FORM 10-Q SECURITIES & EXCHANGE COMMISSION Washington, D. C. 20549
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2006
Or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the 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, Wisconsin
53201
(Address of principal executive offices)
(Zip Code)
(414) 908-1600
(Registrant’s telephone number, including area code)
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 o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-Accelerated Filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o
No x
As of October 31, 2006 the following shares were outstanding:
Common Stock, $1.00 par value
9,089,706
Shares
Class B Common Stock, $1.00 par value
2,586,887
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s latest annual report on Form 10-K.
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
September 30, 2006
December 31, 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
5,299,953
22,780,913
Marketable securities, at amortized cost
815,030
875,317
Accounts receivable, net
34,985,077
27,843,048
Inventories
47,039,922
38,548,602
Deferred income tax benefits
1,661,788
1,174,235
Prepaid expenses and other current assets
819,341
1,424,858
Total current assets
90,621,111
92,646,973
MARKETABLE SECURITIES, at amortized cost
41,996,669
30,290,089
OTHER ASSETS
15,062,053
14,252,604
PLANT AND EQUIPMENT
44,578,858
42,283,678
Less – Accumulated depreciation
16,481,462
14,842,916
28,097,396
27,440,762
TRADEMARK
10,867,969
186,645,198
175,498,397
LIABILITIES & SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Short-term borrowings
11,602,566
9,552,504
Accounts payable
8,288,311
12,222,907
Dividend payable
1,052,693
810,241
Accrued liabilities
7,482,685
6,106,107
Accrued income taxes
570,445
1,221,423
Total current liabilities
28,996,700
29,913,182
LONG-TERM PENSION LIABILITY
3,850,063
3,672,312
DEFERRED INCOME TAX LIABILITIES
5,980,146
5,344,702
SHAREHOLDERS’ INVESTMENT:
Common stock
9,088,312
8,979,243
Class B common stock
2,588,281
2,595,031
Capital in excess of par value
6,213,679
3,437,697
Reinvested earnings
129,570,619
121,334,722
Accumulated other comprehensive income
357,398
221,508
Total shareholders’ investment
147,818,289
136,568,201
The accompanying notes to consolidated condensed financial statements are an integral part of these financial statements.
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CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS FOR THE PERIODS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)
Three Months ended September 30,
Nine Months ended September 30,
2006
2005
NET SALES
56,084,718
55,218,588
160,484,367
157,795,446
COST OF SALES
35,484,325
35,607,712
101,391,210
101,607,480
Gross earnings
20,600,393
19,610,876
59,093,157
56,187,966
SELLING AND ADMINISTRATIVE EXPENSES
12,744,934
11,959,191
37,547,263
35,524,839
Earnings from operations
7,855,459
7,651,685
21,545,894
20,663,127
INTEREST INCOME
488,670
298,428
1,468,378
710,964
INTEREST EXPENSE
(145,271
)
(87,051
(442,565
(237,018
OTHER INCOME (EXPENSE), net
(5,720
4,260
(2,248
(25,788
Earnings before provision for income taxes
8,193,138
7,867,322
22,569,459
21,111,285
PROVISION FOR INCOME TAXES
3,025,000
3,045,000
8,450,000
8,060,000
Net earnings
5,168,138
4,822,322
14,119,459
13,051,285
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic
11,675,238
11,575,788
11,621,084
11,555,307
Diluted
12,098,045
11,992,330
12,031,126
11,973,913
EARNINGS PER SHARE
.44
.42
1.21
1.13
.43
.40
1.17
1.09
CASH DIVIDENDS PER SHARE
.09
.07
.25
.195
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net earnings to net cash provided by operating activities –
Depreciation
1,604,725
1,693,347
Amortization
54,613
35,566
Deferred income taxes
147,891
507,444
Pension contribution
(1,000,000
—
Pension expense
894,753
663,453
Gain (loss) on sale of assets
13
(1,642
Increase in cash surrender value of life insurance
(376,605
(333,000
Changes in operating assets and liabilities -
Accounts receivable
(7,142,029
(6,416,573
(8,491,320
11,021,966
Prepaids and other current assets
617,670
807,958
(3,934,596
2,315,548
Accrued liabilities and other
1,333,778
(2,406,293
(650,978
753,994
Net cash (used for) provided by operating activities
(2,822,626
21,693,053
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities
(17,813,020
(17,615,427
Proceeds from maturities of marketable securities
6,112,114
3,029,703
Purchase of plant and equipment
(2,245,677
(1,086,860
Proceeds from sales of plant and equipment
996
4,587
Net cash used for investing activities
(13,945,587
(15,667,997
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid
(2,665,206
(2,074,017
Shares purchased and retired
(3,124,644
(1,423,656
Proceeds from stock options exercised
1,828,579
1,722,494
Net draws (repayments) under revolving credit agreement
2,050,062
(1,875,404
Income tax benefit from the exercise of stock options
1,198,462
Net cash used for financing activities
(712,747
(3,650,583
Net (decrease) increase in cash and cash equivalents
(17,480,960
2,374,473
CASH AND CASH EQUIVALENTS at beginning of period
10,514,707
CASH AND CASH EQUIVALENTS at end of period
12,889,180
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds
7,638,064
6,848,616
Interest paid
443,781
232,071
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NOTES:
1.
Financial Statements
In the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial information have been made. The results of operations for the three months or nine months ended September 30, 2006, are not necessarily indicative of results for the full year.
2.
Earnings Per Share
The following table sets forth the computation of earnings per share and diluted earnings per share:
Three Months Ended September 30,
Nine Months Ended September 30,
Numerator:
Net Earnings
Denominator:
Basic weighted average shares
Effect of dilutive securities:
Employee stock options
422,807
416,542
410,042
418,606
Diluted weighted average shares
Basic earnings per share
Diluted earnings per share
Diluted weighted average shares outstanding for the quarter and nine months ended September 30, 2006 and 2005 included all outstanding options, as none were antidilutive.
3.
Employee Retirement Plans
The components of the Company’s net periodic pension cost were:
Benefits earned during the period
216,000
195,000
648,000
587,000
Interest cost on projected benefit obligation
425,000
396,000
1,277,000
1,188,000
Expected return on plan assets
(478,000
(1,434,000
Net amortization and deferral
135,000
107,000
404,000
322,000
Net pension expense
298,000
220,000
895,000
663,000
On September 6, 2006, the Company contributed $1 million to its defined benefit pension plan.
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4.
Segment Information
The Company continues to operate in two operating segments: wholesale distribution and retail sales of men’s footwear, which also constitute its reportable segments. None of the Company’s operating segments were aggregated in determining the Company’s reportable segments. The chief operating decision maker, the Company’s Chief Executive Officer, evaluates the performance of its segments based on earnings from operations and accordingly, interest income, interest expense and other income or expense are not allocated to the segments. Summarized segment data for the three and nine months ended September 30, 2006 and 2005 was:
Wholesale Distribution
Retail
Total
Three Months Ended September 30
Product sales
48,472,000
6,697,000
55,169,000
Licensing revenues
916,000
Net sales
49,388,000
56,085,000
7,086,000
769,000
7,855,000
48,264,000
6,036,000
54,300,000
919,000
49,183,000
55,219,000
6,823,000
829,000
7,652,000
Nine Months Ended September 30
137,143,000
20,416,000
157,559,000
2,925,000
140,068,000
160,484,000
18,763,000
2,783,000
21,546,000
135,376,000
19,316,000
154,692,000
3,103,000
138,479,000
157,795,000
17,503,000
3,160,000
20,663,000
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5.
Stock-Based Compensation Plans
Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R), “Share-Based Payment,” (SFAS 123(R)) using the modified prospective method. This method requires that companies recognize compensation expense for new grants and the unvested portion of prior grants at their fair value on the grant date and recognize this expense over the requisite service period for awards expected to vest. The results for prior year periods have not been restated. No stock-based employee compensation expense has been charged against income in the nine month period ended September 30, 2006, as there were no stock options granted during this period, and all of the Company’s stock options granted prior to the effective date were 100% vested at the effective date. The Company’s policy is to estimate the fair market value of each option granted on the date of grant using the Black-Scholes option pricing model and record the compensation expense on a straight-line basis over the vesting period. The Company issues new common stock to satisfy stock option exercises.
The following table illustrates the effect on quarterly net earnings per share for the three and nine month periods ended September 30, 2005, as if the fair value based method of SFAS No. 123, “Accounting for Stock-Based Compensation,” had been applied for all outstanding unvested awards for periods prior to the adoption of SFAS 123(R):
Three Months ended September 30, 2005
Nine Months ended September 30, 2005
Net earnings, as reported
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects
269,853
453,890
Pro forma net income
4,552,469
12,597,395
Earnings per share
Basic - as reported
Basic - pro forma.
.39
Diluted - as reported
Diluted - pro forma
.38
1.05
At September 30, 2006, the Company had two stock option plans: the 1997 Stock Option Plan and the 2005 Equity Incentive Plan. Under the plans, options to purchase common stock were granted to officers and key employees at prices not less than the fair market value of the common stock on the date of the grant. Most options expire ten years from the grant date, with the exception of certain incentive stock options, which expire five years from the grant date. As of September 30, 2006, there were 798,750 shares remaining available for stock option grants under the 2005 Equity Incentive Plan.
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The following table summarizes the stock option activity under the Company’s plans for the nine-month period ended September 30, 2006:
Weighted Average Exercise Price
Wtd. Average Remaining Contractual Term (Years)
AggregateIntrinsicValue
Outstanding at December 31, 2005
1,537,048
11.44
Exercised
(251,058
7.28
Outstanding at September 30, 2006
1,285,990
12.25
5.27
13,008,136
All of the outstanding stock options at September 30, 2006 were exercisable.
The following table summarizes stock option activity for the three- and nine-month periods ended September 30, 2006 and 2005:
Total intrinsic value of stock options exercised
875,935
318,460
3,072,980
1,965,258
Cash received from stock option exercises
633,090
419,245
341,614
127,384
786,103
Total fair value of stock options vested
441,780
744,098
6.
Comprehensive Income
Comprehensive income for the three- and nine-months ended September 30, 2006 and 2005 was as follows:
Foreign currency translation adjustments
31,664
54,090
135,890
(162,384
Total comprehensive income
5,199,802
4,876,412
14,255,349
12,888,901
The components of Accumulated Other Comprehensive Income as recorded on the accompanying balance sheets were as follows:
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7.
New Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (FIN 48). This Interpretation clarifies the accounting and disclosures for uncertainty in tax positions. FIN 48 provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 will be effective for the Company January 1, 2007. The Company is currently evaluating the impact of adopting FIN 48 on its financial statements.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post Retirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132 (R)”. SFAS No. 158 requires recognition of the over funded or under funded status of a defined benefit pension plan as an asset or a liability on the balance sheet and recognition of the changes in that funded status in the year in which changes occur through comprehensive income. SFAS No. 158 also requires an employer to measure the funded status of a plan as of the date of its year end balance sheet. Our use of a year end measurement date for all pension plans will not change. SFAS No. 158 is effective for financial statements issued for fiscal years ending after December 15, 2006. The Company is currently assessing the impact SFAS No. 158 will have on its consolidated financial statements upon adoption of the statement on December 31, 2006.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” to define fair value, establish a framework for measuring fair value in accordance with generally accepted accounting principles, and expand disclosures about fair value measurements. SFAS No. 157 will be effective for fiscal years ended after November 14, 2007, the Company’s 2008 fiscal year. The Company is assessing the impact the adoption of SFAS No. 157 will have on its consolidated financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
The Company is a distributor of men’s casual, dress and fashion shoes under the Florsheim, Nunn Bush, Nunn Bush NXXT, Brass Boot, Stacy Adams and SAO by Stacy Adams brand names. Inventory is purchased from third party overseas manufacturers. The majority of foreign-sourced purchases are denominated in U.S. dollars. The Company’s products are sold to shoe specialty stores, department stores and clothing retailers primarily in North America, with some distribution in Europe. The Company also has a retail division, which as of September 30, 2006, consisted of 34 Company-owned retail stores in the United States, four in Europe and an Internet business. Sales in retail outlets are made directly to consumers by Company employees. The Company also has licensing agreements with third parties who sell its branded shoes overseas, as well as licensing agreements with apparel and accessory manufacturers in the United States. As such, the Company’s results are primarily impacted by the economic conditions and the retail environment in the United States.
Overall, net earnings in the third quarter of 2006 were $5.2 million, or $.43 per diluted share compared with $4.8 million, or $.40 per diluted share in the same period of 2005. For the nine months ended September 30, 2006, net earnings were $14.1 million, or $1.17 per diluted share compared with $13.1 million, or $1.09 per diluted share in 2005. A detailed analysis of operating results follows.
RESULTS OF OPERATIONS
Consolidated net sales in the third quarter of 2006 were $56.1 million, up from $55.2 million in the prior year. For the nine months ended September 30, 2006, consolidated net sales increased to $160.5 million from $157.8 million in 2005. Sales in the Company’s wholesale division for the three- and nine-month periods ended September 30, 2006 and 2005 were as follows:
Wholesale Division Sales
% change
Stacy Adams
14,507,809
13,988,398
3.7
%
42,410,963
41,466,069
2.3
Nunn Bush
17,303,367
18,807,589
-8.0
50,423,995
52,442,425
-3.8
Florsheim
15,272,440
14,262,812
7.1
40,562,138
38,239,495
6.1
Foreign
1,387,974
1,205,188
15.2
3,746,322
3,227,729
16.1
Total Wholesale
48,471,590
48,263,987
0.4
137,143,418
135,375,718
1.3
Licensing
916,198
919,022
-0.3
2,925,071
3,103,389
-5.7
Total Wholesale Division
49,387,788
49,183,009
140,068,489
138,479,107
1.1
-9-
The acquisition of one of the Company’s significant customers by another retailer in 2005 resulted in some loss of sales volume at Nunn Bush and Florsheim in 2006. The acquiring company decided not to go forward with either the Nunn Bush or Florsheim product lines in its stores. Sales to this customer were down $3.1 million and $6.1 million for the current quarter and nine months, respectively. Total sales to this customer in 2005 were approximately $12 million. The Company expects to lose a total of approximately $9.2 million in sales volume during 2006 due to the loss of this customer.
The sales increase at Stacy Adams was attributable to growth in several categories of footwear within the brand, including high fashion, contemporary and casual styles. Quarterly and year-to-date sales in the Stacy Adams division were somewhat offset by a decline in sales of the SAO sub-brand this year.
Quarterly sales in the Nunn Bush division were down this year compared with last year due to $1.8 million of lost sales to the customer discussed above. Sales to this customer were down $3.7 million for the nine-month period ended September 30, 2006. For both the quarter and year-to-date, some of the lost business has been made up with other accounts.
In the current quarter, Florsheim sales were up 7.1%, despite the loss of $1.3 million in sales to the major customer (discussed above). Florsheim sales for the first nine months of 2006 were up 6.1% compared with last year, despite the loss of approximately $2.4 million in sales from the major customer and the loss of approximately $2.1 million in sales of the FLS sub-brand following the Company’s decision last year to discontinue FLS in the United States. Management believes this growth, despite the volume loss, reflects the positive reaction to the brand’s evolution this year to more casual and contemporary styles in the line. In total, the discontinuation of FLS will cost the Company approximately $2.5 million in sales volume during 2006 compared with 2005.
Retail net sales in the current quarter were up approximately 11% to $6.7 million from $6.0 million in the prior year. Year-to-date sales in the retail division increased to $20.4 million this year from $19.3 million last year. The quarter and year-to-date increases were primarily attributable to five additional stores at September 30, 2006 compared with September 30, 2005. Same store sales in the three- and nine-month periods ended September 30, 2006 were up 6% and 2%, respectively, compared with the same periods in the prior year. The Company continues to evaluate new store locations in the United States.
Overall gross earnings as a percent of net sales for the three months ended September 30, 2006 was 36.7% compared with 35.5% in the prior year period. Wholesale gross earnings as a percent of net sales for the quarter was 31.6% in 2006, up from 30.5% in 2005. Gross earnings as a percent of net sales in the retail division was 65.1% in the third quarter of 2006 compared with 65.5% in 2005.
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Overall gross earnings as a percent of net sales for the nine months ended September 30, 2006 was 36.8% compared with 35.6% in 2005. Wholesale gross earnings as a percent of net sales for the nine months ended September 30 was 31.2% in 2006 and 30.0% in 2005. Retail gross earnings as a percent of net sales for the first nine months of this year was 65.4% and 64.7% last year. The increase in wholesale margins for the three and nine months ended September 30, 2006 was primarily the result of higher margins on new footwear, favorable purchase prices on selected product from our manufacturers, and the impact of fewer closeout sales this season.
The Company’s cost of sales does not include distribution costs (e.g., receiving, inspection or warehousing costs). Distribution costs for the three-month periods ended September 30, 2006 and 2005, were $1,596,000 and $1,498,000, respectively. The Company’s distribution costs to date in 2006 and 2005 were $4,769,000 and $4,561,000, respectively. The Company includes these costs in selling and administrative expenses. Therefore, the Company’s gross earnings may not be comparable to other companies, as some companies may include distribution costs in cost of sales.
The Company’s selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs, rent and depreciation. In the current quarter, selling and administrative expenses as a percent of net sales were 22.7% versus 21.7% in 2005. Wholesale selling and administrative expenses as a percent of net wholesale sales were 18.9% in 2006 and 18.3% in 2005. Retail selling and administrative expenses as a percent of net sales were 53.6% in 2006 and 51.7% in 2005.
For the nine months ended September 30, selling and administrative expenses as a percent of net sales were 23.4% in 2006 versus 22.5% in 2005. Wholesale selling and administrative expenses as a percent of net wholesale sales to date were 19.7% in 2006 and 19.3% in 2005. Retail selling and administrative expenses as a percent of net sales increased to 51.8% in 2006 from 48.3% in 2005. The increase in retail expenses as a percent of sales for both the third quarter and first nine months of 2006 was due to higher expenses in relation to sales in the new stores, as well as increased costs associated with lease renewals at some existing stores.
Interest income in the third quarter and first nine months of 2006 was up over last year $190,000 and $757,000, respectively, due to higher interest earned on municipal bonds and cash. Interest expense in the three and nine months ended September 30, 2006 was up $58,000 and $206,000, respectively, over last year. The higher interest expense this year was due to higher interest rates on commercial paper in 2006 compared with 2005.
The effective tax rate for the quarter ended September 30, 2006 and 2005 was 36.9% and 38.7%, respectively. The effective tax rate for the nine months ended September 30, 2006 was 37.4% compared with 38.2% in the prior year. The lower rates in the current year resulted from the higher interest income earned on municipal bonds which is tax-exempt, lowering the Company’s effective tax rate.
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LIQUIDITY & CAPITAL RESOURCES
The Company’s primary source of liquidity is its cash and short-term marketable securities, which aggregated approximately $6.1 million at September 30, 2006 as compared with $23.7 million at December 31, 2005.
Net cash provided by operating activities to date in 2006 was $24.5 million lower than the same period in 2005 primarily due to the Company’s efforts in 2005 to reduce inventory levels which resulted in an unusually high amount of cash provided by operations in 2005. In 2006, the Company built up inventory levels to accommodate additional needs this year. The Company also contributed $1 million to its defined benefit pension plan in 2006.
Cash used for investing activities decreased $1.7 million, mainly due to lower net purchases of marketable securities to date this year, as compared with 2005.
Cash flows used for financing activities in 2006 decreased $2.9 million as compared with last year, primarily due to changes in net borrowings between periods.
As of September 30, 2006, the Company had a total of $50 million available under its borrowing facility, of which total borrowings were $11.6 million. The facility includes one financial covenant which specifies a minimum level of net worth. The Company was in compliance with the covenant at September 30, 2006. The facility has a 364-day term and expires April 30, 2007.
The Company will continue to evaluate the best uses for its free cash, including continued increased dividends, stock repurchases and acquisitions. The Company currently has 1.4 million shares available under its previously announced buyback program.
The Company believes that available cash and marketable securities, cash provided by operations, and available borrowing facilities will provide adequate support for the cash needs of the business in 2006.
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FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements with respect to the Company’s outlook for the future. These statements represent the Company’s reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. These factors could include significant adverse changes in the economic conditions affecting overseas suppliers or the men’s footwear markets served by the Company, as well as changes in interest rates, discount rates, or currency exchange rates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.
Item 4. 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 Chief Executive Officer and Chief 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 material information relating to the Company required to be included in the Company’s periodic filings under the Exchange Act. Such officers have also concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in accumulating and communicating information in a timely manner allowing timely decisions regarding required disclosures.
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.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
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 since the program began. The table below presents information pursuant to Item 703(a) of Regulation S-K regarding the repurchase of the Company’s Common Stock by the Company in the three-month period ended September 30, 2006.
Period
Total Number of Shares Purchased
Average Price Paid Per Share
Total Number of Shares Purchased as Part of the Publicly Announced Program
Maximum Number of Shares that May Yet Be Purchased Under the Program
07/01/06 - 07/31/06
2,850
23.26
1,436,236
08/01/06 - 08/31/06
12,289
20.61
1,426,947
09/01/06 - 09/30/06
43,350
21.44
1,380,597
58,489
21.36
Item 6. Exhibits
See the Exhibit Index included herewith for a listing of exhibits.
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SIGNATURES
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 thereunto duly authorized.
Date November 2, 2006
/s/ John F. Wittkowske
John F. Wittkowske
Senior Vice President and
Chief Financial Officer
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WEYCO GROUP, INC. (THE “REGISTRANT”) (COMMISSION FILE NO. 0-9068)
EXHIBIT INDEX TO CURRENT REPORT ON FORM 10-Q DATE OF SEPTEMBER 30, 2006
EXHIBIT NUMBER
DESCRIPTION
INCORPORATED HEREIN BY REFERENCE TO
FILED HEREWITH
31.1
Certification of Chief Executive Officer
31.2
Certification of Chief Financial Officer
32.1
Section 906 Certification of Chief Executive Officer
32.2
Section 906 Certification of Chief Financial Officer
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