Rocky Shoes & Boots, Inc. announced record financial results for the second quarter and six month period ended June 30, 2005. For the three months ended June 30, 2005, net sales increased 139% to a record $65.5 million compared to $27.4 million for the corresponding period a year ago. Net income rose to a record $2.8 million versus net income of $1.4 million and diluted earnings per share increased to 50 cents versus 29 cents last year.

For the first half, net sales increased 158% to a record $127.0 million compared to net sales of $49.3 million for the six months ended June 30, 2004. Net income rose to $3.9 million versus net income of $1.5 million a year ago, and diluted earnings per share increased to 70 cents versus 31 cents for the corresponding period last year.

On January 6, 2005, Rocky Shoe & Boots, Inc. completed the acquisition of EJ Footwear Group. The results for the three month and six month period ended June 30, 2005 represent the performance of the consolidated company, while the year ago results reflect Rocky Shoes & Boots on a stand-alone basis.

Mike Brooks, chairman and chief executive officer of Rocky Shoes & Boots, stated, “We are very pleased with our results for the quarter, which were primarily driven by a strong increase in sales and significant gross margin expansion. Our financial performance continues to benefit from the acquisition of EJ Footwear, evidenced by our record revenues and earnings during the first half of fiscal 2005. The combination of Rocky and EJ Footwear has created a powerful new operating platform and we are committed to capitalizing on our growing position in the market.”

Second Quarter Results

Net sales for the second quarter increased 139% to $65.5 million compared to $27.4 million a year ago. The second quarter results reflect the acquisition of EJ Footwear, which contributed $38.0 million in revenue during the three month period ended June 30, 2005.

Gross profit in the second quarter of 2005 increased to $25.7 million, or 39.3% of sales, from $7.8 million or 28.3% of sales, for the same period last year. The 1100 basis point increase was primarily due to sales of EJ Footwear product which carry a higher gross margin than Rocky products.

Selling, general and administrative (SG&A) expenses were $19.5 million, or 29.7% of sales for the second quarter of 2005 compared to $5.4 million, or 19.7% of sales, a year ago. The increase was primarily a result of higher SG&A associated with the EJ Footwear business.

Income from operations increased to $6.2 million or 9.5% of net sales for the period from $2.4 million or 8.7% of net sales in the prior year.

Six Month Results

Net sales for the six months ended June 30, 2005 increased 158% to $127 million compared to $49.3 million a year ago. This was primarily a result of the EJ Footwear acquisition, which contributed $77.9 million in revenue during the period.

Gross profit increased to $49.9 million, or 39.3% of sales, from $13.4 million or 27.2% of sales, for the same period last year. The 1210 basis point increase was primarily due to sales of EJ Footwear product which carry a higher gross margin than Rocky products.

Selling, general and administrative (SG&A) expenses were $40.1 million, or 31.6% of sales compared to $10.7 million, or 21.7% of sales, a year ago. The increase was primarily a result of higher SG&A associated with the EJ Footwear business.

Income from operations increased to $9.8 million or 7.7% of net sales versus $2.7 million or 5.4% of net sales in the prior year.

Funded Debt and Interest Expense

The company's funded debt at June 30, 2005 was $110.7 million versus $22.0 million at June 30, 2004. The year-over-year increase was principally due to borrowings under the credit facility to fund the purchase of EJ Footwear. Interest expense increased to $2.1 million for the second quarter fiscal 2005, versus $0.3 million for same period last year, primarily due to the increase in borrowings.

Inventory

Inventory increased to $85.4 million at June 30, 2005 compared with $38.6 million on the same date a year ago, primarily due to the acquisition of EJ Footwear.

Outlook

The company stated it remains comfortable with its previously issued guidance for fiscal 2005 of net sales in the range of $300 million to $305 million and earnings per share in the range of $2.55 to $2.65.

Mr. Brooks concluded, “As we head into the fall and winter selling seasons we believe we are well positioned to deliver continued success in the back half of the year. Our entire team has worked extremely hard integrating the Rocky and EJ organizations and we are very encouraged by our progress to date. Over the past 6-months we have successfully diversified our brands, product, and distribution to become a more balanced company, both operationally and financially, and move forward excited about the many long-term opportunities we have created.” 

              Rocky Shoes & Boots, Inc. and Subsidiaries
            Condensed Consolidated Statements of Operations
                              (Unaudited)

                     Three Months Ended          Six Months Ended
                           June 30,                  June 30,
                  ------------------------- --------------------------
                      2005         2004          2005         2004
                  ------------ ------------ ------------- ------------
NET SALES         $65,519,637  $27,433,987  $127,017,721  $49,316,076

COST OF GOODS SOLD 39,796,398   19,657,778    77,086,610   35,921,263
                  ------------ ------------ ------------- ------------

GROSS MARGIN       25,723,239    7,776,209    49,931,111   13,394,813

SELLING, GENERAL
 AND ADMINISTRATIVE
 EXPENSES          19,484,789    5,396,376    40,146,472   10,724,067
                  ------------ ------------ ------------- ------------

INCOME FROM
 OPERATIONS         6,238,450    2,379,833     9,784,639    2,670,746

OTHER INCOME AND
 (EXPENSES):
Interest expense   (2,115,578)    (274,868)   (3,994,170)    (533,441)
Other - net           126,889       24,182       117,644       98,388
                  ------------ ------------ ------------- ------------
Total other - net  (1,988,689)    (250,686)   (3,876,526)    (435,053)

INCOME BEFORE
 INCOME TAXES       4,249,761    2,129,147     5,908,113    2,235,693

INCOME TAX EXPENSE  1,444,864      681,325     2,008,759      715,420
                  ------------ ------------ ------------- ------------

NET INCOME         $2,804,897   $1,447,822    $3,899,354   $1,520,273
                  ============ ============ ============= ============

NET INCOME PER SHARE

Basic                   $0.53        $0.32         $0.75        $0.34
Diluted                 $0.50        $0.29         $0.70        $0.31