Rocky Shoes & Boots fourth quarter net sales increased 12.6% to a record $32.9 million compared to $29.2 million for the corresponding period a year ago. Net income rose 4.2% to a record $2.2 million versus net income of $2.1 million last year. Diluted earnings per share decreased to 43 cents versus 44 cents a year ago due to an increase in diluted shares outstanding in the fourth quarter of fiscal 2004 as compared to the fourth quarter of fiscal 2003.

For the full year ended December 31, 2004, net sales increased 24.6% to a record $132.2 million compared to net sales of $106.2 million for the year ended December 31, 2003. Net income rose 42.3% to $8.6 million versus net income of $6.0 million a year ago, and diluted earnings per share rose 31.8% to $1.74 versus $1.32 for the corresponding period last year.

Mike Brooks, Chairman and Chief Executive Officer of Rocky Shoes & Boots, stated: “We are very pleased with our record revenues and earnings for the fourth quarter, which represent a solid ending to a great year for our company. Throughout 2004 we made significant progress executing our strategic plan to further leverage our core competencies into additional footwear and non-footwear categories. Our success to date, evidenced by our growing occupational footwear business, is a testament to the strength of the Rocky brand. In addition, we have made meaningful strides with our apparel initiatives and continue to gain key market share and we are optimistic about our opportunities for this business going forward.”

The Company recently announced it has received an order from the U.S. Military to produce Infantry Combat Boots (ICBs) for approximately $21 million. Shipment of the ICBs is expected to begin in the second quarter of fiscal 2005 with an estimated completion date of December 2005. All of the ICBs will be manufactured in the Company’s factory in Moca, Puerto Rico.

Mr. Brooks commented, “This order represents a great opportunity for us to utilize our domestic manufacturing facilities in Puerto Rico and reflects our leadership position in the marketplace. We look forward to taking advantage of our operating platform to produce our high quality footwear for the U.S. Military.”

Net sales for the fourth quarter increased 12.6% to $32.9 million compared to $29.2 million a year ago. The fourth quarter results benefited from shipments of $5.7 million of boots produced for delivery to the U.S. military versus $0.4 million for the corresponding period last year.

Gross profit decreased to $9.3 million, or 28.2% of sales, from $9.5 million or 32.5% of sales, for the same period last year. The 430 basis point decrease in the fourth quarter of 2004 was primarily due to the $5.3 million of increased shipments to the U.S. military in fourth quarter 2004. Military boots are sold at lower gross margins than branded products.

Selling, general and administrative (SG&A) expenses were $6.6 million, or 20.1% of sales for the fourth quarter of 2004 compared to $6.5 million, or 22.1% of sales, a year ago. The decrease as a percentage of sales is primarily due to nominal expenses associated with military shipments.

Income from operations decreased 11.9% to $2.7 million or 8.2% of net sales for the period from $3.0 million or 10.4% of net sales in the prior year.

Net sales for the fiscal year ended December 31, 2004 increased 24.6% to $132.2 million compared to $106.2 million a year ago. This was primarily a result of an increase in branded sales of $9.0 million or 8.7% and shipments of $18.5 million of boots produced for delivery to the U.S. military versus $0.4 million for the corresponding period last year.

Gross profit increased to $38.7 million, or 29.2% of sales, from $32.8 million or 30.9% of sales, for the same period last year. The 170 basis point decrease in 2004 was primarily due to the $18.1 million of increased shipments to the U.S. military in 2004.

Selling, general and administrative (SG&A) expenses were $25.6 million, or 19.4% of sales for 2004 compared to $23.3 million, or 21.9% of sales, a year ago. The decrease as a percentage of sales is primarily due to nominal expenses associated with military shipments.

Income from operations improved 37.1% to $13.0 million or 9.8% of net sales for the full year 2004 versus $9.5 million or 9.0% of net sales in the prior year.

Mr. Brooks continued, “Fiscal 2004 was truly an historic year for our company highlighted by our announcement to acquire EJ Footwear. By combining forces with EJ we have more than doubled the size of our current business, diversified our operations, and significantly enhanced our prospects for growth. We are extremely excited about the many opportunities this acquisition has created and we look forward to leveraging each organization’s strengths in order to fully maximize the potential of all our brands.”

The Company’s funded debt at December 31, 2004 was $16.5 million versus $18.0 million at December 31, 2003. The year-over-year decrease in funded debt was principally due to reductions in inventory.

Inventory was $33.0 million at December 31, 2004 compared with $38.1 million on the same date a year ago. The decrease in inventory is primarily due to the implementation of improved inventory control systems.

The Company stated for fiscal 2005 it now expects to report net sales in the range of $300 to $305 million compared its previous guidance of $280 to $285 million and earnings per share in the range of $2.55 to $2.65, versus its previous guidance of $2.35 to $2.45.

Mr. Brooks concluded, “I am extremely proud of what we were able to accomplish this past year and would like to thank our entire organization for their hard work and dedication. We move ahead with a strong portfolio of leading brands, solid financials, and a management team focused on long-term growth and increased shareholder value.” 

              Rocky Shoes & Boots, Inc. and Subsidiaries
               Condensed Consolidated Income Statements

                       Three Months Ended          Year Ended
                          December 31,             December 31,
                       2004         2003        2004          2003
                       ----         ----        ----          ----
                     (Unaudited) (Unaudited) (Unaudited)

NET SALES           $32,879,994 $29,196,840 $132,248,963 $106,164,753

COST OF GOODS SOLD   23,605,969  19,701,519   93,583,637   73,383,128
                    ----------- ----------- ------------ ------------

GROSS MARGIN          9,274,025   9,495,321   38,665,326   32,781,625


SELLING, GENERAL AND
 ADMINISTRATIVE
 EXPENSES             6,593,376   6,454,566   25,640,907   23,278,449
                    -----------  ---------- ------------ ------------

INCOME FROM
 OPERATIONS           2,680,649   3,040,755   13,024,419    9,503,176


OTHER INCOME AND
 (EXPENSES):
   Interest expense    (379,538)   (431,272)  (1,335,100)  (1,378,131)
   Other - net          337,086     187,089      381,073      348,448
                    -----------  ---------- ------------ ------------
      Total other
       - net            (42,452)   (244,183)    (954,027)  (1,029,683)
                    -----------  ---------- ------------ ------------

INCOME BEFORE INCOME
 TAX                  2,638,197   2,796,572   12,070,392    8,473,493

INCOME TAX              451,437     698,174    3,476,000    2,434,250
                    -----------  ---------- ------------ ------------

NET INCOME           $2,186,760  $2,098,398   $8,594,392   $6,039,243
                    ===========  ========== ============ ============

NET INCOME PER SHARE
      Basic               $0.47       $0.50        $1.89        $1.44
      Diluted             $0.43       $0.44        $1.74        $1.32

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING
      Basic           4,635,958   4,221,998    4,557,283    4,189,794
                    ===========  ========== ============ ============
      Diluted         5,035,424   4,775,880    4,953,529    4,560,763
                    ===========  ========== ============ ============