WEYCO GROUP INC

The following condensed consolidated balance sheet as of December 31, 2025, which has been derived from audited financial statements, and the unaudited interim condensed consolidated 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 condensed consolidated financial statements in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES:

1. Financial Statements

In the opinion of management, the accompanying unaudited condensed consolidated 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 six months ended June 30, 2026, 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 and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. New Accounting Pronouncement

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASC”) No. 2024-03,Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses, which will require us to disclose disaggregated information about certain income statement expense line items. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. We are currently evaluating the potential impact of this standard on our consolidated financial statements and related disclosures.

3. Earnings Per Share

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

Diluted weighted average shares outstanding for the three months ended June 30, 2026 and 2025, excluded share-based awards totaling 59,000 and 168,000, respectively, as the impact of such awards was anti-dilutive. Diluted weighted average shares outstanding for the six months ended June 30, 2026 and 2025, excluded share-based awards totaling 90,000 and 115,000, respectively, as the impact of such awards was anti-dilutive.

4. Investments

All our marketable securities are classified as held-to-maturity debt securities and reported at amortized cost pursuant to ASC 320,Investments – Debt and Equity Securities, as we have both the intent and ability to hold these investments to maturity.

Below is a summary of the amortized cost and estimated market values of our marketable securities as of June 30, 2026, and December 31, 2025.

The unrealized gains and losses on marketable securities at June 30, 2026, and at December 31, 2025, were as follows:

The estimated market values provided are Level 2 valuations as defined by ASC 820,Fair Value Measurements and Disclosures. We reviewed our portfolio of investments as of June 30, 2026, and determined that no other-than-temporary market value impairment exists.

5. ** Tariff Refund Receivable**

In early 2025, the U.S. imposed tariffs on certain imported goods under the International Emergency Economic Powers Act (“IEEPA”). During 2025 and the first quarter of 2026, we paid approximately$19.8 million in IEEPA tariffs. In February 2026, the U.S. Supreme Court invalidated IEEPA tariffs, and in April 2026, U.S. Customs and Border Protection (“CBP”) commenced a phased process for accepting refund claims. Accordingly, in April, we submitted refund claims for our Phase 1 entries totaling$18.6 million, substantially all of which were approved during the second quarter. As a result, during the quarter we recognized:$15.3 million in tariff refunds as a reduction to cost of sales ($14.3 million in the Wholesale segment and$1.0 million in the Retail segment),$3.3 million as a reduction of inventory, and$0.7 million of interest income.

Proceeds from our Phase 1 entries, including tariffs paid and related interest, totaled $19.3 million. We received $1.8 million of these proceeds during the second quarter and the remaining $17.5 million in July 2026. Accordingly,$17.5 million was reflected as a receivable on the Condensed Consolidated Balance Sheets as of June 30, 2026.

Our remaining entries, totaling$1.2 million (now classified as Phase 3 entries), have not yet been assigned a claim submission timeline. Accordingly, the timing and amount of any additional recoveries remain uncertain and subject to execution by CBP.

Following the U.S. Supreme Court's ruling in February 2026, the Administration imposed a 10% incremental tariff under a separate statutory authority, which remained in effect throughout the second quarter. On July 24, 2026, the Administration increased the incremental tariff on imports from China, Dominican Republic, and Vietnam to 12.5%. U.S. trade policies continue to evolve and remain unpredictable, creating near term gross margin uncertainty. We have mitigation strategies in place and will continue to adjust, as appropriate, in response to future policy developments.

6. Intangible Assets

Our indefinite-lived intangible assets, comprised of goodwill and trademarks, are predominantly recorded in our North American Wholesale segment. There wereno changes in the carrying value of our goodwill and trademarks during the six months ended June 30, 2026. Our amortizable intangible assets, which became fully amortized during the first quarter, were included within other assets in the Condensed Consolidated Balance Sheets, and consisted of the following:

Amortization expense related to the intangible assets was $0 and $58,000 in the second quarters of 2026 and 2025, respectively. For the six-month periods ended June 30, 2026 and June 30, 2025, amortization expense related to the intangible assets was $39,000 and $116,000, respectively.

7. Segment Information

We havetwo reportable segments: North American wholesale operations (“Wholesale”) and North American retail operations (“Retail”). Our chief operating decision maker (our CEO) regularly reviews segment-level earnings from operations to assess segment performance and to allocate capital and personnel resources to the segments. The tables below present net sales, significant expenses, and earnings from operations by reportable segment, reconciled to total net sales, earnings from operations, and earnings before provision for income taxes. The significant expense categories and amounts align with the segment-level information that is regularly provided to the CEO. Corporate expenses are included in our Wholesale segment.

(1) In accordance with ASC 280, we have separately reported cost recoveries related to IEEPA tariff refunds for both the three and six months ended June 30, 2026, as these amounts represent significant segment items that align with segment-level information provided to the CEO. There were no IEEPA tariff refunds recognized in the three and six months ended June 30, 2025.

(2) Other net sales and losses from operations were derived from our retail and wholesale operations in Australia and South Africa (collectively, “Florsheim Australia”), which do not meet the criteria for separate reportable segment classification.

Transactions between segments consist of sales from the Wholesale segment to Retail segment. Intersegment sales are valued at the cost of inventory, plus an estimated cost to ship the products. Intersegment sales for the three and six months ended June 30, 2026 were $2.5 million and $5.5 million, respectively. Intersegment sales have been eliminated and are excluded from net sales in the above tables.

Other financial data by segment is disclosed below. Total assets and capital expenditures are not disclosed because our CEO does not review or allocate resources based on such information.

(3)The amounts of depreciation and amortization disclosed by reportable segment are included within segment selling and administrative expenses in the tables above.

(4)Other depreciation and amortization was incurred by Florsheim Australia’s operating segments which are not reportable segments.

8**. Employee Retirement Plans**

The components of pension expense were as follows:

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

On June 22, 2026, our Board of Directors authorized the termination of the Weyco Group, Inc. Pension Plan, as amended and restated (the “Plan”), effective as of August 31, 2026, subject to review by the Pension Benefit Guaranty Corporation under its standard termination procedures. The Board also approved the termination of the Weyco Group, Inc. Pension Trust in connection with the termination of the Plan.

We do not expect to make additional cash contributions to the Plan upon termination, given its overfunded status as of December 31, 2025. However, the actual required contributions will depend on the nature and timing of participant settlements, as well as prevailing market conditions.

9. Leases

We lease retail shoe stores, as well as several office and distribution facilities worldwide. The leases have original lease periods expiring between 2026 and 2031. 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:

Variable lease costs primarily include percentage rentals based upon sales in excess of specified amounts. For the three and six months ended June 30, 2026, variable lease costs were $0.5 million and $0.9 million, respectively.

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 June 30, 2026:

The operating lease liabilities were classified in the Condensed Consolidated Balance Sheets as follows:

We determined the present value of our lease liabilities using a weighted-average discount rate of 4.93%. As of June 30, 2026, our leases had a weighted-average remaining lease term of 2.9 years.

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

10. Income Taxes

The effective income tax rates for the three months ended June 30, 2026 and 2025 were 28.4% and 51.1%, respectively. For the six months ended June 30, the effective tax rates were 27.8% in 2026 and 35.8% in 2025. The three and six months ended June 30, 2026 effective tax rates differed from the U.S. federal rate of 21% primarily because of U.S. state taxes. The three and six months ended June 30, 2025 effective tax rates differed from the U.S. federal rate of 21% primarily because of U.S. state taxes and the establishment of a $1.1 million valuation allowance against Florsheim Australia’s deferred tax assets.

11. Share-Based Compensation Plans

During the three and six months ended June 30, 2026, we recognized $0.4 million and $0.9 million, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2021 through 2025. During the three and six months ended June 30, 2025, we recognized $0.4 million and $0.8 million, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2020 through 2024.

The following table summarizes our stock option activity for the six-month period ended June 30, 2026:

*The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our Company’s common stock on June 30, 2026 of $39.33 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 six-month period ended June 30, 2026:

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our Company’s common stock on June 30, 2026 of $39.33 multiplied by the number of non-vested restricted shares outstanding.

12. Short-Term Borrowings

At June 30, 2026, we had a $40.0 million revolving line of credit with a bank that is secured by a lien against our general business assets and expires on September 25, 2026. Outstanding advances on the line of credit bear interest at the one-month term secured overnight financing rate (“SOFR”) plus 110 basis points. Our line of credit agreement contains representations, warranties and covenants (including a minimum tangible net worth financial covenant) that are customary for a facility of this type. At June 30, 2026 and December 31, 2025, there wereno outstanding borrowings on the line of credit, and we were in compliance with all financial covenants.

13. Financial Instruments

At June 30, 2026, our wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $1.5 million U.S. dollars at a price of approximately $2.1 million Australian dollars. These contracts all expire in 2026. 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.

14. Comprehensive Income

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

The following tables show changes in accumulated other comprehensive loss, net of tax, during the three and six months ended June 30, 2026 and 2025:

The following table shows reclassification adjustments out of accumulated other comprehensive loss, net of tax, during the three and six months ended June 30, 2026 and 2025:

15. Equity

The following table reconciles our equity for the three and six months ended June 30, 2026:

The following table reconciles our equity for the three and six months ended June 30, 2025: