10-Q

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 September 30, 2023

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 October 27, 2023, there were 9,497,622 shares of common stock outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

The following consolidated condensed balance sheet as of December 31, 2022, which has been derived from audited financial statements, and the unaudited interim consolidated condensed financial statements have been prepared by Weyco Group, Inc. (“we,” “our,” “us,” and 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 we believe that the disclosures made are adequate to make the information not misleading. Please read these consolidated condensed financial statements in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K.

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WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

	September 30,		December 31,
	2023		2022
	(Dollars in thousands)
ASSETS:
Cash and cash equivalents	$	33,397	$	16,876
Investments, at fair value		110		107
Marketable securities, at amortized cost		1,096		1,385
Accounts receivable, net		53,209		53,298
Income tax receivable		250		945
Inventories		79,567		127,976
Prepaid expenses and other current assets		3,060		5,870
Total current assets		170,689		206,457
Marketable securities, at amortized cost		6,412		7,123
Deferred income tax benefits		979		1,038
Property, plant and equipment, net		29,337		28,812
Operating lease right-of-use assets		11,546		13,428
Goodwill		12,317		12,317
Trademarks		33,618		33,618
Other assets		23,962		23,827
Total assets	$	288,860	$	326,620
LIABILITIES AND EQUITY:
Short-term borrowings	$	—	$	31,136
Accounts payable		4,831		14,946
Dividend payable		—		2,290
Operating lease liabilities		3,840		4,026
Accrued liabilities		11,389		15,137
Total current liabilities		20,060		67,535
Deferred income tax liabilities		8,485		8,530
Long-term pension liability		15,866		15,523
Operating lease liabilities		8,640		10,661
Other long-term liabilities		426		466
Total liabilities		53,477		102,715
Common stock		9,511		9,584
Capital in excess of par value		71,269		70,475
Reinvested earnings		175,338		164,039
Accumulated other comprehensive loss		(20,735)		(20,193)
Total equity		235,383		223,905
Total liabilities and equity	$	288,860	$	326,620

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

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WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands, except per share amounts)
Net sales	$	84,150	$	96,971	$	237,458	$	252,690
Cost of sales		47,997		57,583		135,136		154,404
Gross earnings		36,153		39,388		102,322		98,286
Selling and administrative expenses		23,720		25,181		72,803		72,983
Earnings from operations		12,433		14,207		29,519		25,303
Interest income		269		86		598		266
Interest expense		(5)		(197)		(522)		(209)
Other (expense) income, net		(133)		141		(431)		316
Earnings before provision for income taxes		12,564		14,237		29,164		25,676
Provision for income taxes		3,227		3,467		7,518		6,358
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Weighted average shares outstanding
Basic		9,451		9,535		9,458		9,560
Diluted		9,530		9,605		9,539		9,638
Earnings per share
Basic	$	0.99	$	1.13	$	2.29	$	2.02
Diluted	$	0.98	$	1.12	$	2.27	$	2.01
Cash dividends declared (per share)	$	0.25	$	0.24	$	0.74	$	0.72
Comprehensive income	$	8,656	$	9,248	$	21,104	$	17,406

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

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WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine Months Ended September 30,
	2023		2022
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	21,646	$	19,318
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities -
Depreciation		1,930		1,840
Amortization		204		213
Bad debt expense		107		135
Deferred income taxes		(82)		(215)
Net foreign currency transaction gains		(9)		(233)
Share-based compensation expense		996		1,157
Pension expense		970		53
Impairment of trademark		—		350
Net gain on remeasurement of contingent consideration		—		(407)
Increase in cash surrender value of life insurance		(315)		(450)
Changes in operating assets and liabilities -
Accounts receivable		(6)		(11,188)
Inventories		48,442		(41,134)
Prepaid expenses and other assets		2,775		1,319
Accounts payable		(10,164)		(10,116)
Accrued liabilities and other		(4,331)		(2,571)
Accrued income taxes		775		(139)
Net cash provided by (used for) operating activities		62,938		(42,068)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities		1,015		1,495
Proceeds from sale of investment securities		—		8,050
Purchases of property, plant and equipment		(2,565)		(1,515)
Net cash (used for) provided by investing activities		(1,550)		8,030
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(9,285)		(6,878)
Shares purchased and retired		(3,439)		(3,264)
Net proceeds from stock options exercised		33		276
Payment of contingent consideration		(500)		—
Taxes paid related to the net share settlement of equity awards		(173)		(12)
Proceeds from bank borrowings		70,060		71,833
Repayments of bank borrowings		(101,196)		(37,168)
Net cash (used for) provided by financing activities		(44,500)		24,787
Effect of exchange rate changes on cash and cash equivalents		(367)		(612)
Net increase (decrease) in cash and cash equivalents	$	16,521	$	(9,863)
CASH AND CASH EQUIVALENTS at beginning of period		16,876		19,711
CASH AND CASH EQUIVALENTS at end of period	$	33,397	$	9,848
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	$	6,462	$	6,729
Interest paid	$	971	$	209

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

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NOTES:

1.    Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly our 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 and nine months ended September 30, 2023, 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 that affect the reported 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, trademarks, and sales allowances could materially differ from those estimates, which would impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.

2.    New Accounting Pronouncement

Recently Adopted

In June 2016, the FASB issued Accounting Standards Update (“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, based on historical experience, current conditions, and reasonable forecasts, 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 reinvested earnings in the period of adoption. We adopted this standard in first quarter of 2023. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

3.    Earnings Per Share

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands, except per share amounts)
Numerator:
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Denominator:
Basic weighted average shares outstanding		9,451		9,535		9,458		9,560
Effect of dilutive securities:
Employee share-based awards		79		70		81		78
Diluted weighted average shares outstanding		9,530		9,605		9,539		9,638
Basic earnings per share	$	0.99	$	1.13	$	2.29	$	2.02
Diluted earnings per share	$	0.98	$	1.12	$	2.27	$	2.01

Diluted weighted average shares outstanding for the three months ended September 30, 2023, excluded anti-dilutive stock options totaling 606,000 shares of common stock at a weighted average exercise price of $28.13. Diluted weighted average shares outstanding for the nine months ended September 30, 2023, excluded anti-dilutive stock options totaling 692,000 shares of common stock at a weighted average exercise price of $28.56. Diluted weighted average shares outstanding for the three months ended September 30, 2022, excluded anti-dilutive stock options totaling 1,046,000 shares of common stock at a weighted average exercise price of $26.80. Diluted weighted average shares outstanding for the nine months ended September 30, 2022, excluded anti-dilutive stock options totaling 819,000 shares of common stock at a weighted average exercise price of $27.59.

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4.    Investments

Investments, at fair value

At both September 30, 2023 and December 31, 2022, we had $0.1 million of cash invested in highly liquid taxable bond funds. We classify these investments as trading securities and report them at fair value. There were no significant unrealized gains or losses on these investments in the three or nine months ended September 30, 2023 and 2022. 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 Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.

Marketable securities, at amortized cost

We also invest in marketable securities. As noted in our Annual Report on Form 10-K for the year ended December 31, 2022, all our marketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to ASC 320, Investments – Debt and Equity Securities, as we have the intent and ability to hold all investments to maturity.

Below is a summary of the amortized cost and estimated market values of our marketable securities as of September 30, 2023, and December 31, 2022.

	September 30, 2023				December 31, 2022
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
	(Dollars in thousands)
Marketable Securities:
Current	$	1,096	$	1,093	$	1,385	$	1,381
Due from one through five years		3,264		3,127		3,977		3,950
Due from six through ten years		3,148		3,069		2,347		2,455
Due from eleven through twenty years		—		—		799		773
Total	$	7,508	$	7,289	$	8,508	$	8,559

The unrealized gains and losses on marketable securities at September 30, 2023, and at December 31, 2022, were as follows:

	September 30, 2023				December 31, 2022
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
	(Dollars in thousands)
Marketable Securities	$	160	$	(379)	$	145	$	(94)

The estimated market values provided are Level 2 valuations as defined by ASC 820. We reviewed our portfolio of investments as of September 30, 2023, and determined that no other-than-temporary market value impairment exists.

5.    Intangible Assets

During the nine months ended September 30, 2023, there were no changes in the carrying value of our indefinite-lived intangible assets (goodwill and trademarks). Our amortizable intangible assets, which were included within other assets in the Consolidated Condensed Balance Sheets (unaudited), consisted of the following:

			September 30, 2023						December 31, 2022
	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	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739
Total amortizable intangible assets			$	3,500	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739

Amortization expense related to the intangible assets was approximately $58,000 in both the third quarters of 2023 and 2022. For both the nine-month periods ended September 30, 2023 and September 30, 2022, amortization expense related to the intangible assets was approximately $175,000.

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6.    Segment Information

We have two reportable segments: North American wholesale operations (“Wholesale”) and North American retail operations (“Retail”). Our Chief Executive Officer evaluates the performance of our segments based on earnings 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 our wholesale and retail operations in Australia, South Africa, and Asia Pacific, which do not meet the criteria for separate reportable segment classification. Summarized segment data for the three and nine-month periods ended September 30, 2023 and 2022, were as follows:

Three Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	68,927	$	7,584	$	7,094	$	83,605
Licensing revenues		545		—		—		545
Net sales	$	69,472	$	7,584	$	7,094	$	84,150
Earnings from operations	$	11,251	$	926	$	256	$	12,433
2022
Product sales	$	81,183	$	7,129	$	8,205	$	96,517
Licensing revenues		454		—		—		454
Net sales	$	81,637	$	7,129	$	8,205	$	96,971
Earnings from operations	$	12,906	$	825	$	476	$	14,207

Nine Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	189,118	$	24,141	$	22,484	$	235,743
Licensing revenues		1,715		—		—		1,715
Net sales	$	190,833	$	24,141	$	22,484	$	237,458
Earnings from operations	$	25,435	$	3,277	$	807	$	29,519
2022
Product sales	$	206,435	$	22,409	$	22,562	$	251,406
Licensing revenues		1,284		—		—		1,284
Net sales	$	207,719	$	22,409	$	22,562	$	252,690
Earnings from operations	$	21,939	$	2,766	$	598	$	25,303

7.    Employee Retirement Plans

The components of our pension expense were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Service cost	$	116	$	111	$	350	$	334
Interest cost		658		438		1,974		1,315
Expected return on plan assets		(575)		(751)		(1,726)		(2,253)
Net amortization and deferral		124		219		372		657
Pension expense	$	323	$	17	$	970	$	53

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

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8.    Leases

We lease retail shoe stores, as well as several office and distribution facilities worldwide. These leases have original lease periods expiring between 2023 and 2029. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of our operating lease costs were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Operating lease costs	$	1,119	$	1,283	$	3,744	$	3,855
Variable lease costs (1)		40		—		91		10
Total lease costs	$	1,159	$	1,283	$	3,835	$	3,865

⁽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 our financial statements.

The following is a schedule of maturities of operating lease liabilities as of September 30, 2023:

	Operating Leases
	(Dollars in thousands)
2023, excluding the nine months ended September 30, 2023	$	1,129
2024		4,054
2025		3,169
2026		2,736
2027		1,599
Thereafter		1,061
Total lease payments		13,748
Less imputed interest		(1,268)
Present value of lease liabilities	$	12,480

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

	September 30, 2023		December 31, 2022
	(Dollars in thousands)
Operating lease liabilities - current	$	3,840	$	4,026
Operating lease liabilities - non-current		8,640		10,661
Total	$	12,480	$	14,687

We determined the present value of our lease liabilities using a weighted-average discount rate of 4.25%.  As of September 30, 2023, our leases had a weighted-average remaining lease term of 3.8 years.

Supplemental cash flow information related to our operating leases is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,204	$	1,160	$	3,728	$	3,444
Right-of-use assets obtained in exchange for new lease liabilities (noncash)	$	99	$	3,710	$	1,571	$	5,870

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9.    Income Taxes

The effective income tax rates for the three months ended September 30, 2023 and 2022 were 25.7% and 24.4%, respectively. The effective income tax rates for the nine months ended September 30, 2023 and 2022 were 25.8% and 24.8%, respectively. The 2023 and 2022 effective tax rates differed from the federal rate of 21% primarily because of state and foreign taxes.

10.  Share-Based Compensation Plans

During the three and nine months ended September 30, 2023, we recognized $321,000 and $996,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2018 through 2023. During the three and nine months ended September 30, 2022, we recognized $339,000 and $1,157,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2017 through 2022.

The following table summarizes our stock option activity for the nine-month period ended September 30, 2023:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Term (Years)	Value*
Outstanding at December 31, 2022	1,345,369	$	25.83
Granted	149,200	$	25.79
Exercised	(404,564)	$	25.36
Forfeited or expired	(31,890)	$	25.59
Outstanding at September 30, 2023	1,058,115	$	26.02	6.9	$	1,682,000
Exercisable at September 30, 2023	609,387	$	26.82	5.7	$	1,041,000

*The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our common stock on September 29, 2023 of $25.35 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

The following table summarizes our restricted stock award activity for the nine-month period ended September 30, 2023:

				Weighted
		Weighted		Average
	Shares of	Average		Remaining	Aggregate
	Restricted	Grant Date		Contractual	Intrinsic
	Stock	Fair Value		Term (Years)	Value*
Non-vested at December 31, 2022	71,808	$	24.67
Issued	27,700		25.79
Vested	(28,243)		25.65
Forfeited	(2,175)		25.13
Non-vested at September 30, 2023	69,090	$	25.54	2.9	$	1,751,000

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our common stock on September 29, 2023 of $25.35 multiplied by the number of non-vested restricted shares outstanding.

11.  Short-Term Borrowings

On September 28, 2023, we amended our line of credit agreement. The amendment (“Amended Credit Agreement”) extended the maturity of our credit facility to September 28, 2024 and has a maximum available borrowing limit of $40.0 million. Under the terms of the Amended Credit Agreement, amounts outstanding bear interest at the one-month term secured overnight financing rate (“SOFR”) plus 125 basis points. The Amended Credit Agreement is secured by a security interest in our general business assets, and contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At September 30, 2023, there were no outstanding borrowings on the line of credit, and we were in compliance with all financial covenants.

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12.  Financial Instruments

At September 30, 2023, our wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $1.2 million U.S. dollars at a price of approximately $1.7 million Australian dollars. These contracts all expire in 2023. Based on quarter-end exchange rates, there were no significant unrealized gains or losses on the outstanding contracts.

We determine 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

Comprehensive income for the three and nine months ended September 30, 2023 and 2022, was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Foreign currency translation adjustments		(773)		(1,684)		(817)		(2,398)
Pension liability adjustment, net of tax of $32, $57, $97, and $171, respectively		92		162		275		486
Total comprehensive income	$	8,656	$	9,248	$	21,104	$	17,406

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

	September 30,		December 31,
	2023		2022
	(Dollars in thousands)
Foreign currency translation adjustments	$	(9,413)	$	(8,596)
Pension liability, net of tax		(11,322)		(11,597)
Total accumulated other comprehensive loss	$	(20,735)	$	(20,193)

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The following tables show changes in accumulated other comprehensive loss during the nine months ended September 30, 2023 and 2022:

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2022	$	(8,596)	$	(11,597)	$	(20,193)
Other comprehensive loss before reclassifications		(817)		—		(817)
Amounts reclassified from accumulated other comprehensive loss		—		275		275
Net current period other comprehensive (loss) income		(817)		275		(542)
Ending balance, September 30, 2023	$	(9,413)	$	(11,322)	$	(20,735)

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2021	$	(6,783)	$	(18,011)	$	(24,794)
Other comprehensive loss before reclassifications		(2,398)		—		(2,398)
Amounts reclassified from accumulated other comprehensive loss		—		486		486
Net current period other comprehensive (loss) income		(2,398)		486		(1,912)
Ending balance, September 30, 2022	$	(9,181)	$	(17,525)	$	(26,706)

The following table shows reclassification adjustments out of accumulated other comprehensive loss during the three and nine month periods ended September 30, 2023 and 2022:

	Amounts Reclassified from Accumulated Other Comprehensive Loss									Affected line item in the
	Three Months Ended September 30,				Nine Months Ended September 30,					statement where net income is
	2023		2022		2023		2022			presented
Amortization of defined benefit pension items
Prior service cost	$	5	$	2	$	15	$	5	(1)	Other (expense) income, net
Actuarial losses		119		217		357		652	(1)	Other (expense) income, net
Total before tax		124		219		372		657
Tax benefit		(32)		(57)		(97)		(171)
Net of tax	$	92	$	162	$	275	$	486

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

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14.  Equity

The following table reconciles our equity for the nine months ended September 30, 2023:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2022	$	9,584	$	70,475	$	164,039	$	(20,193)
Net earnings		—		—		7,445		—
Foreign currency translation adjustments		—		—		—		(306)
Pension liability adjustment, net of tax		—		—		—		99
Cash dividends declared		—		—		(2,289)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		1		15		—		—
Share-based compensation expense		—		338		—		—
Shares purchased and retired		(62)		—		(1,478)		—
Balance, March 31, 2023	$	9,523	$	70,828	$	167,717	$	(20,400)
Net earnings		—		—		4,864		—
Foreign currency translation adjustments		—		—		—		262
Pension liability adjustment, net of tax		—		—		—		84
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		29		(194)		—		—
Share-based compensation expense		—		337		—		—
Shares purchased and retired		(23)		—		(571)		—
Balance, June 30, 2023	$	9,529	$	70,971	$	169,633	$	(20,054)
Net earnings		—		—		9,337		—
Foreign currency translation adjustments		—		—		—		(773)
Pension liability adjustment, net of tax		—		—		—		92
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		6		3		—		—
Issuance of restricted stock		28		(28)		—		—
Restricted stock forfeited		(2)		2		—		—
Share-based compensation expense		—		321		—		—
Shares purchased and retired		(50)		—		(1,255)		—
Balance, September 30, 2023	$	9,511	$	71,269	$	175,338	$	(20,735)

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The following table reconciles our equity for the nine months ended September 30, 2022:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2021	$	9,709	$	68,718	$	147,762	$	(24,794)
Net earnings		—		—		4,053		—
Foreign currency translation adjustments		—		—		—		521
Pension liability adjustment, net of tax		—		—		—		154
Cash dividends declared		—		—		(2,316)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		—		8		—		—
Share-based compensation expense		—		350		—		—
Shares purchased and retired		(75)		—		(1,722)		—
Balance, March 31, 2022	$	9,634	$	69,076	$	147,777	$	(24,119)
Net earnings		—		—		4,495		—
Foreign currency translation adjustments		—		—		—		(1,235)
Pension liability adjustment, net of tax		—		—		—		170
Cash dividends declared		—		—		(2,307)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		15		193		—		—
Share-based compensation expense		—		468		—		—
Shares purchased and retired		(29)		—		(701)		—
Balance, June 30, 2022	$	9,620	$	69,737	$	149,264	$	(25,184)
Net earnings		—		—		10,770		—
Foreign currency translation adjustments		—		—		—		(1,684)
Pension liability adjustment, net of tax		—		—		—		162
Cash dividends declared		—		—		(2,310)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		3		45		—		—
Issuance of restricted stock		28		(28)		—		—
Share-based compensation expense		—		339		—		—
Shares purchased and retired		(30)		—		(707)		—
Balance, September 30, 2022	$	9,621	$	70,093	$	157,017	$	(26,706)

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  These statements represent our good faith judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. Such statements can be identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “likely,” “plans,” “predicts,” “projects,” “should,” “will,” or variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Therefore, the reader is cautioned that these forward-looking statements are subject to a number of risks, uncertainties or other factors that may cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risk factors described under Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year-ended December 31, 2022, filed on March 13, 2023, which information is incorporated herein by reference. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

GENERAL

The Company designs and markets quality and innovative footwear principally for men, but also for women and children, under a portfolio of well-recognized brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters, and Forsake. Inventory is purchased from third-party overseas manufacturers. Almost all of these foreign-sourced purchases are denominated in U.S. dollars.

We have two reportable segments, North American wholesale operations (“Wholesale”) and North American retail operations (“Retail”).  In the Wholesale segment, our products are sold to leading footwear, department, and specialty stores, as well as e-commerce retailers, primarily in the United States and Canada. We also have licensing agreements with third parties who sell our branded apparel, accessories, and specialty footwear in the United States, as well as our footwear in Mexico and certain markets overseas. Licensing revenues are included in our Wholesale segment. Our Retail segment consists of e-commerce businesses and four brick and mortar retail stores in the United States. Retail sales are made directly to consumers on our websites, or by our employees in our stores. Our “other” operations include our wholesale and retail businesses in Australia, South Africa, and Asia Pacific (collectively, “Florsheim Australia”). The majority of our operations are in the United States and our results are primarily affected by the economic conditions and retail environment in the United States.

EXECUTIVE OVERVIEW

Sales in our North American wholesale segment were down 15% for the quarter, compared to a record third quarter last year. Wholesale sales in 2022 reflected strong consumer demand, but also significant pipeline fill as many accounts were replenishing stock depleted due to pandemic-related supply chain delays. This quarter was our second most profitable third quarter in terms of wholesale operating earnings, second only to last year. This year, the retail environment is more challenging due to macro-economic pressures, and consumers are being cautious in terms of expenditures on footwear and apparel. With demand softening, retailers are being conservative with at-once and future orders at the wholesale level.

The change in retail dynamics is most apparent in the outdoor market. Given the spike in demand in 2021 and the first half of last year, retailers placed heavy orders with the expectation of strong consumer sell-throughs. Sales did not keep pace in the back half of last year, and the outdoor trade channel entered 2023 with an inventory glut. The situation has been exacerbated by unseasonably warm weather in early Fall. As a result, sales of the BOGS brand declined 42%, compared to record sales last year, with retailers placing fewer orders due to the current saturation of product in the market. While the majority of our BOGS’ inventory is in core product that remains valid from year to year, we are also taking steps to reduce inventory of slower moving styles. We anticipate that the inventory backlog in the outdoor footwear category will not normalize until the second half of 2024. While the market is challenging, we are optimistic about the brand’s long-term growth prospects given BOGS’ strong consumer loyalty. We continue to develop new BOGS product with a special focus on less insulated footwear with a longer selling season.

In our legacy business, Florsheim net sales were down 7%, compared to record sales for the brand in last year’s third quarter. Sales of Stacy Adams were down 1%, and sales of the Nunn Bush brand were up 11%, with the increase driven in part by incremental sales in the casual and hybrid categories, and sales of new programs to a few large retailers. All three brands maintained solid retail sell-throughs during the quarter despite a general slowdown in the more refined footwear category. We are encouraged by our progress in selling

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hybrid footwear that is more casual in nature but can be worn across a variety of settings from office to social occasions. Consumers are gravitating towards this category of footwear, and we see this as an important growth area for our Legacy business. From a product development perspective, we are expanding our range of hybrid footwear while selectively adding to our true casual and refined footwear assortment.

Retail sales were up 6% for the quarter with the increase driven primarily by our e-commerce business. Footwear industry statistics indicate the e-commerce sales channel is down year-to-date, so it is encouraging that we continue to grow our e-commerce platform in a very competitive environment.

Sales at Florsheim Australia were down 14%, and in local currency, were down 10%. The Australian market is facing some of the same challenges as in the U.S. regarding softness in the footwear and apparel category. We also lost a sizeable wholesale account that impacted our wholesale shipments for the quarter. Going forward, we believe that we will make up some of this deficit in the Australian market through other accounts as well as the transfer of the Asia-Pacific wholesale business to the Florsheim Australia office.

Third Quarter Highlights

Consolidated net sales were $84.2 million, down 13% compared to record third-quarter sales of $97.0 million in 2022. Consolidated gross earnings increased to 43.0% of net sales compared to 40.6% of net sales in last year’s third quarter, due mainly to higher gross margins in our Wholesale segment. Earnings from operations were $12.4 million, down 12% compared to record operating earnings of $14.2 million in 2022. Quarterly net earnings totaled $9.3 million, or $0.98 per diluted share, compared to record net earnings of $10.8 million, or $1.12 per diluted share, last year.

Year-to-Date Highlights

Consolidated net sales for the first nine months of 2023 were $237.5 million, down 6% compared to record sales of $252.7 million in the first nine months of 2022. Consolidated gross earnings were 43.1% of net sales in the first nine months of 2023 versus 38.9% of net sales in the same period one year ago. The increase was primarily due to higher gross margins in our Wholesale segment. Year-to-date consolidated operating earnings were a record $29.5 million in 2023, up 17% over our previous record of $25.3 million in 2022. Our net earnings reached a record $21.6 million, or $2.27 per diluted share, in the first nine months of 2023, up 12% over our previous record of $19.3 million, or $2.01 per diluted share, in 2022.

Financial Position Highlights

At September 30, 2023, our cash, short-term investments, and marketable securities totaled $41.0 million and we had no debt outstanding on our $40.0 million revolving line of credit. During the first nine months of 2023, we generated $62.9 million of cash from operations, due mainly to reductions in inventory levels. We paid off $31.1 million on our line of credit, paid $9.3 million in dividends, repurchased $3.4 million of our common stock, and we had $2.6 million of capital expenditures during the period.

SEGMENT ANALYSIS

Net sales and earnings from operations for our segments for the three and nine months ended September 30, 2023 and 2022, were as follows:

	Three Months Ended September 30,				%		Nine Months Ended September 30,				%
	2023		2022		Change		2023		2022		Change
	(Dollars in thousands)
Net Sales
North American Wholesale	$	69,472	$	81,637	-15	%	$	190,833	$	207,719	-8	%
North American Retail		7,584		7,129	6	%		24,141		22,409	8	%
Other		7,094		8,205	-14	%		22,484		22,562	0	%
Total	$	84,150	$	96,971	-13	%	$	237,458	$	252,690	-6	%
Earnings from Operations
North American Wholesale	$	11,251	$	12,906	-13	%	$	25,435	$	21,939	16	%
North American Retail		926		825	12	%		3,277		2,766	18	%
Other		256		476	-46	%		807		598	35	%
Total	$	12,433	$	14,207	-12	%	$	29,519	$	25,303	17	%

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North American Wholesale Segment

Net Sales

Net sales in our Wholesale segment for the three and nine months ended September 30, 2023 and 2022, were as follows:

	Three Months Ended September 30,				%		Nine Months Ended September 30,				%
	2023		2022		Change		2023		2022		Change
	(Dollars in thousands)
North American Wholesale Segment Net Sales
Stacy Adams	$	14,348	$	14,544	-1	%	$	43,750	$	47,131	-7	%
Nunn Bush		15,401		13,824	11	%		41,681		40,001	4	%
Florsheim		22,638		24,463	-7	%		69,303		70,505	-2	%
BOGS/Rafters		16,057		27,735	-42	%		33,298		47,607	-30	%
Forsake		483		617	-22	%		1,086		1,191	-9	%
Total North American Wholesale	$	68,927	$	81,183	-15	%	$	189,118	$	206,435	-8	%
Licensing		545		454	20	%		1,715		1,284	34	%
Total North American Wholesale Segment	$	69,472	$	81,637	-15	%	$	190,833	$	207,719	-8	%

Wholesale sales for the quarter and year-to-date periods were down across most of our major brands (Stacy Adams, Florsheim, and BOGS/Rafters) due to reduced demand in 2023 following record growth in 2022. Last year’s sales were up significantly due to post-pandemic retailer pipeline fill and strong consumer demand. So far in 2023, most of our brands experienced decreases in pairs sold, as the footwear industry returned to its normal cycle, and as many retailers in the U.S. and Canada continue to pare back higher levels of inventory. BOGS has been particularly impacted by this slowdown due to the current saturation of product in the outdoor footwear market, and due to the mild start to Fall. Nunn Bush sales rose 11% and 4% for the quarter and year-to-date periods, respectively, due mainly to new programs with a few large retailers that performed well in the third quarter.

Licensing revenues consist of royalties earned on the sales of branded apparel, accessories, and specialty footwear in the United States and on branded footwear in Mexico and certain overseas markets.

Earnings from Operations

Wholesale gross earnings were 38.6% of net sales in the third quarter of 2023 compared to 36.3% of net sales last year. Quarterly gross margins improved as a result of lower inventory costs compared to last year, primarily related to inbound freight costs. For the nine months ended September 30, wholesale gross earnings were 38.0% of net sales in 2023 and 33.5% of net sales in 2022.  The increase in gross margins for the year-to-date period was due to higher selling prices and lower inbound freight costs. In the first half of last year, gross margins were negatively impacted by inflated inbound freight costs as a result of the global supply chain issues at that time, which have since eased.

Wholesale selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs and depreciation. Wholesale selling and administrative expenses were $15.6 million for the quarter compared to $16.7 million last year. The decrease was primarily due to lower employee costs, mainly commission-based compensation. As a percent of net sales, wholesale selling and administrative expenses were 22% and 21% of net sales in the third quarters of 2023 and 2022, respectively. For the nine months ended September 30, wholesale selling and administrative expenses were $47.1 million, or 25% of net sales, in 2023 versus $47.7 million, or 23% of net sales, in 2022.

Wholesale operating earnings totaled $11.3 million for the quarter, down 13% from $12.9 million in last year’s third quarter, due primarily to lower sales. For the nine months ended September 30, wholesale operating earnings reached a record $25.4 million in 2023, up 16% over our previous record of $21.9 million in 2022. The year-to-date earnings increase was primarily due to higher gross margins.  

Our cost of sales does not include distribution costs (e.g., receiving, inspection, warehousing, shipping, and handling costs) which are included in selling and administrative expenses. Wholesale distribution costs were $3.8 million in the third quarter of 2023 and $4.1 million in the same period of 2022.  For the nine-month periods ended September 30, wholesale distribution costs were $11.5 million in 2023 and $11.3 million in 2022.

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North American Retail Segment

Net Sales

Net sales in our retail segment were a third-quarter record of $7.6 million in 2023, up 6% compared to our previous record of $7.1 million last year. The quarterly increase was due to higher sales across all our domestic e-commerce websites, with the largest increases at BOGS and Florsheim. For the nine months ended September 30, retail net sales reached a record $24.1 million in 2023, up 8% over our previous record of $22.4 million in 2022. The year-to-date increase was due to higher sales volumes across all our e-commerce websites, with the largest increase at Florsheim. Brick-and-mortar sales for the first nine months of 2023 were relatively flat compared to last year.

Earnings from Operations

Retail gross earnings as a percent of net sales were 65.4% and 66.3% in the third quarters of 2023 and 2022, respectively. For the nine months ended September 30, 2023, retail gross earnings were 66.0% of net sales, compared to 66.5% of net sales in the same period of 2022.

Selling and administrative expenses for the retail segment consist primarily of freight, advertising expense, employee costs, and rent and occupancy costs. Retail selling and administrative expenses were $4.0 million, or 53% of net sales, in the third quarter of 2023 versus $3.9 million, or 55% of net sales, in the third quarter of 2022. For the nine months ended September 30, retail selling and administrative expenses were $12.6 million, or 52% of net sales, in 2023 and $12.1 million, or 54% of net sales, in 2022.

Retail operating earnings rose to $926,000 for the quarter, up 12% compared to $825,000 in last year’s third quarter. For the nine months ended September 30, retail operating earnings were $3.3 million in 2023, up 18% over $2.8 million in 2022. The increases for the quarter and year-to-date periods were primarily due to higher earnings from our e-commerce businesses, driven by higher web sales.

Other

Operating results reported in the “other” category consist entirely of the operating results at Florsheim Australia. Third quarter 2023 net sales of Florsheim Australia totaled $7.1 million, down 14% compared to $8.2 million in the third quarter of 2022. In local currency, its net sales were down 10%, primarily in its wholesale businesses. For the nine months ended September 30, 2023, other net sales were $22.5 million, down slightly compared to $22.6 million in the same period one year ago. In local currency, Florsheim Australia’s net sales were up 5% for the year-to-date period, due to higher sales in its retail businesses partially offset by lower sales in its wholesale businesses. The weakening of the Australian dollar relative to the U.S. dollar led to the lower sales growth in U.S. dollars this year.

Florsheim Australia’s gross earnings were 61.6% of net sales for the quarter compared to 61.4% of net sales in last year’s third quarter. For the nine months ended September 30, its gross earnings as a percent of net sales were 61.5% and 60.9% in 2023 and 2022, respectively.

Other operating earnings totaled $256,000 for the quarter versus $476,000 last year. The decrease was primarily due to lower earnings in Australia’s wholesale businesses, as a result of lower sales. For the nine-months ended September 30, 2023, other operating earnings totaled $807,000, compared to $598,000 in the same period last year. The year-to-date earnings increase was largely due to improved results of the retail businesses in Australia.

Other income and expense

Interest income was $269,000 and $86,000 for the three months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, interest income was $598,000 in 2023 and $266,000 in 2022. The increases in 2023 were due to more interest earned on the higher cash balances this year. Interest expense decreased $192,000 in the three months ended September 30, 2023, compared to the same period of 2022, due to less interest incurred as we paid off our debt in the 2023 quarter. Interest expense for the nine months ended September 30, 2023 was up $313,000 over the same period of 2022, due to interest incurred on the higher average debt balances earlier this year.

Other (expense) income, net, totaled ($133,000) for the quarter compared to $141,000 in last year’s third quarter. For the year-to-date period, other (expense) income, net, totaled ($431,000) in 2023 and $316,000 in 2022. The increases in expense for both the quarter and year-to-date periods was primarily due to an increase in the non-service costs components of pension expense this year. See Note 7 in the Notes to Consolidated Condensed Financial Statements (Unaudited) for additional details.

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The effective income tax rates for the three months ended September 30, 2023 and 2022 were 25.7% and 24.4%, respectively. The effective income tax rates for the nine months ended September 30, 2023 and 2022 were 25.8% and 24.8%, respectively. The 2023 and 2022 effective tax rates differed from the federal rate of 21% primarily because of state and foreign taxes.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash, short-term investments, short-term marketable securities, and our revolving line of credit. During the first nine months of 2023, we generated $62.9 million of cash from operations compared to a use of cash totaling $42.1 million in the same period one year ago. The increase in 2023 was primarily due to changes in operating assets and liabilities, principally inventory. Our inventory level was $79.6 million as of September 30, 2023 compared to $128.0 million at December 31, 2022.  We believe our inventory is now at a normalized level, and we continue to review areas of slow-moving product.

We paid dividends totaling $9.3 million and $6.9 million in the first nine months of 2023 and 2022, respectively. The increase in 2023 was due to a shift in timing of our quarterly dividend payment schedule; the first nine months of 2023 included four quarterly dividend payments, as our fourth quarter 2022 dividend was paid in early January 2023. Conversely, the first nine months of 2022 only included three dividend payments, as our fourth quarter 2021 dividend was paid in December 2021. On November 7, 2023, our Board of Directors declared a cash dividend of $0.25 per share to all shareholders of record on November 27, 2023, payable on January 2, 2024.

We repurchase our common stock under our share repurchase program when we believe market conditions are favorable. During the first nine of 2023, we repurchased 135,513 shares for a total cost of $3.4 million. As of September 30, 2023, we had the authority to repurchase approximately 904,000 shares under our previously announced stock repurchase program. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” below for more information.

Capital expenditures totaled $2.6 million in the first nine months of 2023.  Management estimates that total capital expenditures for 2023 will be between $3.0 million and $4.0 million.

On September 28, 2023, we amended our line of credit agreement. The amendment (“Amended Credit Agreement”) extended the maturity of our credit facility to September 28, 2024 and has a maximum available borrowing limit of $40.0 million. Under the terms of the Amended Credit Agreement, amounts outstanding bear interest at the one-month term secured overnight financing rate (“SOFR”) plus 125 basis points. The Amended Credit Agreement is secured by a security interest in our general business assets, and contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At September 30, 2023, there were no outstanding borrowings on the line of credit, and we were in compliance with all financial covenants. At December 31, 2022, outstanding borrowings on the line of credit totaled $31.1 million at an interest rate of 5.77%. So far in 2023, our cash provided by operations exceeded cash outlays, which allowed us to repay outstanding borrowings under our line of credit.

As of September 30, 2023, approximately $4.5 million of cash and cash equivalents was held by our foreign subsidiaries.

We will continue to evaluate the best uses for our available liquidity, including, among other uses, capital expenditures, continued stock repurchases and acquisitions. The Company believes that available cash, short-term investments, marketable securities, cash provided by operations, and available borrowing facilities will provide adequate support for the cash needs of the business for at least one year, although there can be no assurances.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures designed to ensure that the information we must disclose in our filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated our 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, our 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 our periodic filings under the Exchange Act. Such officers have also concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in accumulating and communicating information in a timely manner, allowing timely decisions regarding required disclosures.

There have been no significant 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 our 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.

From time to time, we are engaged in legal proceedings in the ordinary course of business. We are not presently party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, financial condition, operating results or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In 1998, our stock repurchase program was established. On several occasions since the program’s inception, our Board of Directors has increased the number of shares authorized for repurchase under the program. In total, 8.5 million shares have been authorized for repurchase. The table below presents information regarding our repurchases of our common stock in the three-month period ended September 30, 2023.

					Maximum Number
	Total	Average		Total Number of	of Shares
	Number	Price		Shares Purchased as	that May Yet Be
	of Shares	Paid		Part of the Publicly	Purchased Under
Period	Purchased	Per Share		Announced Program	the Program
07/01/2023 - 07/31/2023	7,931	$	26.29	7,931	946,091
08/01/2023 - 08/31/2023	30,144		25.75	30,144	915,947
09/01/2023 - 09/30/2023	12,281		26.08	12,281	903,666
Total	50,356	$	25.92	50,356

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Item 6. Exhibits.

Exhibit	Description	Incorporation Herein By Reference To	Filed Herewith
10.1	Third Amendment to Credit Agreement, dated as of September 28, 2023	Exhibit 10.9 to Form 8-K filed September 29, 2023
10.2	Third Amended and Restated Revolving Loan Note, dated September 28, 2023	Exhibit 10.10 to Form 8-K filed September 29, 2023
31.1	Certification of Chief Executive Officer		X
31.2	Certification of Chief Financial Officer		X
32	Section 906 Certification of Chief Executive Officer and Chief Financial Officer		X
101	The following financial information from Weyco Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets (Unaudited); (ii) Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited); (iii) Consolidated Condensed Statements of Cash Flows (Unaudited); and (iv) Notes to Consolidated Condensed Financial Statements		X
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in iXBRL (included in Exhibit 101).		X

21

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.

	WEYCO GROUP, INC.
Dated: November 9, 2023	/s/ Judy Anderson
	Judy Anderson
	Vice President, Chief Financial Officer and Secretary

22

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Thomas W. Florsheim, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Weyco Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2023	/s/ Thomas W. Florsheim, Jr.
	Thomas W. Florsheim, Jr.
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Judy Anderson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Weyco Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2023	/s/ Judy Anderson
	Judy Anderson
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF PERIODIC FINANCIAL REPORTS

We, Thomas W. Florsheim, Jr., Chief Executive Officer, and Judy Anderson, Chief Financial Officer, of Weyco Group, Inc. each certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(1) The Periodic Report on Form 10-Q for the quarter ended September 30, 2023 (the “Periodic Report”), to which this statement is an exhibit fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

(2) The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Weyco Group, Inc.

Dated: November 9, 2023	/s/ Thomas W. Florsheim, Jr.
	Thomas W. Florsheim, Jr.
	Chief Executive Officer
	/s/ Judy Anderson
	Judy Anderson
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in type form within the electronic version of this written statement required by Section 906, has been provided to Weyco Group, Inc. and will be retained by Weyco Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Oct. 27, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-09068
Entity Registrant Name	WEYCO GROUP, INC.
Entity Incorporation, State or Country Code	WI
Entity Tax Identification Number	39-0702200
Entity Address, Address Line One	333 W. Estabrook Boulevard
Entity Address, Address Line Two	P. O. Box 1188
Entity Address, City or Town	Milwaukee
Entity Address, State or Province	WI
Entity Address, Postal Zip Code	53201
City Area Code	414
Local Phone Number	908-1600
Title of 12(b) Security	Common Stock - $1.00 par value per share
Trading Symbol	WEYS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,497,622
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000106532
Current Fiscal Year End Date	--12-31

XML

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
ASSETS:
Cash and cash equivalents	$ 33,397	$ 16,876
Investments, at fair value	110	107
Marketable securities, at amortized cost	1,096	1,385
Accounts receivable, net	53,209	53,298
Income tax receivable	250	945
Inventories	79,567	127,976
Prepaid expenses and other current assets	3,060	5,870
Total current assets	170,689	206,457
Marketable securities, at amortized cost	6,412	7,123
Deferred income tax benefits	979	1,038
Property, plant and equipment, net	29,337	28,812
Operating lease right-of-use assets	11,546	13,428
Goodwill	12,317	12,317
Trademarks	33,618	33,618
Other assets	23,962	23,827
Total assets	288,860	326,620
LIABILITIES AND EQUITY:
Short-term borrowings		31,136
Accounts payable	4,831	14,946
Dividend payable		2,290
Operating lease liabilities	3,840	4,026
Accrued liabilities	11,389	15,137
Total current liabilities	20,060	67,535
Deferred income tax liabilities	8,485	8,530
Long-term pension liability	15,866	15,523
Operating lease liabilities	8,640	10,661
Other long-term liabilities	426	466
Total liabilities	53,477	102,715
Common stock	9,511	9,584
Capital in excess of par value	71,269	70,475
Reinvested earnings	175,338	164,039
Accumulated other comprehensive loss	(20,735)	(20,193)
Total equity	235,383	223,905
Total liabilities and equity	$ 288,860	$ 326,620

XML

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
Net sales	$ 84,150	$ 96,971	$ 237,458	$ 252,690
Cost of sales	47,997	57,583	135,136	154,404
Gross earnings	36,153	39,388	102,322	98,286
Selling and administrative expenses	23,720	25,181	72,803	72,983
Earnings from operations	12,433	14,207	29,519	25,303
Interest income	269	86	598	266
Interest expense	(5)	(197)	(522)	(209)
Other (expense) income, net	(133)	141	(431)	316
Earnings before provision for income taxes	12,564	14,237	29,164	25,676
Provision for income taxes	3,227	3,467	7,518	6,358
Net earnings	$ 9,337	$ 10,770	$ 21,646	$ 19,318
Basic weighted average shares outstanding	9,451	9,535	9,458	9,560
Diluted weighted average shares outstanding	9,530	9,605	9,539	9,638
Basic earnings per share	$ 0.99	$ 1.13	$ 2.29	$ 2.02
Diluted earnings per share	0.98	1.12	2.27	2.01
Cash dividends declared (per share)	$ 0.25	$ 0.24	$ 0.74	$ 0.72
Comprehensive income	$ 8,656	$ 9,248	$ 21,104	$ 17,406

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 21,646	$ 19,318
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities -
Depreciation	1,930	1,840
Amortization	204	213
Bad debt expense	107	135
Deferred income taxes	(82)	(215)
Net foreign currency transaction gains	(9)	(233)
Share-based compensation expense	996	1,157
Pension expense	970	53
Impairment of trademark		350
Net gain on remeasurement of contingent consideration		(407)
Increase in cash surrender value of life insurance	(315)	(450)
Changes in operating assets and liabilities
Accounts receivable	(6)	(11,188)
Inventories	48,442	(41,134)
Prepaid expenses and other assets	2,775	1,319
Accounts payable	(10,164)	(10,116)
Accrued liabilities and other	(4,331)	(2,571)
Accrued income taxes	775	(139)
Net cash provided by (used for) operating activities	62,938	(42,068)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable securities	1,015	1,495
Proceeds from sale of investment securities		8,050
Purchases of property, plant and equipment	(2,565)	(1,515)
Net cash (used for) provided by investing activities	(1,550)	8,030
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(9,285)	(6,878)
Shares purchased and retired	(3,439)	(3,264)
Net proceeds from stock option exercised	33	276
Payment of contingent consideration	(500)
Taxes paid related to the net share settlement of equity awards	(173)	(12)
Proceeds from bank borrowings	70,060	71,833
Repayments of bank borrowings	(101,196)	(37,168)
Net cash (used for) provided by financing activities	(44,500)	24,787
Effect of exchange rate changes on cash and cash equivalents	(367)	(612)
Net increase (decrease) in cash and cash equivalents	16,521	(9,863)
CASH AND CASH EQUIVALENTS at beginning of period	16,876	19,711
CASH AND CASH EQUIVALENTS at end of period	33,397	9,848
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds	6,462	6,729
Interest paid	$ 971	$ 209

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Financial Statements

9 Months Ended

Sep. 30, 2023

Financial Statements

Financial Statements

1.    Financial Statements

In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly our 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 and nine months ended September 30, 2023, 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 that affect the reported 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, trademarks, and sales allowances could materially differ from those estimates, which would impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.

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New Accounting Pronouncement

9 Months Ended

Sep. 30, 2023

New Accounting Pronouncement

New Accounting Pronouncement

2.    New Accounting Pronouncement

Recently Adopted

In June 2016, the FASB issued Accounting Standards Update (“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, based on historical experience, current conditions, and reasonable forecasts, 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 reinvested earnings in the period of adoption. We adopted this standard in first quarter of 2023. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

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Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share

Earnings Per Share

3.    Earnings Per Share

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands, except per share amounts)
Numerator:
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Denominator:
Basic weighted average shares outstanding		9,451		9,535		9,458		9,560
Effect of dilutive securities:
Employee share-based awards		79		70		81		78
Diluted weighted average shares outstanding		9,530		9,605		9,539		9,638
Basic earnings per share	$	0.99	$	1.13	$	2.29	$	2.02
Diluted earnings per share	$	0.98	$	1.12	$	2.27	$	2.01

Diluted weighted average shares outstanding for the three months ended September 30, 2023, excluded anti-dilutive stock options totaling 606,000 shares of common stock at a weighted average exercise price of $28.13. Diluted weighted average shares outstanding for the nine months ended September 30, 2023, excluded anti-dilutive stock options totaling 692,000 shares of common stock at a weighted average exercise price of $28.56. Diluted weighted average shares outstanding for the three months ended September 30, 2022, excluded anti-dilutive stock options totaling 1,046,000 shares of common stock at a weighted average exercise price of $26.80. Diluted weighted average shares outstanding for the nine months ended September 30, 2022, excluded anti-dilutive stock options totaling 819,000 shares of common stock at a weighted average exercise price of $27.59.

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Investments

9 Months Ended

Sep. 30, 2023

Investments

Investments

4.    Investments

Investments, at fair value

At both September 30, 2023 and December 31, 2022, we had $0.1 million of cash invested in highly liquid taxable bond funds. We classify these investments as trading securities and report them at fair value. There were no significant unrealized gains or losses on these investments in the three or nine months ended September 30, 2023 and 2022. 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 Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures.

Marketable securities, at amortized cost

We also invest in marketable securities. As noted in our Annual Report on Form 10-K for the year ended December 31, 2022, all our marketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to ASC 320, Investments – Debt and Equity Securities, as we have the intent and ability to hold all investments to maturity.

Below is a summary of the amortized cost and estimated market values of our marketable securities as of September 30, 2023, and December 31, 2022.

	September 30, 2023				December 31, 2022
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
	(Dollars in thousands)
Marketable Securities:
Current	$	1,096	$	1,093	$	1,385	$	1,381
Due from one through five years		3,264		3,127		3,977		3,950
Due from six through ten years		3,148		3,069		2,347		2,455
Due from eleven through twenty years		—		—		799		773
Total	$	7,508	$	7,289	$	8,508	$	8,559

The unrealized gains and losses on marketable securities at September 30, 2023, and at December 31, 2022, were as follows:

	September 30, 2023				December 31, 2022
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
	(Dollars in thousands)
Marketable Securities	$	160	$	(379)	$	145	$	(94)

The estimated market values provided are Level 2 valuations as defined by ASC 820. We reviewed our portfolio of investments as of September 30, 2023, and determined that no other-than-temporary market value impairment exists.

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Intangible Assets

9 Months Ended

Sep. 30, 2023

Intangible Assets

Intangible Assets

5.    Intangible Assets

During the nine months ended September 30, 2023, there were no changes in the carrying value of our indefinite-lived intangible assets (goodwill and trademarks). Our amortizable intangible assets, which were included within other assets in the Consolidated Condensed Balance Sheets (unaudited), consisted of the following:

			September 30, 2023						December 31, 2022
	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	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739
Total amortizable intangible assets			$	3,500	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739

Amortization expense related to the intangible assets was approximately $58,000 in both the third quarters of 2023 and 2022. For both the nine-month periods ended September 30, 2023 and September 30, 2022, amortization expense related to the intangible assets was approximately $175,000.

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Segment Information

9 Months Ended

Sep. 30, 2023

Segment Information

Segment Information

6.    Segment Information

We have two reportable segments: North American wholesale operations (“Wholesale”) and North American retail operations (“Retail”). Our Chief Executive Officer evaluates the performance of our segments based on earnings 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 our wholesale and retail operations in Australia, South Africa, and Asia Pacific, which do not meet the criteria for separate reportable segment classification. Summarized segment data for the three and nine-month periods ended September 30, 2023 and 2022, were as follows:

Three Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	68,927	$	7,584	$	7,094	$	83,605
Licensing revenues		545		—		—		545
Net sales	$	69,472	$	7,584	$	7,094	$	84,150
Earnings from operations	$	11,251	$	926	$	256	$	12,433
2022
Product sales	$	81,183	$	7,129	$	8,205	$	96,517
Licensing revenues		454		—		—		454
Net sales	$	81,637	$	7,129	$	8,205	$	96,971
Earnings from operations	$	12,906	$	825	$	476	$	14,207

Nine Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	189,118	$	24,141	$	22,484	$	235,743
Licensing revenues		1,715		—		—		1,715
Net sales	$	190,833	$	24,141	$	22,484	$	237,458
Earnings from operations	$	25,435	$	3,277	$	807	$	29,519
2022
Product sales	$	206,435	$	22,409	$	22,562	$	251,406
Licensing revenues		1,284		—		—		1,284
Net sales	$	207,719	$	22,409	$	22,562	$	252,690
Earnings from operations	$	21,939	$	2,766	$	598	$	25,303

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Employee Retirement Plans

9 Months Ended

Sep. 30, 2023

Employee Retirement Plans

Employee Retirement Plans

7.    Employee Retirement Plans

The components of our pension expense were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Service cost	$	116	$	111	$	350	$	334
Interest cost		658		438		1,974		1,315
Expected return on plan assets		(575)		(751)		(1,726)		(2,253)
Net amortization and deferral		124		219		372		657
Pension expense	$	323	$	17	$	970	$	53

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

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Leases

9 Months Ended

Sep. 30, 2023

Leases

Leases

8.    Leases

We lease retail shoe stores, as well as several office and distribution facilities worldwide. These leases have original lease periods expiring between 2023 and 2029. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of our operating lease costs were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Operating lease costs	$	1,119	$	1,283	$	3,744	$	3,855
Variable lease costs (1)		40		—		91		10
Total lease costs	$	1,159	$	1,283	$	3,835	$	3,865

⁽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 our financial statements.

The following is a schedule of maturities of operating lease liabilities as of September 30, 2023:

	Operating Leases
	(Dollars in thousands)
2023, excluding the nine months ended September 30, 2023	$	1,129
2024		4,054
2025		3,169
2026		2,736
2027		1,599
Thereafter		1,061
Total lease payments		13,748
Less imputed interest		(1,268)
Present value of lease liabilities	$	12,480

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

	September 30, 2023		December 31, 2022
	(Dollars in thousands)
Operating lease liabilities - current	$	3,840	$	4,026
Operating lease liabilities - non-current		8,640		10,661
Total	$	12,480	$	14,687

We determined the present value of our lease liabilities using a weighted-average discount rate of 4.25%.  As of September 30, 2023, our leases had a weighted-average remaining lease term of 3.8 years.

Supplemental cash flow information related to our operating leases is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,204	$	1,160	$	3,728	$	3,444
Right-of-use assets obtained in exchange for new lease liabilities (noncash)	$	99	$	3,710	$	1,571	$	5,870

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Income Taxes

9 Months Ended

Sep. 30, 2023

Income Taxes

Income Taxes

9.    Income Taxes

The effective income tax rates for the three months ended September 30, 2023 and 2022 were 25.7% and 24.4%, respectively. The effective income tax rates for the nine months ended September 30, 2023 and 2022 were 25.8% and 24.8%, respectively. The 2023 and 2022 effective tax rates differed from the federal rate of 21% primarily because of state and foreign taxes.

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Share-Based Compensation Plans

9 Months Ended

Sep. 30, 2023

Share-Based Compensation Plans

Share-Based Compensation Plans

10.  Share-Based Compensation Plans

During the three and nine months ended September 30, 2023, we recognized $321,000 and $996,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2018 through 2023. During the three and nine months ended September 30, 2022, we recognized $339,000 and $1,157,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2017 through 2022.

The following table summarizes our stock option activity for the nine-month period ended September 30, 2023:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Term (Years)	Value*
Outstanding at December 31, 2022	1,345,369	$	25.83
Granted	149,200	$	25.79
Exercised	(404,564)	$	25.36
Forfeited or expired	(31,890)	$	25.59
Outstanding at September 30, 2023	1,058,115	$	26.02	6.9	$	1,682,000
Exercisable at September 30, 2023	609,387	$	26.82	5.7	$	1,041,000

*The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our common stock on September 29, 2023 of $25.35 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

The following table summarizes our restricted stock award activity for the nine-month period ended September 30, 2023:

				Weighted
		Weighted		Average
	Shares of	Average		Remaining	Aggregate
	Restricted	Grant Date		Contractual	Intrinsic
	Stock	Fair Value		Term (Years)	Value*
Non-vested at December 31, 2022	71,808	$	24.67
Issued	27,700		25.79
Vested	(28,243)		25.65
Forfeited	(2,175)		25.13
Non-vested at September 30, 2023	69,090	$	25.54	2.9	$	1,751,000

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our common stock on September 29, 2023 of $25.35 multiplied by the number of non-vested restricted shares outstanding.

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Short-Term Borrowings

9 Months Ended

Sep. 30, 2023

Short-Term Borrowings

Short-Term Borrowings

11.  Short-Term Borrowings

On September 28, 2023, we amended our line of credit agreement. The amendment (“Amended Credit Agreement”) extended the maturity of our credit facility to September 28, 2024 and has a maximum available borrowing limit of $40.0 million. Under the terms of the Amended Credit Agreement, amounts outstanding bear interest at the one-month term secured overnight financing rate (“SOFR”) plus 125 basis points. The Amended Credit Agreement is secured by a security interest in our general business assets, and contains customary representations, warranties, and covenants (including a minimum tangible net worth financial covenant) for a facility of this type. At September 30, 2023, there were no outstanding borrowings on the line of credit, and we were in compliance with all financial covenants.

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Financial Instruments

9 Months Ended

Sep. 30, 2023

Financial Instruments

Financial Instruments

12.  Financial Instruments

At September 30, 2023, our wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $1.2 million U.S. dollars at a price of approximately $1.7 million Australian dollars. These contracts all expire in 2023. Based on quarter-end exchange rates, there were no significant unrealized gains or losses on the outstanding contracts.

We determine 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.

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Comprehensive Income

9 Months Ended

Sep. 30, 2023

Comprehensive Income

Comprehensive Income

13.  Comprehensive Income

Comprehensive income for the three and nine months ended September 30, 2023 and 2022, was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Foreign currency translation adjustments		(773)		(1,684)		(817)		(2,398)
Pension liability adjustment, net of tax of $32, $57, $97, and $171, respectively		92		162		275		486
Total comprehensive income	$	8,656	$	9,248	$	21,104	$	17,406

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

	September 30,		December 31,
	2023		2022
	(Dollars in thousands)
Foreign currency translation adjustments	$	(9,413)	$	(8,596)
Pension liability, net of tax		(11,322)		(11,597)
Total accumulated other comprehensive loss	$	(20,735)	$	(20,193)

The following tables show changes in accumulated other comprehensive loss during the nine months ended September 30, 2023 and 2022:

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2022	$	(8,596)	$	(11,597)	$	(20,193)
Other comprehensive loss before reclassifications		(817)		—		(817)
Amounts reclassified from accumulated other comprehensive loss		—		275		275
Net current period other comprehensive (loss) income		(817)		275		(542)
Ending balance, September 30, 2023	$	(9,413)	$	(11,322)	$	(20,735)

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2021	$	(6,783)	$	(18,011)	$	(24,794)
Other comprehensive loss before reclassifications		(2,398)		—		(2,398)
Amounts reclassified from accumulated other comprehensive loss		—		486		486
Net current period other comprehensive (loss) income		(2,398)		486		(1,912)
Ending balance, September 30, 2022	$	(9,181)	$	(17,525)	$	(26,706)

The following table shows reclassification adjustments out of accumulated other comprehensive loss during the three and nine month periods ended September 30, 2023 and 2022:

	Amounts Reclassified from Accumulated Other Comprehensive Loss									Affected line item in the
	Three Months Ended September 30,				Nine Months Ended September 30,					statement where net income is
	2023		2022		2023		2022			presented
Amortization of defined benefit pension items
Prior service cost	$	5	$	2	$	15	$	5	(1)	Other (expense) income, net
Actuarial losses		119		217		357		652	(1)	Other (expense) income, net
Total before tax		124		219		372		657
Tax benefit		(32)		(57)		(97)		(171)
Net of tax	$	92	$	162	$	275	$	486

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

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Equity

9 Months Ended

Sep. 30, 2023

Equity

Equity

14.  Equity

The following table reconciles our equity for the nine months ended September 30, 2023:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2022	$	9,584	$	70,475	$	164,039	$	(20,193)
Net earnings		—		—		7,445		—
Foreign currency translation adjustments		—		—		—		(306)
Pension liability adjustment, net of tax		—		—		—		99
Cash dividends declared		—		—		(2,289)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		1		15		—		—
Share-based compensation expense		—		338		—		—
Shares purchased and retired		(62)		—		(1,478)		—
Balance, March 31, 2023	$	9,523	$	70,828	$	167,717	$	(20,400)
Net earnings		—		—		4,864		—
Foreign currency translation adjustments		—		—		—		262
Pension liability adjustment, net of tax		—		—		—		84
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		29		(194)		—		—
Share-based compensation expense		—		337		—		—
Shares purchased and retired		(23)		—		(571)		—
Balance, June 30, 2023	$	9,529	$	70,971	$	169,633	$	(20,054)
Net earnings		—		—		9,337		—
Foreign currency translation adjustments		—		—		—		(773)
Pension liability adjustment, net of tax		—		—		—		92
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		6		3		—		—
Issuance of restricted stock		28		(28)		—		—
Restricted stock forfeited		(2)		2		—		—
Share-based compensation expense		—		321		—		—
Shares purchased and retired		(50)		—		(1,255)		—
Balance, September 30, 2023	$	9,511	$	71,269	$	175,338	$	(20,735)

The following table reconciles our equity for the nine months ended September 30, 2022:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2021	$	9,709	$	68,718	$	147,762	$	(24,794)
Net earnings		—		—		4,053		—
Foreign currency translation adjustments		—		—		—		521
Pension liability adjustment, net of tax		—		—		—		154
Cash dividends declared		—		—		(2,316)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		—		8		—		—
Share-based compensation expense		—		350		—		—
Shares purchased and retired		(75)		—		(1,722)		—
Balance, March 31, 2022	$	9,634	$	69,076	$	147,777	$	(24,119)
Net earnings		—		—		4,495		—
Foreign currency translation adjustments		—		—		—		(1,235)
Pension liability adjustment, net of tax		—		—		—		170
Cash dividends declared		—		—		(2,307)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		15		193		—		—
Share-based compensation expense		—		468		—		—
Shares purchased and retired		(29)		—		(701)		—
Balance, June 30, 2022	$	9,620	$	69,737	$	149,264	$	(25,184)
Net earnings		—		—		10,770		—
Foreign currency translation adjustments		—		—		—		(1,684)
Pension liability adjustment, net of tax		—		—		—		162
Cash dividends declared		—		—		(2,310)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		3		45		—		—
Issuance of restricted stock		28		(28)		—		—
Share-based compensation expense		—		339		—		—
Shares purchased and retired		(30)		—		(707)		—
Balance, September 30, 2022	$	9,621	$	70,093	$	157,017	$	(26,706)

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Financial Statements (Policies)

9 Months Ended

Sep. 30, 2023

Financial Statements

Use of Estimates

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 that affect the reported 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, trademarks, and sales allowances could materially differ from those estimates, which would impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.

Recently Adopted

Recently Adopted

In June 2016, the FASB issued Accounting Standards Update (“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, based on historical experience, current conditions, and reasonable forecasts, 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 reinvested earnings in the period of adoption. We adopted this standard in first quarter of 2023. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share

Schedule of computation of basic and diluted earnings per share

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(In thousands, except per share amounts)
Numerator:
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Denominator:
Basic weighted average shares outstanding		9,451		9,535		9,458		9,560
Effect of dilutive securities:
Employee share-based awards		79		70		81		78
Diluted weighted average shares outstanding		9,530		9,605		9,539		9,638
Basic earnings per share	$	0.99	$	1.13	$	2.29	$	2.02
Diluted earnings per share	$	0.98	$	1.12	$	2.27	$	2.01

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Investments (Tables)

9 Months Ended

Sep. 30, 2023

Investments

Schedule of marketable securities

	September 30, 2023				December 31, 2022
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
	(Dollars in thousands)
Marketable Securities:
Current	$	1,096	$	1,093	$	1,385	$	1,381
Due from one through five years		3,264		3,127		3,977		3,950
Due from six through ten years		3,148		3,069		2,347		2,455
Due from eleven through twenty years		—		—		799		773
Total	$	7,508	$	7,289	$	8,508	$	8,559

Schedule of unrealized gains and losses on marketable securities

	September 30, 2023				December 31, 2022
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
	(Dollars in thousands)
Marketable Securities	$	160	$	(379)	$	145	$	(94)

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Intangible Assets

Schedule of company's amortizable intangible assets

			September 30, 2023						December 31, 2022
	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	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739
Total amortizable intangible assets			$	3,500	$	(2,936)	$	564	$	3,500	$	(2,761)	$	739

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2023

Segment Information

Schedule of segment reporting information

Three Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	68,927	$	7,584	$	7,094	$	83,605
Licensing revenues		545		—		—		545
Net sales	$	69,472	$	7,584	$	7,094	$	84,150
Earnings from operations	$	11,251	$	926	$	256	$	12,433
2022
Product sales	$	81,183	$	7,129	$	8,205	$	96,517
Licensing revenues		454		—		—		454
Net sales	$	81,637	$	7,129	$	8,205	$	96,971
Earnings from operations	$	12,906	$	825	$	476	$	14,207

Nine Months Ended
September 30,	Wholesale		Retail		Other		Total
	(Dollars in thousands)
2023
Product sales	$	189,118	$	24,141	$	22,484	$	235,743
Licensing revenues		1,715		—		—		1,715
Net sales	$	190,833	$	24,141	$	22,484	$	237,458
Earnings from operations	$	25,435	$	3,277	$	807	$	29,519
2022
Product sales	$	206,435	$	22,409	$	22,562	$	251,406
Licensing revenues		1,284		—		—		1,284
Net sales	$	207,719	$	22,409	$	22,562	$	252,690
Earnings from operations	$	21,939	$	2,766	$	598	$	25,303

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Employee Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2023

Employee Retirement Plans

Schedule of company's pension expense

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Service cost	$	116	$	111	$	350	$	334
Interest cost		658		438		1,974		1,315
Expected return on plan assets		(575)		(751)		(1,726)		(2,253)
Net amortization and deferral		124		219		372		657
Pension expense	$	323	$	17	$	970	$	53

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases

Schedule of operating lease costs

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Operating lease costs	$	1,119	$	1,283	$	3,744	$	3,855
Variable lease costs (1)		40		—		91		10
Total lease costs	$	1,159	$	1,283	$	3,835	$	3,865

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

Schedule of maturities of operating lease liabilities

	Operating Leases
	(Dollars in thousands)
2023, excluding the nine months ended September 30, 2023	$	1,129
2024		4,054
2025		3,169
2026		2,736
2027		1,599
Thereafter		1,061
Total lease payments		13,748
Less imputed interest		(1,268)
Present value of lease liabilities	$	12,480

	September 30, 2023		December 31, 2022
	(Dollars in thousands)
Operating lease liabilities - current	$	3,840	$	4,026
Operating lease liabilities - non-current		8,640		10,661
Total	$	12,480	$	14,687

Schedule of supplemental cash flow information

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,204	$	1,160	$	3,728	$	3,444
Right-of-use assets obtained in exchange for new lease liabilities (noncash)	$	99	$	3,710	$	1,571	$	5,870

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Share-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Compensation Plans

Schedule of company's stock option activity

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Term (Years)	Value*
Outstanding at December 31, 2022	1,345,369	$	25.83
Granted	149,200	$	25.79
Exercised	(404,564)	$	25.36
Forfeited or expired	(31,890)	$	25.59
Outstanding at September 30, 2023	1,058,115	$	26.02	6.9	$	1,682,000
Exercisable at September 30, 2023	609,387	$	26.82	5.7	$	1,041,000

*The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our common stock on September 29, 2023 of $25.35 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

Schedule of company's restricted stock award

				Weighted
		Weighted		Average
	Shares of	Average		Remaining	Aggregate
	Restricted	Grant Date		Contractual	Intrinsic
	Stock	Fair Value		Term (Years)	Value*
Non-vested at December 31, 2022	71,808	$	24.67
Issued	27,700		25.79
Vested	(28,243)		25.65
Forfeited	(2,175)		25.13
Non-vested at September 30, 2023	69,090	$	25.54	2.9	$	1,751,000

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our common stock on September 29, 2023 of $25.35 multiplied by the number of non-vested restricted shares outstanding.

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2023

Comprehensive Income

Schedule of comprehensive income

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Net earnings	$	9,337	$	10,770	$	21,646	$	19,318
Foreign currency translation adjustments		(773)		(1,684)		(817)		(2,398)
Pension liability adjustment, net of tax of $32, $57, $97, and $171, respectively		92		162		275		486
Total comprehensive income	$	8,656	$	9,248	$	21,104	$	17,406

Schedule of accumulated other comprehensive loss

	September 30,		December 31,
	2023		2022
	(Dollars in thousands)
Foreign currency translation adjustments	$	(9,413)	$	(8,596)
Pension liability, net of tax		(11,322)		(11,597)
Total accumulated other comprehensive loss	$	(20,735)	$	(20,193)

Schedule of changes in accumulated other comprehensive loss

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2022	$	(8,596)	$	(11,597)	$	(20,193)
Other comprehensive loss before reclassifications		(817)		—		(817)
Amounts reclassified from accumulated other comprehensive loss		—		275		275
Net current period other comprehensive (loss) income		(817)		275		(542)
Ending balance, September 30, 2023	$	(9,413)	$	(11,322)	$	(20,735)

	Foreign		Defined
	Currency		Benefit
	Translation		Pension
	Adjustments		Items		Total
Beginning balance, December 31, 2021	$	(6,783)	$	(18,011)	$	(24,794)
Other comprehensive loss before reclassifications		(2,398)		—		(2,398)
Amounts reclassified from accumulated other comprehensive loss		—		486		486
Net current period other comprehensive (loss) income		(2,398)		486		(1,912)
Ending balance, September 30, 2022	$	(9,181)	$	(17,525)	$	(26,706)

Schedule of reclassification adjustments out of accumulated other comprehensive loss

	Amounts Reclassified from Accumulated Other Comprehensive Loss									Affected line item in the
	Three Months Ended September 30,				Nine Months Ended September 30,					statement where net income is
	2023		2022		2023		2022			presented
Amortization of defined benefit pension items
Prior service cost	$	5	$	2	$	15	$	5	(1)	Other (expense) income, net
Actuarial losses		119		217		357		652	(1)	Other (expense) income, net
Total before tax		124		219		372		657
Tax benefit		(32)		(57)		(97)		(171)
Net of tax	$	92	$	162	$	275	$	486

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

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Equity (Tables)

9 Months Ended

Sep. 30, 2023

Equity

Schedule of reconciliation of company's equity

The following table reconciles our equity for the nine months ended September 30, 2023:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2022	$	9,584	$	70,475	$	164,039	$	(20,193)
Net earnings		—		—		7,445		—
Foreign currency translation adjustments		—		—		—		(306)
Pension liability adjustment, net of tax		—		—		—		99
Cash dividends declared		—		—		(2,289)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		1		15		—		—
Share-based compensation expense		—		338		—		—
Shares purchased and retired		(62)		—		(1,478)		—
Balance, March 31, 2023	$	9,523	$	70,828	$	167,717	$	(20,400)
Net earnings		—		—		4,864		—
Foreign currency translation adjustments		—		—		—		262
Pension liability adjustment, net of tax		—		—		—		84
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		29		(194)		—		—
Share-based compensation expense		—		337		—		—
Shares purchased and retired		(23)		—		(571)		—
Balance, June 30, 2023	$	9,529	$	70,971	$	169,633	$	(20,054)
Net earnings		—		—		9,337		—
Foreign currency translation adjustments		—		—		—		(773)
Pension liability adjustment, net of tax		—		—		—		92
Cash dividends declared		—		—		(2,377)		—
Stock options exercised, net of shares withheld for employee taxes and strike price		6		3		—		—
Issuance of restricted stock		28		(28)		—		—
Restricted stock forfeited		(2)		2		—		—
Share-based compensation expense		—		321		—		—
Shares purchased and retired		(50)		—		(1,255)		—
Balance, September 30, 2023	$	9,511	$	71,269	$	175,338	$	(20,735)

The following table reconciles our equity for the nine months ended September 30, 2022:

							Accumulated
			Capital in				Other
	Common		Excess of		Reinvested		Comprehensive
	Stock		Par Value		Earnings		Loss
	(Dollars in thousands)
Balance, December 31, 2021	$	9,709	$	68,718	$	147,762	$	(24,794)
Net earnings		—		—		4,053		—
Foreign currency translation adjustments		—		—		—		521
Pension liability adjustment, net of tax		—		—		—		154
Cash dividends declared		—		—		(2,316)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		—		8		—		—
Share-based compensation expense		—		350		—		—
Shares purchased and retired		(75)		—		(1,722)		—
Balance, March 31, 2022	$	9,634	$	69,076	$	147,777	$	(24,119)
Net earnings		—		—		4,495		—
Foreign currency translation adjustments		—		—		—		(1,235)
Pension liability adjustment, net of tax		—		—		—		170
Cash dividends declared		—		—		(2,307)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		15		193		—		—
Share-based compensation expense		—		468		—		—
Shares purchased and retired		(29)		—		(701)		—
Balance, June 30, 2022	$	9,620	$	69,737	$	149,264	$	(25,184)
Net earnings		—		—		10,770		—
Foreign currency translation adjustments		—		—		—		(1,684)
Pension liability adjustment, net of tax		—		—		—		162
Cash dividends declared		—		—		(2,310)		—
Stock options exercised, net of shares withheld for emloyee taxes and strike price		3		45		—		—
Issuance of restricted stock		28		(28)		—		—
Share-based compensation expense		—		339		—		—
Shares purchased and retired		(30)		—		(707)		—
Balance, September 30, 2022	$	9,621	$	70,093	$	157,017	$	(26,706)

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Earnings Per Share- Basic and diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net earnings	$ 9,337	$ 10,770	$ 21,646	$ 19,318
Denominator:
Basic weighted average shares outstanding	9,451	9,535	9,458	9,560
Effect of dilutive securities:
Employee share-based awards	79	70	81	78
Diluted weighted average shares outstanding	9,530	9,605	9,539	9,638
Basic earnings per share	$ 0.99	$ 1.13	$ 2.29	$ 2.02
Diluted earnings per share	$ 0.98	$ 1.12	$ 2.27	$ 2.01

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Earnings Per Share - Additional Information (Details) - $ / shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	606,000	1,046,000	692,000	819,000
Weighted Average Exercise Price of Antidilutive Securities Excluded from Computation of Earnings Per Share (in dollars per share)	$ 28.13	$ 26.80	$ 28.56	$ 27.59

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Investments - Investments, at fair value (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Investments
Investments, at fair value	$ 110		$ 110		$ 107
Unrealized gain losses on investments	$ 0	$ 0	$ 0	$ 0

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Investments - Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Investments
Amortized Cost, Current	$ 1,096	$ 1,385
Amortized Cost, Due from one through five years	3,264	3,977
Amortized Cost, Due from six through ten years	3,148	2,347
Amortized Cost, Due from eleven through twenty years		799
Amortized Cost, Total	7,508	8,508
Market Value, Current	1,093	1,381
Market Value, Due from one through five years	3,127	3,950
Market Value, Due from six through ten years	3,069	2,455
Market Value, Due from eleven through twenty years		773
Market Value, Total	$ 7,289	$ 8,559

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Investments - Unrealized gains and losses (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Investments
Unrealized Gains	$ 160	$ 145
Unrealized Losses	$ (379)	$ (94)

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Intangible Assets - Amortizable intangible assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Amortizable intangible assets
Gross Carrying Amount	$ 3,500	$ 3,500
Accumulated Amortization	(2,936)	(2,761)
Net	$ 564	739
Customer relationships
Amortizable intangible assets
Weighted Average Life (Years)	15 years
Gross Carrying Amount	$ 3,500	3,500
Accumulated Amortization	(2,936)	(2,761)
Net	$ 564	$ 739

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Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Intangible Assets
Impairment of trademark				$ 350,000
indefinite-lived intangible assets	$ 0		$ 0
Amortization of intangible assets	$ 58,000	$ 58,000	$ 175,000	$ 175,000

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Segment Information - Additional Information (Details)	9 Months Ended
	Sep. 30, 2023 segment
Segment Information
Number of reportable segments	2

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Segment Information - Schedule of segment data (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
SEGMENT INFORMATION
Net sales	$ 84,150	$ 96,971	$ 237,458	$ 252,690
Earnings from operations	12,433	14,207	29,519	25,303
Product sales
SEGMENT INFORMATION
Net sales	83,605	96,517	235,743	251,406
Licensing revenues
SEGMENT INFORMATION
Net sales	545	454	1,715	1,284
Wholesale
SEGMENT INFORMATION
Net sales	69,472	81,637	190,833	207,719
Earnings from operations	11,251	12,906	25,435	21,939
Wholesale | Product sales
SEGMENT INFORMATION
Net sales	68,927	81,183	189,118	206,435
Wholesale | Licensing revenues
SEGMENT INFORMATION
Net sales	545	454	1,715	1,284
Retail
SEGMENT INFORMATION
Net sales	7,584	7,129	24,141	22,409
Earnings from operations	926	825	3,277	2,766
Retail | Product sales
SEGMENT INFORMATION
Net sales	7,584	7,129	24,141	22,409
Other
SEGMENT INFORMATION
Net sales	7,094	8,205	22,484	22,562
Earnings from operations	256	476	807	598
Other | Product sales
SEGMENT INFORMATION
Net sales	$ 7,094	$ 8,205	$ 22,484	$ 22,562

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Employee Retirement Plans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Retirement Plans
Service cost	$ 116	$ 111	$ 350	$ 334
Interest cost	658	438	1,974	1,315
Expected return on plan assets	(575)	(751)	(1,726)	(2,253)
Net amortization and deferral	124	219	372	657
Pension expense	$ 323	$ 17	$ 970	$ 53

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Leases - Operating lease costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating lease costs	$ 1,119	$ 1,283	$ 3,744	$ 3,855
Variable lease costs	40		91	10
Total lease costs	$ 1,159	$ 1,283	$ 3,835	$ 3,865

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Leases - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases
2023, excluding the nine months ended September 30, 2023	$ 1,129
2024	4,054
2025	3,169
2026	2,736
2027	1,599
Thereafter	1,061
Total lease payments	13,748
Less imputed interest	(1,268)
Present value of lease liabilities	$ 12,480	$ 14,687

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Leases - Operating lease liabilities classification (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases
Operating lease liabilities - current	$ 3,840	$ 4,026
Operating lease liabilities - non-current	8,640	10,661
Total	$ 12,480	$ 14,687

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Leases - Additional Information (Details)	Sep. 30, 2023
Leases
Weighted-average discount rate (percent)	4.25%
Weighted-average remaining lease term	3 years 9 months 18 days

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Leases - Supplemental cash flow information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases
Cash paid for amounts included in the measurement of lease liabilities	$ 1,204	$ 1,160	$ 3,728	$ 3,444
Right-of-use assets obtained in exchange for new lease liabilities (noncash)	$ 99	$ 3,710	$ 1,571	$ 5,870

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Income Taxes - Effective tax rate (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Taxes
U.S. federal statutory income tax rate			21.00%	21.00%
Effective tax rate	25.70%	24.40%	25.80%	24.80%

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Share-Based Compensation Plans- Additional information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Plans
Share-based compensation expense	$ 321,000	$ 339,000	$ 996,000	$ 1,157,000

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Share-Based Compensation Plans - Company's stock option activity (Details) - Employee stock option - USD ($)		9 Months Ended
	Sep. 29, 2023	Sep. 30, 2023
Share-Based Compensation Plans
Shares, Outstanding at beginning of period		1,345,369
Shares, Granted		149,200
Shares, Exercised		(404,564)
Shares, Forfeited or expired		(31,890)
Shares, Outstanding at end of period		1,058,115
Shares, Exercisable at end of period		609,387
Weighted Average Exercise Price, Outstanding at beginning of period (in dollars per share)		$ 25.83
Weighted Average Exercise Price, Granted (in dollars per share)		25.79
Weighted Average Exercise Price, Exercised (in dollars per share)		25.36
Weighted Average Exercise Price, Forfeited or expired (in dollars per share)		25.59
Weighted Average Exercise Price, Outstanding at end of period (in dollars per share)		26.02
Weighted Average Exercise Price, Exercisable at end of period (in dollars per share)		$ 26.82
Weighted Average Remaining Contractual Term (Years), Outstanding		6 years 10 months 24 days
Weighted Average Remaining Contractual Term (Years), Exercisable, Outstanding		5 years 8 months 12 days
Aggregate Intrinsic Value, Outstanding		$ 1,682,000
Aggregate Intrinsic Value, Exercisable		$ 1,041,000
Fair market value of options granted (in dollars per share)	$ 25.35

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Share-Based Compensation Plans - Company's restricted stock award activities (Details) - Restricted stock - USD ($)		9 Months Ended
	Sep. 29, 2023	Sep. 30, 2023
Share-Based Compensation Plans
Shares of Restricted Stock, Non-vested beginning of period		71,808
Shares of Restricted Stock, Issued		27,700
Shares of Restricted Stock, Vested		(28,243)
Shares of Restricted Stock, Forfeited		(2,175)
Shares of Restricted Stock, Non-vested end of period		69,090
Weighted Average Grant Date Fair Value, Non-vested beginning of period (in dollars per share)		$ 24.67
Weighted Average Grant Date Fair Value, Issued (in dollars per share)		25.79
Weighted Average Grant Date Fair Value, Vested (in dollars per share)		25.65
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share)		25.13
Weighted Average Grant Date Fair Value, Non-vested end of period (in dollars per share)		$ 25.54
Weighted Average Remaining Contractual Term (Years)		2 years 10 months 24 days
Aggregate intrinsic value		$ 1,751,000
Fair market value of options granted (in dollars per share)	$ 25.35

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Short-Term Borrowings (Details) - USD ($) $ in Thousands		9 Months Ended
	Sep. 28, 2023	Sep. 30, 2023	Dec. 31, 2022
Short-Term Borrowings
Short-term borrowings			$ 31,136
Revolving credit facility
Short-Term Borrowings
Line of credit facility, expiration date	Sep. 28, 2024
Revolving credit facility
Short-Term Borrowings
Line of credit facility on general corporate assets	$ 40,000
Revolving credit facility | Secured overnight financing rate (SOFR)
Short-Term Borrowings
Spread on variable rate		1.25%

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Financial Instruments (Details) - Sep. 30, 2023 $ in Millions, $ in Millions	USD ($)	AUD ($)
Unrealized gains or losses based on quarter-end exchange rates	$ 0.0
Foreign exchange contracts Australian
Foreign exchange contracts outstanding	$ 1.2	$ 1.7

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Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Comprehensive Income
Net earnings	$ 9,337	$ 10,770	$ 21,646	$ 19,318
Foreign currency translation adjustments	(773)	(1,684)	(817)	(2,398)
Pension liability adjustment, net of tax of $32, $57, $97, and $171, respectively	92	162	275	486
Total comprehensive income	8,656	9,248	21,104	17,406
Pension liability, net of tax	$ 32	$ 57	$ 97	$ 171

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Comprehensive Income - Accumulated other comprehensive loss (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Comprehensive Income
Foreign currency translation adjustments	$ (9,413)	$ (8,596)	$ (9,181)	$ (6,783)
Pension liability, net of tax	(11,322)	(11,597)	(17,525)	(18,011)
Total accumulated other comprehensive loss	$ (20,735)	$ (20,193)	$ (26,706)	$ (24,794)

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Comprehensive Income - Changes in accumulated other comprehensive loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Comprehensive Income
Foreign Currency Translation Adjustments, Beginning balance			$ (8,596)	$ (6,783)
Foreign Currency Translation Adjustments, Other comprehensive income (loss) before reclassifications			(817)	(2,398)
Foreign Currency Translation Adjustments, Amounts reclassified from accumulated other comprehensive loss			0	0
Foreign Currency Translation Adjustments, Net current period other comprehensive (loss) income			(817)	(2,398)
Foreign Currency Translation Adjustments, Ending balance	$ (9,413)	$ (9,181)	(9,413)	(9,181)
Defined Benefit Pension Items, Beginning balance			(11,597)	(18,011)
Defined Benefit Pension Items, Other comprehensive (loss) income before reclassifications			0	0
Defined Benefit Pension Items, Amounts reclassified from accumulated other comprehensive loss	92	162	275	486
Defined Benefit Pension Items, Net current period other comprehensive (loss) income			275	486
Defined Benefit Pension Items, Ending balance	(11,322)	(17,525)	(11,322)	(17,525)
Beginning balance			(20,193)	(24,794)
Other comprehensive loss before reclassifications			(817)	(2,398)
Amounts reclassified from accumulated other comprehensive loss			275	486
Net current period other comprehensive (loss) income			(542)	(1,912)
Ending balance	$ (20,735)	$ (26,706)	$ (20,735)	$ (26,706)

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Comprehensive Income - Reclassification adjustments out of accumulated other comprehensive loss (Details) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
		Sep. 30, 2023		Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Amortization of defined benefit pension items
Prior service cost	[1]	$ 5		$ 2	$ 15	$ 5
Actuarial losses	[1]	119		217	357	652
Total before tax		124		219	372	657
Tax benefit		(32)	[1]	(57)	(97)	(171)
Net of tax		$ 92		$ 162	$ 275	$ 486

[1] These amounts were included in pension expense. See Note 7 for additional details.

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Equity (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Equity
Balance at beginning			$ 223,905				$ 223,905
Net earnings	$ 9,337			$ 10,770			21,646	$ 19,318
Foreign currency translation adjustments	(773)			(1,684)			(817)	(2,398)
Pension liability adjustment, net of tax							275	486
Balance at ending	235,383						235,383
Common stock
Equity
Balance at beginning	9,529	$ 9,523	9,584	9,620	$ 9,634	$ 9,709	9,584	9,709
Net earnings	0	0	0	0	0	0
Foreign currency translation adjustments	0	0	0	0	0	0
Pension liability adjustment, net of tax	0	0	0	0	0	0
Cash dividends declared	0	0	0	0	0	0
Stock options exercised, net of shares withheld for employee taxes and strike price	6	29	1	3	15	0
Issuance of restricted stock	28			28
Restricted stock forfeited	(2)
Share-based compensation expense	0	0	0	0	0	0
Shares purchased and retired	(50)	(23)	(62)	(30)	(29)	(75)
Balance at ending	9,511	9,529	9,523	9,621	9,620	9,634	9,511	9,621
Capital in excess of par value
Equity
Balance at beginning	70,971	70,828	70,475	69,737	69,076	68,718	70,475	68,718
Net earnings	0	0	0	0	0	0
Foreign currency translation adjustments	0	0	0	0	0	0
Pension liability adjustment, net of tax	0	0	0	0	0	0
Cash dividends declared	0	0	0	0	0	0
Stock options exercised, net of shares withheld for employee taxes and strike price	3	(194)	15	45	193	8
Issuance of restricted stock	(28)			(28)
Restricted stock forfeited	2
Share-based compensation expense	321	337	338	339	468	350
Shares purchased and retired	0	0	0	0	0	0
Balance at ending	71,269	70,971	70,828	70,093	69,737	69,076	71,269	70,093
Reinvested earnings
Equity
Balance at beginning	169,633	167,717	164,039	149,264	147,777	147,762	164,039	147,762
Net earnings	9,337	4,864	7,445	10,770	4,495	4,053
Foreign currency translation adjustments	0	0	0	0	0	0
Pension liability adjustment, net of tax	0	0	0	0	0	0
Cash dividends declared	(2,377)	(2,377)	(2,289)	(2,310)	(2,307)	(2,316)
Stock options exercised, net of shares withheld for employee taxes and strike price	0	0	0	0	0	0
Issuance of restricted stock	0			0
Restricted stock forfeited	0
Share-based compensation expense	0	0	0	0	0	0
Shares purchased and retired	(1,255)	(571)	(1,478)	(707)	(701)	(1,722)
Balance at ending	175,338	169,633	167,717	157,017	149,264	147,777	175,338	157,017
Accumulated other comprehensive loss
Equity
Balance at beginning	(20,054)	(20,400)	(20,193)	(25,184)	(24,119)	(24,794)	(20,193)	(24,794)
Net earnings				0	0	0
Foreign currency translation adjustments	(773)	262	(306)	(1,684)	(1,235)	521
Pension liability adjustment, net of tax	92	84	(99)	162	170	(154)
Cash dividends declared				0	0	0
Stock options exercised, net of shares withheld for employee taxes and strike price				0	0	0
Issuance of restricted stock				0
Share-based compensation expense				0	0	0
Shares purchased and retired				0	0	0
Balance at ending	$ (20,735)	$ (20,054)	$ (20,400)	$ (26,706)	$ (25,184)	$ (24,119)	$ (20,735)	$ (26,706)