<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number:
SEPTEMBER 30, 1998 0-21026
------------------ -------
ROCKY SHOES & BOOTS, INC.
-------------------------
(Exact name of registrant as specified in its charter)
OHIO 31-1364046
---- ----------
(State of Incorporation) (IRS Employer Identification Number)
39 E. CANAL STREET
NELSONVILLE, OHIO 45764
-----------------------
(Address of principal executive offices)
(740) 753-1951
--------------
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former Fiscal
year if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
Yes X No
----- -----
Indicate the number of shares outstanding for each of the issuer's classes of
common stock, as of the latest practicable date.
5,440,615 common shares, no par value, outstanding at November 11, 1998.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Sept. 30, 1998 Dec. 31, 1997
(Unaudited)
-------------- -------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and Cash Equivalents $ 2,317,899 $ 8,556,883
Trade Receivables 38,163,615 17,789,329
Other Receivables 630,180 475,593
Inventories 46,770,790 32,894,236
Other Current Assets 2,599,324 2,324,817
------------ -----------
Total Current Assets 90,481,808 62,040,858
Fixed Assets - Net 19,798,940 17,608,454
Other Assets 1,367,586 1,305,526
------------ -----------
Total Assets $111,648,334 $80,954,838
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 8,147,068 $ 2,414,936
Current Maturities - Long-Term Debt 8,505,016 1,173,840
Accrued Liabilities 2,937,427 2,464,511
------------ -----------
Total Current Liabilities 19,589,511 6,053,287
Long-Term Debt-less current maturities 27,081,868 13,406,962
Deferred Liabilities 2,381,191 2,298,059
------------ -----------
Total Liabilities 49,052,570 21,758,308
Shareholders' Equity:
Preferred Stock, Series A, no par value;
$.06 stated value; 125,000 shares authorized; 0 5,400
issued 1997-90,000 shares;
and outstanding 1997-82,857 shares
Common Stock, no par value;
10,000,000 shares authorized; issued
1998-5,465,415 shares; 1997-5,476,620 shares; 41,596,267 42,604,658
and outstanding 1998-5,440,615 shares;
1997-5,359,668 shares
Common Stock held in Treasury, at cost (207,533) (1,226,059)
Retained Earnings 21,207,030 17,812,531
------------ -----------
Total Shareholders' Equity 62,595,764 59,196,530
------------ -----------
Total Liabilities and Shareholders' Equity $111,648,334 $80,954,838
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
2
<PAGE> 3
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $31,854,878 $31,561,742 $66,299,611 $65,830,000
Cost of Goods Sold 23,866,014 22,817,169 48,913,879 47,527,279
----------- ----------- ----------- -----------
Gross Margin 7,988,864 8,744,573 17,385,732 18,302,721
Selling, General and Administrative
Expenses 4,937,299 5,094,178 12,170,762 11,812,322
----------- ----------- ----------- -----------
Income From Operations 3,051,565 3,650,395 5,214,970 6,490,399
Other Income (Expenses):
Interest Expense (609,903) (889,979) (1,133,439) (1,996,277)
Other - net 291,867 (69,510) 568,891 (78,645)
----------- ----------- ----------- -----------
Total other - net (318,036) (959,489) (564,548) (2,074,922)
----------- ----------- ----------- -----------
Income Before Income Taxes 2,733,529 2,690,906 4,650,422 4,415,477
Income Taxes 738,349 917,287 1,255,923 1,435,789
----------- ----------- ----------- -----------
Net Income $ 1,995,180 $ 1,773,619 $ 3,394,499 $ 2,979,688
=========== =========== =========== ===========
Net Income Per Share:
Basic $0.37 $0.47 $0.62 $0.80
===== ===== ===== =====
Diluted $0.36 $0.44 $0.61 $0.75
===== ===== ===== =====
Weighted Average Number of Shares
Outstanding:
Basic 5,460,435 3,752,974 5,441,723 3,719,674
========= ========= ========= =========
Diluted 5,505,512 4,026,664 5,573,104 3,961,108
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net Income $ 3,394,499 $ 2,979,688
Adjustments to Reconcile Net Income
to Net Cash Used In
Operating Activities:
Depreciation and Amortization 2,889,198 2,139,592
Deferred Taxes and Other 83,132 130,373
Change in Assets and Liabilities:
Receivables (20,528,873) (26,931,873)
Inventories (13,876,554) (13,051,891)
Other Assets (351,102) (96,313)
Accounts Payable 5,440,909 10,282,119
Accrued and Other Liabilities 472,916 1,082,669
------------- -------------
Net Cash Used In
Operating Activities (22,475,875) (23,465,636)
------------- -------------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of Fixed Assets (4,773,926) (2,631,349)
------------- -------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from Long-Term Debt 64,455,000 34,287,911
Payments on Long-Term Debt (43,448,918) (9,167,408)
Purchase Treasury Stock (207,533)
Proceeds from exercise of stock options
including related income tax effect 212,268 786,294
------------- -------------
Net Cash Provided By
Financing Activities 21,010,817 25,906,797
------------- -------------
(DECREASE) IN CASH AND CASH
EQUIVALENTS (6,238,984) (190,188)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 8,556,883 349,637
------------- -------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,317,899 $ 159,449
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
ROCKY SHOES & BOOTS, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL REPORTING
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments which are
necessary for a fair presentation of the financial results. All such
adjustments reflected in the interim consolidated financial statements
are considered to be of a normal and recurring nature. The results of
the operations for the three month and nine month periods ended
September 30, 1998 and 1997 are not necessarily indicative of the
results to be expected for the whole year. Accordingly, these financial
statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's Annual Report on Form 10-K
for year ended December 31, 1997.
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
Sept. 30, 1998 Dec. 31, 1997
<S> <C> <C>
Raw Materials $13,209,709 $ 6,210,161
Work-in Process 4,906,386 3,348,275
Manufactured finished goods 26,109,314 21,140,951
Factory outlet finished goods 2,545,381 2,194,849
----------- -----------
Total $46,770,790 $32,894,236
=========== ===========
</TABLE>
3. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and Federal, state and local income taxes was as
follows:
Nine Months Ended
Sept. 30,
1997 1997
Interest $1,172,974 $1,809,121
========== ==========
Federal, state and local
income taxes $1,022,754 $ 735,284
========== ==========
Accounts payable at September 30, 1998 and December 31, 1997 included a
total of $424,240 and $133,017, respectively, relating to the purchase
of fixed assets. The Company retired 116,952 common shares and 7,143
preferred shares from treasury
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shares during the current year at a total cost of $1,226,059. In addition, the
Company repurchased 24,800 common shares under its share repurchase program
during the three months ended September 30, 1998, for placement in treasury.
4. PER SHARE INFORMATION
A reconciliation of the shares used in the basic and diluted income per share
computation for the three months and nine months ended September 30, 1998 and
1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic-Weighted average
shares outstanding 5,460,435 3,752,974 5,441,723 3,719,674
Diluted securities:
Preferred Stock 0 82,857 9,820 86,447
Stock options 45,077 190,833 121,561 154,987
--------- --------- --------- ---------
Diluted-weighted average
shares outstanding 5,505,512 4,026,664 5,573,104 3,961,108
========= ========= ========= =========
</TABLE>
5. RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130 and SFAS No. 131.
SFAS No. 130 "Reporting Comprehensive Income" is not applicable due to the
absence of other items of comprehensive income. SFAS No. 131 "Disclosures About
Segments of an Enterprise and Related Information" will require adoption in
December 1998. SFAS No. 131 requires companies to report financial and
descriptive information about their reportable operating segments. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. SFAS No. 131 will be effective for the
Company in 1998 and will require comparative information for earlier years.
Interim financial information will not be required during the initial year of
application; however, comparative interim financial information will be required
for interim periods in the second year of application. Management has not yet
completed its analysis of this Statement as to its impact on the Company's
financial disclosures.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures about
Pensions and other Postretirement Benefits" which will require adoption in
December 1998. SFAS No. 132 revises employers' disclosures about pension and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans. The Statement standardizes the disclosure
requirements for pensions and other postretirement benefits to the extent
practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
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analysis, and eliminates certain disclosures. Restatement of disclosures for
earlier periods is required. The Company has not yet determined what effect the
adoption of this Statement will have on its financial statements.
In June 1998, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities" which
will require adoption by the first quarter of 2000. SFAS No. 133 requires that
derivatives be reported on the balance sheet at fair value. Changes in fair
value are recognized in net income or, for derivatives which are hedging market
risk related to future cash flows, in the accumulated other comprehensive income
section of shareholders' equity. The cumulative effect of adoption is reflected
in net income and accumulated other comprehensive income, as appropriate. SFAS
No. 133 will be effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. The Company has not yet determined the effect or timing of
implementation of this Statement.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for The Costs of Computer Software
Developed or Obtained for Internal Use," which revises the accounting for
software development costs. SOP 98-1 will be effective for the Company beginning
in fiscal 1999.
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PART 1 - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information derived
from the Company's Condensed Consolidated Financial Statements, expressed as a
percentage of net sales. The discussion that follows the table should be read in
conjunction with the Condensed Consolidated Financial Statements of the Company.
PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 74.9% 72.3% 73.8% 72.2%
----- ----- ----- -----
Gross Margin 25.1% 27.7% 26.2% 27.8%
Selling, General and
Administrative Expenses 15.5% 16.1% 18.4% 17.9%
----- ----- ----- -----
Income from Operations 9.6% 11.6% 7.8% 9.9%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997
Net Sales
Net sales for the quarter ended September 30, 1998 increased $293,136, or 0.9%,
to $31,854,878 from $31,561,742 for the same period last year. Rugged outdoor
and handsewn casual footwear sales were higher than the same period last year,
while occupational footwear sales were similar to the prior year. Sales for the
third quarter of 1997 included approximately $2 million of footwear uppers to a
private label customer, which were curtailed earlier this year. This decision
was made in order to enhance the Company's gross margin in future years,
especially for ROCKY(R) branded footwear. Sales prices were approximately 2%
higher than the same period last year. Sales for the third quarter were impacted
by generally lower initial orders, postponements and cancellations due to
carryover of retail inventories from 1997, changes in consumer confidence, and
warm weather.
Gross Margin
Gross margin declined to $7,988,864, for the third quarter of 1998 from
$8,744,573 for the same period last year. As a percentage of net sales, gross
margin was 25.1% for the third quarter versus 27.7% for the third quarter of
1997. The reduction in gross margin was due to higher overhead from lower than
expected sales and substantially higher health insurance costs related to
several large claims.
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<PAGE> 9
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses declined $156,879, or 3.1%,
to $4,937,299 for the third quarter of 1998, compared with $5,094,178 for the
same period last year. Lower sales commissions were the primary reason for the
decline in SG&A expenses for the most recent quarter. For the three months ended
September 30, 1998, SG&A expenses were 15.5% of net sales versus 16.1% a year
ago.
Interest Expense
Interest expense decreased $280,076, or 31.5%, to $609,903 for the third quarter
of 1998 from $889,979 for the same period last year. This decrease is due to
lower outstanding balances on the Company's revolving credit line compared to
borrowings at September 30, 1997, and generally lower interest rates resulting
from renegotiations of the Company's credit facilities earlier this year.
Income Taxes
Income taxes decreased $178,938, or 19.5%, to $738,349 for the three months
ended September 30, 1998, versus $917,287 for the same period a year ago. The
Company's effective tax rate declined to 27.0% for the third quarter from 34.1%
last year. The relatively low effective tax rate resulted from favorable tax
treatment afforded income earned by the Company's subsidiary in Puerto Rico and
local tax abatements available to the Company's subsidiary in Puerto Rico.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1997.
Net Sales
Net sales for the first nine months of 1998 improved $469,611, or 0.7%, to
$66,299,611 compared with $65,830,000 for the same period in 1997. The increase
is attributable to increased sales of ROCKY(R) branded rugged outdoor and
handsewn casual footwear, and to a lesser extent, additional sales of
occupational footwear. Sales for the nine months ended September 30, 1997
included approximately $4 million of footwear uppers to a private label
customer, which were curtailed earlier this year. Sales for the year-to-date
period have been impacted by generally lower initial orders, postponements and
cancellations due to carryover of retail inventories from 1997, changes in
consumer confidence, and warm weather.
Gross Margin
Gross margin for the nine months ended September 30, 1998 decreased $916,989, or
5.0%, to $17,385,732 compared to $18,302,721 for the same period last year. As a
percentage of net sales, gross margin declined to 26.2% for the first nine
months of 1998 versus 27.8% in 1997. Gross margin has been primarily impacted by
lower than expected sales during the first nine months of 1998, which resulted
in lower production in the Company's manufacturing facilities during certain
periods in order to bring inventories in line with demand.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses rose $358,440, or 3.0% to
$12,170,762 for the first nine months of 1998 from $11,812,322 for the same
period last year. As a percentage of net sales, SG&A expenses increased to 18.4%
for the nine months ended September 30, 1998 from 17.9% in 1997. The higher
level of SG&A in 1998 is primarily due to increased sales expense, as well as
higher salaries and fringe benefits costs versus the same period last year.
Interest Expense
Interest expense for the first nine months of 1998 declined $862,838, or 43.2%,
to $1,133,439 from $1,996,277 for the same period a year ago. This decrease is
due to lower outstanding balances on the Company's revolving credit line
compared to borrowings at September 30, 1997, and generally lower interest rates
resulting from renegotiations of the Company's credit facilities earlier this
year. The Company utilized the net proceeds from a $26.9 million follow-on
offering in the fourth quarter of 1997 to pay down outstanding debt.
Income Taxes
Income taxes decreased $179,866, or 12.6% to $1,255,923 for the nine months
ended September 30, 1998 versus $1,435,789 a year ago. The Company's effective
tax rate was 27.0% for the first nine months of 1998 compared with 32.5% for the
same period in 1997. The relatively low effective tax rate is due to favorable
tax treatment afforded income earned by the Company's subsidiary in Puerto Rico.
LIQUIDITY AND CAPITAL RESOURCES
The Company has primarily funded its working capital requirements and capital
expenditures through borrowings under its revolving credit line and other
indebtedness, and in the fourth quarter of fiscal 1997, through issuance of an
additional 1,730,000 shares of common stock. Working capital is primarily used
to support changes in accounts receivable and inventory as a result of the
Company's seasonal business cycle and business expansion. These requirements are
generally lowest in the months of January through March of each year and highest
during the months of May through October of each year. In addition, the Company
requires financing to support additions to machinery, equipment and facilities
as well as the introduction of footwear styles.
At September 30, 1998, the Company had working capital of $70,892,297 versus
$55,987,571, at December 31, 1997. During the fourth quarter of 1997, the
Company received $26.9 million net proceeds from a follow-on common stock
offering and the exercise of the underwriters' over allotment option in
connection therewith. The proceeds were used to reduce outstanding debt and
increase working capital.
The Company renegotiated its revolving credit line during the second quarter of
1998, which has reduced its cost of borrowed funds. The revolving credit line
permits maximum borrowing of $25,000,000 for the period from January 28, through
and including May 15, of each year and of $42,000,000 from May 16, through and
including January 27, of the following year. The revolving credit line expires
May 31, 2003. Changes in the revolving credit line during the year reflect the
Company's seasonal requirements for
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working capital. As of September 30, 1998, the Company had borrowed $32,500,000
against its available line of credit.
Capital expenditures for 1998 are expected to be approximately $4,500,000 for
machinery and equipment to support increased production and for lasts, dies and
patterns for new footwear styles, and construction of a new distribution
facility. Initial construction of the new distribution facility began October
1998. The Company believes it will be able to finance such additions and meet
operating expenditure requirements in 1998 through available cash on hand,
additional long-term borrowing and operating cash flows.
YEAR 2000
Company's State of Readiness:
The year 2000 ("Y2K") issue refers to a condition in computer software where a
two-digit field rather than a four-digit field is used to distinguish a calendar
year. Unless corrected, date-sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in system failures
or miscalculations causing disruptions to various activities and operations.
Such uncorrected conditions could significantly interfere with the conduct of
the Company's business, could result in disruption of its operations and could
subject it to potentially significant legal liabilities.
The Company is in the process of developing a comprehensive plan to ensure that
all of its hardware and software will be Year 2000 compliant prior to the end of
1999. In addition, a questionnaire will be prepared for distribution to the
Company's vendors to obtain pertinent information and assurances that their
systems and products will be Year 2000 compliant. Finally, the Company has
internal non-information technology systems comprised primarily of building
security systems that need to be assessed for compliance. It is expected that
the assessment of the impact of the Company's vendors' systems and the Company's
non-information technology system and its hardware will be complete by June
1999. As part of its contingency plan, the Company will initiate testing of its
hardware and upgrade or replace mission critical equipment as necessary to
achieve compliance by June 1999. Currently, the Company is replacing its
manufacturing and financial application software that is critical to the orderly
conduct of the business. The software upgrade is scheduled to be completed
during the second quarter of 1999.
Costs to Address Year 2000 Issues:
The Company currently estimates that additional expenditures of approximately
$0.3 million, including hardware and software, will be made during 1998 and 1999
to upgrade and enhance the Company's systems. As of September 30, 1998 the
Company has incurred $2.1 million related to computer hardware and software
upgrades. The anticipated impact and costs of the project, as well as the date
on which the Company expects to complete the project, are based on management's
best estimates using information currently available and numerous assumptions
about future events. However, there can be no guarantee that these estimates
will be achieved and actual results could differ materially from those plans.
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<PAGE> 12
Risks of the Company's Year 2000 Issues:
Because the Company's Y2K compliance is dependent upon key third party vendors
also being Y2K compliant on a timely basis, there can be no guarantee that the
Company's efforts will prevent a material adverse impact on its results of
operations, financial conditions and cash flows. The possible consequences to
the Company not being fully Y2K compliant include temporary plant closings,
delays in the delivery of finished products, delays in the receipt of key
materials and supplies, invoice and collection errors, and financing issues,
including payroll. These consequences could have a material adverse impact on
the Company's results of operations, financial condition and cash flows if the
Company is unable to conduct its business in the ordinary course.
The Company's Contingency Plans:
The Company is reviewing and plans to test all mission critical systems and
major system components for Year 2000 compliance. It is anticipated that these
efforts will be completed prior to the end of 1999. The Company plans to
incorporate Year 2000 issues into its business contingency plans within this
same timeframe. A contingency plan will be developed to respond promptly in the
event of failure. Worst case scenarios are being evaluated in relation to the
Company's key business needs. Specific timetables and phases will be established
for these contingency plans. The Company cannot currently estimate the cost, if
any, associated with contingency planning efforts that may be necessary to
complete the Y2K efforts.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, 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 the intent, belief and expectations of the Company and
its management, including statements regarding the sufficiency of capital
resources and year 2000 compliance. Investors are cautioned that such statements
involve risks and uncertainties, including, but not limited to, changes in
consumer demand, seasonality, impact of weather, competition, reliance on
suppliers, changing retailing trend, reliance on foreign manufacturing, changes
in tax rates, limited protection of proprietary technology, the ability to
detect and correct year 2000 deficiencies, and other risks, uncertainties and
factors described in the Company's most recent Annual Report on Form 10-K and
other filings from time to time with the Securities and Exchange Commission.
There can be no assurance that the forward-looking statements included herein
will prove to be accurate, and the inclusion of such statements herein should
not be regarded as a representation by the Company, its management or any other
person that the objectives and plans of the Company will be achieved. All
forward looking statements made herein are based on information presently
available to the management of the Company. The Company undertakes no obligation
to publicly update or revise any forward-looking statements.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Securities Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K
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A. Exhibits
The exhibits to this report begin at page 16.
B. Reports on Form 8-K
Form 8-K, dated 8/31/98, announcing stock repurchase program
(item 5).
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<PAGE> 15
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 thereunto duly authorized.
ROCKY SHOES & BOOTS, INC.
Date: 11/13/98 By: /s/ DAVID FRAEDRICH
------------------- ------------------------------------------------
David Fraedrich, Executive Vice President,
Treasurer and Chief Financial Officer
(Duly Authorized Officer and Principal Financial
and Accounting Officer)
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ROCKY SHOES & BOOTS, INC.
AND SUBSIDIARIES
FORM 10-Q
EXHIBIT INDEX
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
10.1 Termination of Buy and Sell Agreement, dated August 18,
1998
27 Financial Data Schedule
16
<PAGE> 1
Exhibit 10.1
ROCKY SHOES & BOOTS, INC.
TERMINATION OF
BUY AND SELL AGREEMENT
THIS TERMINATION OF BUY AND SELL AGREEMENT is entered into as of this
18th day of August, 1998, among Rocky Shoes & Boots, Inc., an Ohio corporation
with its principal place of business at 39 East Canal Street, Nelsonville, Ohio
45764 (the "Company"), and Mike Brooks, Barbara Brooks Fuller, Patricia H.
Robey, Jay W. Brooks, and Charles Stuart Brooks.
RECITALS
A. The parties hereto entered into a Buy and Sell Agreement, dated December 21,
1992 (the "Agreement"), as amended on February 3, 1995, and June 30, 1996, which
sets forth the terms and conditions under which certain shares of the Company's
common stock, without par value (the "Common Stock"), may be sold, transferred,
disposed of, or redeemed.
B. The Company has been public for more than five years and several of the
individual shareholders subject to the Agreement have a need to make transfers
for estate planning or other purposes, and the Company and such shareholders
desire that the Agreement be terminated and all shares of common stock owned by
each such shareholder subject to the Agreement be released from the terms of the
Agreement.
AGREEMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, the Agreement is terminated.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
/s/ MIKE BROOKS /s/ BARBARA BROOKS FULLER
- ----------------------------- --------------------------------
Mike Brooks Barbara Brooks Fuller
/s/ PATRICIA H. ROBEY /s/ JAY W. BROOKS
- ----------------------------- --------------------------------
Patricia H. Robey Jay W. Brooks
/s/ Charles Stuart Brooks ROCKY SHOES & BOOTS, INC.
- -----------------------------
Charles Stuart Brooks
/s/ DAVID S. FRAEDRICH
--------------------------------
By: David S. Fraedrich
Executive Vice President
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<CIK> 0000895456
<NAME> ROCKY SHOES & BOOTS, INC.
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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