Weyco Reports Third Quarter Sales and Earnings

MILWAUKEE, Nov. 3 /PRNewswire-FirstCall/ -- Weyco Group, Inc. (Nasdaq: WEYS) today announced financial results for the quarter ended September 30, 2009.

Net sales for the third quarter were $57.9 million, an increase of 1% from 2008 sales of $57.2 million. Net earnings for the quarter were $3.4 million, down from $4.3 million in 2008. Diluted earnings per share were $.29 per share in 2009 as compared with $.37 per share in the third quarter of 2008.

On January 23, 2009, the Company acquired a majority interest in a new subsidiary that subsequently purchased the Florsheim wholesale and retail businesses in Australia, Asia Pacific and South Africa (collectively "Florsheim Australia"). The financial results of Florsheim Australia are included in the Company's consolidated financial statements from the date of acquisition. The Company previously had license agreements with these entities; consequently, no licensing revenues were recorded for these entities after January 23, 2009.

Net sales in the wholesale division, which includes North American wholesale sales and licensing revenues, were $42.4 million for the third quarter of 2009, compared with $48.8 million in 2008. Wholesale product sales were $41.8 million in the third quarter of 2009, down from $47.8 million in 2008. In the wholesale division, sales of the Company's Stacy Adams, Nunn Bush and Florsheim brands were down 10%, 7% and 21%, respectively. Licensing revenues were $616,000 in 2009 and $991,000 in 2008. The decrease in licensing revenues resulted from the Company's acquisition of its licensees in Australia, Asia Pacific, and South Africa, described above, and also was due to a general trend of lower sales of the Company's licensed products in the current challenging retail environment.

Net sales in the retail division, which includes sales from the Company's North American retail stores and domestic Internet business, were $5.1 million in the third quarter of 2009, compared with $6.2 million in 2008. The Company has two fewer stores this year compared with 2008. Same store sales were down 9.5%.

Foreign sales, which include the wholesale and retail sales of Florsheim Europe and Florsheim Australia, were $10.5 million in the third quarter of 2009, compared to $2.2 million in 2008. In 2009, Florsheim Europe's net sales were $2.3 million, with the remaining $8.2 million representing sales of Florsheim Australia.

Operating earnings for the third quarter were $4.6 million, down from $6.3 million in 2008. As a percent of sales, operating earnings fell from 11.1% in 2008 to 7.9% in 2009, due primarily to lower sales volumes in 2009.

"Our results continue to be impacted by the generally weak retail economy," stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group. "Our Company has strong brands and a lean cost structure and we believe that we will be well-positioned for success when the overall economy improves."

Weyco Group will host a conference call on November 4, 2009, at 11:00 a.m. Eastern Time to discuss the third quarter financial results in more detail. To participate in the call please dial 888-713-4215 or 617-213-4867, referencing passcode #41299823, 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 #84847251. 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, and Stacy Adams. 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 the Far East.

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 NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
                                   (UNAUDITED)

                                       Three Months Ended   Nine Months Ended
                                          September 30,       September 30,
                                         2009      2008      2009      2008
                                        -------   -------   -------   -------
                                      (In thousands, except per share amounts)

    Net sales                           $57,943   $57,170  $166,904  $171,465
    Cost of sales                        36,272    36,265   106,631   108,561
                                        -------   -------   -------   -------
    Gross earnings                       21,671    20,905    60,273    62,904

    Selling and administrative expenses  17,089    14,578    50,156    43,097
                                        -------   -------   -------   -------
    Earnings from operations              4,582     6,327    10,117    19,807

    Interest income                         523       496     1,542     1,496
    Interest expense                         (1)      (15)      (26)      (45)
    Other income and expense, net           373         3     1,172        11
                                        -------   -------   -------   -------

    Earnings before provision for
     income taxes                         5,477     6,811    12,805    21,269

    Provision for income taxes            1,877     2,470     4,352     7,745
                                        -------   -------   -------   -------


    Net earnings                          3,600     4,341     8,453    13,524

    Net earnings attributable to
     noncontrolling interest                240         -       404         -
                                        -------   -------   -------   -------


    Net earnings attributable to
     Weyco Group, Inc.                   $3,360    $4,341    $8,049   $13,524
                                        =======   =======   =======   =======

    Weighted average shares outstanding
      Basic                              11,256    11,352    11,259    11,418
      Diluted                            11,453    11,726    11,493    11,791

    Earnings per share
      Basic                               $0.30     $0.38     $0.71     $1.18
                                        =======   =======   =======   =======
      Diluted                             $0.29     $0.37     $0.70     $1.15
                                        =======   =======   =======   =======
    Cash dividends per share              $0.15     $0.14     $0.44     $0.39
                                        =======   =======   =======   =======

                        WEYCO GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

                                                  September 30,   December 31,
                                                       2009            2008
                                                     --------        --------
                                                       (Dollars in thousands)

    ASSETS:
    Cash and cash equivalents                         $10,709         $11,486
    Marketable securities, at amortized cost            1,326           6,623
    Accounts receivable, net                           42,612          29,873
    Accrued income tax receivable                           -           2,226
    Inventories                                        44,452          47,012
    Deferred income tax benefits                          371             579
    Prepaid expenses and other current assets           3,245           3,678
                                                     --------        --------
      Total current assets                            102,715         101,477

    Marketable securities, at amortized cost           46,319          39,447
    Deferred income tax benefits                          629             736
    Other assets                                       11,058          10,069
    Property, plant and equipment, net                 28,351          28,043
    Trademark                                          10,868          10,868
                                                     --------        --------
      Total assets                                   $199,940        $190,640
                                                     ========        ========

    LIABILITIES & SHAREHOLDERS' INVESTMENT:
    Short-term borrowings                                  $-          $1,250
    Accounts payable                                    7,043           7,494
    Dividend payable                                    1,690           1,589
    Accrued liabilities                                 8,491           6,490
    Accrued income taxes                                  801               -
                                                     --------        --------
      Total current liabilities                        18,025          16,823

    Long-term pension liability                        15,255          15,160

    Common stock                                       11,322          11,353
    Capital in excess of par value                     16,578          15,203
    Reinvested earnings                               143,204         142,617
    Accumulated other comprehensive loss               (8,384)        (10,516)
                                                     --------        --------
      Total Weyco Group Inc. shareholders'
       investment                                     162,720         158,657
    Noncontrolling interest                             3,940               -
                                                     --------        --------
      Total shareholders' investment                  166,660         158,657
                                                     --------        --------
      Total liabilities and shareholders'
       investment                                    $199,940        $190,640
                                                     ========        ========

                        WEYCO GROUP, INC. AND SUBSIDIARIES
                  CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)

                                                              2009      2008
                                                            -------   -------
                                                        (Dollars in thousands)

    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net earnings                                           $8,453   $13,524
      Adjustments to reconcile net earnings to net cash
       provided by operating activities -
        Depreciation                                          2,163     1,962
        Amortization                                             70        85
        Deferred income taxes                                   315      (598)
        Stock-based compensation                                645       437
        Pension contribution                                  (1,000)        -
        Pension expense                                       2,240     1,014
        Loss on disposal of fixed assets                         14       141
        Increase in cash surrender value of life insurance     (249)     (247)
    Change in operating assets and liabilities -
        Accounts receivable                                  (8,042)   (2,297)
        Inventories                                           9,614    (1,179)
        Prepaids and other current assets                       956       453
        Accounts payable                                     (1,953)   (2,568)
        Accrued liabilities and other                         1,623    (1,673)
        Accrued income taxes                                  3,027       184
                                                            -------   -------
          Net cash provided by operating activities          17,876     9,238
                                                            -------   -------

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Acquisition of businesses                              (9,320)        -
      Purchase of marketable securities                      (8,065)   (2,841)
      Proceeds from maturities of marketable securities       6,420     4,078
      Life insurance premiums paid                             (155)     (155)
      Purchase of property, plant and equipment                (935)   (2,048)
      Proceeds from the sale of property, plant and
       equipment                                                  -         2
                                                            -------   -------
        Net cash used for investing activities              (12,055)     (964)
                                                            -------   -------


    CASH FLOWS FROM FINANCING ACTIVITIES:
      Cash received from noncontrolling interest              1,314         -
      Cash dividends paid                                    (4,881)   (4,144)
      Shares purchased and retired                           (2,596)   (8,418)
      Proceeds from stock options exercised                     677     2,058
      Net (repayments) borrowings under revolving
       credit agreement                                      (1,250)    1,450
      Income tax benefits from share-based compensation         138     1,635
                                                            -------   -------
      Net cash used for financing activities                 (6,598)   (7,419)
                                                            -------   -------

        Net (decrease) increase in cash and cash
        equivalents                                            (777)      855

    CASH AND CASH EQUIVALENTS at beginning of period        $11,486    $7,859
                                                            -------   -------


    CASH AND CASH EQUIVALENTS at end of period              $10,709    $8,714
                                                            =======   =======

    SUPPLEMENTAL CASH FLOW INFORMATION:
      Income taxes paid, net of refunds                      $1,304    $6,470
                                                            =======   =======
      Interest paid                                             $28       $45
                                                            =======   =======