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)
  October 23, 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 offýces) (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 October 23, 2007, Rocky Brands, Inc. (the “Company”) issued a press release entitled “Rocky Brands, Inc. Announces Third Quarter Fiscal 2007 Results” regarding its consolidated financial results for the third quarter ended September 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 margins for 2008 and expected 2007 revenues and earnings (paragraphs 3 and 10 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), quarterly report on Form 10-Q for the quarter ended March 31, 2007 (filed May 7, 2007) and quarterly report on Form 10-Q for the quarter ended June 30, 2007 (filed July 31, 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 October 23, 2007, entitled “Rocky Brands, Inc. Announces Third 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: October 23, 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 October 23, 2007, entitled “Rocky Brands, Inc. Announces Third Quarter Fiscal 2007 Results.”
 
*   Such press release is being “furnished” (not filed) under Item 2.02 of this Current Report on Form 8-K.

 


 

     
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 THIRD QUARTER FISCAL 2007 RESULTS
NELSONVILLE, Ohio, October 23, 2007 — Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its third quarter ended September 30, 2007.
For the third quarter of 2007, net sales increased 5.4% to $82.3 million versus net sales of $78.1 million in the third quarter of 2006. The Company reported net income of $1.1 million, or $0.21 per diluted share versus net income of $4.2 million or $0.76 per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, “While our third quarter sales were in-line with our projections our earnings were lower than we anticipated due to a combination of factors. During the quarter we experienced a 550 basis point decline in gross margin as a result of significant pricing pressure and an increase in product costs. In addition, we made the strategic decision to increase our retail operating expenses in order to capitalize on the near-term prospects created by the bankruptcy of a key competitor. We are committed to driving further top-line gains in both our wholesale and retail divisions while at the same time evaluating all our opportunities in an effort to return to more normalized margins beginning in 2008.”
Third Quarter Results
Net sales for the third quarter increased to $82.3 million compared to $78.1 million a year ago. The increase in sales was primarily driven by a 25.0% increase in retail revenues, combined with a slight increase in wholesale sales.
Gross profit in the third quarter of 2007 was $29.3 million, or 35.6% of sales, compared to $32.1 million or 41.1% of sales, for the same period last year. The decline was primarily due to pricing pressure and an increase in product costs.
Selling, general and administrative (SG&A) expenses were $25.1 million, or 30.5% of sales, for the third quarter of 2007 compared to $22.6 million, or 28.9% of sales, a year ago. The increase in SG&A was driven by additional selling and distribution expenses to support the future growth of the retail division.
Income from operations was $4.2 million, or 5.1% of net sales, for the period compared to $9.5 million, or 12.2% of net sales, in the prior year.
Funded Debt and Interest Expense
The Company’s funded debt at September 30, 2007 was $122.8 million versus $127.3 million at September 30, 2006. Interest expense was $2.9 million for the third quarter of 2007 versus $2.9 million for the same period last year.
Inventory
Inventory decreased $2.6 million, or 3.0%, to $85.1 million at September 30, 2007 compared with $87.7 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.

 

 

Outlook
The Company stated that based on actual third quarter results and better visibility into the fourth quarter, it now expects net sales for fiscal 2007 to be approximately $280 million compared to its previous guidance of approximately $277 million, and earnings per share of approximately $0.30 versus its previous guidance of approximately $1.16.
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 margins in 2008 (paragraph 3) and expected 2007 revenues and earnings (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, 2006 (filed March 15, 2007), the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2007 (filed May 9, 2007) and the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2007 (filed July 31, 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
                         
    September 30, 2007     December 31, 2006     September 30, 2006  
    Unaudited           Unaudited  
ASSETS:
                       
CURRENT ASSETS:
                       
Cash and cash equivalents
  $ 2,707,273     $ 3,731,253     $ 2,327,977  
Trade receivables-net
    81,279,819       65,259,580       81,054,978  
Other receivables
    1,064,827       1,159,444       987,939  
Inventories
    85,081,978       77,948,976       87,710,315  
Deferred income taxes
    3,902,775       3,902,775       133,783  
Income tax receivable
    2,743,633       3,632,808       10,873  
Prepaid expenses
    1,494,045       1,581,303       2,320,048  
 
                 
Total current assets
    178,274,350       157,216,139       174,545,913  
FIXED ASSETS-net
    25,233,363       24,349,674       24,245,710  
DEFERRED PENSION ASSET
    53,866       13,564       1,563,639  
IDENTIFIED INTANGIBLES & GOODWILL
    61,548,322       61,979,659       62,844,903  
OTHER ASSETS
    2,618,442       2,796,776       2,815,654  
 
                 
TOTAL ASSETS
  $ 267,728,343     $ 246,355,812     $ 266,015,819  
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
                       
CURRENT LIABILITIES:
                       
Accounts payable
  $ 15,514,243     $ 10,162,291     $ 16,290,173  
Current maturities-long term debt
    318,024       7,288,474       7,282,374  
Accrued expenses:
                       
Taxes-other
    571,718       552,782       255,598  
Other
    6,150,386       3,643,503       3,606,520  
 
                 
Total current liabilities
    22,554,371       21,647,050       27,434,665  
LONG TERM DEBT-less current maturities
    122,438,442       103,203,107       120,040,154  
DEFERRED INCOME TAXES
    17,009,025       17,009,025       13,477,939  
DEFERRED LIABILITIES
    335,534       368,580       379,144  
 
                 
TOTAL LIABILITIES
    162,337,372       142,227,762       161,331,902  
SHAREHOLDERS’ EQUITY:
                       
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding
September 30, 2007 - 5,488,293; December 31, 2006 -
5,417,198; September 30, 2006 - 5,405,098
    53,897,100       53,238,841       52,723,651  
 
                       
Accumulated other comprehensive loss
    (916,463 )     (993,182 )     —  
Retained earnings
    52,410,334       51,882,391       51,960,266  
 
                 
Total shareholders’ equity
    105,390,971       104,128,050       104,683,917  
 
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 267,728,343     $ 246,355,812     $ 266,015,819  
 
                 

 

 

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                               
NET SALES
  $ 82,308,547     $ 78,114,725     $ 202,763,235     $ 192,937,394  
 
                               
COST OF GOODS SOLD
    53,030,023       45,998,535       123,477,571       111,831,955  
 
                       
 
                               
GROSS MARGIN
    29,278,524       32,116,190       79,285,664       81,105,439  
 
                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    25,108,505       22,606,038       70,222,025       65,166,515  
 
                       
 
                               
INCOME FROM OPERATIONS
    4,170,019       9,510,152       9,063,639       15,938,924  
 
                               
OTHER INCOME AND (EXPENSES):
                               
Interest expense
    (2,943,139 )     (2,883,656 )     (8,786,060 )     (8,295,285 )
Other-net
    131,365       73,056       95,364       131,518  
 
                       
Total other-net
    (2,811,774 )     (2,810,600 )     (8,690,696 )     (8,163,767 )
 
                               
INCOME BEFORE INCOME TAXES
    1,358,245       6,699,552       372,943       7,775,157  
 
                               
INCOME TAX EXPENSE/(BENEFIT)
    209,000       2,480,000       (155,000 )     2,878,000  
 
                       
 
                               
NET INCOME
  $ 1,149,245     $ 4,219,552     $ 527,943     $ 4,897,157  
 
                       
 
                               
NET INCOME PER SHARE
                               
Basic
  $ 0.21     $ 0.78     $ 0.10     $ 0.91  
Diluted
  $ 0.21     $ 0.76     $ 0.09     $ 0.88  
 
                               
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic
    5,484,923       5,400,647       5,472,233       5,386,254  
 
                       
Diluted
    5,594,707       5,553,028       5,590,879       5,588,616