1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996 .
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For transition period from ............... to ...............
Commission file number 0-9068
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Weyco Group, Inc.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-0702200
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
234 E. Reservoir Avenue, P. O. Box 1188, Milwaukee, WI 53201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code (414) 263-8800
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 par value per share
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(Title of Class)
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in any definitive proxy of information
statements incorporated by reference or in any amendment to this Form 10-K.
(X)
As of March 4, 1997, there were outstanding 1,259,116 shares of Common Stock
and 328,359 shares of Class B Common Stock. At the same date, the aggregate
market value (based upon the average of the high and low trades for that day)
of all common stock held by non-affiliates was approximately $48,889,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1996, are incorporated by reference in Parts I, II and IV of this
report.
Portions of the Corporation's Proxy Statement, dated March 24, 1997, prepared
for the Annual Meeting of Shareholders scheduled for April 22, 1997, are
incorporated by reference in Part III of this report.
Exhibit Index Pages 9-10
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PART I
Item 1. Business
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The Company is a Wisconsin corporation incorporated in the year 1906 as
Weyenberg Shoe Manufacturing Company. Effective April 25, 1990, the name of
the corporation was changed to Weyco Group, Inc.
The Company and its subsidiaries engage in one line of business, the
manufacture, purchase and distribution of men's footwear. The Company does not
sell women's or children's shoes because these markets differ significantly
from the men's market. The principal brands of shoes sold are "Nunn Bush,"
"Brass Boot," "Stacy Adams," and "Weyenberg" and trademarks maintained by the
Company on these names are important to the business. The Company's products
consist of both mid-priced quality leather dress shoes which would be worn as a
part of more formal and traditional attire and lower priced quality casual
footwear of man-made materials or leather which would be appropriate for
leisure or less formal occasions. The Company's footwear, and that of the
industry in general, is available in a broad range of sizes and widths,
primarily produced or purchased to meet the needs and desires of the American
male population.
The Company assembles footwear at one manufacturing plant in Wisconsin.
Shoe components, referred to as "uppers," are purchased from outside sources,
generally foreign, and turned into complete shoes by attaching the sole, either
leather or man-made, applying appropriate "finishes" and packing the shoes into
individual cartons, ready for sale. The Company purchases raw materials and
shoe components from many suppliers and is not dependent on any one of them.
The supply of these items is generally plentiful and there are no long-term
purchase commitments. Over the past five years, production at the Company's
plant has accounted for approximately 15% of the value of the Company's
wholesale footwear sales.
In addition to the production of footwear at the Company's own
manufacturing plants, complete shoes are purchased from many sources worldwide,
generally at U. S. dollar prices. These purchases account for the balance of
the Company's wholesale footwear sales. In recent years, domestic production
of men's shoes by the Company and the industry has declined, while imports to
the United States have increased.
The Company's business is separated into two divisions - wholesale and
retail. Wholesale sales constituted approximately 92% of total sales in 1996,
87% in 1995, and 79% in 1994. At wholesale, shoes are marketed nationwide
through more than 8,000 shoe, clothing and department stores. All sales are to
unaffiliated customers from North America. Sales to the Company's largest
customer were 13%, 15% and 11% of total sales for 1996, 1995 and 1994,
respectively. Sales to another customer were 10% of total sales for 1996.
There are no other individually significant customers. The Company employs
traveling salesmen who sell the Company's products to the retail outlets.
Shoes are shipped to these retailers primarily from warehouses maintained in
Milwaukee and Beaver Dam, Wisconsin. Although there is no clearly identifiable
seasonality in the men's footwear business, new styles are historically
developed and shown twice each year, in spring and fall. In accordance with
the industry practices, the Company is required to carry significant amounts of
inventory to meet customer delivery requirements and periodically provides
extended payment terms to customers.
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Retail sales constituted approximately 8% of total sales in 1996, 13% in
1995 and 21% in 1994. In the retail division there are 17 company-operated
stores in principal cities of the United States. The decrease in retail sales
in recent years is a result of the termination of leased departments and
company-operated stores. In 1996, 1 company-operated store and 13 leased
departments were closed. In 1995, 10 company-operated stores were closed due to
unprofitable operations or unattractive lease renewal terms. In 1994, the
Company closed 45 leased departments as a result of the termination of a lease
agreement with a department store and 7 company-operated stores due to
unprofitable operations or unattractive lease renewal terms. Sales in retail
outlets are made directly to the consumer by company employees. In addition to
the sale of the Company's brands of footwear in these retail outlets, other
branded footwear and accessories are also sold in order to provide the consumer
with as complete a selection as practically possible.
In dollar sales, the Company is about eighth largest among approximately
900 domestic men's shoe distributors. During 1996 it sold approximately 3% of
the total men's non-rubber dress and casual shoes sold in the United States.
Price, quality and service are all important competitive factors in the
shoe industry and the Company has been recognized as a leader in all of them.
Although the Company engages in no specific research and development
activities, new products and new processes are continually being tested by the
Company and used where appropriate, in order to produce the best value for the
consumer, consistent with reasonable price. Compliance with environmental
regulations historically has not had, and is not expected to have, a material
adverse effect on the Company's results of operations or cash flows.
Approximately 450 persons are employed by the Company.
Item 2. Properties
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The following facilities are operated by the Company and its
subsidiaries:
Location Character Owned/Leased
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Milwaukee, Wisconsin Multistory office Owned
and warehouse
Milwaukee, Wisconsin Multistory warehouse Owned
Beaver Dam, Wisconsin Multistory warehouse Owned
Beaver Dam, Wisconsin Multistory factory Leased (1)
(1) Not a material lease.
All of the above-named facilities are adequately equipped, well maintained
and suitable for foreseeable needs. If all available manufacturing space were
utilized and significant additional shoe making equipment were acquired,
production could be increased about 25%.
In addition to the above-described manufacturing and warehouse facilities,
the Company operates 17 retail stores throughout the United States under
various rental agreements. See Note 10 to Consolidated Financial Statements and
Item 1. Business above.
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Item 3. Legal Proceedings
Previously, the Company had been identified as a potentially responsible
party ("PRP") in two separate actions in connection with an alleged hazardous
substance discharge in the State of Wisconsin. The actions were settled during
1996. The Company paid a cash settlement which was not material in relation to
the Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
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Executive Officers of the Registrant
Served
Officer Age Office(s) Since Business Experience
- ------------------- --- ---------------------------- ------ --------------------------------
Thomas W. Florsheim 66 Chairman of the Board and 1968 Chairman of the Company --
Chief Executive Officer 1968 to present
Thomas W. Florsheim, Jr. 39 President and Chief 1995 President of the Company --
Operating Officer & Director 1995 to present; Vice President
of the Company -- 1988 to 1995
John W. Florsheim 33 Executive Vice President & Director 1995 Executive Vice President of the
Company --1995 to present;
Vice President of the Company --
1994 to 1995; Brand Manager,
M & M/Mars, Inc. 1990 to 1994
David N. Couper 48 Vice President 1981 Vice President of the Company --
1981 to present
James F. Gorman 53 Vice President 1975 Vice President of the Company --
1975 to present
Peter S. Grossman 53 Vice President 1971 Vice President of the Company --
1971 to present
John F. Wittkowske 37 Vice President-Finance & 1993 Vice President-Finance of the Company
Secretary 1995 to present; Secretary/Treasurer of
the company --1993 to 1995; Audit
Manager, Arthur Andersen LLP,
Independent Public Accountants --
1986 to 1993
Thomas W. Florsheim is the father of John W. Florsheim and Thomas W.
Florsheim, Jr.
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PART II
Item 5. Market for Registrant's Common Equity
and Related Shareholder Matters
Information required by this Item is set forth on pages 2 and 17 of the
Annual Report to Shareholders for the year ended December 31, 1996,
and is incorporated herein by reference.
Item 6. Selected Financial Data
Information required by this Item is set forth on page 2 of the Annual
Report to Shareholders for the year ended December 31, 1996, and
is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Information required by this Item is set forth on pages 3 and 4 of the
Annual Report to Shareholders for the year ended December 31, 1996,
and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
Information required by this Item is set forth on pages 5 through 15
of the Annual Report to Shareholders for the year ended December
31, 1996, and is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
Not applicable.
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PART III
Item 10. Directors and Executive Officers of the Registrant
Information required by this Item is set forth on pages 1 through 3
of the Company's proxy statement for the Annual Meeting of
Shareholders to be held on April 22, 1997, and is incorporated
herein by reference.
Item 11. Executive Compensation
Information required by this Item is set forth on pages 4 through 8
of the Company's proxy statement for the Annual Meeting of
Shareholders to be held on April 22, 1997, and is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners of Management
Information required by this Item is set forth on pages 1 and 2 of
the Company's proxy statement for the Annual Meeting of
Shareholders to be held on April 22, 1997, and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions
Information required by this Item is set forth on pages 6 through 8
of the Company's proxy statement for the Annual Meeting of
Shareholders to be held on April 22, 1997, and is incorporated
herein by reference.
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PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
(a) The following documents are filed as a part of this report:
Page Reference
to
Annual Report
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1. Financial Statements -
Consolidated Statements of Earnings
for the years ended December 31
1996, 1995 and 1994 5
Consolidated Balance Sheets -
December 31, 1996 and 1995 6-7
Consolidated Statements of Shareholders'
Investment for the years ended
December 31, 1996, 1995 and 1994 8
Consolidated Statements of Cash Flows
for the years ended December 31,
1996, 1995 and 1994 9
Notes to Consolidated Financial
Statements - December 31, 1996, 1995
and 1994 10-15
Report of Independent Public Accountants 16
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Item 14. Exhibits, Financial Statement Schedules,
and Report on Form 8-K (Continued)
Page Reference
to
Form 10-K
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2. Financial Statement Schedules for the
years ended December 31, 1996,
1995 and 1994 -
Schedule II - Valuation and Qualifying
Accounts 11
All other schedules have been omitted because of the
absence of the conditions under which they are
required.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Weyco Group, Inc.'s Annual
Report to Shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 17, 1997. Our audits were made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in the index above is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
February 17, 1997.
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Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K (Continued)
3. Exhibits
Incorporated Herein Filed
Exhibit Description By Reference To Herewith
- ------- ------------------------------------- ------------------- --------
3.1 Articles of Incorporation as Restated Exhibit 3.1 to Form
August 29, 1961, and Last Amended 10-K for Year Ended
April 25, 1990 December 31, 1990
3.2 Bylaws as Revised January 21, 1991 Exhibit 3.2 to Form
and Amended November 3, 1992 10-K for Year Ended
December 31, 1992
10.1* Employment Agreement - Thomas W. X
Florsheim, dated January 1, 1997
10.2* Employment Agreement - Thomas W. X
Florsheim, Jr., dated January 1, 1997
10.3* Employment Agreement - John W. X
Florsheim, dated January 1, 1997
10.4* Restated and Amended Deferred Exhibit 10.3 to Form
Compensation Agreement - Thomas W. 10-K for Year Ended
Florsheim, dated December 1, 1995 December 31, 1995
10.5* Restated and Amended Deferred Exhibit 10.4 to Form
Compensation Agreement - Robert 10-K for Year Ended
Feitler, dated December 1, 1995 December 31, 1995
10.6* Excess Benefits Plan - Restated Effective Exhibit 10.6 to Form
as of January 1, 1989 10-K for Year Ended
December 31, 1991
10.7* Pension Plan - Amended and Restated Exhibit 10.7 to Form
Effective January 1, 1989 10-K for Year Ended
December 31, 1991
10.8* Deferred Compensation Plan - Effective Exhibit 10.8 to Form
as of January 1, 1989 10-K for Year Ended
December 31, 1991
10.9* 1992 Nonqualified Stock Option Plan Exhibit 10.9 to Form
10-K for Year Ended
December 31, 1991
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Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K (Continued)
3. Exhibits (Continued)
Incorporated Herein Filed
Exhibit Description By Reference To Herewith
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10.10* Death Benefit Plan Agreement - Exhibit 10.10 to Form
Thomas W. Florsheim, dated 10-K for Year Ended
November 8, 1993 December 31, 1993
10.11* Death Benefit Plan Agreement - Exhibit 10.11 to Form
Robert Feitler, dated 10-K for Year Ended
November 8, 1993 December 31, 1993
10.12* 1996 Nonqualified Stock Option Plan Exhibit 10.12 to Form
10-K for Year Ended
December 31, 1995
21 Subsidiaries of the Registrant X
23.1 Consent of Independent Public X
Accountants Dated March 21, 1997
27 Financial Data Schedule X
*Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
None
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SCHEDULE II
WEYCO GROUP, INC.
VALUATION AND QUALIFYING ACCOUNTS
Deducted from Assets
--------------------------------------------------------------------
Doubtful Cash Returns and
Accounts Discounts Allowances Total
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BALANCE, DECEMBER 31, 1993 700,000 118,000 720,000 1,538,000
Add - Additions charged to
earnings 505,324 384,925 3,559,427 4,449,676
Deduct - Charges for purposes for
which reserves were
established (307,144) (447,925) (3,559,427) (4,314,496)
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BALANCE, DECEMBER 31, 1994 898,180 55,000 720,000 1,673,180
Add - Additions charged to
earnings 486,549 275,694 4,692,992 5,455,235
Deduct - Charges for purposes for
which reserves were
established (361,549) (264,694) (4,452,992) (5,079,235)
------------- ------------- --------------- ---------------
BALANCE, DECEMBER 31, 1995 1,023,180 66,000 960,000 2,049,180
Add - Additions charged to
earnings 438,938 454,241 4,314,617 5,207,796
Deduct - Charges for purposes for
which reserves were
established (313,938) (456,241) (4,194,617) (4,964,796)
------------- ------------- --------------- ---------------
BALANCE, DECEMBER 31, 1996 $ 1,148,180 $ 64,000 $ 1,080,000 $ 2,292,180
============= ============= =============== ===============
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
WEYCO GROUP, INC.
(Registrant)
By /s/ John Wittkowske
--------------------------------------- March 24, 1997
John Wittkowske, Vice President-Finance
_________________
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas W. Florsheim, Sr., Thomas W. Florsheim,
Jr., and John Wittkowske, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue thereof.
______________
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signatures and Titles Date
/s/ Thomas W. Florsheim March 24, 1997
------------------------------------------------
Thomas W. Florsheim, Chairman of the Board
and Chief Executive Officer (Principal
Executive Officer)
/s/ Thomas W. Florsheim, Jr. March 24, 1997
------------------------------------------------
Thomas W. Florsheim, Jr., President and Chief
Operating Officer and Director
/s/ John W. Florsheim March 24, 1997
------------------------------------------------
John W. Florsheim, Executive Vice President
and Director
/s/ John Wittkowske March 24, 1997
------------------------------------------------
John Wittkowske, Vice President-Finance
(Principal Accounting Officer)
/s/ Robert Feitler March 24, 1997
------------------------------------------------
Robert Feitler, Director
/s/ Leonard J. Goldstein March 24, 1997
------------------------------------------------
Leonard J. Goldstein, Director
/s/ Frank W. Norris March 24, 1997
------------------------------------------------
Frank W. Norris, Director
/s/ Frederick P. Stratton, Jr. March 24, 1997
------------------------------------------------
Frederick P. Stratton, Jr., Director
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