WEYCO GROUP INC

The following condensed consolidated balance sheet as of December 31, 2024, 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 (UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(UNAUDITED)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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 three and six months ended June 30, 2025, 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 Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures*,* which will require us to disclose specified additional information in our income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU will also require us to disaggregate our income taxes paid disclosure by federal, state, and foreign taxes, with further disaggregation required for significant individual jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024 and interim periods within fiscal years beginning after December 15, 2025 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.

In November 2024, the FASB issued ASU 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, 2025 excluded anti-dilutive stock options totaling 168,000 shares of common stock at a weighted average exercise price of $31.92. Diluted weighted average shares outstanding for the six months ended June 30, 2025 excluded anti-dilutive stock options totaling 115,000 shares of common stock at a weighted average exercise price of $34.56. Diluted weighted average shares outstanding for the three months ended June 30, 2024 excluded anti-dilutive stock options totaling 393,000 shares of common stock at a weighted average exercise price of $30.15. Diluted weighted average shares outstanding for the six months ended June 30, 2024 excluded anti-dilutive stock options totaling 394,000 shares of common stock at a weighted average exercise price of $30.15.

4. Investments

All our marketable securities are classified as held-to-maturity debt securities and reported at amortized cost pursuant to Accounting Standards Codification (“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 the estimated market values of our marketable securities as of June 30, 2025, and December 31, 2024.

The unrealized gains and losses on marketable securities at June 30, 2025, and at December 31, 2024, 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, 2025, and determined that no other-than-temporary market value impairment exists.

5. 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, 2025. Our amortizable intangible assets, which were included within other assets in the Condensed Consolidated Balance Sheets, consisted of the following:

Amortization expense related to the intangible assets was $58,000 in both the second quarters of 2025 and 2024. For both the six-month periods ended June 30, 2025 and June 30, 2024, amortization expense related to the intangible assets was $116,000.

6. 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) Other net sales and losses from operations were derived from our wholesale and retail operations in Australia, South Africa, and Asia Pacific (collectively, “Florsheim Australia”), which do not meet the criteria for separate reportable segment classification. We ceased operations in the Asia Pacific region in 2023 and completed the wind down of that business in 2024. Accordingly, quarter and year-to-date 2025 operating results of the other category only reflect the operations of Australia and South Africa.

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.

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

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

7. 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 expense, net” in the Condensed Consolidated Statements of Earnings.

8. Leases

We lease retail shoe stores, as well as several office and distribution facilities worldwide. The leases have original lease periods expiring between 2025 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:

(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 June 30 2025:

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 4.89%. As of June 30, 2025, our leases had a weighted-average remaining lease term of 3.2 years.

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

9. Income Taxes

The effective income tax rates for the three months ended June 30, 2025 and 2024 were 51.1% and 25.1%, respectively. For the six months ended June 30, the effective tax rates were 35.8% in 2025 and 25.9% in 2024. 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 on deferred tax assets at Florsheim Australia, as it was determined more likely than not that these assets will not be realized. The three and six months ended June 30, 2024 effective tax rates differed from the U.S. federal rate of 21% primarily because of U.S. state taxes.

10. Share-Based Compensation Plans

During the three and six months ended June 30, 2025, we recognized $375,000 and $802,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2020 through 2024. During the three and six months ended June 30, 2024, we recognized $331,000 and $698,000, respectively, of compensation expense associated with stock option and restricted stock awards granted in years 2019 through 2023.

The following table summarizes our stock option activity for the six-month period ended June 30, 2025:

*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, 2025 of $33.16 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, 2025:

*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our Company’s common stock on June 30, 2025 of $33.16 multiplied by the number of non-vested restricted shares outstanding.

11. Short-Term Borrowings

At June 30, 2025, 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 26, 2025. Outstanding advances on the line of credit bear interest at the one-month term secured overnight financing rate (“SOFR”) plus 125 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, 2025 and December 31, 2024, there wereno outstanding borrowings on the line of credit, and we were in compliance with all financial covenants.

12. 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, 2025 and 2024:

The following table shows reclassification adjustments out of accumulated other comprehensive loss, net of tax, during the three and six months ended June 30, 2025 and 2024:

13. Equity

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

The following table reconciles our equity for the three and six months ended June 30, 2024: