UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 20162017

 

Or

 

¨ 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:0-9068

 

WEYCO GROUP, INC.

(Exact name of registrant as specified in its charter)

WEYCO GROUP, INC.
(Exact name of registrant as specified in its charter)

 

WISCONSIN39-0702200
(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)

 

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.

Yesx    No¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yesx    No¨

 

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

 

Large accelerated filer¨    Accelerated filer  x   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¨Nox

 

As of April 30, 2016,28, 2017, there were 10,620,918 sharesof10,403,947 shares of common stock outstanding.

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

The following unaudited consolidated condensed financial statements have been prepared by Weyco Group, Inc. (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 that the disclosures made are adequate to make the information not misleading. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s latest annual report on Form 10-K.

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

 

 March 31, December 31,  March 31, December 31, 
 2016  2015  2017  2016 
 (Dollars in thousands)  (Dollars in thousands) 
ASSETS:                
Cash and cash equivalents $16,317  $17,926  $21,473  $13,710 
Marketable securities, at amortized cost  3,476   4,522   4,756   4,601 
Accounts receivable, net  59,119   54,009   47,762   50,726 
Income tax receivable  0   789 
Inventories  74,885   97,184   55,134   69,898 
Prepaid expenses and other current assets  4,002   5,835   3,076   6,203 
Total current assets  157,799   179,476   132,201   145,927 
                
Marketable securities, at amortized cost  21,737   20,685   19,283   21,061 
Deferred income tax benefits  101   -   701   660 
Property, plant and equipment, net  32,006   31,833   33,345   33,717 
Goodwill  11,112   11,112   11,112   11,112 
Trademarks  34,748   34,748   32,978   32,978 
Other assets  21,314   21,143   22,762   22,785 
Total assets $278,817  $298,997  $252,382  $268,240 
                
LIABILITIES AND EQUITY:                
Short-term borrowings $24,634  $26,649  $-  $4,268 
Accounts payable  4,752   13,339   4,844   11,942 
Dividend payable  -   2,147   -   2,192 
Accrued liabilities  9,543   17,484   9,275   10,572 
Accrued income tax payable  550   31   193   - 
Deferred income tax liabilities  1,996   1,537 
Total current liabilities  41,475   61,187   14,312   28,974 
                
Deferred income tax liabilities  -   70   801   703 
Long-term pension liability  30,505   30,188   27,716   27,801 
Other long-term liabilities  2,637   2,823   2,453   2,482 
                
Common stock  10,656   10,767   10,430   10,505 
Capital in excess of par value  46,134   45,759   50,911   50,184 
Reinvested earnings  158,093   160,325   155,182   157,468 
Accumulated other comprehensive loss  (17,200)  (18,467)  (16,077)  (16,569)
Total Weyco Group, Inc. equity  197,683   198,384   200,446   201,588 
Noncontrolling interest  6,517   6,345   6,654   6,692 
Total equity  204,200   204,729   207,100   208,280 
Total liabilities and equity $278,817  $298,997  $252,382  $268,240 

 

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

 

 1 

 

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)

 

 Three Months Ended March 31,  Three Months Ended March 31, 
 2016  2015  2017  2016 
 (In thousands, except per share amounts)  (In thousands, except per share amounts) 
          
Net sales $78,900  $78,052  $69,120  $78,900 
Cost of sales  51,773   49,315   43,892   51,773 
Gross earnings  27,127   28,737   25,228   27,127 
                
Selling and administrative expenses  23,312   22,951   21,769   22,920 
Earnings from operations  3,815   5,786   3,459   4,207 
                
Interest income  204   260   179   204 
Interest expense  (73)  (18)  (7)  (73)
Other income (expense), net  154   (278)
Other expense, net  (135)  (238)
                
Earnings before provision for income taxes  4,100   5,750   3,496   4,100 
                
Provision for income taxes  1,468   2,158   1,381   1,468 
                
Net earnings  2,632   3,592   2,115   2,632 
                
Net loss attributable to noncontrolling interest  (55)  (41)  (102)  (55)
                
Net earnings attributable to Weyco Group, Inc. $2,687  $3,633  $2,217  $2,687 
                
Weighted average shares outstanding                
Basic  10,657   10,770   10,435   10,657 
Diluted  10,693   10,867   10,498   10,693 
                
Earnings per share                
Basic $0.25  $0.34  $0.21  $0.25 
Diluted $0.25  $0.33  $0.21  $0.25 
                
Cash dividends declared (per share) $0.20  $0.19  $0.21  $0.20 
                
Comprehensive income $4,126  $2,266  $2,875  $4,126 
                
Comprehensive income (loss) attributable to noncontrolling interest  172   (301)
Comprehensive income attributable to noncontrolling interest  166   172 
                
Comprehensive income attributable to Weyco Group, Inc. $3,954  $2,567  $2,709  $3,954 

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

2

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

  Three Months Ended March 31, 
  2017  2016 
  (Dollars in thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings $2,115  $2,632 
Adjustments to reconcile net earnings to net cash provided by operating activities -        
Depreciation  1,001   919 
Amortization  97   99 
Bad debt expense (income)  133   (142)
Deferred income taxes  10   144 
Net foreign currency transaction losses (gains)  1   (149)
Stock-based compensation  369   364 
Pension expense  266   767 
Increase in cash surrender value of life insurance  (135)  (135)
Changes in operating assets and liabilities -        
Accounts receivable  2,823   (4,950)
Inventories  14,765   22,313 
Prepaid expenses and other assets  3,210   1,715 
Accounts payable  (7,096)  (8,571)
Accrued liabilities and other  (1,291)  (2,005)
Accrued income taxes  981   528 
Net cash provided by operating activities  17,249   13,529 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of marketable securities  (250)  (1,501)
Proceeds from maturities of marketable securities  1,850   1,475 
Purchase of property, plant and equipment  (416)  (924)
Net cash provided by (used for) investing activities  1,184   (950)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Cash dividends paid  (4,378)  (4,272)
Cash dividends paid to noncontrolling interest of subsidiary  (204)  - 
Shares purchased and retired  (2,393)  (2,895)
Proceeds from stock options exercised  356   12 
Payment of contingent consideration  -   (5,217)
Proceeds from bank borrowings  6,816   31,299 
Repayments of bank borrowings  (11,084)  (33,314)
Income tax benefits from stock-based compensation  15   - 
Net cash used for financing activities  (10,872)  (14,387)
         
Effect of exchange rate changes on cash and cash equivalents  202   199 
         
Net increase (decrease) in cash and cash equivalents $7,763  $(1,609)
         
CASH AND CASH EQUIVALENTS at beginning of period  13,710   17,926 
         
CASH AND CASH EQUIVALENTS at end of period $21,473  $16,317 
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
Income taxes paid, net of refunds $308  $693 
Interest paid $7  $73 

 

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

 

2

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

  Three Months Ended March 31, 
  2016  2015 
  (Dollars in thousands) 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings $2,632  $3,592 
Adjustments to reconcile net earnings to net cash provided by operating activities -        
Depreciation  919   734 
Amortization  99   110 
Bad debt (income) expense  (142)  34 
Deferred income taxes  144   (55)
Net foreign currency transaction (gains) losses  (149)  203 
Stock-based compensation  364   360 
Pension expense  767   937 
Increase in cash surrender value of life insurance  (135)  (135)
Changes in operating assets and liabilities -        
Accounts receivable  (4,950)  (683)
Inventories  22,313   7,822 
Prepaid expenses and other assets  1,715   1,870 
Accounts payable  (8,571)  (8,841)
Accrued liabilities and other  (2,005)  (5,564)
Accrued income taxes  528   1,218 
Net cash provided by operating activities  13,529   1,602 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of marketable securities  (1,501)  (300)
Proceeds from maturities of marketable securities  1,475   1,715 
Purchase of property, plant and equipment  (924)  (531)
Net cash (used for) provided by investing activities  (950)  884 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Cash dividends paid  (4,272)  (4,095)
Shares purchased and retired  (2,895)  (2,422)
Proceeds from stock options exercised  12   2,149 
Payment of contingent consideration  (5,217)  - 
Proceeds from bank borrowings  31,299   31,419 
Repayments of bank borrowings  (33,314)  (30,203)
Income tax benefits from stock-based compensation  -   412 
Net cash used for financing activities  (14,387)  (2,740)
         
Effect of exchange rate changes on cash and cash equivalents  199   (128)
         
Net decrease in cash and cash equivalents $(1,609) $(382)
         
CASH AND CASH EQUIVALENTS at beginning of period  17,926   12,499 
         
CASH AND CASH EQUIVALENTS at end of period $16,317  $12,117 
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
Income taxes paid, net of refunds $693  $535 
Interest paid $73  $18 

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

 3 

 

 

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 monththree-month period ended March 31, 2016,2017, may not necessarily be indicative of the results for the full year.

 

2.New Accounting Pronouncements

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2017-07“Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost”(“ASU 2017-07”). This new standard requires that employers disaggregate the service cost component from the other components of net periodic benefit cost in the income statement. The service cost component should be included in the same line item as other compensation costs rendered by employees, while the other cost components should be presented outside of earnings from operations. The amendments in this update are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted. The Company retrospectively adopted this ASU in the first quarter of 2017. Accordingly, the service cost component of net periodic benefit cost was included within selling and administrative expenses while the other cost components were classified in other expense, net, in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited). See Note 8.

3.Reclassification

Certain prior year amounts in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited) were reclassified to conform to current year presentation. For the three months ended March 31, 2016, the Company reclassified $392,000 of expense from selling and administrative expenses to other expense, net. This amount represents the non-service cost components of net periodic benefit cost for the period then ended, and was reclassified in connection with the adoption of ASU 2017-07. This reclassification had no effect on previously reported net earnings or equity.

4.Earnings Per Share

 

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

 

 Three Months Ended March 31,  Three Months Ended March 31, 
 2016  2015  2017  2016 
 (In thousands, except per share amounts)  (In thousands, except per share amounts) 
Numerator:                
Net earnings attributable to Weyco Group, Inc. $2,687  $3,633  $2,217  $2,687 
                
Denominator:                
Basic weighted average shares outstanding  10,657   10,770   10,435   10,657 
Effect of dilutive securities:                
Employee stock-based awards  36   97   63   36 
Diluted weighted average shares outstanding  10,693   10,867   10,498   10,693 
                
Basic earnings per share $0.25  $0.34  $0.21  $0.25 
                
Diluted earnings per share $0.25  $0.33  $0.21  $0.25 

 

Diluted weighted average shares outstanding for the three months ended March 31, 2017, exclude anti-dilutive stock options totaling 573,000 shares of common stock at a weighted average price of $27.45. Diluted weighted average shares outstanding for the three months ended March 31, 2016, exclude anti-dilutive stock options totaling 932,000 shares of common stock at a weighted average price of $27.09. Diluted weighted average shares outstanding for the three months ended March 31, 2015, exclude anti-dilutive stock options totaling 652,700 shares of common stock at a weighted average price of $27.76.

4

 

3.5.Investments

 

As noted in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2015,2016, all of the Company’s investmentsmarketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to Accounting Standards Codification 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 investmentmarketable securities as of March 31, 2016,2017, and December 31, 2015.2016.

 

  March 31, 2016  December 31, 2015 
  Amortized  Market  Amortized  Market 
  Cost  Value  Cost  Value 
  (Dollars in thousands) 
Investments:                
Current $3,476  $3,504  $4,522  $4,546 
Due from one through five years  12,974   13,653   12,395   13,057 
Due from six through ten years  7,699   8,124   6,929   7,217 
Due from eleven through twenty years  1,064   1,099   1,361   1,391 
Total $25,213  $26,380  $25,207  $26,211 

4

  March 31, 2017  December 31, 2016 
  Amortized  Market  Amortized  Market 
  Cost  Value  Cost  Value 
  (Dollars in thousands) 
Municipal bonds:                
Current $4,756  $4,770  $4,601  $4,610 
Due from one through five years  11,437   11,820   12,133   12,486 
Due from six through ten years  6,373   6,536   7,705   7,804 
Due from eleven through twenty years  1,473   1,509   1,223   1,222 
Total $24,039  $24,635  $25,662  $26,122 

 

The unrealized gains and losses on investmentmarketable securities at March 31, 2016,2017, and at December 31, 2015,2016, were as follows:

 

  March 31, 2016  December 31, 2015 
  Unrealized  Unrealized  Unrealized  Unrealized 
  Gains  Losses  Gains  Losses 
  (Dollars in thousands) 
Investments $1,177  $(10) $1,014  $(10)
  March 31, 2017  December 31, 2016 
  Unrealized  Unrealized  Unrealized  Unrealized 
  Gains  Losses  Gains  Losses 
  (Dollars in thousands) 
Municipal bonds $658  $(62) $546  $(86)

 

The estimated market values provided are level 2 valuations as defined by Accounting Standards Codification 820,Fair Value Measurements and Disclosures(“ASC 820”). The Company reviewed its portfolio of investments as of March 31, 2016,2017, and determined that no other-than-temporary market value impairment exists.

 

4.6.Intangible Assets

 

The Company’s indefinite-lived andintangible assets as recorded in the Consolidated Balance Sheets consisted of the following:

  March 31, 2017  December 31, 2016 
  Gross        Gross       
  Carrying  Accumulated     Carrying  Accumulated    
  Amount  Impairment  Net  Amount  Impairment  Net 
  (Dollars in thousands)  (Dollars in thousands) 
Indefinite-lived intangible assets                        
Goodwill $11,112  $-  $11,112  $11,112  $-  $11,112 
Trademarks  34,748   (1,770)  32,978   34,748   (1,770)  32,978 
Total indefinite-lived intangible assets $45,860  $(1,770) $44,090  $45,860  $(1,770) $44,090 

5

The Company’s amortizable intangible assets as recorded in the Consolidated Condensed Balance Sheets (Unaudited) consisted of the following as of March 31, 2016:following:

 

    March 31, 2016 
  Weighted Gross       
  Average Carrying  Accumulated    
  Life (Years) Amount  Amortization  Net 
    (Dollars in thousands) 
Indefinite-lived intangible assets:              
Goodwill   $11,112  $-  $11,112 
Trademarks    34,748   -   34,748 
Total indefinite-lived intangible assets   $45,860  $-  $45,860 
               
Amortizable intangible assets:              
Non-compete agreement 5 $200  $(200) $- 
Customer relationships 15  3,500   (1,186)  2,314 
Total amortizable intangible assets   $3,700  $(1,386) $2,314 
    March 31, 2017  December 31, 2016 
  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  $(1,419) $2,081  $3,500  $(1,361) $2,139 
Total amortizable intangible assets   $3,500  $(1,419) $2,081  $3,500  $(1,361) $2,139 

 

The Company’s indefinite-lived and amortizable intangible assets as recorded in the Consolidated Condensed Balance Sheets (Unaudited) consisted of the following as of December 31, 2015:

    December 31, 2015 
  Weighted Gross       
  Average Carrying  Accumulated    
  Life (Years) Amount  Amortization  Net 
    (Dollars in thousands) 
Indefinite-lived intangible assets:              
Goodwill   $11,112  $-  $11,112 
Trademarks    34,748   -   34,748 
Total indefinite-lived intangible assets   $45,860  $-  $45,860 
               
Amortizable intangible assets:              
Non-compete agreement 5 $200  $(193) $7 
Customer relationships 15  3,500   (1,128)  2,372 
Total amortizable intangible assets   $3,700  $(1,321) $2,379 

The Company’s amortizable intangible assets are included within other assets in the Consolidated Condensed Balance SheetsSheets. (Unaudited).

5

 

5.7.Segment Information

 

The Company has two reportable segments: North American wholesale operations (“wholesale”) and North American retail operations (“retail”). The chief operating decision maker, the Company’s Chief Executive Officer, evaluates the performance of the Company’s segments based on earnings 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, 20162017 and 2015,2016, was as follows:

 

Three Months Ended                  
March 31, Wholesale  Retail  Other  Total  Wholesale Retail Other Total 
 (Dollars in thousands) 
2017         
Product sales $52,149  $4,930  $11,340  $68,419 
Licensing revenues  701   -   -   701 
Net sales $52,850  $4,930  $11,340  $69,120 
Earnings from operations $3,166  $43  $250  $3,459 
 (Dollars in thousands)                 
2016                                
Product sales $61,636  $5,085  $11,569  $78,290  $61,636  $5,085  $11,569  $78,290 
Licensing revenues  610   -   -   610   610   -   -   610 
Net sales $62,246  $5,085  $11,569  $78,900  $62,246  $5,085  $11,569  $78,900 
Earnings from operations $3,333  $246  $236  $3,815  $3,725  $246  $236  $4,207 
                
2015                
Product sales $60,448  $4,920  $11,989  $77,357 
Licensing revenues  695   -   -   695 
Net sales $61,143  $4,920  $11,989  $78,052 
Earnings from operations $4,811  $272  $703  $5,786 

 

6.8.Employee Retirement Plans

 

The components of the Company’s net pension expenseperiodic benefit cost were as follows:

 

  Three Months Ended March 31, 
  2016  2015 
  (Dollars in thousands) 
Benefits earned during the period $375  $411 
Interest cost on projected benefit obligation  614   673 
Expected return on plan assets  (584)  (592)
Net amortization and deferral  362   445 
Net pension expense $767  $937 
  Three Months Ended March 31, 
  2017  2016 
  (Dollars in thousands) 
Service cost $140  $375 
Interest cost  548   614 
Expected return on plan assets  (542)  (584)
Net amortization and deferral  120   362 
Net periodic benefit cost $266  $767 

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

6

 

7.9.Stock-Based Compensation Plans

 

During the three months ended March 31, 2017, the Company recognized approximately $369,000 of compensation expense associated with stock option and restricted stock awards granted in the years 2013 through 2016. During the three months ended March 31, 2016, the Company recognized approximately $364,000 of compensation expense associated with stock option and restricted stock awards granted in the years 2012 through 2015. During the three months ended March 31, 2015, the Company recognized approximately $360,000 of compensation expense associated with stock option and restricted stock awards granted in the years 2011 through 2014.

 

The following table summarizes the Company’s stock option activity for the three monththree-month period ended March 31, 2016:2017:

 

        Weighted    
     Weighted  Average    
     Average  Remaining  Aggregate 
     Exercise  Contractual  Intrinsic 
  Shares  Price  Term (Years)  Value* 
Outstanding at December 31, 2015  1,351,826  $26.09         
Exercised  (500) $23.87         
Forfeited or expired  (4,250) $26.75         
Outstanding at March 31, 2016  1,347,076  $26.09   3.8  $1,438,000 
Exercisable at March 31, 2016  597,656  $25.56   2.9  $967,000 
        Weighted    
     Weighted  Average    
     Average  Remaining  Aggregate 
     Exercise  Contractual  Intrinsic 
  Shares  Price  Term (Years)  Value* 
Outstanding at December 31, 2016  1,486,257  $26.13         
Exercised  (13,387) $26.59         
Forfeited or expired  (2,650) $26.08         
Outstanding at March 31, 2017  1,470,220  $26.12   3.4  $3,002,000 
Exercisable at March 31, 2017  748,620  $26.06   2.4  $1,610,000 

 

* 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, 20162017 of $26.62$28.08 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

6

 

The following table summarizes the Company’s stock option exercise activity for the three months ended March 31, 20162017 and 2015:2016:

 

 Three Months Ended March 31,  Three Months Ended March 31, 
 2016  2015  2017  2016 
 (Dollars in thousands)  (Dollars in thousands) 
Total intrinsic value of stock options exercised $1  $1,057  $41  $1 
Cash received from stock option exercises $12  $2,149  $356  $12 
Income tax benefit from the exercise of stock options $-  $412  $15  $- 
        

 

The following table summarizes the Company’s restricted stock award activity for the three monththree-month period ended March 31, 2016:2017:

 

      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, 2015  55,250  $26.45         
Non-vested at December 31, 2016  58,500  $26.09         
Issued  -   -           -   -         
Vested  (900)  26.94           -             
Forfeited  -   -           -   -         
Non-vested at March 31, 2016  54,350  $26.44   2.5  $1,447,000 
Non-vested at March 31, 2017  58,500  $26.09   2.5  $1,643,000 

 

* The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of the Company's stock on March 31, 20162017 of $26.62$28.08 multiplied by the number of non-vested restricted shares outstanding.

 

8.10.Short-Term Borrowings

 

At March 31, 2016,2017, the Company had a $60 million unsecured revolving line of credit with a bank expiring November 4, 2016.3, 2017. The line of credit bears interest at LIBOR plus 0.75%. At March 31, 2016,2017, the Company had no amounts outstanding borrowings were approximately $24.6 million at an interest rateon the line of 1.19%.credit. The highest balance on the line of credit during the quarter was approximately $28.4$4.3 million.

 

9.Contingent Consideration

Contingent consideration was comprised of two earn-out payments that the Company was obligated to pay the former shareholders of The Combs Company (“Bogs”) related to the Company’s acquisition of Bogs in 2011. The estimate of contingent consideration was formula-driven and was based on Bogs achieving certain levels of gross margin dollars between January 1, 2011, and December 31, 2015. The first earn-out payment was due in 2013 and was paid on March 28, 2013, in the amount of $1,270,000. The second earn-out payment was due in the first quarter of 2016 and was paid on March 22, 2016, in the amount of $5,217,000.

10.11.Financial Instruments

 

At March 31, 2016,2017, the Company had forwardforeign exchange contracts outstanding to sell $2.5$4.0 million Canadian dollars at a price of approximately $1.9$3.0 million U.S. dollars. Additionally, theThe Company’s majority-owned subsidiary, Florsheim Australia, had forwardforeign exchange contracts outstanding to buy $7.6$2.9 million U.S. dollars at a price of approximately $10.3$3.7 million Australian dollars. Florsheim Australia also had foreign exchange contracts outstanding to buy 625,000 Euros at a price of approximately $880,000 Australian dollars. Based on quarter-end exchange rates, there were no significant unrealized gains or losses on the outstanding contracts.

7

 

The Company determines the fair value of forwardforeign 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.

 

7

11.12.Comprehensive Income

 

Comprehensive income for the three months ended March 31, 20162017 and 2015,2016, was as follows:

 

 Three Months Ended March 31,  Three Months Ended March 31, 
 2016  2015  2017  2016 
 (Dollars in thousands)  (Dollars in thousands) 
Net earnings $2,632  $3,592  $2,115  $2,632 
Foreign currency translation adjustments  1,273   (1,597)  687   1,273 
Pension liability, net of tax of $141 and $174, respectively  221   271 
Pension liability, net of tax of $47 and $141, respectively  73   221 
Total comprehensive income $4,126  $2,266  $2,875  $4,126 

 

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

 

 March 31, December 31,  March 31, December 31, 
 2016  2015  2017 2016 
 (Dollars in thousands)  (Dollars in thousands) 
Foreign currency translation adjustments $(4,645) $(5,691) $(5,070) $(5,489)
Pension liability, net of tax  (12,555)  (12,776)  (11,007)  (11,080)
Total accumulated other comprehensive loss $(17,200) $(18,467) $(16,077) $(16,569)

 

The following presents a tabular disclosure about changes in accumulated other comprehensive loss during the three months ended March 31, 2016:2017:

 

 Foreign
Currency
Translation
Adjustments		  Defined
Benefit
Pension
Items		  Total  Foreign
Currency
Translation
Adjustments		  Defined
Benefit
Pension
Items		  Total 
Beginning balance, December 31, 2015 $(5,691) $(12,776) $(18,467)
Beginning balance, December 31, 2016 $(5,489) $(11,080) $(16,569)
Other comprehensive income before reclassifications  1,046   -   1,046   419   -   419 
Amounts reclassified from accumulated other comprehensive loss  -   221   221   -   73   73 
Net current period other comprehensive income  1,046   221   1,267   419   73   492 
Ending balance, March 31, 2016 $(4,645) $(12,555) $(17,200)
Ending balance, March 31, 2017 $(5,070) $(11,007) $(16,077)

 

The following presents a tabular disclosure about reclassification adjustments out of accumulated other comprehensive loss during the three months ended March 31, 2016:2017:

 

 Amounts reclassified
from accumulated other
comprehensive loss for
the three months ended
March 31, 2017		  Affected line item in the
statement where net
income is presented
 Amounts reclassified
from accumulated other
comprehensive loss for
the three months ended
March 31, 2016		  Affected line item in the
statement where net
income is presented		     
Amortization of defined benefit pension items            
Prior service cost $(28) (1) $(16)(1) Other expense, net
Actuarial losses  390  (1)  136(1) Other expense, net
Total before tax  362     120   
Tax benefit  (141)    (47)  
Net of tax $221    $73   

 

(1)These amounts were included in the computation of net periodic pensionbenefit cost. See Note 68 for additional details.

 

 8 

 

 

12.13.Equity

 

A reconciliation of the Company’s equity for the three months ended March 31, 2016,2017, is as follows:

 

        Accumulated            Accumulated    
    Capital in     Other        Capital in     Other    
 Common Excess of Reinvested Comprehensive Noncontrolling  Common Excess of Reinvested Comprehensive Noncontrolling 
 Stock  Par Value  Earnings  Loss  Interest  Stock  Par Value  Earnings  Loss  Interest 
 (Dollars in thousands)  (Dollars in thousands) 
                      
Balance, December 31, 2015 $10,767  $45,759  $160,325  $(18,467) $6,345 
Balance, December 31, 2016 $10,505  $50,184  $157,468  $(16,569)  $6,692 
                                        
Net earnings  -   -   2,687   -   (55)  -   -   2,217   -   (102)
Foreign currency translation adjustments  -   -   -   1,046   227   -   -   -   419   268 
Pension liability adjustment, net of tax  -   -   -   221   -   -   -   -   73   - 
Cash dividends declared  -   -   (2,136)  -   -   -   -   (2,198)  -   - 
Cash dividends paid to noncontrolling interest  -   -   -   -   (204)
Stock options exercised  1   11   -   -   -   13   343   -   -   - 
Stock-based compensation expense  -   364   -   -   -   -   369   -   -   - 
Income tax benefit from stock options exercised  -   -   -   -   -   -   15   -   -   - 
Shares purchased and retired  (112)  -   (2,783)  -   -   (88)  -   (2,305)  -   - 
                                        
Balance, March 31, 2016 $10,656  $46,134  $158,093  $(17,200) $6,517 
Balance, March 31, 2017 $10,430  $50,911  $155,182  $(16,077)  $6,654 

 

 9 

 

 

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 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,” “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, 2015.2016.

 

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: “Florsheim,” “Nunn Bush,” “Stacy Adams,” “BOGS,” “Rafters”“Rafters,” and “Umi.” Inventory is purchased from third-party overseas manufacturers. The majority of foreign-sourced purchases are denominated in U.S. dollars.

 

The Company has two reportable segments, North American wholesale operations (“wholesale”) and North American retail operations.operations (“retail”). In the wholesale segment, the Company’s products are sold to leading footwear, department and specialty stores, primarily in the United States and Canada. The Company also has licensing agreements with third parties who sell its 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 wholesale segment. The Company’s retail segment consisted of 13 Company-owned retail stores and an internet business in the United States as of March 31, 2016.2017. Sales in retail outlets are made directly to consumers by Company employees.

 

The Company’s “other” operations include the Company’s wholesale and retail businesses in Australia, South Africa, Asia Pacific (collectively, “Florsheim Australia”) and Europe (“Florsheim Europe”). The majority of the Company’s operations are in the United States, and its results are primarily affected by the economic conditions and the retail environment in the United States.

 

EXECUTIVE OVERVIEW

 

Sales and Earnings Highlights

 

Consolidated net sales for the first quarter of 20162017 were $78.9$69.1 million, up 1% overdown 12% as compared to last year’s first quarter net sales of $78.1$78.9 million. Earnings from operations decreased 34% to $3.8were $3.5 million this quarter, from $5.8a decrease of 18% as compared to $4.2 million in the same period of 2015.2016. Consolidated net earnings attributable to Weyco Group, Inc. were $2.7$2.2 million in the first quarter of 2016,2017, down 26% from $3.617% as compared to $2.7 million in last year’s first quarter. Diluted earnings per share were $0.25$0.21 for the three months ended March 31, 2016,2017, as compared to $0.33 per share$0.25 in the first quarter of 2015.2016.

 

The majority of the increasedecrease in consolidated net sales came from the Company’s wholesale segment. Wholesale net sales increased $1.1decreased $9.4 million this quarter, compared to the same period last year. This increase was primarilyone year ago, with sales volumes down across all wholesale brands. These sales declines were the result of a challenging retail environment, particularly at customers’ brick and mortar locations, where foot traffic has declined due to higher salesthe growing popularity of the Stacy Adamsonline retailing. The Company’s retail segment and Florsheim brands, partially offset by decreased sales of BOGS product. Florsheim Australia were also had decreased net sales, caused bydown for the translation of the weaker Australian currency into U.S. dollars.quarter.

 

Consolidated earnings from operations decreased $2.0 million for the quarter compared to the same period last year. A majority of this decrease came from the Company’s wholesale segment. Wholesale earnings from operations decreased $1.5 million$748,000 for the quarter, compared to the same period last year, primarily due to lower gross margins in Canada and higher U.S. selling and administrative expenses. Earnings from operations at Florsheim Australia decreased approximately $500,000 this quarter, mainly due to lower gross margins.sales volumes in the Company’s wholesale segment.

 

Financial Position Highlights

 

At March 31, 2017, cash and marketable securities totaled $45.5 million and there was no debt outstanding on the Company’s revolving line of credit. At December 31, 2016, cash and marketable securities totaled $41.5$39.4 million and outstanding debt totaled $24.6 million. At December 31, 2015, cash and marketable securities totaled $43.1 million and outstanding debt totaled $26.6$4.3 million. During the first three months of 2016,2017, the Company generated $13.5$17.2 million of cash from operations. The Company paid dividends of $4.3$4.6 million, spent $2.9 million on purchases of Company stock, paid down $2.0off $4.3 million on its revolving line of credit, spent $2.4 million on purchases of Company stock, and had $924,000$416,000 of capital expenditures. In addition, the Company paid $5.2 million for the final earn-out payment related to the 2011 acquisition of Bogs.

 

 10 

 

 

SEGMENT ANALYSIS

 

Net sales and earnings from operations for the Company’s segments for the three months ended March 31, 20162017 and 2015,2016, were as follows:

 

 Three Months Ended March 31, %  Three Months Ended March 31, % 
 2016  2015  Change  2017  2016  Change 
 (Dollars in thousands)    (Dollars in thousands)   
Net Sales                        
North American Wholesale $62,246  $61,143   2% $52,850  $62,246   -15%
North American Retail  5,085   4,920   3%  4,930   5,085   -3%
Other  11,569   11,989   -4%  11,340   11,569   -2%
Total $78,900  $78,052   1% $69,120  $78,900   -12%
                        
Earnings from Operations                        
North American Wholesale $3,333  $4,811   -31% $3,166  $3,725   -15%
North American Retail  246   272   -10%  43   246   -83%
Other  236   703   -66%  250   236   6%
Total $3,815  $5,786   -34% $3,459  $4,207   -18%

 

North American Wholesale Segment

 

Net Sales

 

Net sales in the Company’s North American wholesale segment for the three months ended March 31, 20162017 and 2015,2016, were as follows:

 

North American Wholesale Segment Net Sales

 

 Three Months Ended March 31, %  Three Months Ended March 31, % 
 2016  2015  Change  2017 2016 Change 
 (Dollars in thousands)    (Dollars in thousands)   
North American Net Sales                        
Stacy Adams $22,901  $20,450   12% $19,318  $22,901   -16%
Nunn Bush  16,814   17,369   -3%  13,746   16,814   -18%
Florsheim  13,634   12,604   8%  12,458   13,634   -9%
BOGS/Rafters  7,751   9,344   -17%  6,157   7,751   -21%
Umi  536   681   -21%  470   536   -12%
Total North American Wholesale $61,636  $60,448   2% $52,149  $61,636   -15%
Licensing  610   695   -12%  701   610   15%
Total North American Wholesale Segment $62,246  $61,143   2% $52,850  $62,246   -15%

 

The increase inCompany’s wholesale segment continued to face a challenging retail environment this quarter. Foot traffic at customers’ brick and mortar locations has been declining, due to the growing popularity of online retailing. This quarter, Stacy Adams, first quarter net sales was driven by strong new product sales. The decline at Nunn Bush was mainly due to lowerand Florsheim’s sales tovolumes declined in the department stores and off-price retailers. Florsheimstore trade channel, a segment particularly struggling with reduced foot traffic. BOGS net sales were upalso down for the quarter, primarily due to higher sales to department storesreflecting the continued softness in the outdoor and national shoe chains. Net sales of the BOGS and Rafters brands were down this quarter, primarily due to this year’s mild winter.better footwear channels.

 

Licensing revenues consist of royalties earned on the sales of branded apparel, accessories and specialty footwear in the United States and on branded footwear in Mexico and certain overseas markets. The increase in licensing revenues this quarter resulted mainly from a licensee transition that occurred in 2016. The new licensee was operational by the first quarter of 2017, resulting in increased revenues compared to the same period last year.

 

 11 

 

 

Earnings from Operations

 

Overall product marginsGross earnings for the North American wholesale segment were 28.5%30.8% of net sales in the first quarter of 2016,2017, as compared to 30.2%29.2% in the first quarter of 2015. The majority of this decrease was due to lower gross margins in Canada. Gross margins in Canada continue to be negatively affected by the weaker Canadian dollar because inventory is purchased in U.S. dollars.2016. Earnings from operations in the North American wholesale segment decreased 31%15% to $3.3$3.2 million in the first quarter of 2015,2017, from $4.8$3.7 million in the same period last year. The declineyear, largely due to the decrease in wholesale operating earnings resulted primarily from lower gross margins in Canada and higher U.S. selling and administrative expenses.sales.

 

The Company’s cost of sales does not include distribution costs (e.g., receiving, inspection or warehousing costs). or shipping and handling expenses. Distribution costs were $3.2$2.7 million and $2.8$3.2 million for three-month periods ended March 31, 2017 and 2016, respectively. The Company’s consolidated wholesale shipping and 2015,handling expenses were approximately $340,000 and $385,000 for the three-months ended March 31, 2017 and 2016, respectively. These costs were included in selling and administrative expenses. The Company’s gross earnings may not be comparable to other companies, as some companies may include distribution costs and shipping and handling expenses in cost of sales.

 

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 24%$13.1 million in the first quarter of 2017, compared to $14.4 million in 2016. The decrease this year was primarily due to lower salesmen’s commissions in accordance with lower sales volumes, and a decrease in advertising costs. Pension expense was also lower this year, which was a direct result of the Company’s decision to freeze pension benefits under its defined benefit plan as of December 31, 2016. Despite these cost savings, wholesale selling and administrative expenses increased to 25% of net sales in the first quarter of 2016 versus2017 as compared to 23% in the same period last year. The increase wasyear, due to higher distribution costs, mainly an increase in temporary labor costs and additional storage costs in the first quarterfixed nature of 2016.many of the Company’s other operating costs.

 

North American Retail Segment

 

Net Sales

 

Net sales in the Company’s North American retail segment were $5.1$4.9 million in the first quarter of 2016, up2017, down 3% as compared to $4.9$5.1 million in 2015.2016. Same store sales, which include sales of both the U.S. internet business andsales, were down 7% for the quarter, due to decreased sales at brick and mortar stores were up 7% forand on the quarter.Company’s websites. There were two fewer domestic retailthe same number of stores operating during the first quarter of 2017 and 2016, than thereas one store closed and one store opened over the past twelve months. Retail sales in 2017 were impacted by the later timing of the Easter holiday in last year’s first quarter. The increase in same store2017 as compared to 2016, which caused sales was due to an increase in the Company’s U.S. internet business.shift into April this year.

 

Earnings from Operations

 

Earnings from operations in the North American retail segment were $43,000 in the first quarter of 2017 as compared to $246,000 in the first quarter of 2016, down 10% as compared to $272,000 in the first quarter of 2015.2016. Retail gross earnings were 64.8%64.4% of net sales in the first quarter of 2016,2017, as compared to 65.9%64.8% of net sales in 2015.2016. Selling and administrative expenses for the retail segment include, and are primarily related to, rent and occupancy costs, employee costs, advertising expense and freight. Retail selling and administrative expenses were 60.0%64% of net sales in the first quarter of 20162017 versus 60.3%60% in last year’s first quarter. The decrease in retail earnings from operations was primarily due to the decrease in retail sales.

 

Other

 

The Company’s other businesses include its wholesale and retail operations of Florsheim Australia and Florsheim Europe. Net sales of the Company’s other businesses were $11.6$11.3 million in the first quarter of 2016,2017, down 4%2% as compared to $12.0$11.6 million in 2015. This2016. The decrease was primarily due to lower net sales at Florsheim Australia, caused byAustralia. Florsheim Australia’s net sales were down 1% for the translation of the weaker Australian currency into U.S. dollars.quarter. In local currency, Florsheim Australia’s net sales were up 2%down 6% for the quarter. This increase was due to higher sales volumes in both its retail businesses, where sales were up 1% (same store sales up 4%), and its wholesale businesses, where sales were up 3%.

 

Collectively, earnings from operations of Florsheim Australia and Florsheim Europe were $236,000 this quarter, down 66% as compared to $703,000$250,000 in the first quarter of 2015. This decrease was primarily due to lower gross margins at Florsheim Australia. Florsheim Australia purchases its inventory2017, and $236,000 in U.S. dollars, and its gross margins have been negatively impacted by the weaknessfirst quarter of its local currency compared to the U.S. dollar.2016.

 

Other income and expense and taxes

 

Interest income for the first quarter of 20162017 was down $56,000$25,000 as compared to the first quarter of 2015,2016, due to a lower average investment balance this year compared to last year. Interest expense was up $55,000down $66,000 for the quarter, due to a higherlower average debt balance this year compared to last year.

In the first quarter of 2017, the Company retrospectively adopted ASU 2017-07, which required the Company to reclassify the non-service cost components of pension expense to other expense, net, in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited). The decrease in other expense this quarter was primarily due to a $266,000 decrease in the non-service cost components of pension expense. Pension expense was down following the freeze of the pension plan, effective December 31, 2016.

12

 

The Company’s effective tax rate for the quarter ended March 31, 2016,2017, was 35.8%39.5% as compared to 37.5%35.8% for the same period of 2015.2016. Last year’s effective tax rate was lower due to donations of footwear that occurred in the first quarter of 2016.

12

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company’s primary sources of liquidity are its cash, short-term marketable securities and its revolving line of credit.Thecredit. The Company generated $13.5$17.2 million of cash from operating activities during the first three months of 2016,2017, compared to $1.6$13.5 million in the same period one year ago. The increase between years was primarily due to the large decreasechanges in the inventory balance during the first quarter.operating assets and liabilities, principally accounts receivable.

 

The Company paid cash dividends of $4.3$4.6 million and $4.1$4.3 million during the three months ended March 31, 20162017 and 2015,2016, respectively.

 

The Company continues to repurchase its common stock under its share repurchase program when the Company believes market conditions are favorable. During the first quarter of 2016,2017, the Company repurchased 111,93987,886 shares at a total cost of $2.9$2.4 million. As of March 31, 2016,2017, the Company had 864,219477,289 shares available under its previously announced stock repurchase program. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” below for more information.

 

Capital expenditures were $924,000$416,000 in the first three months of 2016. In April 2016, the Company began construction to increase the capacity of its U.S. distribution center. The Company expects this project to be complete in the third quarter. Including this project, management2017. Management estimates that annual capital expenditures for 20162017 will be between $4$2 million and $5$3 million.

 

At March 31, 2016,2017, the Company had a $60 million unsecured revolving line of credit with a bank expiring November 4, 2016.3, 2017. The line of credit bears interest at LIBOR plus 0.75%. The Company paid down a net of $2.0 million onoff the line of credit during the first three months of 2016. At March 31, 2016, outstanding borrowings were $24.6 million at an interest rate of 1.19%.quarter. The highest balance on the line of credit during the quarter was approximately $28.4$4.3 million.

In connection with the Bogs acquisition, the Company had to pay two earn-out payments to the former shareholders of Bogs. The Company made the first earn-out payment of $1,270,000 in the first quarter of 2013. The second payment was due in the first quarter of 2016 and was paid on March 22, 2016 in the amount of $5,217,000. See Note 9 of the accompanying consolidated condensed financial statements.

 

As of March 31, 2016,2017, approximately $1.9$2.6 million of cash and cash equivalents was held by the Company’s foreign subsidiaries.

 

The Company will continue to evaluate the best uses for its available liquidity, including, among other uses, capital expenditures, continued stock repurchases and additional acquisitions.

 

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 for at least one year, although there can be no assurances.

 

COMMITMENTS

 

There were no material changes to the Company’s contractual obligations during the quarter ended March 31, 2016,2017, from those disclosed in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2015.2016.

13

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

There have been no material changes to quantitative and qualitative disclosures about market risk from those reported in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2015.2016.

13

 

Item 4. 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 Chief Executive Officer and Chief 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. Such officers have also concluded that, as of the Evaluation Date, the Company’s 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 most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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, 2015.2016.

 

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

 

The table below presents information pursuant to Item 703(a) of Regulation S-K regarding the purchaserepurchase of the Company’s common stock by the Company in the three monththree-month period ended March 31, 2016.2017.

 

        Total Number of  Maximum Number 
  Total  Average  Shares Purchased as  of Shares 
  Number  Price  Part of the Publicly  that May Yet Be 
  of Shares  Paid  Announced  Purchased Under 
Period Purchased  Per Share  Program  the Program(1) 
             
1/1/2016 - 1/31/2016  40,370  $25.49   40,370   935,788 
                 
2/1/2016 - 2/29/2016  32,907  $26.08   32,907   902,881 
                 
3/1/2016 - 3/31/2016  38,662  $26.06   38,662   864,219 
                 
Total  111,939  $25.86   111,939     
        Total Number of  Maximum Number 
  Total  Average  Shares Purchased as  of Shares 
  Number  Price  Part of the Publicly  that May Yet Be 
  of Shares  Paid  Announced  Purchased Under 
Period Purchased  Per Share  Program  the Program (1) 
                 
1/1/2017 - 1/31/2017  4,343  $28.01   4,343   560,832 
                 
2/1/2017 - 2/29/2017  24,608  $27.99   24,608   536,224 
                 
3/1/2017 - 3/31/2017  58,935  $26.85   58,935   477,289 
                 
Total  87,886  $27.22   87,886     

 

(1)In 1998 the Company's stock repurchase program was established. On several occasions since the program's inception, the Board of Directors has extended the number of shares authorized for repurchase under the program. In total, 6.5 million shares have been authorized for repurchase.

 

Item 6. Exhibits.

 

See the Exhibit Index included herewith for a listing of exhibits.

 

 14 

 

 

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 5, 20164, 2017 
 /s/ John F. Wittkowske
 John F. Wittkowske
 Senior Vice President and Chief Financial Officer

 

 15 

 

 

WEYCO GROUP, INC.

(THE “REGISTRANT”)

(COMMISSION FILE NO. 0-9068)

 

EXHIBIT INDEX

TO

CURRENT REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDEDMarch 31, 20162017

 

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 20162017 formatted in XBRL (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 (v) Notes to Consolidated Condensed Financial Statements, furnished herewith   X