The company also backed its outlook for the year and saidrevenue at its ITC unit was likely

The company also backed its outlook for the year and saidrevenue at its ITC unit was likely to be flat to up in the lowsingle digits. Our working capital amounted to $34.9 million at January31, 2009 as compared to $33.6 million at August 2, 2008.We currently maintain three lines of credit with a bank totaling $7.75million, all of which was available at January 31, 2009. The rise in operating costs and expenses was related to greaterexpenditures for sales salaries and commissions, administrative salaries,travel expenses, professional fees, corporate allocated charges andemployeebenefit costs, which were partially offset by lower expenditures for marketingand promotion costs.As a result of the above, the operating profit for the first six months offiscal 2009 totaled $3.1 million as compared to $2.9 million for the first sixmonths of fiscal 2008.FINANCIAL CONDITION AND LIQUIDITYOur financial condition maintained its solid position at January 31, 2009.Cash and cash equivalents totaled $13.1 million as compared to $13.8 millionat August 2, 2008. This improvementin gross profit resulted primarily from the increase in net revenues as grossprofit as a percentage of net revenues remained steady at 35% for both fiscalsix-month periods.Operating costs and expenses increased to $6.0 million for the first sixmonths of fiscal 2009 as compared to $5.6 million for the first six months offiscal 2008. Gross profit climbed to $9.1 million for the first six months of fiscal 2009,up from $8.5 million for the first six months of fiscal 2008. Demand for both our John Deere boot productsand our fashion western wear products remained strong in spite of the dismalcondition of the world-wide economy. Thisdecrease in operating costs and expenses was the result of lower employeebenefit costs.As a result of the above, operating profit for the first six months of fiscal2009 amounted to $284,000 as compared to $1.8 million for the first six monthsof fiscal 2008.Western and Work Boot BusinessNet revenues for the western and work boot business for the first six monthsof fiscal 2009 totaled $25.8 million as compared to $23.9 million for thefirst six months of fiscal 2008.

Gross profit fell from $2.3 million for the first six months of fiscal 2008 to$607,000 for the first six months of fiscal 2009, primarily attributable tothe decrease in net revenues and to higher per unit costs associated withlower production levels.Operating costs and expenses for the first six months of fiscal 2009 totaled$323,000 as compared to $565,000 for the first six months of fiscal 2008. This decrease in net revenues resulted primarily fromreduced military combat boot requirements for the Government. The increase in operating costs and expenses was primarily the result ofhigher expenditures for sales and marketing costs, professional fees andcorporate overhead charges, which were partially offset by lower salescommission expenses.As a result of the above, the operating loss for the first six months offiscal 2009 amounted to $800,000 as compared to a $40,000 operating profit forthe first six months of fiscal 2008.Military Boot BusinessNet revenues for the military boot business for the first six months of fiscal2009 totaled $6.1 million as compared to $11.6 million for the first sixmonths of fiscal 2008. Operating costs and expenses were $1.7 million for the first six months offiscal 2009 as compared to $1.6 million for the first six months of fiscal2008.

Gross profit as apercentage of net revenues fell from 27% for the first six months of fiscal2008 to 19% for the same period of fiscal 2009. The decreasein gross profit was the result of reduced net revenues and an overall salesmix dominated by lower profit margin products and services. This decline was primarily attributable to the soft market forbar code related products and services.Gross profit for the first six months of fiscal 2009 amounted to $900,000 ascompared to $1.6 million for the first six months of fiscal 2008. Increased expenditures for sales relatedcompensation, administrative salaries, group health insurance, travel costs,and professional fees were partially offset by lower outlays for marketing andadvertising costs and employee benefit charges.As a result of the above, the consolidated operating profit amounted to $2.6million for the first six months of fiscal 2009 as compared to $4.9 millionfor the first six months of fiscal 2008.Bar Code BusinessNet revenues for the bar code business were $4.9 million for the first sixmonths of fiscal 2009 as compared to $6.1 million for the first six months offiscal 2008. Market demand for our branded work boot andchildren’s footwear products remained steady.Consolidated gross profit declined from $12.9 million for the first six monthsof fiscal 2008 to $10.7 million for the first six months of fiscal 2009 as aresult of declines in net revenues and profit margins.Gross profit as apercentage of net revenues fell from 31% for the first six months of fiscal2008 to 29% for the same period of fiscal 2009 as per unit overhead costsincreased as aresult of the decline in sales for the bar code and militaryboot businesses.Consolidated operating costs and expenses totaled approximately $8.1 millionfor the first six months of fiscal 2009 as compared to $8.0 million for thefirst six months of fiscal 2008.

This decline in net revenues resulted primarily from reducedrequirements by the Government for military combat boots and a weak market forbar code related products. However, we expect the third quarter of this fiscal year to beadversely affected by new material standards that became effective in February2009 related to children’s footwear products.Gross profit for the second quarter of fiscal 2009 amounted to $4.2 million ascompared to $4.1 million for the second quarter of fiscal 2008. We expect the demandfor military boots to be soft for the remainder of this fiscal year.Gross profit for the second quarter of fiscal 2009 amounted to $104,000 ascompared to $1.4 million for the second quarter of fiscal 2008. Operating costs and expenses amounted to $861,000 for the second quarter offiscal 2009 as compared to $728,000 for the second quarter of fiscal 2008. This decrease ingross profit resulted from lower net revenues and reduced profit margins aspurchased product sales and service business, which command lower profitmargins, made up a larger portion of the overall sales mix. Gross profit for the second quarter of fiscal 2009 totaled $386,000 ascompared to $619,000 for the second quarter of fiscal 2008. Increased sales compensationcosts, travel costs, professional fees, administrative wages and group healthinsurance expenditures were partially offset by reduced advertising andemployee benefit charges.As a result of the above, consolidated operating profit fell from $2.2 millionfor the second quarter of fiscal 2008 to $735,000 for the second quarter offiscal 2009.Bar Code BusinessNet revenues for the bar code business decreased from $2.6 million for thesecond quarter of fiscal 2008 to $2.0 million for the second quarter of fiscal2009 as a soft technology market lowered demand for our system sales andrelated hardware projects.

Consolidated gross profit fell from $6.2 million for the second quarter offiscal 2008 to $4.7 million for the second quarter of fiscal 2009, primarilyattributable to the decrease in net revenues.Consolidated operating costs and expenses totaled approximately $3.9 millionfor both second quarters of fiscal 2009 and 2008. S.Government requirements for military combat boots and to a soft market for ourbar code products and related services. SECOND QUARTER FISCAL 2009 COMPARED TO SECOND QUARTER FISCAL 2008Consolidated net revenues for the second quarter of fiscal 2009 totaled $16.6million as compared to $20.8 million for the second quarter of fiscal 2008.The decline in net revenues was primarily attributable to reduced U. Net earnings for the first six months of fiscal 2009 amounted to$1,667,000, or $.81 per diluted Class A common share as compared to netearnings of $3,291,000, or $1.43 per diluted Class A common share, for thefirst six months of fiscal 2008.