/2H:   d 1$&%*%'PART 1 - FINANCIAL INFORMATION$'ITEM 1 - FINANCIAL STATEMENTS1'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES,'CONDENSED CONSOLIDATED BALANCE SHEETS"June 30, 2000"December 31, 1999"(unaudited)'ASSETS: 'CURRENT ASSETS: 'Cash and cash equivalents "$ 1,351,350 "$ 2,330,324 'Trade receivables - net "22,850,112 "18,712,588 'Other receivables "4,983,912 "5,227,394 'Inventories "46,284,130 "32,573,067'Deferred income taxes"1,017,331"1,017,331'Prepaid expenses"1,991,155"1,222,914"------------"-----------'Total current assets"78,477,990"61,083,618'FIXED ASSETS - net"26,213,787"26,132,222'OTHER ASSETS"2,515,139"2,117,514"------------"-----------'TOTAL ASSETS"$107,206,916"$89,333,354"============"==========='LIABILITIES AND'SHAREHOLDERS' EQUITY:'CURRENT LIABILITIES:'Accounts payable"$ 10,556,046"$ 2,128,112*'Current maturities - long term debt"37,774,865"8,599,897 'Accrued taxes - other "896,153 "412,721!!'Accrued salaries and wages!"863,749!"569,203"'Accrued other""838,620""905,783#"------------#"----------- $'Total current liabilities$"50,929,433$"12,615,716-&'LONG TERM DEBT-less current maturities&"6,030,372&"25,176,918('DEFERRED LIABILITIES("1,290,261("1,311,590)"------------)"-----------+'TOTAL LIABILITIES+"58,250,066+"39,104,224-'SHAREHOLDERS' EQUITY:"/'Common stock, no par value;$0'10,000,000 shares authorized;?1'issued and outstanding June 30, 2000 - 4,489,215 shares;+2'December 31, 1999 - 4,489,215 shares2"35,284,1592"35,284,1593'Retained earnings3"13,672,6913"14,944,9714"------------4"-----------!6'Total shareholders' equity6"48,956,8506"50,229,1307"------------7"-----------19'TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY9"$107,206,9169"$89,333,354:"============:"===========N<'See notes to the unaudited condensed consolidated financial statements.1>'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6?'CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS@'(UNAUDITED)A^Three Months A^Three MonthsA^Six MonthsA^Six Months B^Ended B^ Ended B^ Ended B^ EndedC^June 30,C^June 30,C^June 30,C^June 30, D^2000 D^1999 D^2000 D^1999F'NET SALESF"$22,918,457F"$23,200,428F"$37,760,568F"$36,823,158G'COST OF GOODS SOLDG"17,642,373G"17,237,006G"29,240,724G"27,681,066H"-----------H"-----------H"-----------H"-----------I'GROSS MARGINI"5,276,084I"5,963,422I"8,519,844I"9,142,0923K'SELLING, GENERAL AND ADMINISTRATIVE EXPENSESK"4,392,552K"4,605,435K"9,379,462K"7,949,946L"-----------L"-----------L"-----------L"-----------$M'INCOME (LOSS) FROM OPERATIONSM"883,532M"1,357,987M"(859,618)M"1,192,146#O'OTHER INCOME AND (EXPENSES):P'Interest expenseP"(473,661)P"(543,875)P"(1,131,721)P"(1,050,680)Q'Other - net Q"71,556Q"108,426Q"180,059Q"241,359R"-----------R"-----------R"-----------R"-----------S'Total other - netS"(402,105)S"(435,449)S"(951,662)S"(809,321)T"-----------T"-----------T"-----------T"-----------(V'INCOME (LOSS) BEFORE INCOME TAXESV"481,427V"922,538V"(1,811,280)V"382,825#W'INCOME TAX (BENEFIT) EXPENSEW"138,139W"334,888W"(539,000)W"117,148X"-----------X"-----------X"-----------X"-----------Y'NET INCOME (LOSS)Y"$ 343,288Y"$ 587,650Y"$(1,272,280)Y"$ 265,677Z"===========Z"===========Z"===========Z"==========="['NET INCOME (LOSS) PER SHARE \'Basic\"$ 0.08\"$ 0.12\"$ (0.28)\"$ 0.05]"===========]"===========]"===========]"===========^'Diluted^"$ 0.08^"$ 0.12^"$ (0.28)^"$ 0.05_"===========_"===========_"===========_"===========5a'WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: b'Basicb"4,489,215b"4,747,558b"4,489,215b"4,872,855c"===========c"===========c"===========c"===========d'Dilutedd"4,489,714d"4,763,049d"4,489,215d"4,882,817e"===========e"===========e"===========e"===========Ng'See notes to the unaudited condensed consolidated financial statements.1i'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6j'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSk'(UNAUDITED)l^Six Monthsl^Six Months m^ Ended m^ Endedn^June 30,n^June 30, o^2000 o^1999,p'CASH FLOWS FROM OPERATING ACTIVITIES:q'Net income (loss)q"$ (1,272,280)q"$ 265,677=r'Adjustments to reconcile net income (loss) to net cash2s'provided by (used in) operating activities:$t'Depreciation and amortizationt"2,286,699t"1,770,658u'Deferred taxes and otheru"(50,000).v'Deferred compensation and pension - netv"(21,328)v"(170,369)#w'Loss on sale of fixed assets w"1,226(y'Change in assets and liabilities:z'Receivablesz"(3,894,042)z"(6,864,297){'Inventories{"(13,711,063){"(8,300,069)|'Other current assets|"(768,241)|"(209,382)}'Other assets}"(413,304) }"5,314~'Accounts payable~"8,315,069~"5,284,346$'Accrued and other liabilities"710,814"158,155"------------"-----------,'Net cash used in operating activities"(8,766,450)"(8,109,967),'CASH FLOWS FROM INVESTING ACTIVITIES:'Purchase of fixed assets"(2,426,429)"(5,827,090))'Proceeds from sale of fixed assets"185,483"------------"-----------,'Net cash used in investing activities"(2,240,946)"(5,827,090),'CASH FLOWS FROM FINANCING ACTIVITIES:'Proceeds from debt"26,845,000"18,252,000!'Payments on long term debt"(16,816,578)"(6,809,943)'Purchase treasury stock"(3,807,300)"------------"-----------,'Net cash used in financing activities"10,028,422"7,634,757"------------"-----------,'DECREASE IN CASH AND CASH EQUIVALENTS"(978,974)"(6,302,300)!'CASH AND CASH EQUIVALENTS,'BEGINNING OF PERIOD"2,330,324"7,232,876"------------"-----------!'CASH AND CASH EQUIVALENTS,'END OF PERIOD"$ 1,351,350"$ 930,576"============"===========N'See notes to the unaudited condensed consolidated financial statements.