 32 company-operated stores in principal cities of the United States and three retail stores in major cities in Europe. 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, 2005, the Company had a backlog of $23 million of confirmed orders compared with $25 million as of December 31, 2004.  This does not include unconfirmed blanket orders from customers.  All orders are expected to be filled within one year.

                    As of December 31, 2005, the Company employed 392  persons, of which  33 were members of collective bargaining units.  The Company ratified new contracts covering the majority of these employees during 2002 and in early 2003.  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 is expected to adversely impact the Company’s sales in 2006.
	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 Brazil, China and India.  Although the Company has good working relationships with its manufacturers, the Company does not have long-term contracts with them.  Thus, the Company cannot ensure that it will not 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, 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 affecting discretionary 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 two other institutional shareholders hold significant blocks.  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	60%
Beaver Dam, Wisconsin	Multistory factory	Leased (1)	100,000	50%
Florence, Italy	One story office, warehouse and distribution facility	Leased (1)	9,500	100%

(1) Not material leases.

                    In addition to the above-described office, distribution and warehouse facilities, the Company operates 32 retail stores throughout the United States and three in Europe under various rental agreements.  All of these facilities are suitable and adequate for the Company’s current operations.  See Note 12 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.	47	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	42	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	62	Senior Vice President	1971	Senior Vice President of the Company – 2002 to present; Vice President of the Company -- 1971 to 2002
John F. Wittkowske	46	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, Related Shareholder Matters and Issuer Purchases of Equity Securities
	Information required by this Item is set forth on pages 1, 21 and 29 of the Annual Report to Shareholders for the year ended December 31, 2005, and is incorporated herein by reference.
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, 2005, 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 4 through 9 of the Annual Report to Shareholders for the year ended December 31, 2005, 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 8 of the Annual Report to Shareholders for the year ended December 31, 2005, and is incorporated herein by reference.
Item 8.	Financial Statements and Supplementary Data
	Information required by this Item is set forth on pages 10 through 25 of the Annual Report to Shareholders for the year ended December 31, 2005, 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.	Control 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 28 in the Annual Report to Shareholders for the year ended December 31, 2005, and is incorporated herein by reference.
	Attestation Report of Registered Public Accounting Firm – The attestation report of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, on management’s assessment of the effectiveness of the Company’s internal control over financial reporting is set forth on page 27 in the Annual Report to Shareholders for the year ended December 31, 2005, 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 and Executive Officers of the Registrant
	Information required by this Item is set forth on pages 1 through 5 of the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, and is incorporated herein by reference.

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Item 11.	Executive Compensation
	Information required by this Item is set forth on pages 9 through 12 of the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, and is incorporated herein by reference.
Item 12.	Security Ownership of Certain Beneficial Owners of Management and Related Shareholder Matters
	Information required by this Item is set forth on pages 1, 2 and 12 of the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, and is incorporated herein by reference.
Item 13.	Certain Relationships and Related Transactions
	Information required by this Item is set forth on page 12 of the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, and is incorporated herein by reference.
Item 14.	Principal Accountant Fees and Services
	Information required by this Item is set forth on page 8 of the Company’s proxy statement for the Annual Meeting of Shareholders to be held on April 25, 2006, 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, 2005, 2004 and 2003	10
	Consolidated Balance Sheets - December 31, 2005 and 2004	11
	Consolidated Statements of Shareholders’ Investment for the years ended December 31, 2005, 2004 and 2003	12
	Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003	13
	Notes to Consolidated Financial Statements for the years ended December 31, 2005, 2004 and 2003	14 - 25
	Reports of Independent Registered Public Accounting Firm	26 - 27
		Page Reference to Form 10-K
2.	Financial Statement Schedules for the years ended December 31, 2005, 2004 and 2003 -
	Schedule II  -  Valuation and Qualifying Accounts	11
	Report of Independent Registered Public Accounting Firm	12
	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, 2002	$	2,875,000		$	1,080,000		$	3,955,000
Add - Additions charged to earnings		413,330			5,240,124			5,653,454
Deduct - Charges for purposes for which reserves were established		(1,270,330	)		(4,615,124	)		(5,885,454	)
BALANCE, DECEMBER 31, 2003	$	2,018,000		$	1,705,000		$	3,723,000
Add - Additions charged to earnings		550,179			7,863,440			8,413,619
Deduct - Charges for purposes for which reserves were established		(253,179	)		(7,003,440	)		(7,256,619	)
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

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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, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, and have issued our reports thereon dated March 8, 2006; 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. This 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.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 8, 2006

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EXHIBIT INDEX

Exhibit	Description	Incorporated Herein By Reference To
2.1	Asset Purchase Agreement, Florsheim Group, Inc., dated March 3, 2002	Exhibit 2.1 to Form 10-K for Year Ended December 31, 2001
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 January 28, 2002	Exhibit 3.2 to Form 10-K for Year Ended December 31, 2001
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, 1997, as amended January 1, 1999 and January 1, 2004	Exhibit 10.2 to Form 10-K for Year Ended December 31, 1996, and Amendment No. 1 filed as Exhibit 10.2 to Form 10-K for Year Ended December 31, 1998, and Amendment No. 2 filed as Exhibit 10.2 for Year Ended December 31, 2003
10.3*	Employment Agreement - John W. Florsheim, dated January 1, 1997, as amended January 1, 1999 and January 1, 2004	Exhibit 10.3 to Form 10-K for Year Ended December 31, 1996, and Amendment No. 1 filed as Exhibit 10.3 to Form 10-K for Year  Ended December 31, 1998 and Amendment No. 2 filed as Exhibit 10.3 for Year Ended December 31, 2003
10.6*	Excess Benefits Plan - Amended Effective as of July 1, 2004
10.7*	Pension Plan - Amended and Restated Effective January 1, 1989	Exhibit 10.7 to Form 10-K for Year Ended December 31, 1991

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EXHIBIT INDEX (cont.)

Exhibit	Description	Incorporated Herein By Reference To
10.8*	Deferred Compensation Plan – Amended Effective as of July 1, 2004
10.12*	1996 Nonqualified Stock Option Plan	Exhibit 10.12 to Form 10-K for Year Ended December 31, 1995
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
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
10.18*	Weyco Group, Inc.  Director Nonqualified Stock Option Agreement Virgis Colbert, dated May 19, 2003	Exhibit 10.18 to Form 10-K for Year Ended December 31, 2004
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
10.21*	Weyco Group, Inc.  Director Nonqualified Stock Option Agreement Leonard Goldstein, dated May 19, 2003	Exhibit 10.21 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

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EXHIBIT INDEX (cont.)

Exhibit	Description	Incorporated Herein By Reference To
13	Annual Report to Shareholders
21	Subsidiaries of the Registrant
23.1	Independent Registered Public Accounting Firm’s Consent Dated March 8, 2006
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, 2006
	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/	March 13, 2006
Thomas W. Florsheim, Chairman Emeritus
/s/	March 13, 2006
Thomas W. Florsheim, Jr., Chairman of the Board and Chief Executive Officer
/s/	March 13, 2006
John W. Florsheim, President and Chief
Operating Officer, Assistant Secretary and Director
/s/	March 13, 2006
John Wittkowske, Senior Vice President, Chief Financial Officer and Secretary
(Principal Accounting Officer)
/s/	March 13, 2006
Robert Feitler, Director
/s/	March 13, 2006
Leonard J. Goldstein, Director
/s/	March  13, 2006
Cory L. Nettles, Director
/s/	March  13, 2006
Frederick P. Stratton, Jr., Director

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EX-10.6

EXHIBIT 10.6

WEYCO GROUP, INC. EXCESS BENEFITS PLAN

Amended Effective as of July 1, 2004

TABLE OF CONTENTS

		Page
PREAMBLE		1
ARTICLE I	General	2
1.1	Committee	2
1.2	Deferred Compensation Plan	2
1.3	Effective Date	2
1.4	Employer	2
1.5	Plan	2
1.6	Pension Plan	2
ARTICLE II	Eligibility	3
2.1	Persons Eligible As Participants Under The Plan	3
ARTICLE III	Retirement Benefits	4
3.1	Amount of Retirement Benefits	4
3.2	Manner of Payment	5
3.3	Pre-retirement Survivor Annuity	5
3.4	Interpretation	6
3.5	Commutation of Benefit	6
3.6	Committee Discretion	6
ARTICLE IV		7
4.1	Amendment and Termination	7
ARTICLE V	Miscellaneous	8
5.1	No Guarantee of Employment, etc	8
5.2	Assignment Not Permitted	8
5.3	Absence of Trust	8
5.4	Controlling Law	8
5.5	Severability	8
5.6	Limitations on Provisions	8
5.7	Other Agreements	8
5.8	Gender and Number	8
5.9	Withholding	8
5.10	Facility of Payment	8

i

TABLE OF CONTENTS
(continued)

		Page
5.11	Identity of Payee	9
5.12	Evidence Conclusive	9
5.13	Claims Procedure	9
5.14	Status of Plan Under ERISA	10
5.15	Name and Address Changes	10
5.16	Rule Limiting Participant Elections	10
ARTICLE VI	Change Of Control	11
6.1	Definition Change of Control	11
6.2	Payments in Event of Change of Control	11
6.3	Plan Termination	12

ii

PREAMBLE

          Weyco Group, Inc. hereby amends and restates the excess benefits plan it previously adopted so that participants may receive the additional pension benefits which they are prevented from receiving under the Weyco Group, Inc. Pension and Deferred Compensation plans as a result of the limitations of Internal Revenue Code Sections 401(a)(17) and 415.

1

ARTICLE I
General

          1.1          Committee.  The term “Committee” means an administrative Committee of at least 3 members which is appointed by the Company’s Board of Directors.  Such Committee shall be the Plan Administrator of this Plan for purposes of the Employee Retirement Income Security Act of 1974.  Weyco Group, Inc.’s administrative responsibilities hereunder, including under the Claims Procedure of Section 5.13, are hereby delegated to the Committee.  The Committee may also act at a meeting or by its unanimous written consent.  A majority of the members of the Committee shall constitute a quorum for the transaction of business and shall have full power to act hereunder.  All decisions shall be made by vote of the majority present at any meeting at which a quorum is present, except for actions in writing without a meeting which must be unanimous.  The Committee may appoint a Secretary who may, but need not be, a member of the Committee.  The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs.  Any absent Committee member, and any dissenting Committee member who (at the time of the making of any decision by the majority) registers his dissent in writing delivered at that time to the other Committee members, shall be immune to the fullest extent permitted by law from any and all liability occasioned by or resulting from the decision of the majority.  The Committee shall be entitled to rely upon the Employer’s records as to information pertinent to calculations or determinations made pursuant to the Plan.  A member of the Committee may not vote or decide upon any matter relating solely to himself or vote in any case in which his individual right to claim to any benefit under the Plan is particularly involved.  If, in any case in which a Committee member is so disqualified to act, the remaining members cannot agree, then the Employer will appoint a temporary substitute member to exercise all of the powers of the disqualified member concerning the matter in which that member is disqualified to act.

          1.2          Deferred Compensation Plan.  The term “Deferred Compensation Plan” means the Weyco Group, Inc. Deferred Compensation Plan. 

          1.3          Effective Date.  This restated Weyco Group, Inc. Excess Benefits Plan is effective as of January 1, 1997.

          1.4          Employer.  The term “Employer” means Weyco Group, Inc.

          1.5          Plan.  The term “Plan” means the Weyco Group, Inc. Excess Benefits Plan as set forth in this document and all subsequent amendments hereto.

          1.6          Pension Plan.  The term “Pension Plan” means the Weyco Group, Inc. Pension Plan as amended from time to time.

2

ARTICLE II
Eligibility

          2.1          Persons Eligible As Participants Under The Plan.  Each person who is a participant in the Pension Plan and whose benefit under the Pension Plan is reduced below what it would have been in the absence of limitations set forth in the Pension Plan required by Internal Revenue Code Sections 401(a)(17) and 415 shall be a Participant in this Plan.

3

ARTICLE III
Retirement Benefits

          3.1          Amount of Retirement Benefits.

                         (a)          Normal or Late Retirement.  In the case of a Participant who terminates employment with the Employer on or after his 65th birthday, his pension benefit hereunder shall commence on the first day of the month next following the date of his termination of employment.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan and Deferred Compensation Plan as a single life pension based on retirement on the same date if the provisions of Internal Revenue Code Sections 401(a)(17) and 415 did not exist, minus (ii) the amount of pension, expressed as a single life monthly pension, actually payable to him under the Pension Plan and Deferred Compensation Plan on the same date.

                         (b)          Early Retirement. 

                         (1)          In the case of a Participant who terminates employment with the Employer on or after his 55th birthday and after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan,  his pension benefit hereunder shall commence on either (i) the first day of the month following his 65th birthday or (ii) if so elected by the Participant consistent with Section 5.16, the first day of any month next following the date of his termination of employment and prior to his 65th birthday.

                         (2)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan and Deferred Compensation Plan as a single life monthly pension based on his retirement on the same date and commencement of his benefits under the Pension Plan and Deferred Compensation Plan on the same date if the provisions of Internal Revenue Code Sections 401(a)(17) and 415 did not exist, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan and Deferred Compensation Plan based on his retirement on the same date and assuming benefits commenced on the same date.

                         (c)          Termination of Employment. 

                         (1)          In the case of a Participant who terminates employment with the Employer on or after completing at least 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, but prior to completing 15 such years of Credited Service his pension benefit hereunder shall commence on the first day of the month next following the date he attains age 65.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan and Deferred Compensation Plan at age 65 as a single life monthly pension based on his termination on the same date if the provisions of Internal Revenue Code Sections 401(a)(17) and 415 did not exist, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan and Deferred Compensation Plan based on his termination on the same date and assuming benefits commenced on the same date.

4

                         (2)(a)      In the case of a Participant who terminates employment with the Employer prior to his 55th birthday but after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan, his pension benefit hereunder shall commence (i) on the first day of the month next following the date he attains age 65 or (ii) if so elected by the Participant consistent with Section 5.16, the first day of any month next following his 55th birthday and prior to his 65th birthday.

                         (b)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan and Deferred Compensation Plan as a single life monthly pension based on his termination on the same date and commencement of benefits on the same date if the provisions of Internal Revenue Code Sections 401(a)(17) and 415 did not exist, minus (ii) the amount of pension, if any, expressed as a single life monthly pension actually payable to him under the Pension Plan based on his termination on the same date and assuming benefits under the Pension Plan and Deferred Compensation Plan commenced on the same date.

                         (3)          In the case of an individual who terminates employment with the Employer prior to completing 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, no benefits shall be payable hereunder.

          3.2          Manner of Payment.  If the Participant is unmarried at the time his benefits commence, his pension benefit shall be payable to him in the form of a single life monthly pension.  If the Participant is married at the time his benefits commence, instead of receiving a single life monthly pension he shall receive a Joint and Survivor Pension.  The Joint and Survivor Pension shall be a reduced monthly pension payable to the Participant for his life with a continuing pension payable after his death to his surviving spouse for her life in an amount equal to 50% of the reduced benefit payable during the life of the Participant.  Such Joint and Survivor Pension shall be the  actuarial equivalent of the single life monthly pension which would be payable to the Participant if he were unmarried.  If so elected by the Participant consistent with Section 5.16, the Plan shall pay the benefit of a Participant for which the Participant is eligible in the form of a single life annuity or in one of the optional forms of benefit payable under Section 3.04 of the Pension Plan which is the actuarial equivalent of the single life annuity otherwise payable to the Participant hereunder.  Actuarially equivalent benefits shall be determined under the factors set forth for determining actuarial equivalency in the Pension Plan.

          3.3          Pre-retirement Survivor Annuity.

                         (a)          If any married Participant who has completed 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, (or married former Participant who had completed 5 years of such Credited Service) dies before starting to receive payments hereunder, then his surviving spouse, if any, shall be entitled to a monthly benefit for life.

                         (b)          The amount of such monthly benefit for life shall be:

                                        (i)          In the case of a Participant who dies while employed by the Employer after attainment of age 55 and completion of 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant had terminated employment on the day before his death and commenced to receive benefits under whichever of Section 3.1(a) or (b) would have been applicable under the Joint and Survivor Pension form as described in Section 3.2;

5

                                        (ii)         in the case of a Participant or former Participant who had completed 15 years of such Credited Service but who dies on or before his 55th birthday, an amount equal to what such spouse would have received as a survivor annuity if the Participant had survived to his 55th birthday, retired under Section 3.1 (b) and commenced to receive benefits (based on his Credited Service and the benefit formula as in effect under the Pension Plan and Deferred Compensation Plan on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 55th birthday in the Joint and Survivor Pension form, as described in Section 3.2, and died on the next day;

                                        (iii)        in the case of a Participant or former Participant who dies before having completed 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant or former Participant had survived to the first of the month following his 65th birthday, commenced to received benefits under Section 3.1 (a) (based on his Credited Service and the benefit formula under the Pension Plan and Deferred Compensation Plan as in effect on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 65th birthday in the Joint and Survivor Pension form, as described in Section 3.2, and died on the next day.

                         (c)          Provided that the surviving spouse survives to such commencement date, payment of such benefit will commence on the later of (i) the first day of the month following the Participant’s or former Participant’s date of death or (ii) in the case of a Participant or former Participant who had completed 15 years of Credited Service, the first day of the month following the date on which the Participant or former Participant would have attained age 55 or (iii) in the case of a Participant or former Participant who had not completed 15 years of Credited Service, the first day of the month following what would have been the 65th birthday of the Participant or former Participant.

          3.4          Interpretation.  It is the intention of the Employer that the benefits provided to the Participant and any beneficiary under this Plan and the Pension Plan and Deferred Compensation Plan together shall be no greater than would have been provided to the Participant and any beneficiary under the terms of the Pension Plan and Deferred Compensation Plan if the Participant had at all times been covered under the Pension Plan in accordance with their rules had the limitations of Internal Revenue Code Sections 415 and 401(a)(17) not existed.

          3.5          Commutation of Benefit.  The Committee, in its discretion, may determine to commute the benefits otherwise payable to a Participant or beneficiary hereunder, i.e., the Committee may direct that in lieu of the benefit otherwise payable to a Participant or a beneficiary hereunder, the Plan shall pay such individual a single lump sum cash payment which is the actuarial equivalent of the benefit otherwise payable.  Actuarial equivalency shall be determined under the factors set forth in the Pension Plan.

          3.6          Committee Discretion.  As to the exercise of its discretion in Section 3.5 hereof, the Committee shall in no way be bound by past precedent in connection with other Participants, i.e., the fact that it may have directed an earlier payment commencement date or an alternative form of payment for one Participant shall not in any way obligate the Committee to reach a similar decision for any subsequent Participant.  Any Committee member who is also a Participant in this Plan shall not be authorized to vote or otherwise participate in the decision regarding the time or form of payment of that individual’s benefit.

6

ARTICLE IV

          4.1          Amendment and Termination.  Weyco Group, Inc. may amend or terminate this Plan at any time.  If the Plan is terminated no further benefits shall accrue hereunder.  However, unless necessary to conform to any present or future federal or state law or regulation, amendment or termination may not result in a reduction of benefits of a Participant (or his surviving spouse) who is already receiving benefits, nor may amendment or termination result in a Participant who is still in active service (or his surviving spouse) receiving a benefit hereunder smaller than that to which he would have been entitled had the Participant terminated employment on the day prior to the effective date of such amendment or termination.  The delegation of authority to the Committee in Section 1.2 does not extend to this Section 4.1.

7

ARTICLE V
Miscellaneous

          5.1          No Guarantee of Employment, etc.  Neither the creation of the Plan nor anything contained herein shall be construed as giving any Participant hereunder or other employees of the Employer any right to remain in the employ of the Employer.

          5.2          Assignment Not Permitted.  Payment of benefits hereunder to Participants (or beneficiaries) shall be made only to them and upon their personal receipts or endorsements and such benefits shall not be assignable by them.

          5.3          Absence of Trust.  Benefits under the Plan shall be paid from the Employer’s general assets and any claim of a Participant or beneficiary for benefits under the Plan shall be as an unsecured general creditor and no participant or beneficiary shall have any beneficial ownership interest or secured interest in any of the Employer’s assets as a result of the creation of the Plan.

          5.4          Controlling Law.  To the extent not preempted by the laws of the United States of America, the laws of the State of Wisconsin shall be the controlling state law in all matters relating to the Plan and shall apply.

          5.5          Severability.  If any provisions of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Plan, but this Plan shall be construed and enforced as if said illegal and invalid provisions had never been included herein.

          5.6          Limitations on Provisions.  The provisions of the Plan and any benefits payable hereunder shall be limited as described herein.  Any benefit payable under the Pension Plan shall be paid solely in accordance with the terms and provisions of the Pension Plan, and nothing in the Plan shall operate or be construed in any way to modify, amend, or affect the terms and provisions of the Pension Plan.

          5.7          Other Agreements.  Nothing contained herein shall alter the terms of any other agreement between the Employer and any Participant hereunder.

          5.8          Gender and Number.  Masculine gender shall include the feminine, and the singular shall include the plural, unless the context clearly indicates otherwise.

          5.9          Withholding.  Notwithstanding Section 5.2, the Employer shall withhold from any amounts payable hereunder any taxes or other amounts required by any governmental authority to be withheld.

          5.10        Facility of Payment.  If, in the Employer’s judgment, any person entitled to make an election or to receive payment of a benefit is physically, mentally, or legally prevented from so doing, the Employer may make such election or may authorize payment of such benefit to any person who, or institution which, in the Employer’s judgment, is responsible for caring for the person entitled to the benefit.  If an amount becomes distributable to a minor or a person under legal disability, the Employer may direct that such distribution may be made to such person without the intervention of any legal guardian or conservator, to a relative of such person for the benefit of such person or to the legal guardian or conservator of such person.  Any such distributions shall constitute a full discharge with respect to the Employer, and the Employer shall not be required to see to the application of any distribution so made.

8

          5.11        Identity of Payee.  If at any time any doubt exists as to the identity of any person entitled to payment of any benefit hereunder or as to the amount or time of any such payment, such sum shall be held by the Employer until such doubt is cured or the Employer may pay such sum into a court of competent jurisdiction in accordance with any lawful procedure in such case made and provided.

          5.12        Evidence Conclusive.  The Employer and any person or persons involved in the administration of the Plan shall be entitled to rely upon any certification, statement, or representation made or evidence furnished by any person with respect to his age or other facts required to be determined under any of the provisions of the Plan, and shall not be liable on account of the payment of any monies or the doing of any act or failure to act in reliance thereon.  Any such certification, statement, representation, or evidence, upon being duly made or furnished, shall be conclusively binding upon the person furnishing it but not upon the Employer or any other person involved in the administration of the Plan.  Nothing herein contained shall be construed to prevent any of such parties from contesting any such certification, statement, representation, or evidence or to relieve any person from the duty of submitting satisfactory proof of his age or such other fact.

          5.13        Claims Procedure.  The Participant or the Participant’s beneficiary (a “Claimant”) may file a written request for benefits or claim with the Employer under this Plan.  In the event of any dispute with respect to such a claim, the following claim procedures shall apply:

                         (1)          The Employer, acting as the administrator under this Plan, shall notify the Claimant within 90 days of receipt by the Employer of a written claim of its allowance or denial, unless the Claimant receives written notice from the Employer prior to the end of the initial 90-day period indicating that special circumstances require an extension of time (by not more than 90 days) for decision.  A written notice of decision shall be provided to the Claimant and if the claim is denied in whole or in part, the notice shall contain the following information:  the specific reasons for the denial; specific reference to pertinent provisions of the Plan on which the denial is based; if applicable, a description of any additional material information necessary to perfect the claim and an explanation of why such material or information is necessary; and an explanation of the claim review procedure.

                         (2)          A Claimant is entitled to request a review of any denial of his claim by the Employer.  The request for review must be submitted in writing within 60 days of mailing of notice of the denial.  Absent a request for review within the 60-day period, the claim will be deemed to be conclusively denied.  The Claimant or the Claimant’s representative shall be entitled to review all pertinent documents, and to submit issues and comments orally and in writing.  The Employer shall render a review decision in writing, within 60 days after receipt of a request for a review, provided that, in special circumstances (such as the necessity of holding a hearing) the Employer may extend the time for decision by not more than 60 days upon written notice to the Claimant.  The Claimant shall receive written notice of the separate review decision of the Employer, together with specific reasons for the decision and reference to the pertinent provisions of this Plan.

9

                         (3)          A final decision by Weyco Group, Inc. pursuant to this claims procedure shall be final and binding upon all parties and shall not be subject to de novo judicial review.

          5.14        Status of Plan Under ERISA.  The Plan is intended to be an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, as described in Section 201(2), Section 301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of the Employees Retirement Income Security Act of 1974, as amended.

          5.15        Name and Address Changes.  Each Participant shall keep his name and address on file with the Employer and shall promptly notify the Employer of any changes in his name or address.  All notices required or contemplated by this Plan shall be deemed to have been given to a Participant if mailed with adequate postage prepaid thereon addressed to him at his last address on file with the Employer.  If any check in payment of a benefit hereunder (which was mailed to the last address of the payee as shown on the Employer’s records) is returned unclaimed, further payments shall be discontinued unless evidence is furnished that the recipient is still alive.

          5.16        Rule Limiting Participant Elections.  Any election by the Participant as to timing or form of payment shall be valid only if made irrevocably at least 6 months prior to the Participant’s termination of employment.

10

ARTICLE VI
Change Of Control

          6.1          Definition Change of Control.   For purposes of this Plan, a “Change of Control” shall occur:

                         (1)          if any person or group of persons (as defined in Section 13(d)(3) of the Securities and Exchange Act of 1934 and regulations thereunder), other than the group consisting of members of the family of Thomas W. Florsheim and their descendants or trusts for their benefit (the “Florsheim Group”), directly or indirectly controls in excess of 15% of the voting power of the outstanding common stock of the Employer; 

                         (2)          in the event of  the consolidation or merger of the Employer with or into another corporation or entity which is not a wholly owned subsidiary of the Employer; 

                         (3)          in the event of  the sale or transfer of all or substantially all of the operating assets of the Employer;

                         (4)          in the event of the replacement of a majority of the existing members of the Employer’s Board of Directors by persons not nominated by the Board of Directors or the Florsheim Group, or

                         (5)          in the event of any amendment to Section 2 of Article III of the Employer’s bylaws to enlarge the number of the directors of the Employer if the change was not supported by the existing Board of Directors or the Florsheim Group.

          6.2          Payments in Event of Change of Control. 

                         (a)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is in the employ of the Employer on the date the Change of Control occurs.  Such lump sum payment shall be the actuarial equivalent of the pension which would be payable to the Participant pursuant to Section 3.1 if the Participant had terminated employment on the date the Change of Control occurred and had commenced to receive the pension accrued by him to the date of the Change of Control on the first day of the month following his 65th birthday or, if the Participant is already 65, the first day of the month following the date of the Change of Control.  For purposes of calculating the amount which would be payable to the Participant under the preceding sentence, the 5 year of service requirement in Section 3.1(c)(1) shall be ignored and the provisions of Section 3.1(c)(3) shall be ignored.

                         (b)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is no longer in the employ of the Employer on the date the Change of Control occurs and who has neither been paid a lump sum distribution of his benefits hereunder nor otherwise commenced to receive payment of his benefits hereunder.  Such lump sum payment shall be the actuarial equivalent of the pension which would be payable to the Participant pursuant to Section 3.1 based on the benefits accrued by the Participant hereunder to the time of the Participant’s termination of employment on the assumption that the Participant would commence to receive the pension accrued by him on the first day of the month following his 65th birthday.  

11

                         (c)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is no longer in the employ of the Employer and who is in pay status hereunder receiving monthly benefit payments.  Such lump sum payments shall be the actuarial equivalent of the pension payments remaining to be paid to the Participant hereunder.  

                         (d)          Actuarial equivalency for purposes of this Section 6.2 shall be determined under the factors for single sum distributions set forth in the Pension Plan. 

                         (e)          Payment under this Section 6.2 shall be in lieu of any and all amounts otherwise payable to or with respect to the Participant under this Plan. 

                         (f)          In the event the Participant should die before the lump sum payment called for by this Section 6.2 is paid, such payment shall be made to the Participant’s surviving spouse or, if none, to the Participant’s estate.

                         (g)          In the event a Participant has died prior to the occurrence of a Change of Control, and such Participant’s spouse is entitled to a benefit under Section 3.3, such spouse shall in lieu thereof, and within 30 days after the occurrence of the Change of Control, be paid a lump sum cash amount which is the actuarial equivalent of the payment the spouse would have been entitled to under Section 3.3(b)(i), (ii) or (iii) as the case may be.  

          6.3          Plan Termination.  No Participant shall accrue any additional benefits hereunder from and after the date of the Change of Control.  Once the payments called for by Section 6.2 have been made, the Plan shall be automatically terminated and no further payments shall be due any person hereunder. 

12

EX-10.8

EXHIBIT 10.8

WEYCO GROUP, INC. DEFERRED COMPENSATION PLAN

Amended Effective as of July 1, 2004

TABLE OF CONTENTS

		Page
PREAMBLE		1
ARTICLE I	Definitions	2
1.1	Committee	2
1.2	Effective Date	2
1.3	Employer	2
1.4	Highly Compensated Employee	2
1.5	High Five Year Average Compensation	2
1.6	Pension Plan	2
1.7	Plan	3
1.8	Special Formula	3
ARTICLE II	Eligibility	4
2.1	Persons Eligible As Participants Under The Plan	4
ARTICLE III	Retirement Benefits	5
3.1	Amount of Retirement Benefits For Persons Who Are Not Executive Officers	5
3.2	Manner of Payment	6
3.3	Pre-retirement Survivor Annuity	6
3.4	Interpretation	7
3.5	Commutation of Benefit	7
3.6	Committee Discretion	8
ARTICLE IV	Retirement Benefits	9
4.1	Amount of Retirement Benefits For Executive Officers	9
4.2	Manner of Payment	10
4.3	Pre-retirement Survivor Annuity	10
4.4	Interpretation	11
4.5	Commutation of Benefit	12
4.6	Committee Discretion	12
4.7	Change in Executive Officer Status	12
4.8	Enhanced Early Retirement Benefit	12

i

TABLE OF CONTENTS
(continued)

		Page
ARTICLE V	Amendment and Termination	13
5.1	Amendment and Termination	13
ARTICLE VI	Miscellaneous	14
6.1	No Guarantee of Employment, etc	14
6.2	Assignment Not Permitted	14
6.3	Absence of Trust	14
6.4	Controlling Law	14
6.5	Severability	14
6.6	Limitations on Provisions	14
6.7	Other Agreements	14
6.8	Gender and Number	14
6.9	Withholding	14
6.10	Facility of Payment	14
6.11	Identity of Payee	15
6.12	Evidence Conclusive	15
6.13	Claims Procedure	15
6.14	Status of Plan Under ERISA	16
6.15	Name and Address Changes	16
6.16	Rule Limiting Participant Elections	16
ARTICLE VII	Change of Control	17
7.1	Definition Change of Control	17
7.2	Payments in Event of Change of Control	17
7.3	Plan Termination	18

ii

PREAMBLE

           The Weyco Group, Inc. Deferred Compensation Plan, a non-qualified plan created June 22, 1989 for the purpose of providing supplemental retirement benefits to eligible employees, is hereby amended to read as follows effective as of January 1, 1997.

1

ARTICLE I
Definitions

          1.1          Committee.  The term “Committee” means an administrative Committee of at least 3 members which is appointed by the Company’s Board of Directors.  Such Committee shall be the Plan Administrator of this Plan for purposes of the Employee Retirement Income Security Act of 1974.  Weyco Group, Inc.’s administrative responsibilities hereunder, including under the Claims Procedure of Section 6.13, are hereby delegated to the Committee.  The Committee may also act at a meeting or by its unanimous written consent.  A majority of the members of the Committee shall constitute a quorum for the transaction of business and shall have full power to act hereunder.  All decisions shall be made by vote of the majority present at any meeting at which a quorum is present, except for actions in writing without a meeting which must be unanimous.  The Committee may appoint a Secretary who may, but need not be, a member of the Committee.  The Committee may adopt such bylaws and regulations as it deems desirable for the conduct of its affairs.  Any absent Committee member, and any dissenting Committee member who (at the time of the making of any decision by the majority) registers his dissent in writing delivered at that time to the other Committee members, shall be immune to the fullest extent permitted by law from any and all liability occasioned by or resulting from the decision of the majority.  The Committee shall be entitled to rely upon the Employer’s records as to information pertinent to calculations or determinations made pursuant to the Plan.  A member of the Committee may not vote or decide upon any matter relating solely to himself or vote in any case in which his individual right to claim to any benefit under the Plan is particularly involved.  If, in any case in which a Committee member is so disqualified to act, the remaining members cannot agree, then the Employer will appoint a temporary substitute member to exercise all of the powers of the disqualified member concerning the matter in which that member is disqualified to act.

          1.2          Effective Date.  This amended Weyco Group, Inc. Deferred Compensation Plan is effective as of January 1, 1997.

          1.3          Employer.  The term “Employer” means Weyco Group, Inc.

          1.4          Highly Compensated Employee.  The term “Highly Compensated Employee” means an employee described in Section 14.15 of the Pension Plan who was a participant in the Pension Plan on December 31, 1988.

          1.5          High Five Year Average Compensation.  The term “High Five Year Average Compensation” means the amount which would be the Employee’s Average Annual Compensation under Section 1.06 of the Pension Plan if the relevant period described in Section 1.06 of the Pension Plan were the 20 year period ending with the current Plan Year and if the five years of compensation taken into account for purposes of averaging were not required to be consecutive years.

          1.6          Pension Plan.  The term “Pension Plan” means the Weyco Group, Inc. Pension Plan, as amended from time to time.

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          1.7          Plan.  The term “Plan” means the Weyco Group, Inc. Deferred Compensation Plan as set forth in this document and all subsequent amendments hereto.

          1.8          Special Formula.  The term “Special Formula” means the pension which would be calculated under Section 3.01(d) of Pension Plan if the formula in the Weyenberg Shoe Manufacturing Company Salaried Employees Pension Plan as in effect on December 31, 1988 referred to in such Section 3.01(d) utilized the following definition of “Final Earnings” in lieu of the definition of “Final Earnings” in Section 1.16 of the Weyenberg Shoe Manufacturing Company Salaried Employees Pension Plan as in effect on December 31, 1988:

“Final Earnings” means the Employee’s highest average Earnings for any five (5) consecutive calendar years during the twenty (20) calendar years immediately preceding the earlier of his Normal Retirement Date, his Early Retirement Date, his Disability and Normal Retirement Date or his Deferred Vested Retirement Date.”

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ARTICLE II
Eligibility

          2.1          Persons Eligible As Participants Under The Plan.  Each Highly Compensated Employee who had been a participant in the Weyenberg Shoe Manufacturing Company Salaried Employees Pension Plan on December 31, 1989 and who therefore is not eligible for the minimum benefit under the provisions of Section 3.01(d) of the Pension Plan shall be a Participant in this Plan.  Also, each executive officer of the Company shall be a Participant in this Plan.  “Executive Officer” mean a person who is a Senior Vice President or above. 

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ARTICLE III
Retirement Benefits

          3.1          Amount of Retirement Benefits For Persons Who Are Not Executive Officers

          This Article III applies to Participants who are not executive officers.

                         (a)          Normal or Late Retirement.  In the case of a Participant who terminates employment with the Employer on or after his 65th birthday, his pension benefit hereunder shall commence on the first day of the month next following the date of his termination of employment.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life pension based on retirement on the same date if the exclusion of Highly Compensated Employees from the minimum benefit described in Section 3.01(d) of the Pension Plan did not exist and as if the minimum benefit described in Section 3.01(d) were based on the Special Formula, minus (ii) the amount of pension, expressed as a single life monthly pension, actually payable to him under the Pension Plan on the same date.

                         (b)          Early Retirement. 

                                        (1)          In the case of a Participant who terminates employment with the Employer on or after his 55th birthday and after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan,  his pension benefit hereunder shall commence on either (i) the first day of the month following his 65th birthday or (ii) if so elected by the Participant consistent with Section 6.16, the first day of any month next following the date of his termination of employment and prior to his 65th birthday.

                                        (2)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life monthly pension based on his retirement on the same date and commencement of his benefits under the Pension Plan on the same date if the exclusion of Highly Compensated Employees from the minimum benefit described in Section 3.01(d) of the Pension Plan did not exist and as if the minimum benefit described in Section 3.01(d) were based on the Special Formula, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan based on his retirement on the same date and assuming benefits commenced on the same date.

                         (c)          Termination of Employment.  (1)  In the case of a Participant who terminates employment with the Employer on or after completing at least 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, but prior to completing 15 such years of Credited Service his pension benefit hereunder shall commence on the first day of the month next following the date he attains age 65.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan at age 65 as a single life monthly pension based on his termination on the same date  if the exclusion of Highly Compensated Employees from the minimum benefit described in Section 3.01(d) of the Pension Plan did not exist and as if the minimum benefit described in Section 3.01(d) were based on the Special Formula, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan based on his termination on the same date and assuming benefits commenced on the same date.

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                                        (2)(a)      In the case of a Participant who terminates employment with the Employer prior to his 55th birthday but after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan, his pension benefit hereunder shall commence (i) on the first day of the month next following the date he attains age 65 or (ii) if so elected by the Participant consistent with Section 6.16, the first day of any month next following his 55th birthday and prior to his 65th birthday.

                                        (b)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life monthly pension based on his termination on the same date and commencement of benefits on the same date if the exclusion of Highly Compensated Employees from the minimum benefit described in Section 3.01(d) of the Pension Plan did not exist and as if the minimum benefit described in Section 3.01(d) were based on the Special Formula, minus (ii) the amount of pension, if any, expressed as a single life monthly pension actually payable to him under the Pension Plan based on his termination on the same date and assuming benefits under the Pension Plan commenced on the same date.

                                        (3)          In the case of an individual who terminates employment with the Employer prior to completing 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, no benefits shall be payable hereunder.

          3.2          Manner of Payment.  If the Participant is unmarried at the time his benefits commence, his pension benefit shall be payable to him in the form of a single life monthly pension.  If the Participant is married at the time his benefits commence, instead of receiving a single life monthly pension he shall receive a Joint and Survivor Pension.  The Joint and Survivor Pension shall be a reduced monthly pension payable to the Participant for his life with a continuing pension payable after his death to his surviving spouse for her life in an amount equal to 50% of the reduced benefit payable during the life of the Participant.  Such Joint and Survivor Pension shall be the  actuarial equivalent of the single life monthly pension which would be payable to the Participant if he were unmarried.  If so elected by the Participant consistent with Section 6.16, the Plan shall pay the benefit of a Participant for which the Participant is eligible in the form of a single life annuity or in one of the optional forms of benefit payable under Section 3.04 of the Pension Plan which is the actuarial equivalent of the single life annuity otherwise payable to the Participant hereunder.  Actuarially equivalent benefits shall be determined under the factors set forth for determining actuarial equivalency in the Pension Plan.

          3.3          Pre-retirement Survivor Annuity.

                         (a)          If any married Participant who has completed 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, (or married former Participant who had completed 5 years of such Credited Service) dies before starting to receive payments hereunder, then his surviving spouse, if any, shall be entitled to a monthly benefit for life.

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                         (b)          The amount of such monthly benefit for life shall be:

                                        (i)          in the case of a Participant who dies while employed by the Employer after attainment of age 55 and completion of 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant had terminated employment on the day before his death and commenced to receive benefits under whichever of Section 3.1(a) or (b) would have been applicable under the Joint and Survivor Pension form as described in Section 3.2;

                                        (ii)         in the case of a Participant or former Participant who had completed 15 years of such Credited Service but who dies on or before his 55th birthday, an amount equal to what such spouse would have received as a survivor annuity if the Participant had survived to his 55th birthday, retired under Section 3.1 (b) and commenced to receive benefits (based on his Credited Service and the benefit formula as in effect under the Pension Plan on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 55th birthday in the Joint and Survivor Pension form, as described in Section 3.2, and died on the next day;

                                        (iii)        in the case of a Participant or former Participant who dies before having completed 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant or former Participant had survived to the first of the month following his 65th birthday, commenced to received benefits under Section 3.1 (a) (based on his Credited Service and the benefit formula under the Pension Plan as in effect on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 65th birthday in the Joint and Survivor Pension form, as described in Section 3.2, and died on the next day.

                         (c)          Provided that the surviving spouse survives to such commencement date, payment of such benefit will commence on the later of (i) the first day of the month following the Participant’s or former Participant’s date of death or (ii) in the case of a Participant or former Participant who had completed 15 years of Credited Service, the first day of the month following the date on which the Participant or former Participant would have attained age 55 or (iii) in the case of a Participant or former Participant who had not completed 15 years of Credited Service, the first day of the month following what would have been the 65th birthday of the Participant or former Participant.

          3.4          Interpretation.  It is the intention of the Employer that the benefits provided to the Participant and any beneficiary under this Plan and the Pension Plan together shall be no greater than would have been provided to the Participant and any beneficiary under the terms of the Pension Plan if the Participant had at all times been covered under the Pension Plan in accordance with its rules had the exclusion of the Participant from the minimum benefit described in Section 3.01(d) of the Pension Plan not existed.

          3.5          Commutation of Benefit.  The Committee, in its discretion, may determine to commute the benefits otherwise payable to a Participant or beneficiary hereunder, i.e., the Committee may direct that in lieu of the benefit otherwise payable to a Participant or a beneficiary hereunder, the Plan shall pay such individual a single lump sum cash payment which is the actuarial equivalent of the benefit otherwise payable.  Actuarial equivalency shall be determined under the factors set forth in the Pension Plan.

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          3.6          Committee Discretion.  As to the exercise of its discretion in Section 3.5 hereof, the Committee shall in no way be bound by past precedent in connection with other Participants, i.e., the fact that it may have directed an earlier payment commencement date or an alternative form of payment for one Participant shall not in any way obligate the Committee to reach a similar decision for any subsequent Participant.  Any Committee member who is also a Participant in this Plan shall not be authorized to vote or otherwise participate in the decision regarding the time or form of payment of that individual’s benefit.

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ARTICLE IV
Retirement Benefits

          4.1          Amount of Retirement Benefits For Executive Officers.

          This Article IV applies to persons who are executive officers.

                         (a)          Normal or Late Retirement.  In the case of a Participant who terminates employment with the Employer on or after his 65th birthday, his pension benefit hereunder shall commence on the first day of the month next following the date of his termination of employment.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life pension based on retirement on the same date if the offset described in Section 3.01(a)(1)(ii) of the Pension Plan did not exist and if Average Annual Compensation as defined in Section 1.06 of the Pension Plan had the same meaning as High Five Year Average Compensation as defined herein, minus (ii) the amount of pension, expressed as a single life monthly pension, actually payable to him under the Pension Plan on the same date.

                         (b)          Early Retirement.

                                        (1)          In the case of a Participant who terminates employment with the Employer on or after his 55th birthday and after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan,  his pension benefit hereunder shall commence on either (i) the first day of the month following his 65th birthday or (ii) if so elected by the Participant consistent with Section 6.16, the first day of any month next following the date of his termination of employment and prior to his 65th birthday.

                                        (2)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life monthly pension based on his retirement on the same date and commencement of his benefits under the Pension Plan on the same date if the offsets described in Sections 1.01(b)(i)(A)(2), 1.01(c)(i)(A)(2) and 3.01(a)(1)(ii) of the Pension Plan did not exist and if Average Annual Compensation as defined in Section 1.06 of the Pension Plan had the same meaning as High Five Year Average Compensation as defined herein, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan based on his retirement on the same date and assuming benefits commenced on the same date.

                         (c)          Termination of Employment. 

                                        (1)          In the case of a Participant who terminates employment with the Employer on or after completing at least 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, but prior to completing 15 such years of Credited Service his pension benefit hereunder shall commence on the first day of the month next following the date he attains age 65.  The amount of such monthly pension payable as a single life monthly pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan at age 65 as a single life monthly pension based on his termination on the same date if the offset described in Section 3.01(a)(1)(ii) of the Pension Plan did not exist and if defined in Section 1.06 of the Pension Plan had the same meaning as High Five Year Average Compensation as defined herein, minus (ii) the amount of pension, if any, expressed as a single life monthly pension, actually payable to him under the Pension Plan based on his termination on the same date and assuming benefits commenced on the same date.

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                                        (2)(a)     In the case of a Participant who terminates employment with the Employer prior to his 55th birthday but after completing 15 years of Credited Service, as defined in Section 1.13 of the Pension Plan, his pension benefit hereunder shall commence (i) on the first day of the month next following the date he attains age 65 or (ii) if so elected by the Participant consistent with Section 6.16, the first day of any month next following his 55th birthday and prior to his 65th birthday.

                                        (b)          The amount of such monthly pension payable as a single life pension shall be (i) the amount of monthly pension which would be payable to him under the Pension Plan as a single life monthly pension based on his termination on the same date and commencement of benefits on the same date if the offsets described in Sections 1.01(b)(i)(A)(2), 1.01(c)(i)(A)(2) and 3.01(a)(l)(ii) of the Pension Plan did not exist and if Average Annual Compensation as defined in Section 1.06 of the Pension Plan had the same meaning as High Five Year Average Compensation as defined herein, minus (ii) the amount of pension, if any, expressed as a single life monthly pension actually payable to him under the Pension Plan based on his termination on the same date and assuming benefits under the Pension Plan commenced on the same date.

                                        (3)          In the case of an individual who terminates employment with the Employer prior to completing 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, no benefits shall be payable hereunder.

          4.2          Manner of Payment.  If the Participant is unmarried at the time his benefits commence, his pension benefit shall be payable to him in the form of a single life monthly pension.  If the Participant is married at the time his benefits commence, instead of receiving a single life monthly pension he shall receive a Joint and Survivor Pension.  The Joint and Survivor Pension shall be a reduced monthly pension payable to the Participant for his life with a continuing pension payable after his death to his surviving spouse for her life in an amount equal to 50% of the reduced benefit payable during the life of the Participant.  Such Joint and Survivor Pension shall be the  actuarial equivalent of the single life monthly pension which would be payable to the Participant if he were unmarried.  If so elected by the Participant consistent with Section 6.16, the Plan shall pay the benefit of a Participant for which the Participant is eligible in the form of a single life annuity or in one of the optional forms of benefit payable under Section 3.04 of the Pension Plan which is the actuarial equivalent of the single life annuity otherwise payable to the Participant hereunder.  Actuarially equivalent benefits shall be determined under the factors set forth for determining actuarial equivalency in the Pension Plan.

          4.3          Pre-retirement Survivor Annuity.

                         (a)          If any married Participant who has completed 5 years of Credited Service, as defined in Section 1.13 of the Pension Plan, (or married former Participant who had completed 5 years of such Credited Service) dies before starting to receive payments hereunder, then his surviving spouse, if any, shall be entitled to a monthly benefit for life.

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                         (b)          The amount of such monthly benefit for life shall be:

                                        (i)          in the case of a Participant who dies while employed by the Employer after attainment of age 55 and completion of 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant had terminated employment on the day before his death and commenced to receive benefits under whichever of Section 4.1(a) or (b) would have been applicable under the Joint and Survivor Pension form as described in Section 4.2;

                                        (ii)         in the case of a Participant or former Participant who had completed 15 years of such Credited Service but who dies on or before his 55th birthday, an amount equal to what such spouse would have received as a survivor annuity if the Participant had survived to his 55th birthday, retired under Section 4.1 (b) and commenced to receive benefits (based on his Credited Service and the benefit formula as in effect under the Pension Plan on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 55th birthday in the Joint and Survivor Pension form, as described in Section 4.2, and died on the next day;

                                        (iii)        in the case of a Participant or former Participant who dies before having completed 15 years of such Credited Service, an amount equal to what such spouse would have received as a survivor annuity if the Participant or former Participant had survived to the first of the month following his 65th birthday, commenced to received benefits under Section 4.1 (a) (based on his Credited Service and the benefit formula under the Pension Plan as in effect on the date of his death or, if earlier, date of termination of employment) on the first of the month following his 65th birthday in the Joint and Survivor Pension form, as described in Section 4.2, and died on the next day.

                         (c)          Provided that the surviving spouse survives to such commencement date, payment of such benefit will commence on the later of (i) the first day of the month following the Participant’s or former Participant’s date of death or (ii) in the case of a Participant or former Participant who had completed 15 years of Credited Service, the first day of the month following the date on which the Participant or former Participant would have attained age 55 or (iii) in the case of a Participant or former Participant who had not completed 15 years of Credited Service, the first day of the month following what would have been the 65th birthday of the Participant or former Participant.

          4.4          Interpretation.  It is the intention of the Employer that the benefits provided to the Participant and any beneficiary under this Plan and the Pension Plan together shall be no greater than would have been provided to the Participant and any beneficiary under the terms of the Pension Plan if the Participant had at all times been covered under the Pension Plan in accordance with its rules, had the offsets described in Sections 1.01(b)(i)(A)(2), 1.01(c)(i)(A)(2) and 3.01(a)(1)(ii) of the Pension Plan not existed and had the definition herein of High Five Year Average Compensation been substituted for Average Annual Compensation in Section 1.06 of the Pension Plan.

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          4.5          Commutation of Benefit.  The Committee, in its discretion, may determine to commute the benefits otherwise payable to a Participant or beneficiary hereunder, i.e., the Committee may direct that in lieu of the benefit otherwise payable to a Participant or a beneficiary hereunder, the Plan shall pay such individual a single lump sum cash payment which is the actuarial equivalent of the benefit otherwise payable.  Actuarial equivalency shall be determined under the factors set forth in the Pension Plan.

          4.6          Committee Discretion.  As to the exercise of its discretion in Section 4.5 hereof, the Committee shall in no way be bound by past precedent in connection with other Participants, i.e., the fact that it may have directed an earlier payment commencement date or an alternative form of payment for one Participant shall not in any way obligate the Committee to reach a similar decision for any subsequent Participant.  Any Committee member who is also a Participant in this Plan shall not be authorized to vote or otherwise participate in the decision regarding the time or form of payment of that individual’s benefit.

          4.7          Change in Executive Officer Status.  If an individual who has been an executive officer ceases to be an executive officer but continues in the employment of the Employer, he shall accrue no additional benefits hereunder after the date of his change of status.  Any benefits payable to him under this Plan shall be based on his accrued benefit hereunder on the date of such change in status.  Notwithstanding the foregoing, if such an individual had been a participant in the Weyenberg Shoe Manufacturing Company Salaried Employees Pension Plan on December 31, 1988, then his entire benefit hereunder shall instead be calculated under Article III hereof based on his total service as an employee (including executive officer service) if by doing so the individual would receive a larger benefit hereunder.

          4.8          Enhanced Early Retirement Benefit.  Notwithstanding any other provision of this Plan to the contrary, a Participant who terminates employment with the Employer after having both attained age 59 and completed at least 25 years of Credited Service shall have his pension calculated under Section 4.1(a) rather than Section 4.1(b) and for purposes of such Section 4.1(a)(i) his pension shall be calculated as though the date of his termination of employment were his 65^th birthday, however, for purposes of calculating the offset under Section 4.1(a)(ii), the amount of the offset attributed to the Pension Plan shall be based on the actual amount of pension payable to him under the Pension Plan based on his actual age and assuming benefits under the Pension Plan commence on the first of the month following his termination of employment.

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ARTICLE V
Amendment and Termination

          5.1          Amendment and Termination.  Weyco Group, Inc. may amend or terminate this Plan at any time.  If the Plan is terminated no further benefits shall accrue hereunder.  However, unless necessary to conform to any present or future federal or state law or regulation, amendment or termination may not result in a reduction of benefits of a Participant (or his surviving spouse) who is already receiving benefits, nor may amendment or termination result in a Participant who is still in active service (or his surviving spouse) receiving a benefit hereunder smaller than that to which he would have been entitled had the Participant terminated employment on the day prior to the effective date of such amendment or termination.  The delegation of authority to the Committee in Section 1.1 does not extend to this Section 5.1.

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ARTICLE VI
Miscellaneous

          6.1          No Guarantee of Employment, etc.  Neither the creation of the Plan nor anything contained herein shall be construed as giving any Participant hereunder or other employees of the Employer any right to remain in the employ of the Employer.

          6.2          Assignment Not Permitted.  Payment of benefits hereunder to Participants (or beneficiaries) shall be made only to them and upon their personal receipts or endorsements and such benefits shall not be assignable by them.

          6.3          Absence of Trust.  Benefits under the Plan shall be paid from the Employer’s general assets and any claim of a Participant or beneficiary for benefits under the Plan shall be as an unsecured general creditor and no participant or beneficiary shall have any beneficial ownership interest or secured interest in any of the Employer’s assets as a result of the creation of the Plan.

          6.4          Controlling Law.  To the extent not preempted by the laws of the United States of America, the laws of the State of Wisconsin shall be the controlling state law in all matters relating to the Plan and shall apply.

          6.5          Severability.  If any provisions of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Plan, but this Plan shall be construed and enforced as if said illegal and invalid provisions had never been included herein.

          6.6          Limitations on Provisions.  The provisions of the Plan and any benefits payable hereunder shall be limited as described herein.  Any benefit payable under the Pension Plan shall be paid solely in accordance with the terms and provisions of the Pension Plan, and nothing in the Plan shall operate or be construed in any way to modify, amend, or affect the terms and provisions of the Pension Plan.

          6.7          Other Agreements.  Nothing contained herein shall alter the terms of any other agreement between the Employer and any Participant hereunder.

          6.8          Gender and Number.  Masculine gender shall include the feminine, and the singular shall include the plural, unless the context clearly indicates otherwise.

          6.9          Withholding.  Notwithstanding Section 6.2, the Employer shall withhold from any amounts payable hereunder any taxes or other amounts required by any governmental authority to be withheld.

          6.10        Facility of Payment.  If, in Weyco Group, Inc.’s judgment, any person entitled to make an election or to receive payment of a benefit is physically, mentally, or legally prevented from so doing, Weyco Group, Inc. may make such election or may authorize payment of such benefit to any person who, or institution which, in Weyco Group, Inc.’s judgment, is responsible for caring for the person entitled to the benefit.  If an amount becomes distributable to a minor or a person under legal disability, Weyco Group, Inc. may direct that such distribution may be made to such person without the intervention of any legal guardian or conservator, to a relative of such person for the benefit of such person or to the legal guardian or conservator of such person.  Any such distributions shall constitute a full discharge with respect to Weyco Group, Inc., and Weyco Group, Inc. shall not be required to see to the application of any distribution so made.

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          6.11        Identity of Payee.  If at any time any doubt exists as to the identity of any person entitled to payment of any benefit hereunder or as to the amount or time of any such payment, such sum shall be held by Weyco Group, Inc. until the further order of Weyco Group, Inc. or until final order of a court of competent jurisdiction may direct Weyco Group, Inc. to pay such sum into a court of competent jurisdiction in accordance with any lawful procedure in such case made and provided.

          6.12        Evidence Conclusive.  Weyco Group, Inc. and any person or persons involved in the administration of the Plan shall be entitled to rely upon any certification, statement, or representation made or evidence furnished by any person with respect to his age or other facts required to be determined under any of the provisions of the Plan, and shall not be liable on account of the payment of any monies or the doing of any act or failure to act in reliance thereon.  Any such certification, statement, representation, or evidence, upon being duly made or furnished, shall be conclusively binding upon the person furnishing it but not upon Weyco Group, Inc. or any other person involved in the administration of the Plan.  Nothing herein contained shall be construed to prevent any of such parties from contesting any such certification, statement, representation, or evidence or to relieve any person from the duty of submitting satisfactory proof of his age or such other fact.

          6.13        Claims Procedure.  The Participant or the Participant’s beneficiary (a “Claimant”) may file a written request for benefits or claim with Weyco Group, Inc. under this Plan.  In the event of any dispute with respect to such a claim, the following claim procedures shall apply:

                                        (1)          Weyco Group, Inc., acting as the administrator under this Plan, shall notify the Claimant within 90 days of receipt by Weyco Group, Inc. of a written claim of its allowance or denial, unless the Claimant receives written notice from Weyco Group, Inc. prior to the end of the initial 90-day period indicating that special circumstances require an extension of time (by not more than 90 days) for decision.  A written notice of decision shall be provided to the Claimant and if the claim is denied in whole or in part, the notice shall contain the following information:  the specific reasons for the denial; specific reference to pertinent provisions of the Plan on which the denial is based; if applicable, a description of any additional material information necessary to perfect the claim and an explanation of why such material or information is necessary; and an explanation of the claim review procedure.

                                        (2)          A Claimant is entitled to request a review of any denial of his claim by Weyco Group, Inc.  The request for review must be submitted in writing within 60 days of mailing of notice of the denial.  Absent a request for review within the 60-day period, the claim will be deemed to be conclusively denied.  The Claimant or the Claimant’s representative shall be entitled to review all pertinent documents, and to submit issues and comments orally and in writing.  Weyco Group, Inc. shall render a review decision in writing, within 60 days after receipt of a request for a review, provided that, in special circumstances (such as the necessity of holding a hearing) Weyco Group, Inc. may extend the time for decision by not more than 60 days upon written notice to the Claimant.  The Claimant shall receive written notice of the separate review decision of Weyco Group, Inc., together with specific reasons for the decision and reference to the pertinent provisions of this Plan.

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                                        (3)          A final decision by Weyco Group, Inc. pursuant to this claims procedure shall be final and binding upon all parties and shall not be subject to de novo judicial review.

          6.14          Status of Plan Under ERISA.  The Plan is intended to be an unfunded plan maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, as described in Section 201(2), Section 301(a)(3), Section 401(a)(1) and Section 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended.

          6.15          Name and Address Changes.  Each Participant shall keep his name and address on file with the Employer and shall promptly notify the Employer of any changes in his name or address.  All notices required or contemplated by this Plan shall be deemed to have been given to a Participant if mailed with adequate postage prepaid thereon addressed to him at his last address on file with the Employer.  If any check in payment of a benefit hereunder (which was mailed to the last address of the  payee as shown on the Employer’s records) is returned unclaimed, further payments shall be discontinued unless evidence is furnished that the recipient is still alive.

          6.16          Rule Limiting Participant Elections.  Any election by the Participant as to timing or form of payment shall be valid only if made irrevocably at least 6 months prior to the Participant’s termination of employment.

16

ARTICLE VII
Change of Control

          7.1          Definition Change of Control.   For purposes of this Plan, a “Change of Control” shall occur:

                                        (1)          if any person or group of persons (as defined in Section 13(d)(3) of the Securities and Exchange Act of 1934 and regulations thereunder), other than the group consisting of members of the family of Thomas W. Florsheim and their descendants or trusts for their benefit (the “Florsheim Group”), directly or indirectly controls in excess of 15% of the voting power of the outstanding common stock of the Employer;

                                        (2)          in the event of  the consolidation or merger of the Employer with or into another corporation or entity which is not a wholly owned subsidiary of the Employer;

                                        (3)          in the event of  the sale or transfer of all or substantially all of the operating assets of the Employer;

                                        (4)          in the event of the replacement of a majority of  the existing members of the Employer’s Board of Directors by persons not nominated by the Board of Directors or the Florsheim Group, or

                                        (5)          in the event of any amendment to Section 2 of Article III of the Employer’s bylaws to enlarge the number of the directors of the Employer if the change was not supported by the existing Board of Directors or the Florsheim Group,

          7.2          Payments in Event of Change of Control.

                         (a)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is in the employ of the Employer on the date the Change of Control occurs.  Such lump sum payment shall be the actuarial equivalent of the pension which would be payable to the Participant pursuant to Section 3.1 or 4.1, whichever is applicable,  if the Participant had terminated employment on the date the Change of Control occurred and had commenced to receive the pension accrued by him to the date of the Change of Control on the first day of the month following his 65th birthday or, if the Participant is already 65, the first day of the month following the date of the Change of Control.  For purposes of calculating the amount which would be payable to the Participant under the preceding sentence, the 5 year of service requirement in Sections 3.1(c)(1) and 4.1(c)(1) shall be ignored and the provisions of Sections 3.1(c)(3) and 4.1(c)(3) shall be ignored.

                         (b)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is no longer in the employ of the Employer on the date the Change of Control occurs and who has neither been paid a lump sum distribution of his benefits hereunder nor otherwise commenced to receive payment of his benefits hereunder.  Such lump sum payment shall be the actuarial equivalent of the pension which would be payable to the Participant pursuant to Section 3.1 or 4.1, whichever is applicable, based on the benefits accrued by the Participant hereunder to the time of the Participant’s termination of employment on the assumption that the Participant would commence to receive the pension accrued by him on the first day of the month following his 65th birthday.

17

                         (c)          Within 30 days after the occurrence of a Change of Control, a lump sum payment shall be made to each Participant hereunder who is no longer in the employ of the Employer and who is in pay status hereunder receiving monthly benefit payments.  Such lump sum payments shall be the actuarial equivalent of the pension payments remaining to be paid to the Participant hereunder.

                         (d)          Actuarial equivalency for purposes of this Section 7.2 shall be determined under the factors for single sum distributions set forth in the Pension Plan.

                         (e)          Payment under this Section 7.2 shall be in lieu of any and all amounts otherwise payable to or with respect to the Participant under this Plan.

                         (f)          In the event the Participant should die before the lump sum payment called for by this Section 7.2 is paid, such payment shall be made to the Participant’s surviving spouse or, if none, to the Participant’s estate.

                         (g)          In the event a Participant has died prior to the occurrence of a Change of Control, and such Participant’s spouse is entitled to a benefit under Section 3.3, or 4.3, whichever is applicable, such spouse shall in lieu thereof, and within 30 days after the occurrence of the Change of Control, be paid a lump sum cash amount which is the actuarial equivalent of the payment the spouse would have been entitled to under Section 3.3(b)(i), (ii) or (iii) or Section 4.3(b) (i), (ii) or (iii), whichever is applicable.

          7.3          Plan Termination.   No Participant shall accrue any additional benefits hereunder from and after the date of the Change of Control.  Once the payments called for by Section 7.2 have been made, the Plan shall be automatically terminated and no further payments shall be due any person hereunder.

18

EX-13

Exhibit 13

2005 ANNUAL REPORT

WEYCO Group, Inc.

To Our Shareholders:

2005 was a year of transitions and challenges in our wholesale business.  Our retail division had a strong year, with same store volume growth as well as overall growth due to the net addition of three retail stores this year.  Licensing revenue also increased this year.

Overall net sales were $209.5 million, down 6% compared to $223.0 million last year.  Net earnings were $19.4 million, down 4% from $20.3 million in 2004.  Diluted earnings per share were $1.62 in 2005 and $1.72 in 2004.

A little over half of the decrease in overall net sales, and the entire 12% decrease in Florsheim net sales in 2005, were related to our strategic decision this year to discontinue the lower-priced FLS sub-brand in the United States.  We will now focus on higher-priced Florsheim products that consists of Florsheim, Comfortech, and Florsheim Imperial products priced between $90 and $160 at retail.  Additionally, we are introducing new, more casual and fashion oriented styles to the Florsheim line within this higher price point. While our discontinuation of FLS this year caused loss of volume, we believe that we are now focusing on the areas of  Florsheim that have the most potential to grow and which will maintain the higher end Florsheim image for the long term.

Stacy Adams net sales decreased 7% for the year.  The brand faced general challenges in the moderate market this year, as high gas and energy prices left less discretionary income for the moderate consumer.  Going forward, we have begun to introduce new casual styles to our traditional dress shoe customers. These styles have been well received at retail and we plan to develop this area of the business over the next several years.  Overall, we believe that Stacy Adams occupies a unique space in the men’s market and that there remains significant upside, both in the footwear and licensed apparel and accessory businesses.

Nunn Bush net sales were down 6% in 2005.  For the first six months of the year, sales were down 12% due to product transitions at some major accounts.  Business stabilized in the second half of the year, with net sales up slightly for that period.  We believe that Nunn Bush offers a compelling mix of relevant styling, exceptional value, and product innovation in tandem with a well-recognized brand name.  We will focus on these strengths as we move into 2006.

Licensing revenues increased 11% for the year and continue to be an important part of our business.  We have licensing partners for both the Florsheim and Stacy Adams brands.  Stacy Adams licensees sell branded accessories and apparel, primarily in the United States.  The majority of licensing revenues for Florsheim are from footwear sales outside of the United States, with the largest markets being Mexico, Canada, Australia and the Pacific Rim.  Additionally, Florsheim has several licensees selling mainly accessories in the U.S. market, as well as a licensee in the work boot product category.

2

Our retail division had a strong showing this year, with same store sales up 4.7%.  At the end of the year, we had 32 retail stores in the United States, three in Europe and an Internet business.  The number of domestic stores is up from 29 at the end of 2004. During the year, we opened five new stores and closed two others in our continued efforts  to maintain the profitability and effectiveness of our retail stores.  Our domestic retail volume has steadily increased since the Florsheim acquisition in 2002, and we believe that there is still unrealized potential for us in our retail business.  We plan to continue to seek favorable locations and add new stores at a rate of three or four per year, with a target of 50 locations throughout the country. 

Our net earnings were down 4% for the year.  This is less than the 6% decrease in sales due to the offsetting impacts of lower selling and administrative expenses and higher interest income this year.

Our balance sheet is strong.  At the end of 2005, our cash and investments totaled $53.9 million, with outstanding borrowings of $9.6 million.  This net cash position of $44.3 million is up from a net cash position of $10.4 million at the end of 2004.  As our net cash position grows, we will continue to evaluate ways to best utilize the cash, including continued repurchases of shares, increased dividends and potential acquisitions. We are being very selective in our search for acquisition opportunities, and will only consider opportunities that we believe will enhance our product line and increase shareholder value.

2006 marks the 100th year of business for Weyco Group.  We are beginning our second century with a great portfolio of brands, a successful retail business and a strong balance sheet.

We look forward to the opportunities that lie ahead, and appreciate the support of our shareholders as we continue to build our future.

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

3

SELECTED FINANCIAL DATA

	Years Ended December 31
	2005 (1)		2004 (1)		2003 (1)		2002 (1)		2001
Net sales	$	209,469,000	$	223,013,000	$	215,761,000	$	181,200,000	$	131,693,000
Net earnings	$	19,401,000	$	20,278,000	$	17,135,000	$	13,188,000	$	9,501,000
Diluted earnings per share*	$	1.62	$	1.72	$	1.46	$	1.15	$	.82
Weighted average diluted shares outstanding*		11,965,928		11,762,278		11,756,574		11,506,884		11,585,002
Cash dividends per share*	$	.26 1/2	$	.21 1/2	$	.19	$	.17	$	.15 1/2
Total assets	$	175,498,000	$	156,356,000	$	151,186,000	$	149,239,000	$	97,954,000
Bank borrowings	$	9,553,000	$	11,360,000	$	27,945,000	$	37,802,000	$	—

⁽¹⁾ Includes the operating results of the Florsheim business acquired in May 2002.

COMMON STOCK DATA

	2005							2004
	Price Range				Cash Dividends Declared*			Price Range				Cash Dividends Declared*
Quarter:	High		Low					High		Low
First	$	22.48	$	21.25	$	.05	½	$	18.50	$	15.07	$	.05
Second		21.95		17.76		.07			19.02		15.01		.05	½
Third		23.90		18.60		.07			18.50		14.88		.05	½
Fourth		20.78		17.08		.07			22.50		18.50		.05	½
					$	.26	½					$	.21	½

There are 225 holders of record of the Company’s common stock and 108 holders of record of the Company’s Class B common stock as of February 15, 2006.

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

The Class B Common Stock is not listed nor does it trade publicly because of its limited transferability.  See Note 14 of the Notes to Consolidated Financial Statements.

*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 13 of the Notes to Consolidated Financial Statements.

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 under the Florsheim, Nunn Bush, Nunn Bush NXXT, Brass Boot, Stacy Adams and SAO by Stacy Adams brand names.  Inventory is purchased from third-party overseas manufacturers. The majority of foreign-sourced purchases are denominated in U.S. dollars. The Company’s products are sold to 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, 2005, consisted of 32 Company-owned retail stores in the United States, three 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. 

All share and per share amounts in this document (where appropriate) have been adjusted to reflect the two-for-one stock split distributed to shareholders on April 1, 2005.  See Note 13 of the Notes to Consolidated Financial Statements.  Certain prior year amounts in this discussion have been reclassified to conform to the current year presentation.

The Company’s overall strategic growth plan is focused on positioning each of its brands, as well as its retail business, for long-term success.  Net earnings in 2005, 2004 and 2003 were $19.4 million, $20.3 million and $17.1 million, respectively.  Diluted earnings per share were $1.62, $1.72, and $1.46 in 2005, 2004 and 2003, respectively.  In 2005, the men’s moderately priced footwear market was challenged by consumer trends toward more contemporary and causal footwear as well as a current trend among retailers that favors private label brands.  Additionally, higher gas and energy prices in the fall of 2005 negatively impacted the spending habits of moderate consumers, which is a large portion of the Company’s target market.  Despite the challenges in 2005, the Company continued its long-term strategy and delivered strong new products to the market, which were well received at retail.  

The Company continues to maintain a strong balance sheet.  Cash and marketable securities were $53.9 million at the end of 2005, up from $21.8 million at the end of 2004.   Inventory at December 31, 2005 was down $9.1 million from the prior year. The Company’s continued focus on inventory levels and enhancements in its overall buying process contributed to improved inventory turns in 2005.  Borrowings under the Company’s Revolving Line of Credit declined $1.8 million in 2005 to $9.6 million at December 31, 2005.   The Company’s excess of cash and marketable securities over borrowings was $44.3 million at December 31, 2005, compared with $10.4 million at December 31, 2004.  This increase was generated primarily by net earnings and reductions in inventory. 

5

The acquisition of one of the Company’s major customers by another retailer in 2005 is expected to adversely impact the Company’s sales in 2006.  The acquiring company has indicated that it will most likely not go forward with the Company’s Nunn Bush and Florsheim product lines.  Total Nunn Bush and Florsheim sales to this customer in 2005 were approximately $12.0 million.  The Company does not expect to see the full impact of this loss in 2006, as the Company is still currently shipping orders to the customer. 

RESULTS OF OPERATIONS

2005 vs. 2004
Consolidated net sales for the year ended December 31, 2005 were $209.5 million, down 6.1% from 2004 sales of $223.0 million.  Net sales in the Company’s wholesale division, which includes both wholesale sales and licensing revenues, were $181.9 million in 2005 compared with $196.6 million in the prior year.  Wholesale sales were $177.6 million in 2005 and $192.6 million in 2004.  Licensing revenues in 2005 were $4.37 million, up 10.9% from $3.94 million last year.  In 2005, licensing revenues in both Stacy Adams and Florsheim were up, despite one of the Company’s Florsheim domestic accessory licensees losing a major customer.  Royalties from this licensee were $210,000 less in 2005 than in 2004, and the Company estimates that royalties from this licensee will be down an additional $200,000 in 2006.

Retail net sales in 2005 rose 4.1% to $27.5 million in 2005 from $26.4 million in 2004. Same store sales in the current year increased 4.7% over 2004.  In 2005, the Company opened five new stores and closed two stores. 

Wholesale net sales by brand for the years ended December 31, 2005 and 2004 were as follows:

	Years ended  December 31,
	2005		2004		% change
North American Sales:
Stacy Adams	$	53,779,842	$	57,909,936		-7.1	%
Nunn Bush		69,520,709		74,178,817		-6.3	%
Florsheim		50,616,255		57,286,188		-11.6	%
Foreign Sales		3,657,278		3,254,427		12.4	%
Total	$	177,574,084	$	192,629,368		-7.8	%

Sales of the Company’s Stacy Adams brand were down in 2005 due to general softness in the moderate segment of the overall retail footwear market, as well as lower sales of the SAO by Stacy Adams sub brand resulting from fashion trends in the casual “streetwear” market shifting toward athletic footwear, and also due to the loss of a major retail customer related to the discontinuation of FLS (discussed below). 

6

Nunn Bush sales were lower due to product transitions out of old product at some major accounts in 2005.  These transitions were completed in the third quarter of 2005 and the new programs have been well received.  Sales for the last six months of the year were up .2%.  Sales of Florsheim were down because of the Company’s strategic decision in the first quarter to discontinue its FLS product line in the United States.  FLS is a lower priced sub brand in the Florsheim division.  Sales of FLS were $2.8 million in 2005 compared with $10 million in 2004.  Sales of other Florsheim products were up 2% in 2005 compared with 2004. 

Overall gross earnings as a percent of net sales were 36.6% in 2005 and 37.2% in 2004.  Wholesale gross earnings as a percent of net sales were 30.7% in 2005 compared with 32.3% in 2004.  This decrease was primarily due to changes in product mix.  Retail gross earnings as a percent of net sales increased 130 basis points from 63.5% in 2004 to 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, 2005 and 2004 were $5.9 million and $6.4 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 2005, the Company’s overall selling and administrative expenses as a percent of net sales decreased to 22.0% compared with 22.4% in 2004.  Wholesale selling and administrative expenses as a percent of net wholesale sales declined to 18.9% in the current year from 19.5% in the prior year.  Retail selling and administrative expenses as a percent of net sales were also down from 46.9% in 2004 to 45.6% in 2005.  The decrease in wholesale expenses of $4.1 million in 2005 was primarily due to lower salaries and commissions of $1.5 million, a decrease in advertising expenses of $1.2 million, and a decline in other general administrative expenses in 2005 due to the Company’s continued efforts to control costs.

Interest income in 2005 was up $537,000 from 2004 due to higher cash and marketable securities balances and higher interest rates.  Interest expense was $340,000 in 2005 and $478,000 in 2004.   The decrease was the result of lower average borrowings in 2005 compared with 2004.

The effective tax rate for 2005 was 38.1% as compared with 38.4% in 2004. 

2004 vs. 2003
Overall net sales for the year ended December 31, 2004 reached $223.0 million, 3.4% above the prior year sales of $215.8 million.  Sales in the Company’s wholesale division, which include both wholesale sales and licensing revenues, were $196.6 million in 2004, up 3.0% from $190.9 million in 2003.  Wholesale sales were $192.6 million in 2004 compared with $187.3 million in 2003.  Licensing revenues were $3.9 million and $3.6 million in 2004 and 2003, respectively.    

7

In the retail segment, net sales were $26.4 million in 2004, rising 6.4% over $24.9 million in 2003.  The Company closed three stores and opened two new stores in 2004.  Same store sales were up 9% in 2004.

Wholesale net sales by brand for the years ended December 31, 2004 and 2003 were as follows:

	Years ended  December 31,
	2004		2003		% change
North American Sales:
Stacy Adams	$	57,909,936	$	53,731,658		7.8	%
Nunn Bush		74,178,817		74,193,121		0.0	%
Florsheim		57,286,188		56,798,011		0.9	%
Foreign Sales		3,254,427		2,603,599		25.0	%
Total	$	192,629,368	$	187,326,389		2.8	%

The increase in wholesale net sales was driven by the increase in sales of the Company’s Stacy Adams brand.  The growth in Stacy Adams reflected increases in its dress shoe business.  Nunn Bush sales were flat in comparison with 2003.  Florsheim sales were up approximately 1% over 2003, with third and fourth quarter sales up 11%.

Gross earnings as a percent of net sales increased from 35.4% in 2003 to 37.2% in 2004.  Gross margin improvements were achieved across all the Company’s brands and in the Company’s retail segment.  Gross earnings as a percent of net sales in the wholesale division increased 180 basis points, from 30.5% in 2003 to 32.3% in 2004, which was mainly due to changes in product mix.  Retail gross earnings as a percent of net sales increased from 63.2% in 2003 to 63.5% in 2004.

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, 2004 and 2003 were $6.4 million and $6.7 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.  Selling and administrative expenses as a percent of net sales were 22.4% in 2004 compared with 22.8% in 2003.  This decrease is primarily the result of cost control efforts achieved in both of the Company’s operating segments. Wholesale selling and administrative expenses as a percent of net wholesale sales decreased from 19.9% in 2003 to 19.5% in 2004.  Retail selling and administrative expenses as a percent of net sales also declined from 47.6% in 2003 to 46.9% in 2004. 

Interest income in 2004 of $501,000 was comparable with $529,000 for 2003.  Interest expense in 2004 was $478,000 versus $1,375,000 during 2003.   The decrease is the result of lower average borrowings in 2004 in comparison to 2003.

8

The effective tax rate for 2004 was 38.4% as compared with 35.8% in 2003.  The 2003 effective tax rate included a 2.4% benefit due to the resolution of certain tax matters related to an audit of the Company’s 1996 federal tax return.

LIQUIDITY & CAPITAL RESOURCES

The Company’s primary source of liquidity is its cash and short-term marketable securities, which aggregated $23.7 million at December 31, 2005 and $10.7 million as of December 31, 2004.  During 2005, the Company’s primary source of cash was from operations while its primary use of cash was the purchase of marketable securities.

The Company generated $38.7 million in cash from operating activities in 2005, compared with $19.9 million in the prior year.  This increase was primarily due to lower inventories and higher accounts payable balances at the end of 2005 compared with 2004.   The decrease in inventory at December 31, 2005 reflects the Company’s increased emphasis to improve its overall buying process and accordingly, to reduce the potential for excess inventory and improve inventory turns. The increase in accounts payable was principally due to timing.

Net cash used for investing activities increased $20.0 million in 2005, mainly due to an increase of $19.1 million in net purchases of marketable securities.  The Company continues to invest in municipal securities. 

Net cash used for financing activities decreased $12.1 million in 2005 compared with the prior year, primarily due to lower repayments of borrowings under its Revolving Line of Credit partially offset by $1.8 million for the repurchase of the Company’s common stock. 

The Company’s capital expenditures were $1.8 million, $1.1 million and $9.8 million in 2005, 2004 and 2003, respectively.  Capital expenditures in 2003 included $8.5 million related to the construction project to expand and reconfigure the Company’s distribution center.  The project was completed in the third quarter of 2003, and was financed by draws on the line of credit.  In 2004 and 2005, capital expenditures returned to normal levels.  Capital expenditures are expected to be approximately $2 million to $3 million in 2006.

As of December 31, 2005, the Company had a total of $50 million available under its existing borrowing facility, of which total borrowings were $9.6 million. This facility includes certain financial covenants, including minimum net worth levels, minimum levels of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and a maximum ratio of funded debt to EBITDA.  As of December 31, 2005 the Company was in compliance with all covenants.  The facility expires April 30, 2006, and the Company intends to extend it an additional year at that time.

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 2006.

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, unfunded supplemental pension plan, and its operating leases, which are discussed further in the notes to the financial statements.  The Company also has significant obligations to purchase inventory.  The bank borrowings and supplemental pension obligations are recorded on the Company’s Consolidated Balance Sheets.  Future obligations under operating leases are disclosed in Note 12 of the Notes to Consolidated Financial Statements.  The table below provides summary information about these obligations.

	Payments Due by Period ( in 000’s)
	Total		Less Than a Year		1 – 3 Years		3 – 5 Years		More Than 5 Years
Bank borrowings	$	9,553		9,553		—		—		—
Supplemental pension plan		3,672		230		493		474		2,475
Operating leases		15,366		2,994		3,803		2,790		5,779
Purchase obligations *		37,715		37,715		—		—		—
Total	$	66,306	$	50,492	$	4,296	$	3,264	$	8,254

* - 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 2005 were $332,000.  The Company also has a qualified defined benefit pension plan.  The Company is uncertain at this time whether it will make a contribution to this plan in 2006. The Company expects that if a contribution is made in 2006, it will be approximately $1 million to $2 million. See Note 9 of the Notes to Consolidated Financial Statements. 

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

Allowances for Sales Returns and Doubtful Accounts
The Company records allowances for sales returns and doubtful accounts for losses resulting from accounts receivable balances that will ultimately not be collected.  The allowances 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 allowances include a specific reserve for accounts identified as potentially uncollectible, plus a general reserve for the balance of accounts.  The Company evaluates the allowances 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 allowances 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 accounts for its defined benefit pension plans in accordance with SFAS No. 87, “Employers’ Accounting for Pensions.”  See Note 9 of the Notes to Consolidated Financial Statements for further discussion of these plans.  The calculation of pension expense and the corresponding obligation 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 dates (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.  Actuarial valuations at December 31, 2004 and 2003 used a discount rate of 5.75% and 6.0%, respectively. These rates were based on interest rates earned on high-quality, long-term bonds at those dates. In 2005, the Company refined its methodology and selected its discount rate based on the plan’s projected cash flows.  This method, known as the cash flow matching method, is more accurate and representative of the plan as it discounts each year’s projected cash flows at the associated spot interest rate back to the measurement date.  Based on this methodology, the Company used a discount rate of 5.65% at December 31, 2005.  A 0.5% decrease in the discount rate would increase annual pension expense and the projected benefit obligation by approximately $43,000 and $2.0 million, respectively.

11

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 8.5% in both 2003 and 2004 and 8.0% in 2005.  These rates were based on the Company’s long-term investment policy of equity securities: 20% - 100%; fixed income securities: 80% - 20%; and other, principally cash 0% - 20%.  A 0.5% decrease in the expected return on plan assets would increase annual pension expense by approximately $120,000.

New Accounting Pronouncement

In December 2004, the FASB issued SFAS No. 123(R ), “Accounting for Stock-Based Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  See Note 2 of the Notes to 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 financial instruments.  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. 

At December 31, 2005, the Company had forward exchange contracts outstanding to sell 4.0 million Canadian dollars at a total price of $3.4 million. Based on December 31, 2005 exchange rates, there were no significant gains or losses on these contracts.  All contracts expire in less than one year.  Assuming a 10% depreciation in the U.S. dollar at December 31, 2005, there would be a loss on forward exchange contracts of $418,000.

12

Interest Rates

The Company is exposed to interest rate fluctuations on borrowings under its Line of Credit.  As of December 31, 2005, $9.6 million of commercial paper was outstanding at an average interest rate of 4.43%. The interest expense related to commercial paper for 2005 was $334,000. Assuming a 10% increase in the Company’s weighted average interest rate on borrowings, interest expense in 2005 would have increased by $34,000.

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.

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CONSOLIDATED
STATEMENTS OF EARNINGS
For the years ended December 31, 2005, 2004 and 2003

	2005			2004			2003
NET SALES	$	209,469,303		$	223,013,334		$	215,760,531
COST OF SALES		132,726,939			140,017,783			139,315,498
Gross earnings		76,742,364			82,995,551			76,445,033
SELLING AND ADMINISTRATIVE EXPENSES		46,063,389			50,043,981			49,184,303
Earnings from operations		30,678,975			32,951,570			27,260,730
INTEREST  INCOME		1,037,530			500,605			528,531
INTEREST EXPENSE		(339,670	)		(477,807	)		(1,374,682	)
OTHER INCOME  AND EXPENSE, net		(26,070	)		(71,694	)		275,222
Earnings before provision for income taxes		31,350,765			32,902,674			26,689,801
PROVISION FOR INCOME TAXES		11,950,000			12,625,000			9,555,000
Net earnings	$	19,400,765		$	20,277,674		$	17,134,801
BASIC EARNINGS PER SHARE	$	1.68		$	1.78		$	1.50
DILUTED EARNINGS PER SHARE	$	1.62		$	1.72		$	1.46

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

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CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004

	2005		2004
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,780,913	$	10,514,707
Marketable securities, at amortized cost		875,317		180,000
Accounts receivable, less reserves of $3,822,920 and $4,880,433 respectively		27,843,048		30,774,337
Inventories		38,548,602		47,620,220
Deferred income tax benefits		1,174,235		1,681,135
Prepaid expenses and other current assets		1,424,858		1,779,189
Total current assets		92,646,973		92,549,588
MARKETABLE SECURITIES, at amortized cost		30,290,089		11,123,795
OTHER ASSETS		14,252,604		13,904,006
PLANT AND EQUIPMENT, net		27,440,762		27,910,304
TRADEMARK		10,867,969		10,867,969
	$	175,498,397	$	156,355,662
LIABILITIES AND SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES :
Short-term borrowings	$	9,552,504	$	11,359,536
Accounts payable		12,222,907		6,661,241
Dividend payable		810,241		631,351
Accrued liabilities:
Wages, salaries and commissions		1,598,492		3,566,277
Taxes other than income taxes		851,646		979,853
Other		3,655,969		3,950,485
Accrued income taxes		1,221,423		751,622
Total current liabilities		29,913,182		27,900,365
LONG-TERM PENSION LIABILITY		3,672,312		3,312,860
DEFERRED INCOME TAX LIABILITIES		5,344,702		5,394,516
SHAREHOLDERS’ INVESTMENT:
Common Stock, $1.00 par value, authorized 20,000,000 shares in 2005 and 10,000,000 in 2004, issued and outstanding 8,979,243 in 2005 and 4,440,565 shares in 2004		8,979,243		4,440,565
Class B Common Stock, $1.00 par value, authorized 4,000,000 shares in 2005 and 2,000,000 in 2004, issued and outstanding 2,595,031 shares in 2005 and 1,302,110 shares in 2004		2,595,031		1,302,110
Capital in excess of par value		3,437,697		6,820,136
Reinvested earnings		121,334,722		106,747,060
Accumulated other comprehensive income		221,508		438,050
Total shareholders’ investment		136,568,201		119,747,921
	$	175,498,397	$	156,355,662

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

15

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS’ INVESTMENT
For the years ended December 31, 2005, 2004 and 2003

	Common Stock			Class B Common Stock			Capital in Excess of Par Value			Reinvested Earnings			Accumulated Other Comprehensive Income/(Loss)			Comprehensive Income
Balance, December 31, 2002		2,886,456			902,608			4,999,047			77,092,150			(1,095,947	)
Comprehensive Income:
Net earnings		—			—			—			17,134,801			—		$	17,134,801
Foreign currency translation adjustments		—			—			—			—			340,715			340,715
Additional minimum pension liability (net of tax of $552,594)		—			—			—			—			864,311			864,311
Total Comprehensive Income		—			—			—			—			—		$	18,339,827
Cash dividends declared ($.19 per share)*		—			—			—			(2,158,520	)		—
Common stock dividend		1,463,354			437,269			(1,901,697	)		—			—
Conversions of Class B Common Stock to Common Stock		34,442			(34,442	)		—			—			—
Stock options exercised		50,881			—			962,061			—			—
Income tax benefit from stock options exercised		—			—			229,693			—			—
Shares purchased and retired		(110,150	)		—			(99,966	)		(3,151,178	)		—
Balance, December 31, 2003		4,324,983			1,305,435			4,189,138			88,917,253			109,079
Comprehensive Income:
Net earnings		—			—			—			20,277,674			—			20,277,674
Foreign currency translation adjustments		—			—			—			—			328,971			328,971
Total Comprehensive Income		—			—			—			—			—		$	20,606,645
Cash dividends declared ($.21 ½ per share)*		—			—			—			(2,447,867	)		—
Conversions of Class B Common Stock to Common Stock		3,325			(3,325	)		—			—			—
Stock options exercised		112,257			—			2,091,366			—			—
Income tax benefit from stock options exercised		—			—			539,632			—			—
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

*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.

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CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the years ended December 31, 2005, 2004 and 2003

	2005			2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	19,400,765		$	20,277,674		$	17,134,801
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		2,263,187			2,517,417			2,322,794
Amortization		48,537			80,389			187,020
Deferred income taxes		457,086			1,187,260			978,527
Deferred compensation		—			48,000			197,292
Pension expense		884,010			712,959			992,050
(Gain) loss on sale of assets		(1,642	)		116,174			(25,819	)
Increase in cash surrender value of life insurance		(599,699	)		(579,168	)		(574,371	)
Changes in operating assets and liabilities:
Accounts receivable		2,931,289			(874,140	)		2,270,598
Inventories		9,071,618			(3,892,642	)		6,013,355
Prepaids and other assets		298,279			(736,693	)		(165,156	)
Accounts payable		5,561,666			(804,365	)		(3,803,107	)
Accrued liabilities and other		(2,785,877	)		352,726			(258,149	)
Accrued income taxes		1,155,015			1,519,328			1,009,700
Net cash provided by operating activities		38,684,234			19,924,919			26,279,535
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Florsheim assets		—			—			(46,288	)
Purchase of marketable securities		(25,188,918	)		(6,106,521	)		(5,163,270	)
Proceeds from maturities of marketable securities		5,278,770			5,262,953			4,808,799
Purchase of plant and equipment		(1,835,167	)		(1,127,088	)		(9,833,660	)
Proceeds from sales of plant and equipment		4,587			230,706			37,623
Net cash used for investing activities		(21,740,728	)		(1,739,950	)		(10,196,796	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(2,884,927	)		(2,380,158	)		(2,086,763	)
Shares purchased and retired		(1,846,150	)		—			(3,361,294	)
Proceeds from stock options exercised		1,860,809			2,203,623			1,012,943
Net repayments under revolving credit facilities		(1,807,032	)		(16,585,294	)		(9,857,162	)
Net cash used for financing activities		(4,677,300	)		(16,761,829	)		(14,292,276	)
Net increase in cash and cash equivalents		12,266,206			1,423,140			1,790,463
CASH AND CASH EQUIVALENTS, at beginning of year	$	10,514,707		$	9,091,567		$	7,301,104
CASH AND CASH EQUIVALENTS, at end of year	$	22,780,913		$	10,514,707		$	9,091,567
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	10,150,856		$	10,037,356		$	7,543,171
Interest paid	$	337,038		$	509,125		$	1,383,664

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

17

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005, 2004 and 2003

1.  NATURE OF OPERATIONS

Weyco Group, Inc. is a U.S.-based distributor of men’s branded footwear.  The Company’s brands include Florsheim, Nunn Bush, Nunn Bush NXXT, Brass Boot, Stacy Adams 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, 2005 the retail division was comprised of 32 retail stores in the United States, three 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, 2005 and 2004, approximately $15.1 million and $6.9 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.

Plant and Equipment and Depreciation  - Plant and equipment are stated at cost and 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  -  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 2005, 2004, or 2003.

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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.

Financial Instruments – The Company has entered into forward exchange contracts for the purpose of hedging against foreign currency risk.  At December 31, 2005, the Company has financial contracts outstanding to sell 4,000,000 Canadian dollars at a total price of $3,395,000. These contracts all expire in 2006.  Based upon year-end exchange rates, there were no significant gains or losses on outstanding contracts.

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, 2005, 2004 and 2003, licensing revenues were $4,367,000, $3,937,000 and $3,576,000, 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 $954,000, $888,000 and $1,174,000 for 2005, 2004 and 2003, 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 2005, 2004 and 2003 were $5,921,000, $6,444,000 and $6,701,000, respectively.

Advertising Costs - Advertising costs are expensed as incurred.  Total advertising costs were $7,892,000, $9,214,000 and $9,265,000 in 2005, 2004 and 2003, 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 $3,872,000, $3,996,000 and $3,838,000 for 2005, 2004 and 2003, 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 15.

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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, 2005 and 2004, Accumulated Other Comprehensive Income (Loss) consisted entirely of cumulative translation adjustments.

Stock-Based Compensation  -  At December 31, 2005, the Company has three stock-based employee compensation plans, which are described more fully in Note 17.  The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related interpretations.

New Accounting Pronouncement – In December 2004, the FASB issued SFAS No. 123(R ), “Accounting for Stock-Based Compensation”.  The revised statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services.  This statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  SFAS No. 123(R) requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is to be recognized over the period during which the employee is required to provide service in exchange for the award.  In April 2005, the Securities and Exchange Commission postponed the adoption of SFAS No. 123(R), which would have been effective for the Company as of July 1, 2005.  As a result, SFAS No. 123(R) became effective for the Company as of January 1, 2006.   All of the Company’s stock options granted prior to the effective date were 100% vested at the effective date.  Accordingly, no stock option expense will be recognized for those options.  The impact of this pronouncement on the Company’s financial statements with regard to future stock option grants is uncertain at this time as the impact is dependent upon, among other things, the approval of the Company’s Board of Directors to grant stock-based compensation in the future.

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.

20

A summary of the amortized cost and estimated market values of investment securities at December 31, 2005 and 2004 are as follows:

	2005				2004
	Amortized Cost		Market Value		Amortized Cost		Market Value
Municipal bonds :
Current	$	875,317	$	873,538	$	180,000	$	180,702
Due from one through five years		9,793,495		9,789,403		6,397,040		6,608,618
Due from five through ten years		14,096,594		13,980,175		3,526,755		3,542,210
Due from ten through twenty years		1,400,000		1,400,000		1,200,000		1,207,250
Due after twenty years		5,000,000		5,000,000		—		—
Total	$	31,165,406	$	31,043,116	$	11,303,795	$	11,538,780

The unrealized gains and losses on investment securities at December 31 are:

	2005				2004
	Unrealized Gains		Unrealized Losses		Unrealized Gains		Unrealized Losses
Municipal bonds	$	83,102	$	205,392	$	253,976	$	18,991

5.  INVENTORIES

At December 31, 2005 and 2004, inventories consist of:

	2005			2004
Finished shoes	$	51,342,926		$	60,033,352
LIFO reserve		(12,794,324	)		(12,413,132	)
Total inventories	$	38,548,602		$	47,620,220

Finished shoes include inventory in-transit of $17,997,931 and $12,788,331 as of December 31, 2005 and 2004, respectively.

6.  PLANT AND EQUIPMENT

At December 31, 2005 and 2004, plant and equipment consists of:

	2005			2004
Land	$	2,659,135		$	2,653,935
Buildings and improvements		19,541,497			19,541,497
Machinery and equipment		15,403,650			15,009,999
Retail fixtures and leasehold improvements		4,448,607			3,210,567
Construction in progress		230,789			—
Plant and equipment		42,283,678			40,415,998
Less: accumulated depreciation		(14,842,916	)		(12,505,694	)
Plant and equipment, net	$	27,440,762		$	27,910,304

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7.  OTHER ASSETS

Other assets include the following amounts at December 31:

	2005		2004
Pension asset (See Note 9)	$	6,173,530	$	6,480,681
Cash surrender value of life insurance		7,992,822		7,393,125
Other		86,252		30,200
	$	14,252,604	$	13,904,006

8.   SHORT-TERM BORROWINGS

At December 31, 2005, the Company had a 364-day $50 million unsecured Revolving Line of Credit (the “Line of Credit”) with a bank expiring April 30, 2006.  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 certain financial covenants, including minimum net worth levels, minimum levels of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and a maximum ratio of funded debt to EBITDA.  As of December 31, 2005, the Company was in compliance with all covenants.  Outstanding borrowings under the Line of Credit at December 31, 2005 consisted of $9.6 million of commercial paper with an average interest rate of 4.43%.

At December 31, 2004, outstanding borrowings under a prior $50 million line of credit were $11.4 million with an average interest rate of 2.42%.

9.  EMPLOYEE RETIREMENT PLANS

The Company has a defined benefit retirement 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 retirement 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.

The Company’s pension plan weighted average asset allocation at December 31, 2005 and 2004, by asset category, is as follows:

	Plan Assets at December 31
	2005			2004
Asset Category:
Equity Securities		56	%		52	%
Fixed Income Securities		40	%		42	%
Other		4	%		6	%
Total		100	%		100	%

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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% - 100%; fixed income securities: 80% - 20%; 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 are:

	2005			2004
Discount rate		5.65	%		5.75	%
Rate of compensation increase		4.5	%		4.5	%

All plans have a measurement date of December 31.  The following is a reconciliation of the change in benefit obligation and plan assets for the years ended December 31, 2005 and 2004:

Change in projected benefit obligation

	2005			2004
Projected benefit obligation, beginning of year	$	28,263,000		$	27,097,000
Service cost		783,000			785,000
Interest cost		1,584,000			1,584,000
Plan amendments		—			713,000
Actuarial loss (gain)		1,783,000			(578,000	)
Benefits paid		(1,502,000	)		(1,338,000	)
Projected benefit obligation, end of year	$	30,911,000		$	28,263,000

Change in plan assets

Fair value of plan assets, beginning of year	$	24,587,000		$	24,021,000
Actual return on plan assets		1,378,000			1,834,000
Administrative expenses		(50,000	)		(50,000	)
Contributions		217,000			120,000
Benefits paid		(1,502,000	)		(1,338,000	)
Fair value of plan assets, end of year	$	24,630,000		$	24,587,000
Funded status of plan	$	(6,281,000	)	$	(3,676,000	)
Unrecognized net actuarial loss		7,972,000			5,943,000
Unrecognized prior service cost		810,000			901,000
Net amount recognized	$	2,501,000		$	3,168,000

Amounts recognized in the balance sheets consist of:

Other assets	$	6,173,000		$	6,481,000
Long-term pension liability		(3,672,000	)		(3,313,000	)
Net amount recognized	$	2,501,000		$	3,168,000

23

The accumulated benefit obligation for the defined benefit pension plans was $26,948,000 and $24,954,000 at December 31, 2005 and 2004, respectively.

Information for the supplemental pension plan which has an accumulated benefit obligation in excess of plan assets:

	2005		2004
Projected benefit obligation	$	4,586,000	$	3,816,000
Accumulated benefit obligation	$	3,672,000	$	3,198,000
Fair value of pension assets	$	—	$	—

Assumptions used in determining net periodic pension cost at December 31 are:

	2005			2004			2003
Discount rate		5.75	%		6.0	%		6.75	%
Rate of compensation increase		4.5	%		4.5	%		5.0	%
Long-term rate of return on plan assets		8.0	%		8.5	%		8.5	%

The components of net periodic pension cost for the years ended December 31, 2005, 2004 and 2003, are:

	2005			2004			2003
Benefits earned during the period	$	783,000		$	785,000		$	571,000
Interest cost on projected benefit obligation		1,584,000			1,584,000			1,463,000
Expected return on plan assets		(1,915,000	)		(1,993,000	)		(1,674,000	)
Net amortization and deferral		432,000			337,000			440,000
Curtailment loss		—			—			192,000
Net pension expense	$	884,000		$	713,000		$	992,000

The Company is uncertain at this time whether it will make a contribution to its defined benefit retirement plan in 2006.  The Company expects that if a contribution is made in 2006, it will be approximately $1 million to $2 million.

Projected benefit payments for the plans as of December 31, 2005 are estimated as follows:

2006	$	1,553,000
2007	$	1,608,000
2008	$	1,772,000
2009	$	1,876,000
2010	$	1,866,000
2011-2015	$	9,741,000

The Company also has a defined contribution plan covering substantially all employees.  The Company contributed approximately $167,000, $136,000 and $125,000 to the plan in 2005, 2004 and 2003, respectively.

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10.  INCOME TAXES

The provision for income taxes includes the following components:

	2005			2004			2003
Current:
Federal	$	9,450,000		$	9,493,000		$	6,884,000
State		1,566,000			1,711,000			1,426,000
Foreign		477,000			234,000			266,000
Total		11,493,000			11,438,000			8,576,000
Deferred		457,000			1,187,000			979,000
Total provision	$	11,950,000		$	12,625,000		$	9,555,000
Effective tax rate		38.1	%		38.4	%		35.8	%

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, 2005, 2004 and 2003:

	2005			2004			2003
U. S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		3.2			3.4			3.4
Non-taxable municipal bond interest		(0.9	)		(0.5	)		(0.6	)
Resolution of prior period tax matters		—			—			(2.4	)
Other		0.8			0.5			0.4
		38.1%			38.4	%		35.8	%

During 2003, the Company resolved certain matters related to an audit of its 1996 federal income tax return.  The settlement had a favorable impact on the Company’s 2003 tax provision, as the Company had previously provided an amount in excess of the final settlement.

The foreign component of pretax net earnings was $1,459,000, $884,000 and $810,000  for 2005, 2004 and 2003, respectively.

The components of deferred taxes as of December 31, 2005 and 2004, are as follows:

	2005			2004
Deferred tax assets:
Accounts receivable reserves	$	566,000		$	896,000
Deferred compensation		—			621,000
Pension liability		1,362,000			1,292,000
Accrued Liabilities		1,712,000			1,470,000
		3,640,000			4,279,000
Deferred tax liabilities:
Inventory and related reserves		(964,000	)		(1,060,000	)
Pension asset		(2,338,000	)		(2,527,000	)
Cash value of life insurance		(1,670,000	)		(1,497,000	)
Depreciation		(1,832,000	)		(2,040,000	)
Trademark		(865,000	)		(623,000	)
Prepaid and other assets		(142,000	)		(246,000	)
		(7,811,000	)		(7,993,000	)
Net deferred tax liability	$	(4,171,000	)	$	(3,714,000	)

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

	2005			2004
Current deferred income tax benefits	$	1,174,000		$	1,681,000
Noncurrent deferred income tax liabilities		(5,345,000	)		(5,395,000	)
	$	(4,171,000	)	$	(3,714,000	)

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11.  DEFERRED COMPENSATION

The Company expensed $48,000 in 2004 and $197,000 in 2003 in connection with deferred compensation agreements established with certain former executives. Amounts owed under these agreements were included in Accrued Wages, Salaries and Commissions on the Consolidated Balance Sheets.  Obligations of $1.4 million were paid under these agreements in March 2004, and the remaining balance was paid in February 2005.  Accordingly, there was no interest expense in 2005.

12.  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.  Total minimum rents were $2,886,000 in 2005, $2,632,000 in 2004, and $2,569,000 in 2003.  Percentage rentals were $16,000 in 2005, $21,000 in 2004, and $16,000 in 2003.

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, 2005, are shown below.  Renewal options exist for many long-term leases.

2006	$	2,994,000
2007		2,283,000
2008		1,520,000
2009		1,437,000
2010		1,353,000
Thereafter		5,779,000
Total	$	15,366,000

13.  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. 

14.  SHAREHOLDERS’ INVESTMENT

Each share of Class B common stock has 10 votes, may only be transferred to certain permitted transferees, is convertible to one share of common stock at the holder’s option and shares equally with the common stock in cash dividends and liquidation rights.  Any outstanding shares of Class B Common Stock will convert into common stock on July 1, 2007.

26

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. The Company also buys back shares of its common stock from time to time in private transactions at prevailing prices.    During 2003, the Company purchased 95,300 shares at a total cost of $2,862,992 under the program, and 14,850 shares at a total cost of $498,302 in private transactions.  There were no repurchases of common shares in 2004.  During 2005, the Company purchased 96,864 shares at a total cost of $1,846,150 under the program. At December 31, 2005, the Company is authorized to buy back an additional 1,529,336 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 13.

15.  EARNINGS PER SHARE

The following table sets forth the computations of basic and diluted earnings per share:

	2005		2004		2003
Numerator:
Net earnings	$	19,400,765	$	20,277,674	$	17,134,801
Denominator:
Basic weighted average shares outstanding		11,559,326		11,380,370		11,387,432
Effect of dilutive securities:
Employee stock options		406,602		381,908		369,142
Diluted weighted average shares outstanding		11,965,928		11,762,278		11,756,574
Basic earnings per share	$	1.68	$	1.78	$	1.50
Diluted earnings per share	$	1.62	$	1.72	$	1.46

Diluted weighted average shares outstanding for 2005 include all outstanding options to purchase common stock.  Diluted weighted average shares outstanding in 2004 exclude outstanding options to purchase 12,524 shares of common stock at a weighted average price of $18.59 because they were antidilutive.  2003 diluted weighted average shares outstanding exclude outstanding options to purchase 309,750 shares of common stock at a weighted average price of $16.85 because they were antidilutive. 

16.  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.

Wholesale 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.  There were no individually significant customers in 2005.  In 2004 and 2003, sales to the Company’s largest customer were 12% of total sales.  There were no other individually significant customers in those years.

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In the retail division, the Company operated 32 Company-owned stores in principal cities in the United States, three stores in Europe, and an Internet business as of December 31, 2005.  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.

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 2005, 2004 and 2003 are as follows:

	Wholesale Distribution		Retail		Total
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
2004
Product sales	$	192,629,000	$	26,447,000	$	219,076,000
Licensing revenues		3,937,000		—		3,937,000
Net sales		196,566,000		26,447,000		223,013,000
Depreciation		1,756,000		761,000		2,517,000
Earnings from operations		28,567,000		4,385,000		32,952,000
Total assets		149,205,000		7,151,000		156,356,000
Capital expenditures		403,000		724,000		1,127,000
2003
Product sales	$	187,327,000	$	24,858,000	$	212,185,000
Licensing revenues		3,576,000		—		3,576,000
Net sales		190,903,000		24,858,000		215,761,000
Depreciation		1,603,000		720,000		2,323,000
Earnings from operations		23,388,000		3,873,000		27,261,000
Total assets		144,380,000		6,806,000		151,186,000
Capital expenditures		9,241,000		593,000		9,834,000

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:

	2005		2004		2003
United States	$	197,638,791	$	212,211,220	$	206,629,444
Canada		6,002,766		5,465,097		4,864,312
Europe		5,827,746		5,337,017		4,266,775
Total	$	209,469,303	$	223,013,334	$	215,760,531

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17.  STOCK-BASED COMPENSATION PLANS

The Company has three stock option plans:  the 1996 Nonqualified Stock Option Plan,  the 1997 Stock Option Plan, and the 2005 Equity Incentive Plan.  Under the plans, options to purchase common stock are granted to officers and key employees at prices not less than the fair market value of the common stock on the date of the grant.  All options granted in 2005 were fully vested eight months after the date of grant.  Most options expire ten years from the grant date, with the exception of certain incentive stock options, which expire five years from the grant date.  No stock-based employee compensation expense has been reflected in net income, as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. 

The following table summarizes the stock option activity under the Company’s plans for the years ended December 31:

	2005					2004					2003
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of year		1,525,586		$	10.41		1,637,700		$	9.96		1,444,962		$	8.38
Granted		201,250			18.12		113,900			15.78		308,250			16.85
Exercised		(185,788	)		10.02		(224,514	)		9.82		(115,512	)		8.75
Forfeited		(4,000	)		18.03		(1,500	)		16.79		—			—
Outstanding at end of year		1,537,048		$	11.44		1,525,586		$	10.41		1,637,700		$	9.96
Exercisable at end of year		1,537,048		$	11.44		1,523,886		$	10.40		1,637,700		$	9.96
Weighted average fair market value of options granted	$	5.85				$	5.55				$	5.64

The following table summarizes information about stock options outstanding at December 31, 2005:

Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$4.53		135,000		.93	$	4.53
$7.25 to $8.62		652,948		3.95		7.95
$12.04 to $15.64		280,300		6.75		12.96
$16.79 to $19.83		468,800		8.09		17.40
		1,537,048		5.46	$	11.44

As of December 31, 2005, all of the outstanding options are exercisable.  At December 31, 2005, there are 798,750 shares remaining for stock option grants under the plans.

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The following table illustrates the effect on net earnings and earnings per share as if the Company had applied the fair value recognition provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”, as amended by SFAS No. 148, to stock-based employee compensation. 

	2005		2004		2003
Net earnings, as reported	$	19,400,765	$	20,277,674	$	17,134,801
Deduct:  Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		723,742		380,854		1,141,734
Pro forma net income	$	18,677,023	$	19,896,820	$	15,993,067
Earnings per share
Basic - as reported	$	1.68	$	1.78	$	1.50
Basic - pro forma	$	1.62	$	1.75	$	1.40
Diluted - as reported	$	1.62	$	1.72	$	1.46
Diluted - pro forma	$	1.56	$	1.69	$	1.36

The fair market value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used:

	2005			2004			2003
Risk-free interest rate		4.24	%		4.15	%		4.06	%
Expected dividend yields		1.40	%		1.22	%		1.30	%
Expected remaining life		7.4	yrs.		8.8	yrs.		8.8	yrs.
Expected volatility		27.0	%		26.0	%		25.0	%

18.  QUARTERLY FINANCIAL DATA (Unaudited)

2005	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
Net sales	$	57,830,807	$	44,746,051	$	55,218,588	$	51,673,857	$	209,469,303
Gross earnings	$	20,621,666	$	15,955,424	$	19,610,876	$	20,554,398	$	76,742,364
Net earnings	$	5,199,562	$	3,029,400	$	4,822,322	$	6,349,481	$	19,400,765
Net earnings per share:
Basic	$	.45	$	.26	$	.42	$	.55	$	1.68
Diluted	$	.43	$	.25	$	.40	$	.53	$	1.62

2004	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Year
Net sales	$	61,743,369	$	49,786,360	$	55,841,100	$	55,642,505	$	223,013,334
Gross earnings	$	21,258,659	$	18,169,995	$	19,974,380	$	23,592,517	$	82,995,551
Net earnings	$	5,152,696	$	3,974,215	$	4,370,232	$	6,780,531	$	20,277,674
Net earnings per share:
Basic	$	.46	$	.35	$	.38	$	.59	$	1.78
Diluted	$	.44	$	.34	$	.37	$	.57	$	1.72

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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 accompanying consolidated balance sheets of Weyco Group, Inc. and subsidiaries (the “Company”) as of December 31, 2005 and 2004, and the related consolidated statements of earnings, shareholders’ investment, and cash flows for each of the three years in the period ended December 31, 2005.  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, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, 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 8, 2006, expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting and an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 8, 2006

31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
Weyco Group, Inc.:

We have audited management’s assessment, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting,” that Weyco Group, Inc. and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2005, 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.  Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of 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, evaluating management’s assessment, 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 opinions.

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.

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.

32

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, 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, 2005 of the Company and our report dated March 8, 2006 expressed an unqualified opinion on those financial statements.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 8, 2006

33

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, 2005.  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, 2005, 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 our assessment 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 8, 2006

/s/ John Wittkowske

Senior Vice President and Chief Financial Officer

March 8, 2006

34

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		Leonard J. Goldstein		Cory L. Nettles
	Chairman, Executive Committee		Retired, Former Chairman, President and Chief Executive Officer, Miller Brewing Company		Partner, Corporate Services and Government Relations, Quarles & Brady LLP
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		Brian Flannery		Beverly Goldberg
	Vice President, Finance and Treasurer		Vice President Sales, Stacy Adams Brand		Vice President Sales, Florsheim Brand
James G. Kehoe		Robert Lanterman		Rick Lechusz
	Vice President, Distribution		Vice President, and President Brass Boot Brand		Vice President, Credit
Gary Malamet		David McGinnis		George Sotiros
	Vice President, and President Stacy Adams Brand		Vice President, and President Florsheim Brand		Vice President, Information Technology
Tim Then
	Vice President, Retail Division

35

SUPPLEMENTAL INFORMATION

Annual Meeting

Shareholders are invited to attend Weyco Group, Inc.’s 2006 Annual Meeting at 10:00 a.m. on April 25, 2006, 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), or its Code of Business Ethics 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 inquires should be made to (414) 908-1600.

36

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 Retail Corp.	Wisconsin	Weyco Group, Inc.
Florsheim Shoes Europe S.r.l.	Milan, 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 333-129881on Form S-8 of our reports dated March 8, 2006, relating to the consolidated financial statements and consolidated financial statement scheduleof Weyco Group, Inc. and management’s report of the effectiveness of internal control over financial reporting, appearing in and incorporated by reference in this Annual Report on Form 10-K of Weyco Group, Inc. for the year ended December 31, 2005.

/s/ DELOITTE & TOUCHE LLP

Milwaukee, Wisconsin

March 8, 2006

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, 2006
	/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, 2006
	/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, 2005 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, 2006

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, 2005 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, 2006

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.