Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Rocky Brands fourth quarter and fiscal 2011 yearend earnings conference call. At this time all participants are in listen-only mode. Following the presentation we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. (Operator Instructions) I would like to remind everyone that this conference call is being recorded. And will now turn the conference over to Brendon Frey of ICR.

Thanks. Before we begin, please note that today’s discussion including the Q&A period may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such statements are based on information and assumptions available at this time and are subject to change, risks and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of the risks and uncertainties, please refer to today’s press release and reports filed with the Securities and Exchange Commission, including Rocky’s Form 10-K for the year ended December 31, 2010. I’ll now turn the call over to Mr. David Sharp, President and Chief Executive Officer of Rocky Brands.

Thank you. Good afternoon and thanks for joining us. With me on the call today is Jim McDonald our Chief Financial Officer. We are very pleased with our fourth quarter performance. We ended the quarter on plan which given the mild weather throughout much of the country in December was an encouraging end to 2011. Sales trends were very similar to the first three quarters of the year mainly was driven by demand for our new product introductions in the work, hunting and western categories. We continued to experience increased sales velocity under our fast growing commercial military segment. To properly evaluate sales in our fourth quarter and full year we believe it is prudent to include our non-recurring operations namely our military segment this is the big business invested by the departments of defense and also excludes the Dickies license business, because that was discontinued at the end of 2010. To the point of reference, we reported military segment sales of $17 million in 2010 versus $2.2 million in 2011. Dickies sales were $7.6 million in 2010 moving on to just $200,000 in sales of Dickies in 2011. I should note that after dramatically improving our balance sheet and significantly reducing our expense structure we have more recently been able to free up resources and once again put more emphasis on growing our top line. While we have identified several long-term growth vehicles that I will discuss later in the call the initial phase of expansion centered on leveraging our core strength and product innovation to develop new and compelling footwear that feels of our brands for customers. So let’s focus on our own wholesale brands Georgia, Rocky and Durango and our retail division. During the long history, our brands have established leadership positions in the respected categories by…

Thanks David. As we announced last quarter and detailed in today’s earnings release we recorded a one-time non-operational charge of $3.7 million net of tax associated with the termination of our define benefit pension plan. To recap the define benefit pension plan was a predecessor to our current 401-K program and was frozen at the end of 2005. The assets in the pension plan have underperformed expectations over the past several years and the expense associated with this underperformance have been capitalized on our balance sheet. This expense would have been recognized over the next 10 years. Therefore we made the decision to terminate the plan instead of letting the gap between the asset value and the commitments continue to widen and in turn increase the ultimate expense to be recognized. By closing the plan, the company will save approximately $200,000 in annual maintenance fees. So following discussion excluding the impact of the pension charge for a reconciliation of our GAAP results please see the table that accompany today’s announcement. Now to our results, net sales for the fourth quarter were $64 million compared to $66.7 million for the corresponding period a year ago. Wholesale sales for the fourth quarter were $51.7 million compared to $52.5 million last year. We experienced significant growth in our commercial military business, which more than doubled versus the year ago, while at the same time our Durango brand posted a 9% growth in the quarter. This was offset by decline in our work categories due primarily to the discontinuation of our license agreement with Dickies at the end of 2010 and softness in our hunting category as a result of the mild weather late year. Retail sales for the fourth quarter were $11.9 million compared to $12.4 million a year ago and military sales…

Thanks Jim. We are pleased with the top and bottom line results generated by our core wholesale and retail segments and with our momentum that we start 2012. Building on the successful introductions from 2011 the product pipeline for this year particularly the second half is quite strong. We are confident we have the capabilities to increase our total market share through higher sales volumes in our existing lines of business and by extending our reach further into new categories, new distribution channels and new geographies. With regard to new categories, there are two main areas of focus the first being the healthcare industry, which is projected to add more than 5.6 million jobs over the next 10 years, leveraging our existing hospitality and duty product line technologies we’ve created new footwear and developed sales strategies to go after this large and growing market. Two initiatives we are particularly excited about are in new boots targeting E&G workers (Inaudible) blood-borne-pathogen protection and our new Rocky (Inaudible) for nurses and doctors who are on their feet for the majority of the shift. The second category expansion is in the outdoor space that involves going after the survivalist and adventurous segment with a similar product that has been very successful with hunters and military personnel. A lot of these we can volley as plain environment where the cold benefits we provide like light weight, durable, drainable, water proof really makes perfect sense for them. Next is new distribution channels, and this primarily involves Durango through product line extensions that contain a higher element of fashion we are opening up the brand to mainstream retailers in more metropolitan locations. We introduced our newest Western collection at the Fanny’s show in New York late last year and the response was very positive. So far…

Thank you. (Operator Instructions) our first question comes from the line of Mitch Kummetz from Robert W. Baird. Please proceed with your question. Mitch Kummetz – Robert W. Baird: Thank you and congratulations on the quarter. I’ve got probably a handful of questions here I will try to get through this quickly. But David let me start with you, you mentioned the commercial military business but it was up it was double versus last year on the quarter. Could you say where that business is now for the full year 2011 and what your plans are in terms of expected growth for 2012?

I think the numbers we just read were $20 million for the year and it’s about 8.2 in 2010 and obviously I think it’s going to be hard to replicate that kind of growth in 2012. However, we are launching three new extensions at the (Inaudible), which has driven a lot of these business jungle boot version and all leather aviator version for the U.S. air force and the steel soul version that the army has been asking for. And we are also right now the business really is contained in the U.S. Army and we are aggressively after the U.S. Navy and the National Guard units in ’12. Probably this business our largest customers the MCSS the Military Clothing Sales and Service stores that are on base around the world and we are about 25% of the unit sales that are now and about 18% of dollar sales. And obviously some stores do a lot better than others so we are really targeting those stores that we haven’t had great volume with and trying to improve sales that are also. So we are very optimistic that we continue to grow the business but not at the rate we grew. Mitch Kummetz – Robert W. Baird: Got it. And then on the international you highlighted that as one of the growth opportunities for the company you said $10.2 million in 2011. What do you think that business can do this year given some of the new markets that you are going in?

Well as I mentioned we recently signed two new distributors we are talking to three currently about signing up, you know I think this is great as we spent a lot of time in Europe and is a great deal of services in there right now. We are going to continue talking to folks there so that when things do turn around there finally you don’t have to start all over again. But we are focused right now on South America and Central America and have something cooking there. I think we, our plan is to grow that business 10% this year. Mitch Kummetz – Robert W. Baird: Okay. And then Jim on the cost side first of all could you say for 2011 what the gross margin impact was from input cost I’m assuming there were some drag or maybe not and then kind of what your thinking is on 2012 in terms of the input cost outlook to gross margin.

Well its 50 the drag came late in the year here as we when we really started to recognize the increased cost. Now we have taken a price increase that we think will offset that increase next year. So I would, I would say that in our gross margins all those flat where they were in 2011 by segment basis. Mitch Kummetz – Robert W. Baird: Okay, got it. And then also checking how are you guys thinking about budgeting SG&A in 2012 excluding maybe the variable piece on whatever sales growth you might be looking for.

I think that we are, we certainly have reached with the knee high business we take in most cost of all the big severance cost that we’ve had are behind us now and they are behind us getting it last year. So I think we are looking probably for flattish on the other SG&A because maybe even slightly up a little bit as we because we are investing in these new product line we have with marketing and sales things like that, which is what we need to do a little bit. Mitch Kummetz – Robert W. Baird: And then just quickly last question just housekeeping item. But can you tell me what the gross margins were the segment margins were on the quarter.

The wholesale was 33.8%, the retail was 47.8% and military was 14.3%. Mitch Kummetz – Robert W. Baird: Okay.

It was a very little sale there. Mitch Kummetz – Robert W. Baird: Right, okay. Great. Thanks and good luck.

Okay.

Thank you.

(Operator Instructions) our next question comes from the line of Sam Bergman from Bayberry Asset Management. Please proceed with your question. Sam Bergman – Bayberry Asset Management: Good afternoon gentlemen. Few question the new Durango line that’s being launched what retail stores are going to have that product is Macy’s one of them?

Well we are currently approaching Macy’s. I can tell you that today we were in New York City at a major departmental store chain and we had a very, very favorable meeting. And we think we will have a, we will be there in some measures. It’s just too early to speak about it. What we are looking for here is them as new channels of distribution and that Middle America main street is some, today we don’t penetrate at all. So we’ve been focused there and I think in the prepared streams we talked about we received commitments from four retailers, large retailers that you would know Fingerhut, Shoe Show two others hence that were.

Zaffels I believe.

Yeah, zaffels.com is one of them that’s about it. So and platform this week also and I can tell you that I spoke about 3:00 PM today I spoke with the sales folks today and they are very, very pleased with the outcome exceeded our expectations we both in new accounts and about half of the orders have been written to risk channel distribution that we today that we don’t sell. So there is a lot of upside there. Sam Bergman – Bayberry Asset Management: I think last quarter there was tremendous amount of inventory and the inventory came down this quarter. Was any of the inventory increase still related to the weather in the fourth quarter?

Good, well we ended pretty clean with respect to heavy insulated goods. It’s been our standard operating procedure over the last few years to not buy more than our orders for anything over 200 grand. So that kind played for us well we do have some apparels that they carry over into next year insulated underwear apparel we will be carrying out. But none of the – we don’t have any problem with inventories. Here I think that our we’ve worked with all of our key accounts and I think overall will be some shift from one account to another but it is all I think our business will be up a little bit in hunting with key accounts and now doing buying group shows, groups like NBS and sports sync and we are not seeing any softness that we couldn’t carry on so. Our inventory of footwear unit’s pair was actually down 96,000 pairs from December of last year so. Sam Bergman – Bayberry Asset Management: Okay, who is your nearest competitor when it comes to the medical shoe market?

Well, the people that we hope to give a good run for the money is Dansko. We think the we’ve done a little research here we’ve researched this category for the last 12 months we think it’s very underserved these considered very underserved particularly with respect to say with non-slip products that are on hard tile or fluids, we do that kind of products in our hospitality lines and as we think we can build multiple product line as our competitors also. We will be showing this product line to the trade in about another 60 days. Sam Bergman – Bayberry Asset Management: Is this a besides the lining surface there are any extensions to the line that you will be showing in the products or it’s a same simple line you had last year.

Well this is a totally new line. Sam Bergman – Bayberry Asset Management: So that’s the new line that you have with the non-slip technology on it.

That is built specifically for nurses and doctors yes. Sam Bergman – Bayberry Asset Management: Okay, and the last question in terms of picking up more coverage for the company, which way are you leading to at this time for 2012?

Can you be more specific with that question? Sam Bergman – Bayberry Asset Management: Well are you planning to do more IR shows versus last year? Are you meeting in more groups in sections like the ICR exchange or perhaps a rough meeting or a dealer meeting going forward?

We will do the Robert W. Baird Conference this year. We’ve been in contact with some other analysts about the potential of picking up coverage and hopefully they will in the future here. Sam Bergman – Bayberry Asset Management: Thank you very much again it’s a very nice quarter.

Thank you.

Our next question comes from the line of Mark Cooper from Pacific Ridge. Please proceed with your question. Mark Cooper – Pacific Ridge: Good afternoon. Thank you for the call. Could you elaborate a little more on the inventory adjustment for the year?

We had a, in our retail operations we had, when we took our physical inventory we had shrinkage in our inventory that we needed to that, we had to adjust out. That affected our gross margin by about 120 basis points in the quarter. Mark Cooper – Pacific Ridge: So, that was in the retail division?

It was yes. Mark Cooper – Pacific Ridge: So then if I heard your numbers correctly your gross margin in that division was 47.8.

Right. That was assets at inventory charge. Mark Cooper – Pacific Ridge: Assets at inventory charge. Okay and so then looking at the gross margin on the wholesale side there was no inventory charge to that decline I don’t know a little magnitude there was that.

It was down about 120 basis points both of that was brought here to the increases we’ve had in our cost of our products that took the price increase and if we are getting at October we will get full benefit for that. So that’s really most of that was related to. Mark Cooper – Pacific Ridge: Okay, and you could mention that – call I appreciate that. What was the cash flow from operations for the quarter?

I don’t have that number with me right now, I can let you know, but I don’t have that number with me right now. Mark Cooper – Pacific Ridge: Alright, okay. Thank you.

Okay.

(Operator Instructions) And there are no questions in the queue. I would like to hand it back over to you for closing comments.

Well, thank you we will continue to work hard over the next 90 days and speak with you again in April some time. Thank you.

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.