WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

September 30,

December 31,


2021

2020

(Dollars in thousands)
ASSETS:




Cash and cash equivalents

$
18,852

$
32,476
Investments, at fair value

15,162

0
Marketable securities, at amortized cost

751

2,215
Accounts receivable, net

43,307

34,631
Income tax receivable

1,328

1,374
Inventories

52,941

59,025
Prepaid expenses and other current assets

3,862

4,610
Total current assets

136,203

134,331

Marketable securities, at amortized cost

10,638

12,800
Deferred income tax benefits

1,153

1,235
Property, plant and equipment, net

29,582

30,759
Operating lease right-of-use assets

7,484

9,613
Goodwill

12,219

11,112
Trademarks

34,768

32,868
Other assets

24,371

24,001
Total assets

$
256,418

$
256,719

LIABILITIES AND EQUITY:




Accounts payable

$
7,100

$
8,444
Operating lease liabilities

2,018

4,245
Accrued liabilities

12,402

11,656
Total current liabilities

21,520

24,345

Deferred income tax liabilities

2,881

2,914
Long-term pension liability

32,506

33,534
Operating lease liabilities

7,102

7,734
Other long-term liabilities

1,626

267
Total liabilities

65,635

68,794

Common stock

9,750

9,797
Capital in excess of par value

68,352

67,178
Reinvested earnings

140,706

138,955
Accumulated other comprehensive loss

(28,025)

(28,005)
Total equity

190,783

187,925
Total liabilities and equity

$
256,418

$
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 Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2022		2021

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

Net sales	$	61,798	$	53,178	$	166,262	$	133,408	$	81,360	$	46,900
Cost of sales		37,054		32,841		99,543		82,403		52,232		27,595
Gross earnings		24,744		20,337		66,719		51,005		29,128		19,305

Selling and administrative expenses		17,998		24,177		53,797		66,517		23,697		17,671
Earnings (loss) from operations		6,746		(3,840)		12,922		(15,512)
Earnings from operations										5,431		1,634

Interest income		186		121		505		408		91		131
Interest expense		—		(6)		(81)		(59)		(1)		(7)
Other income (expense), net		76		(8)		403		147
Other (expense) income, net										(6)		138

Earnings (loss) before provision (benefit) for income taxes		7,008		(3,733)		13,749		(15,016)
Earnings before provision for income taxes										5,515		1,896

Provision (benefit) for income taxes		1,939		2,136		3,535		(1,426)
Provision for income taxes										1,462		571

Net earnings (loss)		5,069		(5,869)		10,214		(13,590)
Net earnings										4,053		1,325

Weighted average shares outstanding
Basic		9,655		9,756		9,663		9,760		9,596		9,680
Diluted		9,702		9,756		9,691		9,760		9,647		9,686

Earnings (loss) per share
Earnings per share
Basic	$	0.53	$	(0.60)	$	1.06	$	(1.39)	$	0.42	$	0.14
Diluted	$	0.52	$	(0.60)	$	1.05	$	(1.39)	$	0.42	$	0.14

Cash dividends declared (per share)	$	0.24	$	0.24	$	0.72	$	0.72	$	0.24	$	0.24

Comprehensive income (loss)	$	4,651	$	(4,976)	$	10,194	$	(13,383)
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)


	Nine Months Ended September 30,				Three Months Ended March 31,
	2021		2020		2022		2021

	(Dollars in thousands)				(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	10,214	$	(13,590)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities -
Net earnings					$	4,053	$	1,325
Adjustments to reconcile net earnings to net cash provided by operating activities -
Depreciation		1,876		2,256		604		623
Amortization		234		234		71		82
Bad debt expense		52		5,102		15		17
Deferred income taxes		(144)		1,854		(111)		39
Net foreign currency transaction (gains) losses		(121)		37
Net foreign currency transaction losses (gains)						32		(115)
Share-based compensation expense		1,210		1,063		350		545
Pension expense		—		345
Impairment of long-lived assets		—		3,055
Increase in cash surrender value of life insurance		(339)		(250)		(150)		(150)
Changes in operating assets and liabilities - net of effects from acquisition
Changes in operating assets and liabilities -
Accounts receivable		(8,648)		6,908		1,395		2,273
Inventories		6,826		10,528		8,980		11,700
Prepaid expenses and other assets		598		2,963		89		572
Accounts payable		(1,368)		(6,187)		(12,966)		(1,839)
Accrued liabilities and other		(745)		(3,494)		(3,578)		(1,425)
Accrued income taxes		39		(3,985)		1,447		522
Net cash provided by operating activities		9,684		6,839		231		14,169

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquistion of business		(2,612)		0
Proceeds from maturities of marketable securities		3,615		6,045		475		1,720
Purchases of investment securities		(35,000)		0		—		(20,011)
Proceeds from sale of investment securities		19,838		0		8,050		—
Life insurance premiums paid		(111)		(155)
Purchases of property, plant and equipment		(673)		(3,151)		(352)		(73)
Net cash (used for) provided by investing activities		(14,943)		2,739
Net cash provided by (used for) investing activities						8,173		(18,364)

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(6,904)		(9,361)		(2,297)		(2,319)
Shares purchased and retired		(1,535)		(1,304)		(1,797)		(1,079)
Proceeds from bank borrowings		—		32,855
Repayments of bank borrowings		—		(34,724)
Proceeds from stock option exercised						11		—
Net cash used for financing activities		(8,439)		(12,534)		(4,083)		(3,398)

Effect of exchange rate changes on cash and cash equivalents		74		15		118		(23)

Net decrease in cash and cash equivalents	$	(13,624)	$	(2,941)
Net increase (decrease) in cash and cash equivalents					$	4,439	$	(7,616)

CASH AND CASH EQUIVALENTS at beginning of period		32,476		9,799		19,711		32,476

CASH AND CASH EQUIVALENTS at end of period	$	18,852	$	6,858	$	24,150	$	24,860

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	3,693	$	638	$	75	$	24
Interest paid	$	81	$	52	$	1	$	7

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

The accompanying consolidated condensed financial statements include the results of Forsake from the date of acquisition through September 30, 2021. During this period, Forsake’s total sales were approximately $524,000, of which $281,000 was recognized in the wholesale segment and $243,000 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. New Accounting ~~Pronouncements~~Pronouncement

~~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”) 740. 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.

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. 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.

4.    Earnings ~~(Loss)~~ Per Share
The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,


2021

2020

2021

2020

2022

2021

(In thousands, except per share amounts)

(In thousands, except per share amounts)
Numerator:












Net earnings (loss)

$
5,069

$
(5,869)

$
10,214

$
(13,590)
Net earnings

$
4,053

$
1,325

Denominator:

Basic weighted average shares outstanding

9,655

9,756

9,663

9,760

9,596

9,680
Effect of dilutive securities:

Employee share-based awards

47

—

28

—

51

6
Diluted weighted average shares outstanding

9,702

9,756

9,691

9,760

9,647

9,686

Basic earnings (loss) per share

$
0.53

$
(0.60)

$
1.06

$
(1.39)
Basic earnings per share

$
0.42

$
0.14

Diluted earnings (loss) per share

$
0.52

$
(0.60)

$
1.05

$
(1.39)
Diluted earnings per share

$
0.42

$
0.14

5.~~Investments~~
~~Investments, at fair value~~
During the first nine months of 2021, the Company invested $15.2 million of cash in highly liquid fixed income 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 nine months of 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.
~~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, 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 ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020.~~2021.

September 30, 2021

December 31, 2020

March 31, 2022

December 31, 2021

Amortized

Market

Amortized

Market

Amortized

Market

Amortized

Market


Cost

Value

Cost

Value

Cost

Value

Cost

Value

(Dollars in thousands)

(Dollars in thousands)
Municipal bonds:
















Current

$
751

$
755

$
2,215

$
2,249

$
719

$
725

$
219

$
223
Due from one through five years

6,705

7,050

7,420

7,830

5,705

5,784

6,503

6,805
Due from six through ten years

2,734

3,188

3,057

3,608

2,305

2,473

2,479

2,790
Due from eleven through twenty years

1,199

1,300

2,323

2,547

1,013

1,044

1,014

1,102
Total

$
11,389

$
12,293

$
15,015

$
16,234

$
9,742

$
10,026

$
10,215

$
10,920

The unrealized gains and losses on marketable securities at ~~September 30, 2021,~~March 31, 2022, and at December 31, ~~2020,~~2021, were as follows:


	September 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Unrealized		Unrealized		Unrealized		Unrealized		Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses		Gains		Losses		Gains		Losses

	(Dollars in thousands)								(Dollars in thousands)
Municipal bonds	$	904	$	0	$	1,219	$	0	$	290	$	(6)	$	705	$	0

The estimated market values provided are level 2 valuations as defined by ASC ~~820,~~ ~~Fair Value Measurements and Disclosures~~ ~~(“ASC 820”).~~820. The Company reviewed its portfolio of investments as of ~~September 30, 2021,~~March 31, 2022, and 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:


September 30,

December 31,

2021

2020

(Dollars in thousands)
Indefinite-lived intangibles:




Goodwill

$
12,219

$
11,112
Trademarks

34,768

32,868
Total

$
46,987

$
43,980

The additional goodwill and trademarks in 2021 resulted from the Forsake acquisition. Goodwill resulting from the Forsake acquisition has been allocated to the Company’s wholesale and retail segments as of the acquisition date. Changes in the carrying amount of the Company’s goodwill by reportable segment for the nine months ended September 30, 2021, were as follows:


Wholesale

Retail

Total

March 31, 2022

December 31, 2021

(Dollars in thousands)

(Dollars in thousands)
Balance, December 31, 2020

$
11,112

$
0

$
11,112
Acquisition of business

332

775

1,107
Balance, September 30, 2021

$
11,444

$
775

$
12,219
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:


			September 30, 2021						December 31, 2020								March 31, 2022						December 31, 2021
	Weighted		Gross						Gross						Weighted		Gross						Gross
	Average		Carrying		Accumulated				Carrying		Accumulated				Average		Carrying		Accumulated				Carrying		Accumulated
	Life (Years)		Amount		Amortization		Net		Amount		Amortization		Net		Life (Years)		Amount		Amortization		Net		Amount		Amortization		Net

			(Dollars in thousands)						(Dollars in thousands)								(Dollars in thousands)						(Dollars in thousands)
Amortizable intangible assets
Customer relationships		15	$	3,500	$	(2,469)	$	1,031	$	3,500	$	(2,294)	$	1,206		15	$	3,500	$	(2,586)	$	914	$	3,500	$	(2,528)	$	972
Total amortizable intangible assets			$	3,500	$	(2,469)	$	1,031	$	3,500	$	(2,294)	$	1,206			$	3,500	$	(2,586)	$	914	$	3,500	$	(2,528)	$	972

Amortization expense related to the intangible assets was approximately $58,000 in both the ~~third~~first quarters of ~~2021~~2022 and ~~2020. For the nine months ended September 30, amortization expense related to the intangible assets was approximately $175,000 in both 2021 and 2020.~~2021.

7.    Segment Information
The Company has 2 reportable segments: North American wholesale operations (“Wholesale”) and North American retail operations (“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 ~~tables~~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, 2022 and 2021, was as follows:

Three Months Ended

March 31,

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

2021

Product sales

$
33,036

$
5,618

$
7,904

$
46,558
Licensing revenues

342

0

0

342
Net sales

$
33,378

$
5,618

$
7,904

$
46,900
Earnings (loss) from operations

$
1,359

$
756

$
(481)

$
1,634

8.Employee Retirement Plans
The components of the Company’s pension expense were as follows:

Three Months Ended March 31,


2022

2021

(Dollars in thousands)
Service cost

$
112

$
102
Interest cost

432

371
Expected return on plan assets

(752)

(720)
Net amortization and deferral

208

247
Pension expense

$
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).

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 2022 and 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,


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.

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 September 30, 2021 and 2020, was as follows:

Three Months Ended

September 30,

Wholesale

Retail

Other

Total

(Dollars in thousands)
2021







Product sales

$
49,823

$
6,307

$
5,325

$
61,455
Licensing revenues

343

0

0

343
Net sales

$
50,166

$
6,307

$
5,325

$
61,798
Earnings (loss) from operations

$
6,027

$
1,401

$
(682)

$
6,746

2020

Product sales

$
43,788

$
4,367

$
4,799

$
52,954
Licensing revenues

224

0

0

224
Net sales

$
44,012

$
4,367

$
4,799

$
53,178
Earnings (loss) from operations

$
2,752
⁽¹⁾
$
(2,796)
⁽²⁾
$
(3,796)
⁽³⁾
$
(3,840)
~~(1)~~ Included the write-off of a $1.1 million receivable related to Tailored Brands, Inc. due to its bankruptcy filed during the pandemic, $0.5 million in employee costs related to restructuring and temporary closures, $0.5 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.2 million in other related charges, partially offset by $0.3 million of income from government wage subsidies.
~~(2)~~ Included $1.5 million in early lease termination charges, $1.0 million for the impairment of retail store fixed assets, and $0.1 million in employee costs related to restructuring and temporary closures.
~~(3)~~ Included $2.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $1.1 million in employee costs related to restructuring and temporary closures, $0.5 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.2 million in related charges, partially offset by $1.1 million of income from government wage and rent subsidies.

~~Summarized segment data for the nine months ended September 30, 2021 and 2020, was as follows:~~

Nine Months Ended

September 30,

Wholesale

Retail

Other

Total

(Dollars in thousands)
2021








Product sales

$
124,417

$
18,127

$
22,682

$
165,226
Licensing revenues

1,036

0

0

1,036
Net sales

$
125,453

$
18,127

$
22,682

$
166,262
Earnings (loss) from operations

$
10,041

$
3,326

$
(445)

$
12,922

2020

Product sales

$
105,193

$
12,768

$
14,621

$
132,582
Licensing revenues

826

0

0

826
Net sales

$
106,019

$
12,768

$
14,621

$
133,408
Earnings (loss) from operations

$
(4,664)
⁽⁴⁾
$
(3,741)
⁽⁵⁾
$
(7,107)
⁽⁶⁾
$
(15,512)
~~(4)~~ Included the write-off of $4.4 million in receivables due to two bankruptcies of large customers (J.C. Penny Company, Inc. and Tailored Brands, Inc.) filed during the pandemic, $1.9 million in employee costs related to restructuring and temporary closures, $0.5 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.2 million in other related charges, partially offset by $1.6 million of income from government wage subsidies.

~~(5)~~ Included $1.5 million in early lease termination charges, $1.0 million for the impairment of retail store fixed assets, and $0.1 million in employee costs related to restructuring and temporary closures.

~~(6)~~

Included $2.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $2.0 million in employee costs related to restructuring and temporary closures, $1.6 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.6 million in related charges, partially offset by $2.5 million of income from government wage and rent subsidies.

8.~~Employee Retirement Plans~~
~~The components of the Company’s pension expense were as follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,


2021

2020

2021

2020

(Dollars in thousands)
Service cost

$
102

$
115

$
306

$
345
Interest cost

371

502

1,113

1,508
Expected return on plan assets

(720)

(693)

(2,160)

(2,081)
Net amortization and deferral

247

191

741

573
Pension expense

$
—

$
115

$
—

$
345

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

9.~~Leases~~
The Company leases retail shoe stores, as well as several offices and distribution facilities worldwide. The leases have original lease periods expiring between the remainder of 2021 and 2027. 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 September 30,

Nine Months Ended September 30,


2021

2020

2021

2020

(Dollars in thousands)
Operating lease costs

$
1,151

$
1,652

$
3,717

$
5,237
Variable lease costs ⁽¹⁾

67

—

124

12
Total lease costs

$
1,218

$
1,652

$
3,841

$
5,249
⁽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 September 30, 2021:~~


Operating Leases

(Dollars in thousands)
2021, excluding the nine months ended September 30, 2021

$
978
2022

3,462
2023

2,617
2024

1,865
2025

1,215
Thereafter

1,442
Total lease payments

11,579
Less imputed interest

(2,459)
Present value of lease liabilities

$
9,120

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


September 30, 2021

December 31, 2020

(Dollars in thousands)
Operating lease liabilities - current

$
2,018

$
4,245
Operating lease liabilities - non-current

7,102

7,734
Total

$
9,120

$
11,979

The Company determined the present value of its lease liabilities using a weighted-average discount rate of 4.25%. As of September 30, 2021, the Company’s leases have a weighted-average remaining lease term of 2.92 years.
~~Supplemental cash flow information related to the Company’s operating leases is as follows:~~


Three Months Ended September 30,

Nine Months Ended September 30,


2021

2020

2021

2020

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

$
1,024

$
2,174

$
3,629

$
5,424
Right-of-use assets obtained in exchange for new lease liabilities (noncash)

$
244

$
72

$
2,266

$
216

~~10.  Income Taxes~~

~~The Company’s provision (benefit) for income taxes and effective tax rates for the three and nine months ended September 30, 2021 and 2020 are presented in the following table:~~

Three Months Ended September 30,

Nine Months Ended September 30,


2021

2020

2021

2020

(Dollars in thousands)

Earnings (loss) before provision (benefit) for income taxes

$
7,008

$
(3,733)

$
13,749

$
(15,016)

Provision (benefit) for income taxes

$
1,939

$
2,136

$
3,535

$
(1,426)

Effective tax rate

27.7
%

(57.2)
%

25.7
%

9.5
%

Last year’s third quarter and year-to-date income tax provisions included $2.0 million of tax expense related to deferred tax assets of the Company’s foreign subsidiaries. The 2020 effective tax rates were also impacted because the Company did not record an income tax benefit on foreign subsidiary losses, and, in the U.S., the Company had the ability to carry back 2020 losses to a tax year when the U.S. federal statutory tax rate was 35%, which is permitted under the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

11.  Share-Based Compensation Plans
During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the Company recognized ~~$338,000 and $1,210,000 respectively,~~$350,000 of compensation expense associated with stock option and restricted stock awards granted in years 2017 through 2021. During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company recognized ~~$362,000 and $1,063,000, respectively,~~$545,000 of compensation expense associated with stock option and restricted stock awards granted in years ~~2016~~2015 through 2020.
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 in the first quarter of 2021 due to the extension of the exercise periods.

The following table summarizes the Company’s stock option activity for the ~~nine-month~~three-month period ended ~~September 30, 2021:~~March 31, 2022:

Weighted

Weighted

Weighted

Average

Weighted

Average

Average

Remaining

Aggregate

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Exercise

Contractual

Intrinsic


Shares

Price

Term (Years)

Value*

Shares

Price

Term (Years)

Value*
Outstanding at December 31, 2020

1,125,383

$
25.62




Outstanding at December 31, 2021

1,279,833

$
25.44




Granted

186,900

$
24.00





—

—




Exercised

(1,200)

$
18.00





(500)

18.00




Forfeited or expired

(27,015)

$
24.22





(5,740)

22.82




Outstanding at September 30, 2021

1,284,068

$
25.43

5.4

$
829,000
Exercisable at September 30, 2021

769,857

$
26.58

4.1

$
171,000
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 ~~September 30, 2021~~March 31, 2022 of ~~$22.66~~$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 ~~stock option exercise activity for the three and nine-month periods ended September 30, 2021 and 2020:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(Dollars in thousands)
Total intrinsic value of stock options exercised

$
8

$
0

$
8

$
0
Net proceeds from stock option exercises

$
0

$
0

$
0

$
0
Income tax benefit from the exercise of stock options

$
2

$
0

$
2

$
0

~~The following table summarizes the Company’s~~ restricted stock award activity for the ~~nine-month~~three-month period ended ~~September 30, 2021:~~March 31, 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	36,325		24.00				—		—
Vested	(30,345)		24.41				(150)		28.77
Non-vested at September 30, 2021	78,470	$	23.11	3.0	$	1,778,000
Forfeited							—		—
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 ~~September 30, 2021~~March 31, 2022 of ~~$22.66~~$24.72 multiplied by the number of non-vested restricted shares outstanding.

12. Short-Term Borrowings

At ~~September 30, 2021,~~March 31, 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, 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 ~~September 30, 2021, and during the nine-months then ended,~~March 31, 2022, there were 0 amounts outstanding ~~under~~on the Company’s line of credit.

~~On November 4, 2021, the Company renewed~~ There were also 0 amounts outstanding on the line of credit ~~agreement , with an increased borrowing limit of $40 million. The new agreement expires on November 4, 2022. The other principal terms of~~during the ~~new agreement are substantially unchanged.~~quarter.

13. Financial Instruments

At ~~September 30, 2021,~~March 31, 2022, the Company had one foreign exchange contract outstanding to sell $3.0 million Canadian dollars at a price of approximately $2.4 million U.S. dollars. This contract expires in the fourth quarter of 2021. The Company’s wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy ~~$3.5~~$3.9 million U.S. dollars at a price of approximately ~~$4.5~~$5.3 million Australian dollars. ~~Florsheim Australia’s~~These contracts all expire ~~on or before June 30,~~in 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.

14.  Comprehensive Income ~~(Loss)~~
Comprehensive income ~~(loss)~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ was as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,


2021

2020

2021

2020

2022

2021

(Dollars in thousands)

(Dollars in thousands)
Net earnings (loss)

$
5,069

$
(5,869)

$
10,214

$
(13,590)
Net earnings

$
4,053

$
1,325
Foreign currency translation adjustments

(601)

751

(568)

(217)

521

(143)
Pension liability, net of tax of $64, $49, $193 and $149, respectively

183

142

548

424
Total comprehensive income (loss)

$
4,651

$
(4,976)

$
10,194

$
(13,383)
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:


	September 30,		December 31,		March 31,		December 31,
	2021		2020		2022		2021

	(Dollars in thousands)				(Dollars in thousands)
Foreign currency translation adjustments	$	(6,618)	$	(6,050)	$	(6,262)	$	(6,783)
Pension liability, net of tax		(21,407)		(21,955)		(17,857)		(18,011)
Total accumulated other comprehensive loss	$	(28,025)	$	(28,005)	$	(24,119)	$	(24,794)

The following ~~presents a tabular disclosure about~~table shows changes in accumulated other comprehensive loss during the ~~nine~~three months ended ~~September 30,~~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

(568)

0

(568)
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

548

548

0

154

154
Net current period other comprehensive (loss) income

(568)

548

(20)
Ending balance, September 30, 2021

$
(6,618)

$
(21,407)

$
(28,025)
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 ~~nine~~three months ended ~~September 30, 2021:~~March 31, 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 nine months ended

statement where net income is

the three months ended

statement where net income is


September 30, 2021

presented

March 31, 2022

presented
Amortization of defined benefit pension items








Prior service cost

$
(47)
⁽¹⁾
Other income (expense), net

$
2
⁽¹⁾
Other (expense) income, net
Actuarial losses

788
⁽¹⁾
Other income (expense), net

206
⁽¹⁾
Other (expense) income, net
Total before tax

741



208


Tax benefit

(193)



(54)


Net of tax

$
548



$
154

(1)

These amounts were included in pension expense. See Note 8 for additional details.

15.  Equity
The following table reconciles the Company’s equity for the ~~nine~~three months ended ~~September 30, 2021:~~March 31, 2022:

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, 2020

$
9,797

$
67,178

$
138,955

$
(28,005)
Balance, December 31, 2021

$
9,709

$
68,718

$
147,762

$
(24,794)
Net earnings

0

0

1,325

0

0

0

4,053

0
Foreign currency translation adjustments

0

0

0

(143)

0

0

0

521
Pension liability adjustment, net of tax

0

0

0

183

0

0

0

154
Cash dividends declared

0

0

(2,336)

0

0

0

(2,316)

0
Stock option exercised

0

8

0

0
Share-based compensation expense

0

545

0

0

0

350

0

0
Shares purchased and retired

(62)

0

(1,017)

0

(75)

0

(1,722)

0
Balance, March 31, 2021

$
9,735

$
67,723

$
136,927

$
(27,965)
Net earnings

0

0

3,820

0
Foreign currency translation adjustments

0

0

0

176
Pension liability adjustment, net of tax

0

0

0

182
Cash dividends declared

0

0

(2,334)

0
Share-based compensation expense

0

327

0

0
Shares purchased and retired

(21)

0

(435)

0
Balance, June 30, 2021

$
9,714

$
68,050

$
137,978

$
(27,607)
Net earnings

0

0

5,069

0
Foreign currency translation adjustments

0

0

0

(601)
Pension liability adjustment, net of tax

0

0

0

183
Cash dividends declared

0

0

(2,341)

0
Issuance of restricted stock

36

(36)

0

0
Share-based compensation expense

0

338

0

0
Balance, September 30, 2021

$
9,750

$
68,352

$
140,706

$
(28,025)
Balance, March 31, 2022

$
9,634

$
69,076

$
147,777

$
(24,119)

The following table reconciles the Company’s equity for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

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)
Net earnings (loss)

0

0

(8,883)

0
Foreign currency translation adjustments

0

0

0

1,590
Pension liability adjustment, net of tax

0

0

0

144
Cash dividends declared

0

0

(2,355)

0
Share-based compensation expense

0

350

0

0
Balance, June 30, 2020

$
9,813

$
66,533

$
145,148

$
(25,222)
Net earnings (loss)

0

0

(5,869)

0
Foreign currency translation adjustments

0

0

0

��
751
Pension liability adjustment, net of tax

0

0

0

142
Cash dividends declared

0

0

(2,363)

0
Issuance of restricted stock

31

(31)

0

0
Share-based compensation expense

0

362

0

0
Balance, September 30, 2020

$
9,844

$
66,864

$
136,916

$
(24,329)
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~~Company's 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~~year ended December 31, 2020, including most prominently, the risk and uncertainties associated with the ongoing unpredictable global COVID-19 pandemic. As to the latter, since March 2020, the Company has experienced temporary and perhaps long-term changes in the demand profile for certain of its products, restrictions on the ability of its retail stores to remain open and fully operational, delays in and increased costs of shipping goods from overseas suppliers, and other impacts. While these impacts were most prominent in 2020, the pandemic has not ended and remains an unpredictable and possibly potent factor that could impact the Company’s future operations and financial conditions.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 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 September 30, 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 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 ~~driven~~affected by the economic conditions and retail environment in the United States.
EXECUTIVE OVERVIEW
~~The Company’s~~We experienced strong demand in our wholesale segment during the first quarter of 2022, posting a 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 BOGS, registered individual record first-quarter sales.
BOGS sales rose 72% for the quarter which is on top of a 17% annual increase last year. Part of the reason for the strong increase is we were in a much better overall inventory position on classic BOGS product compared to 2021. We feel good about the mix of classic and lifestyle product in our backlog and look forward to a strong second half of the year for BOGS.
Regarding our legacy ~~brands: Florsheim, Nunn Bush, and~~brands (Florsheim, Stacy Adams, ~~all experienced~~and Nunn 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 ~~performance~~increases including the record for Florsheim with a 17% increase, as well as a 24% increase for Nunn Bush. Stacy Adams sales reached 80% of 2019 levels. In many instances, we are still filling the pipeline with our major retail partners, and we anticipate we will be chasing inventory due to supply chain disruptions with certain footwear packages at least into the second half of 2022. We continue to experience strong sell-throughs and high average unit retail ~~level during the third quarter. Early in the pandemic, there was a spike in demand for athletic, rugged-casual, and comfort-casual footwear but substantially reduced demand for~~prices even as inventory levels work back towards more normalized levels. The dress and ~~dress-casual shoes. With~~refined casual markets remain particularly robust with record social events on the ~~rollout of vaccines in March~~calendar and the ~~subsequent loosening of pandemic-related social restrictions, the Company began to see a shift in demand back toward more refined footwear categories as consumers reevaluated their closets for a~~gradual return to ~~the~~an office and more formal social occasions. Retailers and brands were unprepared for the subsequent surge in demand, and the Company has been working to fill the pipeline and restock to normal inventory levels. The situation has been exacerbated by supply chain issues, especially in regard to transportation of finished product. While the Company is working through delays and chasing demand, the Company believes it has been in a relatively better inventory position than its competitors and as a result has gained market share. Management anticipates strong demand within the dress and dress-casual market well into 2022, absent adverse pandemic-related developments.work environment.

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While we are selling a significant amount of dress shoes, we realize that eventually the ~~Company is pleased with the resurgence of the traditional,~~market will return to a more refined footwear market, it is also encouraged by the ability of its legacy brands to expand into the true casual market with expanded offerings of athletic-inspired and outdoor-oriented shoes. The Company’snormalized level as men restock their closets. Our design ~~and selling focus throughout~~emphasis during the pandemic has been ~~towards casualizing its brands,~~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 ~~it is having success~~ both ~~in getting new categories placed as well as~~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 ~~sell-throughs at~~ the ~~consumer level. Moving forward,~~expectation that the ~~Company’s legacy businesses~~post pandemic world will ~~have~~embrace a more ~~balanced ratio between dress footwear and truly casual shoes, reflecting the changing lifestyle trends in a post-pandemic world.~~

~~BOGS wholesale sales were down for the quarter. The decrease entirely reflected production and shipping delays from the Company’s factory base in Asia. Sales across all BOGS category segments~~relaxed lifestyle. We are robust as the Company enters the principal selling season for BOGS at retail. While deliveries are later than originally planned, management believes the Company will be in a better inventory position heading into the holiday season. The outdoor boot category has been strong throughout the pandemic, and BOGS has benefitted from increased consumer interestpicking up market share in the ~~brand. While BOGS classic weather boot sales remain the foundation~~tailored side of the business ~~meaningful progress has been made toward developing a successful~~and our objective is to also increase our penetration of men's casual ~~lifestyle~~ business ~~which will offer additional~~over time.

We had strong growth ~~opportunities for the BOGS brand~~ in the ~~future.~~

Third quarter 2021 wholesale sales were negatively impacted by bottlenecks throughout the supply chain. However, demand is currently strong across all of the Company’s brands, and management anticipates improved inventory flow throughout the fourth quarter of 2021 which will enable the Company to fulfill much of the increased demand through the end of the year and into 2022.

~~In the Company’s U.S.~~ retail segment third quarter sales were up 44%. The Company’s four brick-and-mortar stores in the U.S. performed well, exceeding sales from the same period in 2019. The majority of retail’s growth, however, was driven by e-commerce, with sales up 33% versus last year and up 54% versus 2019 in the U.S. The Company continues to invest heavily in building out its e-commerce platform to maintain its growth momentum. With the reduction in unprofitable brick-and-mortar stores and increases in e-commerce sales, the Company’s direct-to-consumer business is becoming an important profit driver in the Weyco business model.

~~The Company experienced a temporary setback in its overseas businesses~~ 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 ~~renewed lockdowns~~e-commerce sales are an important piece of our business model going forward. We are very pleased that our four remaining brick and mortar stores had solid performances with an increase in ~~Australia and New Zealand impacted both retail~~aggregate sales ~~and wholesale shipments. The Company has made good headway towards reestablishing profitably in its~~over 2019.

Regarding Florsheim Australia, ~~businesses,~~ which ~~encompasses the markets in Australia,~~includes New Zealand, the Pacific Rim and South ~~Africa. Since~~Africa, our sales were down 8%. The Omicron outbreak in Hong Kong and the ~~beginning of~~Pacific Rim significantly reduced both wholesale and retail sales in that region. However, our business in the Australian 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 ~~management~~ has ~~focused~~enabled us to reset our business model on ~~shedding or renegotiating unfavorable~~the Australian continent. A combination of more manageable leases, ~~and leveraging its~~ e-commerce ~~platform in the U.S. Unfortunately, the zero-case tolerance policy in Australia and Auckland for COVID-19,~~growth, and the ~~subsequent shutdown~~continued growth of ~~retail stores, resulted~~our BOGS Australian business puts us in a ~~loss at Florsheim Australia for the quarter. The Australia market has begun~~much better position to ~~reopen~~have a profitable year in ~~stages in the fourth quarter,~~that region.

Consolidated Sales and ~~the Company remains confident that it will ultimately reap the benefits of the changes made over the past year.~~

~~Third Quarter Highlights~~Earnings

Consolidated net sales were a first-quarter record of $81.4 million compared to $46.9 million in the first quarter of 2021. Consolidated gross earnings declined to 35.8% of net sales for the ~~third~~ quarter ~~of 2021 were $61.8 million, an increase of 16%~~ compared to ~~last year’s third quarter~~41.2% of net sales ~~of $53.2 million.~~in last year's first quarter, primarily due to lower wholesale margins, as discussed below. Consolidated earnings from operations totaled ~~$6.7~~$5.4 million for the ~~third~~ quarter, ~~of 2021, up from operating losses of $3.8~~compared to $1.6 million in the same period ~~one year ago. The Company’s~~of 2021. Quarterly net earnings rose to ~~$5.1~~$4.1 million, or ~~$0.52~~$0.42 per diluted share, ~~in the third quarter of 2021,~~up from ~~net losses of $5.9~~$1.3 million, or ~~$0.60~~$0.14 per diluted share, in last ~~year’s third~~year's first quarter.

Last ~~year’s third~~year's first quarter ~~operating~~ results ~~were significantly~~continued to be impacted by the effects of the COVID-19 ~~pandemic, and included non-recurring charges totaling $7.4 million.~~pandemic. As such, comparisons of ~~2021~~first quarter 2022 financial performance to ~~2020~~2021 may have limited utility. Therefore, selected comparisons to 2019 (pre-COVID) are included as appropriate. Net sales for the first quarter 2022 exceeded 2019 levels by 10%. Our operating earnings also improved, beating 2019 levels by 6%.

Financial Position

At March 31, 2022, cash, short-term investments, and marketable securities totaled $34.0 million and there were no amounts outstanding on our line of credit. During the first three months ~~ended September 30, 2021 rose to approximately 75%~~ of ~~third quarter 2019 net sales levels. Consolidated operating earnings for the quarter recovered to 80%~~2022, we generated $231,000 of ~~2019 levels.~~

~~Year-to-Date Highlights~~

~~Consolidated net sales for the first nine months~~cash from operations and liquidated $8.1 million of ~~2021 were $166.3~~investment securities. We paid dividends of $2.3 million, ~~up 25% from net sales~~repurchased $1.8 million of ~~$133.4 million~~our common stock, and had $352,000 of capital expenditures during the first nine months of 2020. Consolidated earnings from operations totaled $12.9 million in the first nine months of 2021, up from operating losses of $15.5 million in the first nine months of 2020. The Company’s net earnings totaled $10.2 million, or $1.05 per diluted share, for the nine months ended September 30, 2021 versus net losses of $13.6 million, or $1.39 per diluted share, in the same period last year.

Last year’s year-to-date results were significantly impacted by the COVID-19 pandemic. The majority of retailers, including the Company’s retail stores, were shut-down in mid-March 2020 and remained closed for a majority of the second quarter. Net sales for the nine months ended September 30, 2021 recovered to 77% of net sales in the first nine months of 2019. Consolidated operating earnings for the year-to-date period recovered to 83% of 2019 levels.

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~~Financial Position Highlights~~

At September 30, 2021, cash , short-term investments and marketable securities totaled $45.4 million and there were no amounts outstanding under the Company’s revolving line of credit. During the first nine months of 2021, the Company generated $9.7 million of cash from operations and $3.6 million from maturities of marketable securities. The Company invested $15.2 million in short-term investments, paid dividends of $6.9 million, repurchased $1.5 million of Company stock, and had $673,000 of capital expenditures. The Company also spent $2.6 million to acquire the Forsake brand in the second quarter.

SEGMENT ANALYSIS

Net sales and earnings (loss) from operations for the Company’s segments infor the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ were as follows:


	Three Months Ended September 30,				%		Nine Months Ended September 30,				%		Three Months Ended March 31,				%
	2021		2020		Change		2021		2020		Change		2022		2021		Change

	(Dollars in thousands)												(Dollars in thousands)
Net Sales
North American Wholesale	$	50,166	$	44,012	14	%	$	125,453	$	106,019	18	%	$	67,100	$	33,378	101	%
North American Retail		6,307		4,367	44	%		18,127		12,768	42	%		7,860		5,618	40	%
Other		5,325		4,799	11	%		22,682		14,621	55	%		6,400		7,904	-19	%
Total	$	61,798	$	53,178	16	%	$	166,262	$	133,408	25	%	$	81,360	$	46,900	73	%

Earnings (Loss) from Operations
North American Wholesale	$	6,027	$	2,752	119	%	$	10,041	$	(4,664)	315	%	$	4,846	$	1,359	257	%
North American Retail		1,401		(2,796)	150	%		3,326		(3,741)	189	%		828		756	10	%
Other		(682)		(3,796)	82	%		(445)		(7,107)	94	%		(243)		(481)	49	%
Total	$	6,746	$	(3,840)	276	%	$	12,922	$	(15,512)	183	%	$	5,431	$	1,634	232	%

North American Wholesale Segment

Net Sales

Net sales in the Company’s North American wholesale segment for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ were as follows:

~~North American Wholesale Segment Net Sales~~


	Three Months Ended September 30,				%		Nine Months Ended September 30,				%		Three Months Ended March 31,				%
	2021		2020		Change		2021		2020		Change		2022		2021		Change

	(Dollars in thousands)												(Dollars in thousands)
North American Net Sales
North American Wholesale Segment Net Sales
Stacy Adams	$	8,652	$	7,274	19	%	$	27,322	$	25,036	9	%	$	16,797	$	7,900	113	%
Nunn Bush		9,202		8,129	13	%		26,650		21,660	23	%		14,374		8,021	79	%
Florsheim		13,442		8,605	56	%		39,255		29,941	31	%		22,012		9,479	132	%
BOGS/Rafters		18,248		19,780	(8)	%		30,909		28,556	8	%		13,099		7,636	72	%
Forsake		279		—	100	%		281		—	100	%		386		—	100	%
Total North American Wholesale	$	49,823	$	43,788	14	%	$	124,417	$	105,193	18	%	$	66,668	$	33,036	102	%
Licensing		343		224	53	%		1,036		826	25	%		432		342	26	%
Total North American Wholesale Segment	$	50,166	$	44,012	14	%	$	125,453	$	106,019	18	%	$	67,100	$	33,378	101	%

~~Net~~First quarter 2022 sales ~~for the three and nine months ended September 30, 2021~~ were up across all of our brands. As discussed above, last year's first quarter sales of the ~~Company’s~~ legacy brands (Stacy Adams, Nunn Bush, and Florsheim)~~. Last year’s third quarter and year-to-date~~ were lower than normal because the pandemic significantly impacted sales of ~~the legacy brands were down significantly as a result of the pandemic.~~dress and dress-casual footwear. Sales of the BOGS outdoor brand, ~~were down~~which have been less affected by the pandemic, rose 72% for the quarter, ~~due mainly to delays in receiving inventory caused by disruptions~~with sales up across all major distribution channels. The wholesale segment experienced significant growth in the ~~supply chain.~~first quarter of 2022, with net sales surpassing 2019 levels by 13%. Florsheim and BOGS achieved record first-quarter sales, ~~for the year-to-date period were up compared to the first nine months of 2020, primarily due to increased~~and sales ~~to e-commerce and off-price retailers.~~

~~Business recovery continues in the Company’s wholesale segment, with wholesale sales for the three and nine months ended September 30, 2021 rising to approximately 74% and 72%~~ of the ~~comparative~~Nunn Bush brand beat 2019 ~~levels. At wholesale, there was a significant pickup in demand across all~~levels by 24%. Stacy Adams sales reached 80% of the Company’s brands during the third quarter, however, bottlenecks in the supply chain caused delays in receiving merchandise which negatively impacted third quarter shipments. The Company has begun to see increased levels of inventory receipts in October, which management expects to continue throughout the rest of the year, and which should help the Company meet the increased demand for its products in the fourth quarter and into 2022.2019 levels.

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. ~~Last year's licensing revenues were down for the quarter and year-to-date periods, in line with reductions in licensees’ sales of branded products.~~

~~Earnings (Loss) from Operations~~

Gross earnings for the North American wholesale segment were 34.6% of net sales in the third quarter of 2021 compared to 35.7% of net sales in last year’s third quarter. Third quarter gross margins were negatively impacted by higher inbound freight costs. The Company has been paying premium freight rates in order to reserve space on container ships. The Company has raised its selling prices to mitigate the impact of higher material and freight costs on its gross margins; however, management believes that margins will continue to be adversely affected at least through the first half of 2022. Last year’s third quarter gross margins were adversely impacted by a $0.5 million reserve for obsolete and slow-moving inventory due to COVID-19 related impacts.

~~For the nine months ended September 30, 2021, wholesale gross earnings were 33.8% of net sales compared to 33.7% of net sales in the same period of 2020.~~

Earnings ~~(Loss)~~ from Operations

Retail gross earnings ~~were 68.4%~~as a percent of net sales were 65.9% and 65.3% in the ~~third quarter~~first quarters of 2022 and 2021, ~~compared to 63.6% of net sales in last year’s third quarter. For the nine months ended September 30, retail gross earnings were 66.5% of net sales in 2021, and 63.5% of net sales in 2020.~~

respectively. Selling and administrative expenses for the retail segment consist primarily of freight, advertising expense, employee costs, and rent and occupancy costs. Retail selling and administrative expenses were ~~$2.9~~$4.4 million, or ~~46%~~55% of net sales, in the ~~third~~first quarter of ~~2021, compared to $5.6~~2022 versus $2.9 million, or ~~128%~~52% of net sales, in ~~the third quarter of 2020. For the nine months ended September 30, retail selling~~last year's first quarter. The increase was primarily due to higher e-commerce expenses, primarily freight and administrative expenses were $8.7 million, or 48% of net sales, in 2021, versus $11.9 million, or 93% of net sales, in 2020. Third quarter and year-to-date 2020 expenses included $1.5 million in early lease termination charges, $1.0 million for the impairment of retail store fixed assets, and $0.1 million in employee costs related to restructuring and temporary closures.

~~The retail segment had~~advertising. Retail operating earnings ~~of $1.4 million~~were $828,000 for the quarter upcompared to $756,000 last year. This increase was primarily due to improved performance at active brick-and-mortar locations. Earnings from operating losses totaling $2.8 million in last year’s third quarter. For the nine months ended September 30, retail earnings from operations totaled $3.3 million in 2021, up from operating losses of $3.7 million in 2020. The increasesour e-commerce businesses were down slightly for the quarter, ~~and first nine months of 2021~~as increased sales were ~~due to~~offset by the higher ~~sales and lower selling and administrative~~ expenses.

Retail operating earnings for the three and nine months ended September 30, 2021 outpaced 2019 levels due largely to growth in the Company’s more profitable e-commerce businesses and the shedding of unprofitable stores last year.

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 $5.3~~2022 totaled $6.4 million compared to $7.9 million in the ~~third quarter~~2021. The decrease was due to the closing of ~~2021, up from $4.8 million in the third quarter of 2020. The increase was at~~ Florsheim ~~Australia, with sales up in both its wholesale~~Europe and ~~retail businesses, partially offset by~~ lower sales at Florsheim ~~Europe, as the Company is in the final stages of winding down this business. For the nine months ended September 30, 2021, other~~Australia. Florsheim Australia's net sales ~~were $22.7 million, compared to $14.6 million in~~fell 8% for the ~~same period last year. The year-to-date increase was primarily at Florsheim Australia,~~quarter, with sales updown in both its wholesale and retail businesses. ~~Last year’s third quarter and year-to-date~~The weakening of the Australian dollar relative to the U.S. dollar also contributed to the decrease, as Florsheim Australia's net sales in local currency were only down 2% for the quarter. Retail sales in Australia, which account for a majority of Florsheim Australia's sales, were ~~down significantly as a result of COVID-related retail shutdowns.~~

~~Other~~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 Australia's net sales for the ~~third~~first quarter of 2021 recovered to 56% of 2019 levels. Business recovery in Australia has been hindered by a large number of Florsheim Australia’s retail stores being closed for a majority of the third quarter due to lockdowns imposed in New South Wales and Victoria. Stores in New South Wales have begun to reopen in October, and it is expected that all of the Company’s stores in Australia will be reopened during the fourth quarter, absent adverse pandemic-related developments. For the year-to-date period, other net sales recovered to 82%2022 reached 89% of 2019 levels.

~~Collectively, Florsheim Australia and Florsheim Europe had~~Other operating losses ~~totaling $682,000 in~~totaled $243,000 for the ~~third~~ quarter ~~of 2021, compared to~~versus operating losses of ~~$3.8 million in the third quarter of 2020, and operating losses of $1.4 million in 2019.~~$481,000 last year. The improvement ~~in 2021~~between periods was ~~largely~~primarily due to ~~improved performance~~the shedding of losses at Florsheim Australia. Last year’s third quarter losses included $2.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $1.1 million in employee costs related to restructuring and temporary closures, $0.5 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.2 million in other related charges, partially offset by $1.1 million of income from government wage and rent subsidies.

For the nine months ended September 30, 2021, Florsheim Australia and Florsheim Europe had operating losses totaling $445,000, compared to operating losses totaling $7.1 million in the same period last year, and operating losses of $2.7 million in 2019. The improvement in 2021 was largely due to improved performance at Florsheim Australia. Last year’s year-to-date losses included $2.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $2.0 million in employee costs related to restructuring and temporary closures, $1.6 million in reserves for obsolete and slow moving inventory due to COVID-19-related impacts, and $0.6 million in other related charges, partially offset by $2.5 million of income from government wage and rent subsidies.

~~Other income and expense~~

Interest income was $186,000 and $121,000 for the three months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, interest income was $505,000 in 2021 and $408,000 in 2020. Interest expense decreased $6,000 for the three months ended September 30, 2021, compared to the same period of 2020. For the nine months ended September 30, 2021, interest expense increased $22,000 compared to the same period last year.Europe.

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Other income and expense and taxes

Interest income was $91,000 and $131,000 in the first quarters of 2022 and 2021, respectively. Interest expense was $1,000 and $7,000 for the three months ended March 31, 2022 and 2021, respectively. Other (expense), income, net, ~~rose to $76,000~~totaled expense of ~~income~~$6,000 for the quarter compared to ~~$8,000~~income of ~~expense~~$138,000 in ~~last year’s third quarter. For~~ the ~~year-to-date period, other income (expense), net, totaled $403,000~~first quarter of ~~income in 2021 versus $147,000 of income in 2020. Changes between periods were largely~~2021. The decrease was primarily due to lower unrealized gains ~~and losses recognized~~ on foreign exchange contracts ~~entered into~~held by Florsheim Australia.

~~The Company’s~~Our effective tax rate for the ~~three months~~three-months ended ~~September 30, 2021~~March 31, 2022, was ~~27.7%~~26.5% compared to ~~(57.2%)~~30.1% for the same period of ~~2020. For the nine months ended September 30, the effective tax rate was 25.7% in~~2021. The 2022 and 2021 versus 9.5% in 2020. Last year’s third quarter and year-to-date income tax provisions included $2.0 million of tax expense related to deferred tax assets of the Company’s foreign subsidiaries. The 2020 effective tax rates were ~~also~~negatively impacted because ~~the Company~~we did not record an income tax ~~benefit~~benefits on foreign subsidiary losses ~~and,~~ in the U.S., the Company had the ability to carry back 2020 losses to a tax year when the U.S. federal statutory tax rate was 35%, which is permitted under the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).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 ~~$9.7 million~~$231,000 of cash from operating activities during the first ~~nine~~three months of ~~2021,~~2022, compared to ~~$6.8~~$14.2 million in the same period ~~of 2020.~~one year ago. The ~~increase between years~~decrease in 2022 was primarily due to ~~higher earnings this year, partially offset by~~ changes in operating assets and liabilities, principally inventory and accounts ~~receivable and inventory. The Company’s~~payable. We are continuing to build our inventory levels ~~increased~~as required to ~~$52.9 million at September 30, 2021 from $33.6 million at June 30, 2021. These figures include inventory that has left~~support the supplier, is paid for, and is in-transit to the Company’s distribution facility. With transit times historically being approximately four to six weeks, the percentage of in-transit versus on-hand inventory has typically been between 10 – 20% of the Company’s total wholesale inventory. With transit times now running in excess of eight weeks, and with the delays in obtaining space on shipping vessels and the large amount of inventory on order, the Company’s wholesale in-transit inventory was approximately 56% of its total inventory as of September 30, 2021. Bottlenecks in the supply chain are beginning to loosen up, and the Company is now receiving a much greater number of containers currently than is normal. Management believes the Company will be well-positioned to fulfill much of its increased demand ~~in the fourth quarter.~~for our products.

~~During the second quarter of 2021, the Company~~We paid $2.6 million to acquire the Forsake brand. In connection with the acquisition, the Company is obligated to make annual 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 is approximately $1.4dividends totaling $2.3 million in ~~total.~~

~~During~~both the first ~~nine months~~quarters of ~~2021, the Company invested $15.2 million of cash in highly liquid fixed income funds.~~

~~The Company paid three quarterly dividend dividends totaling $6.9 million in the first nine months of 2021,~~2022 and four quarterly dividend payments totaling $9.4 million in the first nine months of 2020. The Company accelerated the timing of its January 2021 dividend into 2020, and resumed its regular quarterly payment schedule in March 2021. On ~~November 2, 2021, the Company’s~~May 3, 2022, our Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on ~~November 29, 2021,~~May 27, 2022, payable ~~December 31, 2021.~~June 30, 2022.

~~The Company repurchases its~~We repurchase our common stock under ~~its~~our share repurchase program when ~~it believes~~we believe market conditions are favorable. During the first ~~half~~three months of ~~2021, the Company~~2022, we repurchased ~~83,545~~75,097 shares for a total cost of ~~$1.5~~$1.8 million. ~~The Company did not repurchase any of its shares in the third quarter of 2021.~~ As of ~~September 30, 2021, the Company~~March 31, 2022, we had the authority to repurchase approximately ~~252,000~~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 ~~$673,000~~$352,000 in the first ~~nine~~three months of ~~2021.~~2022. Management estimates that annual capital expenditures for ~~2021~~2022 will be between ~~$1.0~~$2.0 million and ~~$1.5~~$3.0 million.

At ~~September 30, 2021, the Company~~March 31, 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, 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 ~~September 30, 2021,~~March 31, 2022, there were no amounts outstanding on the ~~Company was~~line of credit and we were in compliance with all financial ~~covenants and there~~covenants. There were also no amounts outstanding ~~under the line of credit. There also were no amounts outstanding under~~on the line of credit during the ~~nine-month period ended September 30,~~

PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
~~None~~None.

Item ~~1A. Risk Factors.~~2. Unregistered Sales of Equity Securities and Use of Proceeds.
~~There~~In 1998, the Company's stock repurchase program was established. On several occasions since the program's inception, our Board of Directors has increased the number of shares authorized for repurchase under the program. In total, 8.5 million shares have been ~~no material changes~~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 ~~the risk factors affecting the Company from those disclosed~~Item 703(a) of Regulation S-K regarding our repurchases of our common stock in the ~~Company’s annual report on Form 10-K for the year ended December~~three-month period March 31, ~~2020.~~2022.









Maximum Number

Total

Average

Total Number of

of Shares

Number

Price

Shares Purchased as

that May Yet Be

of Shares

Paid

Part of the Publicly

Purchased Under
Period

Purchased

Per Share

Announced Program

the Program
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

75,097

$
23.92

75,097

~~Item 5. Other Information~~
On November 4, 2021, the Company renewed its revolving line of credit (the “Credit Agreement”) with Associated Bank, National Association for another one-year term that expires on November 4, 2022. The Credit Agreement was renewed with an increased borrowing limit of $40 million. Under the terms of the Credit Agreement, amounts outstanding bear interest at LIBOR plus 1.35%. The Credit Agreement, which is secured by a lien against the Company’s general corporate assets, contains customary representations, warranties and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. The foregoing description does not purport to be complete and is qualified in its entirety by reference to the First Amendment to Credit Agreement with Associated Bank, National Association, a copy of which is filed as Exhibit 10.1 to this Form 10-Q.

2419

WISCONSIN		39-0702200
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

Exhibit	Description	Incorporation Herein By Reference To	Filed Herewith
~~10.1~~	~~First Amendment to Credit Agreement, dated as of November 4, 2021, between Weyco Group, Inc. and Associated Bank, National Association~~		X

~~10.2~~	~~Amended and Restated Revolving Loan Note, dated November 4, 2021, between Weyco Group, Inc. and Associated Bank, National Association~~		X

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 ~~September 30, 2021~~March 31, 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~~Company's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2021,~~March 31, 2022 formatted in iXBRL (included in Exhibit 101).		X

		WEYCO GROUP, INC.

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


	Wholesale		Retail		Total		March 31, 2022		December 31, 2021

	(Dollars in thousands)						(Dollars in thousands)
Balance, December 31, 2020	$	11,112	$	0	$	11,112
Acquisition of business		332		775		1,107
Balance, September 30, 2021	$	11,444	$	775	$	12,219
Indefinite-lived intangibles:
Goodwill							$	12,317	$	12,317
Trademarks								34,768		34,768
Total							$	47,085	$	47,085


Three Months Ended
March 31,	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

2021
Product sales	$	33,036	$	5,618	$	7,904	$	46,558
Licensing revenues		342		0		0		342
Net sales	$	33,378	$	5,618	$	7,904	$	46,900
Earnings (loss) from operations	$	1,359	$	756	$	(481)	$	1,634


	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


Nine Months Ended
September 30,	Wholesale			Retail			Other			Total

	(Dollars in thousands)
2021
Product sales	$	124,417		$	18,127		$	22,682		$	165,226
Licensing revenues		1,036			0			0			1,036
Net sales	$	125,453		$	18,127		$	22,682		$	166,262
Earnings (loss) from operations	$	10,041		$	3,326		$	(445)		$	12,922

2020
Product sales	$	105,193		$	12,768		$	14,621		$	132,582
Licensing revenues		826			0			0			826
Net sales	$	106,019		$	12,768		$	14,621		$	133,408
Earnings (loss) from operations	$	(4,664)	⁽⁴⁾	$	(3,741)	⁽⁵⁾	$	(7,107)	⁽⁶⁾	$	(15,512)


	Operating Leases
	(Dollars in thousands)
2021, excluding the nine months ended September 30, 2021	$	978
2022		3,462
2023		2,617
2024		1,865
2025		1,215
Thereafter		1,442
Total lease payments		11,579
Less imputed interest		(2,459)
Present value of lease liabilities	$	9,120


	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		(568)		0		(568)
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		548		548		0		154		154
Net current period other comprehensive (loss) income		(568)		548		(20)
Ending balance, September 30, 2021	$	(6,618)	$	(21,407)	$	(28,025)
Net current period other comprehensive income								521		154		675
Ending balance, March 31, 2022							$	(6,262)	$	(17,857)	$	(24,119)


	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 nine months ended			statement where net income is	the three months ended			statement where net income is
	September 30, 2021			presented	March 31, 2022			presented
Amortization of defined benefit pension items
Prior service cost	$	(47)	⁽¹⁾	Other income (expense), net	$	2	⁽¹⁾	Other (expense) income, net
Actuarial losses		788	⁽¹⁾	Other income (expense), net		206	⁽¹⁾	Other (expense) income, net
Total before tax		741				208
Tax benefit		(193)				(54)
Net of tax	$	548			$	154


							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, 2020	$	9,797	$	67,178	$	138,955	$	(28,005)
Balance, December 31, 2021									$	9,709	$	68,718	$	147,762	$	(24,794)
Net earnings		0		0		1,325		0		0		0		4,053		0
Foreign currency translation adjustments		0		0		0		(143)		0		0		0		521
Pension liability adjustment, net of tax		0		0		0		183		0		0		0		154
Cash dividends declared		0		0		(2,336)		0		0		0		(2,316)		0
Stock option exercised										0		8		0		0
Share-based compensation expense		0		545		0		0		0		350		0		0
Shares purchased and retired		(62)		0		(1,017)		0		(75)		0		(1,722)		0
Balance, March 31, 2021	$	9,735	$	67,723	$	136,927	$	(27,965)
Net earnings		0		0		3,820		0
Foreign currency translation adjustments		0		0		0		176
Pension liability adjustment, net of tax		0		0		0		182
Cash dividends declared		0		0		(2,334)		0
Share-based compensation expense		0		327		0		0
Shares purchased and retired		(21)		0		(435)		0
Balance, June 30, 2021	$	9,714	$	68,050	$	137,978	$	(27,607)
Net earnings		0		0		5,069		0
Foreign currency translation adjustments		0		0		0		(601)
Pension liability adjustment, net of tax		0		0		0		183
Cash dividends declared		0		0		(2,341)		0
Issuance of restricted stock		36		(36)		0		0
Share-based compensation expense		0		338		0		0
Balance, September 30, 2021	$	9,750	$	68,352	$	140,706	$	(28,025)
Balance, March 31, 2022									$	9,634	$	69,076	$	147,777	$	(24,119)


					Maximum Number
	Total	Average		Total Number of	of Shares
	Number	Price		Shares Purchased as	that May Yet Be
	of Shares	Paid		Part of the Publicly	Purchased Under
Period	Purchased	Per Share		Announced Program	the Program
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	75,097	$	23.92	75,097