Weyco Group, Inc. 10-K Summary: Fiscal Year Ended December 31, 2002
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2002, for Weyco Group, Inc., a Wisconsin corporation engaged in the manufacture, purchase, and distribution of men's footwear. The company operates through wholesale (91% of 2002 sales) and retail (9% of 2002 sales) divisions. Key brands include Florsheim, Nunn Bush, Brass Boot, and Stacy Adams. The company maintains one manufacturing plant in Wisconsin but sources approximately 96% of its footwear from overseas suppliers.
Key Financial Metrics
Revenue and Profit: The filing text incorporates the Consolidated Statements of Earnings by reference and does not provide specific revenue, net income, or margin figures within the provided text.
Cash Flow and Liquidity: Specific cash flow and liquidity ratios are not disclosed in the text, as the Consolidated Statements of Cash Flows are incorporated by reference.
Debt: Specific debt balances are not provided in the text.
Backlog: As of December 31, 2002, the company reported a backlog of $62.5 million, compared to $40.2 million as of December 31, 2001.
Market Value: The aggregate market value of voting and non-voting common equity held by non-affiliates was approximately $101.3 million as of March 3, 2003.
Material Changes Versus Prior Period
- Acquisitions: In 2002, the company acquired certain assets of Florsheim Group, Inc.'s U.S. wholesale business and European wholesale business (Florsheim Europe S.r.l. and Florsheim France SARL). The total purchase price was $48.5 million, including $1.7 million in acquisition costs.
- Store Expansion: The acquisition included leaseholds for 23 retail and outlet stores in the U.S. and three retail stores in Europe (Germany, Italy, France), increasing the total retail footprint to 30 U.S. stores and 3 European stores.
- Backlog Increase: The backlog increased by $22.3 million (from $40.2 million to $62.5 million), primarily due to the addition of Florsheim backlogs.
- Customer Concentration: In 2002, no single customer accounted for 10% or more of total sales. This contrasts with 2001 and 2000, when the largest customer, Brown Shoe Group, accounted for 10% of total sales.
- Accountant Change: The company changed independent accountants in June 2002 from Arthur Andersen LLP to Deloitte and Touche LLP.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary: Management believes the $62.5 million backlog consists of firm orders expected to be filled within one year. New labor contracts ratified in 2002 and early 2003 are not expected to have a significant impact on future operations.
Risks and Contingencies:
- Supplier Dependence: The company is not dependent on any single supplier, but 96% of footwear sold was purchased from overseas suppliers in 2002.
- Legal/Recovery Risk: The filing notes that investors will not be able to sue Arthur Andersen LLP pursuant to Section 11(a)(4) of the Securities Act of 1933 regarding registration statements, as the firm has ceased operations and cannot provide written consent. Ultimate recovery on claims may be limited.
- Inventory: The company is required to carry significant inventory to meet customer delivery requirements and provides extended payment terms.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the Consolidated Financial Statements (incorporated by reference from pages 10-22 of the Annual Report to Shareholders).
- Review the details of the $48.5 million Florsheim acquisition to assess integration progress and goodwill implications.
- Confirm the status of the $62.5 million backlog and the timeline for fulfillment.
- Assess the impact of the change in auditors from Arthur Andersen to Deloitte & Touche on financial reporting continuity.
- Monitor the company's exposure to overseas suppliers given that 96% of sales volume is imported.