Weyco (WEYS) 8-K Weyco Reports Second Quarter Sales and Earnings

WEYCO REPORTS SECOND QUARTER SALES AND EARNINGS

(Milwaukee, Wisconsin—August 4, 2009)  Weyco Group, Inc. (NASDAQ:WEYS) today announced financial results for the quarter ended June 30, 2009.

Net sales for the second quarter were $50.1 million, a decrease of 6% from 2008 sales of $53.0 million.  Net earnings for the quarter were $2.2 million, down from $4.1 million in 2008.  Diluted earnings per share were $.19 per share in 2009 as compared with $.34 per share in the second quarter of 2008.

On January 23, 2009, the Company acquired a majority interest in a new subsidiary that subsequently purchased the Florsheim wholesale and retail businesses in Australia, Asia Pacific and South Africa (collectively “Florsheim Australia”).  The financial results of Florsheim Australia are included in the Company’s consolidated financial statements from the date of acquisition.  The Company previously had license agreements with these entities; consequently, no licensing revenues were recorded for these entities after January 23, 2009.

Net sales in the wholesale division, which includes North American wholesale sales and licensing revenues, were $35.9 million for the second quarter of 2009, compared with $44.9 million in 2008.  Wholesale product sales were $35.4 million in the second quarter of 2009, down from $43.9 million in 2008. In the wholesale division, sales of the Company’s Stacy Adams, Nunn Bush and Florsheim brands were down 24%, 12% and 24%, respectively.  Licensing revenues were $552,000 in 2009 and $969,000 in 2008.  The decrease in licensing revenues resulted from the Company’s acquisition of its licensees in Australia, Asia Pacific, and South Africa, and also due to a general trend of lower sales of the Company’s licensed products in the current challenging retail environment.

Net sales in the retail division, which includes sales from the Company’s North American retail stores and domestic Internet business, were $5.4 million in the second quarter of 2009, compared with $6.7 million in 2008.  The Company has three fewer stores this year compared with 2008.  Same store sales were down 9.8%.

Foreign sales, which include the wholesale and retail sales of Florsheim Europe and Florsheim Australia, were $8.7 million in the second quarter of 2009, compared to $1.4 million in 2008.  In 2009, sales of Florsheim Europe were $959,000, with the remaining $7.7 million representing sales of Florsheim Australia.

Operating earnings for the second quarter were $2.2 million, down from $5.9 million in 2008.  As a percent of sales, operating earnings fell from 11.1% in 2008 to 4.4% in 2009.  Operating earnings were affected by the lower sales volumes and to a lesser extent, lower gross margins.

“While our results mirror the general slowdown in the marketplace,” stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group, “our Company remains well positioned for the long term with a solid financial foundation and strong brands that have a loyal base of consumers.”

Weyco Group will host a conference call on August 5, 2009, at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail.  To participate in the call please dial 888-713-4214 or 617-213-4866, referencing passcode #94419257, five minutes before the start of the call. A replay will be available for one week beginning about one hour after the completion of the call by dialing 888-286-8010 or 617-801-6888, referencing passcode #21941208.  Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group’s website at www.weycogroup.com.

About Weyco Group:

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

Forward-Looking Statements

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

For more information, contact:

John Wittkowske

Senior Vice President and Chief Financial Officer

414-908-1880

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
	(In thousands, except per share amounts)
Net sales	$	50,053		$	53,017		$	108,961		$	114,295
Cost of sales		31,142			33,284			70,359			72,296
Gross earnings		18,911			19,733			38,602			41,999
Selling and administrative expenses		16,709			13,848			33,066			28,519
Earnings from operations		2,202			5,885			5,536			13,480
Interest income		566			491			1,019			999
Interest expense		(2	)		(20	)		(25	)		(30	)
Other income and expense, net		893			1			799			8
Earnings before provision for income taxes		3,659			6,357			7,329			14,457
Provision for income taxes		1,165			2,300			2,475			5,275
Net earnings		2,494			4,057			4,854			9,182
Net earnings attributable to noncontrolling interest		309			-			164			-
Net earnings attributable to Weyco Group, Inc.	$	2,185		$	4,057		$	4,690		$	9,182
Weighted average shares outstanding
Basic		11,253			11,443			11,266			11,452
Diluted		11,542			11,786			11,513			11,823
Earnings per share
Basic	$	0.19		$	0.35		$	0.42		$	0.80
Diluted	$	0.19		$	0.34		$	0.41		$	0.78
Cash dividends per share	$	0.15		$	0.14		$	0.29		$	0.25

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2009			2008
	(Dollars in thousands)
ASSETS:
Cash and cash equivalents	$	21,137		$	11,486
Marketable securities, at amortized cost		2,965			6,623
Accounts receivable, net		34,146			29,873
Accrued income tax receivable		819			2,226
Inventories		43,342			47,012
Deferred income tax benefits		250			579
Prepaid expenses and other current assets		3,116			3,678
Total current assets		105,775			101,477
Marketable securities, at amortized cost		39,219			39,447
Deferred income tax benefits		1,028			736
Other assets		10,871			10,069
Property, plant and equipment, net		28,593			28,043
Trademark		10,868			10,868
Total assets	$	196,354		$	190,640
LIABILITIES & SHAREHOLDERS' INVESTMENT:
Short-term borrowings	$	-		$	1,250
Accounts payable		7,482			7,494
Dividend payable		1,688			1,589
Accrued liabilities		7,784			6,490
Total current liabilities		16,954			16,823
Long-term pension liability		15,852			15,160
Common stock		11,310			11,353
Capital in excess of par value		16,220			15,203
Reinvested earnings		141,692			142,617
Accumulated other comprehensive loss		(9,397	)		(10,516	)
Total Weyco Group Inc. shareholder's investment		159,825			158,657
Noncontrolling interest		3,723			-
Total shareholders' investment		163,548			158,657
Total liabilities and shareholders' investment	$	196,354		$	190,640

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED)

	2009			2008
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	4,854		$	9,182
Adjustments to reconcile net earnings to net cash provided by operating activities -
Depreciation		1,435			1,283
Amortization		47			54
Deferred income taxes		(212	)		(138	)
Stock-based compensation		429			293
Pension expense		1,424			676
Loss on disposal of fixed assets		14			131
Increase in cash surrender value of life insurance		(114	)		(112	)
Change in operating assets and liabilities -
Accounts receivable		423			4,699
Inventories		10,724			2,693
Prepaids and other current assets		1,136			357
Accounts payable		(1,514	)		(4,181	)
Accrued liabilities and other		730			(1,673	)
Accrued income taxes		1,406			(1,166	)
Net cash provided by operating activities		20,782			12,098
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses		(9,320	)		-
Purchase of marketable securities		(405	)		(1,799	)
Proceeds from maturities of marketable securities		4,245			3,468
Life insurance premiums paid		(155	)		(155	)
Purchase of property, plant and equipment		(590	)		(1,835	)
Net cash used for investing activities		(6,225	)		(321	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from noncontrolling interest		1,314			-
Cash dividends paid		(3,184	)		(2,535	)
Shares purchased and retired		(2,440	)		(6,247	)
Proceeds from stock options exercised		520			1,261
Net (repayments) borrowings under revolving credit agreement		(1,250	)		1,450
Income tax benefits from share-based compensation		134			941
Net cash used for financing activities		(4,906	)		(5,130	)
Net increase in cash and cash equivalents		9,651			6,647
CASH AND CASH EQUIVALENTS at beginning of period	$	11,486		$	7,859
CASH AND CASH EQUIVALENTS at end of period	$	21,137		$	14,506
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	1,183		$	5,603
Interest paid	$	28		$	30