Weyco Reports Second Quarter Sales and Earnings

News provided by

Weyco Group, Inc.

Aug 03, 2010, 04:05 ET

MILWAUKEE, Wis., Aug. 3 /PRNewswire-FirstCall/ -- Weyco Group, Inc. (Nasdaq: WEYS) today announced financial results for the quarter ended June 30, 2010.

Net sales for the second quarter were $48.7 million, a decrease of 3% from second quarter 2009 sales of $50.1 million.  Net earnings for the quarter were $1.3 million, down from $2.2 million in 2009.  Net earnings included a decrease of $0.8 million resulting from exchange gains and losses on intercompany loans between the U.S. and Florsheim Australia.  These amounts are included in other income and expense on the statement of earnings.  Diluted earnings per share were $.11 per share in 2010 as compared with $.19 per share in the second quarter of 2009.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $35.3 million for the second quarter of 2010, compared with $35.9 million in the same period in 2009.  Wholesale sales were $34.8 million in the second quarter of 2010, down from $35.4 million in 2009.   Licensing revenues were $470,000 in 2010 and $552,000 in 2009.  Wholesale net sales of Stacy Adams footwear were up 2%, while sales of the Nunn Bush brand were flat and Florsheim were down 7%.

Net sales in the North American retail segment, which include sales from the Company's 35 Florsheim retail stores in the U.S. and its Internet business, were $5.3 million in the second quarter of 2010, compared with $5.4 million in the second quarter of 2009. One retail store closed during the second quarter 2010.  Same store sales were down 1%.

Other net sales, which include wholesale and retail sales in Europe, Australia, Asia and South Africa, were $8.1 million in the second quarter of 2010, compared to $8.7 million in 2009.  The majority of the decrease occurred in the Australian wholesale business.

Operating earnings for the second quarter of 2010 were $1.7 million, down from $2.2 million in 2009.  As a percent of sales, operating earnings were 3.5% in 2010 and 4.4% in 2009. The decrease in operating earnings for the second quarter was primarily due to decreased sales volume.

Earnings before tax were $1.9 million for the second quarter of 2010 compared to $3.7 million last year.  This decrease is caused by the $500,000 decrease in operating earnings and a decrease in other income and expense of $1.3 million, resulting from a $1.2 million ($0.8 million after tax) decrease in the exchange gains and losses recognized on intercompany loans between the U.S. and Florsheim Australia.  In the second quarter of 2010, a loss of $344,000 was incurred versus a gain of $870,000 in 2009.

"The retail environment continues to be challenging," stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group.  "After an initial uptick in demand in the first quarter, consumers have once again returned to a more cautious approach to discretionary spending.  In addition, retailers continue to closely monitor their inventory levels.  We are looking forward to the fall when we have a number of different product launches being delivered.  We continue to invest in our brands and work with our retail partners to build our businesses."

Weyco Group will host a conference call on August 4, 2010, at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail.  To participate in the call please dial 888-713-4209 or 617-213-4863, referencing passcode #96346059, five minutes before the start of the call. A replay will be available for one week beginning about one hour after the completion of the call by dialing 888-286-8010 or 617-801-6888, referencing passcode #14909398.  Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group's website at www.weycogroup.com.

About Weyco Group:

Weyco Group, Inc., designs and markets moderately priced and better-grade men's branded footwear for casual, fashion, and dress lifestyles.  The principal brands of shoes sold by the Company are Florsheim, Nunn Bush, Stacy Adams and Umi.  The Company's products are sold to shoe specialty stores, department stores and clothing retailers.  Weyco Group, Inc. operates wholesale and retail businesses in the United States, Canada, Europe, Australia, South Africa and Asia Pacific.

Forward-Looking Statements

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

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED)











Three Months Ended June 30,

Six Months Ended June 30,


2010

2009

2010

2009


(In thousands, except per share amounts)









Net sales

$             48,724

$            50,053

$          109,762

$       108,961

Cost of sales

30,066

31,142

67,696

70,359

Gross earnings

18,658

18,911

42,066

38,602









Selling and administrative expenses

16,972

16,709

34,939

33,066

Earnings from operations

1,686

2,202

7,127

5,536









Interest income

607

566

1,105

1,019

Interest expense

(87)

(2)

(87)

(25)

Other income and (expense), net

(351)

893

(218)

799









Earnings before provision for income taxes

1,855

3,659

7,927

7,329









Provision for income taxes

774

1,165

2,864

2,475









Net earnings

1,081

2,494

5,063

4,854









Net (loss) earnings attributable to noncontrolling interest

(201)

309

(76)

164









Net earnings attributable to Weyco Group, Inc.

$               1,282

$              2,185

$              5,139

$           4,690









Weighted average shares outstanding







Basic

11,326

11,253

11,309

11,266

Diluted

11,533

11,542

11,514

11,513









Earnings per share







Basic

$                 0.11

$                0.19

$                0.45

$             0.42

Diluted

$                 0.11

$                0.19

$                0.45

$             0.41









Cash dividends per share

$                 0.16

$                0.15

$                0.31

$             0.29


WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)







June 30,

December 31,


2010

2009


(Dollars in thousands)

ASSETS:


Cash and cash equivalents

$               13,109

$          30,000

Marketable securities, at amortized cost

5,529

3,954

Accounts receivable, net

31,518

33,020

Accrued income tax receivable

735

-

Inventories

37,266

40,363

Prepaid expenses and other current assets

3,497

3,922

Total current assets

91,654

111,259





Marketable securities, at amortized cost

59,342

42,823

Deferred income tax benefits

2,509

2,261

Other assets

15,374

13,070

Property, plant and equipment, net

26,011

26,872

Trademark

10,868

10,868

Total assets

$             205,758

$        207,153










LIABILITIES AND EQUITY:


Accounts payable

$                  6,591

$             9,202

Dividend payable

1,812

1,693

Accrued liabilities

7,675

7,846

Accrued income taxes

-

1,241

Deferred income tax liabilities

351

295

Total current liabilities

16,429

20,277





Long-term pension liability

19,343

18,533





Common stock

11,353

11,333

Capital in excess of par value

18,242

16,788

Reinvested earnings

147,140

146,241

Accumulated other comprehensive loss

(10,578)

(10,066)

Total Weyco Group Inc. equity

166,157

164,296

Noncontrolling interest

3,829

4,047

Total equity

169,986

168,343

Total liabilities and equity

$             205,758

$        207,153



WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (UNAUDITED)











2010

2009




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:



Net earnings

$              5,063

$               4,854

Adjustments to reconcile net earnings to net cash



provided by operating activities -






Depreciation

1,386

1,435


Amortization

60

47


Net foreign currency transaction losses (gains)

213

(758)


Deferred income taxes

(475)

(212)


Stock-based compensation

569

429


Pension expense

1,624

1,424


Loss on disposal of fixed assets

-

14


Increase in cash surrender value of life insurance

(120)

(114)

Changes in operating assets and liabilities:




Accounts receivable

1,995

423


Inventories

2,843

10,724


Prepaids and other current assets

175

1,136


Accounts payable

(2,574)

(1,514)


Accrued liabilities and other

(900)

1,488


Accrued income taxes

(1,972)

1,406



Net cash provided by operating activities

7,887

20,782







CASH FLOWS FROM INVESTING ACTIVITIES:



Acquisition of businesses

(2,509)

(9,320)

Purchase of marketable securities

(21,802)

(405)

Proceeds from maturities of marketable securities

3,648

4,245

Life insurance premiums paid

(155)

(155)

Purchase of property, plant and equipment

(646)

(590)



Net cash used for investing activities

(21,464)

(6,225)







CASH FLOWS FROM FINANCING ACTIVITIES:



Cash received from noncontrolling interest

-

1,314

Cash dividends paid

(3,401)

(3,184)

Shares purchased and retired

(753)

(2,440)

Proceeds from stock options exercised

607

520

Net (repayments) borrowings under revolving credit agreement

-

(1,250)

Income tax benefits from share-based compensation

331

134



Net cash used for financing activities

(3,216)

(4,906)








Effect of exchange rate changes on cash

(98)

-








Net (decrease) increase in cash and cash equivalents

(16,891)

9,651







CASH AND CASH EQUIVALENTS at beginning of period

$            30,000

$             11,486







CASH AND CASH EQUIVALENTS at end of period

$            13,109

$             21,137







SUPPLEMENTAL CASH FLOW INFORMATION:



Income taxes paid, net of refunds

$              5,352

$               1,183

Interest paid

$                   82

$                    28

SOURCE Weyco Group, Inc.

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