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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:
MARCH 31, 2003 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)
(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 by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
--- ---
4,051,430 common shares, no par value, outstanding at May 8, 2003
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
PAGE
PART I. FINANCIAL INFORMATION NUMBER
Item 1. Consolidated Financial Statements
Condensed Consolidated Balance Sheets
March 31, 2003 (Unaudited) and December 31, 2002 and March 31,
2002 (Unaudited) 3
Unaudited Condensed Consolidated Statements of Operations
for the Three Months Ended March 31, 2003 and 2002 4
Unaudited Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2003 and 2002 5
Notes to Interim Unaudited Condensed Consolidated Financial
Statements 6 - 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10 - 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Item 4. Controls and Procedures. 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
CERTIFICATIONS 16-17
2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2003 December 31, 2002 March 31, 2002
Unaudited Unaudited
-------------- ----------------- --------------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 2,391,867 $ 4,276,722 $ 1,117,729
Trade receivables - net 10,639,471 15,282,618 11,005,564
Other receivables 1,854,435 1,173,714 2,525,586
Inventories 28,342,873 23,181,989 29,713,341
Deferred income taxes 578,951 584,511 615,609
Prepaid expenses 1,748,220 1,267,097 1,539,910
------------ ------------ ------------
Total current assets 45,555,817 45,766,651 46,517,739
FIXED ASSETS - net 18,770,432 19,049,287 20,471,642
DEFERRED PENSION ASSET 1,651,222 1,651,222 2,169,021
DEFERRED INCOME TAXES 153,495 153,495 295,784
OTHER ASSETS 1,842,517 1,796,359 2,537,800
------------ ------------ ------------
TOTAL ASSETS $ 67,973,483 $ 68,417,014 $ 71,991,986
============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 4,881,731 $ 1,642,306 $ 3,629,340
Current maturities - long term debt 488,169 486,161 474,315
Accrued taxes - other 410,500 346,168 609,655
Accrued salaries and wages 712,192 807,611 704,559
Accrued plant closing costs 210,000 210,000 851,175
Accrued other 393,097 523,118 275,248
------------ ------------ ------------
Total current liabilities 7,095,689 4,015,364 6,544,292
LONG TERM DEBT-less current maturities 10,340,806 10,488,388 15,419,643
DEFERRED LIABILITIES 1,687,053 1,520,338 173,750
------------ ------------ ------------
TOTAL LIABILITIES 19,123,548 16,024,090 22,137,685
SHAREHOLDERS' EQUITY:
Common stock, no par value;
10,000,000 shares authorized; issued and outstanding March
31, 2003 - 4,051,430; December 31, 2002 - 4,489,065; March
31, 2002 - 4,498,965 32,368,617 35,289,038 35,340,315
Accumulated other comprehensive loss (2,311,749) (2,311,749) (831,161)
Retained earnings 18,793,067 19,415,635 15,345,147
------------ ------------ ------------
Total shareholders' equity 48,849,935 52,392,924 49,854,301
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 67,973,483 $ 68,417,014 $ 71,991,986
============ ============ ============
See notes to the interim unaudited condensed consolidated financial statements.
3
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
2003 2002
------------ ------------
NET SALES $ 13,754,941 $ 13,749,588
COST OF GOODS SOLD 10,289,413 11,408,935
------------ ------------
GROSS MARGIN 3,465,528 2,340,653
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 4,250,606 3,899,501
------------ ------------
LOSS FROM OPERATIONS (785,078) (1,558,848)
OTHER INCOME AND (EXPENSES):
Interest expense (196,180) (283,109)
Other - net 91,873 88,831
------------ ------------
Total other - net (104,307) (194,278)
LOSS BEFORE INCOME TAX BENEFIT (889,385) (1,753,126)
INCOME TAX BENEFIT (266,816) (525,938)
------------ ------------
NET LOSS $ (622,569) $ (1,227,188)
============ ============
NET LOSS PER SHARE
Basic $ (0.14) $ (0.27)
------------ ------------
Diluted $ (0.14) $ (0.27)
------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 4,363,115 4,493,823
============ ============
Diluted 4,363,115 4,493,823
============ ============
See notes to the interim unaudited condensed consolidated financial statements.
4
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (622,569) $ (1,227,188)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 896,882 1,033,333
Deferred liabilities and deferred income taxes 172,275 (1,445,704)
Loss (Gain) on sale of fixed assets 9,194 (7,802)
Change in assets and liabilities:
Receivables 3,962,426 3,785,448
Inventories (5,160,884) (1,999,677)
Prepaid expenses (481,123) (486,718)
Other assets (46,158) (408,363)
Accounts payable 3,184,305 2,041,008
Accrued and other liabilities (161,108) (917,879)
------------ ------------
Net cash provided by operating activities 1,753,240 366,458
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (574,056) (699,572)
Proceeds from sale of fixed assets 1,955 8,960
------------ ------------
Net cash used in investing activities (572,101) (690,612)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt 19,092,057 19,887,761
Payments on long term debt (19,237,631) (21,438,969)
Purchase of treasury stock (3,106,156)
Proceeds from exercise of stock options 185,736 38,156
------------ ------------
Net cash used in financing activities (3,065,994) (1,513,052)
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (1,884,855) (1,837,206)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,276,722 2,954,935
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 2,391,867 $ 1,117,729
============ ============
See notes to the interim unaudited condensed consolidated financial statements.
5
ROCKY SHOES & BOOTS, INC.
AND SUBSIDIARIES
NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. INTERIM FINANCIAL REPORTING
In the opinion of management, the accompanying interim 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 unaudited interim consolidated
financial statements are considered to be of a normal and recurring
nature. The results of the operations for the three month periods ended
March 31, 2003 and 2002 are not necessarily indicative of the results
to be expected for the whole year. Accordingly, these consolidated
financial statements should be read in conjunction with the
consolidated financial statements and notes thereto contained in the
Company's Annual Report to the Shareholders on Form 10-K for year ended
December 31, 2002.
Certain reclassifications have been made to the prior year amounts in
order to conform to the current year presentation.
The Company accounts for its stock option plans in accordance with APB
Opinion No. 25, under which no compensation cost has been recognized.
Had compensation cost for all stock option plans been determined
consistent with the SFAS No. 123, "Accounting for Stock Based
Compensation," the Company's net loss and loss per share would have
resulted in the amounts as reported below.
Three Months Ended March 31,
2003 2002
---- ----
Net loss as reported $(622,569) $ (1,227,188)
Deduct: Stock based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects
333,640 396,095
--------- -------------
Pro forma net loss $(956,209) $ (1,623,283)
========= =============
Earnings per share:
Basic and diluted - as reported $ (0.14) $ (0.27)
Basic and diluted - pro forma $ (0.22) $ (0.36)
The pro forma amounts are not representative of the effects on reported
net income for future years.
6
2. CLOSURE OF MANUFACTURING OPERATIONS
In September 2001, the Board of Directors approved a restructuring plan
to consolidate and realign the Company's footwear manufacturing
operations. Under this plan, the Company moved the footwear
manufacturing operations at its Nelsonville, Ohio factory to the
Company's factory in Puerto Rico. The restructuring plan was completed
in fourth quarter 2001.
The execution of this plan, which started in September 2001, resulted
in the elimination of 67 employees at the Company's Nelsonville, Ohio
facility, and a transfer of a significant amount of machinery and
equipment located at the Nelsonville facility to the Moca, Puerto Rico
facility.
There was no change in the December 31, 2002 accrued balance for plant
closing costs in the quarter ended March 31, 2003.
3. INVENTORIES
Inventories are comprised of the following:
March 31, 2003 December 31, 2002 March 31, 2002
-------------- ----------------- --------------
Raw materials $ 5,504,857 $ 3,535,884 $ 6,439,302
Work-in Process 1,314,838 436,435 1,981,243
Finished good 20,557,913 18,301,351 20,072,913
Factory outlet finished goods 1,137,265 1,080,319 1,380,883
Reserve for obsolescence or
lower of cost or market (172,000) (172,000) (161,000)
------------ ------------ ------------
Total $ 28,342,873 $ 23,181,989 $ 29,713,341
============ ============ ============
4. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and Federal, state and local income taxes was as
follows:
Three Months Ended
March 31,
2003 2002
-------- --------
Interest $217,902 $308,759
======== ========
Federal, state and local
income taxes $335,000 $ 25,000
======== ========
Accounts payable at March 31, 2003 and December 31, 2002 include a
total of $57,813 and $34,198, respectively, relating to the purchase of
fixed assets.
7
5. PER SHARE INFORMATION
Basic earnings/(loss) per share (EPS) is computed by dividing net loss
applicable to common shareholders by the basic weighted average number
of common shares outstanding during each period. The diluted earnings
per share computation includes common share equivalents, when dilutive.
There are no adjustments to net income necessary in the calculation of
basic and diluted earnings per share.
6. RECENTLY ISSUED ACCOUNTING STANDARDS
In November 2002, the Financial Accounting Standards Board ("FASB")
issued FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others" ("FIN 45"). FIN 45 requires a guarantor to
recognize a liability, at the inception of the guarantee, for the fair
value of obligations it has undertaken in issuing the guarantee and
also include more detailed disclosures with respect to guarantees. FIN
45 is effective for guarantees issued or modified starting January 1,
2003 and required the additional disclosures beginning with the
Company's fiscal year ended December 31, 2002. The provisions of FIN 45
have been adopted with no material impact on the Company's results of
operations or financial condition.
In November 2002, the Emerging Issues Task Force reached a consensus on
Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables"
("EITF 00-21"). EITF 00-21 provides guidance on how to determine
whether an arrangement involving multiple deliverables contains more
than one unit of accounting. EITF 00-21 will be effective for
arrangements entered into after June 30, 2003. The adoption of EITF No.
00-21 is not expected to have a material impact on the Company's
results of operations or financial condition.
In December 2002, the FASB issued SFAS No. 148 (see Footnote 1),
"Accounting for Stock-Based Compensation - Transition and Disclosure."
SFAS No. 148 provides alternative methods of transition for a voluntary
change to the fair-value-based method of accounting for stock-based
employee compensation and amends the disclosure requirements of SFAS
No. 123. The transition provisions of this Statement are effective for
fiscal years ending after December 15, 2002, and the disclosure
requirements of the Statement are effective for interim periods
beginning after December 15, 2002. The Company accounts for stock-based
employee compensation arrangements in accordance with the provision of
APB No. 25 and complies with the disclosure provisions of SFAS No. 123
and SFAS No. 148.
In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities ("FIN 46"), to expand upon
and strengthen existing accounting guidance that addresses when a
company should include in its financial statements the assets,
liabilities and activities of another entity. Until now, one company
generally has included another entity in its consolidated financial
statements only if it controlled the entity through voting interests.
FIN 46 changes that by requiring a variable interest entity, as
defined, to be consolidated by a company if that company is subject to
a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual
returns or both. FIN 46 also requires
8
disclosures about variable interest entities that the company is not
required to consolidate but in which it has a significant variable
interest. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003 and to older
entities in the first fiscal year or interim period beginning after
June 15, 2003. Certain of the disclosure requirements, none of which
appear to apply to the Company at this time, are effective in all
financial statements issued after January 31, 2003, regardless of when
the variable interest entity was established. The provisions of FIN 46
have been adopted and based upon a review of such provisions it has
been determined that there are no variable interest entities which
would require consolidation or disclosure at this time.
In April 2003, the FASB issued SFAS No. 149, "Amendments of Statement
133 on Derivative Instruments and Hedging Activities." This Statement
amends and clarifies financial accounting and reporting for derivative
instruments, and hedging activities for decisions made as part of the
Derivatives Implementation Group. This Statement is generally effective
for contracts entered into or modified after June 30, 2003. The Company
has not completed its evaluation of SFAS No. 149, but does not believe
it will have a significant impact on the financial statements
7. ACQUISITION
On April 15, 2003, the Company completed the purchase of certain assets
from Gates-Mills, Inc. ("Gates"). Under the terms of the Purchase
Agreement, Rocky acquired all of the intellectual property of Gates,
including ownership of the Gates (R) trademark, selected raw material
and finished goods inventory, and certain records in connection with
the Gates business in exchange for $3,510,070 plus a deferred purchase
price if sales by the Company related to the Gates product line from
the date of purchase through December 31, 2003 reach certain targets.
The Company intends to file both the financial statements and the
pro-forma financial information required by the Regulation S-X Article
3.05 and Article 11.01.
8. PURCHASE OF TREASURY SHARES
The Company is authorized to repurchase up to 500,000 shares of our
outstanding common shares. The purchases may occur on the open market
and/or in privately negotiated transactions as market conditions
warrant. During the three-month period ended March 31, 2003, the
Company repurchased 483,533 shares at an average price of $6.42. As of
March 31, 2003, the Company had purchased a total of 499,933 shares at
an average price of $6.38. No additional shares have been repurchased
since March 31, 2003.
9
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 Interim Unaudited Condensed Consolidated Financial
Statements, expressed as a percentage of net sales. The discussion that follows
the table should be read in conjunction with the Interim Unaudited Condensed
Consolidated Financial Statements of the Company.
PERCENTAGE OF NET SALES
Three Months Ended
March 31,
2003 2002
---- ----
Net Sales 100.0% 100.0%
Cost of Goods Sold 74.8% 83.0%
----- -----
Gross Margin 25.2% 17.0%
----- -----
Selling, General and
Administrative Expenses 30.9% 28.3%
----- -----
Loss from Operations (5.7%) (11.3%)
===== =====
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED
MARCH 31, 2002
Net Sales
Net Sales improved slightly to $13,754,941 for the quarter ended March 31, 2003
compared to $13,749,588 for the same period a year ago. Branded sales, led by an
increase of $2,765,000, or 47.9%, in occupational footwear sales, rose 38.5%.
Increases were realized in all branded product categories. There were no sales
to the U.S. military in the first quarter 2003 versus $3,821,000 for the same
period a year ago. The Company attributes the improved sales performance within
all branded product categories to more seasonal weather during the peak selling
season and to its expanded product offerings.
Gross Margin
Gross margin rose to $3,465,528, or 25.2% of net sales, for the first quarter of
2003 compared with $2,340,653, or 17.0% of net sales, for the same period last
year. The improved gross margin reflects no sales of military footwear in first
quarter 2003. These were produced at a lower gross margin than footwear in the
Company's other categories. Additionally, gross margin on branded products
improved 160 basis points as a result of higher margin sourced product sales,
which rose to 49.1% of net sales for the quarter from 30.0% last year.
10
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased $351,108, or
9.0%, to $4,250,606 for the first quarter 2003 compared to $3,899,501 for the
same period last year. As a percentage of net sales, SG&A increased to 30.9% of
net sales versus 28.4% a year ago principally due to increased commissions that
were a result of the higher level of branded sales, and to a lesser extent,
increased fringe benefits.
Interest Expense
Interest expense declined 30.7% for the first quarter 2003 to $196,180 in the
quarter ended March 31, 2003 compared to $283,109 the prior year. The decrease
in interest expense is a result of both lower outstanding balances and lower
rates under the Company's revolving line of credit. The Company's funded debt
decreased 31.9% to $10,828,975 at March 31, 2003 versus $15,893,958 a year ago.
Income Taxes
Income tax benefit for the three months ended March 31, 2003 decreased to
$266,816 compared to $525,938 for the same period a year ago. The Company's
effective tax benefit rate of 30.0% for the three months ended March 31, 2003
and 2002 reflects primarily the lower tax rates in Puerto Rico.
Liquidity and Capital Resources
The Company has principally funded working capital requirements and capital
expenditures through borrowings under its line of credit and other indebtedness.
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.
In addition, the Company requires financing to support additions to machinery,
equipment and facilities as well as the introduction of new styles of footwear.
At March 31, 2003, the Company had working capital of $38,460,128 versus
$41,751,287, at December 31, 2002.
The Company's line of credit provides for advances based on a percentage of
eligible accounts receivable and inventory with maximum borrowings under the
line of credit of $45,000,000. As of March 31, 2003, the Company had borrowed
$4,975,794 and $411,000 against its revolving line of credit and term loan
agreements, respectively. The amount available for borrowings under the credit
facility was $13,850,513 at March 31, 2003. The line of credit expires in
September 2005.
The Company generated cash from operations of $1,753,240 in first quarter 2003
compared to $366,458 for the same period of the prior year. The primary source
of the increase in cash generated from operations is due to collections of
accounts receivable and increased accounts payable, offset by the seasonal
increase in inventory levels to support booked and anticipated orders.
The principal use of cash flows in investing activities for the first quarters
of 2003 and 2002 was for investment in property, plant, and equipment, and
purchase of treasury stock for $3,106,156.
11
In the first quarter of 2003, property, plant, and equipment expenditures were
$574,056 versus $699,572 for the same period last year. The current year
expenditures primarily represent investments in injection molding equipment to
improve the capabilities of the Company's Puerto Rico subsidiary and investments
in molds used in the production of new products sourced in the far east.
Capital expenditures for 2003 are expected to be approximately $1.5 million. The
Company believes it will be able to finance such additions and meet operating
expenditure requirements in 2003 through available cash on hand, operating cash
flows and additional long-term borrowings.
Inflation
The Company cannot determine the precise effects of inflation; however,
inflation continues to have an influence on the cost of materials, salaries, and
employee benefits. The Company attempts to offset the effects of inflation
through increased selling prices, productivity improvements, and reduction of
costs.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no significant changes in critical accounting policies from
those disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
The foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations 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 intent, beliefs, expectations, projections,
forecasts, and plans of the Company and its management, and include any
statements regarding capital expenditures (paragraph 11). 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 trends, reliance on
foreign manufacturing, changes in tax rates, limited protection of proprietary
technology, 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. One or more of these factors
have affected, and in the future could affect the Company's business and
financial results and cause actual results to differ materially from plans and
projections. Although the Company and its management believe that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate. Therefore, there can be
no assurance that the forward-looking statements included herein will prove to
be accurate. In light of the significant uncertainties inherent in the
forward-looking statements contained herein, the inclusion of such information
should not be regarded as a representation by the Company, its management or any
other person that the Company's objectives and plans 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.
12
PART 1 - FINANCIAL INFORMATION
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes since December 31, 2002.
ITEM 4 - CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer along with our Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon this evaluation, our
Chief Executive Officer along with our Chief Financial Officer concluded that
our disclosure controls and procedures are effective in alerting them in a
timely manner to material information relating to us (including our consolidated
subsidiaries) required to be included in our periodic SEC reports. It should be
noted that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.
Since the date of our evaluation to the filing date of this Quarterly
Report on Form 10-Q, there have been no significant changes in our internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
13
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
99.1 Certification of CEO under Section 906 of the Sarbanes-Oxley
Act of 2002.
99.2 Certification of CFO under Section 906 of the Sarbanes-Oxley
Act of 2002.
(b) Reports on Form 8-K. None.
14
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: May 15, 2003 /s/ James E. McDonald
--------------------------------------------
James E. McDonald, Vice President and
Chief Financial Officer*
* In his capacity as Vice President and Chief Financial Officer, Mr.
McDonald is duly authorized to sign this report on behalf of the
Registrant.
15
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
I, Mike Brooks, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rocky Shoes &
Boots, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ Mike Brooks
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Mike Brooks
Chief Executive Officer
16
CERTIFICATION BY CHIEF FINANCIAL OFFICER
I, James E. McDonald, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Rocky Shoes &
Boots, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/ James E. McDonald
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James E. McDonald
Chief Financial Officer
17