Weyco Reports Fourth Quarter and Full Year 2011 Results

MILWAUKEE, Feb. 28, 2012 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ:WEYS) (the "Company") today announced financial results for the quarter and year ended December 31, 2011.

FOURTH QUARTER

Net sales for the fourth quarter were $75 million, up 20% compared to fourth quarter 2010 sales of $62 million. Operating earnings for the fourth quarter of 2011 were $8.9 million, compared to $7.2 million in 2010. Net earnings attributable to the Company were $5.5 million, compared to $5.1 million in 2010. Diluted earnings per share increased to $.50 per share in 2011 from $.45 per share in the fourth quarter of 2010. The increase in 2011 sales was primarily due to the Company's March 2, 2011 acquisition of the Combs Company ("Bogs"), the owner of the BOGS and Rafters footwear brands. The financial results of Bogs are included in the Company's consolidated financial statements from the date of acquisition.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $55.0 million for the fourth quarter of 2011, compared with $44.7 million in 2010. Wholesale product sales were $53.8 million in the fourth quarter of 2011, up from $43.9 million in 2010. Wholesale net sales for the fourth quarter of 2011 included Bogs' sales of $12.4 million. Wholesale net sales of Stacy Adams, Nunn Bush and Florsheim footwear were down 9%, 2% and 8% this quarter, respectively. Licensing revenues were $1.2 million in 2011 and $766,000 in 2010. Bogs' licensing revenues were $440,000 for the fourth quarter of 2011. Operating earnings for the segment decreased approximately $254,000 for the fourth quarter.

Net sales in the North American retail segment, which include sales from the Company's Florsheim retail stores in the United States and its Internet business, were $7.5 million in the fourth quarter of 2011, compared with $6.8 million in 2010, an increase of 11%. Same store sales were up 21% for the quarter. There were five fewer domestic retail stores during the fourth quarter of 2011 compared to 2010. Operating earnings for the segment improved by approximately $830,000 for the quarter, due to improvement in same store performance as well as the closing of underperforming stores earlier in 2011.

Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $12.3 million in the fourth quarter of 2011, compared to $10.9 million in 2010. The majority of other net sales were generated by Florsheim Australia. Florsheim Australia's net sales were up 18%. In local currency, net sales were up 15%. Collectively, the operating earnings of the Company's other businesses in the fourth quarter of 2011 were up $1.2 million as compared to 2010.

FULL YEAR 2011

Overall net sales in 2011 of $271 million were up 18% compared with $229 million in the prior year. Earnings from operations were $23.2 million in 2011, up from $18.8 million in the prior year. Net earnings attributable to Weyco Group, Inc. were $15.3 million in 2011, up from $13.7 million in 2010. Diluted earnings per share were $1.37 in 2011 and $1.19 in the prior year.

In the North American wholesale segment, net sales were $199 million in 2011 compared with $166 million in 2010. Wholesale product sales were $196 million in 2011, up 19% from $164 million in 2010. Wholesale net sales for the year included Bogs' sales of $28 million. Sales of the Company's Stacy Adams and Florsheim brands were each up 1% for the year, while the Nunn Bush brand was flat. The Umi brand, which was acquired in April 2010, had $3.8 million of net sales in 2011 as compared to $1.2 million of net sales in 2010. Licensing revenues were $3.4 million in 2011 compared to $2.2 million in 2010. The operating earnings of the wholesale segment were flat for the year.

In the retail segment, net sales were $24.7 million, up 10% from $22.5 million in 2010. There were five fewer stores in 2011 than 2010. Same store sales were up 18%. The retail division's operating earnings increased $1.9 million in 2011 due to improvement in same store performance as well as the closing of underperforming stores during the year.

The Company's other businesses had net sales of $47.3 million in 2011 compared to $40.7 million in 2010. The majority of the increase was at Florsheim Australia, whose net sales increased $6.5 million, or 20%. In local currency, Florsheim Australia's net sales increased 7%, and the rest of the increase was due to the strengthening of the Australian dollar relative to the US dollar during 2011 as compared to 2010. There was a $2.5 million increase in earnings from operations in the Company's other businesses in 2011 due mainly to Florsheim Australia's increased sales and gross margins.

Interest expense for the year increased primarily due to additional debt outstanding during 2011 following the Bogs acquisition.

Cash and marketable securities totaled $62 million at December 31, 2011 compared to $70 million at December 31, 2010. There were additional bank borrowings of $32 million under our revolving line of credit this year, mainly to fund the Bogs acquisition along with increased inventory and capital expenditure needs as a result of the acquisition.

"The Bogs acquisition has gone well and the brand is now fully integrated into our Company," stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group, Inc. "We are also very pleased with the improvement of our retail division as well as the strength of our international businesses."

The Company's Board of Directors declared a cash dividend on February 27, 2012 of $0.16 per share to all shareholders of record on March 19, 2012, payable April 2, 2012.

Weyco Group will host a conference call on February 29, 2012 at 11:00 a.m. Eastern Time to discuss the fourth quarter and full year 2011 financial results in more detail. To participate in the call please dial 888-679-8033 or 617-213-4846, referencing passcode 48897191, 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 95712068. 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 quality and innovative footwear for men, women and children under a portfolio of well-recognized brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters and Umi. The Company's products can be found in leading footwear, department, and specialty stores worldwide. Weyco Group also operates Florsheim concept stores in the United States and Australia, as well as in a variety of international markets.

Forward-Looking Statements

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

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2010 (UNAUDITED)












Three Months Ended December 31,


Twelve Months Ended December 31,



2011


2010


2011


2010



(In thousands, except per share amounts)










Net sales

$ 74,803


$ 62,333


$ 271,100


$ 229,231

Cost of sales

44,110


36,253


164,378


138,934

Gross earnings

30,693


26,080


106,722


90,297










Selling and administrative expenses

21,756


18,917


83,525


71,516

Earnings from operations

8,937


7,163


23,197


18,781










Interest income

503


589


2,220


2,291

Interest expense

(259)


(25)


(611)


(120)

Other income and expense, net

168


23


216


345










Earnings before provision for income taxes

9,349


7,750


25,022


21,297










Provision for income taxes

3,247


2,476


8,581


7,171










Net earnings

6,102


5,274


16,441


14,126










Net earnings attributable to noncontrolling interest

570


138


1,190


458










Net earnings attributable to Weyco Group, Inc.

$   5,532


$   5,136


$   15,251


$   13,668










Weighted average shares outstanding









Basic

10,881


11,282


11,066


11,293


Diluted

11,016


11,488


11,159


11,493










Earnings per share









Basic

$     0.51


$     0.46


$       1.38


$       1.21


Diluted

$     0.50


$     0.45


$       1.37


$       1.19










Cash dividends per share

$     0.16


$     0.16


$       0.64


$       0.63



WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)








December 31,


December 31,



2011


2010



(Dollars in thousands)

ASSETS:

Cash and cash equivalents


$          10,329


$             7,150

Marketable securities, at amortized cost


4,745


4,989

Accounts receivable, net


43,636


38,840

Accrued income tax receivable


816


-

Inventories


62,689


56,111

Deferred income tax benefits


395


-

Prepaid expenses and other current assets


5,613


4,398

    Total current assets


128,223


111,488






Marketable securities, at amortized cost


46,839


58,059

Deferred income tax benefits


3,428


1,090

Property, plant and equipment, net


31,077


25,675

Goodwill


11,112


-

Trademarks


34,748


12,748

Other assets


18,081


14,375

    Total assets


$        273,508


$         223,435






LIABILITIES AND EQUITY:

Short-term borrowings


$          37,000


$             5,000

Accounts payable


12,936


10,360

Dividend payable


1,742


1,811

Accrued liabilities


13,217


10,204

Accrued income taxes


-


116

Deferred income tax liabilities


-


228

    Total current liabilities


64,895


27,719






Long-term pension liability


26,344


18,572

Other long-term liabilities


10,879


-






Common stock


10,922


11,356

Capital in excess of par value


22,222


19,548

Reinvested earnings


146,266


150,546

Accumulated other comprehensive loss


(13,419)


(9,004)

    Total Weyco Group, Inc. equity


165,991


172,446

Noncontrolling interest


5,399


4,698

    Total equity


171,390


177,144

    Total liabilities and equity


$        273,508


$         223,435



WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)











Twelve Months Ended December 31,




2011


2010




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$ 16,441


$  14,126


Adjustments to reconcile net earnings to net cash





provided by operating activities -






Depreciation

2,591


2,700



Amortization

253


116



Bad debt expense

316


35



Deferred income taxes

(343)


503



Net foreign currency transaction losses (gains)

197


(400)



Stock-based compensation

1,224


1,128



Pension contribution

(1,600)


(1,500)



Pension expense

2,836


3,248



Net gains on sale of marketable securities

(346)


-



Net (gains) losses on disposal of assets

(14)


16



Impairment of property, plant and equipment

165


310



Increase in cash surrender value of life insurance

(527)


(515)


Changes in operating assets and liabilities, net of effects from acquisitions -





Accounts receivable

(1,267)


(4,642)



Inventories

(3,667)


(14,889)



Prepaids and other current assets

(752)


(681)



Accounts payable

2,141


1,031



Accrued liabilities and other

427


654



Accrued income taxes

(932)


(1,142)



   Net cash provided by operating activities

17,143


98







CASH FLOWS FROM INVESTING ACTIVITIES:





Acquisition of businesses, net of cash acquired

(27,023)


(2,638)


Purchase of marketable securities

(1,179)


(22,762)


Proceeds from maturities and sales of marketable securities

12,963


6,375


Proceeds from the sale of assets

14


-


Life insurance premiums paid

(155)


(155)


Purchase of property, plant and equipment

(8,189)


(1,510)



    Net cash used for investing activities

(23,569)


(20,690)







CASH FLOWS FROM FINANCING ACTIVITIES:





Cash dividends paid

(7,155)


(7,026)


Shares purchased and retired

(13,021)


(2,321)


Proceeds from stock options exercised

1,096


1,202


Repayment of debt assumed in acquisition

(3,814)


-


Net (repayments) borrowings of commercial paper

(5,000)


5,000


Proceeds from bank borrowings

73,000


-


Repayments of bank borrowings

(36,000)


-


Income tax benefits from stock-based compensation

496


555



    Net cash provided by (used for) financing activities

9,602


(2,590)








Effect of exchange rate changes on cash and cash equivalents

3


332








Net increase (decrease) in cash and cash equivalents

$   3,179


$ (22,850)







CASH AND CASH EQUIVALENTS at beginning of year

7,150


30,000







CASH AND CASH EQUIVALENTS at end of year

$ 10,329


$    7,150







SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$   7,989


$    8,472


Interest paid

$      457


$       118





CONTACT: John Wittkowske, Senior Vice President and Chief Financial Officer of Weyco Group, Inc., +1-414-908-1880


The following information was filed by Weyco Group Inc (WEYS) on Tuesday, February 28, 2012 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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