Company Quick10K Filing
Weyco Group
Price22.69 EPS1
Shares10 P/E19
MCap227 P/FCF-55
Net Debt-9 EBIT18
TEV218 TEV/EBIT12
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-10
10-K 2020-12-31 Filed 2021-03-12
10-Q 2020-09-30 Filed 2020-11-09
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10-K 2019-12-31 Filed 2020-03-12
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-14
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-03-13
10-Q 2017-09-30 Filed 2017-11-06
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10-K 2016-12-31 Filed 2017-03-09
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-05
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-03-10
10-Q 2015-09-30 Filed 2015-11-05
10-Q 2015-06-30 Filed 2015-08-06
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10-K 2014-12-31 Filed 2015-03-11
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-07
10-Q 2014-03-31 Filed 2014-05-08
10-K 2013-12-31 Filed 2014-03-12
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-09
10-K 2012-12-31 Filed 2013-03-14
10-Q 2012-09-30 Filed 2012-11-07
10-Q 2012-06-30 Filed 2012-08-09
10-Q 2012-03-31 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-03-13
8-K 2020-11-03
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8-K 2020-08-04
8-K 2020-05-15
8-K 2020-05-05
8-K 2020-05-05
8-K 2020-03-10
8-K 2019-11-05
8-K 2019-08-06
8-K 2019-05-07
8-K 2019-05-07
8-K 2019-03-05
8-K 2018-11-06
8-K 2018-08-07
8-K 2018-05-08
8-K 2018-05-04
8-K 2018-03-06

WEYS 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 weys-20210331xex31d1.htm
EX-31.2 weys-20210331xex31d2.htm
EX-32 weys-20210331xex32.htm

Weyco Group Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
3052441831226102012201420172020
Assets, Equity
1008060402002012201420172020
Rev, G Profit, Net Income
25167-2-11-202012201420172020
Ops, Inv, Fin

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

Or

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: 000-09068

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock - $1.00 par value per share

WEYS

The Nasdaq Stock Market

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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

As of April 23, 2021, there were 9,735,467 shares of common stock outstanding.

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

The following consolidated condensed balance sheet as of December 31, 2020, which has been derived from audited financial statements, and the unaudited interim consolidated condensed financial statements have been prepared by Weyco Group, Inc. (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. It is suggested that these consolidated condensed 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.

1

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

March 31, 

December 31, 

    

2021

    

2020

(Dollars in thousands)

ASSETS:

 

  

 

  

Cash and cash equivalents

$

24,860

$

32,476

Investments, at fair value

20,011

Marketable securities, at amortized cost

 

1,483

 

2,215

Accounts receivable, net

32,317

34,631

Income tax receivable

853

1,374

Inventories

 

47,340

 

59,025

Prepaid expenses and other current assets

 

3,951

 

4,610

Total current assets

 

130,815

 

134,331

Marketable securities, at amortized cost

 

11,804

 

12,800

Deferred income tax benefits

 

1,218

 

1,235

Property, plant and equipment, net

 

30,196

 

30,759

Operating lease right-of-use assets

10,538

9,613

Goodwill

 

11,112

 

11,112

Trademarks

 

32,868

 

32,868

Other assets

 

24,164

 

24,001

Total assets

$

252,715

$

256,719

LIABILITIES AND EQUITY:

 

  

 

  

Accounts payable

$

6,605

$

8,444

Operating lease liabilities

4,048

4,245

Accrued liabilities

 

10,640

 

11,656

Total current liabilities

 

21,293

 

24,345

Deferred income tax liabilities

 

3,001

 

2,914

Long-term pension liability

 

33,191

 

33,534

Operating lease liabilities

8,565

7,734

Other long-term liabilities

 

245

 

267

Total liabilities

 

66,295

 

68,794

Common stock

9,735

9,797

Capital in excess of par value

 

67,723

 

67,178

Reinvested earnings

 

136,927

 

138,955

Accumulated other comprehensive loss

 

(27,965)

 

(28,005)

Total equity

 

186,420

 

187,925

Total liabilities and equity

$

252,715

$

256,719

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

2

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)

Three Months EndedMarch 31, 

    

2021

    

2020

(In thousands, except per share amounts)

Net sales

$

46,900

$

63,584

Cost of sales

27,595

 

40,407

Gross earnings

 

19,305

 

23,177

 

 

Selling and administrative expenses

 

17,671

 

21,836

Earnings from operations

 

1,634

 

1,341

 

 

Interest income

 

131

 

149

Interest expense

 

(7)

 

(51)

Other income, net

 

138

 

407

 

 

Earnings before provision for income taxes

 

1,896

 

1,846

 

 

Provision for income taxes

 

571

 

684

 

 

Net earnings

1,325

1,162

 

  

 

  

Weighted average shares outstanding

 

  

 

  

Basic

 

9,680

 

9,781

Diluted

 

9,686

 

9,786

 

 

Earnings per share

 

 

Basic

$

0.14

$

0.12

Diluted

$

0.14

$

0.12

 

 

Cash dividends declared (per share)

$

0.24

$

0.24

 

 

Comprehensive income (loss)

$

1,365

$

(1,258)

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

3

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 

    

2021

    

2020

(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net earnings

$

1,325

$

1,162

Adjustments to reconcile net earnings to net cash provided by operating activities -

 

  

 

  

Depreciation

 

623

 

733

Amortization

 

82

 

71

Bad debt expense

 

17

 

145

Deferred income taxes

 

39

 

360

Net foreign currency transaction gains

 

(115)

 

(356)

Share-based compensation expense

 

545

 

351

Pension expense

 

 

111

Increase in cash surrender value of life insurance

 

(150)

 

(135)

Changes in operating assets and liabilities -

 

  

 

  

Accounts receivable

 

2,273

 

4,878

Inventories

 

11,700

 

18,704

Prepaid expenses and other assets

 

572

 

2,176

Accounts payable

 

(1,839)

 

(8,477)

Accrued liabilities and other

 

(1,425)

 

(5,410)

Accrued income taxes

 

522

 

680

Net cash provided by operating activities

 

14,169

 

14,993

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Proceeds from maturities of marketable securities

 

1,720

 

4,510

Purchases of investment securities

 

(20,011)

 

Purchases of property, plant and equipment

 

(73)

 

(1,797)

Net cash (used for) provided by investing activities

 

(18,364)

 

2,713

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Cash dividends paid

 

(2,319)

 

(4,694)

Shares purchased and retired

 

(1,079)

 

(1,304)

Proceeds from bank borrowings

 

 

11,883

Repayments of bank borrowings

 

 

(18,932)

Net cash used for financing activities

 

(3,398)

 

(13,047)

Effect of exchange rate changes on cash and cash equivalents

 

(23)

 

(277)

Net (decrease) increase in cash and cash equivalents

$

(7,616)

$

4,382

CASH AND CASH EQUIVALENTS at beginning of period

 

32,476

9,799

CASH AND CASH EQUIVALENTS at end of period

$

24,860

$

14,181

SUPPLEMENTAL CASH FLOW INFORMATION:

 

  

 

  

Income taxes paid, net of refunds

$

24

$

235

Interest paid

$

7

$

51

The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.

4

NOTES:

1.    Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three-month period ended March 31, 2021, may not necessarily be indicative of the results for the full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results specifically related to inventory reserves, realizability of deferred tax assets, goodwill and trademarks could materially differ from those estimates that impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.

2.    New Accounting Pronouncements

Recently Adopted

On January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of Accounting Standards Codification (“ASC”) Topic 740, Income Taxes. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provided optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurements of Credit Losses on Financial Instruments.  This ASU modifies the measurement of expected credit losses of certain financial instruments, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. This ASU will be effective for the Company in the first quarter of 2023. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

5

3.    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

Three Months EndedMarch 31, 

    

2021

    

2020

(In thousands, except per share amounts)

Numerator:

 

  

 

  

Net earnings

$

1,325

$

1,162

 

 

Denominator:

 

 

Basic weighted average shares outstanding

 

9,680

 

9,781

Effect of dilutive securities:

 

 

Employee share-based awards

 

6

 

5

Diluted weighted average shares outstanding

 

9,686

 

9,786

 

 

Basic earnings per share

$

0.14

$

0.12

 

 

Diluted earnings per share

$

0.14

$

0.12

Diluted weighted average shares outstanding for the three months ended March 31, 2021, excludes anti-dilutive stock options totaling 1,160,000 shares of common stock at a weighted average price of $24.86. Diluted weighted average shares outstanding for the three months ended March 31, 2020, excludes anti-dilutive stock options totaling 1,190,000 shares of common stock at a weighted average price of $26.74.

4.    Investments

Investments, at fair value

During the first quarter of 2021, the Company invested $20.0 million of cash in highly liquid taxable bond funds. The Company classifies these investments as trading securities and reports them at fair value. There were no significant unrealized gains or losses on these investments in the first quarter of 2021. The fair value measurements of these investments are based on quoted market prices in active markets, and thus represent a level 1 valuation as defined by ASC 820.

Marketable securities, at amortized cost

The Company also invests in marketable securities. As noted in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, all of the Company’s marketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to ASC Topic 320, Investments – Debt and Equity Securities, as the Company has the intent and ability to hold all investments to maturity.

Below is a summary of the amortized cost and estimated market values of the Company’s marketable securities as of March 31, 2021, and December 31, 2020.

March 31, 2021

December 31, 2020

Amortized

Market

Amortized

Market

    

Cost

    

Value

    

Cost

    

Value

(Dollars in thousands)

Municipal bonds:

 

  

 

  

 

  

 

  

Current

$

1,483

$

1,504

$

2,215

$

2,249

Due from one through five years

 

7,141

 

7,509

 

7,420

 

7,830

Due from six through ten years

 

2,349

 

2,777

 

3,057

 

3,608

Due from eleven through twenty years

 

2,314

 

2,504

 

2,323

 

2,547

Total

$

13,287

$

14,294

$

15,015

$

16,234

6

The unrealized gains and losses on marketable securities at March 31, 2021, and at December 31, 2020, were as follows:

March 31, 2021

December 31, 2020

    

Unrealized

    

Unrealized

    

Unrealized

    

Unrealized

    

Gains

    

Losses

    

Gains

    

Losses

(Dollars in thousands)

Municipal bonds

$

1,007

$

$

1,219

$

The estimated market values provided are level 2 valuations as defined by ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). The Company reviewed its portfolio of investments as of March 31, 2021, and determined that no other-than-temporary market value impairment exists.

5.    Intangible Assets

During the three months ended March 31, 2021, there were no changes in the carrying value of the Company’s indefinite-lived intangible assets (goodwill and trademarks). The Company’s amortizable intangible assets, which were included within other assets in the Consolidated Condensed Balance Sheets (unaudited), consisted of the following:

    

    

March 31, 2021

December 31, 2020

Weighted

Gross

Gross

Average

Carrying

Accumulated

Carrying

Accumulated

    

Life (Years)

    

Amount

    

Amortization

    

Net

    

Amount

    

Amortization

    

Net

(Dollars in thousands)

(Dollars in thousands)

Amortizable intangible assets

  

  

  

  

  

Customer relationships

 

15

$

3,500

(2,353)

$

1,147

$

3,500

(2,294)

$

1,206

Total amortizable intangible assets

$

3,500

(2,353)

$

1,147

$

3,500

(2,294)

$

1,206

Amortization expense related to the intangible assets was approximately $60,000 in both the first quarters of 2021 and 2020.

6.    Segment Information

The Company has two reportable segments: North American wholesale operations (“wholesale”) and North American retail operations (“retail”). The Company’s Chief Executive Officer evaluates the performance of the Company’s segments based on earnings (loss) from operations. Therefore, interest income or expense, other income or expense, and income taxes are not allocated to the segments. The “other” category in the table below includes the Company’s wholesale and retail operations in Australia, South Africa, Asia Pacific and Europe, which do not meet the criteria for separate reportable segment classification. Summarized segment data for the three months ended March 31, 2021 and 2020, was as follows:

Three Months Ended

March 31, 

    

Wholesale

    

Retail

    

Other

    

Total

(Dollars in thousands)

2021

 

  

 

  

 

  

 

Product sales

$

33,036

$

5,618

$

7,904

$

46,558

Licensing revenues

 

342

 

 

 

342

Net sales

$

33,378

$

5,618

$

7,904

$

46,900

Earnings (loss) from operations

$

1,359

$

756

$

(481)

$

1,634

 

 

 

 

2020

 

 

 

 

Product sales

$

52,228

$

4,761

$

6,134

$

63,123

Licensing revenues

 

461

 

 

 

461

Net sales

$

52,689

$

4,761

$

6,134

$

63,584

Earnings (loss) from operations

$

2,760

$

(89)

$

(1,330)

$

1,341

7

7.    Employee Retirement Plans

The components of the Company’s pension expense were as follows:

Three Months Ended March 31, 

    

2021

    

2020

(Dollars in thousands)

Service cost

$

102

$

115

Interest cost

 

371

 

500

Expected return on plan assets

 

(720)

 

(690)

Net amortization and deferral

 

247

186

Pension expense

$

$

111

The components of pension expense other than the service cost component were included in "other income, net" in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited).

8.    Leases

The Company leases retail shoe stores, as well as several office and distribution facilities worldwide. The leases have original lease periods expiring between 2021 and 2030.  Many leases include one or more options to renew. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement.  The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of the Company’s operating lease costs were as follows:

    

Three Months Ended March 31, 

    

2021

    

2020

(Dollars in thousands)

Operating lease costs

 

$

1,334

$

1,882

Variable lease costs (1)

20

10

Total lease costs

 

$

1,354

$

1,892

(1)    Variable lease costs primarily include percentage rentals based upon sales in excess of specified amounts.

Short-term lease costs, which were excluded from the above table, are not material to the Company’s financial statements.

The following is a schedule of maturities of operating lease liabilities as of March 31, 2021:

    

Operating Leases

(Dollars in thousands)

2021, excluding the quarter ended March 31, 2021

 

$

3,310

2022

 

 

3,587

2023

 

 

2,567

2024

 

 

1,784

2025

 

 

1,117

Thereafter

 

 

1,261

Total lease payments

 

 

13,626

Less imputed interest

 

 

(1,013)

Present value of lease liabilities

 

$

12,613

The operating lease liabilities are classified in the consolidated condensed balance sheets (unaudited) as follows:

    

March 31, 2021

    

December 31, 2020

(Dollars in thousands)

Operating lease liabilities - current

$

4,048

$

4,245

Operating lease liabilities - non-current

8,565

7,734

Total

$

12,613

$

11,979

8

The Company determined the present value of its lease liabilities using a weighted-average discount rate of 4.25%. As of March 31, 2021, the Company’s leases have a weighted-average remaining lease term of 3.6 years.

Supplemental cash flow information related to the Company’s operating leases is as follows:

Three Months Ended March 31,

    

2021

    

2020

(Dollars in thousands)

Cash paid for amounts included in the measurement of lease liabilities

$

1,387

$

1,978

Right-of-use assets obtained in exchange for new lease liabilities (noncash)

$

2,022

$

144

9. Income Taxes

The Company’s provision for income taxes and effective tax rates for the three months ended March 31, 2021 and 2020 are presented in the following table:

Three Months Ended March 31,

    

2021

    

2020

    

(Dollars in thousands)

Earnings before provision for income taxes

$

1,896

$

1,846

Income tax provision

$

571

$

684

Effective tax rate

30.1

%  

37.1

%

The Company’s first quarter 2021 and 2020 effective tax rates were negatively impacted because it did not record income tax benefits on foreign subsidiary losses in both periods.

10.  Share-Based Compensation Plans

During the three months ended March 31, 2021, the Company recognized $545,000 of compensation expense associated with stock option and restricted stock awards granted in years 2015 through 2020. During the three months ended March 31, 2020, the Company recognized $351,000 of compensation expense associated with stock option and restricted stock awards granted in years 2016 through 2019.

During the first quarter of 2021, the Company’s Board of Directors approved extending the expiration date of stock options granted in years 2015 and 2016. The original expiration date of the stock options granted in 2015 was August 25, 2021, and was extended by two years to August 25, 2023. The original expiration date of the stock options granted in 2016 was August 25, 2022, and was extended by one year to August 25, 2023. The Company recorded an additional $232,000 of compensation expense during the quarter due to the exercise periods of these options being extended.

The following table summarizes the Company’s stock option activity for the three-month period ended March 31, 2021:

Weighted

Weighted

Average

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

    

Shares

    

Price

    

Term (Years)

    

Value*

Outstanding at December 31, 2020

 

1,125,383

$

25.62

 

  

 

  

Granted

 

 

  

 

  

Exercised

 

 

  

 

  

Forfeited or expired

 

 

  

 

  

Outstanding at March 31, 2021

 

1,125,383

$

25.62

 

5.2

$

685,000

Exercisable at March 31, 2021

 

640,512

$

26.77

 

2.8

$

*     The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of the Company's stock on March 31, 2021 of $21.63 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

9

The following table summarizes the Company’s restricted stock award activity for the three-month period ended March 31, 2021:

Weighted

Weighted

Average

Shares of

Average

Remaining

Aggregate

Restricted

Grant Date

Contractual

Intrinsic

    

Stock

    

Fair Value

    

Term (Years)

    

Value*

Non-vested at December 31, 2020

 

72,490

$

23.77

 

  

 

  

Issued

 

 

  

 

  

Vested

 

(150)

 

28.77

 

  

 

  

Forfeited

 

 

 

  

 

  

Non-vested at March 31, 2021

 

72,340

$

23.76

 

2.5

$

1,565,000

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of the Company’s stock on March 31, 2021 of $21.63 multiplied by the number of non-vested restricted shares outstanding.

11.  Short-Term Borrowings

At March 31, 2021, the Company had a $30 million revolving line of credit with a bank that is secured by a lien against the Company’s general corporate assets. The line of credit bears interest at LIBOR plus 1.35% and expires on November 4, 2021. The related credit agreement contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At March 31, 2021, there were no amounts outstanding on the Company’s line of credit. There were also no amounts outstanding on the line of credit during the quarter.

12.  Financial Instruments

At March 31, 2021, the Company had foreign exchange contracts outstanding to sell $5.0 million Canadian dollars at a price of approximately $3.9 million U.S. dollars. The Company’s wholly owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $2.8 million U.S. dollars at a price of approximately $3.7 million Australian dollars. These contracts expire in 2021. Based on quarter-end exchange rates, there were no significant unrealized gains or losses on the outstanding contracts.

The Company determines the fair value of foreign exchange contracts based on the difference between the foreign currency contract rates and the widely available foreign currency rates as of the measurement date. The fair value measurements are based on observable market transactions, and thus represent a level 2 valuation as defined by ASC 820.

13.  Comprehensive Income (Loss)

Comprehensive income (loss) for the three months ended March 31, 2021 and 2020, was as follows:

Three Months EndedMarch 31, 

    

2021

    

2020

(Dollars in thousands)

Net earnings

$

1,325

$

1,162

Foreign currency translation adjustments

 

(143)

 

(2,558)

Pension liability, net of tax of $64 and $48, respectively

 

183

 

138

Total comprehensive income (loss)

$

1,365

$

(1,258)

10

The components of accumulated other comprehensive loss as recorded in the Consolidated Condensed Balance Sheets (Unaudited) were as follows:

    

March 31, 

    

December 31, 

2021

2020

(Dollars in thousands)

Foreign currency translation adjustments

$

(6,193)

$

(6,050)

Pension liability, net of tax

 

(21,772)

 

(21,955)

Total accumulated other comprehensive loss

$

(27,965)

$

(28,005)

The following presents a tabular disclosure about changes in accumulated other comprehensive loss during the three months ended March 31, 2021:

Foreign

Defined

    

 Currency

    

Benefit

    

Translation

 Pension 

 Adjustments

Items

Total

Beginning balance, December 31, 2020

$

(6,050)

$

(21,955)

$

(28,005)

Other comprehensive loss before reclassifications

 

(143)

 

 

(143)

Amounts reclassified from accumulated other comprehensive loss

 

 

183

 

183

Net current period other comprehensive (loss) income

 

(143)

 

183

 

40

Ending balance, March 31, 2021

$

(6,193)

$

(21,772)

$

(27,965)

The following presents a tabular disclosure about reclassification adjustments out of accumulated other comprehensive loss during the three months ended March 31, 2021:

Amounts reclassified from

accumulated other

comprehensive loss for 

Affected line item in the

the three months ended

statement where net income is 

    

March 31, 2021

    

presented

Amortization of defined benefit pension items

 

  

 

  

Prior service cost

$

(16)

(1)

Other income, net

Actuarial losses

 

263

(1)

Other income, net

Total before tax

 

247

  

Tax benefit

 

(64)

  

Net of tax

$

183

  

(1)These amounts were included in pension expense. See Note 7 for additional details.

11

14.  Equity

The following table reconciles the Company’s equity for the three months ended March 31, 2021:

Accumulated

Capital in

Other

Common

Excess of

Reinvested

Comprehensive

    

Stock

    

Par Value

    

Earnings

    

Loss

(Dollars in thousands)

Balance, December 31, 2020

$

9,797

$

67,178

$

138,955

$

(28,005)

Net earnings

 

 

 

1,325

 

Foreign currency translation adjustments

 

 

 

 

(143)

Pension liability adjustment, net of tax

 

 

 

 

183

Cash dividends declared

 

 

 

(2,336)

 

Share-based compensation expense

545

Shares purchased and retired

(62)

(1,017)

Balance, March 31, 2021

$

9,735

$

67,723

$

136,927

$

(27,965)

The following table reconciles the Company’s equity for the three months ended March 31, 2020:

Accumulated

Capital in

Other

Common

Excess of

Reinvested

Comprehensive

    

Stock

    

Par Value

    

Earnings

    

Loss

 

(Dollars in thousands)

Balance, December 31, 2019

$

9,873

$

65,832

$

158,825

$

(24,536)

Net earnings

 

 

 

1,162

 

Foreign currency translation adjustments