Filed
Pursuant to Rule 424(b)(5)
Registration
File No. 333-165170
Prospectus
Supplement
(To
Prospectus dated May 6, 2010)
ROCKY BRANDS, INC.
1,800,000 Shares of Common
Stock
We are
selling 1,800,000 shares of our common stock.
Our
common stock is traded on the NASDAQ Global Select Market under the symbol
“RCKY.” On May 8, 2010, the last sale price of our common stock as reported on
the NASDAQ Global Select Market was $9.15 per
share.
Investing in our common stock
involves risks. See “Risk Factors” beginning on page S-7 of this
prospectus supplement.
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Per Share
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Total
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Public
offering price
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$ |
8.400 |
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$ |
15,120,000 |
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Underwriting
discount
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$ |
.504 |
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$ |
907,200 |
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Proceeds,
before expenses to us
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$ |
7.896 |
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$ |
14,212,800 |
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The
underwriters have a 30-day option to purchase up to 270,000 additional
shares from us on the same terms set forth above to cover over-allotments, if
any.
As of
April 23, 2010, the aggregate market value of our outstanding common stock held
by non-affiliates, or the public float, was approximately $52,416,926, which was
calculated based on 4,959,028 shares of outstanding common stock held by
non-affiliates and on a price per share of $10.57, the closing price of our
common stock on April 23, 2010. We have not offered any securities
pursuant to General Instruction I.B.6 of Form S-3 during the 12 calendar months
prior to and including the date of this prospectus
supplement.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or passed upon the adequacy or accuracy of this prospectus
supplement or the accompanying prospectus. Any representation to the contrary is
a criminal offense.
Sole
Book-Running Manager
The date of this prospectus supplement
is May 10,
2010.
Table
of Contents
Prospectus
Supplement
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Page
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Cautionary
Statement Concerning Forward-Looking Statements
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S-1 |
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About
This Prospectus Supplement
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S-1 |
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Summary
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S-2 |
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Risk
Factors
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S-7 |
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Use
of Proceeds
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S-13 |
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Capitalization
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S-14 |
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Price
Range of Common Stock and Dividend Policy
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S-15 |
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Underwriting
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S-15 |
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Where
You Can Find More Information
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S-17 |
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Incorporation
by Reference
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S-17 |
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Legal
Matters
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S-18 |
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Experts
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S-18 |
Prospectus
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Page
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About
This Prospectus
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2 |
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About
Rocky Brands, Inc.
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3 |
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Risk
Factors
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4 |
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Special
Note Regarding Forward-Looking Statements
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9 |
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Where
You Can Find More Information and Incorporation by
Reference
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10 |
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Use
of Proceeds
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11 |
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Description
of Capital Stock
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11 |
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Plan
of Distribution
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14 |
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Legal
Matters
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15 |
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Experts
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15 |
You
should rely only on the information contained or incorporated by reference to
this prospectus supplement and the accompanying prospectus. Neither we nor the
underwriters have authorized any other person to provide information different
from that contained in this prospectus supplement, the accompanying prospectus
and the documents incorporated by reference herein and therein. If anyone
provides you with different or inconsistent information, you should not rely on
it. You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is accurate as of the dates on their
respective covers, regardless of time of delivery of the prospectus and this
prospectus supplement or any sale of securities. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
This prospectus supplement, the
accompanying prospectus, and the information incorporated by reference in this
prospectus supplement contain forward-looking statements. We
sometimes use words such as “anticipate,” “believe,” “continue,” “estimate,”
“expect,” “intend,” “may,” “plan,” “project,” “will” and similar expressions, as
they relate to us, our management and our industry, to identify forward-looking
statements. Forward-looking statements relate to our expectations,
beliefs, plans, strategies, prospects, future performance, anticipated trends
and other future events. Specifically, this prospectus supplement,
the accompanying prospectus, and the information incorporated by reference in
this prospectus supplement contain forward-looking statements relating to, among
other things:
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our
business, growth, operating and financing
strategies;
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the
introduction or success of new
products;
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the
impact of seasonality and weather on our
operations;
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expectations
regarding our net sales and earnings
growth;
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expectations
regarding our liquidity;
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our
future financing plans; and
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trends
affecting our financial condition or results of
operations.
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We have based our forward-looking
statements largely on our current expectations and projections about future
events and financial trends affecting our business. Actual results
may differ materially. Some of the risks, uncertainties and
assumptions that may cause actual results to differ from these forward-looking
statements are described in “Risk Factors”. In light of these risks,
uncertainties and assumptions, the forward-looking events and circumstances
discussed in this prospectus supplement, the accompanying prospectus, and the
information incorporated by reference in this prospectus supplement might not
occur.
You should read this prospectus
supplement and the documents that we incorporate by reference in this prospectus
supplement and the accompanying prospectus completely and with the understanding
that our future results may be materially different from what we
expect. We qualify all of our forward-looking statements by these
cautionary statements, and we assume no obligation to update these
forward-looking statements publicly for any reason.
About This
Prospectus Supplement
This
prospectus supplement and the accompanying prospectus form part of a
registration statement on Form S-3 that we filed with the Securities and
Exchange Commission, or the “SEC,” using a “shelf” registration process. This
document contains two parts. The first part consists of this prospectus
supplement, which provides you with specific information about this offering.
The second part, the accompanying prospectus, provides more general information,
some of which may not apply to this offering. Generally, when we refer only to
the “prospectus,” we are referring to both parts combined.
In this
prospectus supplement, the “Company,” “we,” “us,” and “our” and similar terms
refer to Rocky Brands, Inc. and its direct and indirect subsidiaries on a
consolidated basis. References to our “common stock” refer to the common stock
of Rocky Brands, Inc.
This
prospectus supplement includes a discussion of risk factors and other special
considerations applicable to this particular offering of securities. This
prospectus supplement, and the information incorporated herein by reference, may
also add, update or change information in the accompanying prospectus. You
should read both this prospectus supplement and the accompanying prospectus
together with additional information described under the heading “Where You Can
Find More Information.” If there is any inconsistency between the information in
this prospectus supplement and the accompanying prospectus, you should rely on
the information in this prospectus supplement.
The information below is only a
summary of more detailed information included elsewhere in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. This
summary may not contain all the information that is important to you or that you
should consider before making a decision to invest in our common stock. Please
read this entire prospectus supplement and the accompanying prospectus,
including the risk factors, as well as the information incorporated by reference
in this prospectus supplement and the accompanying prospectus,
carefully. Unless
the context otherwise indicates, the terms “Company,” “we,” “us,” and “our” and
similar terms refer to Rocky Brands, Inc. and its direct and indirect
subsidiaries on a consolidated basis. References to our “common stock” refer to
the common stock of Rocky Brands, Inc.
We are a leading designer, manufacturer
and marketer of premium quality footwear marketed under a portfolio of well
recognized brand names including Rocky, Georgia Boot, Durango, Lehigh, Mossy
Oak, Michelin and Dickies. Our brands have a long history of representing
high quality, comfortable, functional and durable footwear and our products are
organized around four target markets: outdoor, work, duty and western. Our
footwear products incorporate varying features and are positioned across a range
of suggested retail price points from $29.95 for our value priced products to
$249.95 for our premium products. In addition, as part of our strategy of
outfitting consumers from head-to-toe, we market complementary branded apparel
and accessories that we believe leverage the strength and positioning of each of
our brands. Our exclusive license to use the Dickies brand will terminate on
December 31, 2010.
Competitive
Strengths
Our competitive strengths
include:
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Strong portfolio of
brands. We believe the Rocky, Georgia Boot, Durango,
Lehigh, Mossy Oak, Michelin and Dickies brands are well recognized and
established names that have a reputation for performance, quality and
comfort in the markets they serve: outdoor, work, duty and
western. We plan to continue strengthening these brands through
product innovation in existing footwear markets, by extending certain of
these brands into our other target markets and by introducing
complementary apparel and accessories under our owned
brands.
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Commitment to product
innovation. We believe a critical component of our
success in the marketplace has been a result of our continued commitment
to product innovation. Our consumers demand high quality, durable products
that incorporate the highest level of comfort and the most advanced
technical features and designs. We have a dedicated group of
product design and development professionals, including well recognized
experts in the footwear and apparel industries, who continually interact
with consumers to better understand their needs and are committed to
ensuring our products reflect the most advanced designs, features and
materials available in the
marketplace.
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Long-term retailer
relationships. We believe that our long history of
designing, manufacturing and marketing premium quality, branded footwear
has enabled us to develop strong relationships with our retailers in each
of our distribution channels. We reinforce these relationships
by continuing to offer innovative footwear products, by continuing to meet
the individual needs of each of our retailers and by working with our
retailers to improve the visual merchandising of our products in their
stores. We believe that strengthening our relationships with
retailers will allow us to increase our presence through additional store
locations and expanded shelf space, improve our market position in a
consolidating retail environment and enable us to better understand and
meet the evolving needs of both our retailers and
consumers.
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Diverse product sourcing and
manufacturing capabilities. We believe our strategy, of
utilizing both company operated and third party facilities for the
sourcing of our products, offers several advantages. Operating
our own facilities significantly improves our knowledge of the entire
production process, which allows us to more efficiently source product
from third parties that is of the highest quality and at the lowest cost
available. We intend to continue to source a higher proportion
of our products from third party manufacturers, which we believe will
enable us to obtain high quality products at lower costs per
unit.
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Growth
Strategy
We intend to increase our sales through
the following strategies:
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Expand into new target markets
under existing brands. We believe there is significant
opportunity to extend certain of our brands into our other target
markets. We intend to continue to introduce products across
varying feature sets and price points in order to meet the needs of our
retailers.
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Cross-sell our brands to our
retailers. We believe that many retailers of our existing and
acquired brands target consumers with similar characteristics and, as a
result, we believe there is significant opportunity to offer each of our
retailers a broader assortment of footwear and apparel that target
multiple markets and span a range of feature sets and price
points.
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Expand Business
Internationally. We intend to extend certain of our
brands into international markets. We believe this is a significant
opportunity because of the long history and authentic heritage of these
brands. We intend on growing our business internationally through a
network of distributors.
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Increase apparel
offerings. We believe the long history and authentic
heritage of our owned brands provide significant opportunity to extend
each of these brands into complementary apparel. We intend to
continue to increase our Rocky apparel offerings and believe that similar
opportunities exist for our Georgia Boot and Durango brands in their
respective markets.
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Acquire or develop new
brands. We intend to continue to acquire or develop new
brands that are complementary to our portfolio and could leverage our
operational infrastructure and distribution
network.
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Product Lines
Our product lines consist of high
quality products that target the following markets:
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Outdoor. Our
outdoor product lines consist of footwear, apparel and accessory items
marketed to outdoor enthusiasts who spend time actively engaged in
activities such as hunting, fishing, camping or hiking. Our
consumers demand high quality, durable products that incorporate the
highest level of comfort and the most advanced technical features, and we
are committed to ensuring our products reflect the most advanced designs,
features and materials available in the marketplace. Our
outdoor product lines consist of all-season sport/hunting footwear,
apparel and accessories that are typically waterproof and insulated and
are designed to keep outdoorsmen comfortable on rugged terrain or in
extreme weather conditions.
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Work. Our
work product lines consist of footwear and apparel marketed to industrial
and construction workers, as well as workers in the hospitality industry,
such as restaurants or hotels. All of our work products are
specially designed to be comfortable, incorporate safety features for
specific work environments or tasks and meet applicable federal and other
standards for safety. This category includes products such as
safety toe footwear for steel workers and non-slip footwear for kitchen
workers.
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Duty. Our
duty product line consists of footwear products marketed to law
enforcement, security personnel and postal employees who are required to
spend a majority of time at work on their feet. All of our duty footwear
styles are designed to be comfortable, flexible, lightweight, slip
resistant and durable. Duty footwear is generally designed to
fit as part of a uniform and typically incorporates stylistic features,
such as black leather uppers in addition to the comfort features that are
incorporated in all of our footwear
products.
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Western. Our
western product line currently consists of authentic footwear products
marketed to farmers and ranchers who generally live in rural communities
in North America. We also selectively market our western
footwear to consumers enamored with the western
lifestyle.
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Brands
Our products are marketed under four
well-recognized, proprietary brands, Rocky, Georgia Boot, Durango and Lehigh, in
addition to the licensed brands of Dickies, Michelin and Mossy Oak. Our
exclusive license to use the Dickies brand will terminate on December 31,
2010.
Rocky
Rocky, established in 1979, is our
premium priced line of branded footwear, apparel and accessories. The
Rocky brand originally targeted outdoor enthusiasts, particularly hunters, and
has since become the market leader in the hunting boot category. In 2002,
we also extended into hunting apparel, including jackets, pants, gloves and
caps. Our Rocky products for hunters and other outdoor enthusiasts are designed
for specific weather conditions and the diverse terrains of North America. We
currently design Rocky products for each of our four target markets and offer
our products at a range of suggested retail price points: $99.95 to $249.95 for
our footwear products, $29.95 to $49.95 for tops and bottoms in our apparel
lines and $49.95 to $199.95 for our basic and technical outerwear.
We also produce Rocky duty footwear
targeting law enforcement professionals, security workers and postal service
employees, and we believe we have established a leading market share position in
this category.
Georgia
Boot
Georgia Boot was launched in 1937 and
is our moderately priced, high quality line of work footwear. This line of
products primarily targets construction workers and those who work in industrial
plants where special safety features are required for hazardous work
environments. All of our boots are designed to help prevent injury and
subsequent work loss and are designed according to standards determined by the
Occupational Safety & Health Administration or other standards required by
employers. Georgia Boot footwear is sold at suggested retail price points
ranging from $79.95 to $109.95.
In addition, we market a line of
Georgia Boot footwear to brand loyal consumers for hunting and other outdoor
activities. These products are primarily all leather boots distributed in
the western and southwestern states where hunters do not require camouflaged
boots or other technical features incorporated in our Rocky
footwear.
Durango
Durango is our moderately priced, high
quality line of western footwear. Launched in 1965, the brand has developed
broad appeal and earned a reputation for authenticity and quality in the western
footwear market. Our Durango line of products primarily targets farm and ranch
workers who live in the heartland where western influenced footwear and apparel
is worn for work and casual wear and, to a lesser extent, this line appeals to
urban consumers enamored with western influenced fashion. Other products in the
Durango line that target casual and fashion oriented consumers have colorful
leather uppers and shafts with ornate stitch patterns and are offered for men,
women and children. Our current line of products is offered at suggested retail
price points ranging from $79.95 to $149.95, and we market products designed for
both work and casual wear.
Lehigh
The Lehigh brand was launched in 1922
and is our moderately priced, high quality line of safety shoes sold at
suggested retail price points ranging from $29.95 to $149.95. Our current
line of products is designed to meet occupational safety footwear
needs. Most of this footwear incorporates steel toes to protect workers and
often incorporates other safety features such as metatarsal guards or non-slip
outsoles. Additionally, certain models incorporate durability features to
combat abrasive surfaces or caustic substances often found in some work
places.
With the recent shift in manufacturing
jobs to service jobs in the U.S., Lehigh began marketing products for the
hospitality industry. These products have non-slip outsoles designed to
reduce slips, trips and falls in kitchen environments where floors are often
tiled and greasy. Price points for this kind of footwear range from $29.95
to $49.95.
Distribution
Channels
Our products are distributed through
three distinct business segments: wholesale, retail and military. In our
wholesale business, we distribute our products through a wide range of
distribution channels representing over 10,000 retail store locations in the
U.S. and Canada. Our wholesale channels vary by product line and include
sporting goods stores, outdoor retailers, independent shoe retailers, hardware
stores, catalogs, mass merchants, uniform stores, farm store chains, specialty
safety stores and other specialty retailers. Our retail business includes
direct sales of our products to consumers through our Lehigh Outfitters mobile
and retail stores (including a fleet of trucks, supported by small warehouses
that include retail stores, which we refer to as mini-stores), our Rocky outlet
store and our websites. We also sell footwear under the Rocky label to the
U.S. military.
We are an Ohio
corporation. Our headquarters is located at 39 East Canal Street,
Nelsonville, Ohio 45764, and our telephone number is (740)
753-1951. Our corporate website address is
www.rockybrands.com. This reference to our website is a textual
reference only. We do not incorporate the information on our website
into this prospectus supplement and you should not consider any information on,
or that can be accessed through, our website as part of this prospectus
supplement.
The
Offering
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Common
stock offered by us.
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1,800,000 shares
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Common
stock outstanding after the offering
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7,405,537 shares. If
the underwriters exercise their over-allotment option in full, we will
issue an additional 270,000 shares, which will result
in 7,675,534 shares outstanding.
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Use
of proceeds
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We
intend to use the net proceeds from this offering to prepay amounts due
under term loans totaling $40 million in the aggregate and to pay any
associated prepayment fees. See “Use of
Proceeds.”
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Dividends
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We
have not declared or paid any dividends on our common stock in the past
and do not anticipate paying dividends in the foreseeable future. Any
future payment of dividends is within the discretion of the Board of
Directors and will depend upon, among other factors, the capital
requirements, operating results and financial condition of the Company. In
addition, our ability to pay cash dividends is limited under the terms of
our debt facilities. See “Price Range of Common Stock and Dividend
Policy.”
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Nasdaq
Global Select symbol
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RCKY
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Risk
Factors
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Investing
in our common stock involves substantial risks. You should carefully
consider all the information in or incorporated by reference into this
prospectus supplement and the accompanying prospectus prior to investing
in our common stock. In particular, we urge you to carefully consider the
factors set forth under “Risk
Factors.”
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The number of shares to be outstanding
after this offering is based on 5,605,537 shares outstanding as of May 7,
2010. The number of shares to be outstanding after this offering does
not give effect to 360,031 shares reserved for issuance under our stock option
plans, of which options to purchase 269,750 shares at a weighted average
exercise price of $18.80 per share were outstanding as of May 7,
2010.
Selected
Financial Data
We derived the summary consolidated
financial statement data for the years ended December 31, 2005, 2006, 2007, 2008
and 2009 set forth below from our audited consolidated financial statements and
related notes incorporated by reference in this prospectus supplement and the
accompanying prospectus. We derived the summary consolidated financial statement
data as of and for the three months ended March 31, 2009 and 2010 from our
unaudited condensed consolidated financial statements and related notes
incorporated by reference in this prospectus supplement and the accompanying
prospectus. Our results for interim periods are not necessarily indicative of
the results that may be expected for the entire year. You should read the
information presented below together with our consolidated financial statements,
the notes to those statements and the other financial information incorporated
by reference in this prospectus supplement and the accompanying
prospectus.
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Three Months
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Year Ended December 31,
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Ended March 31,
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(In thousands, except per share data)
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2005
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2006
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2007
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2008
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2009
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2009
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2010
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(Unaudited)
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Consolidated
Statements of Operations:
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NET
SALES
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$ |
296,023 |
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$ |
263,491 |
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$ |
275,267 |
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$ |
259,538 |
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$ |
229,486 |
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$ |
50,065 |
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$ |
56,079 |
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COST
OF GOODS SOLD
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184,793 |
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154,174 |
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167,273 |
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157,295 |
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144,928 |
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29,972 |
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37,322 |
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GROSS
MARGIN
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111,230 |
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109,317 |
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107,994 |
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102,243 |
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84,558 |
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20,093 |
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18,757 |
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OPERATING
EXPENSES
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Selling,
general and administrative expenses
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83,165 |
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89,624 |
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96,410 |
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87,496 |
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75,072 |
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19,946 |
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18,025 |
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Restructuring
charges
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- |
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- |
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- |
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- |
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711 |
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- |
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- |
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Non-cash
intangible impairment charges
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- |
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762 |
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24,874 |
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4,863 |
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- |
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- |
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- |
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Total
operating expenses
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83,165 |
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90,386 |
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121,284 |
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92,359 |
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75,783 |
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19,946 |
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18,025 |
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INCOME
(LOSS) FROM OPERATIONS
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28,065 |
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18,931 |
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(13,290 |
) |
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9,884 |
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8,775 |
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|
147 |
|
|
|
732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME AND (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(9,257 |
) |
|
|
(11,568 |
) |
|
|
(11,644 |
) |
|
|
(9,318 |
) |
|
|
(7,501 |
) |
|
|
(1,774 |
) |
|
|
(1,645 |
) |
|
Other -
net
|
|
|
464 |
|
|
|
242 |
|
|
|
389 |
|
|
|
(27 |
) |
|
|
578 |
|
|
|
(125 |
) |
|
|
37 |
|
|
Total
other - net
|
|
|
(8,793 |
) |
|
|
(11,326 |
) |
|
|
(11,255 |
) |
|
|
(9,345 |
) |
|
|
(6,923 |
) |
|
|
(1,899 |
) |
|
|
(1,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
|
|
19,272 |
|
|
|
7,605 |
|
|
|
(24,545 |
) |
|
|
539 |
|
|
|
1,852 |
|
|
|
(1,752 |
) |
|
|
(876 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAX EXPENSE (BENEFIT)
|
|
|
6,258 |
|
|
|
2,786 |
|
|
|
(1,440 |
) |
|
|
(628 |
) |
|
|
677 |
|
|
|
(631 |
) |
|
|
(315 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
|
$ |
13,014 |
|
|
$ |
4,819 |
|
|
$ |
(23,105 |
) |
|
$ |
1,167 |
|
|
$ |
1,175 |
|
|
$ |
(1,121 |
) |
|
$ |
(561 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
2.48 |
|
|
$ |
0.89 |
|
|
$ |
(4.22 |
) |
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.10 |
) |
|
Diluted
|
|
$ |
2.33 |
|
|
$ |
0.86 |
|
|
$ |
(4.22 |
) |
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,257,530 |
|
|
|
5,392,390 |
|
|
|
5,476,281 |
|
|
|
5,508,614 |
|
|
|
5,551,382 |
|
|
|
5,546,541 |
|
|
|
5,603,125 |
|
|
Diluted
|
|
|
5,584,771 |
|
|
|
5,578,176 |
|
|
|
5,476,281 |
|
|
|
5,513,430 |
|
|
|
5,551,382 |
|
|
|
5,546,541 |
|
|
|
5,603,125 |
|
Risk
Factors
You
should carefully consider the risk factors set forth below as well as the other
information contained or incorporated by reference in this prospectus supplement
and the accompanying prospectus before investing in our common stock. Any of the
following risks could materially and adversely affect our business, financial
condition or results of operations. In such a case, you may lose all or part of
your investment. The risks described below are not the only risks facing us.
Additional risks and uncertainties not currently known to us or those we
currently view to be immaterial may also materially adversely affect our
business, financial condition or results of operations.
Risks
Relating to Our Business
Expanding
our brands into new footwear and apparel markets may be difficult and expensive,
and if we are unable to successfully continue such expansion, our brands may be
adversely affected, and we may not achieve our planned sales
growth.
Our growth strategy is founded
substantially on the expansion of our brands into new footwear and apparel
markets. New products that we introduce may not be successful with
consumers or one or more of our brands may fall out of favor with
consumers. If we are unable to anticipate, identify or react
appropriately to changes in consumer preferences, we may not grow as fast as we
plan to grow or our sales may decline, and our brand image and operating
performance may suffer.
Furthermore, achieving market
acceptance for new products will likely require us to exert substantial product
development and marketing efforts, which could result in a material increase in
our selling, general and administrative, or SG&A, expenses, and there can be
no assurance that we will have the resources necessary to undertake such
efforts. Material increases in our SG&A expenses could adversely
impact our results of operations and cash flows.
We may also encounter difficulties in
producing new products that we did not anticipate during the development
stage. Our development schedules for new products are difficult to
predict and are subject to change as a result of shifting priorities in response
to consumer preferences and competing products. If we are not able to
efficiently manufacture newly-developed products in quantities sufficient to
support retail distribution, we may not be able to recoup our investment in the
development of new products. Failure to gain market acceptance for
new products that we introduce could impede our growth, reduce our profits,
adversely affect the image of our brands, erode our competitive position and
result in long term harm to our business.
A
majority of our products are produced outside the U.S. where we are subject to
the risks of international commerce.
A majority of our products are produced
in the Dominican Republic and China. Therefore, our business is
subject to the following risks of doing business offshore:
|
|
|
the
imposition of additional United States legislation and regulations
relating to imports, including quotas, duties, taxes or other charges or
restrictions;
|
|
|
|
foreign
governmental regulation and
taxation;
|
|
|
|
fluctuations
in foreign exchange rates;
|
|
|
|
changes
in economic conditions;
|
|
|
|
transportation
conditions and costs in the Pacific and
Caribbean;
|
|
|
|
changes
in the political stability of these countries;
and
|
|
|
|
changes
in relationships between the United States and these
countries.
|
If any of these factors were to render
the conduct of business in these countries undesirable or impracticable, we
would have to manufacture or source our products elsewhere. There can
be no assurance that additional sources or products would be available to us or,
if available, that these sources could be relied on to provide product at terms
favorable to us. The occurrence of any of these developments would
have a material adverse effect on our business, financial condition, results of
operations and cash flows.
Our
success depends on our ability to anticipate consumer trends.
Demand for our products may be
adversely affected by changing consumer trends. Our future success
will depend upon our ability to anticipate and respond to changing consumer
preferences and technical design or material developments in a timely
manner. The failure to adequately anticipate or respond to these
changes could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Loss
of services of our key personnel could adversely affect our
business.
The development of our business has
been, and will continue to be, highly dependent upon Mike Brooks, Chairman and
Chief Executive Officer, David Sharp, President and Chief Operating Officer, and
James E. McDonald, Executive Vice President, Chief Financial Officer and
Treasurer. Messrs. Brooks, Sharp, and McDonald each have an at-will
employment agreement with us. Each employment agreement provides that
in the event of termination of employment without cause, the terminated
executive will receive a severance benefit. In the event of
termination for any reason, the terminated executive may not compete with us for
a period of one year. None of our other executive officers and key
employees has an employment agreement with our company. The loss of
the services of any of these officers could have a material adverse effect on
our business, financial condition, results of operations and cash
flows.
We
depend on a limited number of suppliers for key production materials, and any
disruption in the supply of such materials could interrupt product manufacturing
and increase product costs.
We purchase raw materials from a number
of domestic and foreign sources. We do not have any long-term supply
contracts for the purchase of our raw materials, except for limited blanket
orders on leather. The principal raw materials used in the production
of our footwear, in terms of dollar value, are leather, Gore-Tex waterproof
breathable fabric, Cordura nylon fabric and soling
materials. Availability or change in the prices of our raw materials
could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
We
currently have a licensing agreement for the use of Gore-Tex waterproof
breathable fabric, and any termination of this licensing agreement could impact
our sales of waterproof products.
We are currently one of the largest
customers of Gore-Tex waterproof breathable fabric for use in
footwear. Our licensing agreement with W.L. Gore & Associates,
Inc. may be terminated by either party upon advance written notice to the other
party by October 1 for termination effective December 31 of that same
year. Although other waterproofing techniques and materials are
available, we place a high value on our Gore-Tex waterproof breathable fabric
license because Gore-Tex has high brand name recognition with our
customers. The loss of our license to use Gore-Tex waterproof
breathable fabric could have a material adverse effect on our competitive
position, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Our
licensing agreement for the use of the Dickies trademark will terminate on
December 31, 2010, and the termination of this licensing agreement could impact
our sales and growth strategy.
Our exclusive license to use the
Dickies brand will terminate on December 31, 2010. The loss of our
license to use the Dickies brand could have a material adverse effect on our
competitive position and growth strategy, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. Sales of our Dickies branded merchandise approximated $11.2
million in 2009.
Our
outdoor products are seasonal.
We have historically experienced
significant seasonal fluctuations in our business because we derive a
significant portion of our revenues from sales of our outdoor products. Many of
our outdoor products are used by consumers in cold or wet weather. As a result,
a majority of orders for these products are placed by our retailers in January
through April for delivery in July through October. In order to meet demand, we
must manufacture and source outdoor footwear year round to be in a position to
ship advance orders for these products during the last two quarters of each
year. Accordingly, average inventory levels have been highest during the second
and third quarters of each year and sales have been highest in the last two
quarters of each year. There is no assurance that we will have either sufficient
inventory to satisfy demand in any particular quarter or have sufficient demand
to sell substantially all of our inventory without significant
markdowns.
Our
outdoor products are sensitive to weather conditions.
Historically, our outdoor products have
been used primarily in cold or wet weather. Mild or dry weather has
had in the past, and may have in the future, a material adverse effect on sales
of our products, particularly if mild or dry weather conditions occur in broad
geographical areas during late fall or early winter. Also, due to
variations in weather conditions from year to year, results for any single
quarter or year may not be indicative of results for any future
period.
Our
business could suffer if our third party manufacturers violate labor laws or
fail to conform to generally accepted ethical standards.
We require our third party
manufacturers to meet our standards for working conditions and other matters
before we are willing to place business with them. As a result, we
may not always obtain the lowest cost production. Moreover, we do not
control our third party manufacturers or their respective labor
practices. If one of our third party manufacturers violates generally
accepted labor standards by, for example, using forced or indentured labor or
child labor, failing to pay compensation in accordance with local law, failing
to operate its factories in compliance with local safety regulations or
diverging from other labor practices generally accepted as ethical, we likely
would cease dealing with that manufacturer, and we could suffer an interruption
in our product supply. In addition, such a manufacturer’s actions
could result in negative publicity and may damage our reputation and the value
of our brand and discourage retail customers and consumers from buying our
products.
The
growth of our business will be dependent upon the availability of adequate
capital.
The growth of our business will depend
on the availability of adequate capital, which in turn will depend in large part
on cash flow generated by our business and the availability of equity and debt
financing. We cannot assure you that our operations will generate
positive cash flow or that we will be able to obtain equity or debt financing on
acceptable terms or at all. Our revolving credit facility contains
provisions that restrict our ability to incur additional indebtedness or make
substantial asset sales that might otherwise be used to finance our
expansion. Security interests in substantially all of our assets,
which may further limit our access to certain capital markets or lending
sources, secure our obligations under our revolving credit
facility. Moreover, the actual availability of funds under our
revolving credit facility is limited to specified percentages of our eligible
inventory and accounts receivable. Accordingly, opportunities for
increasing our cash on hand through sales of inventory would be partially offset
by reduced availability under our revolving credit facility. As a
result, we cannot assure you that we will be able to finance our current
expansion plans.
We
must comply with the restrictive covenants contained in our revolving credit
facility.
Our credit facility and term loan
agreements require us to comply with certain financial restrictive covenants
that impose restrictions on our operations, including our ability to incur
additional indebtedness, make investments of other restricted payments, sell or
otherwise dispose of assets and engage in other activities. Any
failure by us to comply with the restrictive covenants could result in an event
of default under those borrowing arrangements, in which case the lenders could
elect to declare all amounts outstanding thereunder to be due and payable, which
could have a material adverse effect on our financial condition. As
of December 31, 2009, we were in compliance with all financial
restrictive covenants.
We
face intense competition, including competition from companies with
significantly greater resources than ours, and if we are unable to compete
effectively with these companies, our market share may decline and our business
could be harmed.
The footwear and apparel industries are
intensely competitive, and we expect competition to increase in the
future. A number of our competitors have significantly greater
financial, technological, engineering, manufacturing, marketing and distribution
resources than we do, as well as greater brand awareness in the footwear
market. Our ability to succeed depends on our ability to remain
competitive with respect to the quality, design, price and timely delivery of
products. Competition could materially adversely affect our business,
financial condition, results of operations and cash flows.
We
currently manufacture a portion of our products and we may not be able to do so
in the future at costs that are competitive with those of competitors who source
their goods.
We currently plan to retain our
internal manufacturing capability in order to continue benefiting from expertise
we have gained with respect to footwear manufacturing methods conducted at our
manufacturing facilities. We continue to evaluate our manufacturing
facilities and third party manufacturing alternatives in order to determine the
appropriate size and scope of our manufacturing facilities. There can
be no assurance that the costs of products that continue to be manufactured by
us can remain competitive with products sourced from third parties.
We
rely on distribution centers in Logan and Columbus, Ohio, San
Bernardino, California and Waterloo, Ontario, Canada, and if there is a natural
disaster or other serious disruption at any of these facilities, we may be
unable to deliver merchandise effectively to our retailers.
We rely on distribution centers located
in Logan and Columbus, Ohio, San Bernardino, California and Waterloo, Ontario,
Canada. Any natural disaster or other serious disruption at any of these
facilities due to fire, tornado, flood, terrorist attack or any other cause
could damage a portion of our inventory or impair our ability to use our
distribution center as a docking location for merchandise. Either of
these occurrences could impair our ability to adequately supply our retailers
and harm our operating results.
We
are subject to certain environmental and other regulations.
Some of our operations use substances
regulated under various federal, state, local and international environmental
and pollution laws, including those relating to the storage, use, discharge,
disposal and labeling of, and human exposure to, hazardous and toxic
materials. Compliance with current or future environmental laws and
regulations could restrict our ability to expand our facilities or require us to
acquire additional expensive equipment, modify our manufacturing processes or
incur other significant expenses. In addition, we could incur costs,
fines and civil or criminal sanctions, third party property damage or personal
injury claims or could be required to incur substantial investigation or
remediation costs, if we were to violate or become liable under any
environmental laws. Liability under environmental laws can be joint and several
and without regard to comparative fault. There can be no assurance
that violations of environmental laws or regulations have not occurred in the
past and will not occur in the future as a result of our inability to obtain
permits, human error, equipment failure or other causes, and any such violations
could harm our business, financial condition, results of operations and cash
flows.
If
our efforts to establish and protect our trademarks, patents and other
intellectual property are unsuccessful, the value of our brands could
suffer.
We regard certain of our footwear
designs as proprietary and rely on patents to protect those
designs. We believe that the ownership of patents is a significant
factor in our business. Existing intellectual property laws afford only limited
protection of our proprietary rights, and it may be possible for unauthorized
third parties to copy certain of our footwear designs or to reverse engineer or
otherwise obtain and use information that we regard as
proprietary. If our patents are found to be invalid, however, to the
extent they have served, or would in the future serve, as a barrier to entry to
our competitors, such invalidity could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
We own U.S. registrations for a number
of our trademarks, trade names and designs, including such marks as Rocky,
Georgia Boot, Durango and Lehigh. Additional trademarks, trade names
and designs are the subject of pending federal applications for
registration. We also use and have common law rights in certain
trademarks. Over time, we have increased distribution of our goods in
several foreign countries. Accordingly, we have applied for trademark
registrations in a number of these countries. We intend to enforce
our trademarks and trade names against unauthorized use by third
parties.
Our
success depends on our ability to forecast sales.
Our investments in infrastructure and
product inventory are based on sales forecasts and are necessarily made in
advance of actual sales. The markets in which we do business are
highly competitive, and our business is affected by a variety of factors,
including brand awareness, changing consumer preferences, product innovations,
susceptibility to fashion trends, retail market conditions, weather conditions
and economic and other factors. One of our principal challenges is to
improve our ability to predict these factors, in order to enable us to better
match production with demand. In addition, our growth over the years
has created the need to increase the investment in infrastructure and product
inventory and to enhance our systems. To the extent sales forecasts
are not achieved, costs associated with the infrastructure and carrying costs of
product inventory would represent a higher percentage of revenue, which would
adversely affect our business, financial condition, results of operations and
cash flows.
Risks
Related to Our Industry
Because
the footwear market is sensitive to decreased consumer spending and slow
economic cycles, if general economic conditions deteriorate, many of our
customers may significantly reduce their purchases from us or may not be able to
pay for our products in a timely manner.
The footwear industry has been subject
to cyclical variation and decline in performance when consumer spending
decreases or softness appears in the retail market. Many factors
affect the level of consumer spending in the footwear industry,
including:
|
|
|
general
business conditions;
|
|
|
|
the
availability of consumer credit;
|
|
|
|
increases
in prices of nondiscretionary
goods;
|
|
|
|
consumer
confidence in future economic
conditions.
|
If the recent decline in general
economic conditions in the United States and other global markets continues, or
if consumers fear that economic conditions will continue to decline, consumers
may reduce expenditures for products such as our products. Adverse
changes may occur as a result of adverse global or regional economic conditions,
fluctuating oil prices, declining consumer confidence, unemployment,
fluctuations in stock markets, contraction of credit availability, bankruptcy or
liquidity problems with our customers or other factors affecting economic
conditions generally. These changes may negatively affect the sales of our
products, increase exposure to losses from bad debts, increase the cost and
decrease the availability of financing, increase the risk of loss on
investments, or increase costs associated with producing and distributing our
products.
The
continued shift in the marketplace from traditional independent retailers to
large discount mass merchandisers may result in decreased margins.
A continued shift in the marketplace
from traditional independent retailers to large discount mass merchandisers has
increased the pressure on many footwear manufacturers to sell products to these
mass merchandisers at less favorable margins. Because of competition
from large discount mass merchandisers, a number of our small retailing
customers have gone out of business, and in the future more of these customers
may go out of business, which could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
Risks
Relating to Our Common Stock and this Offering
Our
common stock price has been volatile, which could result in a substantial loss
for shareholders.
Our common stock is traded on the
Nasdaq Global Select Market. While our average daily trading volume for the
52-week period ended April 30, 2010 was approximately 16,545 shares, we have
experienced more limited volume in the past and may experience it in the future.
The trading price of our common stock has been and may continue to be volatile.
The sale prices of our common stock, as reported by the Nasdaq National Market,
have ranged from $3.65 to $10.66 for the 52-week period ended April 30, 2010.
The trading price of our common stock could be affected by a number of factors,
including, but not limited to the following:
|
|
|
changes
in expectations of our future
performance;
|
|
|
|
changes
in estimates by securities analysts (or failure to meet such
estimates);
|
|
|
|
quarterly
fluctuations in our sales and financial
results;
|
|
|
|
broad
market fluctuations in volume and price;
and
|
|
|
|
a
variety of risk factors, including the ones described elsewhere in this
prospectus.
|
Accordingly,
the price of our common stock after the offering is likely to fluctuate greatly
and may be lower than the price you pay.
Future
sale of our common stock could adversely affect our stock price.
Future sales of substantial amounts of
shares of our common stock in the public market, or the perception that these
sales could occur, may cause the market price of our common stock to decline. In
addition, we may be required to issue additional shares upon exercise of
previously granted options that are currently outstanding. Our directors and
executive officers have entered into lock-up agreements with the underwriters,
in which they have agreed to refrain from selling their shares for a period of
90 days after this offering. Increased sales of our common stock in the market
after exercise of our currently outstanding stock options or expiration of the
lock-up agreements could exert significant downward pressure on our stock price.
These sales also might make it more difficult for us to sell equity or equity
related securities in the future at a time and price we deem
appropriate.
We
can issue shares of preferred stock without shareholder approval, which could
adversely affect the rights of common shareholders.
Our articles of incorporation permit us
to establish the rights, privileges, preferences and restrictions, including
voting rights, of future series of our preferred stock and to issue such stock
without approval from our shareholders. The rights of holders of our common
stock may suffer as a result of the rights granted to holders of preferred stock
that we may issue in the future. In addition, we could issue preferred stock to
prevent a change in control of our company, depriving common shareholders of an
opportunity to sell their stock at a price in excess of the prevailing market
price.
Anti-takeover
provisions of our articles of incorporation, code of regulations, shareholder
rights plan and Ohio law could prevent or delay a change in control of our
company, even if a change of control would benefit our
shareholders.
Provisions of our articles of
incorporation and code of regulations, as well as provisions of Ohio law, could
discourage, delay or prevent a merger, acquisition or other change in control of
our company, even if a change in control might benefit our shareholders. These
provisions could also discourage proxy contests and make it more difficult for
you and other shareholders to elect directors and take other corporate actions.
As a result, these provisions could limit the price that investors are willing
to pay in the future for shares of our common stock. These provisions might also
discourage a potential acquisition proposal or tender offer, even if the
acquisition proposal or tender offer is at a price well above the then current
market price for our common stock. These provisions include the
following:
|
|
|
a
board of directors that is classified so that only one-half of the
directors stand for election each
year;
|
|
|
|
authorization
of “blank check” preferred stock, which our board of directors could issue
with provisions designed to thwart a takeover
attempt;
|
|
|
|
limitations
on the ability of shareholders to call special meetings of
shareholders;
|
|
|
|
no
cumulative voting in the election of directors, which would otherwise
allow the holders of less than a majority of our common stock to elect
director candidates;
|
|
|
|
a
prohibition against shareholder action by written consent unless signed by
all shareholders of record; and
|
|
|
|
advance
notice requirements for nominations for election to our board of directors
or for proposing matters that can be acted upon by shareholders at
shareholder meetings.
|
We adopted a shareholder rights plan in
2009 under a shareholder rights agreement intended to protect shareholders
against unsolicited attempts to acquire control of our company that do not offer
what our board of directors believes to be an adequate price to all shareholders
or that our board of directors otherwise opposes. As part of the plan, our board
of directors declared a dividend that resulted in the issuance of one preferred
stock purchase right for each outstanding share of our common stock. Unless
extended, the preferred share purchase rights will terminate on June 11, 2012.
If a bidder proceeds with an unsolicited attempt to purchase our stock and
acquires 20% or more (or announces its intention to acquire 20% or more) of our
outstanding stock, and the board of directors does not redeem the preferred
stock purchase right, the right will become exercisable at a price that
significantly dilutes the interest of the bidder in our common
stock.
The
effect of the shareholder rights plan is to make it more difficult to acquire
our company without negotiating with the board of directors. The shareholder
rights plan, however, could discourage offers even if made at a premium over the
market price of our common stock, and even if the shareholders might believe the
transaction would benefit them.
In addition, we are subject to the
Chapter 1704 of the Ohio Revised Code, the Merger Moratorium Act, which limits
business combination transactions with interested shareholders (generally 10% or
greater shareholders) that our board of directors has not approved. These
provisions and other similar provisions make it more difficult for a third party
to acquire us without negotiation. These provisions apply even if some
shareholders would consider the transaction beneficial.
We
do not anticipate paying cash dividends on our shares of common stock in the
foreseeable future.
We intend to retain any future earnings
to fund the operation and expansion of our business and, therefore, we do not
anticipate paying cash dividends on our shares of common stock in the
foreseeable future. As a result, you may only realize a return on your
investment upon a sale of our common stock, if at all.
Use
of Proceeds
The net
proceeds to us from our sale of 1,800,000 shares of common stock are
estimated to be approximately $14.1 million after deducting an assumed
underwriting discount and estimated offering expenses payable by
us. If the underwriters exercise their over-allotment option in full,
the net proceeds of the offering to us are estimated to be approximately $16.2
million.
We intend to use the net proceeds we
receive from this offering to prepay amounts due under term loans totaling $40
million in the aggregate and to pay any associated prepayment fees.
The notes have an interest rate of
11.5% payable semi-annually over the five year term of the
notes. Principal repayment is due at maturity in May
2012.
Capitalization
The following table sets forth our cash
and cash equivalents and our consolidated capitalization as of March 31,
2010:
|
|
|
on
an as adjusted basis to give effect to our sale of 1,800,000 shares
of common stock in this offering after deducting an assumed underwriting
discount and estimated offering expenses payable by us (assuming no
exercise of the underwriters’ overallotment option) and the application of
the estimated net proceeds of such sale as described in “Use of
Proceeds.”
|
The information set forth in the
following table should be read in conjunction with and is qualified in its
entirety by reference to the audited and unaudited financial statements and
notes thereto incorporated by reference in this prospectus supplement and the
accompanying prospectus.
|
|
|
As of March 31, 2010
|
|
|
(In thousands, except share data)
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
3,518 |
|
$
|
3,518
|
|
| |
|
|
|
|
|
|
|
|
Total
debt
|
|
|
46,745 |
|
|
32,632
|
|
| |
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
Common
stock, no par value; 25,000,000 shares authorized; 5,605,537 actual shares
issued and outstanding; and 7,255,537 shares issued and outstanding on an
as adjusted basis; and additional paid-in capital
|
|
|
54,801 |
|
|
68,914
|
|
|
Accumulated
other comprehensive loss
|
|
|
(3,127 |
) |
|
(3,127
|
) |
|
Retained
earnings
|
|
|
30,536 |
|
|
30,536
|
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' equity
|
|
|
82,210 |
|
|
96,323
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
capitalization
|
|
$ |
128,955 |
|
$
|
128,955
|
|
Price
Range of Common Stock and Dividend Policy
Our common stock is traded on the
NASDAQ Global Select Market under the symbol “RCKY.” The following
table sets forth, for the periods indicated, the range of high and low sale
prices for our common stock as reported by the NASDAQ Global Select
Market:
|
|
|
High
|
|
|
Low
|
|
|
2008:
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
7.11 |
|
|
$ |
4.80 |
|
|
Second
Quarter
|
|
$ |
6.00 |
|
|
$ |
4.61 |
|
|
Third
Quarter
|
|
$ |
6.15 |
|
|
$ |
2.82 |
|
|
Fourth
Quarter
|
|
$ |
4.39 |
|
|
$ |
2.25 |
|
|
2009:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
4.96 |
|
|
$ |
2.71 |
|
|
Second
Quarter
|
|
$ |
4.32 |
|
|
$ |
3.23 |
|
|
Third
Quarter
|
|
$ |
6.40 |
|
|
$ |
3.66 |
|
|
Fourth
Quarter
|
|
$ |
9.65 |
|
|
$ |
5.55 |
|
|
2010:
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
$ |
9.97 |
|
|
$ |
7.16 |
|
|
Second
Quarter (through May 10, 2010)
|
|
$ |
10.66 |
|
|
$ |
8.91 |
|
On May 10, 2010, the last reported sale
price of our common stock on the NASDAQ Global Select Market was $9.15 per
share. As of May 10, 2010, there were 95 shareholders of record of
our common stock. We believe the number of beneficial owners of our
common stock on that date was substantially greater.
We
have not declared or paid any dividends on our common stock in the past and do
not anticipate paying dividends in the foreseeable future. Any future payment of
dividends is within the discretion of the Board of Directors and will depend
upon, among other factors, the capital requirements, operating results and
financial condition of our company. In addition, our ability to pay cash
dividends is limited under the terms of our debt facilities. We presently intend
to retain our earnings to finance the growth and development of our business and
do not anticipate paying any cash dividends in the foreseeable
future.
Underwriting
Under an underwriting agreement dated
May 10, 2010, we have agreed to sell to the underwriters named below the
indicated number of shares of our common stock:
|
Underwriters
|
|
Number of
Shares
|
|
|
|
|
|
|
|
| Robert
W. Baird & Co. Incorporated |
|
|
1,440,000 |
|
|
D.A.
Davidson & Co.
|
|
|
360,000 |
|
|
Total
|
|
|
1,800,000 |
|
The underwriting agreement provides
that the underwriters are obligated to purchase all of the shares of our common
stock in this offering if any are purchased, other than those shares covered by
the over-allotment option we describe below. The underwriting agreement also
provides that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may be increased or this offering of our common
stock may be terminated.
We have granted the underwriters a
30-day option to purchase on a pro-rata basis up to 270,000 additional shares at
the public offering price less the underwriting discount. This option may be
exercised only to cover over-allotments, if any, of our common stock. The
underwriters propose to offer our common stock at the public offering price on
the cover page of this prospectus supplement and to selling group members at
that price less a selling concession of up to $0.3024 per share. The
underwriters and selling group members may allow a discount of not more than
$0.10 per share on sales to other broker/dealers. After the offering, the
underwriters may change the public offering price and selling concession and
discount to dealers.
The following table summarizes the
compensation that we will pay to the underwriters. The compensation we will pay
to the underwriters will consist solely of the underwriting discount, which is
equal to the public offering price per share of common stock less the amount the
underwriters pay to us per share of common stock. The underwriters have not
received and will not receive from us any other item of compensation or expense
in connection with this offering considered by the Financial Industry Regulatory
Authority, or FINRA, to be underwriting compensation. The underwriting discount
was determined through arms' length negotiations between us and the
underwriters.
|
|
|
Assuming No
Exercise of
the Over-
Allotment
Option
|
|
|
Assuming Full
Exercise of the
Over-Allotment
Option
|
|
|
Per
share
|
|
$ |
0.504 |
|
|
$ |
0.504 |
|
|
Total
|
|
$ |
907,200 |
|
|
$ |
1,043,280 |
|
We estimate that the expenses payable
by us in connection with this offering, other than the underwriting discount,
will be approximately $100,000. In no event will the compensation to
be received by the underwriters or any other FINRA member exceed 8% of the gross
proceeds of the offering.
We, our
executive officers and our directors have agreed not to offer or transfer, or
file with the Securities and Exchange Commission a registration statement under
the Securities Act of 1933, as amended, relating to any additional shares of our
common stock or securities convertible into or exchangeable or exercisable for
any shares of our common stock without the prior written consent of Robert W.
Baird & Co. Incorporated for a period of 90 days after the date of this
prospectus supplement, except in certain limited circumstances, including in our
case for grants of employee or director equity incentive awards under our equity
incentive plans in effect on the date hereof and issuances of securities as a
result of the exercise of any options or stock appreciation rights under such
plans.
Notwithstanding
the foregoing, if (1) during the last 17 days of the 90-day restricted period,
we issue an earnings release or material news or a material event relating to
our company occurs; or (2) prior to the expiration of the 90-day restricted
period, we announce that we will release earnings results during the 16-day
period beginning on the last day of the 90-day period, then in each case the
restrictions imposed by the lock-up agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material
event.
We have
agreed to indemnify the underwriters against liabilities under the Securities
Act of 1933, as amended, or to contribute to payments which the underwriters may
be required to make in that respect.
The
underwriters may engage in over-allotment transactions, stabilizing transactions
and syndicate covering transactions in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended.
|
|
|
Over-allotment
involves sales by the underwriter of shares in excess of the number of
shares the underwriters are obligated to purchase, which creates a
syndicate short position.
|
|
|
|
Stabilizing
transactions permit bids to purchase shares of our common stock so long as
the stabilizing bids do not exceed a specified
maximum.
|
|
|
|
Syndicate
covering transactions involve purchases of our common stock in the open
market after the distribution has been completed to cover syndicate short
positions.
|
These
stabilizing transactions and syndicate covering transactions may cause the price
of our common stock to be higher than the price that might otherwise exist in
the open market. These transactions may be effected on the NASDAQ Global Select
Market or otherwise and, if commenced, may be discontinued at any
time.
The
underwriters and their affiliates have provided, and may provide in the future,
advisory and investment banking services to us, for which they have received and
would receive customary compensation.
Where
You Can Find More Information
We have filed a registration statement
on Form S-3 with the Securities and Exchange Commission. This
prospectus supplement and the accompanying prospectus do not contain all of the
information in the registration statement. In addition, we file
annual, quarterly and special reports, proxy statements and other information
with the Commission. Our Commission filings are available to the public
over the Internet at the Commission’s web site at
http://www.sec.gov. You may also read and copy any document we file
with the Commission at its public reference facilities at 100 F Street, N.E.,
Washington, DC 20549. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the Commission at
100 F Street, N.E., Washington, DC 20549. Please call the Commission
at 1-800-SEC-0330 for further information on the operation of the public
reference facilities. Our Commission filings are also available at
the office of the Nasdaq Stock Market, One Liberty Plaza, 165 Broadway, New
York, New York 10006. For further information on obtaining copies of
our public filings at the Nasdaq Stock Market, you should call
212-401-8700.
Incorporation
by Reference
We “incorporate by reference” into this
prospectus supplement the information we file with the Commission (Commission
file number 000-21026), which means that we can disclose important information
to you by referring you to those documents. The information incorporated
by reference is an important part of this prospectus supplement and the
accompanying prospectus. Information that we file with the Commission
after the date of this prospectus supplement will automatically update this
prospectus supplement and the accompanying prospectus. We incorporate by
reference the documents listed below, and any filings we make with the
Commission under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 after the initial filing of the registration statement that
contains this prospectus (except for information furnished and not filed with
the Commission in a Current Report on Form 8-K):
|
|
|
our
Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the Commission on March 2,
2010;
|
|
|
|
our
Quarterly Report on Form 10-Q for the period ended March 31, 2010, filed
with the Commission on May 3, 2010;
|
|
|
|
the
description of our common shares, which is contained in our registration
statement on Form 8-A filed with the Commission on December 22, 1992,
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended,
as updated in any amendment or report filed for the purpose of updating
such description; and
|
|
|
|
the
description of the preferred stock purchase rights associated with our
common stock, contained in our registration statement on Form 8-A filed
with the Commission on June 15, 2009, as updated in any amendment or
report filed for the purpose of updating such
description.
|
Information
furnished by us in Current Reports on Form 8-K under Items 2.02 and 9.01 is
expressly not incorporated by reference in this prospectus.
We will provide to each person,
including any beneficial owner, to whom a prospectus supplement and accompanying
prospectus is delivered, without charge, upon written or oral request, a copy of
any or all of the documents that are incorporated by reference into this
prospectus supplement but not delivered with the prospectus supplement or
accompanying prospectus, including exhibits that are specifically incorporated
by reference into such documents. You may request a copy of these
filings at no cost, by writing to or telephoning us at:
Rocky
Brands, Inc.
39 East
Canal Street
Nelsonville,
Ohio 45764
Attention: James
E. McDonald, Chief Financial Officer
Legal
Matters
The validity of the shares offered
hereby has been passed upon for us by Porter Wright Morris & Arthur LLP, 41
South High Street, Columbus, Ohio 43215. Curtis A.
Loveland, a partner in Porter Wright Morris & Arthur LLP, is our secretary
and a director and beneficially owns an aggregate of 107,302 shares of our
common stock consisting of a combination of stock and options exercisable within
60 days after May 7, 2010. Certain legal matters will be passed upon
for the underwriters by Lowenstein Sandler PC, Roseland, New
Jersey.
Experts
The consolidated financial statements
and the related financial statement schedule, incorporated in this prospectus
supplement by reference from our Annual Report on Form 10-K for the year ended
December 31, 2009, and the effectiveness our internal control over financial
reporting have been audited by Schneider Downs & Co., Inc., an independent
registered public accounting firm, as stated in their reports which are
incorporated herein by reference. Such consolidated financial
statements and financial statement schedule have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
$50,000,000
ROCKY
BRANDS, INC.
Common
Stock with Preferred Stock Purchase Rights
| |
|
| |
|
|
|
We may offer from
time to time to sell shares of our common stock. The aggregate
offering price of our shares of common stock sold under this prospectus
will
not exceed
$50,000,000.
|
|
|
This
prospectus provides a general description of the securities we may
offer. Each time we sell securities, we will provide specific
terms of the securities offered in a supplement to this
prospectus. The prospectus supplement may also add, update or
change information contained in this prospectus. You should
read this prospectus and the applicable prospectus supplement carefully
before you invest in any securities. This prospectus may not be
used to consummate a sale of securities unless accompanied by the
applicable prospectus supplement.
|
|
|
We
will sell these securities directly to our stockholders or to purchasers
or through agents on our behalf or through underwriters or dealers as
designated from time to time. If any agents or underwriters are
involved in the sale of any of these securities, the applicable prospectus
supplement will provide the names of the agents or underwriters and any
applicable fees, commissions or
discounts.
|
|
|
The
last reported sale price of our common stock on April 28, 2010 was $10.09
per share.
|
|
|
Trading
symbol: Nasdaq Global Select Market –
RCKY
|
|
|
As
of May 4, 2010, the aggregate market value of our outstanding common stock
held by non-affiliates, or the public float, was approximately
$50,482,905, which was calculated based on 4,959,028 shares of outstanding
common stock held by non-affiliates and on a price per share of $10.18,
the closing price of our common stock on May 4, 2010. Pursuant to General
Instruction I.B.6 of Form S-3, in no event will we sell our
securities in a public primary offering with a value exceeding more than
one-third of our public float in any 12-month period so long as our public
float remains below $75.0 million. We have not offered any securities
pursuant to General Instruction I.B.6 of Form S-3 during the 12
calendar months prior to and including the date of this
prospectus.
|
This
investment involves risk. See “Risk Factors” beginning on page
4.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved of anyone’s investment in these securities or determined if this
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date
of this prospectus is May 6, 2010
TABLE
OF CONTENTS
|
|
|
Page
|
|
About
This Prospectus
|
|
|
2 |
|
About
Rocky Brands, Inc.
|
|
|
3 |
|
Risk
Factors
|
|
|
4 |
|
Special
Note Regarding Forward-Looking Statements
|
|
|
9 |
|
Where
You Can Find More Information and Incorporation by
Reference
|
|
|
10 |
|
Use
of Proceeds
|
|
|
11 |
|
Description
of Capital Stock
|
|
|
11 |
|
Plan
of Distribution
|
|
|
14 |
|
Legal
Matters
|
|
|
15 |
|
Experts
|
|
|
15 |
ABOUT
THIS PROSPECTUS
This prospectus is a part of a
registration statement that we filed with the Securities and Exchange
Commission, or the Commission, utilizing a “shelf” registration
process. Under this shelf registration process, we may offer to sell
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $50,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we
sell securities under this shelf registration, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change
information contained in this prospectus. To the extent that any
statement that we make in a prospectus supplement is inconsistent with
statements made in this prospectus, the statements made in this prospectus will
be deemed modified or superseded by those made in the prospectus
supplement. You should read both this prospectus and any prospectus
supplement, including all documents incorporated herein or therein by reference,
together with additional information described under “Where You Can Find More
Information and Incorporation by Reference.”
We
have not authorized any dealer, salesman or other person to give any information
or to make any representation other than those contained or incorporated by
reference in this prospectus and the accompanying prospectus
supplement. You must not rely upon any information or representation
not contained or incorporated by reference in this prospectus or the
accompanying prospectus supplement. This prospectus and the
accompanying prospectus supplement do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the registered
securities to which they relate, nor do this prospectus and the accompanying
prospectus supplement constitute an offer to sell or the solicitation of an
offer to buy securities in any jurisdiction to any person to whom it is unlawful
to make such offer or solicitation in such jurisdiction. You should
not assume that the information contained in this prospectus and the
accompanying prospectus supplement is accurate on any date subsequent to the
date set forth on the front of the document or that any information we have
incorporated by reference is correct on any date subsequent to the date of the
document incorporated by reference, even though this prospectus and any
accompanying prospectus supplement is delivered or securities are sold on a
later date.
In this prospectus, “we,” “us,” “our”
and “Rocky” refer to Rocky Brands, Inc. and its subsidiaries.
ABOUT
ROCKY BRANDS, INC.
We are a leading designer, manufacturer
and marketer of premium quality footwear marketed under a portfolio of well
recognized brand names including Rocky Outdoor Gear, Georgia Boot, Durango,
Lehigh, Dickies and Mossy Oak. Our brands have a long history of
representing high quality, comfortable, functional and durable footwear and our
products are organized around four target markets: outdoor, work, duty and
western. Our footwear products incorporate varying features and are
positioned across a range of suggested retail price points from $29.95 for our
value priced products to $249.95 for our premium products. In
addition, as part of our strategy of outfitting consumers from head-to-toe, we
market complementary branded apparel and accessories that we believe leverage
the strength and positioning of each of our brands.
Our products are distributed through
three distinct business segments: wholesale, retail and military. In
our wholesale business, we distribute our products through a wide range of
distribution channels representing over 10,000 retail store locations in the
U.S. and Canada. Our wholesale channels vary by product line and
include sporting goods stores, outdoor retailers, independent shoe retailers,
hardware stores, catalogs, mass merchants, uniform stores, farm store chains,
specialty safety stores and other specialty retailers. Our retail
business includes direct sales of our products to consumers through our Lehigh
Safety Shoes mobile and retail stores (including a fleet of trucks, supported by
small warehouses that include retail stores, which we refer to as mini-stores),
our Rocky outlet store and our websites. We also sell footwear under
the Rocky label to the U.S. military.
We are an Ohio
corporation. Our headquarters is located at 39 East Canal Street,
Nelsonville, Ohio 45764, and our telephone number is (740)
753-1951. Our corporate website address is
www.rockyboots.com. This reference to our website is a textual
reference only. We do not incorporate the information on our website
into this prospectus and you should not consider any information on, or that can
be accessed through, our website as part of this prospectus.
Rocky, Rocky Outdoor Gear, Georgia
Boot, Durango and Lehigh and our other marks mentioned or used in this
prospectus or the documents incorporated by reference herein are our registered
trademarks and service marks. This prospectus and the documents
incorporated by reference herein also contains trademarks and service marks
belonging to other entities.
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below, together with all of the
other information included in this prospectus, before making an investment
decision. If any of the following risks actually occurs, our
business, financial condition or results of operations could
suffer. In that case, the trading price of our common stock could
decline, and you may lose all or part of your investment.
Risks
Relating to Our Business
Expanding
our brands into new footwear and apparel markets may be difficult and expensive,
and if we are unable to successfully continue such expansion, our brands may be
adversely affected, and we may not achieve our planned sales
growth.
Our growth strategy is founded
substantially on the expansion of our brands into new footwear and apparel
markets. New products that we introduce may not be successful with
consumers or one or more of our brands may fall out of favor with
consumers. If we are unable to anticipate, identify or react
appropriately to changes in consumer preferences, we may not grow as fast as we
plan to grow or our sales may decline, and our brand image and operating
performance may suffer.
Furthermore, achieving market
acceptance for new products will likely require us to exert substantial product
development and marketing efforts, which could result in a material increase in
our selling, general and administrative, or SG&A, expenses, and there can be
no assurance that we will have the resources necessary to undertake such
efforts. Material increases in our SG&A expenses could adversely
impact our results of operations and cash flows.
We may also encounter difficulties in
producing new products that we did not anticipate during the development
stage. Our development schedules for new products are difficult to
predict and are subject to change as a result of shifting priorities in response
to consumer preferences and competing products. If we are not able to
efficiently manufacture newly-developed products in quantities sufficient to
support retail distribution, we may not be able to recoup our investment in the
development of new products. Failure to gain market acceptance for
new products that we introduce could impede our growth, reduce our profits,
adversely affect the image of our brands, erode our competitive position and
result in long term harm to our business.
A
majority of our products are produced outside the U.S. where we are subject to
the risks of international commerce.
A majority of our products are produced
in the Dominican Republic and China. Therefore, our business is
subject to the following risks of doing business offshore:
|
|
•
|
the
imposition of additional United States legislation and regulations
relating to imports, including quotas, duties, taxes or other charges or
restrictions;
|
|
|
•
|
foreign
governmental regulation and
taxation;
|
|
|
•
|
fluctuations
in foreign exchange rates;
|
|
|
•
|
changes
in economic conditions;
|
|
|
•
|
transportation
conditions and costs in the Pacific and
Caribbean;
|
|
|
•
|
changes
in the political stability of these countries;
and
|
|
|
•
|
changes
in relationships between the United States and these
countries.
|
If any of these factors were to render
the conduct of business in these countries undesirable or impracticable, we
would have to manufacture or source our products elsewhere. There can
be no assurance that additional sources or products would be available to us or,
if available, that these sources could be relied on to provide product at terms
favorable to us. The occurrence of any of these developments would
have a material adverse effect on our business, financial condition, results of
operations and cash flows.
Our
success depends on our ability to anticipate consumer trends.
Demand for our products may be
adversely affected by changing consumer trends. Our future success
will depend upon our ability to anticipate and respond to changing consumer
preferences and technical design or material developments in a timely
manner. The failure to adequately anticipate or respond to these
changes could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Loss
of services of our key personnel could adversely affect our
business.
The development of our business has
been, and will continue to be, highly dependent upon Mike Brooks, Chairman and
Chief Executive Officer, David Sharp, President and Chief Operating Officer, and
James E. McDonald, Executive Vice President, Chief Financial Officer and
Treasurer. Messrs. Brooks, Sharp, and McDonald each have an at-will
employment agreement with us. Each employment agreement provides that
in the event of termination of employment without cause, the terminated
executive will receive a severance benefit. In the event of
termination for any reason, the terminated executive may not compete with us for
a period of one year. None of our other executive officers and key
employees has an employment agreement with our company. The loss of
the services of any of these officers could have a material adverse effect on
our business, financial condition, results of operations and cash
flows.
We
depend on a limited number of suppliers for key production materials, and any
disruption in the supply of such materials could interrupt product manufacturing
and increase product costs.
We purchase raw materials from a number
of domestic and foreign sources. We do not have any long-term supply
contracts for the purchase of our raw materials, except for limited blanket
orders on leather. The principal raw materials used in the production
of our footwear, in terms of dollar value, are leather, Gore-Tex waterproof
breathable fabric, Cordura nylon fabric and soling
materials. Availability or change in the prices of our raw materials
could have a material adverse effect on our business, financial condition,
results of operations and cash flows.
We
currently have a licensing agreement for the use of Gore-Tex waterproof
breathable fabric, and any termination of this licensing agreement could impact
our sales of waterproof products.
We are currently one of the largest
customers of Gore-Tex waterproof breathable fabric for use in
footwear. Our licensing agreement with W.L. Gore & Associates,
Inc. may be terminated by either party upon advance written notice to the other
party by October 1 for termination effective December 31 of that same
year. Although other waterproofing techniques and materials are
available, we place a high value on our Gore-Tex waterproof breathable fabric
license because Gore-Tex has high brand name recognition with our
customers. The loss of our license to use Gore-Tex waterproof
breathable fabric could have a material adverse effect on our competitive
position, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Our
licensing agreement for the use of the Dickies trademark will terminate on
December 31, 2010, and the termination of this licensing agreement could impact
our sales and growth strategy.
Our exclusive license to use the
Dickies brand will terminate on December 31, 2010. The loss of our
license to use the Dickies brand could have a material adverse effect on our
competitive position and growth strategy, which could have a material adverse
effect on our business, financial condition, results of operations and cash
flows. Sales of our
Dickies branded merchandise approximated $11.2 million in 2009.
Our
outdoor products are seasonal.
We have historically experienced
significant seasonal fluctuations in our business because we derive a
significant portion of our revenues from sales of our outdoor
products. Many of our outdoor products are used by consumers in cold
or wet weather. As a result, a majority of orders for these products
are placed by our retailers in January through April for delivery in July
through October. In order to meet demand, we must manufacture and
source outdoor footwear year round to be in a position to ship advance orders
for these products during the last two quarters of each
year. Accordingly, average inventory levels have been highest during
the second and third quarters of each year and sales have been highest in the
last two quarters of each year. There is no assurance that we will
have either sufficient inventory to satisfy demand in any particular quarter or
have sufficient demand to sell substantially all of our inventory without
significant markdowns.
Our
outdoor products are sensitive to weather conditions.
Historically, our outdoor products have
been used primarily in cold or wet weather. Mild or dry weather has
had in the past, and may have in the future, a material adverse effect on sales
of our products, particularly if mild or dry weather conditions occur in broad
geographical areas during late fall or early winter. Also, due to
variations in weather conditions from year to year, results for any single
quarter or year may not be indicative of results for any future
period.
Our
business could suffer if our third party manufacturers violate labor laws or
fail to conform to generally accepted ethical standards.
We require our third party
manufacturers to meet our standards for working conditions and other matters
before we are willing to place business with them. As a result, we
may not always obtain the lowest cost production. Moreover, we do not
control our third party manufacturers or their respective labor
practices. If one of our third party manufacturers violates generally
accepted labor standards by, for example, using forced or indentured labor or
child labor, failing to pay compensation in accordance with local law, failing
to operate its factories in compliance with local safety regulations or
diverging from other labor practices generally accepted as ethical, we likely
would cease dealing with that manufacturer, and we could suffer an interruption
in our product supply. In addition, such a manufacturer’s actions
could result in negative publicity and may damage our reputation and the value
of our brand and discourage retail customers and consumers from buying our
products.
The
growth of our business will be dependent upon the availability of adequate
capital.
The growth of our business will depend
on the availability of adequate capital, which in turn will depend in large part
on cash flow generated by our business and the availability of equity and debt
financing. We cannot assure you that our operations will generate
positive cash flow or that we will be able to obtain equity or debt financing on
acceptable terms or at all. Our revolving credit facility contains
provisions that restrict our ability to incur additional indebtedness or make
substantial asset sales that might otherwise be used to finance our
expansion. Security interests in substantially all of our assets,
which may further limit our access to certain capital markets or lending
sources, secure our obligations under our revolving credit
facility. Moreover, the actual availability of funds under our
revolving credit facility is limited to specified percentages of our eligible
inventory and accounts receivable. Accordingly, opportunities for
increasing our cash on hand through sales of inventory would be partially offset
by reduced availability under our revolving credit facility. As a
result, we cannot assure you that we will be able to finance our current
expansion plans.
We
must comply with the restrictive covenants contained in our revolving credit
facility.
Our credit facility and term loan
agreements require us to comply with certain financial restrictive covenants
that impose restrictions on our operations, including our ability to incur
additional indebtedness, make investments of other restricted payments, sell or
otherwise dispose of assets and engage in other activities. Any
failure by us to comply with the restrictive covenants could result in an event
of default under those borrowing arrangements, in which case the lenders could
elect to declare all amounts outstanding thereunder to be due and payable, which
could have a material adverse effect on our financial condition. As
of December 31, 2009, we were in compliance with all financial
restrictive covenants.
We
face intense competition, including competition from companies with
significantly greater resources than ours, and if we are unable to compete
effectively with these companies, our market share may decline and our business
could be harmed.
The footwear and apparel industries are
intensely competitive, and we expect competition to increase in the
future. A number of our competitors have significantly greater
financial, technological, engineering, manufacturing, marketing and distribution
resources than we do, as well as greater brand awareness in the footwear
market. Our ability to succeed depends on our ability to remain
competitive with respect to the quality, design, price and timely delivery of
products. Competition could materially adversely affect our business,
financial condition, results of operations and cash flows.
We
currently manufacture a portion of our products and we may not be able to do so
in the future at costs that are competitive with those of competitors who source
their goods.
We currently plan to retain our
internal manufacturing capability in order to continue benefiting from expertise
we have gained with respect to footwear manufacturing methods conducted at our
manufacturing facilities. We continue to evaluate our manufacturing
facilities and third party manufacturing alternatives in order to determine the
appropriate size and scope of our manufacturing facilities. There can
be no assurance that the costs of products that continue to be manufactured by
us can remain competitive with products sourced from third parties.
We
rely on distribution centers in Logan and Columbus, Ohio, San
Bernardino, California and Waterloo, Ontario, Canada, and if there is a natural
disaster or other serious disruption at any of these facilities, we may be
unable to deliver merchandise effectively to our retailers.
We rely on distribution centers located
in Logan and Columbus, Ohio, San Bernardino, California and Waterloo, Ontario,
Canada. Any natural disaster or other serious disruption at any of these
facilities due to fire, tornado, flood, terrorist attack or any other cause
could damage a portion of our inventory or impair our ability to use our
distribution center as a docking location for merchandise. Either of
these occurrences could impair our ability to adequately supply our retailers
and harm our operating results.
We
are subject to certain environmental and other regulations.
Some of our operations use substances
regulated under various federal, state, local and international environmental
and pollution laws, including those relating to the storage, use, discharge,
disposal and labeling of, and human exposure to, hazardous and toxic
materials. Compliance with current or future environmental laws and
regulations could restrict our ability to expand our facilities or require us to
acquire additional expensive equipment, modify our manufacturing processes or
incur other significant expenses. In addition, we could incur costs,
fines and civil or criminal sanctions, third party property damage or personal
injury claims or could be required to incur substantial investigation or
remediation costs, if we were to violate or become liable under any
environmental laws. Liability under environmental laws can be joint and several
and without regard to comparative fault. There can be no assurance
that violations of environmental laws or regulations have not occurred in the
past and will not occur in the future as a result of our inability to obtain
permits, human error, equipment failure or other causes, and any such violations
could harm our business, financial condition, results of operations and cash
flows.
If
our efforts to establish and protect our trademarks, patents and other
intellectual property are unsuccessful, the value of our brands could
suffer.
We regard certain of our footwear
designs as proprietary and rely on patents to protect those
designs. We believe that the ownership of patents is a significant
factor in our business. Existing intellectual property laws afford only limited
protection of our proprietary rights, and it may be possible for unauthorized
third parties to copy certain of our footwear designs or to reverse engineer or
otherwise obtain and use information that we regard as
proprietary. If our patents are found to be invalid, however, to the
extent they have served, or would in the future serve, as a barrier to entry to
our competitors, such invalidity could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
We own U.S. registrations for a number
of our trademarks, trade names and designs, including such marks as Rocky,
Georgia Boot, Durango and Lehigh. Additional trademarks, trade names
and designs are the subject of pending federal applications for
registration. We also use and have common law rights in certain
trademarks. Over time, we have increased distribution of our goods in
several foreign countries. Accordingly, we have applied for trademark
registrations in a number of these countries. We intend to enforce
our trademarks and trade names against unauthorized use by third
parties.
Our
success depends on our ability to forecast sales.
Our investments in infrastructure and
product inventory are based on sales forecasts and are necessarily made in
advance of actual sales. The markets in which we do business are
highly competitive, and our business is affected by a variety of factors,
including brand awareness, changing consumer preferences, product innovations,
susceptibility to fashion trends, retail market conditions, weather conditions
and economic and other factors. One of our principal challenges is to
improve our ability to predict these factors, in order to enable us to better
match production with demand. In addition, our growth over the years
has created the need to increase the investment in infrastructure and product
inventory and to enhance our systems. To the extent sales forecasts
are not achieved, costs associated with the infrastructure and carrying costs of
product inventory would represent a higher percentage of revenue, which would
adversely affect our business, financial condition, results of operations and
cash flows.
Risks
Related to Our Industry
Because
the footwear market is sensitive to decreased consumer spending and slow
economic cycles, if general economic conditions deteriorate, many of our
customers may significantly reduce their purchases from us or may not be able to
pay for our products in a timely manner.
The footwear industry has been subject
to cyclical variation and decline in performance when consumer spending
decreases or softness appears in the retail market. Many factors
affect the level of consumer spending in the footwear industry,
including:
•general
business conditions;
•interest
rates;
•the
availability of consumer credit;
•weather;
•increases
in prices of nondiscretionary goods;
•taxation;
and
•consumer
confidence in future economic conditions.
Consumer purchases of discretionary
items, including our products, may decline during recessionary periods and also
may decline at other times when disposable income is lower. A
downturn in regional economies where we sell products also reduces
sales.
The
continued shift in the marketplace from traditional independent retailers to
large discount mass merchandisers may result in decreased margins.
A continued shift in the marketplace
from traditional independent retailers to large discount mass merchandisers has
increased the pressure on many footwear manufacturers to sell products to these
mass merchandisers at less favorable margins. Because of competition
from large discount mass merchandisers, a number of our small retailing
customers have gone out of business, and in the future more of these customers
may go out of business, which could have a material adverse effect on our
business, financial condition, results of operations and cash
flows.
SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus and the information
incorporated by reference in this prospectus contain forward-looking
statements. We sometimes use words such as “anticipate,” “believe,”
“continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will” and
similar expressions, as they relate to us, our management and our industry, to
identify forward-looking statements. Forward-looking statements
relate to our expectations, beliefs, plans, strategies, prospects, future
performance, anticipated trends and other future
events. Specifically, this prospectus and the information
incorporated by reference in this prospectus contain forward-looking statements
relating to, among other things:
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our
business, growth, operating and financing
strategies;
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the
introduction or success of new
products;
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the
impact of seasonality and weather on our
operations;
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expectations
regarding our net sales and earnings
growth;
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expectations
regarding our liquidity;
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our
future financing plans; and
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trends
affecting our financial condition or results of
operations.
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We have based our forward-looking
statements largely on our current expectations and projections about future
events and financial trends affecting our business. Actual results
may differ materially. Some of the risks, uncertainties and
assumptions that may cause actual results to differ from these forward-looking
statements are described in “Risk Factors”. In light of these risks,
uncertainties and assumptions, the forward-looking events and circumstances
discussed in this prospectus and the information incorporated by reference in
this prospectus might not occur.
You should read this prospectus, the
documents that we filed as exhibits to the registration statement of which this
prospectus is a part and the documents that we incorporate by reference in this
prospectus completely and with the understanding that our future results may be
materially different from what we expect. We qualify all of our
forward-looking statements by these cautionary statements, and we assume no
obligation to update these forward-looking statements publicly for any
reason.
WHERE
YOU CAN FIND MORE INFORMATION
AND
INCORPORATION BY REFERENCE
We have filed a registration statement
on Form S-3 with the Securities and Exchange Commission. This
prospectus does not contain all of the information in the registration
statement. In addition, we file annual, quarterly and special
reports, proxy statements and other information with the Commission. Our
Commission filings are available to the public over the Internet at the
Commission’s web site at http://www.sec.gov. You may also read and
copy any document we file with the Commission at its public reference facilities
at 100 F Street, N.E., Washington, DC 20549. You can also obtain
copies of the documents at prescribed rates by writing to the Public Reference
Section of the Commission at 100 F Street, N.E., Washington, DC
20549. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference facilities. Our
Commission filings are also available at the office of the Nasdaq Stock Market,
One Liberty Plaza, 165 Broadway, New York, New York 10006. For
further information on obtaining copies of our public filings at the Nasdaq
Stock Market, you should call 212-401-8700.
We “incorporate by reference” into this
prospectus the information we file with the Commission (Commission file number
000-21026), which means that we can disclose important information to you by
referring you to those documents. The information incorporated by
reference is an important part of this prospectus. Information that we
file with the Commission after the date of this prospectus will automatically
update this prospectus. We incorporate by reference the documents listed
below, and any filings we make with the Commission under Sections 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the
initial filing of the registration statement that contains this prospectus
(except for information furnished and not filed with the Commission in a Current
Report on Form 8-K):
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our
Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the Commission on March 2,
2010;
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the
description of our common shares, which is contained in our registration
statement on Form 8-A filed with the Commission on December 22, 1992,
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended,
as updated in any amendment or report filed for the purpose of updating
such description; and
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the
description of the preferred stock purchase rights associated with our
common stock, contained in our registration statement on Form 8-A filed
with the Commission on June 15, 2009, as updated in any amendment or
report filed for the purpose of updating such
description.
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Information
furnished by us in Current Reports on Form 8-K under Items 2.02 and 9.01 is
expressly not incorporated by reference in this prospectus.
We will provide to each person,
including any beneficial owner, to whom a prospectus is delivered, without
charge, upon written or oral request, a copy of any or all of the documents that
are incorporated by reference into this prospectus but not delivered with the
prospectus, including exhibits that are specifically incorporated by reference
into such documents. You may request a copy of these filings at no
cost, by writing to or telephoning us at:
Rocky
Brands, Inc.
39 East
Canal Street
Nelsonville,
Ohio 45764
Attention: James
E. McDonald, Chief Financial Officer
(740)
753-1951
USE
OF PROCEEDS
Unless otherwise indicated in the
prospectus supplement, we intend to use the net proceeds from the sale of
securities under this prospectus for general corporate purposes, which may
include additions to working capital, repayment or redemption of existing
indebtedness and financing capital expenditures and acquisitions. We
will set forth in the particular prospectus supplement our intended use for the
net proceeds we receive from the sale of our securities under such prospectus
supplement.
DESCRIPTION
OF CAPITAL STOCK
The following description of our
capital stock is only a summary and is subject to the provisions of our articles
of incorporation and code of regulations, which are included as exhibits to the
registration statement of which this prospectus forms a part, and provisions of
applicable law.
Our articles of incorporation authorize
our board of directors to issue 25,000,000 shares of common stock, without par
value, and 500,000 shares of preferred stock, without par value, of which
250,000 shares are voting preferred stock and 250,000 shares are non-voting
preferred stock.
Common
Stock
The holders of common stock are
entitled to one vote for each share held of record on all matters submitted to
be voted upon. Shareholders are not entitled to cumulate votes for
the election of directors. Common shareholders are entitled to share
ratably in any dividends that may be declared by the board of directors out of
funds legally available therefor. Holders of common stock do not have
preemptive, redemption, conversion or other preferential rights and, upon the
liquidation, dissolution or winding up of our company, are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preference, if any, which may be granted to the holders of preferred
stock. All shares outstanding before this offering are, and the
shares to be issued in this offering will be, validly issued, fully paid and
non-assessable. The rights, preferences and privileges of holders of
common stock are subject to the rights, preferences and privileges of holders of
any classes or series of preferred stock that we may issue in the
future. As of March 1, 2010, 5,602,537 shares of common stock were
outstanding.
Preferred
Stock
Our articles of incorporation authorize
our board of directors to issue, without further action by the holders of our
common stock, up to 500,000 shares of preferred stock, of which 250,000 shares
are voting preferred stock and 250,000 shares are non-voting preferred stock, in
one or more series and to fix any preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms and
conditions of redemption as are provided in resolutions adopted by the
board. The issuance of preferred stock could have an adverse effect
on the rights of holders of common stock. For example, any preferred
stock may rank senior to the common stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding up, or both. In
addition, any preferred stock may have class or series voting
rights. Holders of preferred stock have no preemptive or other rights
to subscribe for additional shares.
Classified
Board of Directors; Election of Directors
Our code of regulations provides that
our board of directors shall consist of up to 15 members. Our board
is divided into two classes, with staggered terms of two years
each. Each year the term of one class expires. As a
result, approximately one-half of the directors are elected at each annual
meeting of shareholders. This can delay the ability of a significant
shareholder or group of shareholders to gain control of our board of
directors.
Our code of regulations provides that
the number of directors cannot be fewer than three nor more than 15; any change
in the number of directors cannot have the effect of shortening the term of any
incumbent director; and no action may be taken to increase the number of
directors unless at least two-thirds of the directors then in office concur in
such action. Consistent with the adoption of a classified board, our
code of regulations precludes the removal of an incumbent director unless such
removal is for cause. This will prevent a shareholder or group of
shareholders from removing incumbent directors and simultaneously gaining
control of the board by filling the vacancies created by removals with their own
nominees. Vacancies on our board of directors may be filled by the
remaining directors and, in cases where a director has been removed for cause,
by the shareholders. These provisions may only be repealed or amended
with the affirmative vote of the holders of two-thirds of the shares entitled to
vote on the proposal. Otherwise, our code of regulations may be
amended with the affirmative vote of the holders of a majority of the shares
entitled to vote on the proposal.
Our code of regulations requires that
notice in writing of proposed shareholder nominations for the election of
directors be given to our secretary prior to the meeting. The notice
must contain certain information about the non-incumbent nominee, including
name, age, business and residence addresses, principal occupation, the class and
number of our shares beneficially owned by the nominee and such other
information as would be required to be included in a proxy statement soliciting
proxies for election of the nominee, as well as certain information about the
nominating shareholder. We may require any nominee to furnish other
information reasonably required by us to determine the nominee’s eligibility to
serve as a director. If the presiding officer of any shareholder
meeting determines that a person was not nominated in accordance with the
foregoing procedures, the person shall not be eligible for election as a
director.
In addition, our code of regulations
requires that notice in writing from any shareholder who proposes to bring
business before any meeting of shareholders must be timely given to our
secretary prior to the meeting. The notice must contain certain
information, including a brief description of the business proposed to be
brought before the meeting, the reasons for conducting this business at the
meeting, the class and number of our shares beneficially owned by the
shareholder and any supporting shareholders and any material interest of the
proposing shareholder in the business so proposed. If the presiding
officer of any shareholder meeting determines that any business was not properly
brought before the meeting in accordance with the foregoing procedures, the
business will not be conducted at the meeting. Nothing in our code of
regulations precludes discussion by any shareholder of any business properly
brought before the meeting in accordance with these procedures.
To be timely, shareholder notice of a
nomination for election of a director or to bring business before any
shareholder meeting must be received by us not less than 30 days nor more than
60 days prior to the meeting (or, if fewer than 40 days’ notice or prior public
disclosure of the meeting date is given or made to shareholders, not later than
the tenth day following the day of mailing notice of the meeting or public
disclosure of the mailing).
Shareholder
Rights Plan
We adopted a shareholder rights plan in 2009 under a shareholder
rights agreement intended to protect shareholders against unsolicited attempts
to acquire control of our company that do not offer what our board of directors
believes to be an adequate price to all shareholders or that our board of
directors otherwise opposes. As part of the plan, our board of
directors declared a dividend that resulted in the issuance of one preferred
stock purchase right for each outstanding share of our common
stock. Unless extended, the preferred share purchase rights expire on
June 11, 2012. If a bidder proceeds with an unsolicited attempt to
purchase our stock and acquires 20% or more (or announces its intention to
acquire 20% or more) of our outstanding stock, and the board of directors does
not redeem the preferred stock purchase rights, the rights will become
exercisable at a price that significantly dilutes the interest of the bidder in
our common stock.
Provisions
Relating to Acquisitions and Mergers
Under our articles of incorporation, we
have elected not to be covered by the Ohio Control Share Acquisition Act, known
as the Control Act. The Control Act requires the prior approval of
shareholders for transfers of corporate control that occur in the open market,
including tender offers, or that are privately negotiated.
Under our articles of incorporation,
the affirmative vote of the holders of two-thirds of the shares entitled to vote
is required for the approval or authorization of any (1) merger or consolidation
of our company with or into any other corporation, or (2) sale, lease, exchange
or other disposition of all or substantially all of our assets to or with any
other corporation, person or other entity, unless two-thirds of our directors
have approved the transaction.
Our articles of incorporation further
provide that it is a proper corporate purpose, reasonably calculated to benefit
shareholders, for our board of directors to base our response to any acquisition
proposal, as defined in our articles of incorporation, on our board’s evaluation
of what is in our best interests. This evaluation will include
consideration of the best interests of our shareholders, including the
relationship of the consideration offered in the acquisition proposal to the
then-current market price of our stock, our current value in a freely negotiated
transaction and the estimate of our future value as an independent entity; the
business and financial conditions and earnings prospects of the acquiring person
or persons; the competence, experience and integrity of the acquiring person or
persons and its or their management; and such other factors as our board of
directors deems relevant, including the social, legal and economic effects of
the acquisition proposal upon employees, suppliers, customers and our
business. An acquisition proposal means any proposal for a tender
offer or exchange offer for any of our equity securities, any proposal to merge
or consolidate us with another corporation, or any proposal to purchase or
otherwise acquire all or substantially all of our properties and
assets.
Our articles of incorporation
explicitly provide that the provisions of Chapter 1704 of the Ohio Revised Code
apply to us. Section 1704 generally prevents an issuing public corporation
(generally defined as an Ohio corporation with 50 or more shareholders that has
its principal place of business, its principal offices, assets with substantial
value, or a substantial percentage of its assets in Ohio) from entering into
certain business combinations with an interested shareholder (generally defined
as any person or entity that can vote, or direct the voting of, 10% or more of
the issuing public corporation’s stock) or its affiliates for a period of three
years after the date of the transaction in which the person became an interested
shareholder, unless prior to this transaction (1) the directors have approved
the Section 1704 business combination or (2) the directors have approved this
transaction. Section 1704 provides further that a corporation may, in
its articles of incorporation or code of regulations, elect not to be governed
by Section 1704. We have not made this election.
These provisions relating to
acquisitions, mergers and combinations may only be amended by the affirmative
vote of the holders of two-thirds of the shares entitled to vote on the
proposal. Otherwise, our articles of incorporation may be amended by the
affirmative vote of the holders of a majority of the shares entitled to vote on
the proposal.
Limitation
of Director Liability and Indemnification Agreements
Under the Ohio General Corporation Law,
a director’s liability to us or our shareholders for damages is limited to only
those situations where it is proven by clear and convincing evidence that his
act or failure to act was undertaken with deliberate intent to cause injury to
us or undertaken with reckless disregard for our best interests and those
situations involving unlawful loans, asset distributions, dividend payments or
share repurchases. As a result, shareholders may be unable to recover
monetary damages against directors for actions that constitute gross negligence
or that are in violation of their fiduciary duties, although it may be possible
to obtain injunctive or other equitable relief with respect to such actions. If
equitable remedies are found not to be available to shareholders for any
particular case, shareholders may not have any effective remedy against the
challenged conduct. Our articles of incorporation provide that
indemnification may be granted to directors, officers and certain other persons
serving (or having served) as a director or officer of our company or any other
company or enterprise at our request against all expenses (including attorneys’
fees), judgments, fines and settlement amounts, paid or incurred by them in any
action or proceeding, on account of their service as a director or officer of
our company or any other company or enterprise when serving at our request, to
the fullest extent permitted by law.
We also entered into indemnification
agreements with each director and executive officer, including the directors who
are also our employees, to confirm and expand our obligation to indemnify these
persons. These indemnification agreements (1) confirm the indemnity
provided to them by our articles of incorporation and give them assurances that
this indemnity will continue to be provided despite future changes in our
articles of incorporation, and (2) provide that, in addition, the directors and
officers shall be indemnified to the fullest possible extent permitted by law
against all expenses (including attorneys’ fees) judgments, fines and settlement
amounts, paid or incurred by them in any action or proceeding, including any
action by or in the right of our company, on account of their service as a
director or officer of our company or as a director or officer of any of our
subsidiaries or as a director or officer of any other company or enterprise when
they are serving in such capacities at our request.
No indemnity will be provided under the
indemnification agreements to any director or officer on account of conduct that
is adjudged to have been undertaken with deliberate intent to cause injury to us
or undertaken with reckless disregard for our best interests. In addition, the
indemnification agreements provide that no indemnification will be permitted if
a final court adjudication shall determine that the indemnification is not
lawful, or in respect of any suit in which judgment is rendered against a
director or officer for an accounting of profits made from a purchase or sale of
our securities in violation of Section 16(b) of the Securities Exchange Act of
1934 or of any similar statutory law, or on account of any remuneration paid to
a director or officer that is adjudicated to have been paid in violation of
law. Except as so limited, indemnification of directors and officers
will be permitted under the indemnification agreements to the fullest extent
permitted by law.
We believe that these indemnification
provisions are essential to attracting and retaining qualified persons as
officers and directors. We have obtained directors’ and officers’
insurance.
Transfer
Agent and Registrar
The transfer agent and registrar for
our common stock is Computershare Investor Services LLC located in Chicago,
Illinois.
PLAN
OF DISTRIBUTION
We may
sell the securities from time to time pursuant to underwritten public offerings,
negotiated transactions, block trades or a combination of these
methods. We may sell the securities separately or
together:
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through
one or more underwriters or dealers in a public offering and sale by
them;
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directly
to one or more purchasers.
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We may
distribute the securities from time to time in one or more
transactions:
· at
a fixed price or prices, which may be changed;
· at
market prices prevailing at the time of sale;
· at
prices related to such prevailing market prices; or
We may
solicit directly offers to purchase the securities being offered by this
prospectus. We may also designate agents to solicit offers to
purchase the securities from time to time. We will name in a
prospectus supplement any agent involved in the offer or sale of our
securities.
If we
utilize a dealer in the sale of the securities being offered by this prospectus,
we will sell the securities to the dealer, as principal. The dealer
may then resell the securities to the public at varying prices to be determined
by the dealer at the time of resale.
If we
utilize an underwriter in the sale of the securities being offered by this
prospectus, we will execute an underwriting agreement with the underwriter at
the time of sale and we will provide the name of any underwriter in the
prospectus supplement that the underwriter will use to make resales of the
securities to the public. In connection with the sale of the
securities, we or the purchasers of securities for whom the underwriter may act
as agent may compensate the underwriter in the form of underwriting discounts or
commissions. The underwriter may sell the securities to or through
dealers, and the underwriter may compensate those dealers in the form of
discounts, concessions or commissions.
We will
provide in the applicable prospectus supplement any compensation we will pay to
underwriters, dealers or agents in connection with the offering of the
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Underwriters, dealers and
agents participating in the distribution of the securities may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended, and
any discounts and commissions received by them and any profit realized by them
on resale of the securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters,
dealers and agents against civil liabilities, including liabilities under the
Securities Act or to contribute to payments they may be required to make in
respect thereof.
The
securities may or may not be listed on a national securities
exchange. To facilitate the offering of securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the securities. This may
include over-allotments or short sales of the securities, which involves the
sale by persons participating in the offering of more securities than we sold to
them. In these circumstances, these persons would cover such
over-allotments or short positions by making purchases in the open market or by
exercising their over-allotment option. In addition, these persons
may stabilize or maintain the price of the securities by bidding for or
purchasing securities in the open market or by imposing penalty bids, whereby
selling concessions allowed to dealers participating in the offering may be
reclaimed if securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be
to stabilize or maintain the market price of the securities at a level above
that which might otherwise prevail in the open market. These
transactions may be discontinued at any time.
We may
enter into derivative transactions with third parties, or sell securities not
covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement indicates, in
connection with any derivative transaction, the third parties may sell
securities covered by this prospectus and the applicable prospectus supplement,
including in short sale transactions. If so, the third party may use
securities pledged by us or borrowed from us or others to settle those sales or
to close out any related open borrowings of stock, and may use securities
received from us in settlement of those derivatives to close out any related
open borrowings of stock. The third party in such sale transactions
will be an underwriter and, if not identified in this prospectus, will be
identified in the applicable prospectus supplement or a post-effective amendment
to the registration statement of which this prospectus is a part. In addition,
we may otherwise loan or pledge securities to a financial institution or other
third party that in turn may sell the securities short using this
prospectus. Such financial institution or other third party may
transfer its economic short position to investors in our securities or in
connection with a concurrent offering of other securities.
The
underwriters, dealers and agents may engage in transactions with us, or perform
services for us, in the ordinary course of business.
LEGAL
MATTERS
The validity of the shares offered
hereby has been passed upon for us by Porter Wright Morris & Arthur LLP, 41
South High Street, Columbus, Ohio 43215. Curtis A.
Loveland, a partner in Porter Wright Morris & Arthur LLP, is our secretary
and a director and beneficially owns an aggregate of 107,302 shares of our
common stock consisting of a combination of stock and options exercisable within
60 days after April 28, 2010.
EXPERTS
The consolidated financial statements
and the related financial statement schedule, incorporated in this prospectus by
reference from our Annual Report on Form 10-K, and the effectiveness our
internal control over financial reporting have been audited by Schneider Downs
& Co., Inc., an independent registered public accounting firm, as stated in
their reports which are incorporated herein by reference. Such
consolidated financial statements and financial statement schedule have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Rocky
Brands, Inc.
1,800,000 Shares
of Common Stock
Prospectus
May
10, 2010
