Exhibit 99
         
 
  ROCKY BRANDS, INC.
 
       
 
  Company Contact:   Jim McDonald
 
      Chief Financial Officer
 
      (740) 753-1951
 
       
 
  Investor Relations:   Integrated Corporate Relations, Inc.
 
      Brendon Frey/Chad Jacobs
 
      (203) 682-8200
ROCKY BRANDS, INC. ANNOUNCES THIRD QUARTER FISCAL 2008 RESULTS
Company Reports Third Quarter Diluted Earnings Per Share of $0.43
Wholesale Gross Margin Increased 410 Basis Points
SG&A Expenses Decreased Approximately $3.1 million
Company’s Funded Debt Decreased 12.4% Year-over-Year
NELSONVILLE, Ohio, October 28, 2008 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its third quarter ended September 30, 2008.
For the third quarter of 2008, net sales were $72.5 million versus net sales of $82.3 million in the third quarter of 2007. The Company reported net income of $2.4 million, or $0.43 per diluted share versus net income of $1.1 million or $0.21 per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, “We are pleased with our third quarter results, particularly the significant increase in our bottom line. While the current macroeconomic conditions have created a challenging sales environment, we have continued to focus on areas of our business that we can control such as cost containment and manufacturing efficiencies. Our ability to successfully execute our strategy is reflected in the 410 basis point increase in wholesale gross margins and the $3.1 million or 12.5% reduction in our operating expenses compared with a year ago. We move ahead optimistic about our opportunity to drive improved profitability on a year-over-year basis during the fourth quarter.”
Third Quarter Results
Net sales for the third quarter were $72.5 million compared to $82.3 million a year ago. Wholesale sales for the third quarter were $55.6 million compared to $64.1 million for the same period in 2007. The decline in wholesale sales is primarily attributable to supply chain disruptions combined with the difficult economic conditions. Retail sales for the third quarter were $15.3 million compared to $18.2 million for the same period in 2007. Retail sales were negatively impacted by customer decisions to close plants, reduce headcount, and defer safety shoe purchases as the result of the challenging economy. Military segment sales for the third quarter were $1.6 million, versus no comparable sales in the same period in 2007.
Gross margin in the third quarter was $27.1 million, or 37.4% of sales, compared to $29.3 million or 35.6% of sales, for the same period last year. Wholesale gross margin for the third quarter was $19.7 million, or 35.4% of net sales, compared to $20.0 million, or 31.3% of net sales, in the same period last year. The 410 basis point increase reflects an increase in sales price per unit, as well as a decrease in manufacturing costs resulting from increased operating efficiencies. Retail gross margin for the third quarter was $7.3 million, or 47.5% of net sales, compared to $9.2 million, or 50.8% of net sales, for the same period in 2007. Military gross margin for the third quarter was $0.1 million, or 8.2% of net sales.
Selling, general and administrative (SG&A) expenses decreased 12.5% or $3.1 million to $22.0 million, or 30.3% of sales, for the third quarter of 2008 compared to $25.1 million, or 30.5% of sales, a year ago. The decrease in SG&A expenses is primarily the result of reductions in compensation, distribution and advertising expenses.

 


 

Income from operations increased 200 basis points to $5.1 million or 7.1% of net sales compared to $4.2 million, or 5.1% of net sales, in the prior year.
Income tax expense for the third quarter included a $0.6 million benefit compared to a $0.3 million benefit in the same period last year.
Funded Debt and Interest Expense
The Company’s funded debt decreased $15.2 million, or 12.4% to $107.6 million at September 30, 2008 versus $122.8 million at September 30, 2007. Interest expense decreased to $2.3 million for the third quarter of 2008 versus $2.9 million for the same period last year. The decrease in interest expense was due to reduced borrowings under the Company’s line of credit as well as lower interest rates compared to the same period last year.
Inventory
Inventory decreased $1.8 million to $83.3 million at September 30, 2008 compared with $85.1 million on the same date a year ago.
Mr. Brooks concluded, “We have worked extremely hard over the past year to improve the overall efficiency of our Company and we are pleased with our recent accomplishments. Given the uncertainty in the marketplace we will continue to operate in a conservative manner and will look to capitalize on cost containment opportunities until our growth prospects improve. Importantly, we have reduced our debt levels, which has improved our balance sheet.”
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 Outdoor Gear®, Georgia Boot®, Durango®, Lehigh®, and the licensed brands Dickies®, Zumfoot® and Michelin®.
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 improved profitability (paragraph 3) and our continued conservative manner of operating (paragraph 10). 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, 2007 (filed March 6, 2008), the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008 (filed May 1, 2008), and the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2008 (filed August 6, 2008). 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
                         
    September 30, 2008             September 30, 2007  
    Unaudited     December 31, 2007     Unaudited  
ASSETS:
                       
CURRENT ASSETS:
                       
Cash and cash equivalents
  $ 4,332,477     $ 6,537,884     $ 2,707,273  
Trade receivables — net
    72,654,591       65,931,092       81,279,819  
Other receivables
    1,289,396       674,707       1,064,827  
Inventories
    83,320,590       75,403,664       85,081,978  
Deferred income taxes
    1,978,946       1,952,536       3,902,775  
Income tax receivable
          719,945       2,743,633  
Prepaid expenses
    2,780,959       2,226,920       1,494,045  
 
                 
Total current assets
    166,356,959       153,446,748       178,274,350  
FIXED ASSETS — net
    24,254,455       24,484,050       25,233,363  
DEFERRED PENSION ASSET
                53,866  
IDENTIFIED INTANGIBLES & GOODWILL
    36,044,132       36,509,690       61,548,322  
OTHER ASSETS
    1,740,079       2,284,039       2,618,442  
 
                 
TOTAL ASSETS
  $ 228,395,625     $ 216,724,527     $ 267,728,343  
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
                       
CURRENT LIABILITIES:
                       
Accounts payable
  $ 14,492,182     $ 11,908,902     $ 15,514,243  
Current maturities — long term debt
    464,846       324,648       318,024  
Accrued expenses:
                       
Income taxes payable
    96,666              
Taxes — other
    612,445       516,038       571,718  
Other
    6,980,260       5,421,083       6,150,386  
 
                 
Total current liabilities
    22,646,399       18,170,671       22,554,371  
LONG TERM DEBT — less current maturities
    107,115,967       103,220,384       122,438,442  
DEFERRED INCOME TAXES
    12,569,600       13,247,953       17,009,025  
DEFERRED LIABILITIES
    1,170,026       360,928       335,534  
 
                 
TOTAL LIABILITIES
    143,501,992       134,999,936       162,337,372  
SHAREHOLDERS’ EQUITY:
                       
Common stock, no par value;
                       
25,000,000 shares authorized; issued and outstanding September 30, 2008 — 5,508,278; December 31, 2007 — 5,488,293; September 30, 2007 — 5,488,293
    54,193,211       53,997,960       53,897,100  
 
                       
Accumulated other comprehensive loss
    (1,462,344 )     (1,051,232 )     (916,463 )
Retained earnings
    32,162,766       28,777,863       52,410,334  
 
                 
Total shareholders’ equity
    84,893,633       81,724,591       105,390,971  
 
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 228,395,625     $ 216,724,527     $ 267,728,343  
 
                 

 


 

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2008     2007     2008     2007  
NET SALES
  $ 72,500,603     $ 82,308,547     $ 193,492,740     $ 202,763,235  
 
                               
COST OF GOODS SOLD
    45,414,533       53,030,023       116,060,912       123,477,571  
 
                       
 
                               
GROSS MARGIN
    27,086,070       29,278,524       77,431,828       79,285,664  
 
                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    21,961,032       25,108,505       65,897,978       70,222,025  
 
                       
 
INCOME FROM OPERATIONS
    5,125,038       4,170,019       11,533,850       9,063,639  
 
                               
OTHER INCOME AND (EXPENSES):
                               
Interest expense
    (2,285,051 )     (2,943,139 )     (7,101,237 )     (8,786,060 )
Other — net
    34,254       131,365       31,385       95,364  
 
                       
Total other — net
    (2,250,797 )     (2,811,774 )     (7,069,852 )     (8,690,696 )
 
                               
INCOME/(LOSS) BEFORE INCOME TAXES
    2,874,241       1,358,245       4,463,998       372,943  
 
                               
INCOME TAX EXPENSE/(BENEFIT)
    500,000       209,000       1,056,000       (155,000 )
 
                       
 
                               
NET INCOME/(LOSS)
  $ 2,374,241     $ 1,149,245     $ 3,407,998     $ 527,943  
 
                       
 
                               
NET INCOME/(LOSS) PER SHARE
                               
Basic
  $ 0.43     $ 0.21     $ 0.62     $ 0.10  
Diluted
  $ 0.43     $ 0.21     $ 0.62     $ 0.09  
 
                               
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic
    5,508,278       5,484,923       5,508,132       5,472,233  
 
                       
Diluted
    5,512,514       5,594,707       5,518,018       5,590,879