µ/2ÿñH<d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ%ñ'PART 1 - FINANCIAL INFORMATION$ñ'ITEM 1 - FINANCIAL STATEMENTS1ñ'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES,ñ'CONDENSED CONSOLIDATED BALANCE SHEETSñ"Sept. 30, 1998ñ"Dec. 31, 1997ñ"(Unaudited)ñ"--------------ñ"-------------ñ 'ASSETS:ñ 'Current Assets: ñ 'Cash and Cash Equivalentsñ "$ 2,317,899ñ "$ 8,556,883ñ 'Trade Receivablesñ "38,163,615ñ "17,789,329ñ'Other Receivablesñ"630,180ñ"475,593ñ'Inventoriesñ"46,770,790ñ"32,894,236ñ'Other Current Assetsñ"2,599,324ñ"2,324,817ñ"------------ñ"-----------ñ'Total Current Assetsñ"90,481,808ñ"62,040,858ñ'Fixed Assets - Netñ"19,798,940ñ"17,608,454ñ'Other Assetsñ"1,367,586ñ"1,305,526ñ"------------ñ"-----------ñ'Total Assetsñ"$111,648,334ñ"$80,954,838ñ"============ñ"===========,ñ'LIABILITIES AND SHAREHOLDERS' EQUITY:ñ'Current Liabilities:ñ'Accounts Payableñ"$ 8,147,068ñ"$ 2,414,936*ñ'Current Maturities - Long-Term Debtñ"8,505,016ñ"1,173,840ñ 'Accrued Liabilitiesñ "2,937,427ñ "2,464,511ñ!"------------ñ!"----------- ñ"'Total Current Liabilitiesñ""19,589,511ñ""6,053,287-ñ$'Long-Term Debt-less current maturitiesñ$"27,081,868ñ$"13,406,962ñ&'Deferred Liabilitiesñ&"2,381,191ñ&"2,298,059ñ'"------------ñ'"-----------ñ)'Total Liabilitiesñ)"49,052,570ñ)"21,758,308ñ+'Shareholders' Equity:/ñ,'Preferred Stock, Series A, no par value;4ñ-'$.06 stated value; 125,000 shares authorized;ñ-"0 ñ-"5,400!ñ.'issued 1997-90,000 shares;)ñ/'and outstanding 1997-82,857 shares"ñ1'Common Stock, no par value;+ñ2'10,000,000 shares authorized; issued4ñ3'1998-5,465,415 shares; 1997-5,476,620 shares;ñ3"41,596,267ñ3"42,604,658-ñ4'and outstanding 1998-5,440,615 shares;ñ5'1997-5,359,668 shares-ñ7'Common Stock held in Treasury, at costñ7"(207,533)ñ7"(1,226,059)ñ8'Retained Earningsñ8"21,207,030ñ8"17,812,531ñ9"------------ñ9"-----------!ñ:'Total Shareholders' Equityñ:"62,595,764ñ:"59,196,530ñ;"------------ñ;"-----------1ñ<'Total Liabilities and Shareholders' Equityñ<"$111,648,334ñ<"$80,954,838ñ="============ñ="===========Nñ?'The accompanying notes are an integral part of the financial statements ñA1ñC'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES2ñD'CONDENSED CONSOLIDATED STATEMENTS OF INCOMEñE'(UNAUDITED)ñG"Three Months EndedñG"Three Months EndedñG"Nine Months EndedñG"Nine Months EndedñH"September 30,ñH"September 30,ñH"September 30,ñH"September 30, ñJ"1998 ñJ"1997 ñJ"1998 ñJ"1997 ñK"---- ñK"---- ñK"---- ñK"----ñL'Net SalesñL"$31,854,878ñL"$31,561,742ñL"$66,299,611ñL"$65,830,000ñN'Cost of Goods SoldñN"23,866,014ñN"22,817,169ñN"48,913,879ñN"47,527,279ñO"-----------ñO"-----------ñO"-----------ñO"-----------ñQ'Gross MarginñQ"7,988,864ñQ"8,744,573ñQ"17,385,732ñQ"18,302,721*ñS'Selling, General and AdministrativeñT'ExpensesñT"4,937,299ñT"5,094,178ñT"12,170,762ñT"11,812,322ñU"-----------ñU"-----------ñU"-----------ñU"-----------ñW'Income From OperationsñW"3,051,565ñW"3,650,395ñW"5,214,970ñW"6,490,399ñY'Other Income (Expenses):ñZ'Interest ExpenseñZ"(609,903)ñZ"(889,979)ñZ"(1,133,439)ñZ"(1,996,277)ñ['Other - netñ["291,867ñ["(69,510)ñ["568,891ñ["(78,645)ñ\"-----------ñ\"-----------ñ\"-----------ñ\"-----------ñ]'Total other - netñ]"(318,036)ñ]"(959,489)ñ]"(564,548)ñ]"(2,074,922)ñ^"-----------ñ^"-----------ñ^"-----------ñ^"-----------!ñ`'Income Before Income Taxesñ`"2,733,529ñ`"2,690,906ñ`"4,650,422ñ`"4,415,477ñb'Income Taxesñb"738,349ñb"917,287ñb"1,255,923ñb"1,435,789ñc"-----------ñc"-----------ñc"-----------ñc"-----------ñe'Net Incomeñe"$ 1,995,180ñe"$ 1,773,619ñe"$ 3,394,499ñe"$ 2,979,688ñf"===========ñf"===========ñf"===========ñf"===========ñh'Net Income Per Share: ñi'Basic ñi"$0.37 ñi"$0.47 ñi"$0.62 ñi"$0.80 ñj"===== ñj"===== ñj"===== ñj"=====ñk'Diluted ñk"$0.36 ñk"$0.44 ñk"$0.61 ñk"$0.75 ñl"===== ñl"===== ñl"===== ñl"=====(ñn'Weighted Average Number of Sharesño'Outstanding: ñp'Basicñp"5,460,435ñp"3,752,974ñp"5,441,723ñp"3,719,674ñq"=========ñq"=========ñq"=========ñq"=========ñr'Dilutedñr"5,505,512ñr"4,026,664ñr"5,573,104ñr"3,961,108ñs"=========ñs"=========ñs"=========ñs"=========Oñu'The accompanying notes are an integral part of the financial statements. ñw1ñy'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6ñz'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSñ{'(UNAUDITED)ñ}"Nine Months Endedñ}"Nine Months Endedñ~"Sept. 30,ñ~"Sept. 30, ñ"1998 ñ"1997ñ€'CASH FLOWS FROMñ'OPERATING ACTIVITIES:ñƒ'Net Incomeñƒ"$ 3,394,499ñƒ"$ 2,979,688*ñ„'Adjustments to Reconcile Net Incomeñ…'to Net Cash Used Inñ†'Operating Activities:$ñ‡'Depreciation and Amortizationñ‡"2,889,198ñ‡"2,139,592ñˆ'Deferred Taxes and Other ñˆ"83,132ñˆ"130,373(ñŠ'Change in Assets and Liabilities:ñ‹'Receivablesñ‹"(20,528,873)ñ‹"(26,931,873)ñŒ'InventoriesñŒ"(13,876,554)ñŒ"(13,051,891)ñ'Other Assetsñ"(351,102)ñ"(96,313)ñŽ'Accounts PayableñŽ"5,440,909ñŽ"10,282,119$ñ'Accrued and Other Liabilitiesñ"472,916ñ"1,082,669ñ"-------------ñ"-------------ñ’'Net Cash Used Inñ“'Operating Activitiesñ“"(22,475,875)ñ“"(23,465,636)ñ”"-------------ñ”"-------------ñ–'CASH FLOWS FROMñ—'INVESTING ACTIVITIES:ñ™'Purchase of Fixed Assetsñ™"(4,773,926)ñ™"(2,631,349)ñš"-------------ñš"-------------ñœ'CASH FLOWS FROMñ'FINANCING ACTIVITIES:#ñŸ'Proceeds from Long-Term DebtñŸ"64,455,000ñŸ"34,287,911!ñ 'Payments on Long-Term Debtñ "(43,448,918)ñ "(9,167,408)ñ¡'Purchase Treasury Stockñ¡"(207,533).ñ¢'Proceeds from exercise of stock options*ñ£'including related income tax effectñ£"212,268ñ£"786,294ñ¤"-------------ñ¤"-------------ñ¥'Net Cash Provided Byñ¦'Financing Activitiesñ¦"21,010,817ñ¦"25,906,797ñ§"-------------ñ§"-------------"ñ©'(DECREASE) IN CASH AND CASHñª'EQUIVALENTSñª"(6,238,984)ñª"(190,188)!ñ¬'CASH AND CASH EQUIVALENTS,ñ­'BEGINNING OF PERIODñ­"8,556,883ñ­"349,637ñ®"-------------ñ®"-------------!ñ¯'CASH AND CASH EQUIVALENTS,ñ°'END OF PERIODñ°"$ 2,317,899ñ°"$ 159,449ñ±"=============ñ±"=============Oñ³'The accompanying notes are an integral part of the financial statements. ñµ