Exhibit 99
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ROCKY SHOES & BOOTS, INC. |
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Company Contact:
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Jim McDonald |
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Chief Financial Officer |
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(740) 753-1951 |
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Investor Relations:
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Integrated Corporate Relations, Inc. |
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Brendon E. Frey/Chad A. Jacobs |
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(203) 682-8200 |
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Media Relations:
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Integrated Corporate Relations, Inc. |
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Megan McDonnell |
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(203) 682-8200 |
ROCKY SHOES & BOOTS, INC. REPORTS RECORD THIRD QUARTER REVENUES AND
EARNINGS
— Third Quarter Revenues Increase 88.0% to a Record $94.1 million —
— Reports Record Third Quarter Diluted Earnings Per Share of
$1.15 —
NELSONVILLE, Ohio, October 26, 2005 – Rocky Shoes & Boots, Inc. (Nasdaq: RCKY) today announced
record financial results for the third quarter and nine month period ended September 30, 2005.
For the three months ended September 30, 2005, net sales increased 88.0% to a record $94.1 million
compared to $50.1 million for the corresponding period a year ago. Net income rose to a record $6.5
million versus net income of $4.9 million and diluted earnings per share increased to $1.15 versus
$0.98 last year.
For the nine months ended September 30, 2005, net sales increased 122.5% to a record $221.1 million
compared to net sales of $99.4 million for the nine months ended September 30, 2004. Net income
rose to a record $10.4 million versus net income of $6.4 million a year ago, and diluted earnings
per share increased to $1.86 versus $1.30 for the corresponding period last year.
On January 6, 2005, Rocky Shoe & Boots, Inc. completed the acquisition of EJ Footwear Group. The
results for the three month and nine month period ended September 30, 2005 represent the
performance of the consolidated company, while the year ago results reflect Rocky Shoes & Boots on
a stand-alone basis.
Mike Brooks, Chairman and Chief Executive Officer of Rocky Shoes & Boots, stated, “As we previously
announced, third quarter sales of our outdoor footwear were weaker than expected, partially offset
by strength in our work and western categories. While we are disappointed with our recent
results, we remain very confident in the vitality of our brands and optimistic about our prospects
for growth.”
Third Quarter Results
Net sales for the third quarter increased 88.0% to $94.1 million compared to $50.0 million a year
ago. The third quarter results reflect the acquisition of EJ Footwear, which contributed $43.8
million in revenue during the three month period ended September 30, 2005.
Gross profit in the third quarter of 2005 increased to $34.1 million, or 36.2% of sales, from $16.0
million or 32.0% of sales, for the same period last year. The 420 basis point increase was
primarily due to sales of EJ Footwear product which carry a higher gross margin than Rocky
products.
Selling, general and administrative (SG&A) expenses were $21.8 million, or 23.2% of sales for the
third quarter of 2005 compared to $8.3 million, or 16.6% of sales, a year ago. The increase was
primarily a result of higher SG&A associated with the EJ Footwear business.
Income from operations increased to $12.3 million or 13.0% of net sales for the period from $7.7
million or 15.3% of net sales in the prior year.
Nine Month Results
Net sales for the nine months ended September 30, 2005 increased 122.5% to $221.1 million compared
to $99.3 million a year ago. This was primarily a result of the EJ Footwear acquisition, which
contributed $121.6 million in revenue during the period.
Gross profit increased to $84.0 million, or 38.0% of sales, from $29.4 million or 29.6% of sales,
for the same period last year. The 840 basis point increase was primarily due to sales of EJ
Footwear product which carry a higher gross margin than Rocky products.
Selling, general and administrative (SG&A) expenses were $62.0 million, or 28.0% of sales compared
to $19.0 million, or 19.2% of sales, a year ago. The increase was primarily a result of higher SG&A
associated with the EJ Footwear business.
Income from operations increased to $22.0 million or 10.0% of net sales versus $10.3 million or
10.4% of net sales in the prior year.
Funded Debt and Interest Expense
The Company’s funded debt at September 30, 2005 was $127.5 million versus $32.9 million at
September 30, 2004. The year-over-year increase was principally due to borrowings under the credit
facility to fund the purchase of EJ Footwear. Interest expense increased to $2.5 million for the
third quarter fiscal 2005, versus $0.4 million for same period last year, primarily due to the
increase in borrowings.
Inventory
Inventory increased to $77.3 million at September 30, 2005 compared with $38.7 million on the same
date a year ago, primarily due to the acquisition of EJ Footwear.
Outlook
The Company stated it remains comfortable with its previously updated guidance for fiscal 2005 of
net sales in the range of $294 million to $296 million and diluted earnings per share in the range
of $2.25 to $2.29. The Company also reaffirmed its fiscal 2006 guidance of net sales between $313
million to $318 million and diluted earnings per share in the range of $3.05 to $3.15.
It is important to note that Rocky Shoes & Boots filed a registration statement with the Securities
and Exchange Commission on September 15, 2005 for a follow-on equity offering of 2.6 million shares
of common stock consisting of 2 million primary shares offered by the Company and 600,000 shares
offered by certain selling stockholders. If the equity offering is completed, there will be
dilution to the Company’s forward looking guidance that is not currently reflected in the guidance
issued today, October 26, 2005.
Mr. Brooks concluded, “We are very pleased with our accomplishments year-to-date, particularly our
record sales and profits, as well as our ability to successfully integrate the Rocky and EJ
organizations. Looking ahead, we have a tremendous opportunity to increase our share of the market
and expand our position in the industry. Our entire Company is focused on achieving our strategic
goals and delivering long-term value to our shareholders.”
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 apparel and accessories. The
Company’s footwear, apparel and accessories are marketed through several distribution channels,
primarily under owned brands, ROCKY® and GATES®, and as a result of the acquisition of EJ Footwear,
GEORGIA BOOT®, LEHIGH®, DURANGO, and the licensed brand DICKIES®.
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 sales and earnings guidance for fiscal 2005 (paragraph 16), the potential
dilutive effect of a follow-on offering (paragraph 17), and the achievement of the Company’s
strategic goals (paragraph 18). 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, 2004 (filed March 16, 2005)
quarterly report on Form 10-Q for the quarter ended June 30, 2005 (filed August 9, 2005), and
amended quarterly report on Form 10-Q for the quarter ended March 31, 2005 (filed September 13,
2005). 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 SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
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September 30, 2005 |
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September 30, 2004 |
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Unaudited |
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December 31, 2004 |
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Unaudited |
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ASSETS: |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
2,050,120 |
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$ |
5,060,859 |
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$ |
780,739 |
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Trade
receivables — net |
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83,711,308 |
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27,182,198 |
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45,522,136 |
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Other receivables |
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1,629,606 |
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1,114,959 |
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782,285 |
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Inventories |
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77,322,005 |
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32,959,124 |
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38,738,153 |
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Deferred income taxes |
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1,297,850 |
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230,151 |
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959,810 |
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Income tax receivable |
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2,264,531 |
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Prepaid expenses |
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1,339,103 |
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588,618 |
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809,482 |
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Total current assets |
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167,349,992 |
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69,400,440 |
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87,592,605 |
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FIXED ASSETS
— net |
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23,690,488 |
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20,179,486 |
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20,091,910 |
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DEFERRED PENSION ASSET |
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1,347,825 |
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1,347,824 |
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2,499,524 |
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IDENTIFIED INTANGIBLES |
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47,116,646 |
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2,561,427 |
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2,708,179 |
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GOODWILL |
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20,620,543 |
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1,557,861 |
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1,557,861 |
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OTHER ASSETS |
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4,072,998 |
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1,658,616 |
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587,942 |
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TOTAL ASSETS |
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$ |
264,198,492 |
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$ |
96,705,654 |
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$ |
115,038,021 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY: |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
13,242,936 |
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$ |
4,349,248 |
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$ |
6,704,676 |
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Current
maturities — long term debt |
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6,389,559 |
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6,492,020 |
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525,596 |
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Accrued expenses: |
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Income taxes |
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3,222,774 |
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2,354,207 |
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Taxes — other |
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596,460 |
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422,692 |
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382,846 |
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Salaries and wages |
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2,656,279 |
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1,295,722 |
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2,270,769 |
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Other |
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2,717,026 |
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1,228,708 |
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1,328,492 |
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Total current liabilities |
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28,825,034 |
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13,788,390 |
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13,566,586 |
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LONG TERM
DEBT — less current maturities |
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121,111,944 |
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10,044,544 |
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32,388,913 |
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DEFERRED INCOME TAXES |
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18,527,196 |
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1,205,814 |
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262,907 |
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DEFERRED LIABILITIES |
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1,472,442 |
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296,108 |
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2,232,671 |
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TOTAL LIABILITIES |
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169,936,616 |
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25,334,856 |
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48,451,077 |
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SHAREHOLDERS’ EQUITY: |
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Common stock, no par value; |
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10,000,000 shares authorized; issued and
outstanding September 30, 2005 - 5,295,725;
December 31, 2004 - 4,694,670;
September 30, 2004 - 4,620,170 |
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50,694,385 |
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38,399,114 |
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36,674,834 |
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Accumulated other comprehensive loss |
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(889,564 |
) |
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(1,077,586 |
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(1,950,400 |
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Retained earnings |
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44,457,055 |
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34,049,270 |
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31,862,510 |
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Total shareholders’ equity |
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94,261,876 |
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71,370,798 |
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66,586,944 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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$ |
264,198,492 |
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$ |
96,705,654 |
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$ |
115,038,021 |
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ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2005 |
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2004 |
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2005 |
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2004 |
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NET SALES |
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$ |
94,087,786 |
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$ |
50,052,894 |
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$ |
221,105,507 |
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$ |
99,368,970 |
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COST OF GOODS SOLD |
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60,014,309 |
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34,056,404 |
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137,100,919 |
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69,977,667 |
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GROSS MARGIN |
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34,073,477 |
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15,996,490 |
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84,004,588 |
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29,391,303 |
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SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES |
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21,820,251 |
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8,323,464 |
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61,966,723 |
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19,047,531 |
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INCOME FROM OPERATIONS |
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12,253,226 |
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7,673,026 |
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|
22,037,865 |
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10,343,772 |
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OTHER INCOME AND (EXPENSES): |
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Interest expense |
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(2,523,143 |
) |
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(422,120 |
) |
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(6,517,313 |
) |
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(955,561 |
) |
Other — net |
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130,958 |
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(54,404 |
) |
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248,597 |
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43,984 |
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Total other — net |
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(2,392,185 |
) |
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(476,524 |
) |
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(6,268,716 |
) |
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(911,577 |
) |
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INCOME BEFORE INCOME TAXES |
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9,861,041 |
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|
7,196,502 |
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|
15,769,149 |
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|
9,432,195 |
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INCOME TAX EXPENSE |
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3,352,605 |
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|
2,309,143 |
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|
5,361,364 |
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|
3,024,563 |
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NET INCOME |
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$ |
6,508,436 |
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|
$ |
4,887,359 |
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|
$ |
10,407,785 |
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|
$ |
6,407,632 |
|
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NET INCOME PER SHARE |
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Basic |
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$ |
1.23 |
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$ |
1.06 |
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$ |
1.99 |
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|
$ |
1.41 |
|
Diluted |
|
$ |
1.15 |
|
|
$ |
0.98 |
|
|
$ |
1.86 |
|
|
$ |
1.30 |
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING |
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|
|
|
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|
|
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|
Basic |
|
|
5,289,736 |
|
|
|
4,605,800 |
|
|
|
5,232,964 |
|
|
|
4,530,867 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
5,646,161 |
|
|
|
4,992,319 |
|
|
|
5,585,224 |
|
|
|
4,943,929 |
|
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