EXHIBIT 13

2002 ANNUAL REPORT

WEYCO GROUP, INC.

To Our Shareholders:

2002 was a landmark year for Weyco Group. This year will go down in Company
history as the year we "brought the Florsheim brand home". Fifty years ago, the
Florsheim family sold its stake in our namesake shoe company, which was founded
by our great grandfather in 1892. This year, we had the unique opportunity to
reacquire our name and one of the best known brands in the men's shoe business.

In March of 2002, Florsheim Group, Inc., filed a petition for relief under
Chapter 11 of the U.S. Bankruptcy Code, as well as a motion for the court to
approve an asset purchase agreement with Weyco Group. After a waiting period in
which interested third parties were allowed to submit bids for the Florsheim
assets, our bid prevailed.

On May 20, 2002, we acquired certain assets of Florsheim Group, Inc.'s U.S.
wholesale business, as well as the leaseholds and associated assets for 23
retail and outlet shoe stores located in the U.S. Shortly thereafter, we
acquired Florsheim's European wholesale business as well as three retail stores
located in Germany, France and Italy. In addition, we now own the Florsheim
trademarks, and have licensing agreements with third parties to distribute the
brand internationally. The total purchase price, including acquisition costs,
was $48.5 million.

To fund the acquisition and related costs of incorporating the new brand into
our operations, we entered into an unsecured $60 million revolving line of
credit. At December 31, 2002 we had $37.8 million outstanding on the line of
credit. We believe that this facility will be more than adequate to provide for
our current and foreseeable future cash needs.

While the sentimental merits of this acquisition make a good story for the
Company annals, the more important perspective is what this acquisition will add
to our Company's performance. We believe that the Florsheim brand is an
excellent complement to our existing Nunn Bush, Nunn Bush NXXT, Brass Boot,
Stacy Adams and SAO by Stacy Adams brands. It is a brand that is sold at a
different price point and which focuses on different market segments than our
other brands. Its existence in our portfolio of products will allow us to
significantly increase our share of the men's branded shoe business.

We also believe that our Company has the operational facilities and know-how to
be able to efficiently source and distribute Florsheim shoes and to serve its
customers well. Our ability to leverage our existing systems with limited
additional overhead had a significant positive impact on our third and fourth
quarter post acquisition performance.

In short, we are very pleased to have our name back and we embrace the challenge
of guiding the Florsheim brand toward meeting its full potential in the
marketplace.

Our net sales for 2002 were $181.2 million, up 38% from $131.7 million for 2001.
Net earnings for 2002 were $13.2 million, an increase of 39% over net earnings
of $9.5 million for 2001. Diluted earnings per share were $3.44, up 40% from
$2.46 in 2001. The Florsheim business contributed $37.1 million of wholesale net
sales, while wholesale sales of our other brands increased 1%. The additional 23
domestic retail stores and three European stores contributed $11.7 million in
sales this year. Overall, we are pleased with the results of our retail segment,
where operating earnings were $2.1 million in 2002 as compared with breakeven in
2001, especially during a difficult retail environment this year.

To accommodate the current year acquisition, we purchased and improved a new
warehouse facility adjacent to our existing distribution center. The total cost
was $6.3 million. In late 2002, we began a $9 million construction project to
expand and reconfigure the distribution facility to more efficiently handle the
increased volumes resulting from the Florsheim acquisition and enable us to
continue to meet the ever-changing requirements of our customers. This project
will be funded under our available line of credit facility.

Our licensing activities continued to develop nicely in 2002. As each year
passes, we see the Stacy Adams image develop further clarity in the marketplace
as a result of the licensing of the name to apparel products. The Stacy Adams
brand name can now be found on socks, belts, hats, ties, suits, sportswear,
dress shirts, wallets, and jewelry. Royalty income from licensing the Stacy
Adams name has steadily increased over the past four years. To date, most of the
royalties have been reinvested into promoting the brand, but we believe the
resulting awareness of the brand image is a valuable investment into the brand's
future.

We entered new licensing arrangements in 2002 as a result of the Florsheim
acquisition. These are primarily licensing agreements with third parties to sell
Florsheim footwear overseas. We have entered agreements with these parties as
they have first-hand knowledge of their local environments and we believe that
they are well-suited to sell and promote our footwear in their locales. Most of
these licensees had previous arrangements with Florsheim Group and therefore
have a proven track record of appropriately marketing the brand overseas. We
believe that royalties from these arrangements as well as those from the Stacy
Adams brand will be a nice complement to our future top-line and bottom-line
growth.

As we look toward 2003, we see a year of continued growth in all our brands. We
are thrilled by the new opportunities that the Florsheim acquisition brings to
our Company. We hope that our shareholders share our enthusiasm and we
appreciate your support as we continue to build our future.

Thomas W. Florsheim, Jr. John W. Florsheim
Chairman and Chief Executive Officer President and
Chief Operating Officer

SELECTED FINANCIAL DATA

Years Ended December 31
------------------------------------------------------------------------

2002(1) 2001 2000 1999 1998
------------ ------------ ------------ ------------ ------------

Net sales ......................... $181,200,000 $131,693,000 $148,155,000 $132,905,000 $126,576,000
Net earnings ...................... $ 13,188,000 $ 9,501,000 $ 10,622,000 $ 11,058,000 $ 9,805,000
Diluted earnings per share ........ $ 3.44 $ 2.46 $ 2.59 $ 2.55 $ 2.07
Weighted average diluted shares
outstanding ...................... 3,835,628 3,861,667 4,108,234 4,338,587 4,731,075

Cash dividends per share .......... $ .51 $ .47 $ .43 $ .39 $ .35

Total assets ...................... $146,235,000 $ 97,954,000 $ 91,943,000 $ 95,919,000 $ 92,782,000

Long term debt .................... $ 37,802,000 $ -- $ -- $ -- $ --

(1) Includes the operating results of the acquired Florsheim business. See Note
3 to the Consolidated Financial Statements for additional information.

COMMON STOCK DATA

2002 2001
----------------------------------- -----------------------------------
Price Range Cash Price Range Cash
------------------ Dividends -------------------- Dividends
Quarter: High Low Declared High Low Declared
- ------- ----------------------------------- -----------------------------------

First $32.50 $25.35 $.12 $24.75 $23.88 $.11
Second 40.99 29.00 .13 24.00 22.90 .12
Third 40.00 31.00 .13 25.50 23.25 .12
Fourth 37.70 32.76 .13 26.00 25.25 .12
---- ----
$.51 $.47
==== ====

There are 286 holders of record of the Company's common stock and 118 holders of
record of the Company's Class B common stock as of March 3, 2003.

The stock prices shown above are the high and low actual trades for the calendar
periods indicated.

The Class B Common Stock is not listed nor does it trade publicly because of its
limited transferability. See Note 14 to the Consolidated Financial Statements
for additional information.

MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ACQUISITION

On May 20, 2002, the Company acquired certain assets of Florsheim Group, Inc.'s
domestic wholesale and retail operations. On July 1 and July 27, 2002, the
Company acquired certain assets and assumed the operating liabilities of
Florsheim Europe S.r.l. and Florsheim France SARL, respectively. The total
purchase price was $48.5 million, and the Company entered into a two-year $60
million revolving line of credit to fund the acquisition and related expenses.
See Notes 3 and 9 of the Notes to Consolidated Financial Statements for further
details on the acquisition and borrowings under the line of credit.

LIQUIDITY & CAPITAL RESOURCES

The Company's primary source of liquidity is its cash and short term marketable
securities, which aggregated $9,400,000 at December 31, 2002 and $20,118,000 as
of December 31, 2001. During 2002, the primary sources of cash were operations,
draws on the line of credit facility, and proceeds from the maturities of
marketable securities. The primary uses of cash were the acquisition of the
Florsheim business and the purchase of plant and equipment.

The increase in net cash provided by operating activities this year primarily
reflects the increase in net income for the year, which is largely the result of
increased sales volume since the acquisition. Draws were made on the line of
credit facility this year to finance the acquisition and to fund the integration
of the acquisition into the operations at the corporate office and distribution
facility. Capital expenditures included $6.3 million to purchase and improve a
new building adjacent to the Company's current distribution facility, $800,000
to expand the current conveyor system in the distribution center, and $500,000
to expand the corporate office. Marketable securities matured throughout the
year, and the cash proceeds were used to fund the acquisition.

In late 2002 the Company began a $9 million construction project to expand and
reconfigure the distribution center to more efficiently handle the increased
volumes resulting from the acquisition. The project is expected to be completed
in the third quarter of 2003, and will be financed by draws on the existing line
of credit. As of December 31, 2002, the Company has commitments totaling $7.7
million relating to the construction project.

As of December 31, 2002, the Company had $22.2 million available under its
existing borrowing facilities. These borrowing facilities include certain
financial covenants, including a minimum net worth of $79.9 million at December
31, 2002 and minimum levels of Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) levels and a minimum ratio of funded debt to EBITDA. As of
December 31, 2002 the Company is in compliance with all covenants.

The Company's significant contractual obligations are its operating leases,
long-term debt, deferred compensation agreements, and its unfunded supplemental
pension plan, which are discussed further in the notes to the financial
statements. The long-term debt, deferred compensation and supplemental pension
obligations are recorded on the Company's Consolidated Balance Sheets. Future
obligations under operating leases are disclosed in Note 13.

The Company believes that available cash and marketable securities, cash
provided by operations, and available borrowing facilities will provide adequate
support for the cash needs of the business in 2003.

RESULTS OF OPERATIONS

2002 vs. 2001
Overall net sales for the year ended December 31, 2002 of $181.2 million have
increased 38% compared with $131.7 million for 2001. The increase resulted from
increases in both the wholesale and retail segments (See Note 16 of the Notes to
Consolidated Financial Statements for more information on operating segments).
Wholesale net sales for the current year were $165.3 million, as compared with
$126.6 million for 2001. Retail net sales for 2002 were $15.9 million, as
compared with $5.1 million in 2001.

Net sales for 2002 relating to the new Florsheim wholesale and retail operations
were $37.1 million and $11.7 million, respectively. The Nunn Bush division sales
were up 7% while the Stacy Adams division sales were down 3%. Excluding the
acquisition of the Florsheim wholesale business, sales for Weyco's existing
wholesale business were up $1.6 million in 2002. On the retail side, excluding
the 2002 Florsheim retail business, retail sales were down $900,000 between 2001
and 2002. This is primarily due to the closing of two retail stores in January
2002.

Gross earnings as a percent of net sales increased from 28.5% in 2001 to 32.6%
for 2002. This is a result of increased gross earnings as a percent of net sales
in the wholesale segment, from 27.6% in 2001 to 29.9% in 2002, as well as in the
retail segment, from 52.5% in 2001 to 61.1% in 2002. In both segments, the
increases are due to changes in product mix between years. In addition, a part
of the increase in overall gross earnings as a percent of net sales is due to
changes in the mix of wholesale and retail sales as a percentage of total sales.
Retail sales, which carry a higher margin, comprised 8.8% of overall net sales
in 2002 versus 3.9% in 2001.

Selling and administrative expenses as a percent of net sales were 18.4% in 2001
versus 20.8% in 2002. This is the result of increased wholesale selling and
administrative expenses as a percent of net sales, from 17.0% in 2001 to 18.2%
in 2002, and decreased retail selling and administrative expenses as a percent
of net sales, from

52.3% in 2001 to 48.0% in 2002. The increase in wholesale selling and
administrative expenses is due to the ramp up of operations in 2002 to
accommodate the Florsheim acquisition. The decrease in retail selling and
administrative expenses as a percent of net sales is due to lower operating
costs at the stores that were acquired in the 2002 acquisition. Overall selling
and administrative expenses as a percent of net sales increased due to these
factors and also due to the previously discussed change in the mix of retail and
wholesale sales. The retail segment has significantly higher selling and
administrative expenses as a percent of net sales than the wholesale segment.

Interest income for 2002 was $853,000 as compared with $1,022,000 for 2001. This
decrease was due to reductions in the average balance of marketable securities
outstanding between 2001 and 2002.

Interest expense for 2002 was $1,289,000 as compared with $296,000 for 2001. The
increase is primarily due to borrowings under the line of credit during 2002 to
fund the acquisition and related expenses.

2001 other income and expense included a $504,000 gain on the sale of other
investments.

The effective tax rate for 2002 is 37.2% as compared with 35.4% in 2001. The
increase in the rate is primarily due to an increased federal statutory tax rate
of 35% this year, as compared with 34% last year. Also, municipal bond income
decreased this year relative to pre-tax earnings, resulting in an increase in
the effective tax rate.

2001 vs. 2000
Net sales in 2001 were $131,693,000 compared with $148,155,000 in 2000. The 11%
decrease in overall net sales is the result of the decrease in wholesale net
sales from $141,967,000 in 2000 to $126,597,000 in 2001 and the decrease in
retail net sales from $6,188,000 in 2000 to $5,096,000 in 2001. In general,
sales volume was down due to the difficult retail environment.

Overall gross earnings as a percent of net sales was 28.5% for 2001 as compared
to 27.4% for 2000. Wholesale gross earnings as a percent of net sales was 27.6%
for 2001 and 26.3% for 2000, while retail gross earnings as a percent of net
sales were consistent between years. The improvement in gross earnings as a
percent of net sales is primarily the result of inbound freight cost reductions
achieved during 2001.

Overall selling and administrative expenses as a percent of net sales was 18.4%
in 2001 as compared to 16.6% in 2000. This reflects the increase in wholesale
selling and administrative expenses as a percent of wholesale net sales from
15.3% in 2000 to 17.0% in 2001 and the increase in retail selling and
administrative expenses as a percent of net sales from 46.1% in 2000 to 52.3% in
2001. The increase is primarily the result of the various fixed costs included
in selling and administrative expenses.

Interest income was $1,022,000 in 2001 as compared with $1,106,000 in 2000. This
was due to a decrease in the average balance of marketable securities
outstanding between 2000 and 2001.

Interest expense relates to short-term issuances of commercial paper and
short-term advances. Interest expense was $296,000 in 2001 and $627,000 in 2000.
The decrease in interest expense between years reflects the decrease in the
average balance of short-term debt outstanding from $8,273,000 in 2000 to
$7,049,000 in 2001, as well as a decrease in short-term borrowing rates from
7.5% in 2000 to 4.2% in 2001.

Other income and expense in 2001 includes a $504,000 gain on the sale of other
investments. These investments had been carried at cost and included in Other
Assets on the Consolidated Balance Sheets.

The provision for income taxes was at an effective rate of 35.4% in 2001 vs.
35.5% in 2000.

Net earnings for 2001 were $9,501,000, a decrease of 11% compared to 2000 net
earnings of $10,622,000. Included in 2001 net earnings was the $504,000 gain on
the sale of other investments. Excluding this gain, 2001 net earnings were
$9,175,000, or 7% of 2001 net sales, which is consistent with 2000 net earnings
as a percent of net sales of 7%.

Overall Analysis
The Company continues to purchase finished shoes and components from outside
suppliers around the world. The majority of these foreign-sourced purchases are
denominated in U. S. dollars. The Company presently operates one shoe
manufacturing plant in Wisconsin. Production volume in this factory has declined
over the past several years, as the Company is now sourcing more of its shoes
overseas. There have been few inflationary pressures in the shoe industry in
recent years and leather and other component prices have been stable. It is
anticipated that, when necessary, selling price increases could be initiated to
offset periodic increases in costs of purchased shoes, components, materials,
labor and other expenses.

The Company believes that the first half of 2003 will result in strong double
digit percentage revenue growth compared to 2002 based on the timing of the May
20, 2002 acquisition of Florsheim. Given the uncertainty in the current market
it is difficult to forecast the second half of the year, but the Company
believes that mid single digit percentage growth is an appropriate target for
the combined wholesale and retail business.

Off-Balance Sheet Arrangements
The Company does not utilize any special purpose entities or other off-balance
sheet arrangements.

OTHER

Critical Accounting Policies
The Company's accounting policies are more fully described in Note 2 of the
Notes to Consolidated Financial Statements. As disclosed in Note 2, the
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions about future events that affect the amounts reported
in the financial statements and accompanying notes. Future events and their
effects cannot be determined with absolute

certainty. Therefore, the determination of estimates requires the exercise of
judgment. Actual results inevitably will differ from those estimates, and such
differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of the
Company's financial statements include estimates as to the recovery of accounts
receivable, as well as those used in the determination of liabilities related to
customer discounts, taxation, and pension benefits.

The allowances for sales returns, customer discounts and doubtful accounts are
fact-specific and take into account such factors as specific customer
situations, historical experience and current and expected economic conditions.
Changes in these allowances may be required if actual returns, discounts and bad
debt activity varies from the original estimates.

The effective income tax rate is based on estimates of taxable income in each
jurisdiction where income is earned. The Company also records a liability for
potential income tax assessments based on estimates of potential exposure.
Adjustments to the effective income tax rate may be required if actual taxable
income or actual income tax assessments vary from the original estimates.

The pension benefit obligation and pension expense are calculated in accordance
with SFAS No. 87, "Employers' Accounting for Pensions", and are impacted by
certain actuarial assumptions, including the discount rate and the expected rate
of return on plan assets. These rates are evaluated on an annual basis
considering such factors as market interest rates and historical asset
performance. Actuarial valuations at December 31, 2002 used a discount rate of
6.75% and an expected rate of return on plan assets of 8.5%. A .5% decrease in
the discount rate would increase annual pension expense by approximately
$156,000. A .5% decrease in expected return on plan assets would increase our
annual pension expense by approximately $98,000.

Future Accounting Pronouncements

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" (SFAS 146). SFAS 146 nullifies Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)" and requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred. SFAS 146 is effective for exit or disposal activities that are
initiated after December 31, 2002.

The adoption of this statement in 2003 is not expected to have a material impact
on the Company's financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45"). FIN 45 requires that the guarantor
recognize, at the inception of certain guarantees, a liability for the fair
value of the obligation undertaken in issuing such guarantee. FIN 45 also
requires additional disclosure requirements about the guarantor's obligations
under certain guarantees that it has issued. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements of this interpretation are effective for financial statement
periods ending after December 15, 2002. The Company does not expect the adoption
of FIN 45 will have a material impact on its consolidated financial position,
results of operations or cash flows.

Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to market risk from changes in foreign exchange and
interest rates. To reduce the risk from changes in foreign exchange rates, the
Company selectively uses financial instruments. The Company does not hold or
issue financial instruments for trading purposes. The Company does not have
significant market risk on its marketable securities as those investments
consist of high-grade securities and are held to maturity.

Foreign Currency
The Company's earnings are affected by fluctuations in the value of the U.S.
dollar against foreign currencies, primarily as a result of purchasing inventory
from Italian suppliers and the sale of product to Canadian customers. Forward
exchange contracts are used to partially hedge against the earnings effects of
such fluctuations.

At December 31, 2002, the Company has forward exchange contracts outstanding to
purchase 2,000,000 euro at a total price of $1,932,000. Based on December 31,
2002 exchange rates, there are no significant gains or losses on these
contracts. All contracts expire in less than one year. Assuming a 10%
appreciation in the U. S. dollar at December 31, 2002, there would be a loss on
forward exchange contracts of $53,000.

Interest Rates
The Company is exposed to interest rate fluctuations on borrowings under its
Revolving Line of Credit (the "Line of Credit"). As of December 31, 2002,
$27,000,000 of advances on the line of credit were outstanding at an average
interest rate of 4.0% and $10,802,000 of commercial paper was outstanding at an
average interest rate of 1.7%. Total related interest expense for 2002 was
$1,270,000. Assuming a 10% increase in the Company's weighted average interest
rate on borrowings, interest expense in 2002 would have increased by $104,000.

Forward-Looking Statements
This report contains certain forward-looking statements with respect to the
Company's outlook for the future. These statements represent the Company's
reasonable judgment with respect to future events and are subject to risks and
uncertainties that could cause actual results to differ materially. These
factors could include significant adverse changes in the economic conditions
affecting overseas suppliers or the men's footwear markets served by the
Company.

CONSOLIDATED
STATEMENTS OF EARNINGS
For the years ended December 31, 2002, 2001 and 2000

2002 2001 2000
------------- ------------- -------------

NET SALES .......................................... $ 181,200,118 $ 131,692,896 $ 148,155,044

COST OF SALES ...................................... 122,062,238 94,107,329 107,597,357
------------- ------------- -------------

Gross earnings .............................. 59,137,880 37,585,567 40,557,687

SELLING AND ADMINISTRATIVE EXPENSES ................ 37,731,912 24,231,452 24,585,638
------------- ------------- -------------

Earnings from operations .................... 21,405,968 13,354,115 15,972,049

INTEREST INCOME ................................... 853,032 1,021,687 1,106,211

INTEREST EXPENSE ................................... (1,289,159) (296,178) (626,956)

OTHER INCOME AND EXPENSE, net ..................... 18,077 621,618 21,029
------------- ------------- -------------

Earnings before provision for income taxes .. 20,987,918 14,701,242 16,472,333

PROVISION FOR INCOME TAXES ......................... 7,800,000 5,200,000 5,850,000
------------- ------------- -------------

Net earnings ................................ $ 13,187,918 $ 9,501,242 $ 10,622,333
============= ============= =============

BASIC EARNINGS PER SHARE ........................... $ 3.51 $ 2.48 $ 2.61
============= ============= =============

DILUTED EARNINGS PER SHARE ......................... $ 3.44 $ 2.46 $ 2.59
============= ============= =============

The accompanying notes to consolidated financial statements are an integral part
of these statements

CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001

2002 2001
------------- -------------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents .............................. $ 7,301,104 $ 16,850,998
Marketable securities, at amortized cost ............... 2,099,140 3,266,846
Accounts receivable, less reserves of $3,955,000 and
$2,949,000, respectively ............................ 32,170,795 20,867,106
Accrued income tax receivable .......................... 1,008,079 --
Inventories ............................................ 49,740,933 17,501,656
Deferred income tax benefits ........................... 2,421,000 3,068,000
Prepaid expenses and other current assets .............. 803,108 165,531
------------- -------------
Total current assets ................................. 95,544,159 61,720,137
MARKETABLE SECURITIES, at amortized cost ................... 8,026,127 10,753,542
OTHER ASSETS ............................................... 9,683,252 10,143,249
PLANT AND EQUIPMENT, net ................................... 22,159,983 15,337,383
TRADEMARK .................................................. 10,821,681 --
------------- -------------
$ 146,235,202 $ 97,954,311
============= =============

LIABILITIES AND SHAREHOLDERS' INVESTMENT

CURRENT LIABILITIES:
Short-term borrowings .................................. $ -- $ 7,509,904
Accounts payable ....................................... 11,268,713 5,317,817
Dividend payable ....................................... 490,810 451,598
Accrued liabilities -
Wages, salaries and commissions .................... 4,615,368 3,566,298
Taxes other than income taxes ...................... 88,385 395,785
Other .............................................. 3,769,620 2,059,155
Accrued income taxes ................................... -- 1,609,991
------------- -------------
Total current liabilities .......................... 20,232,896 20,910,548
------------- -------------
DEFERRED INCOME TAX LIABILITIES ............................ 3,416,000 3,452,000
LONG TERM DEBT ............................................. 37,801,992 --
SHAREHOLDERS' INVESTMENT:
Common Stock, $1.00 par value,
authorized 10,000,000 shares,
issued and outstanding 2,886,456
shares in 2002 and 2,839,787 shares
in 2001 ............................................ 2,886,456 2,839,787
Class B Common Stock, $1.00 par value,
authorized 2,000,000 shares,
issued and outstanding 902,608
shares in 2002 and
909,031 shares in 2001 ............................. 902,608 909,031
Capital in excess of par value ......................... 4,999,047 3,889,388
Reinvested earnings .................................... 77,092,150 65,953,557
Accumulated other comprehensive loss ................... (1,095,947) --
------------- -------------
Total shareholders' investment ..................... 84,784,314 73,591,763
------------- -------------
$ 146,235,202 $ 97,954,311
============= =============

The accompanying notes to consolidated financial statements are an integral part
of these statements.

CONSOLIDATED STATEMENTS
OF SHAREHOLDERS' INVESTMENT
For the years ended December 31, 2002, 2001 and 2000

Accumulated
Class B Capital Other
Common Common in Excess of Reinvested Comprehensive Comprehensive
Stock Stock Par Value Earnings Loss Income
------------ ------------ ------------ ------------ ------------ -------------

Balance, December 31, 1999 ....... $ 3,215,443 $ 945,543 $ 3,076,392 $ 60,513,123 $ --
Net earnings ................... -- -- -- 10,622,333 -- $ 10,622,233
============
Cash dividends declared
($.43 per share) ............. -- -- -- (1,755,896) --
Conversions of Class B
Common Stock to
Common Stock ................. 26,588 (26,588) -- -- --
Stock options exercised ........ 85,000 -- 1,045,415 -- --
Income tax benefit from stock
options exercised ............ -- -- 384,209 -- --
Shares purchased and retired .. (273,136) -- (725,219) (5,787,938) --
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2000 ....... 3,053,895 918,955 3,780,797 63,591,622 --
Net earnings ................... -- -- -- 9,501,242 -- $ 9,501,242
============
Cash dividends declared
($.47 per share) ............. -- -- -- (1,796,554) --
Conversions of Class B
Common Stock to
Common Stock ................. 2,620 (2,620) -- -- --
Stock options exercised ........ 18,500 -- 236,875 -- --
Income tax benefit from
stock options exercised ...... -- -- 70,841 -- --
Shares purchased and retired ... (235,228) (7,304) (199,125) (5,342,753) --
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2001 ....... 2,839,787 909,031 3,889,388 65,953,557 --
Comprehensive Income -
Net earnings ................... -- -- -- 13,187,918 -- $ 13,187,918
Foreign currency
translation adjustments ...... -- -- -- -- (231,636) (231,636)
Additional minimum
pension liability (net
of tax of $552,594) .......... -- -- -- -- (864,311) (864,311)
------------
Total Comprehensive Income ...... -- -- -- -- -- $ 12,091,971
============
Cash dividends declared
($.51 per share) ............. -- -- -- (1,917,816)
Conversions of Class B
Common Stock to
Common Stock ................. 6,423 (6,423) -- -- --
Stock options exercised ........ 47,746 -- 1,016,409 -- --
Income tax benefit from
stock options exercised ...... -- -- 149,688 -- --
Shares purchased and retired ... (7,500) -- (56,438) (131,509) --
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2002 ....... $ 2,886,456 $ 902,608 $ 4,999,047 $ 77,092,150 $ (1,095,947)

The accompanying notes to consolidated financial statements are an integral part
of these statements.

CONSOLIDATED STATEMENTS
OF CASH FLOWS
For the years ended December 31, 2002, 2001 and 2000

2002 2001 2000
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings .................................................... $ 13,187,918 $ 9,501,242 $ 10,622,333
Adjustments to reconcile net earnings to net cash
provided by operating activities --
Depreciation ................................................ 2,104,960 1,608,525 1,489,511
Amortization of debt issuance costs ......................... 126,159 -- --
Deferred income taxes ....................................... 1,164,000 295,000 1,110,000
Deferred compensation ....................................... 184,380 172,307 161,041
Pension expense (income) .................................... 13,971 (241,850) (318,385)
(Gain) loss on sale of assets ............................... 5,694 (95,350) 6,677
Gain on sale of other investments ........................... -- (504,427) --
Increase in cash surrender value of life insurance .......... (551,394) (493,376) (417,791)
Changes in operating assets and liabilities
(net of acquired business) -
Accounts receivable ...................................... 852,193 2,997,233 (1,960,932)
Inventories .............................................. (7,374,620) (3,788,440) 5,826,515
Prepaids and other current assets ........................ (39,647) 19,811 (119,805)
Accounts payable ......................................... 5,672,219 (638,056) (3,448,024)
Accrued liabilities and other ............................ 1,439,578 34,937 (983,096)
Accrued income taxes ..................................... (2,468,382) 1,121,040 (317,620)
------------ ------------ ------------
Net cash provided by operating activities ............. 14,317,029 9,988,596 11,650,424
------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Florsheim assets ................................. (48,477,847) -- --
Purchase of marketable securities ............................... (6,004,234) -- (5,565,951)
Proceeds from maturities of marketable securities ............... 9,899,355 8,334,637 5,745,678
Proceeds from sales of other investments ........................ -- 603,807 --
Purchase of plant and equipment ................................. (8,194,532) (743,956) (1,204,363)
Proceeds from sales of plant and equipment ...................... 2,200 165,595 29,754
------------ ------------ ------------
Net cash (used for) provided by investing activities .. (52,775,058) 8,360,083 (994,882)
------------ ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs ............................................. (374,057) -- --
Cash dividends paid ............................................. (1,878,604) (1,790,792) (1,731,337)
Shares purchased and retired .................................... (195,447) (5,784,410) (6,786,293)
Proceeds from stock options exercised ........................... 1,064,155 255,375 1,130,415
Net borrowings (repayments) under revolving credit
facilities ..................................................... 30,292,088 2,302,956 (3,593,052)
------------ ------------ ------------
Net cash provided by (used for) financing activities .. 28,908,135 (5,016,871) (10,980,267)
------------ ------------ ------------

Net (decrease) increase in cash and cash equivalents ............ (9,549,894) 13,331,808 (324,725)
------------ ------------ ------------

CASH AND CASH EQUIVALENTS, at beginning of year ..................... $ 16,850,998 $ 3,519,190 $ 3,843,915
------------ ------------ ------------

CASH AND CASH EQUIVALENTS, at end of year ........................... $ 7,301,104 $ 16,850,998 $ 3,519,190
============ ============ ============

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds ............................... $ 9,069,613 $ 3,787,203 $ 4,699,673
Interest paid ................................................... $ 893,957 $ 321,574 $ 633,089

The accompanying notes to consolidated financial statements are an integral part
of these statements.

NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Year Ended December 31, 2002, 2001 and 2000

1. NATURE OF OPERATIONS

Weyco Group, Inc. is a U.S. based manufacturer and distributor of men's branded
footwear. The Company's brands include Florsheim, Nunn Bush, Nunn Bush NXXT,
Brass Boot, Stacy Adams and SAO by Stacy Adams. The Company's products are
primarily sold to unaffiliated retailers throughout the United States. The
Company also has a wholesale operation in Europe and has license agreements with
third parties to sell its products internationally. In addition, the Company
operates 30 retail stores in the United States and 3 in Europe.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The consolidated financial statements include the
accounts of Weyco Group, Inc. and all subsidiaries ("The Company"). All
significant intercompany items are eliminated in the consolidated financial
statements.

Revenue Recognition - Revenue from the sale of product is recognized when title
and risk of loss transfers to the customer and the customer is obligated to pay
the Company. Sales to independent dealers are recorded at the time of shipment
to those dealers. Sales through Company-owned retail outlets are recorded at the
time of delivery to retail customers. All product sales are recorded net of
estimated allowances for returns and discounts. Revenue from third party license
agreements is recognized in the period earned.

Inventories - Inventories are valued at cost, which is not in excess of market,
determined on a last-in, first-out (LIFO) basis. Inventory costs include
material, labor and factory overhead. See Note 6.

Plant and Equipment and Depreciation - Plant and equipment are stated at cost
and depreciated using primarily the straight-line method over their estimated
useful lives as follows: buildings and improvements, 10 to 39 years; machinery
and equipment, 5 to 10 years; furniture and fixtures, 5 to 7 years.

Impairment of Long-Lived Assets - Property, plant and equipment and other
long-term assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected undiscounted cash flows is less than the carrying value of
the related asset or group of assets, a loss is recognized for the difference
between the fair value and carrying value of the asset or group of assets. There
were no adjustments to the carrying value of long-lived assets in fiscal 2002,
2001, 2000.

Income Taxes - Deferred income taxes are provided on temporary differences
arising from differences in the basis of assets and liabilities for income tax
and financial reporting purposes. See Note 11.

Earnings Per Share - Basic earnings per share excludes any dilutive effects of
common stock options. Diluted earnings per share includes any dilutive effects
of common stock options. See Note 15.

Cash and Cash Equivalents - The Company considers all highly liquid investments
with maturities of three months or less at the date of purchase to be cash
equivalents. At December 31, 2002, approximately $5.5 million of our cash and
cash equivalents were held at two banks.

Foreign Currency Translation - Foreign currency balance sheet accounts are
translated into United States dollars at the rates of exchange in effect at
fiscal year end. Income and expenses are translated at the average rates of
exchange in effect during the year. The related translation adjustments are made
directly to a separate component of Shareholders' Investment.

Financial Instruments - In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This standard, as amended,
requires that entities recognize derivatives as either assets or liabilities in
the balance sheet and measure those instruments at fair value. The Company
adopted this standard on January 1, 2001. The adoption of this standard did not
have a material effect on the Company's financial statements.

The Company has entered into forward exchange contracts designated as cash flow
hedges for the purpose of hedging against foreign currency risk arising from
firmly committed inventory purchases with outside foreign vendors. At December
31, 2002, the Company has financial contracts outstanding to purchase 2,000,000
euro at a total price of $1,932,000. These contracts all expire in 2003. Based
upon year-end exchange rates, there are no significant gains or losses on
outstanding contracts.

Comprehensive Income - Comprehensive Income includes net income and changes in
Other Comprehensive Loss. The Company has chosen to report Comprehensive Income
and Accumulated Other Comprehensive Loss in the Consolidated Statements of
Shareholders' Investment. At December 31, 2002, Accumulated Other Comprehensive
Loss consists of the additional minimum pension liability of $864,311 (net of
tax) and Cumulative Translation Adjustment losses of $231,636.

Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported periods. Actual results could differ
from those estimates.

Shipping and Handling Fees - The Company classifies shipping and handling fees
billed to customers as revenues. The corresponding shipping and handling
expenses are included in selling and administrative expenses and totaled
$1,284,000, $774,000 and $1,014,000 for 2002, 2001 and 2000, respectively.

Advertising Costs - Advertising costs are expensed as incurred. Advertising
costs were $6,426,000, $4,961,000 and $4,826,000 in 2002, 2001 and 2000,
respectively. All advertising expenses are included in selling and
administrative expenses with the exception of co-op advertising expenses which
are recorded as a reduction of net sales. Co-op advertising expenses reduced net
sales by $2,842,000, $1,949,000 and $1,842,000 for 2002, 2001 and 2000,
respectively.

Stock-Based Compensation - In December 2002, The Financial Accounting Standards
Board issued Statement of Financial Accounting Standards ("SFAS") No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure". The
Company adopted the disclosure provisions of this statement in 2002. At December
31, 2002, the Company has two stock-based employee compensation plans, which are
described more fully in Note 17. The Company accounts for those plans under the
recognition and measurement principles of APB Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations.

New Accounting Pronouncements - In July 2001, the FASB issued SFAS 141,
"Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."
SFAS 141 requires that all business combinations be accounted for using the
purchase method. Use of the pooling-of-interests method is no longer allowed.
The provisions of SFAS 141 were effective for all business combinations
initiated after June 30, 2001 and all business combinations accounted for using
the purchase method for which the date of acquisition is July 1, 2001 or later.
SFAS 142 addresses the method of accounting for acquired goodwill and other
intangible assets upon, and subsequent to, the date of acquisition. Among other
provisions, SFAS 142 eliminates the amortization of goodwill and replaces it
with periodic assessments of the realization of the recorded goodwill and
indefinitely-lived intangibles. SFAS 142 was effective as of January 1, 2002 and
for business combinations initiated after July 1, 2001. The adoption of these
statements did not impact the Company's results of operations or financial
position. The Company's acquisition in 2002 was recorded in accordance with
these pronouncements (See Note 3).

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 establishes a single
accounting model for long-lived assets to be disposed of by sale and provides
additional implementation guidance for assets to be held and used and assets to
be disposed of other than by sale. The statement supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" and amends the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30 related to the disposal of a segment of a
business. The statement is effective for fiscal years beginning after December
15, 2001. The adoption of this statement on January 1, 2002 did not have an
impact on the Company's financial position or results of operations.

3. ACQUISITION

On May 20, 2002, the Company acquired from Florsheim Group, Inc. and its
subsidiaries (collectively, "Florsheim"), certain assets of Florsheim's U.S.
wholesale business, including its accounts receivable, trademarks, and other
information assets, wholesale inventory (with specified exceptions) and other
specified assets, as well as the leaseholds and associated assets for 23 retail
and outlet shoe stores.

As part of the asset purchase agreement, the Company also agreed to purchase
certain assets of Florsheim Europe S.r.l. and Florsheim France SARL, two
wholly-owned subsidiaries of Florsheim. The acquisition of Florsheim Europe
closed on July 1, 2002 for approximately $400,000 plus the assumption of
operating liabilities. The acquisition of Florsheim France closed on July 27,
2002, for approximately $10,000 plus the assumption of certain operating
liabilities. The domestic and foreign assets acquired and liabilities assumed
are collectively referred to as the "Acquired Business."

Florsheim had been an international distributor of men's dress and casual
footwear. As a result of the acquisition, the Company has acquired a leading
brand name in the men's footwear industry with worldwide name recognition. Weyco
believes that the brand will complement the Company's current brands, and will
enhance the Company's position as a leading distributor of men's casual and
dress footwear. The Company also expects to achieve certain economies of scale.

The total purchase price of the Acquired Business was $48.5 million, including
$1.7 million of acquisition costs. The acquisition has been accounted for using
the purchase method of accounting and accordingly, the purchase price was
allocated on a preliminary basis to identifiable assets acquired and liabilities
assumed based upon their estimated fair values. The results of operations of the
Acquired Business have been included in the Consolidated Condensed Financial
Statements since the respective dates of acquisition.

The following table summarizes the estimated fair value of the assets acquired
and liabilities assumed at the respective dates of acquisition (in thousands):

Accounts receivable ...... $ 12,156
Inventory ................ 24,865
Other current assets ..... 597
Fixed assets ............. 734
Trademarks ............... 10,822
--------
49,174
Current liabilities ... (696)
--------
$ 48,478
========

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," the
acquired Florsheim trademark of $10.8 million is not being amortized, as it has
an indefinite life. The Company completed an impairment test of the acquired
trademark as of December 31, 2002, and found that no impairment currently
exists.

The following table sets forth the unaudited proforma information for the
Company as if the acquisition of the Acquired Business had occurred as of the
beginning of each year (in thousands, except per share data):

2002 2001
----------- -----------

Net sales .................... $ 214,399 $ 222,597
Net earnings ................. $ 15,056 $ 8,719

Basic earnings per share ..... $ 4.00 $ 2.27
Diluted earnings per share ... $ 3.93 $ 2.26

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of all short-term financial instruments, except marketable
securities, approximate fair value due to the short-term nature of those
instruments. Marketable securities are carried at amortized cost. The fair value
of marketable securities is estimated based upon quoted market rates. The
carrying amount of long-term debt approximates fair value as it bears interest
at market rates.

5. INVESTMENTS

All of the Company's investments are classified as held-to-maturity securities
and reported at amortized cost pursuant to SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," as the Company has the intent and
ability to hold all security investments to maturity.

A summary of the amortized cost and estimated market values of investment
securities at December 31, 2002 and 2001 are as follows:

2002 2001
------------------------- -------------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- ----------- ----------- -----------

Municipality bonds:
Current ............................... $ 2,099,140 $ 2,119,001 $ 3,266,846 $ 3,297,767
Due from one through five years ....... 7,038,428 7,387,517 7,178,686 7,377,321
Due from five through ten years ....... 823,614 877,078 3,414,410 3,494,159
Due from ten through twenty years ..... 63,581 63,350 59,364 56,224
Due from twenty through thirty years .. 100,504 100,000 101,082 100,000
----------- ----------- ----------- -----------
Total .......................... $10,125,267 $10,546,946 $14,020,388 $14,325,471
=========== =========== =========== ===========

The unrealized gains and losses on investment securities at December 31 are:

2002 2001
------------------------ -----------------------
Unrealized Unrealized Unrealized Unrealized
Gains Losses Gains Losses
---------- ---------- ---------- ----------

Municipality bonds..... $422,621 $942 $309,305 $4,222

6. INVENTORIES

At December 31, 2002 and 2001, inventories consist of:

2002 2001
----------- -----------

Finished shoes ........... $48,951,574 $17,006,221
Shoes in process ......... 337,221 162,833
Raw materials ............ 452,138 332,602
----------- -----------
Total inventories ... $49,740,933 $17,501,656
=========== ===========

The excess of current cost over LIFO cost of inventories as of December 31, 2002
and 2001 was $16,348,000 and $16,472,000, respectively.

7. PLANT AND EQUIPMENT

At December 31, 2002 and 2001, plant and equipment consists of:

2002 2001
----------- -----------

Land ......................................... $ 2,582,110 $ 471,814
Buildings .................................... 13,843,291 9,521,619
Machinery and equipment ...................... 12,738,871 10,881,944
Retail fixtures and leasehold improvements ... 1,922,982 1,722,494
----------- -----------
Plant and equipment .......................... 31,087,254 22,597,871
Less: accumulated depreciation ............... 8,927,271 7,260,488
----------- -----------
Plant and equipment, net ................. $22,159,983 $15,337,383
=========== ===========

As of December 31, 2002, the Company has commitments totaling $7.7 million for a
construction project to expand the Company's distribution center which is
expected to be completed in the third quarter of 2003.

8. OTHER ASSETS

Other Assets include the following amounts at December 31:

2002 2001
----------- -----------

Net pension assets (See Note 10) ......... $ 3,163,008 $ 4,421,726
Cash surrender value of life insurance ... 6,239,586 5,688,192
Unamortized debt issuance costs .......... 247,898 --
Other investments ........................ 32,760 33,331
----------- -----------
$ 9,683,252 $10,143,249
=========== ===========

9. LONG TERM DEBT

On May 17, 2002, the Company entered into a 2-year $60 million unsecured
Revolving Line of Credit (the "Line of Credit") with a group of banks. The
Company borrowed under the Line of Credit to fund the acquisition of the
Acquired Business and future capital needs. The Line of Credit allows for the
issuance of up to $20 million in non-rated commercial paper at market interest
rates and additional bank borrowings at an interest rate of LIBOR plus from 150
to 250 basis points. At December 31, 2002, outstanding borrowings under the Line
of Credit were $37.8 million, consisting of $10.8 million of commercial paper
with an average interest rate of 1.69% and $27.0 million of bank borrowings with
an average interest rate of 4.01%. The Company also pays a fee of .4375% on the
unused portion of the Line of Credit.

The Company incurred $374,000 of debt issuance costs related to this new Line of
Credit. These costs are included in Other Assets and are being amortized over
the term of the Line of Credit. The Line of Credit includes certain financial
covenants, including a minimum net worth of $79.9 million at December 31, 2002
and minimum levels of Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) levels and a minimum ratio of funded debt to EBITDA. As of
December 31, 2002, the Company is in compliance with all covenants.

10. EMPLOYEE RETIREMENT PLANS

The Company has two defined benefit retirement plans covering substantially all
employees, as well as an unfunded supplemental pension plan for key executives.
Retirement benefits are provided based on employees' years of credited service
and average earnings or stated amounts for years of service. Normal retirement
age is 65 with provisions for earlier retirement. The plans also have provisions
for disability and death benefits. The Company's funding policy for the two
defined benefit retirement plans is to make contributions to the plans such that
all employees' benefits will be fully provided by the time they retire. Plan
assets are stated at market value and consist primarily of U. S. government
securities, corporate obligations and corporate equities.

The following is a reconciliation of the change in benefit obligation and plan
assets for the years ended December 31, 2002 and 2001:

CHANGE IN BENEFIT OBLIGATION
2002 2001
------------ ------------

Benefit obligation, beginning of year .............. $ 19,123,000 $ 18,059,000
Service cost ....................................... 498,000 393,000
Interest cost ...................................... 1,339,000 1,310,000
Actuarial loss ..................................... 2,614,000 602,000
Benefits paid ...................................... (1,291,000) (1,241,000)
------------ ------------
Benefit obligation, end of year .................... $ 22,283,000 $ 19,123,000
============ ============

CHANGE IN PLAN ASSETS

Fair value of plan assets, beginning of year ....... $ 21,020,000 $ 21,940,000
Actual return on plan assets ....................... 394,000 150,000
Contributions ...................................... 172,000 171,000
Benefits paid ...................................... (1,291,000) (1,241,000)
------------ ------------
Fair value of plan assets, end of year ............. $ 20,295,000 $ 21,020,000
============ ============

Funded status of plan .............................. $ (1,988,000) $ 1,897,000
Unrecognized net actuarial loss .................... 6,240,000 2,282,000
Unrecognized prior service cost .................... 328,000 384,000
Unrecognized net transition asset .................. -- (141,000)
------------ ------------
Net amount recognized .............................. $ 4,580,000 $ 4,422,000
============ ============

AMOUNTS RECOGNIZED IN THE BALANCE SHEETS CONSIST OF:

Other assets ....................................... $ 3,163,000 $ 4,422,000
Accumulated other comprehensive income ............. 1,417,000 --
------------ ------------
Net amount recognized .............................. $ 4,580,000 $ 4,422,000
============ ============

Assumptions used in determining the funded status for 2002 and 2001 are:

2002 2001
---- ----

Discount rate ............................ 6.75% 7.25%
Rate of compensation increase ............ 5.0% 5.0%
Long-term rate of return on plan assets .. 8.5% 8.5%

The components of net periodic pension cost for the years ended December 31,
2002, 2001 and 2000, are:

2002 2001 2000
----------- ----------- -----------

Benefits earned during the period .............. $ 498,000 $ 393,000 $ 352,000
Interest cost on projected benefit obligation .. 1,339,000 1,310,000 1,275,000
Expected return on plan assets ................. (1,738,000) (1,822,000) (1,823,000)
Net amortization and deferral .................. (85,000) (123,000) (122,000)
----------- ----------- -----------
Net pension expense (income) ................... $ 14,000 $ (242,000) $ (318,000)
=========== =========== ===========

The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets were $7,334,000, $6,778,000 and $3,956,000, respectively,
as of December 31, 2002, and $2,824,000, $1,878,000 and $0, respectively, as of
December 31, 2001.

The Company also has a defined contribution plan covering substantially all
employees not covered by a collective bargaining agreement. During 2002, 2001
and 2000 the Company contributed $106,000, $90,000 and $93,000, respectively, to
the plan.

11. INCOME TAXES

The provision for income taxes includes the following components:

2002 2001 2000
---------- ---------- ----------

Current --
Federal ............... $5,434,000 $3,766,000 $3,773,000
State ................. 1,023,000 860,000 765,000
Foreign ............... 179,000 279,000 202,000
---------- ---------- ----------
Total ............ 6,636,000 4,905,000 4,740,000
Deferred .................. 1,164,000 295,000 1,110,000
---------- ---------- ----------
Total provision .. $7,800,000 $5,200,000 $5,850,000
========== ========== ==========
Effective tax rate ........ $ 37.2% 35.4% 35.5%
========== ========== ==========

The difference between the effective tax rate and the Federal income tax rate of
35% in 2002 and 34% in 2001 and 2000 is due to state income taxes, net of the
Federal tax benefit, of 3.1% in 2002, 3.8% in 2001 and 3.2% in 2000, the effect
of non-taxable municipal bond interest of (1.2%) in 2002, (2.2%) in 2001 and
(2.1%) in 2000, and other miscellaneous items.

The foreign component of pretax net earnings was $664,000, $699,000 and $491,000
for 2002, 2001 and 2000, respectively.

The components of deferred taxes as of December 31, 2002 and 2001, are as
follows:

2002 2001
----------- -----------

Deferred tax assets:
Accounts receivable and inventory reserves ... $ 307,000 $ 1,317,000
Deferred compensation ........................ 1,099,000 1,027,000
Other ........................................ 1,015,000 722,000
----------- -----------
2,421,000 3,066,000
Deferred tax liabilities:
Pension asset ................................ (1,234,000) (1,724,000)
Cash value of life insurance ................. (1,168,000) (1,069,000)
Depreciation ................................. (1,014,000) (657,000)
----------- -----------
(3,416,000) (3,450,000)
----------- -----------
Net deferred tax liability ............. $ (995,000) $ (384,000)
=========== ===========

The net deferred tax liability is classified in the Consolidated Balance Sheets
as follows:

2002 2001
----------- -----------

Current deferred income tax benefits ........ $ 2,421,000 $ 3,068,000
Noncurrent deferred income tax liabilities .. (3,416,000) (3,452,000)
----------- -----------
$ (995,000) $ (384,000)
=========== ===========

12. DEFERRED COMPENSATION

The Company has deferred compensation agreements with certain former executives.
The Company expensed $184,000 in 2002, $172,000 in 2001 and $161,000 in 2000 in
connection with these agreements. Amounts owed under these agreements are
included in Accrued Wages, Salaries and Commissions on the Consolidated Balance
Sheets.

13. OPERATING LEASES

The Company operates retail shoe stores under both short-term and long-term
leases. Leases provide for a minimum rental plus percentage rentals based upon
sales in excess of a specified amount. Total minimum rents were $1,686,000 in
2002, $600,000 in 2001 and $724,000 in 2000. Percentage rentals were $36,000 in
2002, $42,000 in 2001, and $39,000 in 2000.

Future fixed and minimum rental commitments required under operating leases that
have initial or remaining noncancelable lease terms in excess of one year as of
December 31, 2002, are shown below. Renewal options exist for many long-term
leases.

2003..... 2,245,000
2004..... 1,904,000
2005..... 1,244,000
2006..... 840,000
2007..... 546,000
Thereafter..... 102,000
----------
Total $6,881,000
==========

14. SHAREHOLDERS' INVESTMENT

Each share of Class B Common Stock has 10 votes, may only be transferred to
certain permitted transferees, is convertible to one share of Common Stock at
the holder's option and shares equally with the Common Stock in cash dividends
and liquidation rights.

In April 1998, the Company's Board of Directors first authorized a stock
repurchase program to purchase shares of its common stock in open market
transactions at prevailing prices. The Company also buys back shares of its
common stock in private transactions at prevailing prices. During 2000, the
Company purchased 187,500 shares at a total cost of $4,575,000 under the
program, and 85,600 shares at a total cost of $2,211,000 in private
transactions. During 2001, the Company purchased 177,500 shares at a total cost
of $4,158,000 under the program, and 65,000 shares at a total cost of $1,626,000
in private transactions, and during 2002, the Company purchased 5,000 shares at
a total cost of $126,750 under the program, and 2,500 shares at a total cost of
$68,697 in private transactions. At December 31, 2002, the Company is authorized
to buy an additional 605,600 shares under the program.

15. EARNINGS PER SHARE

The following table sets forth the computations of basic and diluted earnings
per share:

2002 2001 2000
----------- ----------- -----------

Numerator:
Net earnings ..................................... $13,187,918 $ 9,501,242 $10,622,333
=========== =========== ===========

Denominator:
Basic weighted average shares outstanding ........ 3,760,194 3,835,336 4,076,024
Effect of dilutive securities:
Employee stock options ......................... 75,434 26,331 32,210
----------- ----------- -----------
Diluted weighted average shares outstanding ...... 3,835,628 3,861,667 4,108,234
=========== =========== ===========

Basic earnings per share ........................... $ 3.51 $ 2.48 $ 2.61
=========== =========== ===========
Diluted earnings per share ......................... $ 3.44 $ 2.46 $ 2.59
=========== =========== ===========

Diluted weighted average shares outstanding for 2002 exclude outstanding options
to purchase 95,900 shares of common stock at a weighted-average price of $36.32
because they are antidilutive. 2001 diluted weighted average shares outstanding
exclude outstanding options to purchase 156,236 shares of common stock at a
weighted-average price of $25.65 because they are antidilutive. 2000 diluted
weighted average shares outstanding exclude outstanding options to purchase
148,500 shares of common stock at a weighted-average price of $25.64 because
they are antidilutive.

16. SEGMENT INFORMATION

The Company determines its operating segments based on the information utilized
by the Chief Executive Officer to allocate resources and assess performance.
Based upon this criteria, the Company has determined that it operates in two
business segments: wholesale distribution and retail sales of men's footwear.

Wholesale shoes are marketed nationwide through more than 10,000 shoe, clothing
and department stores. All sales are to unaffiliated customers in North America.
There were no customers that accounted for 10% or more of total sales in 2002.
In 2001 and 2000, sales to the Company's largest customer were 10% of total
sales. In addition, at December 31, 2001, another customer's accounts receivable
balance was 11% of the Company's total outstanding accounts receivable. There
are no other individually significant customers.

In the retail division, the Company currently operates 30 company-owned stores
in principal cities in the United States, as well as three stores in Europe.
Twenty-three of the domestic retail stores, as well as the three in Europe, were
acquired in 2002 as part of the Florsheim acquisition. 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.

The accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies. The Company evaluates performance
based on earnings from operations before income taxes. Summarized segment data
for 2002, 2001 and 2000 are as follows:

Wholesale
Distribution Retail Total
------------ ------ -----

2002
Net sales $165,315,000 $15,885,000 $181,200,000
Depreciation 1,619,000 486,000 2,105,000
Earnings from operations 19,334,000 2,072,000 21,406,000
Total assets 139,951,000 6,284,000 146,235,000
Capital expenditures 8,113,000 82,000 8,195,000

2001
Net sales $126,597,000 $5,096,000 $131,693,000
Depreciation 1,451,000 158,000 1,609,000
Earnings from operations 13,344,000 10,000 13,354,000
Total assets 96,139,000 1,815,000 97,954,000
Capital expenditures 317,000 427,000 744,000

2000
Net sales $141,967,000 $6,188,000 $148,155,000
Depreciation 1,370,000 120,000 1,490,000
Earnings from operations 15,646,000 326,000 15,972,000
Total assets 90,122,000 1,821,000 91,943,000
Capital expenditures 920,000 284,000 1,204,000

All corporate assets are included in the wholesale distribution segment. Net
sales above exclude intersegment sales, which are not material.

17. STOCK-BASED COMPENSATION PLANS

The Company has two stock option plans: the 1996 Nonqualified Stock Option Plan
and the 1997 Stock Option Plan. Under the plans, options to purchase common
stock are granted to officers and key employees at prices not less than the fair
market value of the common stock on the date of the grant. All options are fully
vested six months after the date of grant, and most expire ten years from the
grant date, with the exception of certain incentive stock options, which expire
five years from the grant date. No stock-based employee compensation expense has
been reflected in net income, as all options granted under those plans had an
exercise price equal to or greater than the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on
net income and earnings per share as if the Company had applied the fair value
recognition provisions of FASB Statement No. 123, "Accounting for Stock-Based
Compensation", as amended by SFAS No. 148, to stock-based employee compensation.

2002 2001 2000
-------------- ------------- --------------

Net earnings, as reported .................... $ 13,187,918 $ 9,501,242 $ 10,622,333
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects ... 721,857 418,352 439,637
-------------- ------------- --------------

Pro forma net income ......................... $ 12,466,061 $ 9,082,890 $ 10,182,696
============== ============= ==============

Earnings per share
Basic - as reported ........................ $ 3.51 $ 2.48 $ 2.61
Basic - pro forma .......................... 3.32 $ 2.37 $ 2.50

Diluted - as reported ...................... $ 3.44 $ 2.46 $ 2.59
Diluted - pro forma ........................ 3.25 $ 2.35 $ 2.48

The following table summarizes the stock option activity under the Company's
plans for the years ended December 31:

2002 2001 2000
--------------------- -------------------- ---------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
------ --------- ------ --------- ------ ---------

Outstanding at beginning of year ..... 433,500 $ 22.35 368,750 $ 21.62 374,250 $ 18.85
Granted .............................. 95,900 36.32 83,250 23.72 80,500 25.76
Exercised ............................ (47,746) 22.29 (18,500) 13.80 (85,000) 13.30
Forfeited ............................ -- -- -- -- (1,000) 25.13
-------- -------- -------- -------- -------- --------
Outstanding at end of year ........... 481,654 25.14 433,500 22.35 368,750 21.62
======== ======== ========

Exercisable at end of year ........... 385,754 22.36 350,250 22.03 288,250 20.47
Weighted average fair market
value of options granted ............. $ 11.37 $ 7.78 $ 8.47

The fair market value of each option granted is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-average
assumptions used:

2002 2001 2000
------- ------- -------

Risk-free interest rate .... 3.69% 5.39% 5.18%
Expected dividend yields ... 1.45% 1.75% 1.75%
Expected remaining life .... 8.8 yrs. 8.6 yrs. 8.6 yrs.
Expected volatility ........ 25.0% 23.0% 24.0%

Of the options outstanding at December 31, 2002, 61,400 are exercisable at
$13.58, with a remaining contractual life of four years, and 324,354 are
exercisable at prices ranging from $21.75 to $28.05, and have a weighted average
remaining contractual life of six years. The remaining 95,900 are exercisable at
prices ranging from $36.11 to $39.72 and have a weighted average remaining
contractual life of nine years. At December 31, 2002, 133,100 shares of common
stock have been reserved for future stock option grants under the plans.

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

2002 First Quarter Second Quarter(1) Third Quarter(1) Fourth Quarter(1) Year(1)
- ---- ------------- ----------------- ---------------- ----------------- -------

Net sales................. $35,722,349 $32,532,514 $58,762,489 $54,182,766 $181,200,118
Gross earnings............ $9,477,071 $10,088,474 $18,763,722 $20,808,613 $59,137,880
Net earnings.............. $2,273,032 $1,648,988 $4,532,443 $4,733,455 $13,187,918
Net earnings per share
- Basic............ $.61 $.44 $1.20 $1.25 $3.51
- Diluted.......... $.60 $.43 $1.17 $1.23 $3.44

2001...................... First Quarter Second Quarter(1) Third Quarter(1) Fourth Quarter(1) Year(1)
- ---- ------------- ----------------- ---------------- ----------------- -------

Net sales................. $35,358,258 $31,541,688 $33,785,816 $31,007,134 $131,692,896
Gross earnings............ $9,200,349 $8,298,675 $9,232,863 $10,853,680 $37,585,567
Net earnings.............. $2,340,904 $1,627,421 $2,375,375 $3,157,542 $9,501,242
Net earnings per share
- Basic............ $.59 $.42 $.63 $.84 $2.48
- Diluted.......... $.59 $.42 $.62 $.83 $2.46

(1) Includes the operating results of the acquired Florsheim business since the
dates of acquisition as discussed in Note 3.

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
Weyco Group, Inc.:

We have audited the accompanying consolidated balance sheet of Weyco Group, Inc.
and subsidiaries as of December 31, 2002, and the related consolidated
statements of earnings, shareholders' investment and cash flows for the year
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The consolidated financial statements of Weyco
Group, Inc. and subsidiaries as of December 31, 2001 and for the years ended
December 31, 2001 and 2000, were audited by other auditors who have ceased
operations. Those auditors expressed an unqualified opinion on those financial
statements in their report dated February 14, 2002, except for Note 15, as to
which the date was March 3, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such 2002 financial statements present fairly, in all material
respects, the financial position of Weyco Group, Inc. and subsidiaries as of
December 31, 2002, and the results of their operations and their cash flows for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
February 20, 2003

THIS REPORT SET FORTH BELOW IS A COPY OF A REPORT PREVIOUSLY ISSUED BY ARTHUR
ANDERSEN LLP IN CONNECTION WITH THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 2001. THIS REPORT HAS NOT BEEN REISSUED BY ARTHUR
ANDERSEN LLP.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Weyco Group, Inc.:

We have audited the accompanying consolidated balance sheets of Weyco Group,
Inc. (a Wisconsin corporation) and subsidiaries as of December 31, 2001 and
2000, and the related consolidated statements of earnings, shareholders'
investment and cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Weyco Group, Inc. and
subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin
February 14, 2002, except for Note 15,
as to which the date is March 3, 2002

MANAGEMENT'S RESPONSIBILITIES
FOR FINANCIAL REPORTING

The management of Weyco Group, Inc. is responsible for the preparation and
integrity of all financial statements and other information contained in this
Annual Report. The financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America and
necessarily include amounts based on judgments and estimates by management
giving due consideration to materiality. The Company maintains internal control
systems designed to provide reasonable assurance that the Company's financial
records reflect the transactions of the Company and that its assets are
protected from loss or unauthorized use.

The Company's 2002 financial statements have been audited by Deloitte & Touche
LLP, independent auditors, whose report thereon appears above. Management has
made available to Deloitte & Touche LLP the Company's financial records and
related data to allow them to evaluate the Company's system of accounting
controls and provide an independent assessment of the financial statements of
the Company.

The Audit Committee of the Board of Directors is responsible for reviewing and
evaluating the overall performance of the Company's financial reporting and
accounting practices. To ensure independence, Deloitte & Touche LLP has full and
free access to the Audit Committee to discuss the results of their audits, the
adequacy of the Company's internal controls, and the quality of the Company's
financial reporting.

DIRECTORS

Thomas W. Florsheim
Chairman Emeritus

Thomas W. Florsheim, Jr.
Chairman and Chief Executive Officer

John W. Florsheim
President and Chief Operating Officer

Virgis W. Colbert
Executive Vice President
Miller Brewing Company

Robert Feitler
Chairman, Executive Committee

Leonard J. Goldstein
Retired,
Former Chairman, President and Chief Executive Officer,
Miller Brewing Company

Frederick P. Stratton, Jr.
Chairman Emeritus
Briggs & Stratton Corporation,
Manufacturer of Gasoline Engines

OFFICERS

Thomas W. Florsheim, Jr.
Chairman and Chief Executive Officer

John W. Florsheim
President and Chief Operating Officer

David N. Couper
Vice President

James F. Gorman
Senior Vice President

Peter S. Grossman
Senior Vice President

John F. Wittkowske
Senior Vice President, Chief Financial Officer and Secretary

SUPPLEMENTAL INFORMATION

ANNUAL MEETING

Shareholders are invited to attend Weyco Group, Inc.'s 2002 Annual Meeting at
10:00 a.m. on April 22, 2003, at the general offices of the Company, 333 W.
Estabrook Boulevard, Glendale, Wisconsin.

STOCK EXCHANGE

The Company's Common Stock (symbol WEYS) is listed on the NASDAQ Market System
(NMS).

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038

COMPANY HEADQUARTERS

Weyco Group, Inc.
333 W. Estabrook Boulevard
Glendale, WI 53212
414-908-1600

OTHER INFORMATION

A copy of the Company's Annual Report to the Securities and Exchange Commission
(Form 10-K) will be furnished without charge to any shareholder upon written
request.

A copy of the Company's Quarterly Reports will be furnished without charge to
any shareholder upon written or telephone request.

All written requests should be sent to Investor Relations, Weyco Group, Inc.,
P.O. Box 1188, Milwaukee, Wisconsin 53201. Telephone requests should be made to
(414) 908-1600.