Rocky Shoes & Boots has entered into a subcontract agreement with Belleville Shoe Manufacturing Company (“Belleville”) to produce 200,000 pairs of Infantry Combat Boots (“ICBs”) for $16.4 million. The ICBs will be delivered to the U.S. military under Belleville's prime contract with the U.S. Government.
Shipment of the ICBs is expected begin in June 2004 and continue at the rate of 20,000 pairs per 30 day period. All of the ICBs will be manufactured in the Company's factory in Puerto Rico.
This agreement also includes a provision permitting Belleville, at its sole option, to order up to an additional 675,000 pairs of ICBs to be produced by the Company following shipment of the 200,000 pairs of ICBs. The maximum delivery requirement for any such orders would be 20,000 pairs per 30 day period, and the maximum quantity of ICBs remaining to be delivered at any point in time under the agreement may not exceed 240,000 pairs. The price for any additional pairs to be manufactured by the Company beyond the initial 200,000 pairs would be adjusted for changes in the cost of leather.
Mike Brooks, Chairman, President and Chief Executive Officer, stated, “We are delighted to participate in this contract as a subcontractor to Belleville, a company with whom we have worked before, to produce high quality boots for the U.S. military. 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 remain committed to leveraging our brands through expanding lines of clothing and footwear.”
The Company plans to update earnings guidance for 2004 to include the accretive effect of this subcontract agreement when the first quarter 2004 financial results are announced, which is anticipated to be in late April.