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 27, 2007     
ROCKY BRANDS, INC.
 
(Exact name of registrant as specified in its charter)
         
Ohio   0-21026   31-1364046
         
(State or other jurisdiction
of incorporation) 		  (Commission
File Number) 		  (IRS Employer
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 27, 2007, Rocky Brands, Inc. (the “Company”) issued a press release entitled “Rocky Brands, Inc. Announces Second Quarter Fiscal 2007 Results” regarding its consolidated financial results for the second quarter ended June 30, 2007. 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 growth prospects, distribution consolidation and expected 2007 revenues and earnings (paragraphs 3, 12 and 13 of the press release). 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, 2006 (filed March 15, 2007) and quarterly report on Form 10-Q for the quarter ended March 31, 2007 (filed May 7, 2007). 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.

2

Item 9.01.Financial Statements and Exhibits.
      (d) Exhibits.
     
Exhibit No.   Description
 
   
99*
  Press Release, dated July 27, 2007, entitled “Rocky Brands, Inc. Announces Second Quarter Fiscal 2007 Results.”
*   Such press release is being “furnished” (not filed) under Item 2.02 of this Current Report on
     Form 8-K.

3

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 27, 2007  By:   /s/ James E. McDonald    
    James E. McDonald, Executive Vice    
    President and Chief Financial Officer   
 

4

EXHIBIT INDEX
     
Exhibit No.   Description
 
   
99*
  Press Release, dated July 27, 2007, entitled “Rocky Brands, Inc. Announces Second Quarter Fiscal 2007 Results.”
*   Such press release is being “furnished” (not filed) under Item 2.02 of this Current Report on Form 8-K.

5

Exhibit 99
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 2007 RESULTS
— Company Announces New Order to Fulfill a Contract to the U.S. Military —
— Rocky Brands to Consolidate Distribution Centers —
NELSONVILLE, Ohio, July 27, 2007 — Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its second quarter ended June 30, 2007.
For the second quarter of 2007, net sales increased 2.6% to $58.8 million versus net sales of $57.3 million in the second quarter of 2006. The Company reported a net loss of $1.4 million, or ($0.25) per diluted share versus a net loss of $0.2 million or ($0.04) per diluted share a year ago. The net loss for the second quarter of 2007 includes a one time non-cash charge of approximately $0.8 million, or $0.09 per diluted share after tax, due to the required write off of prepaid financing costs related to the refinancing of its term loans as compared to a $0.4 million, or $0.05 per diluted share after tax, charge for a similar write off in second quarter 2006.
Mike Brooks, Chairman and Chief Executive Officer, commented, “Our second quarter performance was negatively impacted by weaker than expected wholesale revenues, partially offset by a double digit sales gain in our retail division. At the same time, an increase in production costs coupled with a greater level of closeouts further reduced our earnings compared with a year ago. We continue to be confident about our growth prospects during the back half of the year and we remain comfortable with our previously issued guidance for fiscal 2007.”
Military Contract
The Company also announced it has received an order to fulfill a contract to the U.S. Military to produce “Hot Weather” boots for approximately $6.4 million. Shipment of the boots is expected to begin in late 2007 with an estimated completion date of late 2008. The contract includes the option for four additional years at the same amount.
Mike Brooks added, “We are very pleased to have received this order from the military which will allow us to better utilize our Company operated production facilities.”
Second Quarter Results
Net sales for the second quarter increased to $58.8 million compared to $57.3 million a year ago. The increase in sales is primarily attributable to a 16.6% increase in retail revenues offset by a 2.7% decrease in wholesale sales.
Gross margin in the second quarter of 2007 was $23.9 million, or 40.7% of sales, compared to $24.1 million or 42.0% of sales, for the same period last year. The decline was primarily due to a decrease in sales of our western footwear, which carry higher gross margins, combined with higher production costs and an increase in closeout sales versus a year ago.

 

Selling, general and administrative (SG&A) expenses were $22.8 million, or 38.8% of sales, for the second quarter of 2007 compared to $21.5 million, or 37.4% of sales, a year ago. The increase in SG&A expenses is partially due to additional selling expenses related to increased sales and higher professional fees.
Income from operations was $1.1 million, or 1.9% of net sales, for the period compared to $2.6 million, or 4.6% of net sales, in the prior year.
Funded Debt and Interest Expense
The Company’s funded debt at June 30, 2007 was $102.7 million versus $109.7 million at June 30, 2006. Interest expense increased to $3.3 million for the second quarter of 2007 versus $3.0 million for the same period last year. The increase in interest expense was due to the write off of prepaid financing costs related to the refinancing of the company’s term loans.
Inventory
Inventory decreased $10.3 million, or 11.0%, to $84.0 million at June 30, 2007 compared with $94.3 million on the same date a year ago. The decrease in inventory is due to our focus on improved inventory management through the scheduling of receipts to more closely coincide with projected shipments and the reduction of discontinued products.
Distribution Consolidation
In an ongoing effort to further reduce costs and improve operating efficiencies, the Company is consolidating its distribution and warehousing. Beginning in 2008, Rocky Brands will distribute products in the U.S. solely from its 196,000 square foot facility in Logan, Ohio, and no longer utilize its leased facility in Tunkhannock, Pennsylvania. At the same time, Rocky Brands has signed a letter of intent with Kane Distribution, which currently manages the Pennsylvania facility, to serve as a third-party logistics partner to manage and operate its combined distribution center in Ohio.
Outlook
The Company stated it remains comfortable with its previously issued guidance and continues to expect fiscal 2007 revenues to increase approximately 5% over 2006 levels, and diluted earnings per share to increase approximately 35% over 2006 levels.
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 growth prospects (paragraph 3), distribution consolidation (paragraph 12) and expected 2007 revenues and earnings (paragraph 13). 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, 2006 (filed March 15, 2007) and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2007 (filed May 9, 2007). 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, 2007     December 31, 2006     June 30, 2006  
    Unaudited           Unaudited  
ASSETS:
                       
CURRENT ASSETS:
                       
Cash and cash equivalents
  $ 1,446,022     $ 3,731,253     $ 474,910  
Trade receivables — net
    60,117,677       65,259,580       55,905,546  
Other receivables
    1,368,863       1,159,444       1,659,889  
Inventories
    83,973,162       77,948,976       94,337,405  
Deferred income taxes
    3,902,775       3,902,775       133,783  
Income tax receivable
    2,561,538       3,632,808       1,766,376  
Prepaid expenses
    2,118,034       1,581,303       2,585,430  
 
                 
Total current assets
    155,488,071       157,216,139       156,863,339  
FIXED ASSETS — net
    24,443,562       24,349,674       23,730,670  
DEFERRED PENSION ASSET
    40,432       13,564       1,550,639  
IDENTIFIED INTANGIBLES & GOODWILL
    61,697,893       61,979,659       62,967,485  
OTHER ASSETS
    2,758,801       2,796,776       3,030,314  
 
                 
TOTAL ASSETS
  $ 244,428,759     $ 246,355,812     $ 248,142,447  
 
                 
 
                       
LIABILITIES AND SHAREHOLDERS’ EQUITY:
                       
CURRENT LIABILITIES:
                       
Accounts payable
  $ 15,471,858     $ 10,162,291     $ 20,205,334  
Current maturities — long term debt
    311,534       7,288,474       7,276,398  
Accrued expenses:
                       
Taxes — other
    673,098       552,782       378,713  
Other
    4,090,661       3,643,503       3,599,139  
 
                 
Total current liabilities
    20,547,151       21,647,050       31,459,584  
LONG TERM DEBT — less current maturities
    102,427,204       103,203,107       102,417,683  
DEFERRED INCOME TAXES
    17,009,025       17,009,025       13,477,939  
DEFERRED LIABILITIES
    324,038       368,580       442,067  
 
                 
TOTAL LIABILITIES
    140,307,418       142,227,762       147,797,273  
 
                       
SHAREHOLDERS’ EQUITY:
                       
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding
June 30, 2007 - 5,482,293; December 31, 2006 - 5,417,198;
June 30, 2006 - 5,400,598
    53,802,287       53,238,841       52,604,460  
 
                       
Accumulated other comprehensive loss
    (942,036 )     (993,182 )     —  
Retained earnings
    51,261,090       51,882,391       47,740,714  
 
                 
Total shareholders’ equity
    104,121,341       104,128,050       100,345,174  
 
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 244,428,759     $ 246,355,812     $ 248,142,447  
 
                 

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007     2006     2007     2006  
 
                               
NET SALES
  $ 58,797,664     $ 57,297,505     $ 120,454,688     $ 114,822,669  
 
                               
COST OF GOODS SOLD
    34,871,210       33,224,213       70,447,548       65,833,420  
 
                       
 
                               
GROSS MARGIN
    23,926,454       24,073,292       50,007,140       48,989,249  
 
                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    22,790,579       21,451,080       45,113,520       42,560,477  
 
                       
 
                               
INCOME FROM OPERATIONS
    1,135,875       2,622,212       4,893,620       6,428,772  
 
                               
OTHER INCOME AND (EXPENSES):
                               
Interest expense
    (3,344,076 )     (3,042,596 )     (5,842,921 )     (5,411,629 )
Other — net
    6,994       76,759       (36,001 )     58,462  
 
                       
Total other — net
    (3,337,082 )     (2,965,837 )     (5,878,922 )     (5,353,167 )
 
                               
(LOSS)/INCOME BEFORE INCOME TAXES
    (2,201,207 )     (343,625 )     (985,302 )     1,075,605  
 
                               
INCOME TAX (BENEFIT)/EXPENSE
    (814,000 )     (128,000 )     (364,000 )     398,000  
 
                       
 
                               
NET (LOSS)/INCOME
  $ (1,387,207 )   $ (215,625 )   $ (621,302 )   $ 677,605  
 
                       
 
                               
NET (LOSS)/INCOME PER SHARE
                               
Basic
  $ (0.25 )   $ (0.04 )   $ (0.11 )   $ 0.13  
Diluted
  $ (0.25 )   $ (0.04 )   $ (0.11 )   $ 0.12  
 
                               
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic
    5,473,919       5,394,749       5,465,783       5,378,939  
 
                       
Diluted
    5,473,919       5,394,749       5,465,783       5,607,902