£/2ÿñH8d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ%ñ'PART 1 - FINANCIAL INFORMATION$ñ'ITEM 1 - FINANCIAL STATEMENTS1ñ'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES,ñ'CONDENSED CONSOLIDATED BALANCE SHEETSñ"(Unaudited) ñ"1998ñ"------------ñ"-----------ñ 'ASSETS:ñ 'Current Assets: ñ 'Cash and Cash Equivalentsñ "$ 930,576ñ "$ 7,232,876ñ 'Trade Receivables - Netñ "21,684,808ñ "15,595,483ñ'Other Receivablesñ"2,429,443ñ"1,654,471ñ'Inventoriesñ"55,410,080ñ"47,110,011ñ'Deferred Income Taxesñ"1,735,699ñ"1,735,699ñ'Prepaid Assetsñ"1,080,915ñ"871,533ñ"------------ñ"-----------ñ'Total Current Assetsñ"83,271,521ñ"74,200,073ñ'Fixed Assets - Netñ"24,371,519ñ"20,503,854ñ'Other Assetsñ"1,876,059ñ"1,894,542ñ"------------ñ"-----------ñ'Total Assetsñ"$109,519,099ñ"$96,598,469ñ"============ñ"===========,ñ'LIABILITIES AND SHAREHOLDERS' EQUITY:ñ'Current Liabilities:ñ'Accounts Payableñ"$ 7,276,436ñ"$ 2,194,026*ñ'Current Maturities - Long Term Debtñ"15,944,005ñ"2,927,625ñ'Accrued Liabilitiesñ"582,552ñ"479,211!ñ 'Accrued Salaries and Wagesñ "835,884ñ "511,916ñ!'Accrued Otherñ!"349,798ñ!"618,952ñ""------------ñ""----------- ñ#'Total Current Liabilitiesñ#"24,988,675ñ#"6,731,730-ñ%'Long-Term Debt-less current maturitiesñ%"25,303,186ñ%"26,877,509ñ''Deferred Liabilitiesñ'"3,133,790ñ'"3,354,159ñ("------------ñ("-----------ñ)'Total Liabilitiesñ)"53,425,651ñ)"36,963,398ñ+'Shareholders' Equity:"ñ-'Common Stock, no par value;$ñ.'10,000,000 shares authorized;6ñ/'issued and outstanding 1999 - 4,552,915 shares;ñ0'1998 - 5,172,815 sharesñ0"35,753,043ñ0"39,560,343ñ1'Retained Earningsñ1"20,340,405ñ1"20,074,728ñ2"------------ñ2"-----------!ñ4'Total Shareholders' Equityñ4"56,093,448ñ4"59,635,071ñ5"============ñ5"===========1ñ6'Total Liabilities and Shareholders' Equityñ6"$109,519,099ñ6"$96,598,469ñ7"============ñ7"===========Cñ9'See notes to the condensed consolidated financial statements1ñ;'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES2ñ<'CONDENSED CONSOLIDATED STATEMENTS OF INCOMEñ='(UNAUDITED)ñ?"Three Months Endedñ?"Three Months Endedñ?"Six Months Endedñ?"Six Months Endedñ@"June 30,ñ@"June 30, ñA"1999 ñA"1998 ñA"1999 ñA"1998ñB"------------ñB"------------ñB"------------ñB"------------ ñD'NetñD"$ 23,200,428ñD"$ 21,487,803ñD"$ 36,823,158ñD"$ 34,444,733 ñE'SalesñF'Cost of Goods SoldñF"17,237,006ñF"15,588,467ñF"27,681,066ñF"25,047,865ñG"------------ñG"------------ñG"------------ñG"------------ñH'Gross MarginñH"5,963,422ñH"5,899,336ñH"9,142,092ñH"9,396,868*ñJ'Selling, General and AdministrativeñK'ExpensesñK"4,605,435ñK"4,161,856ñK"7,949,946ñK"7,233,463ñL"------------ñL"------------ñL"------------ñL"------------ñM'Income From OperationsñM"1,357,987ñM"1,737,480ñM"1,192,146ñM"2,163,405ñO'Other Income (Expense):ñP'Interest ExpenseñP"(543,875)ñP"(331,044)ñP"(1,050,680)ñP"(523,536)ñQ'Other - netñQ"108,426ñQ"114,850ñQ"241,359ñQ"277,024ñR"------------ñR"------------ñR"------------ñR"------------ñT'Total other - netñT"(435,449)ñT"(216,194)ñT"(809,321)ñT"(246,512)ñU"------------ñU"------------ñU"------------ñU"------------!ñW'Income Before Income TaxesñW"922,538ñW"1,521,286ñW"382,825ñW"1,916,893ñY'Income Tax ExpenseñY"334,888ñY"413,654ñY"117,148ñY"517,574ñZ"------------ñZ"------------ñZ"------------ñZ"------------ñ['Net Incomeñ["$ 587,650ñ["$ 1,107,632ñ["$ 265,677ñ["$ 1,399,319ñ\"============ñ\"============ñ\"============ñ\"============"ñ]'Net Income Per Common Share ñ^'Basicñ^"$ .12ñ^"$ .20ñ^"$ .05ñ^"$ .26ñ_"------------ñ_"------------ñ_"------------ñ_"------------ñ`'Dilutedñ`"$ .12ñ`"$ .20ñ`"$ .05ñ`"$ .25ña"------------ña"------------ña"------------ña"------------/ñb'Weighted Average Number of Common Sharesñc'Outstanding ñd'Basicñd"4,747,558ñd"5,450,414ñd"4,872,855ñd"5,432,112ñe"============ñe"============ñe"============ñe"============ñf'Dilutedñf"4,763,049ñf"5,602,723ñf"4,882,817ñf"5,606,901ñg"============ñg"============ñg"============ñg"============Cñi'See notes to the condensed consolidated financial statements1ñk'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6ñl'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSñm'(UNAUDITED)ño"Six Months Endedño"Six Months Endedñp"June 30,ñp"June 30, ñq"1999 ñq"1998 ñr"---- ñr"----ñt'CASH FLOWS FROMñu'OPERATING ACTIVITIESñw'Net Incomeñw"$ 265,677ñw"$ 1,399,319*ñx'Adjustments to Reconcile Net Incomeñy'to Net Cash Used Inñz'Operating Activities:$ñ{'Depreciation and Amortizationñ{"1,770,658ñ{"2,033,080ñ|'Deferred taxes - netñ|"(50,000)ñ|"0,ñ}'Deferred compensation & pension - netñ}"(170,369)ñ}"130,732(ñ~'Change in Assets and Liabilities:ñ'Receivablesñ"(6,864,297)ñ"(4,076,856)ñ€'Inventoriesñ€"(8,300,069)ñ€"(11,721,656)ñ'Other current assetsñ"(209,382)ñ"(1,076,890)ñ‚'Other Assets ñ‚"5,314ñ‚"(45,023)ñƒ'Accounts payableñƒ"5,284,346ñƒ"(50,375)$ñ„'Accrued and Other Liabilitiesñ„"158,155ñ„"(98,051)ñ…"------------ñ…"------------,ñ†'Net Cash Used In Operating Activitiesñ†"(8,109,967)ñ†"(13,505,720)ñ‡"------------ñ‡"------------ñˆ'CASH FLOWS FROMñ‰'INVESTING ACTIVITIES:ñ‹'Purchase of Fixed Assetsñ‹"(5,827,090)ñ‹"(3,167,823)ñŒ"------------ñŒ"------------ñ'CASH FLOWS FROMñŽ'FINANCING ACTIVITIES:#ñ'Proceeds from Long Term Debtñ"18,252,000ñ"24,205,000!ñ'Payments on Long Term Debtñ"(6,809,943)ñ"(14,904,060)ñ‘'Purchase Treasury Stockñ‘"(3,807,300)&ñ’'Proceeds from exercise of stockñ“'options includingñ”'related tax benefit ñ”"--ñ”"183,362ñ•"------------ñ•"------------%ñ–'Net Cash Provided By Financingñ—'Activitiesñ—"7,634,757ñ—"9,484,302ñ˜"------------ñ˜"------------,ñ™'DECREASE IN CASH AND CASH EQUIVALENTSñ™"(6,302,300)ñ™"(7,189,241)/ñ›'CASH AND CASH EQUIVALENTS, BEGINNING OF ñœ'PERIODñœ"7,232,876ñœ"8,556,883ñ"------------ñ"------------"ñŸ'CASH AND CASH EQUIVALENTS,ñ 'END OF PERIODñ "$ 930,576ñ "$ 1,367,642ñ¡"============ñ¡"============Cñ£'See notes to the condensed consolidated financial statements