/2qH8d 1$&%*1'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES,'CONDENSED CONSOLIDATED BALANCE SHEETS^Sept. 30, 1999^Dec. 31, 1998^(Unaudited)^-----------^-----------'ASSETS:'Current Assets: 'Cash and cash equivalents"$ 2,055,711"$ 7,232,876 'Trade receivables - net "38,001,637 "15,595,483 'Other receivables "1,785,152 "1,654,471 'Inventories "48,156,638 "47,110,011 'Deferred income taxes "1,735,699 "1,735,699 'Prepaid assets "1,651,409 "871,533"------------"-----------'Total current assets"93,386,246"74,200,073'Fixed assets - net"25,038,074"20,503,854'Other assets"1,869,416"1,894,542"------------"-----------'Total Assets"$120,293,736"$96,598,469"============"===========,'LIABILITIES AND SHAREHOLDERS' EQUITY:'Current liabilities:'Accounts payable"$ 6,456,464"$ 2,194,026*'Current maturities - long-term debt"24,847,286"2,927,625'Accrued liabilities "9,763"479,211!'Accrued salaries and wages"1,268,418"511,916'Accrued income taxes"448,135"0'Accrued other"898,232"618,952 "------------ "----------- !'Total current liabilities!"33,928,298!"6,731,730-#'Long-term debt-less current maturities#"25,240,338#"26,877,509%'Deferred liabilities%"3,204,432%"3,354,159&"------------&"-----------''Total liabilities'"62,373,068'"36,963,398)'Shareholders' equity:"+'Common Stock, no par value;$,'10,000,000 shares authorized;6-'issued and outstanding 1999 - 4,554,415 shares;.'1998 - 5,172,815 shares."35,762,043."39,560,343/'Retained earnings/"22,158,625/"20,074,7280"------------0"-----------!2'Total shareholders' equity2"57,920,6682"59,635,0713"------------3"-----------15'Total liabilities and shareholders' equity5"$120,293,7365"$96,598,4696"============6"===========D8'See notes to the condensed consolidated financial statements.1:'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES2;'CONDENSED CONSOLIDATED STATEMENTS OF INCOME<'(UNAUDITED)>^Three Months Ended>^Three Months Ended>^Nine Months Ended>^Nine Months Ended?^September 30,?^September 30,?^September 30,?^September 30, @^1999 @^1998 @^1999 @^1998 A^---- A^---- A^---- A^----B'Net salesB"$34,458,907B"$31,854,878B"$71,282,065B"$66,299,611D'Cost of goods soldD"25,674,704D"23,866,014D"53,355,770D"48,913,879E"-----------E"-----------E"-----------E"-----------F'Gross marginF"8,784,203F"7,988,864F"17,926,295F"17,385,732*H'Selling, general and administrativeI'ExpensesI"5,394,236I"4,937,299I"13,344,182I"12,170,762J"-----------J"-----------J"-----------J"-----------L'Income from operationsL"3,389,967L"3,051,565L"4,582,113L"5,214,970#N'Other income and (expenses):O'Interest expenseO"(800,611)O"(609,903)O"(1,851,291)O"(1,133,439)P'Other - net P"4,731P"291,867P"246,090P"568,891Q"-----------Q"-----------Q"-----------Q"-----------S'Total other - netS"(795,880)S"(318,036)S"1,605,201S"(564,548)T"-----------T"-----------T"-----------T"-----------!V'Income before income taxesV"2,594,087V"2,733,529V"2,976,912V"4,650,422X'Income tax expenseX"775,866X"738,349X"893,015X"1,255,923Y"-----------Y"-----------Y"-----------Y"-----------['Net income["$ 1,818,221["$ 1,995,180["$ 2,083,897["$ 3,394,499\"===========\"===========\"===========\"==========="^'Net income per common share _'Basic_"$ 0.40_"$ 0.37_"$ 0.44_"$ 0.62`"-----------`"-----------`"-----------`"-----------a'Diluteda"$ 0.40a"$ 0.36a"$ 0.44a"$ 0.61b"-----------b"-----------b"-----------b"-----------/c'Weighted average number of common sharesd'outstanding e'Basice"4,554,317e"5,460,435e"4,765,509e"5,441,723f"===========f"===========f"===========f"===========h'Dilutedh"4,593,675h"5,505,512h"4,786,436h"5,573,104i"===========i"===========i"===========i"===========Dk'See notes to the condensed consolidated financial statements.1m'ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES6n'CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSo'(UNAUDITED)q^Nine Months Endedq^Nine Months Endedr^September 30,r^September 30,+s'CASH FLOWS FROM OPERATING ACTIVITIES s^1999 s^1998 t^---- t^----u'Net incomeu"$ 2,083,897u"$ 3,394,499Bv'Adjustments to reconcile net income to net cash provided byw'(used in) operatingx'activities:"y'Depreciation & amortizationy"3,044,014y"2,889,198z'Deferred taxes - netz"(50,000)z"0,{'Deferred compensation & pension - net{"(99,727) {"83,132(|'Change in assets and liabilities:}'Receivables}"(22,536,835)}"(20,528,873)~'Inventory~"(1,046,627)~"(13,876,554)'Other current assets"(779,876)"(274,507)'Other assets "4,997"(76,595)'Accounts payable"4,491,057"5,440,9090'Accrued taxes, salaries, wages, and other"1,014,469"472,916"------------"------------,'Net cash used in operating activities"(13,874,631)"(22,475,875)"------------"------------+'CASH FLOWS FROM INVESTING ACTIVITIES'Purchase of fixed assets"(7,786,725)"(4,773,926)"------------"------------,'CASH FLOWS FROM FINANCING ACTIVITIES:#'Proceeds from long term debt"40,102,000"64,455,000!'Payments on long term debt"(19,819,509)"(43,448,918)'Purchase treasury stock"(3,807,300)"(207,533).'Proceeds from exercise of stock options*'Including related income tax effect "9,000"212,268"------------"------------0'Net cash provided by financing activities"16,484,191"21,010,817"------------"------------,'DECREASE IN CASH AND CASH EQUIVALENTS"(5,177,165)"(6,238,984)5'CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD"7,232,876"8,556,883"------------"------------/'CASH AND CASH EQUIVALENTS, END OF PERIOD"$ 2,055,711"$ 2,317,899"============"============D'See notes to the condensed consolidated financial statements.