Unassociated Document

	Company Contact:	Jim McDonald
		Chief Financial Officer
		(740) 753-1951

	Investor Relations:	ICR, Inc.
		Brendon Frey
		(203) 682-8200

ROCKY BRANDS, INC. ANNOUNCES THIRD QUARTER FISCAL 2010 RESULTS

Third Quarter Sales Increased 12.3% to $74.8 Million

Third Quarter Diluted EPS Increased 26.0% to $0.63

Funded Debt Decreased $30.0 Million, or 36.0% to $53.4 Million

NELSONVILLE, Ohio, October 21, 2010 – Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its third quarter ended September 30, 2010.

For the third quarter of 2010, net sales increased 12.3% to $74.8 million versus net sales of $66.6 million in the third quarter of 2009. Net income for the third quarter of 2010 increased $1.9 million to $4.7 million, or $0.63 per diluted share versus net income of $2.8 million, or $0.50 per diluted share a year ago.

Mike Brooks, Chairman and Chief Executive Officer, commented, “During the third quarter we continued to experience positive business trends similar to the first six months of 2010 which allowed us once again deliver improved profitability versus the year ago period. This included higher sales levels in both our wholesales and military segments, a 40 basis point increase in wholesale gross margin, and better operating expense leverage. We are particularly pleased with our wholesale growth which is being driven by demand for our work footwear. We also recently secured a new credit facility that will further reduce our interest expense approximately $2 million next year and free up capital to expand our business. Looking ahead, we are excited about both our near and long-term growth prospects and we are confident we have the right pieces in place to capitalize on the many opportunities still in front of us.”

Third Quarter Review

Net sales for the third quarter increased 12.3% to $74.8 million compared to $66.6 million a year ago. Wholesale sales for the third quarter increased 9.0% to $59.4 million compared to $54.5 million for the same period in 2009. The increase was driven primarily by growth of our work category. Retail sales for the third quarter were $11.1 million compared to $11.5 million for the same period last year. Military segment sales for the third quarter increased to $4.3 million versus $0.6 million for the same period in 2009.

Gross margin in the third quarter of 2010 was $27.2 million, or 36.4% of sales compared to $24.7 million, or 37.1% for the same period last year. The 70 basis point decline in gross margin was due to an increase in sales to the Military which carry lower gross margin than the wholesale and retail businesses.

Selling, general and administrative (SG&A) expenses were $19.2 million, or 25.6% of sales for the third quarter of 2010 compared to $18.6 million, or 27.9% of sales a year ago. The increase in SG&A expenses is primarily due to additional selling expenses and incentive accruals, which were partially offset by decreases in other expenses.

Income from operations increased 31.1% to $8.0 million, or 10.7% of net sales for the period compared to operating income of $6.1 million, or 9.2% of net sales in the prior year.

Interest expense decreased $1.0 million, or 50.0% to $1.0 million for the third quarter of 2010. The decrease is the result of debt reductions over the past 12 months combined with lower interest rates compared to the same period last year.

The Company’s funded debt decreased $30.0 million, or 36.0% to $53.4 million at September 30, 2010 versus $83.4 million at September 30, 2009.

Inventory decreased 7.6% to $62.9 million at September 30, 2010 compared with $68.1 million on the same date a year ago.

Conference Call Information

The Company’s conference call to review third quarter fiscal 2010 results will be broadcast live over the internet today, Thursday, October 21, 2010 at 4:30 pm Eastern Time. The broadcast will be hosted at www.rockybrands.com.

About Rocky Brands, Inc.

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

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

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

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	September 30, 2010			December 31, 2009			September 30, 2009
	Unaudited						Unaudited
ASSETS:

CURRENT ASSETS:
Cash and cash equivalents	$	3,965,906		$	1,797,093		$	4,002,909
Trade receivables – net		61,261,175			45,831,558			58,296,661
Other receivables		1,319,589			1,476,643			1,598,829
Inventories		62,913,777			55,420,467			68,065,444
Deferred income taxes		1,490,601			1,475,695			2,173,391
Income tax receivable		-			-			247,011
Prepaid expenses		1,494,653			1,309,138			1,323,115
Total current assets		132,445,701			107,310,594			135,707,360
FIXED ASSETS – net		22,114,258			22,669,876			23,132,489
IDENTIFIED INTANGIBLES		30,504,785			30,516,910			30,627,527
OTHER ASSETS		1,896,914			2,892,683			3,304,123
TOTAL ASSETS	$	186,961,658		$	163,390,063		$	192,771,499


LIABILITIES AND SHAREHOLDERS' EQUITY:

CURRENT LIABILITIES:
Accounts payable	$	9,449,927		$	6,781,534		$	7,683,778
Current maturities – long term debt		508,376			511,870			503,841
Accrued expenses:
Taxes - other		490,978			440,223			387,817
Income tax payable		2,280,900			26,242			-
Other		6,612,636			5,226,749			5,987,861
Total current liabilities		19,342,817			12,986,618			14,563,297

LONG TERM DEBT – less current maturities		52,910,608			55,079,776			82,940,392
DEFERRED INCOME TAXES		9,060,211			9,071,639			9,558,761
DEFERRED LIABILITIES		3,925,393			3,774,356			4,116,613

TOTAL LIABILITIES		85,239,029			80,912,389			111,179,063

SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding
September 30, 2010 - 7,409,537; December 31, 2009 -
5,576,465; September 30, 2009 - 5,547,215		68,927,984			54,598,104			54,387,752

Accumulated other comprehensive loss		(2,947,290	)		(3,217,144	)		(2,982,564	)
Retained earnings		35,741,935			31,096,714			30,187,248

Total shareholders' equity		101,722,629			82,477,674			81,592,436

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	186,961,658		$	163,390,063		$	192,771,499

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
NET SALES	$	74,760,244		$	66,572,437		$	186,062,284		$	167,825,613

COST OF GOODS SOLD		47,575,649			41,856,651			121,021,756			105,299,667

GROSS MARGIN		27,184,595			24,715,786			65,040,528			62,525,946

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES		19,159,541			18,576,780			53,347,582			56,642,081

INCOME/(LOSS) FROM OPERATIONS		8,025,054			6,139,006			11,692,946			5,883,865

OTHER INCOME AND (EXPENSES):
Interest expense		(955,033	)		(1,955,485	)		(4,721,176	)		(5,665,905	)
Other – net		246,334			224,442			286,451			257,899
Total other - net		(708,699	)		(1,731,043	)		(4,434,725	)		(5,408,006	)

INCOME/(LOSS) BEFORE INCOME TAXES		7,316,355			4,407,963			7,258,221			475,859

INCOME TAX EXPENSE/(BENEFIT)		2,634,000			1,626,518			2,613,000			210,518

NET INCOME/(LOSS)	$	4,682,355		$	2,781,445		$	4,645,221		$	265,341

INCOME/(LOSS) PER SHARE
Basic	$	0.63		$	0.50		$	0.71		$	0.05
Diluted	$	0.63		$	0.50		$	0.71		$	0.05

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic		7,407,409			5,547,215			6,522,058			5,546,993
Diluted		7,422,194			5,547,215			6,541,192			5,546,993