Weyco Reports Fourth Quarter and Full Year 2010 Results

MILWAUKEE, March 3, 2011 /PRNewswire/ -- Weyco Group, Inc. (Nasdaq: WEYS) today announced financial results for the quarter and year ended December 31, 2010.

FOURTH QUARTER

Net sales for the fourth quarter were $62.3 million, up 7% compared to fourth quarter 2009 sales of $58.4 million.  Net earnings attributable to Weyco Group, Inc. were $5.1 million in 2010, up from $4.8 million in 2009.  Diluted earnings per share were $0.45 per share in 2010 as compared with $0.41 per share in 2009.

In the Company's wholesale segment, which includes North American wholesale operations and licensing revenues, net sales were $44.7 million in 2010 compared with $44.0 million in the same period in 2009.  Wholesale sales were $43.9 million in 2010, compared to $43.2 million in 2009.   Licensing revenues were $766,000 in both 2010 and 2009.  Wholesale net sales of Stacy Adams footwear were up 12%, while Nunn Bush and Florsheim were down 4%, and 2%, respectively.

In the Company's retail segment, which includes sales from the Company's 35 Florsheim retail stores in the U.S. and its Internet business, net sales were $6.8 million in 2010, compared with $6.3 million in 2009.  Same store sales were up 9%.

The Company's other businesses, which include wholesale and retail operations in Australia, Asia Pacific, South Africa (collectively, "Florsheim Australia"), and Europe, had net sales of $10.9 million in 2010, compared to $8.1 million in 2009.

Operating earnings were $7.2 million in 2010 compared with $6.7 million in 2009.  During the fourth quarters of 2010 and 2009, earnings from operations were reduced by charges of $310,000 and $1.1 million, respectively, to recognize the impairment of certain North American retail segment fixed assets.

FULL YEAR 2010

Overall net sales in 2010 of $229.2 million were up 2% compared with $225.3 million in the prior year. Earnings from operations were $18.8 million in 2010, up from $16.8 million in the prior year.  Net earnings attributable to Weyco Group, Inc. were $13.7 million, up from $12.8 million in 2009.  Diluted earnings per share were $1.19 in 2010 and $1.11 in the prior year.

In the wholesale segment, net sales were $166.0 million in 2010 compared with $168.7 million in 2009. Wholesale product sales were $163.8 million, down 1% from $166.0 million in 2009.  Sales of the Company's Stacy Adams brand were up 9%, and the Nunn Bush and Florsheim brands were down 6% and 7%, respectively, compared to 2009. The Umi brand, which was acquired in April 2010, had $1.2 million of net sales in 2010.  Sales of the Stacy Adams brand increased this year mainly in department stores and at off-price retailers.  Nunn Bush and Florsheim sales each decreased moderately across several trade channels.  Licensing revenues were $2.2 million in 2010 and $2.7 million in 2009.  The decrease in licensing revenues between years was primarily due to the continued struggles of independent retailers who sell the majority of the Company's licensed products.  The operating earnings of the wholesale segment were down approximately $800,000 for the year, mainly due to the reduced licensing revenues in 2010.

In the retail segment, net sales were $22.5 million, up 2% from $22.0 million in 2009.  There was one fewer store in 2010 than 2009.  Same store sales were up 3.5%.  The retail division's operating earnings increased $1.1 million in 2010, primarily due to the lower fourth quarter impairment charge in 2010 compared to 2009, as discussed above, and also due to lower depreciation expense in 2010.

The Company's other businesses had net sales of $40.7 million in 2010, compared to $34.6 million in 2009.  The majority of the increase was at Florsheim Australia, whose net sales increased $5.5 million, or 20%.  In local currency, Florsheim Australia's sales increased 4%, and the weaker U.S. dollar in 2010 relative to the Australian dollar caused the rest of the sales increase.  There was a $1.7 million increase in earnings from operations in the Company's other businesses in 2010 due mainly to Florsheim Australia's increased sales and gross margins.

The Company's other income and expense was $345,000 of income in 2010 compared with $1.4 million of income in 2009.  The decrease was due to lower foreign currency exchange gains on intercompany loans in the current year as compared to 2009.

At December 31, 2010, the Company's cash and marketable securities totaled $70.2 million and there were $5.0 million of borrowings under its revolving line of credit.  At December 31, 2009, the Company's cash and marketable securities totaled $76.8 million and there was no debt outstanding.   During 2010, cash was used to build inventories from the historically low levels at the end of 2009, and also to increase the Company's stock of core styles in anticipation of possible price increases from overseas manufacturers.

The Company's Board of Directors declared a cash dividend on February 21, 2011 of $.16 per share to all shareholders of record on March 14, 2011, payable April 1, 2011.

As previously announced, on March 2, 2011, the Company acquired 100% of the outstanding shares of The Combs Company ("Bogs"), the owner of the BOGS and Rafters footwear brands.  The purchase price was $29.4 million in cash, plus assumed debt of approximately $3.5 million and contingent payments after two and five years, which are dependent on Bogs achieving certain performance measures.

Weyco Group will host a conference call on Friday, March 4, 2011, at 11:00 a.m. Eastern Time to discuss the fourth quarter and full year 2010 financial results in more detail, as well as the Bogs acquisition discussed above.  To participate in the call, please dial 888-713-4199 or 617-213-4861, referencing passcode #78680084, five minutes before the start of the call.  A replay will be available for one week beginning about one hour after the completion of the call by dialing 888-286-8010 or 617-801-6888, referencing passcode #82032376.  Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group's website at www.weycogroup.com.

About Weyco Group:

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

Forward-Looking Statements

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

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2009 (UNAUDITED)












Three Months Ended December 31,


Twelve Months Ended December 31,



2010


2009


2010


2009



(In thousands, except per share amounts)










Net sales

$               62,333


$               58,401


$             229,231


$             225,305

Cost of sales

36,253


34,197


138,934


140,829

Gross earnings

26,080


24,204


90,297


84,476










Selling and administrative expenses

18,917


17,541


71,516


67,696

Earnings from operations

7,163


6,663


18,781


16,780










Interest income

589


500


2,291


1,850

Interest expense

(25)


-


(120)


(26)

Other income and expense, net

23


42


345


1,406










Earnings before provision for income taxes

7,750


7,205


21,297


20,010










Provision for income taxes

2,476


2,589


7,171


6,940










Net earnings

5,274


4,616


14,126


13,070










Net earnings (loss) attributable to noncontrolling interest

138


(155)


458


249










Net earnings attributable to Weyco Group, Inc.

$                 5,136


$                 4,771


$               13,668


$               12,821










Weighted average shares outstanding









Basic

11,282


11,274


11,293


11,266


Diluted

11,488


11,563


11,493


11,510










Earnings per share









Basic

$                   0.46


$                   0.42


$                   1.21


$                   1.14


Diluted

$                   0.45


$                   0.41


$                   1.19


$                   1.11










Cash dividends per share

$                   0.16


$                   0.15


$                   0.63


$                   0.59



WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)








December 31,


December 31,



2010


2009



(Dollars in thousands)

ASSETS:




Cash and cash equivalents

$                  7,150


$          30,000

Marketable securities, at amortized cost

4,989


3,954

Accounts receivable, net

38,840


33,020

Inventories

56,111


40,363

Prepaid expenses and other current assets

4,398


3,922


Total current assets

111,488


111,259






Marketable securities, at amortized cost

58,059


42,823

Deferred income tax benefits

1,090


2,261

Other assets

14,375


13,070

Property, plant and equipment, net

25,675


26,872

Trademarks

12,748


10,868


Total assets

$             223,435


$        207,153











LIABILITIES AND EQUITY:




Short term borrowings

$                  5,000


$                    -

Accounts payable

10,360


9,202

Dividend payable

1,811


1,693

Accrued liabilities

10,204


7,846

Accrued income taxes

116


1,241

Deferred income tax liabilities

228


295


Total current liabilities

27,719


20,277






Long-term pension liability

18,572


18,533






Common stock

11,356


11,333

Capital in excess of par value

19,548


16,788

Reinvested earnings

150,546


146,241

Accumulated other comprehensive loss

(9,004)


(10,066)


Total Weyco Group Inc. equity

172,446


164,296

Noncontrolling interest

4,698


4,047


Total equity

177,144


168,343


Total liabilities and equity

$             223,435


$        207,153


















WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (UNAUDITED)










2010


2009




(Dollars in thousands)







CASH FLOWS FROM OPERATING ACTIVITIES




Net earnings

$            14,126


$             13,070

Adjustments to reconcile net earnings to net cash




provided by operating activities -





Depreciation

2,700


2,948


Amortization

116


93


Deferred income taxes

503


(18)


Stock-based compensation

1,128


877


Net foreign currency transaction gains

(400)


(1,339)


Impairment of property, plant and equipment

310


1,110


Pension contribution

(1,500)


(1,000)


Pension expense

3,248


2,986


Net losses on disposal of assets

16


13


Increase in cash surrender value of life insurance

(515)


(507)

Changes in operating assets and liabilities:





Accounts receivable

(4,607)


2,917


Inventories

(14,889)


15,758


Prepaids and other current assets

(681)


(1,153)


Accounts payable

1,031


(231)


Accrued liabilities and other

654


(1,089)


Accrued income taxes

(1,142)


3,467



Net cash provided by operating activities

98


37,902













CASH FLOWS FROM INVESTING ACTIVITIES





Acquisition of businesses

(2,638)


(9,320)


Life insurance premiums paid

(155)


(155)


Purchase of marketable securities

(22,762)


(8,073)


Proceeds from maturities of marketable securities

6,375


7,273


Purchase of property, plant and equipment

(1,510)


(1,316)



Net cash used for investing activities

(20,690)


(11,591)













CASH FLOWS FROM FINANCING ACTIVITIES





Cash received from noncontrolling interest

-


1,314


Cash dividends paid

(7,026)


(6,578)


Shares purchased and retired

(2,321)


(2,633)


Proceeds from stock options exercised

1,202


683


Net  borrowings (repayments) under revolving credit agreement

5,000


(1,250)


Income tax benefits from stock-based compensation

555


124



Net cash used for financing activities

(2,590)


(8,340)








Effect of exchange rate changes on cash

332


543








Net (decrease) increase in cash and cash equivalents

$          (22,850)


$             18,514







CASH AND CASH EQUIVALENTS at beginning of period

$            30,000


$             11,486







CASH AND CASH EQUIVALENTS at end of period

$              7,150


$             30,000













SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$              8,472


$               3,055


Interest paid

$                 118


$                    28











CONTACT:  John Wittkowske, Senior Vice President and Chief Financial Officer of Weyco Group, Inc., +1-414-908-1600


The following information was filed by Weyco Group Inc (WEYS) on Thursday, March 3, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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