EXHIBIT 99.2
Unaudited Pro Forma Combined Condensed Financial Data
WEYCO GROUP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
We present below our historical and pro forma combined condensed financial data
as of and for each of the periods indicated. The unaudited pro forma combined
condensed financial data give effect to:
- the borrowing of $44,165,000 under our $60,000,000 Reducing Revolving
Line of Credit ("Line of Credit")
- our acquisition of certain assets of Florsheim's U. S. wholesale
business and 23 retail stores (see Item 2) and Florsheim's European
operations (collectively the "Acquired Business") for a cash purchase
price of $48.4 million, including $1.7 million of acquisition costs.
The unaudited pro forma combined condensed financial data are based on the
estimates and assumptions included in the notes to the unaudited pro forma
combined condensed financial statements. The unaudited pro forma combined
condensed financial data have been prepared using the purchase method of
accounting in which the total cost of the Acquired Business acquisition is
allocated to the tangible and intangible assets acquired and liabilities assumed
based on their respective fair market values at the effective date of the
acquisition. Such allocations ultimately will be based on further management
studies and due diligence and consequently are preliminary and subject to
revision. We do not expect the final allocation of purchase price to differ
materially from that presented in the pro forma data.
We combined our consolidated statements of income for the three months ended
March 31, 2002 (unaudited) and for the year ended December 31, 2001 with
Florsheim's consolidated statements of income for the three months ended March
30, 2002 (unaudited) and for the year ended December 29, 2001. Our 2001 fiscal
year ended on December 31, 2001, while Florsheim's 2001 fiscal year ended on
December 29, 2001. In order to present the Acquired Business's historical
consolidated statements of income in accordance with our fiscal year, we
combined financial data for the appropriate periods derived from the financial
results reported by Florsheim. We also combined our March 31, 2002 unaudited
consolidated balance sheet with the Acquired Business's March 30, 2002 unaudited
consolidated balance sheet.
The unaudited pro forma combined condensed statements of income assume that our
acquisition of the Acquired Business and the borrowings under the Line of Credit
occurred on January 1, 2001. The unaudited pro forma combined condensed balance
sheet assumes that the acquisition and this borrowing occurred on March 31,
2002.
The unaudited pro forma combined condensed financial data are presented for
illustrative purposes only and are not necessarily indicative of the operating
results or financial position that might have been achieved had the transactions
occurred as of an earlier date, and they are not necessarily indicative of
future operating results or financial position. These pro forma amounts do not,
therefore, project our financial position or results of operations for any
future date or period. You should read the unaudited pro forma combined
condensed financial data with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our historical consolidated financial
statements and related notes included in our annual report on Form 10-K for the
fiscal year ended December 31, 2001 and our quarterly on Form 10-Q for the
quarter ended March 31, 2002.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
March 31, 2002
(In Thousands)
ASSETS
Pro Forma
Combined
Pro Forma Statement
Adjustment Statement Adjustment After Debt
For Debt After Debt Acquired for Issuance and
Weyco Group Issuance Issuance Business Acquisition Acquisition
----------- -------- -------- -------- ----------- -----------
Current Assets
Cash and cash equivalents $ 15,239 $ 43,820(a) $ 59,059 $ -- $ (48,360)(b) $ 10,699
Marketable securities 2,969 -- 2,969 -- -- 2,969
Accounts receivable, net 26,872 -- 26,872 10,902 -- 37,774
Inventories 7,027 -- 7,027 21,664 2,166(c) 30,857
Deferred income tax benefits 2,899 -- 2,899 -- -- 2,899
Prepaid expenses and
other current assets 243 345(a) 588 1,100 (394)(d) 1,294
--------- --------- --------- --------- --------- ---------
Total current assets 55,249 44,165 99,414 33,666 (46,588) 86,492
Marketable Securities 12,180 -- 12,180 -- -- 12,180
Other Assets 10,329 -- 10,329 1,707 (1,707)(d) 10,329
Trademark -- -- -- -- 14,097 (c) 14,097
Plant and Equipment (Net) 14,996 -- 14,996 13,060 (11,382)(d) 16,674
--------- --------- --------- --------- --------- ---------
$ 92,754 $ 44,165 $ 136,919 $ 48,433 $ (45,580) $ 139,772
========= ========= ========= ========= ========= =========
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current Liabilities:
Short-term borrowings $ 2,700 $ (2,700)(a) $ -- $ -- -- $ --
Accounts payable 3,818 -- 3,818 12,474 (10,128)(d) 6,164
Dividend payable 450 -- 450 -- -- 450
Accrued liabilities 5,080 -- 5,080 1,904 (1,642)(d) 5,342
Accrued employee compensation -- -- -- 1,177 (932)(d) 245
Accrued income taxes 1,892 -- 1,892 -- -- 1,892
--------- --------- --------- --------- --------- ---------
Total current liabilities 13,940 (2,700) 11,240 15,555 (12,702) 14,093
Deferred Income Tax Liabilities 3,476 -- 3,476 -- -- 3,476
Long-Term Debt -- 46,865(a) 46,865 -- -- 46,865
Other Long-Term Liabilities -- -- -- 518 (518)(d) --
Shareholder Investments:
Common stock 3,746 -- 3,746 -- -- 3,746
Other shareholders' investment 71,592 -- 71,592 -- -- 71,592
Business Equity -- -- -- 32,360 (32,360)(c) --
--------- --------- --------- --------- --------- ---------
$ 92,754 $ 44,165 $ 136,919 $ 48,433 $ (45,580) $ 139,772
========= ========= ========= ========= ========= =========
(a) Reflects the borrowing of $44,165 under the Line of Credit and the
reclassification of outstanding commercial paper borrowings to long
term as they are now a component of the Line of Credit, along with $345
of debt issuance costs.
(b) Reflects the use of cash to fund the purchase of the Acquired Business.
(c) Reflects the purchase price allocation for the acquisition of the
Acquired Business.
(d) Reflects the purchase price allocation and the elimination of assets or
liabilities not acquired in the acquisition.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
March 31, 2002
(In Thousands, except per share data)
Pro Forma
Combined
Pro Forma Statement
Adjustment Statement Adjustment After Debt
For Debt After Debt Acquired for Issuance and
Weyco Group Issuance Issuance Business Acquisition Acquisition
----------- -------- -------- -------- ----------- -----------
Net Sales $ 35,722 -- $ 35,722 $ 20,454 -- $ 56,176
Cost of Sales 26,245 -- 26,245 11,893 -- 38,138
-------- -------- -------- -------- -------- --------
Gross earnings 9,477 -- 9,477 8,561 -- 18,038
Selling and Administrative Expenses 6,187 -- 6,187 6,904 -- 13,091
-------- -------- -------- -------- -------- --------
Earnings from operations 3,290 -- 3,290 1,657 -- 4,947
Interest Income 267 -- 267 -- -- 267
Interest Expense (17) (357)(a) (417) -- -- (417)
(43)(b)
Other Income and Expense (17) -- (17) -- -- (17)
-------- -------- -------- -------- -------- --------
Earnings before provision for
income taxes 3,523 (400) 3,123 1,657 -- 4,780
Provision for Income Taxes 1,250 (156)(c) 1,094 -- 646(d) 1,740
-------- -------- -------- -------- -------- --------
Net earnings $ 2,273 $ (244) $ 2,029 $ 1,657 $ 646 $ 3,040
======== ======== ======== ======== ======== ========
Weighted Average Shares
Outstanding
Basic 3,748 3,748 3,748
Diluted 3,797 3,797 3,797
Earnings Per Share
Basic $ .61 $ .54 $ .81
======== ======== ========
Diluted $ .60 $ .53 $ .80
======== ======== ========
Cash dividends $ .12 $ .12 $ .12
======== ======== ========
(a) Reflects the interest expense on the $44,165 of borrowings used to fund
the acquisition of the Acquired Business. Interest is computed based
upon $17,165 of commercial paper borrowings at an average rate of 2.2%
and $27,000 of bank borrowings under the Line of Credit at an average
rate of 3.89% (representing average 60-day LIBOR of 1.89% +2%). The
overall weighted average interest rate was 3.23%.
(b) Reflects the amortization of debt issuance costs over the term of the
Line of Credit.
(c) Reflects the related tax impact of the pro forma adjustments assuming a
39% statutory tax rate.
(d) Reflects the related tax impact on the earnings of the Acquired
Business assuming a 39% statutory tax rate.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
December 31, 2001
(In Thousands, except per share data)
Pro Forma
Combined
Pro Forma Statement
Adjustment Statement Adjustment After Debt
For Debt After Debt Acquired for Issuance and
Weyco Group Issuance Issuance Business Acquisition Acquisition
----------- -------- -------- -------- ----------- -----------
Net Sales $ 131,693 $ -- $ 131,693 $ 90,904 -- $ 222,597
Cost of Sales 94,107 -- 94,107 54,415 -- 148,522
--------- --------- --------- --------- --------- ---------
Gross earnings 37,586 -- 37,586 36,489 -- 74,075
Selling and Administrative Expenses 24,232 -- 24,232 34,641 -- 58,873
--------- --------- --------- --------- --------- ---------
Earnings from operations 13,354 -- 13,354 1,848 -- 15,202
Interest Income 1,022 -- 1,022 -- -- 1,022
Interest Expense (296) (2,221)(a) (2,689) -- -- (2,689)
(172)(b)
Other Income and Expense 621 -- 621 -- -- 621
--------- --------- --------- --------- --------- ---------
Earnings before provision for
income taxes 14,701 (2,393) 12,308 1,848 -- 14,156
Provision for Income Taxes 5,200 (933)(c) 4,267 -- 721(d) 4,988
--------- --------- --------- --------- --------- ---------
Net earnings $ 9,501 $ (1,460) $ 8,041 $ 1,848 $ 721 $ 9,168
========= ========= ========= ========= ========= =========
Weighted Average Shares
Outstanding
Basic 3,835 3,835 3,835
Diluted 3,861 3,861 3,861
Earnings Per Share
Basic $ 2.48 $ 2.10 $ 2.39
========= ========= =========
Diluted $ 2.46 $ 2.08 $ 2.37
========= ========= =========
(a) Reflects the interest expense on the $44,165 of borrowings used to fund
the acquisition of the Acquired Business. Interest is computed based
upon $17,165 of commercial paper borrowings at an average rate of 4.25%
and $27,000 of bank borrowings under the Line of Credit at an average
rate of 5.52% (representing average 60-day LIBOR of 3.52% +2%). The
overall weighted average interest rate was 5.03%.
(b) Reflects the amortization of debt issuance costs over the term of the
Line of Credit.
(c) Reflects the related tax impact of the pro forma adjustments assuming a
39% statutory tax rate.
(d) Reflects the related tax impact on the earnings of the Acquired
Business assuming a 39% statutory tax rate.