PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

	March 31,		December 31,		March 31,
	2021		2020		2020
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	8,892	$	28,353	$	44,247
Trade receivables – net		84,050		48,010		33,277
Contract receivables		2,171		5,170		2,551
Other receivables		231		364		532
Inventories – net		125,133		77,576		77,214
Prepaid expenses		4,116		3,713		3,522
Total current assets		224,593		163,186		161,343
LEASED ASSETS		1,696		1,572		1,588
PROPERTY, PLANT & EQUIPMENT – net		51,150		33,750		28,434
IDENTIFIED INTANGIBLES – net		170,930		30,209		30,232
OTHER ASSETS		715		374		333
TOTAL ASSETS	$	449,084	$	229,091	$	221,930

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable		45,077		20,090		17,933
Contract liabilities		2,927		5,582		2,551
Current Portion of Long-Term Debt		3,250		0		0
Accrued expenses:
Salaries and wages		3,005		4,463		1,204
Taxes - other		618		893		588
Accrued freight		1,479		911		282
Commissions		1,185		712		362
Accrued duty		6,953		4,270		4,041
Income tax payable		2,357		1,019		0
Other		5,343		2,043		1,430
Total current liabilities		72,194		39,983		28,391
LONG-TERM DEBT		183,019		0		20,000
LONG-TERM TAXES PAYABLE		169		169		169
LONG-TERM LEASE		1,178		944		1,031
DEFERRED INCOME TAXES		8,271		8,271		8,108
DEFERRED LIABILITIES		386		219		215
TOTAL LIABILITIES		265,217		49,586		57,914
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding March 31, 2021 - 7,280,711; December 31, 2020 - 7,247,631; March 31, 2020 - 7,309,121		66,856		65,971		67,195
Retained earnings		117,011		113,534		96,821
Total shareholders' equity		183,867		179,505		164,016
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	449,084	$	229,091	$	221,930

September 30,
December 31,
September 30,
2020
2019
2019
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
$
19,947
$
15,518
$
6,440
Trade receivables – net
49,188
45,585
50,700
Contract receivables
-
4,746
2,036
Other receivables
364
366
310
Inventories – net
80,655
76,731
82,881
Income tax receivable
-
150
-
Prepaid expenses
3,611
3,030
2,656
Total current assets
153,765
146,126
145,023
LEASED ASSETS
1,399
1,743
1,781
PROPERTY, PLANT & EQUIPMENT – net
31,325
27,423
25,150
IDENTIFIED INTANGIBLES – net
30,216
30,240
30,248
OTHER ASSETS
355
294
293
TOTAL ASSETS
$
217,060
$
205,826
$
202,495
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable
$
23,834
$
15,776
$
20,531
Contract liabilities
-
4,746
1,936
Accrued expenses:
Salaries and wages
3,813
3,044
2,791
Taxes - other
789
967
624
Accrued freight
729
867
495
Commissions
544
608
488
Accrued duty
4,586
3,824
2,597
Income tax payable
422
-
19
Other
1,563
1,702
1,766
Total current liabilities
36,280
31,534
31,247
LONG-TERM TAXES PAYABLE
169
169
169
LONG-TERM LEASE
833
1,158
1,188
DEFERRED INCOME TAXES
8,108
8,108
7,780
DEFERRED LIABILITIES
238
201
230
TOTAL LIABILITIES
45,628
41,170
40,614
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding September 30, 2020 - 7,276,379; December 31, 2019 - 7,354,970 and September 30, 2019 - 7,403,219
66,604
67,993
69,273
Retained earnings
104,828
96,663
92,608
Total shareholders' equity
171,432
164,656
161,881
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
217,060
$
205,826
$
202,495

See Notes to Unaudited Condensed Consolidated Financial Statements
‎

Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
NET SALES
$
77,785
$
67,179
$
189,691
$
195,067
COST OF GOODS SOLD
47,952
42,165
121,077
125,633
GROSS MARGIN
29,833
25,014
68,614
69,434
OPERATING EXPENSES
20,175
18,027
54,344
54,004
INCOME FROM OPERATIONS
9,658
6,987
14,270
15,430
OTHER (EXPENSES) INCOME
(55)
43
(112)
160
INCOME BEFORE INCOME TAXES
9,603
7,030
14,158
15,590
INCOME TAX EXPENSE
1,992
1,414
2,917
3,212
NET INCOME
$
7,611
$
5,616
$
11,241
$
12,378
INCOME PER SHARE
Basic
$
1.04
$
0.76
$
1.54
$
1.67
Diluted
$
1.04
$
0.75
$
1.53
$
1.66
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic
7,306
7,400
7,323
7,392
Diluted
7,336
7,455
7,352
7,443

Condensed Consolidated Statements of ~~Shareholders’~~Shareholders’ Equity

Common Stock and
Accumulated
Additional Paid-in Capital
Other
Total
Shares
Comprehensive
Retained
Shareholders'
Outstanding
Amount
Income
Earnings
Equity
BALANCE - December 31, 2018
7,368
$
68,387
$
-
$
83,188
$
151,575
NINE MONTHS ENDED SEPTEMBER 30, 2019
Net income
$
3,605
$
3,605
Dividends paid on common stock ($0.12 per share)
(886)
(886)
Repurchase of common stock
-
-
-
Stock issued for options exercised, including tax benefits
17
$
294
294
Stock compensation expense
6
168
168
BALANCE - March 31, 2019
7,391
$
68,849
$
-
$
85,907
$
154,756
Net income
$
3,156
$
3,156
Dividends paid on common stock ($0.14 per share)
(1,035)
(1,035)
Repurchase of common stock
-
-
-
Stock issued for options exercised, including tax benefits
-
-
-
Stock compensation expense
3
$
164
164
BALANCE - June 30, 2019
7,394
$
69,013
$
-
$
88,028
$
157,041
Net income
$
5,616
$
5,616
Dividends paid on common stock ($0.14 per share)
(1,036)
(1,036)
Repurchase of common stock
-
-
-
Stock issued for options exercised, including tax benefits
7
$
96
96
Stock compensation expense
2
164
164
BALANCE - September 30, 2019
7,403
$
69,273
$
-
$
92,608
$
161,881
BALANCE - December 31, 2019
7,355
$
67,993
$
-
$
96,663
$
164,656
NINE MONTHS ENDED SEPT 30, 2020
Net income
$
1,188
$
1,188
Dividends paid on common stock ($0.14 per share)
(1,030)
(1,030)
Repurchase of common stock
(50)
$
(1,000)
(1,000)
Stock issued for options exercised, including tax benefits
-
-
-
Stock compensation expense
4
202
202
BALANCE - March 31, 2020
7,309
$
67,195
$
-
$
96,821
$
164,016
Net income
$
2,442
$
2,442
Dividends paid on common stock ($0.14 per share)
(1,023)
(1,023)
Repurchase of common stock
-
-
-
Stock issued for options exercised, including tax benefits
-
-
-
Stock compensation expense
3
$
194
194
BALANCE - June 30, 2020
7,312
$
67,389
$
-
$
98,240
$
165,629
Net income
$
7,611
$
7,611
Dividends paid on common stock ($0.14 per share)
(1,023)
(1,023)
Repurchase of common stock
(41)
$
(1,004)
(1,004)
Stock issued for options exercised, including tax benefits
2
29
29
Stock compensation expense
3
190
190
BALANCE - September 30, 2020
7,276
$
66,604
$
-
$
104,828
$
171,432

Nine Months Ended
September 30,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
11,241
$
12,378
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
3,805
3,767
Deferred compensation
-
74
Loss on disposal of fixed assets
-
7
Stock compensation expense
586
496
Change in assets and liabilities:
Receivables
1,295
(6,747)
Inventories
(3,924)
(10,059)
Other current assets
(1,656)
(3,227)
Other assets
(62)
(115)
Accounts payable
8,989
7,201
Accrued and other liabilities
(2,600)
1,096
Income taxes payable
422
19
Net cash provided by operating activities
18,096
4,890
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets
(8,618)
(6,054)
Proceeds from sales of fixed assets
3
-
Net cash used in investing activities
(8,615)
(6,054)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options
29
390
Repurchase of common stock
(2,004)
-
Dividends paid on common stock
(3,077)
(2,959)
Net cash (used in) financing activities
(5,052)
(2,569)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
4,429
(3,733)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD
15,518
10,173
END OF PERIOD
$
19,947
$
6,440

Rocky Brands, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements
‎

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

We are 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, The Original Muck Boot Company, XTRATUF, Servus, NEOS and ~~Lehigh.~~Ranger. Our brands have a long history of representing high quality, comfortable, functional and durable footwear and our products are organized around six target markets: outdoor, work, duty, commercial military, western and lifestyle. In addition, as part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments that are necessary for a fair presentation of the financial results. All such adjustments reflected in the unaudited condensed consolidated financial statements are considered to be of a normal and recurring nature. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019~~2020 are not necessarily indicative of the results to be expected for the whole year. The December 31, ~~2019~~2020 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). This Quarterly Report on Form ~~10-Q~~10-Q should be read in connection with our Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2019,~~2020, which includes all disclosures required by GAAP.

2. ACCOUNTING STANDARDS UPDATES

Recently Issued Accounting Pronouncements

~~We are~~Rocky Brands, Inc. is currently evaluating the impact of certain Accounting Standards Updates (“ASU”) on its Unaudited Condensed Consolidated Financial Statements ~~and~~or Notes to the Unaudited Condensed Consolidated Financial Statements:

Standard	Description
~~Standard~~	~~Description~~	Anticipated Adoption Period	Effect on the financial statements or other significant matters
ASU ~~2016-13,~~2016-13, Measurement of Credit Losses on Financial Instruments	The pronouncement seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date by replacing the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.	Q12023 as long as we continue to qualify as a smaller reporting company	We are evaluating the impacts of the new standard on our existing financial instruments, including trade receivables.
~~ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~	This pronouncement is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.	~~Q1 2021~~	~~We are evaluating the impacts of the new standard on our Consolidated Financial Statements.~~

Table of Contents

Accounting Standards Adopted in the Current Year

Standard	Description
~~Standard~~	~~Description~~	Effect on the financial statements or other significant matters
ASU ~~2018-13~~2018-13 Fair Value Measurement (Topic ~~820)~~820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement	This pronouncement changes the fair value measurement disclosure requirements of ASC 820. The amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting — Chapter 8: Notes to Financial Statements.	We adopted the new standard in Q12020 and the standard did not have a significant impact on our Unaudited Condensed Consolidated Financial Statements.

ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	This pronouncement is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.	We adopted the new standard in Q12021 and the standard did not have a significant impact on our Consolidated Financial Statements.

3. FAIR VALUE

Generally accepted accounting standards establish a framework for measuring fair value. The fair value accounting standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This standard clarifies how to measure fair value as permitted under other accounting pronouncements.

The fair value accounting standard defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This standard also establishes a ~~three-level~~three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

●

Level 1 – Quoted prices in active markets for identical assets or liabilities.

●

Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

~~Level 1 – Quoted prices in active markets for identical assets or liabilities.~~

Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The fair values of cash and cash equivalents, receivables, and payables ~~approximate~~approximated their carrying values because of the short-term nature of these instruments. Receivables consist primarily of amounts due from our customers, net of allowances, amounts due from employees (sales persons’ advances in excess of commissions earned and employee travel advances); other customer receivables, net of allowances; and expected insurance recoveries. The carrying amounts of our long-term credit facility and other short-term financing obligations also approximate fair value, as they are comparable to the available financing in the marketplace during the year. The fair value of our ~~revolving line of~~ credit isfacilities are categorized as Level 2.

~~Deferred Compensation Plan Assets~~We hold assets and ~~Liabilities~~

On December 14, 2018, our Board of Directors adopted the Rocky Brands, Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”), which became effective January 1, 2019. The Deferred Compensation Plan is an unfunded nonqualified deferred compensation plan in which certain executives are eligible to participate. The deferrals are heldliabilities in a separate trust ~~which has been established for the administration of the Deferred Compensation Plan. The trust assets are recorded within prepaid expenses~~ in ~~the accompanying unaudited consolidated balance sheets,~~connection with ~~changes in the~~ deferred compensation ~~charged to operating expenses in the accompanying unaudited consolidated statements of operations.~~plans. The fair value isof these assets are based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1)1).

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4. ACQUISITION

The Performance and Lifestyle Footwear Business of Honeywell International, Inc.

On January 24, 2021, we entered into a Purchase Agreement (the "Purchase Agreement") with certain subsidiaries of Honeywell International Inc. (collectively, "Honeywell"), to purchase Honeywell's performance and lifestyle footwear business, including brand names, trademarks, assets and liabilities associated with Honeywell's performance and lifestyle footwear business (the "Acquisition") for a preliminary purchase price of $230 million.

On March 15, 2021 (the "Acquisition Date"), pursuant to the terms and conditions set forth in the Purchase Agreement, we completed the Acquisition for an aggregate preliminary closing price of approximately $207 million, net of cash acquired, based on preliminary working capital and other adjustments. This is subject to further adjustments based on the final assessment of working capital and other items as of the closing date. The acquisition was funded through cash on hand and borrowings under two new credit facilities. See Note 9for information regarding the two new credit facilities.

The Acquisition expanded our brand portfolio to include The Original Muck Boot Company, XTRATUF, Servus, NEOS and Ranger brands (the "Acquired Brands"). We acquired 100% of the voting interests of certain subsidiaries and additional assets comprising the performance and lifestyle footwear business of Honeywell with the Acquisition.

With the acquisition of the Acquired Brands, we will greatly enhance our powerful portfolio of footwear brands and significantly increase our sales and profitability. We are acquiring a well-run business with a corporate culture and a customer base similar to ours, which provides meaningful growth opportunities within our existing product categories as well as an entry into new market segments. Its innovative and authentic product collections complement our existing offering with minimal overlap, which will allow us to strengthen our wholesale relationships and serve a wider consumer audience. At the same time, we plan to leverage our existing advanced fulfillment capabilities to improve distribution of the Acquired Brands to wholesale customers and accelerate direct-to-consumer penetration.

In connection with the Acquisition, we also entered into employment agreements with seven key employees from the performance and lifestyle footwear business of Honeywell, pursuant to which, among other things, we agreed to grant 25,000 non-qualified stock options in the aggregate to the seven employees as an inducement for continuing their employment with us.

In connection with the Acquisition, Honeywell will provide certain services to us under the Transition Service Agreement (TSA). The costs associated with the TSA are both fixed and variable. We expect these costs to decline over time as we integrate the businesses.

The Acquisition contributed net sales and net income of approximately $6.5 million and $0.5 million, respectively, to the unaudited condensed consolidated operating results for the period March 15, 2021 through March 31, 2021.

Acquisition-related costs

Costs incurred to complete and integrate the Acquisition are expensed as incurred and included in "operating expenses" in the accompanying condensed consolidated statements of operations. During the three months ended March 31, 2021, there were approximately $5.2 million of acquisition-related costs recognized. These costs represent banking fees, legal and professional fees, and consulting fees associated with the Acquisition.

Preliminary Purchase Price Allocation

The Acquisition has been accounted for under the business combinations accounting guidance. As a result, we have applied acquisition accounting, which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The aggregate preliminary closing price noted above was allocated to the major categories of assets acquired and liabilities assumed based on their fair values at the Acquisition Date using primarily Level 2 and Level 3 inputs. These Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. Additionally, estimated fair values are based, in part, upon outside valuation for certain assets, including specifically identified intangible assets.

The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and subject to change within the measurement period (up to 90 days from the acquisition date) as additional information concerning final working capital true-up adjustments and valuations related to assets acquired and liabilities assumed is obtained.

The following table summarizes the consideration paid for the Acquisition and the amounts of the assets acquired and liabilities assumed as of the Acquisition Date, which have been allocated on a preliminary basis and are subject to change based on the final working capital true-up.

($ in thousands)	Fair Value
Cash	$	2,655
Accounts receivable ⁽¹⁾		37,109
Inventories ⁽²⁾		41,640
Property, plant and equipment		15,576
Intangible assets ⁽³⁾		140,727
Other assets		933
Accounts payable		(17,395	)
Accrued expenses		(11,620	)
Total identifiable net assets		209,625
Cash acquired		(2,655	)
Total cash paid, net of cash acquired	$	206,970

⁽¹⁾ The recorded amount for accounts receivable considers expected uncollectible amounts of approximately $0.2 million in its determination of fair value.

⁽²⁾ Fair value of finished goods inventories included a preliminary step up value of approximately $3 million, of which approximately $0.3 million was expensed in the three months ended March 31, 2021 and included in "Cost of Goods Sold" in accompanying the condensed consolidated statements of operations.

⁽³⁾ Intangible assets consist of trademarks and goodwill, allocated on a preliminary basis. The goodwill consists largely of synergies and economies of scale expected from the combining of the operations of Rocky and the Acquired Brands. Upon completion of the working capital true-up and fair value determinations noted above, goodwill will be assigned to the Company's wholesale and retail segments.

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4.Unaudited Pro Forma Financial Information

The following unaudited pro forma results of operations assume that the Acquisition occurred at the beginning of the periods presented. These unaudited pro forma results are presented for information purposes only and are not necessarily indicative of what the results of operations would have been if the Acquisition had occurred at the beginning of the periods presented, nor are they indicative of the future results of operations. The pro forma results presented below are adjusted for the removal of acquisition-related costs of approximately $5.2 million for the three months ended March 31, 2021. There were 0 such transaction expenses for the three months ended March 31, 2020.

	Three Months Ended March 31,
($ in thousands, expect per share amount)	2021		2020
Net sales	$	126,345	$	94,630
Net income	$	13,949	$	2,500
Diluted earnings per share	$	1.90	$	0.34

5. REVENUE

Nature of Performance Obligations

Our products are distributed through three distinct channels, which represent our business segments: Wholesale, Retail, and Military. In our Wholesale business, we distribute our products through a wide range of distribution channels representing over ten thousand retail store locations in the U.S., Canada, and internationally. Our Wholesale channels vary by product line and include sporting goods stores, outdoor specialty stores, online retailers, marine stores, independent retailers, mass merchants, retail uniform stores, and specialty safety shoe stores. Our Retail business includes direct sales of our products to consumers through our e-commerce websites, marketplaces, our Rocky outlet store, and Lehigh ~~business.~~businesses. We also sell footwear under the Rocky label to the U.S. Military.

Significant Accounting Policies and Judgements

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; this generally occurs upon shipment of our product to our customer, which is when the transfer of control of our products passes to the customer. The duration of our arrangements with our customers are typically one year or less. Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of our products at a point in time and consists of either fixed or variable consideration or a combination of both.

Revenues from sales are recorded at the net sales price, which includes estimates of variable consideration for which reserves are established. Components of variable consideration include prompt payment discounts, volume rebates, and product returns. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if the amount is payable to a party other than a customer).

The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Our analyses also contemplated application of the constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates detailed below as of ~~September 30, 2020.~~March 31, 2021. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net revenue and earnings in the period such variances become known.

When a customer has a right to a prompt payment discount, we estimate the likelihood that the customer will earn the discount using historical data and adjust our estimate when the estimate of the likelihood that a customer will earn the discount changes or the consideration becomes fixed, whichever occurs earlier. The estimated amount of variable consideration is recognized as a credit to trade receivables and a reduction in revenue until the uncertainty of the variable consideration is alleviated. Because most of our customers have payment terms less than six months there is not a significant financing component in our contracts with customers.

When a customer is offered a rebate on purchases retroactively this is accounted for as variable consideration because the consideration for the current and past purchases is not fixed until it is known if the discount is earned. We estimate the expected discount the customer will earn at contract inception using historical data and projections and update our estimates when projections materially change or consideration becomes fixed. The estimated rebate is recognized as a credit to trade receivables and offset against revenue until the rebate is earned or the earning period has lapsed.

When a right of return is part of the arrangement with the customer, we estimate the expected returns based on an analysis using historical data. We adjust our estimate either when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed, whichever occurs earlier. Please see ~~Notes 5~~Note 6 and 6Note 7 for additional information.

Trade receivables represent our right to unconditional payment that only relies on the passage of time.

Contract receivables represent contractual minimum payments required under non-cancellable contracts with the U.S. Military and other customers with a duration of one year or less.

Contract liabilities are performance obligations that we expect to satisfy or relieve within the next twelve months, advance consideration obtained prior to satisfying a performance obligation, or unconditional obligations to provide goods or services under non-cancellable contracts before the transfer of goods or services to the customer has occurred. Our contract liability represents unconditional obligations to provide goods under non-cancellable contracts with the U.S. ~~Military.~~Military and other customers.

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Items considered immaterial within the context of the contract are recognized as an expense.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue producing transaction, that are collected from customers, are excluded from revenue.

Costs associated with our manufacturer’s warranty continue to be recognized as expense when the products are sold in accordance with guidance surrounding product warranties.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in included in operating expenses.

Costs associated with obtaining a contract are expensed as incurred in accordance with the practical expedient in ASC ~~340-40~~340-40 in instances where the amortization period is one year or less. We anticipate substantially all of our costs incurred to obtain a contract would be subject to this practical expedient.

Contract Balances

The following table provides information about contract liabilities from contracts with our customers.

	March 31,		December 31,
($ in thousands)	2021		2020
Contract liabilities	$	2,927	$	5,582

September 30,
December 31,
September 30,
($ in thousands)
2020
2019
2019
Contract liabilities
$
-
$
4,746
$
1,936

Significant changes in the contract liabilities balance during the period are as follows:


($ in thousands)		Contract liabilities		~~Contract liabilities~~
Balance, December 31, ~~2019~~2020	$	~~4,746~~	5,582
Non-cancelable contracts with customers entered into during the period		~~2,478~~	116
Revenue recognized related to non-cancelable contracts with customers during the period		~~(7,224)~~	(2,771	)
Balance, ~~September 30, 2020~~ March 31, 2021	$	-	2,927

Disaggregation of Revenue

All revenues are recognized at a point in time when control of our products pass to the customer at point of shipment. Because all revenues are recognized at a point in time and are disaggregated by channel, our segment disclosures are consistent with ASC 606 disaggregation requirements. See Note 1213 for segment disclosures.

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5.6. TRADE RECEIVABLES

Trade receivables are presented net of the related allowance for uncollectible accounts of approximately ~~$192,000, $952,000~~$394,000, $242,000 and ~~$1,251,000 for the periods ending September 30, 2020,~~ $262,000 at March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019,~~March 31, 2020, respectively. We record the allowance based on historical experience, the age of the receivables, and identification of customer accounts that are likely to prove difficult to collect due to various criteria including pending bankruptcy. However, estimates of the allowance in any future period are inherently uncertain and actual allowances may differ from these estimates. If actual or expected future allowances were significantly greater or less than established reserves, a reduction or increase to bad debt expense would be recorded in the period this determination was made. Our credit policy generally provides that trade receivables will be deemed uncollectible and written-off once we have pursued all reasonable efforts to collect on the account.

In accordance with ASC 606, the return reserve liability netted against trade receivables was approximately ~~$1,198,000, $1,050,000~~$1,619,000, $1,348,000 and ~~$1,073,000 for the periods ending September 30, 2020,~~ $838,000 at March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019, respectively~~.March 31, 2020, respectively.

7. INVENTORY

6. ~~INVENTORY~~

Inventories are comprised of the following:

	March 31,		December 31,	March 31,
($ in thousands)	2021		2020	2020
Raw materials	$	19,372	$ 12,875	$	12,634
Work-in-process		1,505	1,128		960
Finished goods		104,256	63,573		63,620
Total	$	125,133	$ 77,576	$	77,214

September 30,
December 31,
September 30,
($ in thousands)
2020
2019
2019
Raw materials
$
12,967
$
12,466
$
11,909
Work-in-process
1,367
856
946
Finished goods
66,321
63,409
70,026
Total
$
80,655
$
76,731
$
82,881

In accordance with ASC 606, the return reserve asset included within inventories was approximately ~~$654,000, $613,000~~$641,000, $744,000 and ~~$649,000 for the periods ending September 30, 2020,~~ $492,000 at March 31, 2021, December 31, ~~2019~~2020 and ~~September 30, 2019,~~March 31, 2020, respectively.

Gross
Accumulated
Carrying
($ in thousands)
Amount
Amortization
Amount
September 30, 2020
Trademarks
Wholesale
$
27,192
-
$
27,192
Retail
2,900
-
2,900
Patents
895
$
771
124
Total Intangibles
$
30,987
$
771
$
30,216
Gross
Accumulated
Carrying
December 31, 2019
Amount
Amortization
Amount
Trademarks
Wholesale
$
27,192
-
$
27,192
Retail
2,900
-
2,900
Patents
895
$
747
148
Total Intangibles
$
30,987
$
747
$
30,240
Gross
Accumulated
Carrying
September 30, 2019
Amount
Amortization
Amount
Trademarks
Wholesale
$
27,192
-
$
27,192
Retail
2,900
-
2,900
Patents
895
$
739
156
Total Intangibles
$
30,987
$
739
$
30,248

⁽¹⁾ Acquired intangibles consist of trademarks and goodwill, allocated on a preliminary basis.

A schedule of approximate amortization expense related to finite-lived intangible assets for the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019~~2020 is as follows:

A schedule of approximate expected amortization expense related to finite-lived intangible assets for the years ending December 31, is as follows:

On March 15, 2021, we entered into a senior secured term loan facility (“Term Facility”) with TCW Asset Management Company, LLC, as agent, for the lenders party thereto in the amount of $130 million. The Term Facility provides for quarterly payments of principal and bears interest of LIBOR plus 7.00% through June 30, 2021. After this date, interest will be assessed quarterly based on our total leverage ratio. The total leverage ratio is calculated as (a) Total Debt to (b) EBITDA. If our total leverage ratio is greater than or equal to 3.25, the effective interest rate will be LIBOR plus 7.00% (or at our option, Prime Rate plus 6.00%). If our total leverage ratio is less than 3.25, the effective interest rate will be LIBOR plus 6.50% (or at our option, Prime Rate plus 5.50%). The term facility also has a LIBOR floor rate of 1.00%.

Our Term Facility is collateralized by a second-lien on accounts receivable, inventory, cash and related assets and a first-lien on substantially all other assets. The term facility matures on March 15, 2026.

On March 15, 2021, we also entered into a senior secured asset-based credit facility (“ABL Facility”) with Bank of America, N.A. ("Bank of America") as agent, for the lenders party thereto. The ABL Facility provides a new senior secured asset-based revolving credit facility up to a principal amount of $150 million, which includes a sub-limit for the issuance of letters of credit up to $5 million. The ABL facility may be increased up to an additional $50 million at the Borrowers’ request and the Lenders’ option, subject to customary conditions. The ABL Facility includes a separate first in, last out (FILO) tranche, which allows the Company to borrow at higher advance rates on eligible accounts receivables and inventory balances. As of March 31, 2021, we had borrowing capacity of $55.7 million.

The ABL Facility is collateralized by first-lien on accounts receivable, inventory, cash and related assets and a second-lien on substantially all other assets. The ABL Facility matures on March 15, 2026. Interest on the ABL Facility is based on the amount available to be borrowed as set forth on the following chart:

In connection with the Term Facility and ABL Facility, we had to pay certain fees that will be capitalized and amortized over the life of each respective loan. In addition, the ABL Facility requires us to pay an annual collateral management fee in the amount of $75,000 due on each anniversary of the ABL Facility issuance date, until it matures.

The Term Facility contains restrictive covenants which requires us to maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio, as defined in the agreement. We believe we are in compliance with all credit facility covenants as of March 31, 2021.

Our ABL Facility contains a restrictive covenant which requires us to maintain a fixed charge coverage ratio upon a triggering event taking place (as defined in the ABL facility). During the three months ended March 31, 2021, there were no triggering events and the covenant was not in effect.

Both the Term Facility and the ABL Facility contain restrictions on the amount of dividend payments.

On February 13, 2019, we entered into a Revolving Credit, Guaranty, and Security Agreement (“Credit Agreement”) with the Huntington National Bank (“Huntington”) as administrative agent. The Credit Agreement provides for a new senior secured asset-based revolving credit facility up to a principal amount of $75 million, which includes a sublimit for the issuance of letters of credit up to $7.5 million (the ~~“Credit~~“Huntington Credit Facility”). The Huntington Credit Facility may be increased up to an additional $25 million at our request and the lenders’ option, subject to customary conditions. ~~The Credit Agreement matures on February 13, 2024.~~

The total amount available under ~~our~~the Huntington Credit Facility iswas subject to a borrowing base calculation based on various percentages of accounts receivable and inventory.

As of ~~September 30,~~March 31, 2020, we had ~~total capacity~~$20.0 million in outstanding borrowings against the Credit Facility with an effective rate of ~~$71.0 million.~~

We1.92%. As of December 31, 2020, we had 0 outstanding borrowings against the Huntington Credit Facility. The Huntington Credit Facility ~~for~~was paid out and closed as part of the ~~periods ending September 30, 2020, December 31, 2019~~Acquisition and ~~September 30, 2019.~~new credit facility with Bank of America.

~~Our~~The Huntington Credit Facility ~~contains~~contained restrictive covenants which ~~require~~required us to maintain a fixed charge coverage ratio. These restrictive covenants ~~are~~were only in effect upon a triggering event taking place. ~~Our~~The Huntington Credit Facility ~~contains~~contained restrictions on the amount of dividends that may be paid. During the ~~nine~~three months ended ~~September 30,~~ March 31, 2020, ~~and 2019,~~ there were no triggering events and the covenant was not in effect.

We are subject to tax examinations in various taxing jurisdictions. The earliest years open for examination are as follows:

Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. NoNaN such expenses were recognized during the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019.~~2020. We do not believe there will be any material changes in our uncertain tax positions over the next 12 months.

Accounting for uncertainty in income taxes requires financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. Under this guidance, income tax positions must meet a ~~more-likely-than-not~~more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the standard. We did not have any unrecognized tax benefits and there was 0no effect on our financial condition or results of operations.

Our estimated effective tax ~~rates~~rate was 23.0% and 21.0% for the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019 are as follows:~~2020, respectively.

Three Months Ended
Nine Months Ended
September 30,
September 30,
($ in thousands)
2020
2019
2020
2019
Effective Tax Rate
20.7
%
20.1
%
20.6
%
20.6
%

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~~10.~~ 11.EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net income applicable to common shareholders by the weighted average number of common shares outstanding during each period. The diluted earnings per share computation includes common share equivalents, when dilutive.

A reconciliation of the shares used in the basic and diluted income per common share computation for the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019~~2020 is as follows:

	Three Months Ended
	March 31,
(shares in thousands)	2021		2020

Basic - weighted average shares outstanding		7,258		7,351
Dilutive stock options		90		35
Diluted - weighted average shares outstanding		7,348		7,386
Anti-dilutive securities		34		151

Three Months Ended
Nine Months Ended
September 30,
September 30,
(shares in thousands)
2020
2019
2020
2019
Basic - weighted average shares outstanding
7,306
7,400
7,323
7,392
Dilutive restricted share units
-
2
-
4
Dilutive stock options
30
53
29
47
Diluted - weighted average shares outstanding
7,336
7,455
7,352
7,443
Anti-dilutive securities
154
43
184
75

~~11.~~ 12.SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information for the ~~nine~~three months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019~~2020 was as follows:

($ in thousands)	2021			2020

Interest paid	$	20		$	19

Federal, state, and local income taxes paid, net	$	4		$	0

Change in contract receivables, net	$	2,999		$	2,195

Change in contract liabilities, net	$	(2,655	)	$	(2,195	)

Property, plant, and equipment purchases in accounts payable	$	1,668		$	1,308

Nine Months Ended
September 30,
($ in thousands)
2020
2019
Interest paid
$
132
$
101
Federal, state, and local income taxes paid, net
$
479
$
5,360
Change in contract receivables, net
$
4,746
$
(2,036)
Change in contract liabilities, net
$
(4,746)
$
1,936
Property, plant, and equipment purchases in accounts payable
$
1,530
$
470

We have identified 3three reportable segments: Wholesale, Retail and Military. Wholesale includes sales of footwear and accessories to several classifications of retailers, including sporting goods stores, outdoor specialty stores, online retailers, marine stores, independent retailers, mass merchants, retail uniform stores, and specialty safety shoe stores. Our Retail business includes direct sales of our products to consumers through our e-commerce websites, marketplaces, our Rocky outlet store, and Lehigh ~~business.~~businesses. Military includes sales to the U.S. Military. The following is a summary of segment results for the Wholesale, Retail, and Military segments for the three ~~and nine~~ months ended ~~September 30, 2020~~ March 31, 2021 and ~~2019 :~~2020.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~COVID-19~~Acquisition - During first quarter in 2021 we closed on the acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. We have incurred significant expenses associated with this acquisition and we expect to continue to incur expenses related to the acquisition as we fully integrate the businesses.

COVID-19- We are monitoring and responding to the evolving nature of the global novel coronavirus pandemic (“COVID-19” or “pandemic”) and its impact to our global business. We are experiencing multiple challenges related to the pandemic and these challenges are anticipated to have an effect on our overall business for the remainder of fiscal 2020. Our most significant impacts from COVID-19 relate to channel shifts and a decrease in production. During the first half of 2020, we saw sales shift from our wholesale channel to our retail channel as more consumers began using our online platforms while some stores were closed and several states were on mandatory stay at home orders. We continued to see some of that sales shift in the third quarter, but we also saw an increase in wholesale sales due to some pent-up demand as wholesale doors continued to open and many started resuming normalized hours of operation. Our manufacturing facilities are experiencing varying levels of production impacts, including increased volumes due to an increase in demand in the third quarter of 2020 and carrying over to the fourth quarter. As we continue to adjust to the changing landscape, we ensure that theThe health and safety of our team members is our top priority and to protect our employees, we are implementing all measures recommended by the Centers for Disease Control and Prevention (“CDC”). We will continue to proactively manage the Company and its operations through the ~~pandemic;~~pandemic, however we cannot predict the ultimate impact that COVID-19 will have on our short- and long-term demand at this time, as it will depend on, among other things, the severity and duration of the COVID-19 pandemic.

The further spread of COVID-19, and the requirements to take action to help limit the spread of the illness, may impact our ability to carry out our business as usual and may materially adversely impact global economic conditions, our business, results of operations and financial condition. Our liquidity is expected to be adequate to continue to run our operations and meet our obligations as they become due. ~~During the second quarter, we repaid our draw down on our line~~

Net sales to foreign countries represented approximately 2.5% and 1.1% of ~~credit that was accessed as a precautionary measure at the beginning of the COVID-19 pandemic.~~net sales for three months ended March 31, 2021 and 2020, respectively.

The following tables set forth, for the periods indicated, information derived from our Unaudited Condensed Consolidated Financial Statements, expressed as a percentage of net sales. The discussion that follows each table should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements as well as our annual report on 10-K for the year ended December 31, ~~2019.~~2020.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019~~March 31, 2020

Wholesale sales increased ~~primarily due~~as we continue to see a ~~strong~~high demand ~~for~~with our Rocky, Georgia and Durango products as ~~stores continued~~we have benefited from strong new collections and healthier stock positions. This has allowed us to ~~re-open~~obtain incremental shelf space with many of our key wholesale partners and ~~consumers started~~experience better sell-through to ~~return~~the end consumer. Included in wholesale sales for the first quarter of 2021 was approximately $5.5 million in net sales attributed to ~~shopping in stores following~~ the ~~initial shutdowns related~~newly acquired brands of The Original Muck Boot Company, XTRATUF, Servus, NEOS and Ranger that were tied to the acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. which was completed on March 15, 2021. In the first quarter of 2020, we did see some softness from the pull forward on certain deliveries ahead of price increases that went into effect on January 1, 2020 as well as decreases due to the COVID-19 ~~pandemic.~~crisis as several states announced closures of all non-essential businesses and implemented stay-at-home directives, which cut back planned deliveries and replenishment orders.

Retail sales increased ~~primarily due~~as we have continued to see strong growth in our direct to consumer e-commerce ~~business~~and marketplace businesses which we believe iswas attributable to both recent investments aimed at increasing traffic and conversion rates as well as an increase in online shopping due to the COVID-19 pandemic. Included in retail sales for the first quarter of 2021 was approximately $1.0 million in net sales attributed to the newly acquired brands of The Original Muck Boot Company, XTRATUF, Servus, NEOS and Ranger that were associated with the acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. which was completed on March 15, 2021. We have also seen an increase in our Lehigh business as businesses continue to re-open and get back to full capacity in the wake of the COVID-19 pandemic.

Military sales ~~decreased slightly~~increased in the first quarter of 2021 due to ~~less scheduled orders as we have had some contracts end within~~a temporary closure of our manufacturing facility in Puerto Rico in 2020 due to the ~~last year.~~COVID-19 crisis.

	Three Months Ended
	March 31,
($ in thousands)	2021			2020			Inc./ (Dec.)
GROSS MARGIN:
Wholesale Margin $'s	$	22,261		$	11,241		$	11,020
Margin %		37.6	%		32.1	%		5.5	%
Retail Margin $'s	$	11,549		$	7,454		$	4,095
Margin %		48.1	%		44.1	%		4.0	%
Military Margin $'s	$	1,329		$	625		$	704
Margin %		29.9	%		16.3	%		13.6	%
Total Margin $'s	$	35,139		$	19,320		$	15,819
Margin %		40.1	%		34.7	%		5.4	%

Three Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
GROSS MARGIN:
Wholesale Margin $'s
$
20,891
$
16,379
$
4,512
Margin %
37.1
%
34.7
%
2.4
%
Retail Margin $'s
$
7,531
$
6,593
$
938
Margin %
46.7
%
45.5
%
1.2
%
Military Margin $'s
$
1,411
$
2,042
$
(631)
Margin %
26.6
%
37.5
%
(10.9)
%
Total Margin $'s
$
29,833
$
25,014
$
4,819
Margin %
38.4
%
37.2
%
1.2
%

Wholesale gross margin increased ~~year over year~~in the first quarter of 2021 due to stronger initial margins on some of our newer products, less discounting ~~selling fewer discontinued products~~ and ~~some increased~~better efficiencies ~~from~~at our manufacturing ~~facilities.~~facilities as we have seen production increase over the last nine months. The first quarter of 2021 also included an increase to cost of goods sold of approximately $331,000 for a fair market value inventory adjustment related to the purchase accounting tied to the acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. On an adjusted basis, 2021 first quarter margins were 38.1%. In the first quarter of 2020, adjusted gross margins were 33.8%, which included approximately $664,0000 of adjustments related to overhead and payroll expenses incurred during the temporary closure of our manufacturing facilities due to COVID-19. These expenses were partially offset by the employee retention credit tied to the CARES Act of 2020.

Retail gross margin increased as a higher percentage of our total retail sales were tied to our direct to consumer business which carries higher margins than our Lehigh ~~business.~~businesses.

Military gross margin ~~decreased year over year as 2019 margins included a $581,000 one-time expense reimbursement~~increased in the first quarter of 2021 due to some higher margin contracts and better efficiencies in our Puerto Rico manufacturing facility ~~associated with~~as production has increased over the ~~temporary closure as a result of Hurricane Maria in 2017. Excluding the one-time reimbursement,~~last nine months. Adjusted gross margins ~~would have been 26.8%.~~

Three Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
Inc./ (Dec.)
OPERATING EXPENSES:
Operating Expenses
$
20,175
$
18,027
$
2,148
11.9
%
% of Net Sales
25.9
%
26.8
%
(0.9)
%

~~The increase in operating expenses was primarily related to an increase in variable expenses tied to~~for the sales increases in our wholesale and retail channels, as well as increased investments in our core brands to help initiate growth and expand within our respective markets. Operating expenses decreased as a % of sales as we were able to leverage our expenses because of the increase in sales.

Three Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
Inc./ (Dec.)
INCOME TAXES:
Income Tax Expense
$
1,992
$
1,414
$
578
40.9
%
Effective Tax Rate
20.7
%
20.1
%
0.6
%

~~The effective tax rate increased slightly in the third~~first quarter of 2020 ~~as our current estimates expect our yearly effective tax rate to be 20.6%.~~

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

Nine Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
Inc./ (Dec.)
NET SALES:
Wholesale
$
125,614
$
130,260
$
(4,646)
(3.6)
%
Retail
49,359
44,035
5,324
12.1
Military
14,718
20,772
(6,054)
(29.1)
Total Net Sales
$
189,691
$
195,067
$
(5,376)
(2.8)
%

~~Wholesale sales decreased due to some early softness from the pull forward from our retail partners on certain deliveries ahead~~were 65.5%, which included approximately $324,000 of price increases that went into effect on January 1, 2020. We also experienced a decrease in wholesale sales due to COVID-19, as several states announced closures of all non-essential businesses and implemented stay-at-home directives in the first and second quarter of 2020, which cut back planned deliveries and replenishment orders.

Retail sales increased primarily due to our direct to consumer e-commerce business which we believe is attributable to both recent investments aimed at increasing traffic and conversion rates, as well as an increase in online shopping due to the COVID-19 pandemic.

Military sales decreased in part due to less scheduled orders in the first half of 2020, as well as due to a temporary closure of our manufacturing facility in Puerto Rico because of the COVID-19 pandemic.

Nine Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
GROSS MARGIN:
Wholesale Margin $'s
$
42,908
$
44,157
$
(1,249)
Margin %
34.2
%
33.9
%
0.3
%
Retail Margin $'s
$
22,838
$
19,371
$
3,467
Margin %
46.3
%
44.0
%
2.3
%
Military Margin $'s
$
2,868
$
5,906
$
(3,038)
Margin %
19.5
%
28.4
%
(8.9)
%
Total Margin $'s
$
68,614
$
69,434
$
(820)
Margin %
36.2
%
35.6
%
0.6
%

Wholesale gross margin increased year over year due to stronger initial margins on some newer products, less discounting, selling less discontinued products and some increased efficiencies from our manufacturing facilities.

~~Retail gross margin increased as a higher percentage of our total retail sales were tied to our direct to consumer business which carries higher margins than our Lehigh business.~~

~~Military gross margin decreased year over year~~adjustments due to adjustments related to ~~the~~ overhead and payroll expenses ~~and supplies~~ incurred during the temporary closure of our manufacturing ~~facilities~~facility due to ~~the COVID-19 pandemic.~~COVID-19. These expenses were partially offset by the employee retention credit tied to the CARES Act of 2020.

The net effect of these ~~closure related expenses and employee retention credits was approximately $654,000. Adjusting for the previously mentioned~~ expenses and credits ~~our~~were approximately $324,000. On an adjusted basis, 2020 ~~military~~first quarter margins ~~were 23.9%. In 2019,~~increased to 26.5% as we continued to see stronger initial margins ~~included a $581,000 one-time expense reimbursement to~~and better efficiencies at our Puerto Rico ~~facility associated with the temporary closure as a result~~facility.

Table of ~~Hurricane Maria in 2017. Excluding the one-time reimbursement, gross margins would have been 25.6%.~~Contents

	Three Months Ended
	March 31,
($ in thousands)	2021			2020			Inc./ (Dec.)			Inc./ (Dec.)
OPERATING EXPENSES:
Operating Expenses	$	28,558		$	17,807		$	10,751			60.4	%
% of Net Sales		32.6	%		32.0	%		0.6	%

Nine Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
Inc./ (Dec.)
OPERATING EXPENSES:
Operating Expenses
$
54,344
$
54,004
$
340
0.6
%
% of Net Sales
28.6
%
27.7
%
0.9
%

The increase in operating expenses ~~as a percentage~~for the first quarter of ~~sales~~2021 was due to ~~the~~an increase in ~~retail sales which carry higher variable expense costs and the decrease in military sales which do not carry the~~ variable expenses ~~that our wholesale~~tied to the sales increase and ~~retail~~approximately $5.2 million dollars of acquisition related expenses tied to the acquisition of the performance and lifestyle footwear business ~~do.~~of Honeywell International, Inc. On an adjusted basis, the operating expenses for the first quarter of 2021 were $23,365 or 26.7% of net sales.

	Three Months Ended
	March 31,
($ in thousands)	2021			2020			Inc./ (Dec.)			Inc./ (Dec.)
INCOME TAXES:
Income Tax Expense	$	1,342		$	316		$	1,026			324.7	%
Effective Tax Rate		23.0	%		21.0	%		2.0	%

Nine Months Ended
September 30,
($ in thousands)
2020
2019
Inc./ (Dec.)
Inc./ (Dec.)
INCOME TAXES:
Income Tax Expense
$
2,917
$
3,212
$
(295)
(9.2)
%
Effective Tax Rate
20.6
%
20.6
%
-
%

The effective tax rate ~~remained flat~~increased to 23.0% for 2021 based on our actual results from fiscal year ~~over year.~~2020 and a preliminary estimate of our tax rate post acquisition.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal sources of liquidity have been our income from operations and borrowings under our credit facility and other indebtedness.

~~Over~~During the ~~last several years~~three months ended March 31, 2021, our ~~principal uses~~primary use of cash ~~have been~~was to partly fund the acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. compared to primarily using cash for working capital ~~dividend payments~~ and capital expenditures to support our ~~growth.~~growth during years prior. Our working capital consists primarily of trade receivables and inventory, offset by debt and accounts ~~payable and accrued expenses.~~payable. Our working capital fluctuates throughout the year as a result of our seasonal business cycle and business expansion and is generally lowest in the months of January through March of each year and highest during the months of May through October of each year. We typically utilize our revolving credit facility to fund our seasonal working capital requirements. As a result, balances on our revolving credit facility can fluctuate significantly throughout the year.

Our capital expenditures relate primarily to projects relating to our corporate offices, property, merchandising fixtures, molds and equipment associated with our manufacturing and distribution operations and for information technology. Capital expenditures were ~~$7.7~~$2.9 million and ~~$5.8~~$2.3 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

We lease certain machinery, a shoe center, and manufacturing facilities under operating leases that generally provide for renewal options.

We believe that our ABL credit facility coupled with cash generated from operations will provide sufficient liquidity to fund our operations and debt obligations for at least the next twelve months. Our continued liquidity, however, is contingent upon future operating performance, cash flows and our ability to meet financial covenants under our credit facility. For more information regarding our credit facility please see Note 8.9.

Table of Contents

Cash Flows

	Three Months Ended
	March 31,
($ in millions)	2021			2020
Operating activities	$	2.9		$	14.1
Investing activities		(208.2	)		(3.4	)
Financing activities		185.8			18.0
Net change in cash and cash equivalents	$	(19.5	)	$	28.7

Nine Months Ended
September 30,
($ in millions)
2020
2019
Operating activities
$
18.1
$
4.9
Investing activities
(8.6)
(6.1)
Financing activities
(5.1)
(2.6)
Net change in cash and cash equivalents
$
4.4
$
(3.8)

Operating Activities. Cash provided by operating activities was primarily impacted by an increase in accounts payable and decreases in accounts receivable, partially offset by ~~an increase~~increases in inventory for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020. Cash provided by operating activities was primarily impacted by an increase in inventory and accounts receivable, partially offset by an increase in accounts payable and accrued liabilities for the nine months ended September 30, 2019.

Investing Activities. Cash used in investing activities ~~was~~primarily related our recent acquisition of the performance and lifestyle footwear business of Honeywell International, Inc. for the three months ended March 31, 2021. See Note 4 for additional information regarding the acquisition. Cash used in investing activities primarily related to investments in molds and equipment associated with our manufacturing operations, for information technology and for improvements to our distribution facility for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2020.

Financing Activities. Cash provided by financing activities was primarily related to proceeds from our term loan and ~~2019.~~

~~Financing Activities.~~revolving credit facility, partially offset by payments on our revolving credit facility and debt issuance costs paid in connection with our recent acquisition. Cash ~~used in~~provided by financing activities was primarily related to the ~~payments of dividends on~~proceeds from our ~~common stock and repurchases of common stock for the nine months ended September 30, 2020. Cash used in financing activities was primarily related to~~revolving credit facility, partially offset by payments of dividends on our common stock for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

~~Inflation~~

Our financial performance is influenced by factors such as higher raw material costs as well as higher salaries and employee benefits. Management attempts to minimize or offset the effects of inflation through increased selling prices, productivity improvements, and cost reductions. We were able to mitigate the effects of inflation during 2019 due to these factors. It is anticipated that any inflationary pressures during 2020 could be offset through possible price increases.

Ohio		No. 31-1364046

~~Ohio~~		~~No. 31-1364046~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of class		Trading symbol	~~Trading symbol~~		Name of exchange on which registered
Common Stock -– No Par Value		RCKY	~~RCKY~~	Nasdaq	~~Nasdaq~~



¨☐ Large accelerated filer		x☒ Accelerated filer
¨
	☐ Non-accelerated filer		x☒ Smaller reporting company
		¨
		☐ Emerging growth company



			Page
PART I	Financial Information
		~~Page~~
~~PART I~~	~~Financial Information~~
Item 1.	~~Financial Statements~~
	Financial Statements
	Condensed Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 (Unaudited), December 31, ~~2019,~~2020, and ~~September 30, 2019~~March 31, 2020 (Unaudited)	2
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	3
	Condensed Consolidated Statements of Shareholders’ Equity ~~for the Three~~as of March 31, 2021 and ~~Nine Months Ended September 30,~~ 2020 ~~and 2019~~ (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1517
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2122
Item 4.	Controls and Procedures	2122
PARTII	Other Information

Item ~~1A.~~2.	~~Risk Factors~~	21
~~Item 2.~~	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 6.	Exhibits	23
SIGNATURES		24

	Three Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,492		$	1,188
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,095			1,260
Stock compensation expense		278			202
Change in assets and liabilities:
Receivables		4,201			14,486
Inventories		(5,912	)		(483	)
Other current assets		331			(1,757	)
Other assets		(267	)		(40	)
Accounts payable		5,922			3,310
Accrued and other liabilities		(6,225	)		(3,967	)
Income taxes payable		(1,019	)		(23	)
Net cash provided by operating activities		2,896			14,176

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(1,209	)		(3,417	)
Acquisition of business, net of cash acquired		(206,970	)		0
Net cash used in investing activities		(208,179	)		(3,417	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility and term loan		210,000			20,000
Repayments on revolving credit facility		(19,500	)		0
Debt issuance costs		(4,270	)		0
Proceeds from stock options		607			0
Repurchase of common stock		0			(1,000	)
Dividends paid on common stock		(1,015	)		(1,030	)
Net cash provided by financing activities		185,822			17,970

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(19,461	)		28,729

CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD		28,353			15,518
END OF PERIOD	$	8,892		$	44,247



39 East Canal Street, Nelsonville, Ohio 45764
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (740) ~~753-9100~~



		September 30,		December 31,		September 30,
		2020		2019		2019
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	19,947	$	15,518	$	6,440
Trade receivables – net		49,188		45,585		50,700
Contract receivables		-		4,746		2,036
Other receivables		364		366		310
Inventories – net		80,655		76,731		82,881
Income tax receivable		-		150		-
Prepaid expenses		3,611		3,030		2,656
Total current assets		153,765		146,126		145,023
LEASED ASSETS		1,399		1,743		1,781
PROPERTY, PLANT & EQUIPMENT – net		31,325		27,423		25,150
IDENTIFIED INTANGIBLES – net		30,216		30,240		30,248
OTHER ASSETS		355		294		293
TOTAL ASSETS	$	217,060	$	205,826	$	202,495

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	23,834	$	15,776	$	20,531
Contract liabilities		-		4,746		1,936
Accrued expenses:
Salaries and wages		3,813		3,044		2,791
Taxes - other		789		967		624
Accrued freight		729		867		495
Commissions		544		608		488
Accrued duty		4,586		3,824		2,597
Income tax payable		422		-		19
Other		1,563		1,702		1,766
Total current liabilities		36,280		31,534		31,247
LONG-TERM TAXES PAYABLE		169		169		169
LONG-TERM LEASE		833		1,158		1,188
DEFERRED INCOME TAXES		8,108		8,108		7,780
DEFERRED LIABILITIES		238		201		230
TOTAL LIABILITIES		45,628		41,170		40,614
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding September 30, 2020 - 7,276,379; December 31, 2019 - 7,354,970 and September 30, 2019 - 7,403,219		66,604		67,993		69,273
Retained earnings		104,828		96,663		92,608
Total shareholders' equity		171,432		164,656		161,881
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	217,060	$	205,826	$	202,495



		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2020		2019		2020		2019
NET SALES	$	77,785	$	67,179	$	189,691	$	195,067
COST OF GOODS SOLD		47,952		42,165		121,077		125,633
GROSS MARGIN		29,833		25,014		68,614		69,434

OPERATING EXPENSES		20,175		18,027		54,344		54,004

INCOME FROM OPERATIONS		9,658		6,987		14,270		15,430

OTHER (EXPENSES) INCOME		(55)		43		(112)		160

INCOME BEFORE INCOME TAXES		9,603		7,030		14,158		15,590

INCOME TAX EXPENSE		1,992		1,414		2,917		3,212

NET INCOME	$	7,611	$	5,616	$	11,241	$	12,378

INCOME PER SHARE
Basic	$	1.04	$	0.76	$	1.54	$	1.67
Diluted	$	1.04	$	0.75	$	1.53	$	1.66
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic		7,306		7,400		7,323		7,392
Diluted		7,336		7,455		7,352		7,443

	Common Stock and						Accumulated
	Additional Paid-in Capital						Other					Total
	Shares						Comprehensive		Retained			Shareholders'
	Outstanding			Amount			Income		Earnings			Equity

BALANCE - December 31, 2019		7,355		$	67,993		$	0	$	96,663		$	164,656

THREE MONTHS ENDED MARCH 31, 2020
Net income									$	1,188		$	1,188
Dividends paid on common stock ($0.14 per share)										(1,030	)		(1,030	)
Repurchase of common stock		(50	)	$	(1,000	)							(1,000	)
Stock issued for options exercised, including tax benefits		0			0					-			0
Stock compensation expense		4			202								202
BALANCE - March 31, 2020		7,309		$	67,195		$	0	$	96,821		$	164,016

BALANCE - December 31, 2020		7,248		$	65,971			0	$	113,534		$	179,505

THREE MONTHS ENDED MARCH 31, 2021
Net income									$	4,492		$	4,492
Dividends paid on common stock ($0.14 per share)										(1,015	)		(1,015	)
Repurchase of common stock		0			0								0
Stock issued for options exercised, including tax benefits		31		$	607								607
Stock compensation expense		2			278								278
BALANCE - March 31, 2021		7,281		$	66,856		$	0	$	117,011		$	183,867



	Common Stock and				Accumulated
	Additional Paid-in Capital				Other				Total
	Shares				Comprehensive		Retained		Shareholders'
	Outstanding		Amount		Income		Earnings		Equity

BALANCE - December 31, 2018	7,368	$	68,387	$	-	$	83,188	$	151,575

NINE MONTHS ENDED SEPTEMBER 30, 2019
Net income						$	3,605	$	3,605
Dividends paid on common stock ($0.12 per share)							(886)		(886)
Repurchase of common stock	-		-						-
Stock issued for options exercised, including tax benefits	17	$	294						294
Stock compensation expense	6		168						168
BALANCE - March 31, 2019	7,391	$	68,849	$	-	$	85,907	$	154,756

Net income						$	3,156	$	3,156
Dividends paid on common stock ($0.14 per share)							(1,035)		(1,035)
Repurchase of common stock	-		-						-
Stock issued for options exercised, including tax benefits	-		-						-
Stock compensation expense	3	$	164						164
BALANCE - June 30, 2019	7,394	$	69,013	$	-	$	88,028	$	157,041

Net income						$	5,616	$	5,616
Dividends paid on common stock ($0.14 per share)							(1,036)		(1,036)
Repurchase of common stock	-		-						-
Stock issued for options exercised, including tax benefits	7	$	96						96
Stock compensation expense	2		164						164
BALANCE - September 30, 2019	7,403	$	69,273	$	-	$	92,608	$	161,881

BALANCE - December 31, 2019	7,355	$	67,993	$	-	$	96,663	$	164,656

NINE MONTHS ENDED SEPT 30, 2020
Net income						$	1,188	$	1,188
Dividends paid on common stock ($0.14 per share)							(1,030)		(1,030)
Repurchase of common stock	(50)	$	(1,000)						(1,000)
Stock issued for options exercised, including tax benefits	-		-						-
Stock compensation expense	4		202						202
BALANCE - March 31, 2020	7,309	$	67,195	$	-	$	96,821	$	164,016

Net income						$	2,442	$	2,442
Dividends paid on common stock ($0.14 per share)							(1,023)		(1,023)
Repurchase of common stock	-		-						-
Stock issued for options exercised, including tax benefits	-		-						-
Stock compensation expense	3	$	194						194
BALANCE - June 30, 2020	7,312	$	67,389	$	-	$	98,240	$	165,629

Net income						$	7,611	$	7,611
Dividends paid on common stock ($0.14 per share)							(1,023)		(1,023)
Repurchase of common stock	(41)	$	(1,004)						(1,004)
Stock issued for options exercised, including tax benefits	2		29						29
Stock compensation expense	3		190						190
BALANCE - September 30, 2020	7,276	$	66,604	$	-	$	104,828	$	171,432

	Gross		Accumulated		Carrying
($ in thousands)	Amount		Amortization		Amount
March 31, 2021
Trademarks
Wholesale	$	27,192		-	$	27,192
Retail		2,900		-		2,900
Patents		895	$	785		110
Acquired Intangibles ⁽¹⁾		140,728	$	-		140,728
Total Intangibles	$	171,715	$	785	$	170,930


		Gross		Accumulated		Carrying
($ in thousands)		Amount		Amortization		Amount
September 30, 2020
Trademarks
Wholesale	$	27,192		-	$	27,192
Retail		2,900		-		2,900
Patents		895	$	771		124
Total Intangibles	$	30,987	$	771	$	30,216

		Gross		Accumulated		Carrying
December 31, 2019		Amount		Amortization		Amount
Trademarks
Wholesale	$	27,192		-	$	27,192
Retail		2,900		-		2,900
Patents		895	$	747		148
Total Intangibles	$	30,987	$	747	$	30,240

		Gross		Accumulated		Carrying
September 30, 2019		Amount		Amortization		Amount
Trademarks
Wholesale	$	27,192		-	$	27,192
Retail		2,900		-		2,900
Patents		895	$	739		156
Total Intangibles	$	30,987	$	739	$	30,248

	Amortization
($ in thousands)	Expense
2021	$	19
2022		22
2023		20
2024		17
2025		12
2026+		20


		Amortization
($ in thousands)		Expense
2020	$	31
2021		26
2022		22
2023		20
2024		17
2025		12
2026+		20

	Average Availability as a
Revolver Pricing Level⁽¹⁾	Percentage of Commitments	Base Rate			LIBOR Rate			Base Rate for FILO			LIBOR Rate for FILO
I	> 66.7%		0.00	%		1.25	%		0.50	%		1.75	%
II	>33.3% and < or equal to 66.7%		0.00	%		1.50	%		0.50	%		2.00	%
III	< or equal to 33.3%		0.25	%		1.75	%		0.75	%		2.25	%

				753‑9100

					Applicable
					Spread Rates for
		Applicable Spread Rates			Domestic Rate
	Average Excess Revolver Availability	for Eurodollar Rate			Revolving
Revolver Pricing Level	for Previous Quarter	Revolving Advances			Advances
I	$25,000,000+		1.00	%		0.50	%
II	$17,500,000 to < 25,000,000		1.25	%		0.50	%
III	$10,000,000 to < 17,500,000		1.50	%		2.50	%
IV	$< 10,000,000		1.75	%		0.00	%


Revolver Pricing Level		Average Excess Revolver Availability for Previous Quarter	Applicable Spread Rates for Eurodollar Rate Revolving Advances		Applicable Spread Rates for Domestic Rate Revolving Advances
I	$	25,000,000+	1.00	%	(0.50)	%
II	$	17,500,000 to < 25,000,000	1.25	%	(0.50)	%
III	$	10,000,000 to < 17,500,000	1.50	%	(0.25)	%
IV	$	< 10,000,000	1.75	%	0.00	%

		Earliest Exam Year
Taxing Authority Jurisdiction:
U.S. Federal	~~Earliest Exam Year~~2017
China	2017
Various U.S. States	2016
~~Taxing Authority Jurisdiction:~~
~~U.S. Federal~~	~~2016~~
~~Various U.S. States~~	~~2015~~
Puerto Rico (U.S. Territory)	~~2014~~2015
Canada	~~2014~~2015

					Maximum number (or
					approximate dollar value) of
	Total number of		Average price		shares (or units) that may yet
	shares (or units)		paid per share (or		be purchased under the plans
Period	purchased		units)		or programs (1)

January 1, 2021 - January 31, 2021		-		-	$	4,561,969
February 1, 2021 - February 28, 2021		-		-		4,561,969
March 1, 2021 - March 31, 2021		-		-		7,500,000
Total		-		-	$	7,500,000


Period	Total number of shares (or units) purchased (1)		Average price paid per share (or units)		Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (2)

July 1, 2020 - July 31, 2020	-		-	$	6,500,013
August 1, 2020 - August 31, 2020	8,616		22.61		6,305,205
September 1, 2020 - September 30, 2020	32,534		24.89		5,495,434
Total	41,150	$	24.56	$	5,495,434

Exhibit Number	Description
~~Exhibit~~ ~~Number~~ 2.1#	~~Description~~ Purchase Agreement, dated January 24, 2021, by and among Honeywell Safety Products USA, Inc., North Safety Products Limited, Honeywell Safety Products (UK) Limited, North Safety de Mexicali S de R.L. de C.V., Honeywell (China) Co. Ltd. and Rocky Brands, Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated January 24, 2021, and filed on January 26, 2021).

2.2*#	Letter Agreement, dated March 14, 2021, Honeywell Safety Products USA, Inc., North Safety Products Limited, Honeywell Safety Products (UK) Limited, North Safety de Mexicali S de R.L. de C.V., Honeywell (China) Co. Ltd. and Rocky Brands, Inc.

10.1	ABL Loan and Security Agreement, dated March 15, 2021, between the Company and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 15, 2021, and filed March 16, 2021).

10.2	Loan and Security Agreement, dated March 15, 2021, between the Company and TCW Asset Management Company LLC. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated March 15, 2021, and filed March 16, 2021).


31.1*	Certification Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Principal Executive Officer.

31.2*	Certification Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Principal Financial Officer.

32**	Section 1350 Certification of Principal Executive Officer/Principal Financial Officer.

101*	Attached as Exhibits 101 to this report are the following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 formatted in Inline XBRL (“eXtensible Business Reporting Language”): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (vi) related notes to these financial statements.
101.INS* 104*	~~XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.~~
101.SCH*	~~Inline XBRL Taxonomy Extension Schema Document~~
101.CAL*	~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~
101.DEF* 101.LAB* 101.PRE* 104*	~~Inline XBRL Taxonomy Definition Linkbase Document~~ ~~Inline XBRL Taxonomy Extension Label Linkbase Document~~ ~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~ Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit ~~101.~~101

			ROCKY BRANDS, INC.
	~~ROCKY BRANDS, INC.~~
Date: May 6, 2021	By:
~~Date: November 5, 2020~~	~~By:~~	/s/THOMAS D. ROBERTSON
			Thomas D. Robertson
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer and Duly Authorized Officer)