UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

⌧	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022

◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________________ to _____________________________

Commission File Number: 000-09068

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, Wisconsin 53201

(Address of principal executive offices)

(Zip Code)

(414) 908-1600

(Registrant’s telephone number, including area code)

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


Title of each class	~~Trading Symbol~~	Trading Symbol	Name of each exchange on which registered
Common Stock - $1.00 par value per share		WEYS	The Nasdaq Stock Market

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 ⌧☒ No ◻☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧☒ No ◻☐

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


Large Accelerated Filer ☐	Accelerated Filer ☒	Non-Accelerated Filer ☐	Smaller Reporting Company ☒	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻☐

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

Yes ☐ No ⌧

As of April ~~23, 2021,~~22, 2022, there were ~~9,735,467~~9,635,433 shares of common stock outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

The following consolidated condensed balance sheet as of December 31, ~~2020,~~2021, which has been derived from audited financial statements, and the unaudited interim consolidated condensed financial statements have been prepared by Weyco Group, Inc. ~~(the~~(“we,” “our,” “us,” and the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although ~~the Company believes~~we believe that the disclosures made are adequate to make the information not misleading. ~~It is suggested that~~Please read these consolidated condensed financial statements ~~be read~~ in conjunction with the financial statements and notes thereto included in ~~the Company’s~~our latest annual report on Form 10-K.

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

March 31,

December 31,


2021

2020

(Dollars in thousands)
ASSETS:




Cash and cash equivalents

$
24,860

$
32,476
Investments, at fair value

20,011

0
Marketable securities, at amortized cost

1,483

2,215
Accounts receivable, net

32,317

34,631
Income tax receivable

853

1,374
Inventories

47,340

59,025
Prepaid expenses and other current assets

3,951

4,610
Total current assets

130,815

134,331

Marketable securities, at amortized cost

11,804

12,800
Deferred income tax benefits

1,218

1,235
Property, plant and equipment, net

30,196

30,759
Operating lease right-of-use assets

10,538

9,613
Goodwill

11,112

11,112
Trademarks

32,868

32,868
Other assets

24,164

24,001
Total assets

$
252,715

$
256,719

LIABILITIES AND EQUITY:




Accounts payable

$
6,605

$
8,444
Operating lease liabilities

4,048

4,245
Accrued liabilities

10,640

11,656
Total current liabilities

21,293

24,345

Deferred income tax liabilities

3,001

2,914
Long-term pension liability

33,191

33,534
Operating lease liabilities

8,565

7,734
Other long-term liabilities

245

267
Total liabilities

66,295

68,794

Common stock

9,735

9,797
Capital in excess of par value

67,723

67,178
Reinvested earnings

136,927

138,955
Accumulated other comprehensive loss

(27,965)

(28,005)
Total equity

186,420

187,925
Total liabilities and equity

$
252,715

$
256,719


	March 31,		December 31,
	2022		2021

	(Dollars in thousands)
ASSETS:
Cash and cash equivalents	$	24,150	$	19,711
Investments, at fair value		106		8,122
Marketable securities, at amortized cost		719		219
Accounts receivable, net		51,871		53,287
Income tax receivable		—		495
Inventories		62,056		71,026
Prepaid expenses and other current assets		4,124		4,317
Total current assets		143,026		157,177

Marketable securities, at amortized cost		9,023		9,996
Deferred income tax benefits		1,098		1,063
Property, plant and equipment, net		28,986		29,202
Operating lease right-of-use assets		8,790		9,543
Goodwill		12,317		12,317
Trademarks		34,768		34,768
Other assets		23,778		23,601
Total assets	$	261,786	$	277,667

LIABILITIES AND EQUITY:
Accounts payable	$	6,251	$	19,234
Operating lease liabilities		3,451		3,593
Accrued liabilities		7,768		11,681
Accrued income tax payable		952		—
Total current liabilities		18,422		34,508

Deferred income tax liabilities		5,003		5,026
Long-term pension liability		27,480		27,776
Operating lease liabilities		6,887		7,520
Other long-term liabilities		1,626		1,442
Total liabilities		59,418		76,272

Common stock		9,634		9,709
Capital in excess of par value		69,076		68,718
Reinvested earnings		147,777		147,762
Accumulated other comprehensive loss		(24,119)		(24,794)
Total equity		202,368		201,395
Total liabilities and equity	$	261,786	$	277,667

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)


	Three Months EndedMarch 31,				Three Months Ended March 31,
	2021		2020		2022		2021

	(In thousands, except per share amounts)				(In thousands, except per share amounts)

Net sales	$	46,900	$	63,584	$	81,360	$	46,900
Cost of sales		27,595		40,407		52,232		27,595
Gross earnings		19,305		23,177		29,128		19,305

Selling and administrative expenses		17,671		21,836		23,697		17,671
Earnings from operations		1,634		1,341		5,431		1,634

Interest income		131		149		91		131
Interest expense		(7)		(51)		(1)		(7)
Other income, net		138		407
Other (expense) income, net						(6)		138

Earnings before provision for income taxes		1,896		1,846		5,515		1,896

Provision for income taxes		571		684		1,462		571

Net earnings		1,325		1,162		4,053		1,325

Weighted average shares outstanding
Basic		9,680		9,781		9,596		9,680
Diluted		9,686		9,786		9,647		9,686

Earnings per share
Basic	$	0.14	$	0.12	$	0.42	$	0.14
Diluted	$	0.14	$	0.12	$	0.42	$	0.14

Cash dividends declared (per share)	$	0.24	$	0.24	$	0.24	$	0.24

Comprehensive income (loss)	$	1,365	$	(1,258)
Comprehensive income					$	4,728	$	1,365

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31,


2021

2020

(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:




Net earnings

$
1,325

$
1,162
Adjustments to reconcile net earnings to net cash provided by operating activities -




Depreciation

623

733
Amortization

82

71
Bad debt expense

17

145
Deferred income taxes

39

360
Net foreign currency transaction gains

(115)

(356)
Share-based compensation expense

545

351
Pension expense

0

111
Increase in cash surrender value of life insurance

(150)

(135)
Changes in operating assets and liabilities -




Accounts receivable

2,273

4,878
Inventories

11,700

18,704
Prepaid expenses and other assets

572

2,176
Accounts payable

(1,839)

(8,477)
Accrued liabilities and other

(1,425)

(5,410)
Accrued income taxes

522

680
Net cash provided by operating activities

14,169

14,993

CASH FLOWS FROM INVESTING ACTIVITIES:




Proceeds from maturities of marketable securities

1,720

4,510
Purchases of investment securities

(20,011)

0
Purchases of property, plant and equipment

(73)

(1,797)
Net cash (used for) provided by investing activities

(18,364)

2,713

CASH FLOWS FROM FINANCING ACTIVITIES:




Cash dividends paid

(2,319)

(4,694)
Shares purchased and retired

(1,079)

(1,304)
Proceeds from bank borrowings

0

11,883
Repayments of bank borrowings

0

(18,932)
Net cash used for financing activities

(3,398)

(13,047)

Effect of exchange rate changes on cash and cash equivalents

(23)

(277)

Net (decrease) increase in cash and cash equivalents

$
(7,616)

$
4,382

CASH AND CASH EQUIVALENTS at beginning of period

32,476

9,799

CASH AND CASH EQUIVALENTS at end of period

$
24,860

$
14,181

SUPPLEMENTAL CASH FLOW INFORMATION:




Income taxes paid, net of refunds

$
24

$
235
Interest paid

$
7

$
51


	Three Months Ended March 31,
	2022		2021

	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	4,053	$	1,325
Adjustments to reconcile net earnings to net cash provided by operating activities -
Depreciation		604		623
Amortization		71		82
Bad debt expense		15		17
Deferred income taxes		(111)		39
Net foreign currency transaction losses (gains)		32		(115)
Share-based compensation expense		350		545
Increase in cash surrender value of life insurance		(150)		(150)
Changes in operating assets and liabilities -
Accounts receivable		1,395		2,273
Inventories		8,980		11,700
Prepaid expenses and other assets		89		572
Accounts payable		(12,966)		(1,839)
Accrued liabilities and other		(3,578)		(1,425)
Accrued income taxes		1,447		522
Net cash provided by operating activities		231		14,169

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities		475		1,720
Purchases of investment securities		—		(20,011)
Proceeds from sale of investment securities		8,050		—
Purchases of property, plant and equipment		(352)		(73)
Net cash provided by (used for) investing activities		8,173		(18,364)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(2,297)		(2,319)
Shares purchased and retired		(1,797)		(1,079)
Proceeds from stock option exercised		11		—
Net cash used for financing activities		(4,083)		(3,398)

Effect of exchange rate changes on cash and cash equivalents		118		(23)

Net increase (decrease) in cash and cash equivalents	$	4,439	$	(7,616)

CASH AND CASH EQUIVALENTS at beginning of period		19,711		32,476

CASH AND CASH EQUIVALENTS at end of period	$	24,150	$	24,860

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	75	$	24
Interest paid	$	1	$	7

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

NOTES:

1. Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three-month period ended March 31, ~~2021,~~2022, may not necessarily be indicative of the results for the full year.

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, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results specifically related to inventory reserves, realizability of deferred tax assets, goodwill and trademarks could materially differ from those estimates, ~~that~~which would impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.

2.New Accounting ~~Pronouncements~~

~~Recently Adopted~~

~~On January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12,~~ ~~Simplifying the Accounting for Income Taxes~~. This guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of Accounting Standards Codification (“ASC”) Topic 740, ~~Income Taxes~~~~. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.~~

~~In March 2020, the FASB issued ASU 2020-04,~~ ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~, which provided optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.Pronouncement

Not Yet Adopted

In June 2016, the FASB issued ~~ASU~~Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurements of Credit Losses on Financial ~~Instruments.~~Instruments. This ASU modifies the measurement of expected credit losses of certain financial instruments, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. This ASU will be effective for the Company in the first quarter of 2023. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

3. Acquisition

On June 7, 2021, the Company acquired substantially all of the operating assets and certain liabilities of Forsake, Inc. (“Forsake”) a distributor of outdoor footwear, under the brand name “Forsake.” The principal assets acquired were inventory, accounts receivable, and intellectual property, including the Forsake brand name. The aggregate purchase price was approximately $2.6 million, plus contingent payments to be paid annually over a period of five years, depending on Forsake achieving certain performance measures. The Company’s estimate of the discounted fair value of the contingent payments was approximately $1.3 million in total. The $2.6 million purchase price was funded with the Company’s available cash. Transaction costs incurred in connection with the acquisition were not material to the Company’s financial statements.

The fair values assigned to the assets acquired and liabilities assumed were:


Accounts receivable, net	$	143
Inventories		619
Prepaid expenses and other current assets		72
Property, plant and equipment, net		17
Goodwill		1,205
Trademark		1,900
Accrued liabilities		(48)
	$	3,908

The Company recorded $3.1 million of intangible assets, including $1.2 million of goodwill, which has been allocated to the wholesale and retail segments as of the acquisition date. Goodwill reflects the excess purchase price over the fair value of net assets. All of this goodwill is deductible for tax purposes. The trademark will not be amortized, but instead tested for impairment on an annual basis.

The accompanying consolidated condensed financial statements include the results of Forsake from the date of acquisition through March 31, 2022. For the three months ended March 31, 2022, Forsake’s net sales totaled approximately $0.7 million, of which $0.4 million was recognized in the wholesale segment and $0.3 million was recognized in the retail segment. Pro forma financial information is not presented as the effects of this acquisition are not material to the Company’s results of operations or financial position.

3.4. Earnings Per Share

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


	Three Months EndedMarch 31,				Three Months Ended March 31,
	2021		2020		2022		2021

	(In thousands, except per share amounts)				(In thousands, except per share amounts)
Numerator:
Net earnings	$	1,325	$	1,162	$	4,053	$	1,325

Denominator:
Basic weighted average shares outstanding		9,680		9,781		9,596		9,680
Effect of dilutive securities:
Employee share-based awards		6		5		51		6
Diluted weighted average shares outstanding		9,686		9,786		9,647		9,686

Basic earnings per share	$	0.14	$	0.12	$	0.42	$	0.14

Diluted earnings per share	$	0.14	$	0.12	$	0.42	$	0.14

Diluted weighted average shares outstanding for the three months ended March 31, 2022, excludes anti-dilutive stock options totaling 928,000 shares of common stock at a weighted average price of $27.24. Diluted weighted average shares outstanding for the three months ended March 31, 2021, excludes anti-dilutive stock options totaling 1,160,000 shares of common stock at a weighted average price of $24.86. Diluted weighted average shares outstanding for the three months ended March 31, 2020, excludes anti-dilutive stock options totaling 1,190,000 shares of common stock at a weighted average price of $26.74.

4.5. Investments

Investments, at fair value

~~During the first quarter of~~At March 31, 2022 and December 31, 2021, the Company ~~invested $20.0~~had $0.1 million and $8.1 million, respectively, of cash invested in highly liquid taxable bond funds. The Company classifies these investments as trading securities and reports them at fair value. There were 0 significant unrealized gains or losses on these investments in the first ~~quarter~~quarters of 2022 and 2021. The fair value measurements of these investments are based on quoted market prices in active markets, and thus represent a level 1 valuation as defined by ~~ASC 820.~~

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.

Marketable securities, at amortized cost

The Company also invests in marketable securities. As noted in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, all of the Company’s marketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to ASC ~~Topic~~ 320, Investments –- Debt and Equity Securities, as the Company has the intent and ability to hold all investments to maturity.

~~Below is a summary of the amortized cost and estimated market values of the Company’s marketable securities as of March 31, 2021, and December 31, 2020.~~

March 31, 2021

December 31, 2020

Amortized

Market

Amortized

Market


Cost

Value

Cost

Value

(Dollars in thousands)
Municipal bonds:








Current

$
1,483

$
1,504

$
2,215

$
2,249
Due from one through five years

7,141

7,509

7,420

7,830
Due from six through ten years

2,349

2,777

3,057

3,608
Due from eleven through twenty years

2,314

2,504

2,323

2,547
Total

$
13,287

$
14,294

$
15,015

$
16,234

~~The unrealized gains and losses on marketable securities at March 31, 2021, and at December 31, 2020, were as follows:~~

March 31, 2021

December 31, 2020


Unrealized

Unrealized

Unrealized

Unrealized


Gains

Losses

Gains

Losses

(Dollars in thousands)
Municipal bonds

$
1,007

$
0

$
1,219

$
0

~~The estimated market values provided are level 2 valuations as defined by ASC 820,~~ ~~Fair Value Measurements and Disclosures~~ ~~(“ASC 820”). The Company reviewed its portfolio of investments as of March 31, 2021, and determined that no other-than-temporary market value impairment exists.~~

5.~~Intangible Assets~~

~~During~~Below is a summary of the ~~three months ended March 31, 2021, there were no changes in the carrying value~~amortized cost and estimated market values of the Company’s ~~indefinite-lived intangible assets (goodwill~~marketable securities as of March 31, 2022, and ~~trademarks). The Company’s amortizable intangible assets, which were included within other assets in the Consolidated Condensed Balance Sheets (unaudited), consisted of the following:~~December 31, 2021.


			March 31, 2021					December 31, 2020
	Weighted		Gross					Gross					March 31, 2022				December 31, 2021
	Average		Carrying		Accumulated			Carrying		Accumulated			Amortized		Market		Amortized		Market
	Life (Years)		Amount		Amortization	Net		Amount		Amortization	Net		Cost		Value		Cost		Value

			(Dollars in thousands)					(Dollars in thousands)					(Dollars in thousands)
Amortizable intangible assets
Customer relationships		15	$	3,500	(2,353)	$	1,147	$	3,500	(2,294)	$	1,206
Total amortizable intangible assets			$	3,500	(2,353)	$	1,147	$	3,500	(2,294)	$	1,206
Municipal bonds:
Current													$	719	$	725	$	219	$	223
Due from one through five years														5,705		5,784		6,503		6,805
Due from six through ten years														2,305		2,473		2,479		2,790
Due from eleven through twenty years														1,013		1,044		1,014		1,102
Total													$	9,742	$	10,026	$	10,215	$	10,920

~~Amortization expense related to the intangible assets was approximately $60,000 in both the first quarters~~The unrealized gains and losses on marketable securities at March 31, 2022, and at December 31, 2021, were as follows:


	March 31, 2022				December 31, 2021
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses

	(Dollars in thousands)
Municipal bonds	$	290	$	(6)	$	705	$	0

The estimated market values provided are level 2 valuations as defined by ASC 820. The Company reviewed its portfolio of ~~2021~~investments as of March 31, 2022, and ~~2020.~~determined that no other-than-temporary market value impairment exists.

6.Intangible Assets

The Company’s indefinite-lived intangible assets as recorded in the Consolidated Condensed Balance Sheets (Unaudited) were as follows:


	March 31, 2022		December 31, 2021

	(Dollars in thousands)
Indefinite-lived intangibles:
Goodwill	$	12,317	$	12,317
Trademarks		34,768		34,768
Total	$	47,085	$	47,085

The Company’s amortizable intangible assets, which were included within other assets in the Consolidated Condensed Balance Sheets (unaudited), consisted of the following:


			March 31, 2022						December 31, 2021
	Weighted		Gross						Gross
	Average		Carrying		Accumulated				Carrying		Accumulated
	Life (Years)		Amount		Amortization		Net		Amount		Amortization		Net

			(Dollars in thousands)						(Dollars in thousands)
Amortizable intangible assets
Customer relationships		15	$	3,500	$	(2,586)	$	914	$	3,500	$	(2,528)	$	972
Total amortizable intangible assets			$	3,500	$	(2,586)	$	914	$	3,500	$	(2,528)	$	972

Amortization expense related to the intangible assets was approximately $58,000 in both the first quarters of 2022 and 2021.

7. Segment Information

The Company has 2 reportable segments: North American wholesale operations (“~~wholesale”~~Wholesale”) and North American retail operations (“~~retail”~~Retail”). The Company’s Chief Executive Officer evaluates the performance of the Company’s segments based on earnings (loss) from operations. Therefore, interest income or expense, other income or expense, and income taxes are not allocated to the segments. The “other” category in the table below includes the Company’s wholesale and retail operations in Australia, South Africa, Asia Pacific and Europe, which do not meet the criteria for separate reportable segment classification. Summarized segment data for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, was as follows:


Three Months Ended
March 31,	Wholesale		Retail		Other		Total		Wholesale		Retail		Other		Total

									(Dollars in thousands)
2022
Product sales									$	66,668	$	7,860	$	6,400	$	80,928
Licensing revenues										432		0		0		432
Net sales									$	67,100	$	7,860	$	6,400	$	81,360
Earnings (loss) from operations									$	4,846	$	828	$	(243)	$	5,431
	(Dollars in thousands)
2021
Product sales	$	33,036	$	5,618	$	7,904	$	46,558	$	33,036	$	5,618	$	7,904	$	46,558
Licensing revenues		342		0		0		342		342		0		0		342
Net sales	$	33,378	$	5,618	$	7,904	$	46,900	$	33,378	$	5,618	$	7,904	$	46,900
Earnings (loss) from operations	$	1,359	$	756	$	(481)	$	1,634	$	1,359	$	756	$	(481)	$	1,634

2020
Product sales	$	52,228	$	4,761	$	6,134	$	63,123
Licensing revenues		461		0		0		461
Net sales	$	52,689	$	4,761	$	6,134	$	63,584
Earnings (loss) from operations	$	2,760	$	(89)	$	(1,330)	$	1,341

7.8. Employee Retirement Plans

The components of the Company’s pension expense were as follows:


	Three Months Ended March 31,				Three Months Ended March 31,
	2021		2020		2022		2021

	(Dollars in thousands)				(Dollars in thousands)
Service cost	$	102	$	115	$	112	$	102
Interest cost		371		500		432		371
Expected return on plan assets		(720)		(690)		(752)		(720)
Net amortization and deferral		247		186		208		247
Pension expense	$	0	$	111	$	0	$	0

The components of pension expense other than the service cost component were included in "other (expense) income, net" in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited).

8.9. Leases

The Company leases retail shoe stores, as well as several office and distribution facilities worldwide. The leases have original lease periods expiring between ~~2021~~2022 and ~~2030.~~2029. Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

~~The components of the Company’s operating lease costs were as follows:~~

Three Months Ended March 31,


2021

2020

(Dollars in thousands)
Operating lease costs

$
1,334

$
1,882
Variable lease costs ⁽¹⁾

20

10
Total lease costs

$
1,354

$
1,892

⁽¹⁾~~Variable lease costs primarily include percentage rentals based upon sales in excess of specified amounts.~~

~~Short-term lease costs, which were excluded from the above table, are not material to the Company’s financial statements.~~

~~The following is a schedule of maturities of operating lease liabilities as of March 31, 2021:~~

Operating Leases

(Dollars in thousands)
2021, excluding the quarter ended March 31, 2021

$

3,310
2022

3,587
2023

2,567
2024

1,784
2025

1,117
Thereafter

1,261
Total lease payments

13,626
Less imputed interest

(1,013)
Present value of lease liabilities

$

12,613

~~The operating lease liabilities are classified in the consolidated condensed balance sheets (unaudited) as follows:~~

March 31, 2021

December 31, 2020

(Dollars in thousands)
Operating lease liabilities - current

$
4,048

$
4,245
Operating lease liabilities - non-current

8,565

7,734
Total

$
12,613

$
11,979

The Company determined the present value of its lease liabilities using a weighted-average discount rate of 4.25%. As of March 31, 2021, the Company’s leases have a weighted-average remaining lease term of 3.6 years.

~~Supplemental cash flow information related to the Company’s operating leases is as follows:~~

Three Months Ended March 31,

2021

2020

(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities

$
1,387

$
1,978
Right-of-use assets obtained in exchange for new lease liabilities (noncash)

$
2,022

$
144

~~9. Income Taxes~~

~~The Company’s provision for income taxes and effective tax rates for the three months ended March 31, 2021 and 2020 are presented in the following table:~~

Three Months Ended March 31,


2021

2020


(Dollars in thousands)
Earnings before provision for income taxes

$
1,896

$
1,846

Income tax provision

$
571

$
684

Effective tax rate

30.1
%

37.1
%

~~The Company’s first quarter 2021 and 2020 effective tax rates were negatively impacted because it did not record income tax benefits on foreign subsidiary losses in both periods.~~

~~10.~~~~Share-Based Compensation Plans~~

During the three months ended March 31, 2021, the Company recognized $545,000 of compensation expense associated with stock option and restricted stock awards granted in years 2015 through 2020. During the three months ended March 31, 2020, the Company recognized $351,000 of compensation expense associated with stock option and restricted stock awards granted in years 2016 through 2019.

During the first quarter of 2021, the Company’s Board of Directors approved extending the expiration date of stock options granted in years 2015 and 2016. The original expiration date of the stock options granted in 2015 was August 25, 2021, and was extended by two years to August 25, 2023. The original expiration date of the stock options granted in 2016 was August 25, 2022, and was extended by one year to August 25, 2023. The Company recorded an additional $232,000 of compensation expense during the quarter due to the exercise periods of these options being extended.

~~The following table summarizes the Company’s stock option activity for the three-month period ended March 31, 2021:~~

Weighted

Weighted

Average

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic


Shares

Price

Term (Years)

Value*
Outstanding at December 31, 2020

1,125,383

$
25.62




Granted

—

—




Exercised

—

—




Forfeited or expired

—

—




Outstanding at March 31, 2021

1,125,383

$
25.62

5.2

$
685,000
Exercisable at March 31, 2021

640,512

$
26.77

2.8

$
0

* The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of the Company's stock on March 31, 2021 of $21.63 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

The components of the Company’s operating lease costs were as follows:


	Three Months Ended March 31,
	2022		2021

	(Dollars in thousands)

Operating lease costs	$	1,264	$	1,334
Variable lease costs ⁽¹⁾		—		20
Total lease costs	$	1,264	$	1,354

⁽¹⁾Variable lease costs primarily include percentage rentals based upon sales in excess of specified amounts.

Short-term lease costs, which were excluded from the above table, are not material to the Company’s financial statements.

The following is a schedule of maturities of operating lease liabilities as of March 31, 2022:


	Operating Leases
	(Dollars in thousands)
2022, excluding the quarter ended March 31, 2022	$	2,924
2023		3,013
2024		2,102
2025		1,379
2026		1,025
Thereafter		724
Total lease payments		11,167
Less imputed interest		(829)
Present value of lease liabilities	$	10,338

The operating lease liabilities are classified in the consolidated condensed balance sheets (unaudited) as follows:


	March 31, 2022		December 31, 2021

	(Dollars in thousands)

Operating lease liabilities - current	$	3,451	$	3,593
Operating lease liabilities - non-current		6,887		7,520
Total	$	10,338	$	11,113

The Company determined the present value of its lease liabilities using a weighted-average discount rate of 4.25%. As of March 31, 2022, the Company’s leases have a weighted-average remaining lease term of 3.4 years.

Supplemental cash flow information related to the Company’s operating leases is as follows:


	Three Months Ended March 31,
	2022		2021

	(Dollars in thousands)

Cash paid for amounts included in the measurement of lease liabilities	$	1,128	$	1,387
Right-of-use assets obtained in exchange for new lease liabilities (noncash)	$	0	$	2,022

10. Income Taxes

The effective income tax rates for the three months ended March 31, 2022 and 2021 were 26.5% and 30.1%, respectively. The 2022 and 2021 effective tax rates were negatively impacted because the Company did not record income tax benefits on foreign subsidiary losses in these periods.

11.Share-Based Compensation Plans

During the three months ended March 31, 2022, the Company recognized $350,000 of compensation expense associated with stock option and restricted stock awards granted in years 2017 through 2021. During the three months ended March 31, 2021, the Company recognized $545,000 of compensation expense associated with stock option and restricted stock awards granted in years 2015 through 2020.

The following table summarizes the Company’s stock option activity for the three-month period ended March 31, 2022:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Term (Years)	Value*
Outstanding at December 31, 2021	1,279,833	$	25.44
Granted	—		—
Exercised	(500)		18.00
Forfeited or expired	(5,740)		22.82
Outstanding at March 31, 2022	1,273,593	$	25.46	5.4	$	1,530,000
Exercisable at March 31, 2022	767,622	$	26.59	3.5	$	336,000

* The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of the Company’s stock on March 31, 2022 of $24.72 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

The following table summarizes the Company’s restricted stock award activity for the three-month period ended March 31, ~~2021:~~2022:


				Weighted						Weighted
		Weighted		Average				Weighted		Average
	Shares of	Average		Remaining	Aggregate		Shares of	Average		Remaining	Aggregate
	Restricted	Grant Date		Contractual	Intrinsic		Restricted	Grant Date		Contractual	Intrinsic
	Stock	Fair Value		Term (Years)	Value*		Stock	Fair Value		Term (Years)	Value*
Non-vested at December 31, 2020	72,490	$	23.77
Non-vested at December 31, 2021							78,470	$	23.11
Issued	—		—				—		—
Vested	(150)		28.77				(150)		28.77
Forfeited	—		—				—		—
Non-vested at March 31, 2021	72,340	$	23.76	2.5	$	1,565,000
Non-vested at March 31, 2022							78,320	$	23.10	2.5	$	1,936,000

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of the Company’s stock on March 31, ~~2021~~2022 of ~~$21.63~~$24.72 multiplied by the number of non-vested restricted shares outstanding.

~~11.~~12. Short-Term Borrowings

At March 31, ~~2021,~~2022, the Company had a ~~$30~~$40 million revolving line of credit with a bank that is secured by a lien against the Company’s general corporate assets. The line of credit bears interest at LIBOR plus 1.35% and expires on November 4, ~~2021.~~2022. The related credit agreement contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At March 31, ~~2021,~~2022, there were 0 amounts outstanding on the Company’s line of credit. There were also 0 amounts outstanding on the line of credit during the quarter.

~~12.~~13. Financial Instruments

At March 31, ~~2021,~~2022, the ~~Company had foreign exchange contracts outstanding to sell $5.0 million Canadian dollars at a price of approximately $3.9 million U.S. dollars. The~~ Company’s ~~wholly owned~~wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy ~~$2.8~~$3.9 million U.S. dollars at a price of approximately ~~$3.7~~$5.3 million Australian dollars. These contracts all expire in ~~2021.~~2022. Based on quarter-end exchange rates, there were no significant unrealized gains or losses on the outstanding contracts.

The Company determines the fair value of foreign exchange contracts based on the difference between the foreign currency contract rates and the widely available foreign currency rates as of the measurement date. The fair value measurements are based on observable market transactions, and thus represent a level 2 valuation as defined by ASC 820.

~~13.~~14. Comprehensive Income ~~(Loss)~~

Comprehensive income ~~(loss)~~ for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, was as follows:


	Three Months EndedMarch 31,				Three Months Ended March 31,
	2021		2020		2022		2021

	(Dollars in thousands)				(Dollars in thousands)
Net earnings	$	1,325	$	1,162	$	4,053	$	1,325
Foreign currency translation adjustments		(143)		(2,558)		521		(143)
Pension liability, net of tax of $64 and $48, respectively		183		138
Total comprehensive income (loss)	$	1,365	$	(1,258)
Pension liability, net of tax of $54 and $64, respectively						154		183
Total comprehensive income					$	4,728	$	1,365

The components of accumulated other comprehensive loss as recorded in the Consolidated Condensed Balance Sheets (Unaudited) were as follows:


	March 31,		December 31,
	2022		2021

	(Dollars in thousands)
Foreign currency translation adjustments	$	(6,262)	$	(6,783)
Pension liability, net of tax		(17,857)		(18,011)
Total accumulated other comprehensive loss	$	(24,119)	$	(24,794)

~~The components of accumulated other comprehensive loss as recorded in the Consolidated Condensed Balance Sheets (Unaudited) were as follows:~~

March 31,

December 31,

2021

2020

(Dollars in thousands)
Foreign currency translation adjustments

$
(6,193)

$
(6,050)
Pension liability, net of tax

(21,772)

(21,955)
Total accumulated other comprehensive loss

$
(27,965)

$
(28,005)

The following ~~presents a tabular disclosure about~~table shows changes in accumulated other comprehensive loss during the three months ended March 31, 2022 and 2021:


	Foreign		Defined				Foreign		Defined
	Currency		Benefit				Currency		Benefit
	Translation		Pension				Translation		Pension
	Adjustments		Items		Total		Adjustments		Items		Total
Beginning balance, December 31, 2020	$	(6,050)	$	(21,955)	$	(28,005)
Other comprehensive loss before reclassifications		(143)		0		(143)
Beginning balance, December 31, 2021							$	(6,783)	$	(18,011)	$	(24,794)
Other comprehensive income before reclassifications								521		0		521
Amounts reclassified from accumulated other comprehensive loss		0		183		183		0		154		154
Net current period other comprehensive (loss) income		(143)		183		40
Ending balance, March 31, 2021	$	(6,193)	$	(21,772)	$	(27,965)
Net current period other comprehensive income								521		154		675
Ending balance, March 31, 2022							$	(6,262)	$	(17,857)	$	(24,119)


	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2020	$	(6,050)	$	(21,955)	$	(28,005)
Other comprehensive loss before reclassifications		(143)		0		(143)
Amounts reclassified from accumulated other comprehensive loss		0		183		183
Net current period other comprehensive (loss) income		(143)		183		40
Ending balance, March 31, 2021	$	(6,193)	$	(21,772)	$	(27,965)

The following ~~presents a tabular disclosure about~~table shows reclassification adjustments out of accumulated other comprehensive loss during the three months ended March 31, ~~2021:~~2022:



	Amounts reclassified from				Amounts reclassified from
	accumulated other				accumulated other
	comprehensive loss for			Affected line item in the	comprehensive loss for			Affected line item in the
	the three months ended			statement where net income is	the three months ended			statement where net income is
	March 31, 2021			presented	March 31, 2022			presented
Amortization of defined benefit pension items
Prior service cost	$	(16)	⁽¹⁾	Other income, net	$	2	⁽¹⁾	Other (expense) income, net
Actuarial losses		263	⁽¹⁾	Other income, net		206	⁽¹⁾	Other (expense) income, net
Total before tax		247				208
Tax benefit		(64)				(54)
Net of tax	$	183			$	154

(1)

These amounts were included in pension expense. See Note 78 for additional details.

~~14.~~15. Equity

The following table reconciles the Company’s equity for the three months ended March 31, 2022:


							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss

	(Dollars in thousands)
Balance, December 31, 2021	$	9,709	$	68,718	$	147,762	$	(24,794)
Net earnings		0		0		4,053		0
Foreign currency translation adjustments		0		0		0		521
Pension liability adjustment, net of tax		0		0		0		154
Cash dividends declared		0		0		(2,316)		0
Stock option exercised		0		8		0		0
Share-based compensation expense		0		350		0		0
Shares purchased and retired		(75)		0		(1,722)		0
Balance, March 31, 2022	$	9,634	$	69,076	$	147,777	$	(24,119)

The following table reconciles the Company’s equity for the three months ended March 31, 2021:

Accumulated

Capital in

Other

Common

Excess of

Reinvested

Comprehensive


Stock

Par Value

Earnings

Loss

(Dollars in thousands)
Balance, December 31, 2020

$
9,797

$
67,178

$
138,955

$
(28,005)
Net earnings

0

0

1,325

0
Foreign currency translation adjustments

0

0

0

(143)
Pension liability adjustment, net of tax

0

0

0

183
Cash dividends declared

0

0

(2,336)

0
Share-based compensation expense

0

545

0

0
Shares purchased and retired

(62)

0

(1,017)

0
Balance, March 31, 2021

$
9,735

$
67,723

$
136,927

$
(27,965)

~~The following table reconciles the Company’s equity for the three months ended March 31, 2020:~~


							Accumulated								Accumulated
			Capital in				Other				Capital in				Other
	Common		Excess of		Reinvested		Comprehensive		Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss		Stock		Par Value		Earnings		Loss

	(Dollars in thousands)								(Dollars in thousands)
Balance, December 31, 2019	$	9,873	$	65,832	$	158,825	$	(24,536)
Balance, December 31, 2020									$	9,797	$	67,178	$	138,955	$	(28,005)
Net earnings		0		0		1,162		0		0		0		1,325		0
Foreign currency translation adjustments		0		0		0		(2,558)		0		0		0		(143)
Pension liability adjustment, net of tax		0		0		0		138		0		0		0		183
Cash dividends declared		0		0		(2,357)		0		0		0		(2,336)		0
Share-based compensation expense		0		351		0		0		0		545		0		0
Shares purchased and retired		(60)		0		(1,244)		0		(62)		0		(1,017)		0
Balance, March 31, 2020	$	9,813	$	66,183	$	156,386	$	(26,956)
Balance, March 31, 2021									$	9,735	$	67,723	$	136,927	$	(27,965)

16. Subsequent Event

On May 3, 2022, the Company's Board of Directors authorized the repurchase of an additional 1.0 million shares of common stock under its repurchase program, bringing the total available for repurchase to approximately 1.1 million shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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~~good faith judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. Such statements can be identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” ~~“is likely,~~“likely,” “plans,” “predicts,” “projects,” “should,” “will,” or variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Therefore, the reader is cautioned that these forward-looking statements are subject to a number of risks, uncertainties or other factors that may cause 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 Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

GENERAL

The Company designs and markets quality and innovative footwear principally for men, but also for women and children, under a portfolio of well-recognized brand names, ~~including:~~including Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters and ~~Rafters.~~Forsake. Inventory is purchased from third-party overseas manufacturers. ~~The majority~~Almost all of these foreign-sourced purchases are denominated in U.S. dollars.

The Company has two reportable segments, North American wholesale operations ~~(“wholesale”~~("Wholesale") and North American retail operations ~~(“retail”~~("Retail"). In the wholesale segment, ~~the Company’s~~our products are sold to leading footwear, department, and specialty stores, as well as e-commerce retailers, primarily in the United States and Canada. ~~The Company~~We also ~~has~~have licensing agreements with third parties who sell ~~its~~our branded apparel, accessories and specialty footwear in the United States, as well as its footwear in Mexico and certain markets overseas. Licensing revenues are included in ~~the Company’s~~our wholesale segment. ~~The Company’s~~Our retail segment ~~consisted~~consists of e-commerce businesses and four brick and mortar retail stores in the United ~~States as of March 31, 2021.~~States. Retail sales are made directly to consumers on ~~the Company’s~~our websites, or by ~~Company~~our employees.

The ~~Company’s “other”~~Company's "other" operations include ~~the Company’s~~our wholesale and retail businesses in Australia, South Africa, Asia Pacific (collectively, ~~“Florsheim Australia”~~"Florsheim Australia") and Europe (“("Florsheim ~~Europe”~~Europe"). ~~In late 2020, the Company decided to close~~However, as previously disclosed, we have closed Florsheim Europe and ~~management is~~are in the ~~process~~final stages of winding down this business. As a result, the 2022 operating results of the "other" category reflect only that of Florsheim Australia. The majority of ~~the Company’s~~our operations are in the United States and ~~its~~our results are primarily affected by the economic conditions and retail environment in the United States.

EXECUTIVE OVERVIEW

~~The ongoing COVID-19 pandemic continued to adversely impact the Company’s results~~We experienced strong demand in our wholesale segment during the first ~~three months~~quarter of ~~2021. After~~2022, posting a ~~tough January~~13% sales gain over the first quarter of 2019 (pre-COVID). We achieved record first-quarter wholesale sales, as two of our brands, Florsheim and February, business improved in March across all of the Company’s brands, a trend that continued through April. The Company believes there are a number of factors behind the improved trajectory, including stimulus checks, pent-up demand, the gradual reopening of offices, as well as consumers planning for events, such as weddings and graduations. While the market remains hard to predict, the Company is encouraged by the current level of demand at retail for its more traditional dress and dress-casual footwear.

BOGS, registered individual record first-quarter sales.

BOGS sales rose ~~32%~~72% for the ~~quarter. Throughout the pandemic, BOGS sales have been strong, reflecting the consumer trend toward more time outdoors. BOGS benefitted from late winter weather in February, as it was one~~quarter which is on top of a 17% annual increase last year. Part of the few weather boot brands to have adequate levels of inventory. Meanwhile, BOGS enjoyed a solid start to Spring with its lightly-insulated lifestyle and garden-oriented products. Orders for Fall 2021 are up significantlyreason for the strong increase is we were in a much better overall inventory position on classic BOGS ~~brand.~~

~~Since~~product compared to 2021. We feel good about the ~~beginning~~mix of classic and lifestyle product in our backlog and look forward to a strong second half of the ~~pandemic, demand~~year for ~~the Company’s~~BOGS.

Regarding our legacy brands (Florsheim, Stacy Adams, and Nunn ~~Bush,~~Bush), the comparison to 2021 is not relevant since much of the country was still restricted from a social event and work perspective. However, in comparison to 2019, two of our three legacy brands had strong increases including the record for Florsheim with a 17% increase, as well as a 24% increase for Nunn Bush. Stacy ~~Adams) has been limited, as consumers spent discretionary dollars on more relaxed~~Adams sales reached 80% of 2019 levels. In many instances, we are still filling the pipeline with our major retail partners, and ~~athletic~~we anticipate we will be chasing inventory due to supply chain disruptions with certain footwear ~~and apparel. While demand improved slightly in the Fall of 2020, the Company did not anticipate significant interest in its dress or dress-casual styles until~~packages at least into the second half of ~~2021, when offices were~~2022. We continue to experience strong sell-throughs and high average unit retail prices even as inventory levels work back towards more ~~fully reopened~~normalized levels. The dress and ~~consumers were likely returning to~~refined casual markets remain particularly robust with record social events ~~that required more formal or fashionable attire. However,~~on the ~~Company experienced rising demand across all of its legacy brands for dress~~calendar and ~~dress-casual footwear in~~ the last month of the quarter, earlier than anticipated. The Company also saw good sell-through performance for this category in the weekly sales data provided by key retailers. While consumer demand is still not at 2019 levels, it is higher than management anticipated. Fortunately, the Company was in a strong inventory position and was ablegradual return to ship a good portion of these orders. Management believes that the Company is one of the few companies to maintain significant inventory levels of more traditional footwear, and is well-positioned to pick up market share as this segment of the footwear business rebounds.an office work environment.

~~The Company~~While we are selling a significant amount of dress shoes, we realize that eventually the market will return to a more normalized level as men restock their closets. Our design emphasis during the pandemic has ~~made progress~~been to further develop the casual side of our legacy business within the particular DNA of each brand. We are encouraged by our progress. Today, Nunn Bush very much has a casual profile, and both Stacy Adams and Florsheim are increasing their casual mix. This period of time has allowed us to move down the learning curve and expand our casual range with the expectation that the post pandemic world will embrace a more relaxed lifestyle. We are picking up market share in ~~placing and selling more casual relaxed footwear as part~~the tailored side of the ~~merchandise mix for all~~business and our objective is to also increase our penetration of ~~its legacy brands. Over the past eighteen months, the Company has devoted the majority of its design work toward developing a broad range of~~men's casual ~~footwear in line with the respective brand DNA and aesthetic of Florsheim, Nunn Bush, and Stacy Adams. Even with the resurgence of traditional~~ business ~~footwear, the Company believes the investment in its casual lifestyle category is critical to its future success.~~over time.

~~The Company continues to see~~We had strong growth in ~~its e-commerce business. The first~~the retail segment during the quarter, driven by a 38% increase in our e-commerce businesses. While we are up significantly in sales, one caveat is that higher shipping and advertising costs reduced our profitability. We are working to mitigate these cost increases while maintaining a solid growth trajectory, as e-commerce sales was driven by higher sales on the BOGS website. The Company also started to see e-commerce growth for its legacy brands in March, which continued through April. Continued investment in the Company’s e-commerce business is a key partare an important piece of ~~its strategy and~~our business model ~~moving~~going forward. We are very pleased that our four remaining brick and mortar stores had solid performances with an increase in aggregate sales over 2019.

~~The overall business at~~Regarding Florsheim Australia, ~~improved this quarter.~~which includes New Zealand, the Pacific Rim and South Africa, our sales were down 8%. The ~~related markets have largely opened up~~Omicron outbreak in Hong Kong and ~~are steadily returning to a pre-pandemic lifestyle. The Company is starting to see~~the Pacific Rim significantly reduced both wholesale and retail ~~numbers~~sales in the region compare favorably to 2019 sales levels. At the same time, the Company has exited unprofitable stores and renegotiated leases on more favorable terms, which management believes will create a healthierthat region. However, our business in the Australian ~~market going forward. The Australian wholesale~~and New Zealand markets was actually up slightly in local currency even with the increased case count versus nearly a zero-case count for the same period in 2021. We are encouraged that retail traffic increased as the quarter progressed and we believe that our position is strengthening in this market. As noted previously, the pandemic has enabled us to reset our business ~~was also boosted by a significant increase in the BOGS wholesale business, which is off to a strong start in 2021,~~model on the ~~heels~~Australian continent. A combination of ~~solid~~more manageable leases, e-commerce growth, ~~last year.~~

~~As disclosed last quarter, the Company decided to wind down its Florsheim wholesale and retail businesses in Europe. The Company’s European business has been unprofitable the last few years~~ and the ~~situation worsened with the onset~~continued growth of ~~the pandemic. The Company has reached~~our BOGS Australian business puts us in a ~~licensing agreement with~~much better position to have a ~~manufacturer and marketer of footwear brands, based~~profitable year in ~~Florence, Italy, which will enable Florsheim men’s and women’s shoes to be sold in Europe and other select markets beginning in November of 2021.~~that region.

The Company has brought down inventories to align with lower sales of the legacy brands. Ending inventory at March 31, 2021, was $47.3 million compared $59.0 million at the end of 2020. With the increased demand for dress and business-casual shoes, the Company has started the process of rebuilding its inventories. Many of the Company’s large accounts are requesting delivery for “as soon as possible” to replenish their dress shoe inventories in order to meet current higher consumer demand. The Company’s backlog has grown for the third and fourth quarters of 2021, however, forecasting is still challenging as retailers remain somewhat cautious. Given the long lead times out of Asia, the Company is bringing in extra inventory on its core styles, as well as some of the new casual product that has sold well at retail, to position the Company for a stronger second half as the U.S. economy opens up. The increased demand for BOGS is also contributing to the Company’s plan for higher inventories.

The Company is currently experiencing price pressure due to increases in freight costs as well as increases in the cost of materials. The Company is trying to cover as much of its needs as possible for this year at current prices, but is planning to increase selling prices in the second half of the year to maintain its gross margins.

Consolidated Sales and Earnings ~~Highlights~~

Consolidated net sales ~~for~~were a first-quarter record of $81.4 million compared to $46.9 million in the first quarter of ~~2021 were $46.9 million, down 26%~~2021. Consolidated gross earnings declined to 35.8% of net sales for the quarter compared to 41.2% of net sales in last ~~year’s~~year's first quarter, ~~net sales of $63.6 million.~~primarily due to lower wholesale margins, as discussed below. Consolidated earnings from operations ~~were $1.6~~totaled $5.4 million for the quarter, ~~an increase of 22%~~ compared to ~~$1.3~~$1.6 million in the same period of ~~2020. Consolidated~~2021. Quarterly net earnings ~~were~~rose to $4.1 million, or $0.42 per diluted share, up from $1.3 million, or $0.14 per diluted share, in last year's first quarter.

Last year's first quarter results continued to be impacted by the effects of the COVID-19 pandemic. As such, comparisons of first quarter 2022 financial performance to 2021 may have limited utility. Therefore, selected comparisons to 2019 (pre-COVID) are included as appropriate. Net sales for the first quarter ~~of 2021 and $1.2 million in last year’s first quarter. Diluted~~2022 exceeded 2019 levels by 10%. Our operating earnings ~~per share were $0.14 per share this quarter and $0.12 per share in the first quarter of 2020.~~also improved, beating 2019 levels by 6%.

Financial Position ~~Highlights~~

At March 31, ~~2021,~~2022, cash, short-term investments, and marketable securities totaled ~~$58.2~~$34.0 million and there ~~was~~were no ~~debt~~amounts outstanding on ~~the Company’s revolving~~our line of credit. During the first three months of ~~2021, the Company~~2022, we generated ~~$14.2 million~~$231,000 of cash from ~~operations. The Company purchased $20.0~~operations and liquidated $8.1 million of ~~short-term investments,~~investment securities. We paid dividends of $2.3 million, repurchased ~~$1.1~~$1.8 million of ~~Company~~our common stock, and had ~~$73,000~~$352,000 of capital expenditures during the quarter.

SEGMENT ANALYSIS

Net sales and earnings (loss) from operations for the Company’s segments for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, were as follows:


	Three Months Ended March 31,				%		Three Months Ended March 31,				%
	2021		2020		Change		2022		2021		Change

	(Dollars in thousands)						(Dollars in thousands)
Net Sales
North American Wholesale	$	33,378	$	52,689	(37)	%	$	67,100	$	33,378	101	%
North American Retail		5,618		4,761	18	%		7,860		5,618	40	%
Other		7,904		6,134	29	%		6,400		7,904	-19	%
Total	$	46,900	$	63,584	(26)	%	$	81,360	$	46,900	73	%

Earnings (Loss) from Operations
North American Wholesale	$	1,359	$	2,760	(51)	%	$	4,846	$	1,359	257	%
North American Retail		756		(89)	NM			828		756	10	%
Other		(481)		(1,330)	64	%		(243)		(481)	49	%
Total	$	1,634	$	1,341	22	%	$	5,431	$	1,634	232	%

~~NM – Not meaningful~~

North American Wholesale Segment

Net Sales

Net sales in the Company’s North American wholesale segment for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, were as follows:


	Three Months Ended March 31,				%		Three Months Ended March 31,				%
	2021		2020		Change		2022		2021		Change

	(Dollars in thousands)						(Dollars in thousands)
North American Wholesale Segment Net Sales
Stacy Adams	$	7,900	$	16,170	(51)	%	$	16,797	$	7,900	113	%
Nunn Bush		8,021		10,619	(24)	%		14,374		8,021	79	%
Florsheim		9,479		19,642	(52)	%		22,012		9,479	132	%
BOGS/Rafters		7,636		5,797	32	%		13,099		7,636	72	%
Forsake								386		—	100	%
Total North American Wholesale	$	33,036	$	52,228	(37)	%	$	66,668	$	33,036	102	%
Licensing		342		461	(26)	%		432		342	26	%
Total North American Wholesale Segment	$	33,378	$	52,689	(37)	%	$	67,100	$	33,378	101	%

~~Last year’s~~First quarter 2022 sales were up across all of our brands. As discussed above, last year's first quarter included approximately two-and-a-half months of sales that occurred before the pandemic struck the U.S. In mid-March 2020, much of the country shut down, which resulted in a sharp drop in sales in the last several weeks of the quarter. First quarter 2021 sales of the ~~Stacy~~legacy brands (Stacy Adams, Nunn Bush, and ~~Florsheim brands continue to be~~Florsheim) were lower than normal because the pandemic significantly impacted ~~by the effects~~sales of ~~the ongoing pandemic, resulting in lower demand for~~ dress and dress-casual footwear. ~~However, sales~~Sales of the BOGS outdoor brand, which have been less affected by the pandemic, rose ~~32%~~72% for the quarter, with sales up across all major distribution channels. The wholesale segment experienced significant growth in the first quarter of ~~2021, as consumers continue to spend more time outdoors during~~2022, with net sales surpassing 2019 levels by 13%. Florsheim and BOGS achieved record first-quarter sales, and sales of the ~~pandemic.~~

Nunn Bush brand beat 2019 levels by 24%. Stacy Adams sales reached 80% of 2019 levels.

Licensing revenues consist of royalties earned on sales of branded apparel, accessories and specialty footwear in the United States and on branded footwear in Mexico and certain overseas markets. ~~Licensing revenues were down for the quarter as compared to the first quarter of 2020, in line with reductions in licensees’ sales of branded products as a result of the pandemic.~~

Earnings from Operations

~~Gross~~Wholesale gross earnings ~~for~~were 30.0% of net sales in the ~~North American wholesale segment were~~first quarter of 2022, compared to 34.5% of net sales in the first quarter of ~~2021, compared to 31.8% of net sales~~2021. The decrease in ~~the first quarter of 2020. Last year’s~~ gross margins ~~were negatively impacted by a 15% tariff on certain footwear imported from China beginning~~was primarily due to higher inbound freight costs, as we continued to pay premium rates during the quarter. Wholesale gross margins are expected to improve in ~~September 2019;~~mid to late 2022 as the ~~tariff was later reduced to 7.5% in February 2020. Gross margins improved in the first quarter of 2021 because the Company sold through much of the higher-tariffed inventory during 2020.~~supply chain stabilizes and negotiated price increases with customers go into effect.

North American wholesale segment selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs and depreciation. Wholesale selling and administrative expenses were $15.3 million for the quarter compared to $10.2 million ~~or 31% of net~~in last year's first quarter. The increase was largely due to higher employee costs as our sales ~~in the~~volumes have increased. Additionally, last year's first quarter ~~of 2021, compared to $14.0 million, or 27% of net sales, in the first quarter of 2020. First quarter 2021~~ expenses were reduced by approximately $1.8 million in government wage subsidies. ~~Additionally, wages~~As a percent of net sales, selling and ~~advertising costs~~administrative expenses were 23% in 2022 and 31% in 2021. Expenses were down ~~for the quarter as a result~~relative to sales because many of ~~the Company’s cost-cutting measures.~~our costs do not vary directly with sales.

Earnings from operations in the North American wholesale segment ~~were $1.4~~rose to $4.8 million in the first quarter of ~~2021, down 51% compared to $2.8~~2022, up from $1.4 million in the same period last ~~year. The decrease was~~year, due to ~~lower~~higher sales, partially offset by ~~higher~~lower gross margins and ~~lower~~higher selling and administrative expenses.

The ~~Company’s~~Company's cost of sales does not include distribution costs (e.g., receiving, inspection, warehousing, shipping and handling ~~costs)~~costs, which are included in selling and administrative expenses). Wholesale distribution costs were $3.6 million in the first quarter of 2022 and $2.3 million in the first quarter of ~~2021 and $3.3 million in the~~2021. Last year's first quarter ~~of 2020. First quarter 2021~~ distribution costs were reduced by approximately $500,000 in government wage ~~subsidies, which partially offset related warehouse labor costs during the quarter. These costs were included in selling and administrative expenses. The Company’s~~subsidies. Our gross earnings may not be comparable to other companies, as some companies may include distribution costs in cost of sales.

North American Retail Segment

Net Sales

Net sales in ~~the Company’s~~our North American retail segment were a first-quarter record of $7.9 million compared to $5.6 million in ~~the first quarter of 2021, up 18% compared to $4.8 million in~~ last ~~year’s~~year's first quarter. Same store sales ~~were up 32% for the quarter~~rose 39%, due to a ~~36%~~38% increase in e-commerce sales ~~mainly BOGS, offset~~(with sales up on all brands' websites) and higher brick-and-mortar sales. Last year's brick-and-mortar sales were down significantly as a result of the pandemic. 2022 retail net sales surpassed the 2019 level by ~~a 5% decline~~41%, due primarily to growth in ~~brick-and-mortar same store sales. There were four fewer brick-and-mortar stores operating at March 31, 2021, as compared to March 31, 2020.~~

e-commerce.

Earnings from Operations

Retail gross earnings ~~were 65.3%~~as a percent of net sales were 65.9% and 65.3% in ~~both~~ the first quarters of 2022 and 2021, ~~and 2020.~~respectively. Selling and administrative expenses for the retail segment ~~include, and are~~consist primarily ~~related to,~~of freight, advertising expense, employee costs, and rent and occupancy costs. Retail selling and administrative expenses were $4.4 million, or 55% of net sales, in the first quarter of 2022 versus $2.9 million, or 52% of net sales, in ~~the first quarter of 2021 versus $3.2 million, or 67% of net sales, in~~ last ~~year’s~~year's first quarter. The ~~decrease in expenses as a percent of net sales~~increase was primarily due to ~~lower operating costs resulting from the closure of brick-and-mortar locations. The retail segment had~~higher e-commerce expenses, primarily freight and advertising. Retail operating earnings ~~of $756,000 this~~were $828,000 for the quarter compared to ~~operating losses of $89,000 in~~$756,000 last ~~year’s first quarter. The improvement~~year. This increase was primarily due to ~~benefits~~improved performance at active brick-and-mortar locations. Earnings from ~~closing unprofitable stores and~~our e-commerce businesses were down slightly for the quarter, as increased sales were offset by the higher ~~earnings from the Company’s e-commerce businesses.~~

expenses.

Other

~~The Company’s~~Our other businesses include ~~its~~our wholesale and retail operations of Florsheim Australia and Florsheim Europe. ~~Net~~Other net sales for the first quarter of ~~the Company’s other businesses were~~2022 totaled $6.4 million compared to $7.9 million in the ~~first quarter of 2021, up 29% compared to $6.1 million in last year’s first quarter.~~2021. The ~~increase~~decrease was due to ~~39%~~the closing of Florsheim Europe and lower sales ~~growth~~ at Florsheim ~~Australia, as compared to~~Australia. Florsheim Australia's net sales fell 8% for the ~~prior year’s first~~ quarter, with sales updown in both its wholesale and retail businesses. The ~~stronger~~weakening of the Australian dollar relative to the U.S. dollar also contributed to the ~~increase,~~decrease, as Florsheim ~~Australia’s~~Australia's net sales in local currency were ~~up 19%~~only down 2% for the quarter. ~~Collectively,~~Retail sales in Australia, which account for a majority of Florsheim ~~Australia and~~Australia's sales, were up 7% for the quarter in local currency, but these results were offset by lower sales in Asia due to additional lockdowns imposed in Hong Kong during the quarter. Florsheim ~~Europe had operating losses totaling $481,000 in~~Australia's net sales for the first quarter of ~~2021, compared to~~2022 reached 89% of 2019 levels.

Other operating losses totaled $243,000 for the quarter versus operating losses of ~~$1.3 million in the first quarter of 2020.~~$481,000 last year. The ~~reduction in operating losses~~improvement between periods was primarily due to ~~improved performance~~the shedding of losses at Florsheim ~~Australia.~~Europe.

Other income and expense and taxes

Interest income was ~~$131,000~~$91,000 and ~~$149,000~~$131,000 in the first quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Interest expense was ~~$7,000~~$1,000 and ~~$51,000~~$7,000 for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Other (expense) income, net, totaled ~~$138,000~~expense of $6,000 for the quarter compared to ~~$407,000~~income of $138,000 in the first quarter of ~~2020.~~2021. The decrease was primarily due to lower unrealized gains on ~~favorable~~ foreign exchange contracts held by Florsheim Australia.

~~The Company’s~~Our effective tax rate for the three-months ended March 31, ~~2021,~~2022, was ~~30.1%~~26.5% compared to ~~37.0%~~30.1% for the same period of ~~2020.~~2021. The ~~2021~~2022 and ~~2020~~2021 effective tax rates were negatively impacted because ~~the Company~~we did not record income tax benefits on foreign subsidiary losses in ~~both~~these periods.

LIQUIDITY AND CAPITAL RESOURCES

~~The Company’s~~Our primary sources of liquidity are ~~its~~our cash, short-term investments, short-term marketable securities, and ~~its~~our revolving line of credit. ~~The Company~~We generated ~~$14.2 million~~$231,000 of cash from operating activities during the first three months of ~~2021,~~2022, compared to ~~$15.0~~$14.2 million in the same period one year ago. The decrease in ~~2021~~2022 was primarily due to changes in operating assets and liabilities, principally ~~inventory.~~inventory and accounts payable. We are continuing to build our inventory levels as required to support the increased demand for our products.

~~During the first quarter of 2021, the Company invested $20.0 million of cash in highly liquid taxable bond funds.~~

~~The Company~~We paid ~~one quarterly dividend~~dividends totaling $2.3 million in both the first ~~quarter~~quarters of ~~2021,~~2022 and two quarterly dividends totaling $4.7 million in the first quarter of 2020. The Company accelerated the timing of its January 2021 quarter dividend into 2020, and resumed its regular quarterly dividend payment schedule in March 2021. On May ~~4, 2021, the Company’s~~3, 2022, our Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on May ~~28, 2021,~~27, 2022, payable June 30, ~~2021.~~2022.

~~The Company repurchases its~~We repurchase our common stock under ~~its~~our share repurchase program when ~~the Company believes~~we believe market conditions are favorable. During the first three months of ~~2021, the Company~~2022, we repurchased ~~61,737~~75,097 shares for a total cost of ~~$1.1~~$1.8 million. As of March 31, ~~2021, the Company~~2022, we had the authority to repurchase approximately ~~274,000~~135,000 shares under ~~its~~our previously announced stock repurchase program.

On May 3, 2022, the Company's Board of Directors authorized the repurchase of an additional 1.0 million shares, bringing the total available to purchase to approximately 1.1 million shares. See Part II, Item 2, "Unregistered Sales of Equity Securities and Use of Proceeds" below for more information.

Capital expenditures were ~~$73,000~~$352,000 in the first three months of ~~2021.~~2022. Management estimates that annual capital expenditures for ~~2021~~2022 will be between ~~$1.0~~$2.0 million and ~~$2.0~~$3.0 million.

At March 31, ~~2021, the Company~~2022, we had a ~~$30~~$40 million revolving line of credit with a bank that is secured by a lien against ~~the Company’s~~our general corporate assets. The line of credit bears interest at LIBOR plus 1.35% and expires on November 4, ~~2021.~~2022. The related credit agreement contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At March 31, ~~2021,~~2022, there were no amounts outstanding on the ~~Company’s~~ line of ~~credit.~~credit and we were in compliance with all financial covenants. There were also no amounts outstanding on the line of credit during the quarter. ~~The Company expects~~We expect to renew this line of credit later this year, but cannot provide any assurances.

As of March 31, ~~2021,~~2022, approximately ~~$3.5~~$3.4 million of cash and cash equivalents was held by the Company’s foreign subsidiaries.

~~The Company~~We will continue to evaluate the best uses for ~~its~~our available liquidity, including, among other uses, capital expenditures, continued stock repurchases and acquisitions. ~~The Company believes~~We believe that available cash, short-term investments, marketable securities, cash provided by operations, and available borrowing facilities will provide adequate support for the cash needs of the business for at least one year, although there can be no assurances.

~~COMMITMENTS~~

~~Not applicable.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

~~The Company maintains~~We maintain disclosure controls and procedures designed to ensure that the information ~~the Company~~we must disclose in ~~its~~our filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. ~~The Company’s~~Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated ~~the Company’s~~our 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”~~"Exchange Act"), as of the end of the period covered by this report (the ~~“Evaluation Date”~~"Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, ~~the Company’s~~our 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~~our periodic filings under the Exchange Act. Such officers have also concluded that, as of the Evaluation Date, ~~the Company’s~~our disclosure controls and procedures are effective in accumulating and communicating information in a timely manner, allowing timely decisions regarding required disclosures.

There have been no ~~significant~~ 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~~our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

1718

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

~~Item 1A. Risk Factors.~~

~~There have been no material changes to the risk factors affecting the Company from those disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2020.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In 1998, the ~~Company’s~~Company's stock repurchase program was established. On several occasions since the ~~program’s~~program's inception, ~~the~~our Board of Directors has increased the number of shares authorized for repurchase under the program. In total, ~~7.5~~8.5 million shares have been authorized for repurchase. This includes the additional 1.0 million shares that were authorized for repurchase on May 3, 2022. The table below presents information pursuant to Item 703(a) of Regulation S-K regarding ~~the~~our repurchases of ~~the Company’s~~our common stock ~~by the Company~~ in the three-month period March 31, ~~2021.~~2022.


					Maximum Number					Maximum Number
	Total	Average		Total Number of	of Shares	Total	Average		Total Number of	of Shares
	Number	Price		Shares Purchased as	that May Yet Be	Number	Price		Shares Purchased as	that May Yet Be
	of Shares	Paid		Part of the Publicly	Purchased Under	of Shares	Paid		Part of the Publicly	Purchased Under
Period	Purchased	Per Share		Announced Program	the Program	Purchased	Per Share		Announced Program	the Program
01/01/2021 - 01/31/2021	46,013	$	17.36	46,013	289,767
02/01/2021 - 02/28/2021	13,829	$	17.80	13,829	275,938
03/01/2021 - 03/31/2021	1,895	$	17.85	1,895	274,043
01/01/2022 - 01/31/2022						22,014	$	23.64	22,014	188,562
02/01/2022 - 02/28/2022						20,460	$	24.24	20,460	168,102
03/01/2022 - 03/31/2022						32,623	$	23.92	32,623	135,479
Total	61,737		17.48	61,737		75,097	$	23.92	75,097

Item 6. Exhibits.

Exhibit	Description	Incorporation Herein By Reference To	Filed Herewith


31.1	Certification of Chief Executive Officer		X

31.2	Certification of Chief Financial Officer		X

32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer		X

101	The following financial information from Weyco Group, Inc.'s’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021~~2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets (Unaudited); (ii) Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited); (iii) Consolidated Condensed Statements of Cash Flows (Unaudited); and (iv) Notes to Consolidated Condensed Financial Statements, furnished herewith		X

104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021,~~2022 formatted in iXBRL (included in Exhibit 101).		X

1820

SIGNATURES

Pursuant to the requirements 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.

Dated: May ~~10, 2021~~9, 2022		/s/ Judy Anderson
		~~/s/ John F. Wittkowske~~Judy Anderson
		~~John F. Wittkowske~~
		~~Senior~~ Vice President and Chief Financial Officer

1921



		Operating Leases
		(Dollars in thousands)
2021, excluding the quarter ended March 31, 2021	$		3,310
2022			3,587
2023			2,567
2024			1,784
2025			1,117
Thereafter			1,261
Total lease payments			13,626
Less imputed interest			(1,013)
Present value of lease liabilities	$		12,613