/2 H;d 1$&%*%'PART 1 - FINANCIAL INFORMATION$'ITEM 1 - FINANCIAL STATEMENTS1'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES,'CONDENSED CONSOLIDATED BALANCE SHEETS'(UNAUDITED)"March 31, 1998"December 31, 1997"--------------"----------------- 'ASSETS: 'Current Assets: 'Cash and Cash Equivalents "$ 1,203,205 "$ 8,556,883'Trade Receivables"12,271,952"17,789,329'Other Receivables"574,598"475,593'Inventories"41,601,557"32,894,236'Deferred Income Taxes"1,547,755"1,474,799'Other Current Assets"1,474,799"850,018"-----------"-----------'Total Current Assets"58,673,866"62,040,858'Fixed Assets - Net"18,123,354"17,608,454'Other Assets"1,294,732"1,305,526"-----------"-----------'Total Assets"$78,091,952"$80,954,838"==========="==========='LIABILITIES AND'SHAREHOLDERS' EQUITY: 'Current Liabilities:!'Accounts Payable!"$ 5,344,873!"$ 2,414,936*"'Current Maturities - Long Term Debt""1,127,096""1,173,840#'Accrued Liabilities#"1,848,362#"2,464,511$"-----------$"----------- %'Total Current Liabilities%"8,320,331%"6,053,287-''Long-Term Debt-less current maturities'"7,893,042'"13,406,962)'Deferred Liabilities)"2,375,955)"2,298,059*"-----------*"-----------,'Total Liabilities,"18,589,328,"21,758,308.'Shareholders' Equity://'Preferred Stock, Series A, no par value;-0'1998-no shares issued and outstanding;%1'1997-100,000 shares issued and 2'82,857 shares outstanding 2"5,400"3'Common Stock, no par value;+4'10,000,000 shares authorized; issued,5'1998-5,444,025 shares; 1997-5,476,620,6'shares and outstanding 1998-5,444,025$7'shares; 1997-5,359,668 shares7"41,398,4067"42,604,658(8'Common Stock in Treasury, at cost8"(1,226,059)9'Retained Earnings9"18,104,2189"17,812,531:"------------:"------------!;'Total Shareholders' Equity;"59,502,624;"59,196,530<"------------<"------------1='Total Liabilities and shareholders' Equity="$78,091,952="$80,954,838>"============>"============1@'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES2A'CONDENSED CONSOLIDATED STATEMENTS OF INCOMEB'(UNAUDITED)D"Three Months EndedD"Three Months EndedE"March 31,E"March 31, G"1998 G"1997 H"---- H"----J'Net SalesJ"$12,956,930J"$12,262,073L'Cost of Goods SoldL"9,375,903L"8,985,198M"-----------M"-----------O'Gross MarginO"3,581,027O"3,276,875*Q'Selling, General and AdministrativeR'ExpensesR"3,071,607R"2,576,538S"-----------S"-----------U'Income From OperationsU"509,420U"700,337#W'Other Income And (Expenses):X'Interest ExpenseX"(192,492)X"(465,267)Y'Other - net Y"78,679 Y"14,431Z"-----------Z"-----------['Total other - net["(113,813)["(450,836)\"-----------\"-----------!^'Income Before Income Taxes^"395,607^"249,501`'Income Taxes`"103,920 `"60,522a"-----------a"-----------c'Net Incomec"$ 291,687c"$ 188,979d"===========d"===========f'Net Income Per Share: g'Basicg"$ 0.05g"$ 0.05h"-----------h"-----------i'Dilutedi"$ 0.05i"$ 0.05j"-----------j"-----------(k'Weighted Average Number of Sharesl'Outstanding: m'Basicm"5,413,809m"3,687,034n"===========n"===========o'Dilutedo"5,611,078o"3,896,273p"===========p"===========Nr'The accompanying notes are an integral part of the financial statements1v'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6w'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSx'(UNAUDITED)z"Three Months Endedz"Three Months Ended{"March 31,{"March 31, |"1998 |"1997 }"---- }"----'CASH FLOWS FROM'OPERATING ACTIVITIES:'Net Income"$ 291,687"$ 188,979*'Adjustments to Reconcile Net Income('to Net Cash Provided By (Used In)'Operating Activities:$'Depreciation and Amortization"994,475"684,260'Deferred Taxes and Other "77,896 "75,573)'Changes in Assets and Liabilities:'Receivables"5,418,372"2,920,870'Inventories"(8,707,321)"(9,582,059)'Other current assets"(697,737)"(141,660)'Other Assets "6,640"(5,556)'Accounts Payable"2,570,228"7,362,659$'Accrued and Other Liabilities"(616,149)"(1,351,658)"------------"-----------%'Net Cash Provided By (Used In)'Operating Activities"(661,909)"151,408"------------"-----------'CASH FLOWS FROM'INVESTING ACTIVITIES:'Purchase of Fixed Assets"(1,145,510)"(531,828)"------------"-----------'CASH FLOWS FROM'FINANCING ACTIVITIES:#'Proceeds from Long Term Debt"7,200,000"5,960,000!'Payments on Long Term Debt"(12,760,665)"(5,993,270).'Proceeds from exercise of stock options+'including related income tax benefit "14,406"361,778"------------"-----------%'Net Cash Provided By (Used In)"(5,546,259)"328,508"------------"-----------'Financing Activities 'DECREASE IN CASH AND CASH"(7,353,678)"(51,912)'EQUIVALENTS!'CASH AND CASH EQUIVALENTS,"8,556,883"349,637'BEGINNING OF PERIOD"------------"-----------!'CASH AND CASH EQUIVALENTS,'END OF PERIOD"$ 1,203,205"$ 297,725"============"===========N'The accompanying notes are an integral part of the financial statements