Rocky Brands, Inc. Announces Fourth Quarter and Full Year 2010 Results

Net Sales Increased 8.2% for the Quarter and 10.2% for the Full Year

Diluted EPS Improved to $0.41 for the Quarter and $1.14 for the Full Year

NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its fourth quarter and fiscal year ended December 31, 2010.

For the fourth quarter of 2010, net sales increased 8.2% to $66.7 million versus net sales of $61.7 million in the fourth quarter of 2009. The Company reported net income of $3.0 million, or $0.41 per diluted share, in the fourth quarter of 2010, versus net income of $0.9 million, or $0.16 per diluted share, for the fourth quarter of 2009.

For fiscal 2010, net sales increased 10.2% to $252.8 million versus net sales of $229.5 million in fiscal 2009. The Company reported net income of $7.7 million, or $1.14 per diluted share, in 2010, versus net income of $1.2 million, or $0.21 per diluted share, in 2009.

Mike Brooks, Chairman and Chief Executive Officer, commented "We ended the year with another strong performance that exceeded internal and external expectations. Our strategic efforts to grow the top line resulted in wholesale sales being up 14% for the quarter and 8% for the full year. The consumer response to our new product introductions and brand extensions has been positive and is fueling additional demand across our account base. In addition to our sales increase, we reduced our operating expenses 5% in 2010 and more than 17% over the past two years. Lastly, we recently completed a successful recapitalization that strengthened our balance sheet and will significantly lower our interest expense going forward. These recent accomplishments have us well positioned for profitable growth in 2011 and we look forward to returning even greater value to our shareholders in the years ahead."

Fourth Quarter Review

Net sales for the fourth quarter increased 8.2% to $66.7 million compared to $61.7 million a year ago. Wholesale sales for the fourth quarter increased 14.4% to $52.5 million compared to $45.9 million for the same period in 2009. Retail sales for the fourth quarter were $12.4 million compared to $12.5 million for the same period last year. Military segment sales for the fourth quarter were $1.8 million versus $3.3 million for the same period in 2009.

Gross margin in the fourth quarter of 2010 was $24.3 million, or 36.5% of sales compared to $22.0 million, or 35.7% for the same period last year. The 80 basis point increase is primarily due to the increase in wholesale sales which carry higher gross margins than our military segment.

Operating expenses were $19.0 million, or 28.4% of sales, for the fourth quarter of 2010 compared to $19.1 million, or 31.0% of sales, a year ago.

Income from operations increased to $5.4 million, or 8.1% of sales, for the period compared to income from operations of $2.9 million, or 4.7% sales, in the prior year.

Interest expense was $1.7 million for the fourth quarter of 2010 versus $1.8 million for the same period last year. The decrease is attributable to reduced borrowings versus a year ago combined with lower interest rates as the result of the new $70 million revolving credit facility with PNC Bank signed in October 2010. This decrease was offset by a non-cash charge of approximately $1 million associated with deferred financing costs relating to the extinguishment of the previous credit facility and term loans.

The Company's funded debt decreased $20.5 million, or 36.9%, to $35.1 million at December 31, 2010 versus $55.6 million at December 31, 2009. This decrease is primarily the result of proceeds from our equity offering in May, 2010 and cash generated from operations.

Conference Call Information

The Company's conference call to review fourth quarter fiscal 2010 results will be broadcast live over the internet today, Tuesday, February 15, 2011 at 4:30 pm Eastern Time. The broadcast will be hosted at http://www.investquest.com/iq/r/rcky.

About Rocky Brands, Inc.

Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky(R), Georgia Boot(R), Durango(R), Lehigh(R), and the licensed brands Michelin(R) and Mossy Oak(R).

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management, and include statements in this press release regarding future shareholder returns (paragraph 3). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company's business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2009 (filed March 2, 2010) and the Company's quarterly reports on Form 10-Q for the quarters ended March 31, 2010 (filed May 3, 2010), June 30, 2010 (filed August 3, 2010), and September 30, 2010 (filed October 28, 1010). One or more of these factors have affected historical results, and could in the future affect the Company's businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company, or any other person should not regard the inclusion of such information as a representation that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.


Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

                                         December 31, 2010   December 31, 2009

                                         Unaudited           Audited

ASSETS:

CURRENT ASSETS:

 Cash and cash equivalents               $ 4,362,531         $ 1,797,093

 Trade receivables - net                   47,593,807          45,831,558

 Other receivables                         911,103             1,476,643

 Inventories                               58,852,556          55,420,467

 Deferred income taxes                     1,218,101           1,475,695

 Prepaid expenses                          1,793,852           1,309,138

        Total current assets               114,731,950         107,310,594

FIXED ASSETS - net                         22,129,282          22,669,876

IDENTIFIED INTANGIBLES                     30,495,485          30,516,910

OTHER ASSETS                               1,222,712           2,892,683

TOTAL ASSETS                             $ 168,579,429       $ 163,390,063

LIABILITIES AND SHAREHOLDERS' EQUITY:

CURRENT LIABILITIES:

 Accounts payable                        $ 9,024,851         $ 6,781,534

 Current maturities - long term debt       487,480             511,870

 Accrued expenses:

 Taxes - other                             590,217             440,223

 Income tax payable                        422,229             26,242

 Other                                     6,050,964           5,226,749

        Total current liabilities          16,575,741          12,986,618

LONG TERM DEBT - less current              34,608,338          55,079,776
maturities

DEFERRED INCOME TAXES                      9,374,685           9,071,639

DEFERRED LIABILITIES                       3,017,107           3,774,356

TOTAL LIABILITIES                          63,575,871          80,912,389

SHAREHOLDERS' EQUITY:

Common stock, no par value;

 25,000,000 shares authorized; issued
 and outstanding December 31, 2010 -       69,052,101          54,598,104
 7,426,787; December 31, 2009 -
 5,576,465

Accumulated other comprehensive loss       (2,828,989  )       (3,217,144  )

Retained earnings                          38,780,446          31,096,714

        Total shareholders' equity         105,003,558         82,477,674

TOTAL LIABILITIES AND SHAREHOLDERS'      $ 168,579,429       $ 163,390,063
EQUITY





Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

                 Three Months Ended                Years Ended

                 December 31,                      December 31,

                 2010             2009             2010              2009

                 Unaudited        Unaudited        Unaudited         Audited

NET SALES        $ 66,729,979     $ 61,659,962     $ 252,792,263     $ 229,485,575

COST OF GOODS      42,397,793       39,628,552       163,419,549       144,928,219
SOLD

GROSS MARGIN       24,332,186       22,031,410       89,372,714        84,557,356

OPERATING
EXPENSES

Selling,
general and        18,955,677       18,430,127       72,303,259        75,072,208
administrative
expenses

Restructuring      -                711,169          -                 711,169
charges

  Total
  operating        18,955,677       19,141,296       72,303,259        75,783,377
  expenses

INCOME FROM        5,376,509        2,890,114        17,069,455        8,773,979
OPERATIONS

OTHER INCOME AND (EXPENSES):

 Interest          (1,743,273 )     (1,834,608 )     (6,464,449  )     (7,500,513  )
 expense

 Other - net       365,762          319,957          652,213           577,856

  Total other      (1,377,511 )     (1,514,651 )     (5,812,236  )     (6,922,657  )
  - net

INCOME BEFORE      3,998,998        1,375,463        11,257,219        1,851,322
INCOME TAXES

INCOME TAX         960,487          465,997          3,573,487         676,515
EXPENSE

NET INCOME       $ 3,038,511      $ 909,466        $ 7,683,732       $ 1,174,807

INCOME PER
SHARE

 Basic           $ 0.41           $ 0.16           $ 1.14            $ 0.21

 Diluted         $ 0.41           $ 0.16           $ 1.14            $ 0.21

WEIGHTED AVERAGE NUMBER OF

COMMON SHARES OUTSTANDING

 Basic             7,417,854        5,564,408        6,747,847         5,551,382

 Diluted           7,436,060        5,592,446        6,764,190         5,551,382




    Source: Rocky Brands, Inc.