/2H-   d 1$&%* 'ROCKY SHOES & BOOTS, INC.'AND SUBSIDIARIES"'CONSOLIDATED BALANCE SHEETS'DECEMBER 31, ^2001 ^2000'CURRENT ASSETS: 'Cash and cash equivalents "$ 2,954,935 "$ 2,117,994' 'Accounts receivable - trade, net "15,091,100 "18,055,881 'Other receivables "2,225,498 "2,956,900 'Inventories "27,713,664 "32,035,237& 'Deferred income taxes - current "615,609 "536,012'Other current assets"1,053,192"1,295,287'Total current assets"49,653,998"56,997,311'FIXED ASSETS, AT COST:$'Property, plant and equipment"43,024,219"47,401,015&'Less - accumulated depreciation"(22,258,125)"(23,070,696)'Total fixed assets - net"20,766,094"24,330,319'DEFERRED PENSION ASSET"1,802,922"2,526,603'DEFERRED INCOME TAXES"295,784'OTHER ASSETS"2,141,016"2,196,939"'TOTAL ASSETS""$ 74,659,814""$ 86,051,1726%'See notes to consolidated financial statements. ''ROCKY SHOES & BOOTS, INC.('AND SUBSIDIARIES")'CONSOLIDATED BALANCE SHEETS+^DECEMBER 31,+^DECEMBER 31, ,^2001 ,^2000.'CURRENT LIABILITIES:/'Accounts payable/"$ 1,559,444/"$ 3,502,296*0'Current maturities - long-term debt0"469,1430"1,070,3741'Accrued expenses:2'Taxes - other2"991,2952"560,5373'Salaries and wages3"985,9923"369,9254'Plant closing costs4"903,2915'Co-op advertising5"231,8625"520,0196'Interest6"121,4176"272,882 7'Other7"124,6597"500,3138"------------8"------------ :'Total current liabilities:"5,387,103:"6,796,346/<'LONG-TERM DEBT - Less current maturities<"16,976,023<"26,445,276>'DEFERRED LIABILITIES:?'Compensation?"155,564?"187,959@'Pension@"1,097,791@"2,295,919A"------------A"------------!C'Total deferred liabilitiesC"1,253,355C"2,483,878D"------------D"------------F'Total liabilitiesF"23,616,481F"35,725,500$H'COMMITMENTS AND CONTINGENCIESJ'SHAREHOLDERS' EQUITY:BK'Preferred stock, Series A, no par value, $.06 stated value;%L'none outstanding 2001 and 2000@M'Common stock, no par value; 10,000,000 shares authorized;?N'outstanding 2001 - 4,492,215 and 2000 - 4,489,215 sharesN"35,302,159N"35,284,159+O'Accumulated other comprehensive lossO"(831,161)P'Retained earningsP"16,572,335P"15,041,513!S'Total shareholders' equityS"51,043,333S"50,325,6721V'TOTAL LIABILITIES AND SHAREHOLDERS' EQUITYV"$ 74,659,814V"$ 86,051,1726Y'See notes to consolidated financial statements. ['ROCKY SHOES & BOOTS, INC.\'AND SUBSIDIARIES,]'CONSOLIDATED STATEMENTS OF OPERATIONS^^YEARS ENDED^^YEARS ENDED^^YEARS ENDED_^ DECEMBER 31,_^DECEMBER 31,_^DECEMBER 31, `^2001 `^2000 `^1999b'NET SALESb"$ 103,319,806b"$ 103,228,987b"$ 98,781,223d'COST OF GOODS SOLDd"80,067,866d"78,617,092d"83,256,768g'GROSS MARGINg"23,251,940g"24,611,895g"15,524,455 j'OTHER OPERATING EXPENSES:k'Selling, general andl'administrative expensesl"18,175,943l"21,426,758l"20,702,396m'Plant closing costsm"1,500,000%p'Total other operating expensesp"19,675,943p"21,426,758p"20,702,396$s'INCOME (LOSS) FROM OPERATIONSs"3,575,997s"3,185,137s"(5,177,941)#v'OTHER INCOME AND (EXPENSES):w'Interest expensew"(2,493,533)w"(3,354,388)w"(2,415,682)x'Other - netx"354,920x"449,257x"236,287{'Total other - net{"(2,138,613){"(2,905,131){"(2,179,395)(~'INCOME (LOSS) BEFORE INCOME TAXES~"1,437,384~"280,006~"(7,357,336)#'INCOME TAX EXPENSE (BENEFIT)"(93,438)"183,464"(2,227,579)'NET INCOME (LOSS)"$ 1,530,822"$ 96,542"$ (5,129,757)*'NET INCOME (LOSS) PER COMMON SHARE:'Basic and diluted"$ 0.34"$ 0.02"$ (1.09)'WEIGHTED AVERAGE COMMON'SHARES OUTSTANDING: 'Basic"4,489,322"4,489,215"4,710,039'Diluted"4,548,632"4,493,304"4,710,0396'See notes to consolidated financial statements. 'ROCKY SHOES & BOOTS, INC.'AND SUBSIDIARIES6'CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY^ACCUMULATED OTHER ^TOTAL ^COMMON^COMPREHENSIVE^RETAINED^SHAREHOLDERS' ^STOCK ^LOSS^EARNINGS ^EQUITY!'BALANCE, DECEMBER 31, 1998"$ 39,560,343"$ 20,074,728"$ 59,635,071$'YEAR ENDED DECEMBER 31, 1999:'Net loss"(5,129,757)"(5,129,757)<'Treasury stock purchased and retired (685,100 shares)"(4,285,184)"(4,285,184)'Stock options exercised "9,000 "9,000!'BALANCE, DECEMBER 31, 1999"35,284,159"14,944,971"50,229,130$'YEAR ENDED DECEMBER 31, 2000:'Net income "96,542 "96,542!'BALANCE, DECEMBER 31, 2000"35,284,159"15,041,513"50,325,672$'YEAR ENDED DECEMBER 31, 2001:'Net income"1,530,822"1,530,8228'Minimum pension liability, net of tax of $323,229"$ (831,161)"(831,161)"------------'Comprehensive income"699,661'Stock options exercised "18,000 "18,000!'BALANCE, DECEMBER 31, 2001"$ 35,302,159"$ (831,161)"$ 16,572,335"$ 51,043,3336'See notes to consolidated financial statements. 'ROCKY SHOES & BOOTS, INC.'AND SUBSIDIARIES,'CONSOLIDATED STATEMENTS OF CASH FLOWS^YEARS ENDED ^YEARS ENDED ^YEARS ENDED ^DECEMBER 31,^DECEMBER 31,^DECEMBER 31, ^2001 ^2000 ^1999,'CASH FLOWS FROM OPERATING ACTIVITIES:'Net income (loss)"$ 1,530,822"$ 96,542"$ (5,129,757)8'Adjustments to reconcile net income (loss) to net-'cash provided by operating activities:$'Depreciation and amortization"4,409,361"4,698,554"3,836,586'Deferred income taxes"(52,152)"(46,954)"(1,052,222).'Deferred compensation and pension - net"(1,661,232)"(468,522)"254,769#'Loss on sale of fixed assets"353,681 "32,116 "9,048('Change in assets and liabilities:'Receivables"3,696,183"2,927,201"(6,690,028)'Inventories"4,321,573"537,830"14,536,944'Other current assets"242,095"(72,373)"(378,992)'Other assets "14,731"(469,514)"(749,720)'Accounts payable"(1,936,064)"1,551,745"162,705'Accrued expenses"1,134,840"335,969"277,6280'Net cash provided by operating activities"12,053,838"9,122,594"5,076,961,'CASH FLOWS FROM INVESTING ACTIVITIES:'Purchase of fixed assets"(1,172,365)"(3,113,529)"(9,675,010))'Proceeds from sale of fixed assets "7,952 "39,770,'Net cash used in investing activities"(1,164,413)"(3,073,759)"(9,675,010),'CASH FLOWS FROM FINANCING ACTIVITIES:#'Proceeds from long-term debt"96,926,759"106,607,246"57,527,000!'Payments on long-term debt"(106,997,243)"(112,868,411)"(53,555,319)!'Purchase of treasury stock"(4,285,184).'Proceeds from exercise of stock options "18,000 "9,000,'Net cash used in financing activities"(10,052,484)"(6,261,165)"(304,503)7'INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS"836,941"(212,330)"(4,902,552)4'CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR"2,117,994"2,330,324"7,232,876-'CASH AND CASH EQUIVALENTS, END OF YEAR"$ 2,954,935"$ 2,117,994"$ 2,330,3246'See notes to consolidated financial statements.