Form 8-K WEYCO GROUP INC For: Aug 02

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August 2, 2016 4:07 PM EDT

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

 

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of Report (date of earliest event reported): August 2, 2016

 

 

WEYCO GROUP, INC.

 

(Exact name of registrant as specified in its charter)

 

 

Wisconsin 0-9068 39-0702200
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		 (I.R.S. Employer
Identification No.)

 

 

333 W. Estabrook Blvd.

P. O. Box 1188

Milwaukee, WI

53201

(Address of principal executive offices) (Zip Code)

 

 

Registrant’s telephone number, including area code: (414) 908-1600 

 

 

 

 

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

   

 

 

 

Item 2.02Results of Operations and Financial Condition

 

The following information is being furnished under Item 2.02 of Form 8-K:

 

On August 2, 2016 Weyco Group, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2016. A copy of this press release is attached as Exhibit 99.1 to this Form 8-K. The information under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

Item 9.01Financial Statements and Exhibits

 

  (d)Exhibits

 

   99.1Press release issued by the registrant on August 2, 2016.

  

 

 

  

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  August 2, 2016 WEYCO GROUP, INC.  
     
     
  /s/ John Wittkowske  
 

John Wittkowske

Senior Vice President/CFO

  

 

Exhibit Index

 

99.1Press release, dated August 2, 2016

 

 

Weyco Reports Second Quarter Sales And Earnings

MILWAUKEE, Aug. 2, 2016 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ: WEYS) (the "Company") today announced financial results for the quarter ended June 30, 2016.

Net sales for the second quarter of 2016 were $56.9 million, a decrease of 11% as compared to 2015 net sales of $63.9 million. Earnings from operations were $1.6 million in the second quarter of 2016, compared to $3.3 million in 2015. Net earnings attributable to the Company were $1.0 million in the second quarter of 2016, compared to $2.0 million in last year's second quarter. Diluted earnings per share were $0.09 in the second quarter of 2016 and $0.19 per share in the second quarter of 2015.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $41.5 million for the second quarter of 2016, down 14% compared to $48.1 million in the same period last year. Within the wholesale segment, net sales of our Stacy Adams, Nunn Bush, and Florsheim brands were down 5%, 17%, and 5%, respectively, mainly due to soft consumer spending in the footwear and apparel segments. Additionally, net sales of our BOGS brand were down 47% for the quarter. The second quarter for BOGS is the brand's smallest quarter and represents less than 10 percent of the annual revenues of BOGS due to the seasonal nature of the brand. Because of the mild winter last year, retailers carried over inventory which impacted shipments in the quarter and caused retailers to be conservative with orders for Fall 2016. Looking forward to the second half of 2016 for BOGS, backlogs for the brand remain down and the Company estimates BOGS annual sales will be down approximately 25%.

Gross earnings for the North American wholesale segment increased to 32.6% of net sales in the second quarter of 2016, from 31.0% in last year's second quarter. Earnings from operations for the wholesale segment were $1.0 million in the second quarter of 2016, down from $2.2 million in the same period last year. This decrease was primarily due to lower sales volumes in the second quarter of 2016.

Net sales in the North American retail segment, which include sales from the Company's Florsheim retail stores and its internet business in the U.S., were $4.7 million in the second quarter of 2016, down 6% compared to $5.0 million in 2015. Same store sales (which include U.S. internet sales) were down 2% for the quarter. There were two fewer domestic retail stores operating during the second quarter of 2016 compared to last year's second quarter. Earnings from operations for the retail segment were $228,000 in the second quarter of 2016, compared to $489,000 in 2015. The decrease in retail segment operating earnings for the quarter was mainly due to the lower sales and earnings performance of our brick and mortar stores.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.7 million in the second quarter of 2016, compared to $10.8 million in 2015. Florsheim Australia's net sales decreased 5% for the quarter, but were mostly offset by increased sales at Florsheim Europe. The earnings from operations of Florsheim Australia and Florsheim Europe were $325,000 in the second quarter of 2016, as compared to $650,000 in the same period last year. The decrease was mainly due to lower sales and gross margins at Florsheim Australia. Florsheim Australia purchases its inventory in U.S. dollars, and its gross margins have been negatively impacted by the weakness of the local currency compared to the U.S. dollar.

Other income (expense) for the second quarter of 2016 was $155,000 of income, compared to expense of $348,000 in last year's second quarter. This quarter's other income included foreign currency transaction gains of $138,000 compared to $240,000 of losses in the same period of 2015. These gains and losses mainly result from the revaluation of an intercompany loan between the Company and Florsheim Australia.

"Our second quarter was challenging," stated Thomas W. Florsheim, Jr., the Company's Chairman and CEO. "In addition to the reduced demand for our BOGS product following last year's mild winter, our retail partners saw a slowdown in traffic and a weaker sales trend, which resulted in a general concern about inventory levels which impacted our other three brands. We feel these conditions may continue in the back half of 2016, but believe our brands are well positioned for future growth when the retail environment for footwear improves."

On August 1, 2016, the Company's Board of Directors declared a cash dividend of $0.21 per share to all shareholders of record on August 29, 2016, payable September 30, 2016.

Conference Call Details:

Weyco Group will host a conference call on August 3, 2016, at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail. To participate in the call, please dial 800-219-3192 or 617-597-5412, referencing passcode 66892006#, five minutes before the start of the call. A replay will be available for one year beginning about two hours after the completion of the call at the following webcast link: http://edge.media-server.com/m/p/of6ngugv. Alternatively, the conference call 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 AND COMPREHENSIVE INCOME (UNAUDITED)









Three Months Ended June 30, 

Six Months Ended June 30, 

2016

2015

2016

2015

(In thousands, except per share amounts)







Net sales

$           56,867

$           63,934

$         135,767

$         141,986

Cost of sales

34,576

39,511

86,349

88,826

Gross earnings

22,291

24,423

49,418

53,160







Selling and administrative expenses

20,719

21,091

44,031

44,042

Earnings from operations

1,572

3,332

5,387

9,118







Interest income 

190

236

394

496

Interest expense

(94)

(12)

(167)

(30)

Other income (expense), net

155

(348)

309

(626)







Earnings before provision for income taxes

1,823

3,208

5,923

8,958







Provision for income taxes

745

1,123

2,213

3,281







Net earnings

1,078

2,085

3,710

5,677







Net earnings attributable to noncontrolling interest

78

45

23

4







Net earnings attributable to Weyco Group, Inc.

$             1,000

$             2,040

$             3,687

$             5,673







Weighted average shares outstanding







Basic

10,546

10,801

10,601

10,785


Diluted

10,600

10,892

10,647

10,880







Earnings per share







Basic

$                0.09

$                0.19

$                0.35

$                0.53


Diluted

$                0.09

$                0.19

$                0.35

$                0.52







Cash dividends declared (per share)

$                0.21

$                0.20

$                0.41

$                0.39
















Comprehensive income

$             1,056

$             2,454

$             5,182

$             4,720







Comprehensive (loss) income attributable to noncontrolling interest

(31)

17

141

(284)







Comprehensive income attributable to Weyco Group, Inc.

$             1,087

$             2,437

$             5,041

$             5,004

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)







June 30, 

December 31, 


2016

2015


(Dollars in thousands)

ASSETS:

Cash and cash equivalents

$                    15,303

$                    17,926

Marketable securities, at amortized cost

3,281

4,522

Accounts receivable, net

39,293

54,009

Accrued income tax receivable

2,725

-

Inventories

76,613

97,184

Prepaid expenses and other current assets

4,161

5,835

     Total current assets

141,376

179,476


Marketable securities, at amortized cost

21,462

20,685

Property, plant and equipment, net

33,476

31,833

Goodwill

11,112

11,112

Trademarks

34,748

34,748

Other assets

21,420

21,143

     Total assets

$                  263,594

$                  298,997






LIABILITIES AND EQUITY:


Short-term borrowings

$                    15,241

$                    26,649

Accounts payable

4,507

13,339

Dividend payable

-

2,147

Accrued liabilities

9,537

17,484

Accrued income tax payable

-

31

Deferred income tax liabilities

2,084

1,537

     Total current liabilities

31,369

61,187


Deferred income tax liabilities

623

70

Long-term pension liability

28,442

30,188

Other long-term liabilities

2,533

2,823


Common stock

10,557

10,767

Capital in excess of par value

46,920

45,759

Reinvested earnings

153,777

160,325

Accumulated other comprehensive loss

(17,113)

(18,467)

     Total Weyco Group, Inc. equity

194,141

198,384

Noncontrolling interest

6,486

6,345

     Total equity

200,627

204,729

     Total liabilities and equity

$                  263,594

$                  298,997

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)








Six Months Ended June 30,

2016

2015

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:



Net earnings

$                     3,710

$                     5,677


Adjustments to reconcile net earnings to net cash provided by (used for) operating activities - 




Depreciation

1,835

1,738

Amortization

194

222

Bad debt expense

45

111

Deferred income taxes

772

(483)

Net foreign currency transaction (gains) losses   

(148)

443

Stock-based compensation

727

721

Pension contribution

(2,400)

(357)

Pension expense

1,667

1,874

Increase in cash surrender value of life insurance

(115)

(115)


Changes in operating assets and liabilities - 




Accounts receivable

14,616

11,407

Inventories

20,558

(17,000)

Prepaid expenses and other assets

1,519

2,678

Accounts payable

(8,827)

(8,450)

Accrued liabilities and other

(2,329)

(5,759)

Accrued income taxes

(2,755)

(1,411)

    Net cash provided by (used for) operating activities

29,069

(8,704)




CASH FLOWS FROM INVESTING ACTIVITIES:



Purchases of marketable securities

(2,245)

(600)


Proceeds from maturities of marketable securities

2,670

4,150


Life insurance premiums paid

(155)

(155)


Purchases of property, plant and equipment

(3,475)

(958)

     Net cash (used for) provided by  investing activities

(3,205)

2,437




CASH FLOWS FROM FINANCING ACTIVITIES:



Cash dividends paid

(6,483)

(6,256)


Shares purchased and retired

(6,106)

(2,421)


Proceeds from stock options exercised

453

2,512


Payment of contingent consideration

(5,217)

-


Proceeds from bank borrowings

58,993

75,935


Repayments of bank borrowings

(70,401)

(63,216)


Income tax benefits from stock-based compensation

-

451

     Net cash (used for) provided by financing activities

(28,761)

7,005





Effect of exchange rate changes on cash and cash equivalents

274

(142)





Net (decrease) increase in cash and cash equivalents

$                    (2,623)

$                       596




CASH AND CASH EQUIVALENTS at beginning of period

17,926

12,499




CASH AND CASH EQUIVALENTS at end of period

$                   15,303

$                   13,095




SUPPLEMENTAL CASH FLOW INFORMATION:



Income taxes paid, net of refunds

$                     3,989

$                     4,735


Interest paid

$                        158

$                          30



CONTACT: John Wittkowske, Senior Vice President and Chief Financial Officer, 414-908-1880


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