UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)           July 24, 2008          
ROCKY BRANDS, INC.
 
(Exact name of registrant as specified in its charter)
         
Ohio
  0-21026   31-1364046
 
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)
     
39 East Canal Street, Nelsonville, Ohio   45764
 
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code           (740) 753-1951          
Not Applicable
 
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.
     On July 24, 2008, Rocky Brands, Inc. (the “Company”) issued a press release entitled “Rocky Brands, Inc. Announces Second Quarter 2008 Results” regarding its consolidated financial results for the quarter ended June 30, 2008. A copy of the Company’s press release is furnished as Exhibit 99 to this Form 8-K and is incorporated herein by reference.
     The information in this Form 8-K and accompanying press release is being furnished under Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
     The information contained or incorporated by reference in this Form 8-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management, and include statements in the accompanying press release regarding margin improvement, increased profitability and growth prospects (paragraph 10). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company’s business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2007 (filed March 6, 2008). One or more of these factors have affected historical results, and could in the future affect the Company’s businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements contained or incorporated by reference in this Form 8-K will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included or incorporated by reference herein, the Company, or any other person should not regard the inclusion of such information as a representation that the objectives and plans of the Company will be achieved. All forward-looking statements contained or incorporated by reference in this Form 8-K are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

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Item 9.01. Financial Statements and Exhibits.
      (d) Exhibits.
     
Exhibit No.   Description
 
   
99*
  Press Release, dated July 24, 2008, entitled “Rocky Brands, Inc. Announces Second Quarter 2008 Results.”
 
*   Such press release is being “furnished” (not filed) under Item 2.02 of this Current Report on Form 8-K.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  Rocky Brands, Inc.
         
     
Date: July 24, 2008  By:   /s/ James E. McDonald    
         James E. McDonald, Executive Vice    
         President and Chief Financial Officer   
 

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Exhibit 99.1
         
 
  ROCKY BRANDS, INC.  
 
       
 
  Company Contact:   Jim McDonald
 
      Chief Financial Officer
 
      (740) 753-1951
 
       
 
  Investor Relations:   Integrated Corporate Relations, Inc.
 
      Brendon Frey/Chad Jacobs
 
      (203) 682-8200
ROCKY BRANDS, INC. ANNOUNCES SECOND QUARTER FISCAL 2008 RESULTS
Company Reports Second Quarter Diluted Earnings Per Share of $0.13
Wholesale Gross Margin Increased 250 Basis Points
SG&A Expenses Decreased Approximately $1.9 million
NELSONVILLE, Ohio, July 24, 2008 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2008.
For the second quarter of 2008, net sales increased 2.9% to $60.5 million versus net sales of $58.8 million in the second quarter of 2007. The Company reported net income of $0.7 million, or $0.13 per diluted share versus a net loss of $1.4 million or ($0.25) per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, “Our second quarter performance was highlighted by the successful execution of our continuing strategy to enhance profitability. Due largely to more favorable sell-in terms with our retail partners and better utilization of our company owned factories, wholesale gross margins increased 250 basis points. At the same time, we were effective at controlling costs evidenced by the nearly $2.0 million reduction in our operating expenses. These improvements allowed us to realize a significant increase in diluted earnings per share versus a year ago with a modest gain in our top-line.”
Second Quarter Results
Net sales for the second quarter increased to $60.5 million compared to $58.8 million a year ago. Wholesale sales for the second quarter were $42.5 million compared to $41.9 million for the same period in 2007. Retail sales for the second quarter were $16.2 million compared to $16.6 million for the same period in 2007. Military segment sales for the second quarter were $1.8 million, compared to $0.3 million in the same period in 2007.
Gross margin in the second quarter was $24.4 million, or 40.3% of sales, compared to $23.9 million or 40.7% of sales, for the same period last year. The prior year’s results included a $0.5 million reimbursement of expenses incurred in prior periods related to a cancelled military contract. Excluding this one-time reimbursement, second quarter 2007 gross margin would have been 40.0%. Wholesale gross margin for the second quarter was $15.7 million, or 36.9% of net sales, compared to $14.4 million, or 34.4% of net sales, in the same period last year. The 250 basis point increase reflects an increase in sales price per unit, as well as a decrease in manufacturing costs resulting from increased operating efficiencies. Retail gross margin for the second quarter was $8.6 million, or 52.8% of net sales, compared to $8.9 million, or 53.6% of net sales, for the same period in 2007. Military gross margin for the second quarter was $0.2 million, or 8.6% of net sales, compared to $0.6 million for the same period in 2007.
Selling, general and administrative (SG&A) expenses decreased 8.4% or $1.9 million to $20.9 million, or 34.5% of sales, for the second quarter of 2008 compared to $22.8 million, or 38.8% of sales, a year ago. The decrease in SG&A expenses is primarily result of reductions in compensation expense and professional fees.

Income from operations increased $2.4 million or 390 basis points to $3.5 million or 5.8% of net sales, respectively for the period compared to $1.1 million, or 1.9% of net sales, in the prior year.
Funded Debt and Interest Expense
The Company’s funded debt at June 30, 2008 was $101.4 million versus $102.7 million at June 30, 2007. Interest expense decreased to $2.4 million for the second quarter of 2008 versus $3.3 million for the same period last year. The decrease in interest expense was primarily due to the write off of prepaid financing costs totaling $0.8 million related to the refinancing of the company’s term loans in the second quarter of 2007.
Inventory
Inventory increased $1.5 million, or 1.9%, to $85.5 million at June 30, 2008 compared with $84.0 million on the same date a year ago.
Mr. Brooks concluded, “We feel confident that our recent initiatives will enable us to post continued year-over-year margin improvement and drive increased profitability over the remainder of this year even though our top-line will be challenged. Longer-term, we are optimistic that our portfolio of company owned and licensed brands provide us with compelling growth prospects into the future.”
About Rocky Brands, Inc.
Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky Outdoor Gear®, Georgia Boot®, Durango®, Lehigh®, and the licensed brands Dickies®, Zumfoot® and Michelin®.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management, and include statements in this press release regarding margin improvement, increased profitability and growth prospects (paragraph 10). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company’s business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2007 (filed March 6, 2008) and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2008 (filed May 1, 2008). One or more of these factors have affected historical results, and could in the future affect the Company’s businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company, or any other person should not regard the inclusion of such information as a representation that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                         
    June 30, 2008             June 30, 2007  
    Unaudited     December 31, 2007     Unaudited  
ASSETS:
                       
CURRENT ASSETS:
                       
Cash and cash equivalents
  $ 3,025,144     $ 6,537,884     $ 1,446,022  
Trade receivables — net
    59,245,156       65,931,092       60,117,677  
Other receivables
    1,010,254       674,707       1,368,863  
Inventories
    85,542,820       75,403,664       83,973,162  
Deferred income taxes
    1,952,536       1,952,536       3,902,775  
Income tax receivable
    729,024       719,945       2,561,538  
Prepaid expenses
    3,117,546       2,226,920       2,118,034  
 
                 
Total current assets
    154,622,480       153,446,748       155,488,071  
FIXED ASSETS — net
    24,090,519       24,484,050       24,443,562  
DEFERRED PENSION ASSET
    —       —       40,432  
IDENTIFIED INTANGIBLES & GOODWILL
    36,207,210       36,509,690       61,697,893  
OTHER ASSETS
    1,909,678       2,284,039       2,758,801  
 
                 
TOTAL ASSETS
  $ 216,829,887     $ 216,724,527     $ 244,428,759  
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
                       
CURRENT LIABILITIES:
                       
Accounts payable
  $ 13,238,830     $ 11,908,902     $ 15,471,858  
Current maturities — long term debt
    338,314       324,648       311,534  
Accrued expenses:
                       
Taxes — other
    840,751       516,038       673,098  
Other
    4,703,591       5,421,083       4,090,661  
 
                 
Total current liabilities
    19,121,486       18,170,671       20,547,151  
LONG TERM DEBT — less current maturities
    101,042,347       103,220,384       102,427,204  
DEFERRED INCOME TAXES
    12,951,828       13,247,953       17,009,025  
DEFERRED LIABILITIES
    1,257,606       360,928       324,038  
 
                 
TOTAL LIABILITIES
    134,373,267       134,999,936       140,307,418  
SHAREHOLDERS’ EQUITY:
                       
Common stock, no par value;
                       
25,000,000 shares authorized; issued and outstanding June 30, 2008 — 5,508,278; December 31, 2007 — 5.488,293; June 30, 2007 — 5,482,293
    54,168,292       53,997,960       53,802,287  
 
                       
Accumulated other comprehensive loss
    (1,500,197 )     (1,051,232 )     (942,036 )
Retained earnings
    29,788,525       28,777,863       51,261,090  
 
                 
Total shareholders’ equity
    82,456,620       81,724,591       104,121,341  
 
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 216,829,887     $ 216,724,527     $ 244,428,759  
 
                 

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
NET SALES
  $ 60,507,421     $ 58,797,664     $ 120,992,137     $ 120,454,688  
 
                               
COST OF GOODS SOLD
    36,111,328       34,871,210       70,646,379       70,447,548  
 
                       
 
                               
GROSS MARGIN
    24,396,093       23,926,454       50,345,758       50,007,140  
 
                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    20,875,459       22,790,579       43,936,946       45,113,520  
 
                       
 
                               
INCOME FROM OPERATIONS
    3,520,634       1,135,875       6,408,812       4,893,620  
 
                               
OTHER INCOME AND (EXPENSES):
                               
Interest expense
    (2,409,515 )     (3,344,076 )     (4,816,186 )     (5,842,921 )
Other – net
    15,723       6,994       (2,869 )     (36,001 )
 
                       
Total other — net
    (2,393,792 )     (3,337,082 )     (4,819,055 )     (5,878,922 )
 
                               
INCOME/(LOSS) BEFORE INCOME TAXES
    1,126,842       (2,201,207 )     1,589,757       (985,302 )
 
                               
INCOME TAX EXPENSE/(BENEFIT)
    394,000       (814,000 )     556,000       (364,000 )
 
                       
 
                               
NET INCOME/(LOSS)
  $ 732,842     $ (1,387,207 )   $ 1,033,757     $ (621,302 )
 
                       
 
                               
NET INCOME/(LOSS) PER SHARE
                               
Basic
  $ 0.13     $ (0.25 )   $ 0.19     $ (0.11 )
Diluted
  $ 0.13     $ (0.25 )   $ 0.19     $ (0.11 )
 
                               
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic
    5,508,278       5,473,919       5,508,058       5,465,783  
 
                       
Diluted
    5,520,625       5,473,919       5,523,265       5,465,783