Weyco Reports Fourth Quarter and Full Year 2010 Results

Mar 03, 2011, 16:05 ET from Weyco Group, Inc.

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

SOURCE Weyco Group, Inc.



RELATED LINKS

http://www.weycogroup.com/