WEYCO GROUP INC - Annual Report: 2008 (Form 10-K)
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
10-K
(Mark
One)
|
x
|
Annual
report pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934 for
fiscal
year ended December 31, 2008, or
|
¨Transition
report pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934
For
transition period from ________________ to
________________
Commission
file number 0-9068
Weyco Group, Inc.
(Exact
name of registrant as specified in its charter)
|
Wisconsin
|
39-0702200
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
333 W. Estabrook Boulevard, P. O. Box 1188, Milwaukee, WI 53201
(Address
of principal executive
offices)
(Zip
Code)
|
Registrant’s telephone number, include area code
|
(414)
908-1600
|
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Name of each exchange on which registered
|
|
|
Common Stock - $1.00 par value per share
|
The NASDAQ
Stock Market LLC
|
|
Securities
registered pursuant to Section 12(g) of the Act:
None
(Title of
Class)
(Title of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes ¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.
Yes ¨ No
x
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulations S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in any
definitive proxy of information statements incorporated by reference or in any
amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
|
Large Accelerated Filer ¨
|
Accelerated Filer x
|
Non-Accelerated Filer ¨
|
Smaller Reporting Company ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No x
The
aggregate market value of the registrant’s Common Stock held by non-affiliates
of the registrant as of the close of business on June 30, 2008 was
$191,406,000. This was based on the closing price of $26.53 per share
as reported by NASDAQ on June 30, 2008, the last business day of the
registrant’s most recently completed second fiscal quarter.
As of
March 2, 2009, there were outstanding 11,338,310 shares of Common
Stock.
DOCUMENTS INCORPORATED BY
REFERENCE
Portions
of the Corporation’s Annual Report to Shareholders for the year ended December
31, 2008, are incorporated by reference in Part II and Part IV of this
report.
Portions
of the Corporation’s Proxy Statement for its Annual Meeting of Shareholders
scheduled for May 5, 2009, are incorporated by reference in Part III of this
report.
PART I
Item
1. Business
The
Company is a Wisconsin corporation incorporated in the year 1906 as Weyenberg
Shoe Manufacturing Company. Effective April 25, 1990, the name of the
corporation was changed to Weyco Group, Inc.
The
Company and its subsidiaries engage in one line of business, the distribution of
men’s footwear.
The
principal brands of shoes sold by the Company are “ Florsheim,” “Nunn Bush,” and
“Stacy Adams.” The Company also has other brands, including
“Brass Boot” and “Nunn Bush NXXT,” which are included within Nunn Bush sales
figures, and “SAO by Stacy Adams,” which is included within Stacy Adams
sales. Trademarks maintained by the Company on these names are
important to the business. The Company’s products consist of both
mid-priced quality leather dress shoes which would be worn as a part of more
formal and traditional attire and quality casual footwear of man-made materials
or leather which would be appropriate for leisure or less formal
occasions. The Company’s footwear, and that of the industry in
general, is available in a broad range of sizes and widths, primarily purchased
to meet the needs and desires of the American male population.
The
Company purchases finished shoes from outside suppliers, primarily located in
China and India. Almost all of these foreign-sourced purchases are
denominated in U.S. dollars. Historically, there have been few
inflationary pressures in the shoe industry and leather and other component
prices have been stable. However, since the latter part of 2006,
there have been upward cost pressures from the Company’s
suppliers. These cost increases were caused by a variety of factors,
including higher labor, materials and freight costs and changes in the strength
of the U.S. dollar. In certain circumstances, the Company is able to
increase prices to offset the effect of these increases in
costs.
-1-
The Company’s business is
separated into two segments - wholesale distribution and retail sales of men’s
footwear. Wholesale distribution sales, which include both wholesale sales and
licensing revenues, constituted approximately 87% of total sales in 2008, 2007
and 2006. At wholesale, shoes are marketed nationwide through more
than 10,000 shoe, clothing and department stores. Sales are to
unaffiliated customers, primarily in North America, with some distribution in
Europe. In 2008, 2007 and 2006, sales to the Company’s largest customer,
JCPenney, were 14%, 12% and 10%, respectively, of total sales. Net
sales to foreign customers were $17.5 million,$18.1 million, and $12.8 million
in 2008, 2007 and 2006, respectively. The Company employs traveling
salespeople who sell the Company’s products to retail outlets. Shoes are shipped
to these retailers primarily from the Company’s distribution center in Glendale,
Wisconsin. Although there is no clearly identifiable seasonality in
the men’s footwear business, new styles are historically developed and shown
twice each year, in spring and fall. In accordance with industry
practices, the Company is required to carry significant amounts of inventory to
meet customer delivery requirements and periodically provides extended payment
terms to customers. The Company has licensing agreements with third
parties who sell its branded shoes outside of the United States and Canada, as
well as licensing agreements with apparel and accessory manufacturers in the
United States. Licensing revenues were approximately 2% of total net
sales in 2008, 2007 and 2006.
Retail
sales constituted approximately 13% of total sales in 2008, 2007 and
2006. The retail division consists of 36 company-operated
stores in the United States, two retail stores in major cities in Europe and an
Internet business. Sales in retail stores are made directly to the consumer by
Company employees. In addition to the sale of the Company’s brands of footwear
in these retail stores, other branded footwear and accessories are also sold in
order to provide the consumer with as complete a selection as practically
possible.
As of December 31, 2008, the
Company had a backlog of $22 million of confirmed orders compared with $30
million as of December 31, 2007. This does not include unconfirmed
blanket orders from customers, which accounts for the majority of the Company’s
orders, particularly from its larger accounts. All orders are
expected to be filled within one year.
As of December 31, 2008, the
Company employed 418 persons, of which 14 were members of collective bargaining
units. Future wage and benefit increases under the collective
bargaining contracts are not expected to have a significant impact on the future
operations or financial position of the Company.
Price,
quality, service and brand recognition are all important competitive factors in
the shoe industry and the Company has been recognized as a leader in all of
them. The Company does not engage in any specific research and
development activities. However, the Company does have a design department that
is continually reviewing and updating product designs. Compliance
with environmental regulations historically has not had, and is not expected to
have, a material adverse effect on the Company’s results of operations or cash
flows.
The
Company makes available, free of charge, copies of its annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
amendments to those reports upon written or telephone
request. Investors can also access these reports through the
Company’s website, www.weycogroup.com,
as soon as reasonably practical after we file or furnish those reports to the
SEC. The information on the Company’s website is not a part of
this filing. Also available on the Company’s website are various
documents relating to the corporate governance of the Company, including its
Code of Ethics.
-2-
Item
1A. Risk
Factors
There are
many factors that affect the Company’s business, many of which are beyond the
Company’s control. The following is a description of some of the
significant factors that might materially and adversely affect the Company’s
business, results of operations and financial condition.
Changes
in the U.S. economy may adversely affect the Company.
Spending
patterns in the footwear market, particularly those in the moderate- priced
market in which a good portion of the Company’s products compete, have
historically been impacted by consumers’ disposable income. As a
result, the success of the Company is impacted by changes in the general
economic conditions, especially in the United States. Factors
affecting discretionary
income for the moderate consumer include, among others, general business
conditions, gas and energy costs, employment, consumer confidence, interest
rates and taxation. Additionally, the economy and consumer behavior
can impact the financial strength and buying patterns of retailers, which can
also affect the Company’s results. In the second half of 2008, as a
result of the worldwide recession, the weakness of some companies in the retail
industry affected their level of purchases from us and the collectability of
amounts owed to us, and in some cases caused us to reduce or cease shipments to
certain retailers who no longer met our credit requirements. The
continued economic slowdown, or a worsening of economic conditions, could
adversely affect the Company’s sales volume and overall
performance.
The
Company is subject to risks related to the retail environment that could
adversely impact the Company’s business.
The
Company is subject to risks associated with doing business in the retail
environment, primarily in the United States. Recently, the U.S.
retail industry has experienced a growing trend toward consolidation of large
retailers. The merger of major retailers could result in the Company losing
sales volume or increasing its concentration of business with a few large
accounts, resulting in reduced bargaining power on the part of the Company,
which could increase pricing pressures and lower the Company’s
margins.
Changes
in consumer preferences could negatively impact the Company.
The
Company’s success is dependent upon its ability to accurately anticipate and
respond to rapidly changing fashion trends and consumer preferences. Failure to
predict or respond to current trends or preferences could have an adverse impact
on the Company’s sales volume and overall performance.
-3-
The
Company relies on independent foreign sources of production and the availability
of leather and other raw materials which could have unfavorable effects on the
Company’s business.
The
Company purchases its products entirely from independent foreign manufacturers,
primarily in China and India. Although the Company has good working
relationships with its manufacturers, the Company does not have long-term
contracts with them. Thus, the Company could experience increases in
manufacturing costs, disruptions in the timely supply of products or
unanticipated reductions in manufacturing capacity, any of which could
negatively impact the Company’s business, results of operations and financial
condition. The Company has the ability to move product to different
suppliers; however, the transition may not occur smoothly and/or quickly and the
Company could miss customer delivery date requirements and, consequently, could
lose orders. Additional risks associated with foreign sourcing that
could negatively impact the Company’s business include adverse changes in
foreign economic conditions, import regulations, restrictions on the transfer of
funds, duties, tariffs, quotas and political or labor interruptions, disruptions
at U.S. or foreign ports or other transportation facilities, foreign currency
fluctuations, expropriation and nationalization.
The
Company’s use of foreign sources of production results in long production and
delivery lead times. Therefore, the Company needs to forecast demand
at least five months in advance. If the Company’s forecasts are
wrong, it could result in the loss of sales if there is not enough product, or
in reduced margins if there is excess inventory that needs to be sold at
discounted prices.
Additionally,
the Company’s products depend on the availability of raw materials, especially
leather. Any significant shortages of quantities or increases in the
cost of leather could have a material adverse effect on the Company’s business
and results of operations.
The
Company operates in a highly competitive environment, which may result in lower
prices and reduce its profits.
The men’s
footwear market is extremely competitive. The Company competes with
manufacturers, distributors and retailers of men’s shoes, certain of which are
larger and have substantially greater resources than the Company
has. The Company competes with these companies primarily on the basis
of price, quality, service and brand recognition, all of which are important
competitive factors in the shoe industry. The Company’s ability to
maintain its competitive edge depends upon these factors, as well as its ability
to deliver new products at the best value for the consumer, maintain positive
brand recognition, and obtain sufficient retail floor space and effective
product presentation at retail. If the Company does not remain
competitive, the Company’s future results of operations and financial condition
could decline.
-4-
The
Company’s business is dependent on information and communication systems, and
significant interruptions could disrupt its business.
The
Company accepts and fills the majority of its larger customers’ orders through
the use of Electronic Data Interchange (EDI). It relies on its
warehouse management system to efficiently process orders. The
corporate office relies on computer systems to efficiently process and record
transactions. Significant interruptions in its information and
communication systems from power loss, telecommunications failure or computer
system failure could significantly disrupt the Company’s business and
operations.
The
Company may not be able to successfully integrate new brands and
businesses.
The
Company intends to continue to look for new acquisition
opportunities. That search could be unsuccessful and costs could be
incurred in failed search efforts. If an acquisition does occur, the
Company cannot guarantee that it would be able to successfully integrate the
brand into its current operations, or that any acquired brand would achieve
results in line with the Company’s historical performance or its specific
expectations for the brand.
Loss
of the services of the Company’s top executives could adversely affect the
business.
Thomas W.
Florsheim, Jr., the Company’s Chairman and Chief Executive Officer, and John W.
Florsheim, the Company’s President and Chief Operating Officer, have a strong
heritage within the Company and the footwear industry. They possess knowledge,
relationships and reputations based on their lifetime exposure to and experience
in the Company and the industry. The loss of either one or both of
the Company’s top executives could have an adverse impact on the Company’s
performance.
The
limited public float and trading volume for the Company’s stock may have an
adverse impact on the stock price or make it difficult to
liquidate.
The
Company’s common stock is held by a relatively small number of
shareholders. The Florsheim family owns over 30% of the stock and one
other institutional shareholder holds a significant block. Other
officers, directors, and members of management own stock or have the potential
to own stock through previously granted stock options. Consequently,
the Company has a small float and low average daily trading
volume. Future sales of substantial amounts of the Company’s common
stock in the public market, or the perception that these sales could occur, may
adversely impact the market price of the stock and the stock could be difficult
to liquidate.
Item
1B.
Unresolved Staff
Comments
None
-5-
Item
2. Properties
The following facilities
were operated by the Company and its subsidiaries as of December 31,
2008:
|
Location
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Character
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Owned/Leased
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Square
Footage
|
%
Utilized
|
||||||||
|
Glendale, Wisconsin
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One
story office and distribution center
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Owned
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780,000 | 90 | % | |||||||
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Montreal,
Canada
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Multistory
office and distribution center
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Leased
(1)
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42,400 | 100 | % | |||||||
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Florence,
Italy
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One
story office, warehouse and distribution facility
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Leased
(1)
|
15,000 | 100 | % | |||||||
(1)
Not material leases.
In
addition to the above-described office, distribution and warehouse facilities,
the Company operates 36 retail stores throughout the United States and two in
Europe under various rental agreements. All of these facilities are
suitable and adequate for the Company’s current operations. See Note
11 to Consolidated Financial Statements and Item 1. Business,
above.
Item
3. Legal
Proceedings
Not Applicable
Item
4. Submission of Matters to a
Vote of Security Holders
Not
Applicable
-6-
Executive Officers of the
Registrant
|
Officer
|
Age
|
Office(s)
|
Served
Since
|
Business Experience
|
||||
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Thomas
W. Florsheim, Jr.
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50
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Chairman
and Chief Executive Officer
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1996
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Chairman
and Chief Executive Officer of the Company — 2002 to present; President
and Chief Executive Officer of the Company — 1999 to 2002;
President and Chief Operating Officer of the Company — 1996 to 1999; Vice
President of the Company – 1988 to 1996
|
||||
|
John
W. Florsheim
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45
|
President,
Chief Operating Officer and Assistant Secretary
|
1996
|
President,
Chief Operating Officer and Assistant Secretary of the Company
– 2002 to present; Executive Vice President, Chief Operating Officer and
Assistant Secretary of the Company – 1999 to 2002; Executive Vice
President of the Company —1996 to 1999; Vice President of the
Company —
|
||||
|
1994
to 1996
|
||||||||
|
Peter
S. Grossman
|
65
|
Senior
Vice President President, Nunn Bush Brand and Retail
Division
|
1971
|
Senior
Vice President of the Company – 2002 to present; Vice President of the
Company — 1971 to 2002
|
||||
|
John
F. Wittkowske
|
|
49
|
|
Senior
Vice President, Chief Financial Officer and Secretary
|
|
1993
|
|
Senior
Vice President, Chief Financial Officer and Secretary of the Company –
2002 to present; Vice President, Chief Financial Officer and
Secretary of the Company — 1995 to
2002; Secretary/Treasurer of the Company — 1993 to
1995
|
Thomas W.
Florsheim, Jr. and John W. Florsheim are brothers, and
Chairman
Emeritus Thomas W. Florsheim is their father.
-7-
PART II
Item
5. Market for Registrant’s
Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity
Securities
Certain
information required by this Item is set forth on pages 1, 31 and 41 of the 2008
Annual Report to Shareholders, and is incorporated herein by
reference.
Stock
Performance
The
following line graph compares the cumulative total shareholder return on the
Company’s common stock during the five years ended December 31, 2008 with the
cumulative return on the NASDAQ Non-Financial Stock Index and the Russell
3000-Shoes Index. The comparison assumes $100 was invested on
December 31, 2003 in the Company’s common stock and in each of the foregoing
indices and assumes reinvestment of dividends.
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||||||
|
Weyco
Group, Inc.
|
100 | 131 | 116 | 152 | 170 | 208 | ||||||||||||||||||
|
NASDAQ
Non-Financial Stock Index
|
100 | 108 | 110 | 121 | 137 | 63 | ||||||||||||||||||
|
Russell
3000 – Shoes Index
|
100 | 131 | 134 | 158 | 179 | 127 | ||||||||||||||||||
In April
1998, the Company first authorized a stock repurchase program to purchase
1,500,000 shares of its common stock in open market transactions at prevailing
prices. In April 2000 and again in May 2001, the Company’s Board of
Directors extended the stock repurchase program to cover the repurchase of
1,500,000 additional shares. Therefore, 4,500,000 shares have been authorized
for repurchase through December 31, 2008. The table below presents
information pursuant to Item 703 of Regulation S-K regarding the repurchase of
the Company’s Common Stock by the Company in the three-month period ended
December 31, 2008.
-8-
|
Total Number of
|
Maximum Number
|
|||||||||||||||
|
Total
|
Average
|
Shares Purchased as
|
of Shares
|
|||||||||||||
|
Number
|
Price
|
Part of the Publicly
|
that May Yet Be
|
|||||||||||||
|
of Shares
|
Paid
|
Announced
|
Purchased Under
|
|||||||||||||
|
Period
|
Purchased
|
Per Share
|
Program
|
the Program
|
||||||||||||
|
10/01/08 - 10/31/08
|
50,079 | $ | 26.72 | 50,079 | 570,646 | |||||||||||
|
11/01/08 - 11/30/08
|
67,064 | $ | 26.59 | 67,064 | 503,582 | |||||||||||
|
12/01/08 - 12/31/08
|
- | - | - | 503,582 | ||||||||||||
|
Total
|
117,143 | $ | 26.65 | 117,143 | ||||||||||||
In
February 2009, the Company’s Board of Directors extended the stock repurchase
plan to cover the repurchase of an additional 1,000,000 shares, bringing the
total authorized since the inception of the plan to 5,500,000, and the total
remaining available for purchase to approximately 1,500,000.
Item
6. Selected Financial
Data
Information
required by this Item is set forth on page 1 of the 2008 Annual
Report
to Shareholders, and is incorporated herein by reference.
Item
7. Management’s
Discussion and Analysis of
Financial
Condition and Results of Operations
Information
required by this Item is set forth on pages 13 through 18 of the
2008
Annual Report to
Shareholders, and is incorporated herein by reference.
Item
7A.
Quantitative and Qualitative Disclosures
about Market Risk
Information required by
this Item is set forth on page 18 of the 2008 Annual
Report
to Shareholders and is incorporated herein by reference.
Item
8. Financial Statements and
Supplementary Data
Information
required by this Item is set forth on pages 19 through 37
of
the 2008 Annual Report to Shareholders, and is incorporated herein
by
reference.
Item
9. Changes
in and Disagreements with Accountants
on
Accounting and Financial
Disclosures
None
-9-
Item
9A. Controls and
Procedures
Evaluation of Disclosure Controls
and Procedures - The Company maintains disclosure controls and procedures
designed to ensure that the information the Company must disclose in its filings
with the Securities and Exchange Commission is recorded, processed, summarized
and reported on a timely basis. The Company’s principal executive
officer and principal financial officer have reviewed and evaluated the
Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) as of the end of the period covered by this report (the “Evaluation
Date”). Based on such evaluation, such officers have concluded that,
as of the Evaluation Date, the Company’s disclosure controls and procedures are
effective in bringing to their attention on a timely basis information relating
to the Company required to be included in the Company’s periodic filings under
the Exchange Act.
Management’s Report on Internal
Control Over Financial Reporting – The Company’s Management Report on
Internal Control Over Financial Reporting is set forth on page 40 of the 2008
Annual Report to Shareholders and is incorporated herein by
reference.
Report of Independent Registered
Public Accounting Firm - Deloitte and Touche LLP, the Company’s
independent registered public accounting firm, has audited the consolidated
financial statements included in this Annual Report on Form 10-K and, as part of
its audit, has issued an attestation report on the effectiveness of the
Company’s internal control over financial reporting. That attestation
report is set forth on page 39 of the 2008 Annual Report to Shareholders, and is
incorporated herein by reference.
Changes in Internal Control Over
Financial Reporting – There have not been any changes in the Company’s
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) that occurred during the Company’s most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Item
9B.
Other
Information
None
-10-
PART III
Item
10. Directors, Executive
Officers and Corporate Governance
Information
required by this Item is set forth on page 7 of this Form 10-K and within the
Company’s proxy statement for the Annual Meeting of Shareholders to be held on
May 5, 2009 (the “2009 Proxy Statement”), and is incorporated herein by
reference.
Item
11. Executive
Compensation
Information
required by this Item is set forth in the Company’s 2009 Proxy Statement,
and is incorporated herein by reference.
Item
12. Security
Ownership of Certain Beneficial Owners and
Management
and Related Shareholder Matters
Information
required by this Item is set forth in the Company’s 2009 Proxy Statement,
and is incorporated herein by reference.
The
following table provides information about the Company’s equity compensation
plans as of December 31, 2008:
|
(a)
|
(b)
|
(c)
|
||||||||||
|
Number of Securities
|
||||||||||||
|
Remaining Available for
|
||||||||||||
|
Future Issuance Under
|
||||||||||||
|
Number of Securities to
|
Weighted-Average
|
Equity Compensation
|
||||||||||
|
be Issued upon Exercise
|
Exercise Price of
|
Plans (Excluding
|
||||||||||
|
Of Outstanding Options,
|
Outstanding Options,
|
Securities Reflected in
|
||||||||||
|
Warrants and Rights
|
Warrants and Rights
|
Column (a))
|
||||||||||
|
Plan Category
|
||||||||||||
|
Equity
compensation plans approved by shareholders
|
1,100,012 | $ | 17.14 | 430,360 | ||||||||
|
Equity
compensation plans not approved by shareholders
|
- | - | - | |||||||||
|
Total
|
1,100,012 | $ | 17.14 | 430,360 | ||||||||
Item
13.
Certain
Relationships and Related Transactions, and Director
Independence
Information
required by this Item is set forth in the Company’s 2009 Proxy Statement,
and is incorporated herein by reference.
Item
14.
Principal
Accountant Fees and Services
Information
required by this Item is set forth in the Company’s 2009 Proxy Statement,
and is incorporated herein by reference.
-11-
PART IV
Item
15. Exhibits and Financial
Statement Schedules
(a)
The following documents are filed as a part of this report:
1. Financial
Statements -
Consolidated
Statements of Earnings for the years ended
December
31, 2008, 2007 and 2006
Consolidated
Balance Sheets -
December
31, 2008 and 2007
Consolidated
Statements of Shareholders’ Investment
for
the years ended December 31, 2008, 2007 and 2006
Consolidated
Statements of Cash Flows for the years ended
December
31, 2008, 2007 and 2006
Notes to
Consolidated Financial Statements for the years ended
December
31, 2008, 2007 and 2006
Reports
of Independent Registered Public Accounting Firm
2. Financial
Statement Schedules for the years ended
December 31, 2008, 2007 and 2006
-
Schedule
II - Valuation and Qualifying Accounts
Report of Independent Registered Public
Accounting Firm
All other
schedules have been omitted because of the absence of the conditions under which
they are required.
|
(b)
|
Exhibits
and Exhibit Index. See the Exhibit Index included as the last
part of this report, which is incorporated herein by
reference. Each management contract and compensatory plan or
arrangement required to be filed as an exhibit to this report is
identified in the Exhibit Index by an asterisk following its exhibit
number.
|
-12-
SCHEDULE
II
WEYCO GROUP,
INC.
VALUATION AND QUALIFYING
ACCOUNTS
|
Deducted from Assets
|
||||||||||||
|
Doubtful
|
Returns
and
|
|||||||||||
|
Accounts
|
Allowances
|
Total
|
||||||||||
|
BALANCE,
DECEMBER 31, 2005
|
$ | 1,472,000 | $ | 2,351,000 | $ | 3,823,000 | ||||||
|
Add
– Additions charged to earnings
|
6,692 | 4,209,010 | 4,215,702 | |||||||||
|
Deduct
- Charges for purposes for which reserves were established
|
(85,692 | ) | (4,239,010 | ) | (4,324,702 | ) | ||||||
|
BALANCE,
DECEMBER 31, 2006
|
$ | 1,393,000 | $ | 2,321,000 | $ | 3,714,000 | ||||||
|
Add
– (Reductions)/Additions charged to earnings
|
(16,260 | ) | 3,794,390 | 3,778,130 | ||||||||
|
Deduct
- Charges for purposes for which reserves were established
|
(194,740 | ) | (4,121,390 | ) | ( 4,316,130 | ) | ||||||
|
BALANCE,
DECEMBER 31, 2007
|
$ | 1,182,000 | $ | 1,994,000 | $ | 3,176,000 | ||||||
|
Add
– Additions charged to earnings
|
663,016 | 3,648,835 | 4,311,851 | |||||||||
|
Deduct
- Charges for purposes for which reserves were established
|
(545,016 | ) | (3,764,835 | ) | (4,309,851 | ) | ||||||
|
BALANCE,
DECEMBER 31, 2008
|
$ | 1,300,000 | $ | 1,878,000 | $ | 3,178,000 | ||||||
-13-
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Shareholders and Board of Directors of
Weyco
Group, Inc.:
We have
audited the consolidated financial statements of Weyco Group, Inc. and subsidiaries (the
“Company”) as of December 31, 2008 and 2007, and for each of the three years in
the period ended December 31, 2008, and the Company's internal control over
financial reporting as of December 31, 2008, and have issued our reports thereon
dated March 9, 2009 (which report on the Company’s consolidated financial
statements expresses an unqualified opinion and includes an explanatory
paragraph concerning the adoption of Statement of Financial Accounting Standards
No. 158, “Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans” on December 31, 2006); such reports are incorporated by
reference elsewhere in this Form 10-K. Our audits also included the
consolidated financial statement schedule of the Company listed in Item
15. The consolidated financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion
based on our audits. In our opinion, this consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/
Deloitte and Touche, LLP
Milwaukee,
Wisconsin
March 9,
2009
-14-
EXHIBIT
INDEX
|
Exhibit
|
Description
|
Incorporated Herein
By Reference To
|
Filed
Herewith
|
|||
|
3.1
|
Articles
of Incorporation as Restated August 29, 1961, and Last Amended February
16, 2005
|
Exhibit
3.1 to Form 10-K for Year Ended December 31,
2004
|
||||
|
3.2
|
Bylaws
as Revised January 21, 1991 and Last Amended July 26, 2007
|
Exhibit
3 to Form 8-K Dated July 26, 2007
|
||||
|
10.1
|
Subscription
Agreement relating to Florsheim Australia Pty Ltd, dated January 23, 2009
by and among Florsheim Australia Pty Ltd, Seraneuse Pty Ltd as trustee for
the Byblose Trust, Weyco Group, Inc. and David Mayne
Venner
|
X
|
||||
|
10.2
|
Shareholders
Agreement relating to Florsheim Australia Pty Ltd, dated January 23, 2009
by and among Florsheim Australia Pty Ltd, Seraneuse Pty Ltd as trustee for
the Byblose Trust, Weyco Group, Inc, and David Mayne
Venner
|
X
|
||||
|
10.3
|
Loan
Agreement dated January 23, 2009 between Weyco Investments, Inc. and
Florsheim Australia Pty Ltd.
|
X
|
||||
|
10.4
|
Fixed and Floating
Charge Agreement Between
Weyco Investments, Inc. and
Florsheim Australia Pty Ltd.
|
X
|
||||
|
10.5*
|
Consulting
Agreement - Thomas W. Florsheim, dated December 28, 2000
|
Exhibit
10.1 to Form 10-K for Year Ended December 31,
2001
|
||||
|
10.6*
|
Employment
Agreement - Thomas W. Florsheim, Jr., dated January 1,
2008
|
Exhibit
10.2 to Form 10-K for Year Ended December 31, 2007
|
||||
|
10.7*
|
Employment
Agreement - John W. Florsheim, dated January 1,
2008
|
Exhibit
10.3 to Form 10-K for Year Ended December 31, 2007
|
||||
-15-
EXHIBIT INDEX
(cont.)
|
Exhibit
|
Description
|
Incorporated Herein
By Reference To
|
Filed
Herewith
|
|||
|
10.8*
|
Excess
Benefits Plan - Amended Effective as of July 1,
2004
|
Exhibit
10.6 to Form 10-K for Year Ended December 31,
2005
|
||||
|
10.9*
|
Pension
Plan - Amended and Restated Effective January 1, 2006
|
Exhibit
10.7 to Form 10-K for Year Ended December 31, 2006
|
||||
|
10.10*
|
Deferred
Compensation Plan – Amended Effective as of July 1, 2004
|
Exhibit
10.8 to Form 10-K for Year Ended December 31,
2005
|
||||
|
10.11
|
Loan
agreement between Weyco Group, Inc. and M&I Marshall & Ilsley Bank
dated April 28, 2006
|
Exhibit
10.9 to Form 10-Q for the Quarter Ended June 30, 2008
|
||||
|
10.12
|
Amendment
to loan agreement dated April 26, 2006 which extends the revolving loan
maturity date to April 30, 2009
|
Exhibit
10.9a to Form 10-Q for the Quarter Ended June 30, 2008
|
||||
|
10.13*
|
1997
Stock Option Plan
|
Exhibit
10.13 to Form 10-K for Year Ended December 31, 1997
|
||||
|
10.14*
|
Change
of Control Agreement John Wittkowske, dated January 26, 1998 and restated
December 22, 2008
|
X
|
||||
|
10.15*
|
Change
of Control Agreement Peter S. Grossman, dated January 26, 1998 and
restated December 22, 2008
|
X
|
||||
|
10.16*
|
Weyco
Group, Inc. Director Nonqualified Stock Option Agreement Robert Feitler,
dated May 19, 2003
|
Exhibit
10.19 to Form 10-K for Year Ended December 31,
2004
|
||||
|
10.17*
|
Weyco
Group, Inc. Director Nonqualified Stock Option Agreement Thomas W.
Florsheim, Sr., dated May 19, 2003
|
Exhibit
10.20 to Form 10-K for Year Ended December 31,
2004
|
-16-
EXHIBIT INDEX
(cont.)
|
Exhibit
|
Description
|
Incorporated Herein
By Reference To
|
Filed
Herewith
|
|||
|
10.18*
|
Weyco
Group, Inc. Director Nonqualified Stock Option Agreement Frederick P.
Stratton, Jr., dated May 19, 2003
|
Exhibit
10.22 to Form 10-K for Year Ended December 31, 2004
|
||||
|
10.19*
|
Weyco
Group, Inc. 2005 Equity Incentive Plan
|
Appendix
C to the Registant’s Proxy Statement Schedule 14A for the Annual Meeting
of Shareholders held on April 26, 2005
|
||||
|
13
|
Annual
Report to Shareholders
|
X
|
||||
|
21
|
Subsidiaries
of the Registrant
|
X
|
||||
|
23.1
|
Independent
Registered Public Accounting Firm’s Consent Dated March 9,
2009
|
X
|
||||
|
31.1
|
Certification
of Principal Executive Officer
|
X
|
||||
|
31.2
|
Certification
of Principal Financial Officer
|
X
|
||||
|
32.1
|
Section 906
Certification of Chief Executive
Officer
|
X
|
||||
|
32.2
|
Section 906
Certification of Chief Financial
Officer
|
|
X
|
*Management
contract or compensatory plan or arrangement
-17-
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WEYCO
GROUP, INC.
(Registrant)
|
By
|
/s/ John F. Wittkowske
|
March 12,
2009
|
|
|
John
F. Wittkowske, Senior Vice President, Chief Financial Officer and
Secretary
|
|||
______________
Power of
Attorney
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Thomas W. Florsheim, Jr., John W. Florsheim, and John
F. Wittkowske, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this report, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitutes, may
lawfully do or cause to be done by virtue thereof.
______
_______
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
|
Signatures
and Titles
|
Date
|
|
|
/s/ Thomas W. Florsheim
|
March 12, 2009
|
|
|
Thomas
W. Florsheim, Chairman Emeritus
|
||
|
/s/ Thomas W. Florsheim,
Jr.
|
March 12, 2009
|
|
|
Thomas
W. Florsheim, Jr., Chairman of the Board
|
||
|
and
Chief Executive Officer (Principal Executive Officer)
|
||
|
/s/ John W. Florsheim
|
March 12, 2009
|
|
|
John
W. Florsheim, President and Chief
|
||
|
Operating
Officer, Assistant Secretary and Director
|
||
|
/s/ John F. Wittkowske
|
March 12, 2009
|
|
|
John
F. Wittkowske, Senior Vice President, Chief
|
||
|
Financial
Officer and Secretary
|
||
|
(Principal Financial Officer)
|
||
|
/s/ Tina Chang
|
March 12, 2009
|
|
|
Tina
Chang, Director
|
||
|
/s/ Robert Feitler
|
March 12, 2009
|
|
|
Robert
Feitler, Director
|
||
|
/s/ Cory L. Nettles
|
March 12, 2009
|
|
|
Cory
L. Nettles, Director
|
||
|
/s/ Frederick P. Stratton,
Jr.
|
March 12, 2009
|
|
|
Frederick
P. Stratton, Jr., Director
|
-18-