EXHIBIT 99
FOR IMMEDIATE RELEASE For Additional Information
Contact: Jim McDonald
Vice President & CFO
(740) 753-1951
ROCKY SHOES & BOOTS, INC. REPORTS
RECORD FIRST QUARTER NET SALES
Branded sales up 24%
Earnings per share $0.01 versus loss of $0.14 last year
NELSONVILLE, Ohio (April 29, 2004) Rocky Shoes & Boots, Inc. (NASDAQ: RCKY)
today reported record net sales for the three months ended March 31, 2004.
Net income increased to $0.1 million, or $0.01 per diluted share, for the three
months ended March 31, 2004 compared to a net loss of $0.6 million, or $0.14 per
diluted share, the prior year. The improvement in net income per share was
achieved despite an 14% increase in the weighted average number of diluted
shares outstanding for the first quarter 2004 compared to the first quarter
2003. This resulted from the increase in the Company's share price during the
past year.
Mike Brooks, Chairman and Chief Executive Officer, commented, "Our record first
quarter results benefited from a 24% increase in branded sales and from the
shipment of boots for delivery to the U.S. military. Importantly, these results
reflect a solid increase in sales of work footwear, which is sold throughout the
year. During the first quarter 2004 we introduced apparel for the work market as
part of our head-to-toe growth strategy. We are pleased with initial bookings
and believe these initiatives represent a significant opportunity to leverage
our brands and, over time, contribute to reducing the seasonality of our
business."
Mr. Brooks continued, "In March 2004 we announced a $16.4 million subcontract
agreement to produce boots for the U.S. military. Shipment of these boots will
begin in June 2004 and continue at the rate of approximately $1.6 million per
30-day period. While our growth strategy is not focused on the military market,
we are pleased to produce these boots when manufacturing capacity is available
at our factory in Puerto Rico. We anticipate there may be additional
opportunities to produce branded boots for the U.S. military in the future."
First Quarter Results
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Net sales increased to a first quarter record $21.9 million compared to $13.8
million for the same period in 2003. This 59.1% increase was led by higher
branded sales and shipments of boots to the U.S. military, which rose $3.1
million and $5.0 million, respectively. Substantial growth was achieved in the
ROCKY(R) Work footwear as well as the Outdoor apparel and footwear categories.
Sales of GATES(R) products, a brand that was acquired in the second quarter
2003, also contributed to the first quarter 2004 net sales increase.
Gross profit increased to $5.6 million, or 25.7% of net sales for the first
quarter 2004 from $3.5 million, or 25.2% of net sales, the prior year. First
quarter 2004 gross margin was influenced by the boots produced for delivery to
the U.S. military and an increase in sourced product sales. The Company
manufactures military boots at lower gross margin than its branded products,
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while sourced products result in higher gross margin than the Company's overall
average. Sourced product sales were 49.6% of net sales for the first quarter
2004 compared to 49.1% for the same period last year.
Selling, general and administrative ("SG&A") expenses were $5.3 million, or
24.3% of net sales, for the quarter ended March 31, 2004 compared to $4.3
million, or 30.9% of net sales, the prior year. The increase in SG&A expenses
was primarily due to higher commissions and distribution costs associated with
the growth in branded product sales, and industry trade show expense compared to
a year ago.
Income from operations was $0.3 million for first quarter 2004 versus a loss
from operations of $0.8 million for the same period last year.
Funded Debt
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The Company reduced its funded debt $3.5 million to $14.5 million at March 31,
2004 compared to year-end 2003. Funded debt was $10.8 million at March 31, 2003
and since that date the Company increased borrowings to purchase certain assets
of Gates-Mills, Inc., repurchased 483,500 of the Company's common shares in the
second quarter 2003, and increased inventory to support sales growth.
Inventory
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Inventory declined $3.0 million to $35.1 million at March 31, 2004 from $38.1
million at December 31, 2003. The $6.8 million increase in inventory since March
31, 2003 was primarily to support increased sales of branded products, including
new line extensions of footwear and apparel for the ROCKY(R) and GATES(R)
brands.
Outlook
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The Company is increasing its earnings guidance for the year 2004 due to the
first quarter 2004 results and the accretive impact of the previously announced
subcontract agreement to produce boots for the U.S. military.
Net sales are anticipated to be approximately $133 million for the year 2004,
which is $11 million higher than previous guidance and $27 million above net
sales for the year 2003. This sales growth is attributable to solid increases in
branded products, footwear, apparel and accessories, and shipment of boots for
delivery to the U.S. military.
If the Company achieves net sales of at least $133 million for the year 2004,
then net income is expected to be approximately $1.75 per diluted share for the
year 2004 compared to previous guidance of $1.54 per diluted share and $1.32 per
diluted share for the year 2003. The Company cautions investors that the net
sales and earnings outlook for the year ended December 31, 2004 is based on
current market conditions and management's expectations. If net sales do not
reach $133 million, then actual earnings may be less than this guidance.
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Conference Call
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The Company is conducting a conference call at 10 a.m. Eastern Time on Thursday,
April 29, 2004 to discuss the first quarter financial results, key business
trends and outlook for 2004. Persons interested in listening to the call can
access it through www.rockyboots.com and clicking on the button "First Quarter
2003 Conference Call".
About Rocky Shoes & Boots, Inc.
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Rocky Shoes & Boots, Inc. designs, develops, manufactures and markets premium
quality rugged outdoor, occupational, work and casual footwear, as well as
branded clothing and accessories. The Company's footwear, apparel and
accessories are marketed through several distribution channels, primarily under
the registered trademarks, ROCKY and GATES.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
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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 initial bookings of work apparel and
the belief that these initiatives represent a significant opportunity to
leverage the Company's brands and, over time, contribute to reducing the
seasonality of its business (paragraph 3), shipments of $16.4 million of boots
for the delivery to the U.S. military beginning in June 2004 and continuing at
the rate of $1.6 million per 30-day period, and management's anticipation there
may be additional opportunities to produce branded boots for the U.S. military
in the future (paragraph 4), increase in the Company's earnings guidance for the
year 2004 due to the results for first quarter 2004 and the accretive impact of
the previously announced subcontract agreement to produce boots for the U.S.
military (paragraph 11), anticipation that net sales will be approximately $133
million for the year 2004 due to solid increases in branded products, footwear,
apparel and accessories, and shipment of boots for delivery to the U.S. military
(paragraph 12), if the Company achieves net sales of at least $133 million for
the year 2004, then net income is expected to be approximately $1.75 per diluted
share for the year 2004 (paragraph 13). These forward-looking statements involve
numerous risks and uncertainties, including, without limitation, the risks that
sales plans will not be met, that present orders may be cancelled or delayed,
that the general economy or consumer spending habits will depress the market for
the Company's products, that there may be disruption in the shipment of products
from overseas to the Company, that the weather in 2004 is drier and warmer than
normal, and all of the other 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, 2003. 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-
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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 SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
2004 2003
------------ ------------
(Unaudited) (Unaudited)
NET SALES $ 21,882,089 $ 13,754,941
COST OF GOODS SOLD 16,263,485 10,289,413
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GROSS MARGIN 5,618,604 3,465,528
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,327,691 4,250,606
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INCOME/(LOSS) FROM OPERATIONS 290,913 (785,078)
OTHER INCOME AND (EXPENSES):
Interest expense (258,573) (196,180)
Other - net 74,206 91,873
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Total other - net (184,367) (104,307)
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INCOME/(LOSS) BEFORE INCOME TAX 106,546 (889,385)
INCOME TAX EXPENSE/(BENEFIT) 34,095 (266,816)
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NET INCOME/(LOSS) $ 72,451 $ (622,569)
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NET INCOME/(LOSS) PER SHARE
Basic $ 0.02 $ (0.14)
Diluted $ 0.01 $ (0.14)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 4,428,023 4,363,115
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Diluted 4,971,568 4,363,115
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ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 DECEMBER 31, 2003 MARCH 31, 2003
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(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,164,802 $ 2,159,050 $ 2,391,867
Trade receivables - net 17,657,161 19,532,287 10,639,471
Other receivables 842,220 830,131 1,854,435
Inventories 35,135,584 38,068,187 28,342,873
Deferred income taxes 959,810 959,810 578,951
Prepaid expenses 1,132,264 1,045,238 1,748,220
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Total current assets 56,891,841 62,594,703 45,555,817
FIXED ASSETS - net 17,325,445 17,610,238 18,770,432
DEFERRED PENSION ASSET 1,499,524 1,499,524 1,651,222
DEFERRED INCOME TAXES 0 0 153,495
OTHER ASSETS 4,498,312 4,470,371 1,842,517
------------ ------------ ------------
TOTAL ASSETS $ 80,215,122 $ 86,174,836 $ 67,973,483
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LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 2,082,062 $ 2,810,161 $ 4,881,731
Current maturities - long-term debt 511,006 503,934 488,169
Accrued taxes - other 451,917 372,432 410,500
Accrued salaries and wages 644,661 1,885,896 712,192
Accrued plant closing costs 75,500 195,500 210,000
Accrued income taxes 380,652 1,929,808 0
Accrued other 346,083 686,934 393,097
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Total current liabilities 4,491,881 8,384,665 7,095,689
LONG TERM DEBT - less current maturities 13,998,680 17,514,994 10,340,806
DEFERRED LIABILITIES 2,057,783 1,890,500 1,687,053
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TOTAL LIABILITIES 20,548,344 27,790,159 19,123,548
SHAREHOLDERS' EQUITY:
Common stock, no par value 36,089,849 34,880,199 32,368,617
Accumulated other comprehensive loss (1,950,400) (1,950,400) (2,311,749)
Retained earnings 25,527,329 25,454,878 18,793,067
------------ ------------ ------------
Total shareholders' equity 59,666,778 58,384,677 48,849,935
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 80,215,122 $ 86,174,836 $ 67,973,483
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