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,
2010
(Exact name
of
registrant as specifıed in its charter)
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Ohio
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31-1364046
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(State or other
jurisdiction
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(Commission
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(IRS
Employer
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of incorporation)
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File Number)
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Identifıc
ation
No.)
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39
East Canal Street, Nelsonville, Ohio
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45764
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(Address
of principal executive offıces)
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(Zip
Code)
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Registrant's
telephone number, including area code
(740)
753-1951
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K fıling is intended to simultaneously
satisfy the fıling obligation of the registrant
under any of the following
provisions (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
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, 2010, Rocky Brands, Inc.
(the “Company”) issued a press release entitled “Rocky Brands, Inc. Announces
Second Quarter Fiscal 2010 Results” regarding its consolidated financial results
for the quarter ended June 30, 2010. 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 reduction of interest
expense and future growth opportunities (paragraph 3). 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, 2009 (filed March 2, 2010), and the Company’s quarterly report on Form 10-Q
for the quarter ended March 31, 2010 (filed May 3, 2010). 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.
Item
9.01.
Financial Statements
and Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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99*
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Press
Release, dated July 27, 2010, entitled “Rocky Brands, Inc. Announces
Second Quarter Fiscal 2010
Results.”
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* Such
press release is being “furnished” (not filed) under Item 2.02 of this Current
Report on
Form
8-K.
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.
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Rocky Brands,
Inc.
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Date:
July 27, 2010
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By:
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/s/
James E.
McDonald
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James
E. McDonald, Executive Vice President
and
Chief Financial
Officer
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Exhibit
99
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ROCKY
BRANDS, INC.
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Company
Contact:
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Jim
McDonald
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Chief
Financial Officer
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(740)
753-1951
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Investor
Relations:
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ICR,
Inc.
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Brendon
Frey
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(203)
682-8200
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ROCKY
BRANDS, INC. ANNOUNCES SECOND QUARTER FISCAL 2010 RESULTS
Company
Returns to Second Quarter Profitability with Diluted EPS of $0.08
Second
Quarter Sales Increased 7.9% to $55.2 Million
Funded
Debt Decreased $50.6 Million, or 58% to $36.9 Million
NELSONVILLE,
Ohio, July 27, 2010 – Rocky Brands, Inc. (Nasdaq: RCKY) today announced
financial results for its second quarter ended June 30, 2010.
For the
second quarter of 2010, net sales increased 7.9% to $55.2 million versus net
sales of $51.2 million in the second quarter of 2009. The Company reported net
income of $0.5 million, or $0.08 per diluted share versus a net loss of $1.4
million, or ($0.25) per diluted share a year ago. Excluding one-time charges of
$0.6 million, net of tax, associated with the early repayment of a portion of
the Company’s senior term loan, second quarter 2010 net income improved to $1.1
million, or $0.17 per diluted share.
Mike
Brooks, Chairman and Chief Executive Officer, commented, “There were several
highlights from the second quarter, most notably the dramatic improvement in our
bottom line. The combination of sales growth, a 370 basis point improvement in
wholesale gross margin, and meaningful operating expense leverage, allowed us to
recover from a loss in the year ago period and deliver profitability that was
well above plan. We also made significant progress in improving our capital
structure during the second quarter. We paid off the majority of our high
interest, senior term loan using proceeds from our successful equity offering
and availability under our existing credit facility. As a result, we cut our
debt level at the end of the second quarter by more than half and will
considerably reduce our interest expense going forward. We are very pleased with
the progress we have made towards building a more efficient organization and we
look forward to taking advantage of our improved position to better capitalize
on the growth opportunities that are ahead.”
Second Quarter
Review
Net sales
for the second quarter increased 7.9% to $55.2 million compared to $51.2 million
a year ago. Wholesale sales for the second quarter increased to $38.5 million
compared to $37.9 million for the same period in 2009. Retail sales for the
second quarter were $11.0 million compared to $12.3 million for the same period
last year. The modest decline in retail sales was the result of the ongoing
transition to more Internet driven transactions and the decision to remove a
portion of our Lehigh mobile stores from operations to help lower costs as
discussed below. Military segment sales for the second quarter increased to $5.7
million versus $0.9 million for the same period in 2009.
Gross
margin in the second quarter of 2010 was $19.1 million, or 34.6% of sales
compared to $17.7 million, or 34.6% for the same period last
year. Wholesale gross margin was up 370 basis points driven by
increased manufacturing efficiencies in the Company’s factories. This was offset
by lower retail gross margin as a result of the ongoing transition to more
Internet driven transactions and the increase in sales to the Military which
carry lower gross margin than the wholesale and retail businesses.
Selling,
general and administrative (SG&A) expenses decreased $2.0 million or 10.8%
to $16.2 million, or 29.3% of sales for the second quarter of 2010 compared to
$18.1 million, or 35.4% of sales a year ago. The decrease in SG&A expenses
was primarily the result of a reduction in salaries & benefits, bad debt
expense, advertising costs, and Lehigh store expenses.
Income
from operations was $2.9 million, or 5.3% of net sales for the period compared
to an operating loss of $0.4 million in the prior year.
Interest
expense increased to $2.1 million for the second quarter of 2010 versus $1.9
million for the same period last year. The increase was attributable to one-time
fees of approximately $0.9 million associated with the early repayment of a
portion of the Company’s senior term loan.
The
Company’s funded debt decreased $50.6 million, or 57.8% to $36.9 million at June
30, 2010 versus $87.5 million at June 30, 2009.
Inventory
decreased $17.5 million, or 22.0%, to $61.8 million at June 30, 2010 compared
with $79.3 million on the same date a year ago.
The
Company’s accounts receivable decreased $3.7 million, or 8.2% to $40.8 million
at June 30, 2010 versus $44.5 million at June 30, 2009.
Conference Call
Information
The
Company’s conference call to review second quarter fiscal 2010 results will be
broadcast live over the internet today, Tuesday, July 27, 2010 at 4:30 pm
Eastern Time. The broadcast will be hosted at
www.rockybrands.com.
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®, Georgia Boot®, Durango®, Lehigh®, and the licensed brands
Dickies®, Michelin® and Mossy Oak®.
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 reduction of interest expense and
future growth opportunities (paragraph 3). 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, 2009 (filed March 2, 2010) and the Company’s quarterly report on Form 10-Q
for the quarter ended March 31, 2010 (filed May 3, 2010). 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
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June
30, 2010
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December
31, 2009
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June
30, 2009
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Unaudited
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Unaudited
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ASSETS:
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CURRENT
ASSETS:
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Cash
and cash equivalents
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$
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3,166,143
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$
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1,797,093
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$
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2,865,461
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Trade
receivables – net
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40,782,470
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45,831,558
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44,454,476
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Other
receivables
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1,182,335
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1,476,643
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1,924,195
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Inventories
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61,811,667
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55,420,467
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79,286,477
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Deferred
income taxes
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1,475,695
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1,475,695
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2,167,966
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Income
tax receivable
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325,493
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-
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2,413,523
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Prepaid
expenses
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1,876,888
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1,309,138
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1,983,480
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Total
current assets
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110,620,691
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107,310,594
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135,095,578
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FIXED
ASSETS – net
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22,436,535
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22,669,876
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23,777,945
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IDENTIFIED
INTANGIBLES
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30,512,822
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30,516,910
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30,769,248
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OTHER
ASSETS
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2,112,475
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2,892,683
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3,609,296
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TOTAL
ASSETS
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$
|
165,682,523
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$
|
163,390,063
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$
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193,252,067
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LIABILITIES
AND SHAREHOLDERS' EQUITY:
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CURRENT
LIABILITIES:
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Accounts
payable
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$
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13,415,750
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$
|
6,781,534
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$
|
8,504,099
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Current
maturities – long term debt
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528,434
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511,870
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495,976
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Accrued
expenses:
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|
|
|
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|
|
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Taxes
- other
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535,101
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440,223
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|
|
|
502,032
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Income
Tax Payable
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-
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|
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26,242
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-
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Other
|
|
|
4,931,764
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|
|
|
5,226,749
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|
|
|
4,504,202
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|
Total
current liabilities
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|
|
19,411,049
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|
|
|
12,986,618
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|
|
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14,006,309
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|
|
|
|
|
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|
|
|
|
|
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LONG
TERM DEBT – less current maturities
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|
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36,370,863
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|
|
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55,079,776
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|
|
|
87,023,125
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|
|
DEFERRED
INCOME TAXES
|
|
|
9,071,639
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|
|
|
9,071,639
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|
|
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9,438,921
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|
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DEFERRED
LIABILITIES
|
|
|
3,875,048
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|
|
|
3,774,356
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|
|
|
4,056,184
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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TOTAL
LIABILITIES
|
|
|
68,728,599
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|
|
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80,912,389
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|
|
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114,524,539
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SHAREHOLDERS'
EQUITY:
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Common
stock, no par value;
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25,000,000
shares authorized; issued and outstanding
June
30, 2010 - 7,406,787; December 31, 2009 - 5,576,465;
June
30, 2009 - 5,547,215
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|
|
68,931,586
|
|
|
|
54,598,104
|
|
|
|
54,384,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Accumulated
other comprehensive loss
|
|
|
(3,037,242
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)
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|
(3,217,144
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)
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|
|
(3,062,448
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)
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|
Retained
earnings
|
|
|
31,059,580
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|
|
|
31,096,714
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|
|
|
27,405,804
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total
shareholders' equity
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|
|
96,953,924
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|
|
|
82,477,674
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|
|
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78,727,528
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
165,682,523
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|
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$
|
163,390,063
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|
|
$
|
193,252,067
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|
Rocky Brands, Inc. and
Subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
|
|
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Three
Months Ended
|
|
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Six
Months Ended
|
|
|
|
|
June
30,
|
|
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June
30,
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|
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2010
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2009
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2010
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|
2009
|
|
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NET
SALES
|
|
$
|
55,223,054
|
|
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$
|
51,188,615
|
|
|
$
|
111,302,040
|
|
|
$
|
101,253,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF GOODS SOLD
|
|
|
36,123,970
|
|
|
|
33,470,943
|
|
|
|
73,446,107
|
|
|
|
63,443,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
MARGIN
|
|
|
19,099,084
|
|
|
|
17,717,672
|
|
|
|
37,855,933
|
|
|
|
37,810,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING,
GENERAL AND
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADMINISTRATIVE
EXPENSES
|
|
|
16,163,354
|
|
|
|
18,119,173
|
|
|
|
34,188,041
|
|
|
|
38,065,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS)
FROM OPERATIONS
|
|
|
2,935,730
|
|
|
|
(401,501
|
)
|
|
|
3,667,892
|
|
|
|
(255,141
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME AND (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(2,121,552
|
)
|
|
|
(1,936,490
|
)
|
|
|
(3,766,143
|
)
|
|
|
(3,710,420
|
)
|
|
Other
– net
|
|
|
3,432
|
|
|
|
158,023
|
|
|
|
40,117
|
|
|
|
33,457
|
|
|
Total
other - net
|
|
|
(2,118,120
|
)
|
|
|
(1,778,467
|
)
|
|
|
(3,726,026
|
)
|
|
|
(3,676,963
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS)
BEFORE INCOME TAXES
|
|
|
817,610
|
|
|
|
(2,179,968
|
)
|
|
|
(58,134
|
)
|
|
|
(3,932,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAX EXPENSE/(BENEFIT)
|
|
|
294,000
|
|
|
|
(785,000
|
)
|
|
|
(21,000
|
)
|
|
|
(1,416,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME/(LOSS)
|
|
$
|
523,610
|
|
|
$
|
(1,394,968
|
)
|
|
$
|
(37,134
|
)
|
|
$
|
(2,516,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME/(LOSS)
PER SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
(0.25
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.45
|
)
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
(0.25
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
6,535,812
|
|
|
|
5,547,215
|
|
|
|
6,072,045
|
|
|
|
5,546,880
|
|
|
Diluted
|
|
|
6,557,289
|
|
|
|
5,547,215
|
|
|
|
6,072,045
|
|
|
|
5,546,880
|
|