Exhibit 99
FOR IMMEDIATE RELEASE For Additional Information
Contact: Jim McDonald
Vice President & CFO
(740) 753-1951
ROCKY SHOES & BOOTS, INC. REPORTS
RECORD THIRD QUARTER RESULTS
Net sales increase 35.8%
Net income per share $0.77 versus $0.52 a year ago
NELSONVILLE, Ohio (October 29, 2003) Rocky Shoes & Boots, Inc. (NASDAQ: RCKY)
today reported record net sales and net income per share for the three months
ended September 30, 2003. Net income increased 45.2% to $3.5 million for the
third quarter 2003 from $2.4 million a year ago. Net income per diluted share
was $0.77 for the quarter versus $0.52 for same period last year.
Mike Brooks, Chairman and Chief Executive Officer, commented, "The record third
quarter results reflect strong sales of our branded products as well as
increased benefits from sourced manufacturing. Branded products introduced
during the past year have been well received and have further strengthened
demand for our growing lines of footwear, clothing and accessories."
Third Quarter Results
Net sales increased 35.8% to $41.3 million for the three months ended September
30, 2003 from $30.5 million for the same period last year. The third quarter
growth was primarily due to $5.4 million of GATES(R) branded sales, a 21.0%
increase in ROCKY(R) branded footwear sales, and higher sales of ROCKY(R)
Outdoor Gear, which more than doubled, compared to the same period a year ago.
Gross profit was a record $13.1 million or 31.6% of net sales for the third
quarter 2003 versus $8.9 million or 29.1% of net sales the prior year. The
principal factor contributing to the record gross profit margin was an increase
in sourced products, which were 73% of net sales for the third quarter 2003
versus 57% for the same period last year.
Selling, general and administrative ("SG&A") expenses were $7.6 million, or
18.4% of net sales, for the three months ended September 30, 2003 versus $5.1
million, or 16.8% of net sales, the prior year. The quarter-over-quarter
difference is primarily attributable to higher incentive compensation accruals
due to increased profits, higher commissions paid as a result of the increase in
net sales, and costs to develop and launch recent product introductions.
Income from operations increased to $5.5 million or 13.2% of net sales for the
third quarter from $3.7 million or 12.3% a year ago.
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Funded Debt
Funded debt was $41.3 million at September 30, 2003 compared with $29.5 million
on the same date last year. Historically, the Company's funded debt is highest
at the end of the third quarter due to significant shipments during the quarter
for the fall and winter seasons. The increase in funded debt at September 30,
2003 compared to last year was principally due to borrowings for the purchase of
certain assets of GATES(R) and the Company's share repurchase program earlier
this year, as well as additional inventory to support sales growth.
Inventory
Inventory was $42.2 million at September 30, 2003 compared with $30.3 million on
the same date a year ago. The increase in inventory is to support sales of
branded products, including new styles introduced during 2003 and inventory to
support sales of GATES(R) branded products. The GATES(R) brand was purchased in
the second quarter of 2003.
Nine Month Results
Net sales and net income for the nine months ended September 30, 2003 were a
record for the year-to-date period. Net sales increased 21.4% to $77.0 million
compared with $63.4 million for the same period last year led by a solid
increase in branded product sales versus a year ago. Gross margin rose to 30.3%
of net sales for the first nine months of 2003 versus 25.4% a year ago, due to
an increase in sourced product sales to 65.5% of net sales compared with 46.6%
for the same period last year and no sales to the U.S. military. SG&A expenses
were 21.9% of net sales versus 21.4% of net sales the prior year. The higher
SG&A expenses for the year-to-date period are primarily attributable to higher
incentive compensation accruals due to increased profits and higher commissions
paid related to the increase in net sales. Income from operations more than
doubled to 8.4% of net sales from 4.1% of net sales last year. Net income was
$3.9 million, or $0.88 per diluted share, for the 2003 year-to-date period
compared with $1.3 million, or $0.28 per diluted share, in 2002.
Outlook
Based on the strong year-to-date performance, the Company anticipates that net
sales for the year 2003 will be approximately $105 million, which are $5 million
above previous guidance and $16 million above last year. This expectation is
based on current orders, sell-through at retail, and initial shipments of
military boots in December 2003. The Company's fourth quarter results are
influenced by re-orders, especially for rugged outdoor footwear, clothing and
accessories, which can be significantly affected by weather and retail
conditions.
If the Company achieves net sales of at least $105 million for the year 2003,
net income is expected to be approximately $1.23 per diluted share for the year
compared with prior guidance of at least $1.05 per diluted share, and $0.62 per
diluted share for the year 2002. The Company cautions investors that the fiscal
2003 net sales and earnings outlook is based on present market conditions. If
net sales do not reach $105 million, actual earnings may be less than this
revised guidance.
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About Rocky Shoes & Boots, Inc.
Rocky Shoes & Boots, Inc. designs, develops, manufactures and markets premium
quality rugged outdoor, occupational, and casual footwear, as well as branded
clothing and accessories. The Company's footwear, clothing and accessories are
marketed through several distribution channels, primarily under the registered
trademarks, ROCKY and GATES.
The Company is conducting a conference call at 10 a.m. Eastern Time on
Wednesday, October 29, 2003 to discuss the third quarter 2003 financial results.
Persons interested in listening to the call can access it through
www.rockyboots.com and clicking on the button "Third Quarter 2003 Conference
Call".
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 stronger demand for the Company's
growing lines of branded products (paragraph 2), and positive outlook for net
sales and earnings for 2003 (paragraphs 10 and 11). These forward-looking
statements involve numerous risks and uncertainties, including the risks that
sales plans will not be met, that present orders may be cancelled or delayed,
that the general economy or consumer spending habits will depress the market for
the Company's products, that there may be disruption in the shipment of products
from overseas to the Company, that the weather in 2003 is drier and warmer than
normal, and all of the other 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, 2002. One or more of these factors have affected, and could in the future
effect, 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.
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ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
NET SALES $ 41,349,824 $ 30,453,543 $ 76,967,913 $ 63,397,202
COST OF GOODS SOLD 28,264,032 21,601,185 53,681,609 47,266,558
------------ ------------ ------------ ------------
GROSS MARGIN 13,085,792 8,852,358 23,286,304 16,130,644
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,628,958 5,119,050 16,823,883 13,535,584
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 5,456,834 3,733,308 6,462,421 2,595,060
OTHER INCOME AND (EXPENSES):
Interest expense (437,241) (422,366) (946,859) (1,038,434)
Other - net (18,744) 102,168 161,359 269,197
------------ ------------ ------------ ------------
Total other - net (455,985) (320,198) (785,500) (769,237)
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAX BENEFIT 5,000,849 3,413,110 5,676,921 1,825,823
INCOME TAX 1,533,254 1,024,933 1,736,076 547,747
------------ ------------ ------------ ------------
NET INCOME $ 3,467,595 $ 2,388,177 $ 3,940,845 $ 1,278,076
============ ============ ============ ============
NET INCOME/(LOSS) PER SHARE
Basic $ 0.84 $ 0.53 $ 0.94 $ 0.28
Diluted $ 0.77 $ 0.52 $ 0.88 $ 0.28
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 4,109,147 4,505,465 4,178,942 4,500,675
============ ============ ============ ============
Diluted 4,512,886 4,555,208 4,459,783 4,613,994
============ ============ ============ ============
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ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2003 2002 2002
UNAUDITED UNAUDITED
------------- ------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,374,062 $ 4,276,722 $ 1,893,242
Trade receivables - net 39,806,328 15,282,618 29,104,380
Other receivables 822,451 1,173,714 1,747,279
Inventories 42,216,415 23,181,989 30,253,309
Deferred income taxes 578,951 584,511 615,609
Prepaid expenses 1,633,904 1,267,097 1,321,298
------------- ------------- -------------
Total current assets $ 86,432,111 $ 45,766,651 $ 64,935,117
FIXED ASSETS - net 17,953,270 19,049,287 19,212,820
DEFERRED PENSION ASSET 1,651,222 1,651,222 2,493,590
DEFERRED INCOME TAXES 153,495 153,495 295,784
OTHER ASSETS 3,704,879 1,796,359 2,230,565
------------- ------------- -------------
TOTAL ASSETS $ 109,894,977 $ 68,417,014 $ 89,167,876
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LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 7,775,924 $ 1,642,306 $ 4,068,998
Current maturities - long-term debt 497,005 486,161 484,200
Accrued taxes - other 377,883 346,168 457,225
Accrued salaries and wages 1,992,671 807,611 1,029,411
Accrued plant closing costs 210,000 210,000 270,499
Accrued other 2,442,185 523,118 1,257,086
------------- ------------- -------------
Total current liabilities 13,295,668 4,015,364 7,567,419
LONG TERM DEBT - less current maturities 40,780,812 10,488,388 29,055,129
DEFERRED LIABILITIES 1,954,277 1,520,338 152,500
------------- ------------- -------------
TOTAL LIABILITIES 56,030,757 16,024,090 36,775,048
SHAREHOLDERS' EQUITY:
Common stock, no par value 32,819,489 35,289,038 35,373,578
Accumulated other comprehensive loss (2,311,749) (2,311,749) (831,161)
Retained earnings 23,356,480 19,415,635 17,850,411
------------- ------------- -------------
Total shareholders' equity 53,864,220 52,392,924 52,392,828
------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 109,894,977 $ 68,417,014 89,167,876
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