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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
file number: 000-23800
 LaCrosse Footwear, Inc.
 (Exact name of registrant as specified in its charter)
 Wisconsin
 39-1446816
 17634 NE Airport Way  Portland, Oregon
 97230
   Title of Class:
    
    Exchange on which securities are registered:Common Stock, $.01 par value
    
    NASDAQ Global Market
  o þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o

    Non-accelerated filer o (Do not check if a smaller reporting company)

    Smaller reporting company þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    8ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    15ITEM 2. PROPERTIES
    
    
    15ITEM 3. LEGAL PROCEEDINGS
    
    
    16ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    16PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
    
    
    16ITEM 6. SELECTED FINANCIAL DATA
    
    
    18ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    19ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    26ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    27ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    27ITEM 9A. CONTROLS AND PROCEDURES (Including Managements
Annual Report on Internal Control Over Financial
Reporting)
    
    
    27ITEM 9B. OTHER INFORMATION
    
    
    28PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT,
AND CORPORATE GOVERNANCE
    
    
    28ITEM 11. EXECUTIVE COMPENSATION
    
    
    29ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    29ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
    
    
    30ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    30PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    30SIGNATURES
    
    
    31EXHIBITS INDEX
    
    
    35CONSOLIDATED
FINANCIAL STATEMENTS
    
    F-1 to F-23EX-10.13EX-10.18EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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Forward Looking Statements
    
 PART I
 
 Item 1. Business
  General
 ® ®
 Company History
   -1-




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Corporate Strategy
  
    
    Build, position and capitalize on the strengths of established brands
    
    Develop innovative products and relevant technologies that will differentiate our
footwear and apparel
    
    Offer superior customer service; and
    
    Enhance and leverage our portfolio of distribution channels, focusing on domestic and
international retail and industrial customers, direct sales to U.S. government agencies and
the military, and direct consumers
 Brand Positioning
 ® ® ® ® ®
 ® ®
 Products
  Danner
 ®
 -2-




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LaCrosse
  Styles
  Product Design and Development
   Customers, Sales, and Distribution
  ® ®
   -3-




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®
 ® ® www.lacrossefootwearinc.com
 ® ®
  Advertising and Promotion
   
    
    Marketing development funds, which include advertising and local retail partner events,
are funds provided by the Company to help retail customers market and sell Danner and
LaCrosse products;
    
    Marketing material updates, website upgrades, point-of-purchase and related advertising;
and
    
    Visual merchandising, which focuses on all branded point-of-sale development and
production.
  -4-




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Manufacturing and Sourcing
 Manufacturing
Overview
  Sourcing Overview
  
    
    Work with suppliers to maintain our standards for high quality products and labor
practices;
    
    Locate and develop relationships with complementary sourcing alternatives; and
    
    Increase speed to market for new products.
    ® ® ®
 Competition
  -5-




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® ® ® ®
 ®
 Employees
  Trademarks and Trade Names; Patents
 ® ® ® ® ® ® ® ® ® ® ® ® ® TM ® ® ® TM ® TM ®
 ® ® TM
 Seasonality
   -6-




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Foreign Operations and Sales Outside of the United States
   Environmental Matters
   Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJoseph P. Schneider
    
    49
    
    President, Chief Executive Officer and DirectorDavid P. Carlson
    
    53
    
    Executive Vice President, Chief Financial Officer, and SecretaryAdrienne L. Moser
    
    47
    
    Senior Vice President of Product, Sales, and MarketingRoss M. Vonhoff
    
    43
    
    Senior Vice President OperationsRobert G. Rinehart, Jr.
    
    56
    
    Vice President of Product DevelopmentJ. Gary Rebello
    
    57
    
    Vice President of Human ResourcesC. Kirk Layton
    
    53
    
    Vice President of Finance, Corporate Controller and Assistant SecretaryKirk S. Nichols
    
    40
    
    Vice President of SalesCraig P. Cohen
    
    42
    
    Vice President International Sales
 Where You Can Find More Information
 www.sec.gov
 -7-




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www.lacrossefootwearinc.com
 
 Item 1A. Risk Factors
  The current slow-down of consumer spending is negatively impacting our domestic retailers, which
impacts their financial operations and their access to capital to fund growth, which increases and
concentrates our credit risk.
  For all of our distribution channels, including domestic retailers, a decline in consumer spending
due to unfavorable economic and consumer credit conditions could create an environment of
increasing price discounts which would negatively impact our product revenues, gross margins and
earnings.
  Sales to the U.S. Government, which are becoming an increasingly significant portion of our net
sales, may not continue at current levels, or we may not be able to fill these orders due to
facility constraints.
  -8-




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Changes in the price or availability of raw materials could disrupt our operations and adversely
affect our financial results, particularly our gross margins .
     We are experiencing consolidation in our raw materials supply base for outsoles and leather, which
presents overall risks in our supply base.
  Our business could be negatively affected by delays or disruptions in the transition to our new
distribution facility.
  Our newly established European subsidiary, LaCrosse Europe ApS, increases our exposure to risks
associated with foreign operations and the transition of customers to our new subsidiary may not be
successful.
  -9-




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Our profitability is significantly dependent upon future effective tax rates for federal, state and
international taxing jurisdictions.
  We conduct a significant portion of our manufacturing activities and a certain portion of our net
sales occurs outside the U.S., and therefore, we are subject to the risks of international
commerce. Also, any adverse political conditions or governmental actions, including the imposition
of duties and quotas, internally within China (where the majority of our third party manufacturers
are concentrated) or externally with the United States and Europe could disrupt our supply of
product to customers.
 ®
 
    
    delays associated with the manufacture, transportation and delivery of
foreign-sourced products;
    
    tariffs, import and export controls and other non-tariff barriers such as quotas and
local content rules;
    
    delays in the transportation and delivery of goods due to increased security
concerns;
    
    foreign currency fluctuations (particularly with respect to the Euro and Chinese
Renminbi), a risk which we do not currently seek to mitigate through hedging transactions;
    
    restrictions on the transfer of funds;
    
    changing economic conditions;
    
    restrictions, due to privacy laws, on the handling and transfer of consumer and other
personal information;
    
    changes in governmental policies and regulations;
    
    political unrest, terrorism or war, any of which can interrupt commerce;
    
    expropriation and nationalization;
    
    difficulties in managing foreign operations effectively and efficiently from the
U.S.;
    
    difficulties in understanding and complying with local laws, regulations and customs
in foreign jurisdictions;
    
    limited capital of foreign distributors and the possibility that such distributors
may terminate their operations or their relationships with us; and
    
    concentration of credit risk, currency, and political risks associated with
international distributors. International distributors represented 2% of our net sales in
2008.
  -10-




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Because we depend on third party manufacturers, we face challenges in maintaining a timely supply
of goods to meet sales demand, and we may experience delay or interruptions in our supply chain.
Any shortfall or delay in the supply of our products may decrease our sales and have an adverse
impact on our customer relationships.
    Our business is substantially affected by weather conditions, and sustained periods of warm and/or
dry weather can negatively impact our sales. Additionally, such weather conditions may negatively
impact our inventory levels and subsequent period sales.
  Failure to efficiently import foreign sourced products could result in decreased margins, cancelled
orders and unanticipated inventory accumulation.
  -11-




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If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have
greater difficulty filling our customers orders, either of which could adversely affect our
business.
   Labor disruptions or disruptions due to natural disasters or casualty losses at one of our
distribution facilities or our domestic manufacturing facility could have a material adverse effect
on our operations.
   Our financial success may be limited by the strength of our relationships with our retail customers
and by the success of such retail customers.
   -12-




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We face significant competition and if we are unable to compete effectively, sales of our products
may decline and our business could be harmed.
   
    
    significantly greater financial resources than we have;
    
    more comprehensive product lines than ours;
    
    broader market presence than we have in retail outlets, or have their own retail
outlets;
    
    greater distribution capabilities than we have;
    
    stronger brand recognition than we have; and
    
    substantially greater product advertising budgets than we do.
   We may be unable to meet changing consumer preferences and demands.
  Our failure or inability to protect our intellectual property could significantly harm our
competitive position and reduce future revenues.
  -13-




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We depend on a limited number of suppliers for key production materials, and any disruption in the
supply of such materials could interrupt product manufacturing and increase product costs.
 ® ®
 ® ®
 In order to be successful, we must retain and motivate key employees, and the failure to do so
could have an adverse impact on our business.
  If we fail to comply with the covenants contained in our revolving credit facility we may be unable
to maintain existing, or secure additional financing, and repayment obligations on our outstanding
indebtedness may be accelerated.
  Our articles of incorporation, bylaws and Wisconsin corporate law each contain provisions that
could delay, defer or prevent a change in control of our company or changes in our management.
  §
    
    classify our board of directors so that only some of our directors are elected each
year;§
    
    do not permit cumulative voting in the election of directors, which would otherwise
allow less than a majority of stockholders to elect director candidates; and§
    
    establish advance notice and other procedural requirements for submitting nominations
for election to the board of directors and for proposing matters that can be acted upon by
stockholders at a meeting
 -14-




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  PROPERTIESOwned or
    
    Approximate FloorLocation
    
    Leased
    
    Area in Square Feet
    
    Principal UsesPortland, OR
    
    Leased(1)
    
    
    145,000
    
    
    Principal sales,
marketing and
executive offices
and distribution
facilityPortland, OR
    
    Leased(2)
    
    
    36,000
    
    
    Manufacturing
operations and
retail outlet storeLa Crosse, WI
    
    Leased(3)
    
    
    185,000
    
    
    Distribution facilityLa Crosse, WI
    
    Leased(4)
    
    
    236,000
    
    
    Distribution facilityIndianapolis, IN
    
    Leased(5)
    
    
    380,000
    
    
    Distribution facilityZhongshan, China
    
    Leased (6)
    
    
    1,400
    
    
    Office spaceCopenhagen, Denmark
    
    Leased (7)
    
    
    3,600
    
    
    Office space
 
 (1)
    
    The lease term on the Single Tenant Industrial Lease is 120 months from August 1, 2006
and the Lease provides for potential term extensions of up to 60 months after the original
term.(2)
    
    The lease for this facility expires in May 2010.(3)
    
    The lease for this facility expires in May 2009.(4)
    
    The lease for this facility expires in April 2009.(5)
    
    In June 2008, we signed a Single Tenant Industrial Lease for 124 months beginning
March 1, 2009.(6)
    
    The lease for this facility expires November, 2009.(7)
    
    The lease for this facility expires November, 2010. -15-




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Price Range of Common Stock
  2008
    
    2007High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    18.98
    
    
    $
    14.05
    
    
    $
    16.48
    
    
    $
    12.72Second Quarter
    
    $
    16.71
    
    
    $
    13.00
    
    
    $
    18.99
    
    
    $
    15.06Third Quarter
    
    $
    17.63
    
    
    $
    14.50
    
    
    $
    22.99
    
    
    $
    16.26Fourth Quarter
    
    $
    17.00
    
    
    $
    9.47
    
    
    $
    18.83
    
    
    $
    16.78
  Dividends
     -16-




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Sales of Unregistered Securities
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Equity Compensation Plan Information
  Market Price of the Registrants Common Equity
  
 12/31/2003
    
    

12/31/2004
    
    

12/31/2005
    
    

12/31/2006
    
    

12/31/2007
    
    

12/31/2008LaCrosse Footwear, Inc.
    
    
    
    $100
    
    
    
    
    $137
    
    
    
    
    $138
    
    
    
    
    $169
    
    
    
    
    $225
    
    
    
    
    $175NASDAQ Global Market Index
    
    
    
    $100
    
    
    
    
    $108
    
    
    
    
    $111
    
    
    
    
    $122
    
    
    
    
    $134
    
    
    
    
    $79Hemscott Group Index
    
    
    
    $100
    
    
    
    
    $134
    
    
    
    
    $144
    
    
    
    
    $177
    
    
    
    
    $176
    
    
    
    
    $124
 -17-




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Item 6. Selected Financial Data
 Selected Income Statement Data
 Year Ended December 31
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004(in thousands, except per share data)Net sales
    
    $
    127,956
    
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378
    
    
    $
    105,470Operating income
    
    $
    10,120
    
    
    $
    10,983
    
    
    $
    8,834
    
    
    $
    8,609
    
    
    $
    7,640Net income
    
    $
    6,167
    
    
    $
    7,300
    
    
    $
    6,344
    
    
    $
    5,234
    
    
    $
    6,973Net income per common shareBasic
    
    $
    0.99
    
    
    $
    1.20
    
    
    $
    1.05
    
    
    $
    0.88
    
    
    $
    1.18Diluted
    
    $
    0.96
    
    
    $
    1.15
    
    
    $
    1.02
    
    
    $
    0.85
    
    
    $
    1.15Weighted average common shares
outstandingBasic
    
    
    6,215
    
    
    
    6,087
    
    
    
    6,022
    
    
    
    5,954
    
    
    
    5,891Diluted
    
    
    6,417
    
    
    
    6,357
    
    
    
    6,213
    
    
    
    6,166
    
    
    
    6,070
 Selected Balance Sheet Data
 Year Ended December 31
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004(in thousands)Cash and cash equivalents
    
    $
    13,683
    
    
    $
    15,385
    
    
    $
    12,702
    
    
    $
    6,113
    
    
    $
    7,149Inventories
    
    $
    28,618
    
    
    $
    27,131
    
    
    $
    22,038
    
    
    $
    24,865
    
    
    $
    16,962Total assets
    
    $
    84,565
    
    
    $
    83,547
    
    
    $
    73,533
    
    
    $
    64,583
    
    
    $
    57,788Long-term debt, including current
maturities
    
    
    
    
    
    $
    394
    
    
    $
    506
    
    
    
    
    
    
    
    Shareholders equity
    
    $
    61,412
    
    
    $
    65,985
    
    
    $
    57,344
    
    
    $
    50,477
    
    
    $
    45,151Dividends paid
    
    $
    9,322
    
    
    $
    914
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Dividends paid per common share
    
    $
    1.50
    
    
    $
    0.15
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00Inventory turns
    
    
    2.8
    
    
    
    2.9
    
    
    
    2.8
    
    
    
    3.0
    
    
    
    3.4Days sales outstanding
    
    
    57
    
    
    
    62
    
    
    
    56
    
    
    
    50
    
    
    
    49
 -18-




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
  ® ® ®
     -19-




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RESULTS OF OPERATIONS  FISCAL 2008 COMPARED TO FISCAL 2007
 Financial Summary  2008 versus 2007
  ($ in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeNet Sales
    
    $
    128.0
    
    
    $
    118.2
    
    
    $
    9.8
    
    
    
    8
    %Gross Profit
    
    $
    50.7
    
    
    $
    46.9
    
    
    $
    3.8
    
    
    
    8
    %Gross Margin %
    
    
    39.6
    %
    
    
    39.7
    %
    
    
    
    
    
    (10 bps)Selling and Administrative Expenses
    
    $
    40.5
    
    
    $
    35.9
    
    
    $
    4.6
    
    
    
    13
    %% of Net Sales
    
    
    31.7
    %
    
    
    30.4
    %
    
    
    
    
    
    130 bpsNon-Operating Income
    
    $
    0.0
    
    
    $
    0.3
    
    
    ($
    0.3
    )
    
    
    (108
    %)Income Before Income Taxes
    
    $
    10.1
    
    
    $
    11.3
    
    
    ($
    1.2
    )
    
    
    (10
    %)Income Tax Provision
    
    $
    3.9
    
    
    $
    4.0
    
    
    ($
    0.1
    )
    
    
    (1
    %)Net Income
    
    $
    6.2
    
    
    $
    7.3
    
    
    ($
    1.1
    )
    
    
    (15
    %)
 Consolidated Net Sales:
  Gross Profit:
 Selling and Administrative Expenses:
 Non-operating Income:
 Income Taxes:
 Net Income:
 -20-




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RESULTS OF OPERATIONS  FISCAL 2007 COMPARED TO FISCAL 2006
 Financial Summary  2007 versus 2006
  ($ in millions)
    
    2007
    
    2006
    
    $ Change
    
    % ChangeNet Sales
    
    $
    118.2
    
    
    $
    107.8
    
    
    $
    10.4
    
    
    
    10
    %Gross Profit
    
    $
    46.9
    
    
    $
    42.3
    
    
    $
    4.6
    
    
    
    11
    %Gross Margin %
    
    
    39.7
    %
    
    
    39.2
    %
    
    
    
    
    
    50 bpsSelling and Administrative Expenses
    
    $
    35.9
    
    
    $
    33.5
    
    
    $
    2.5
    
    
    
    7
    %% of Net Sales
    
    
    30.4
    %
    
    
    31.0
    %
    
    
    
    
    
    (60 bps)Non-Operating Income
    
    $
    0.3
    
    
    $
    0.1
    
    
    $
    0.2
    
    
    
    229
    %Income Before Income Taxes
    
    $
    11.3
    
    
    $
    8.9
    
    
    $
    2.3
    
    
    
    26
    %Income Tax Provision
    
    $
    4.0
    
    
    $
    2.6
    
    
    $
    1.4
    
    
    
    54
    %Net Income
    
    $
    7.3
    
    
    $
    6.3
    
    
    $
    1.0
    
    
    
    15
    %
 Consolidated Net Sales:
 Gross Profit:
 Selling and Administrative Expenses:
 Non-operating Income:
 Income Taxes:
 Net Income:
 -21-




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LIQUIDITY AND CAPITAL RESOURCES
        -22-




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OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
   (In Thousands)
    
    Payments due by periodContractual Obligations
    
    Total
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    ThereafterOperating leases (1)
    
    $
    20,223
    
    
    $
    2,227
    
    
    $
    2,305
    
    
    $
    2,106
    
    
    $
    2,129
    
    
    $
    2,151
    
    
    $
    9,305
  
 1)
    
    In June 2008, we signed a Single Tenant Industrial Lease to move from our La Crosse,
Wisconsin distribution operation to a newly constructed, 380,000 square foot building in
Indianapolis, Indiana. The monthly base rent on the lease is scheduled for 124 months
beginning March 1, 2009. Additionally, in December, 2008, we signed a lease agreement for
3,600 square feet of office space in Copenhagen, Denmark as our sales, marketing and
customer service headquarters for our European operations.  -23-




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(In Thousands)Other Commercial
    
    Maximum AmountCommitment
    
    Committed
    
    Outstanding at 12/31/08
    
    Date of ExpirationLine of credit
    
    $30,000
    
    $
    
    June 30, 2009
  CRITICAL ACCOUNTING ESTIMATES
  Allowances for Doubtful Accounts, Cash Discounts and Non-Defective Returns:
   Allowance for Slow-Moving Inventory:
 Product Warranty:
 -24-




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Valuation of Long-Lived and Intangible Assets:
   Pension and Other Postretirement Benefit Plans:
 Deferred Tax Asset Valuation Allowance:
  Stock-Based Compensation: Share-Based Payment
  -25-




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Recently Issued Accounting Pronouncements
 Business Combinations Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51
 Fair Value Measurements
 The Fair Value Option For Financial Assets and
Financial Liabilities
 Employers Disclosures about Postretirement
Benefit Plan Assets
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   -26-




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Item 8. Financial Statements and Supplementary Data
  
 Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  
 Item 9A. Controls and Procedures
 Evaluation of disclosure controls and procedures
 Changes in internal control
 -27-




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Managements Annual Report on Internal Control over Financial Reporting
   Internal Control  Integrated Framework
   
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers of the Registrant, and Corporate Governance
  -28-




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www.lacrossefootwearinc.com
 
 Item 11. Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
   Approximate number ofsecurities remainingavailable for futureissuance under equityNumber of securities to
    
    Weighted-average
    
    compensation plansbe issued upon exercise
    
    exercise price of
    
    (excluding securitiesof outstanding options,
    
    outstanding options,
    
    reflected in the firstPlan Category
    
    warrants and rights (1)
    
    warrants and rights
    
    column) (2)Equity compensation
plans approved by
security holders
    
    
    796,839
    
    
    $
    11.12
    
    
    
    396,000Equity compensation
plans not approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    796,839
    
    
    $
    11.12
    
    
    
    396,000
 
 (1)
    
    Represents options to purchase the Companys Common Stock granted under the
Companys 1993 Employee Stock Incentive Plan, 1997 Employee Stock Incentive Plan (the
1997 Plan), 2001 Stock Incentive Plan (the 2001 Plan), 2007 Long Term Incentive
Plan and 2001 Non-Employee Director Stock Option Plan, As Amended and Restated (the
Director Plan).(2)
    
    Includes 315,000 shares of the Companys Common Stock available for issuance under
the 2007 Long Term Incentive Plan and 81,000 shares of the Companys Common Stock
available for issuance under the Director Plan. -29-




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##### Table of Contents



Item 13. Certain Relationships, Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  
 PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Financial Statements1.
    
    The following financial statements are included in this Annual Report on Form 10-K beginning
on the pages indicated below:
 Report of Independent Registered Public Accounting Firm
    
    F-1Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    F-2Consolidated Statements of Income for the Years ended December 31,
2008, 2007, and 2006
    
    F-4Consolidated Statements of Shareholders Equity and Comprehensive
Income for the Years ended December 31, 2008, 2007, and 2006
    
    F-5Consolidated Statements of Cash Flows for the Years ended December 31,
2008, 2007, and 2006
    
    F-6Notes to Consolidated Financial Statements
    
    F-7
 2.
    
    Financial Statement ScheduleThe financial statement schedule for the years ended December 31, 2008, 2007 and 2006
is included in this Annual Report on Form 10-K and should be read in conjunction with
the Consolidated Financial Statements.
 Report of Independent Registered Public Accounting Firm on Financial
Statement Schedule
    
    32Schedule II Valuation and Qualifying Accounts
    
    33-34
 All other financial statement schedules are omitted since the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements and notes thereto.3.
    
    See the Exhibit Index for a description of exhibits filed with or incorporated by reference
in this report.
 -30-




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##### Table of Contents



SIGNATURES
 th
 LACROSSE FOOTWEAR, INC.By       /s/ Joseph P. SchneiderJoseph P. SchneiderPresident and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Joseph P. Schneider

Joseph P. Schneider
    
    President, Chief Executive
Officer and Director (Principal
Executive Officer)
    
    March 6, 2009/s/ David P. Carlson

David P. Carlson
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
    
    March 6, 2009/s/ Richard A. Rosenthal

Richard A. Rosenthal
    
    Chairman of the Board and Director
    
    March 6, 2009/s/ Stephen F. Loughlin

Stephen F. Loughlin
    
    Director
    
    March 6, 2009/s/ Luke E. Sims

Luke E. Sims
    
    Director
    
    March 6, 2009/s/ Charles W. Smith

Charles W. Smith
    
    Director
    
    March 6, 2009/s/ John D. Whitcombe

John D. Whitcombe
    
    Director
    
    March 6, 2009/s/ William H. Williams

William H. Williams
    
    Director
    
    March 6, 2009
 -31-




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE
 
   /s/ McGladrey & Pullen, LLP 
 -32-




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##### Table of Contents



AdditionsBalance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    
    Charged to Costs
    
    
    Charged To
    
    
    
    
    
    
    at Endof Year
    
    
    and Expenses
    
    
    Other Accounts
    
    
    Deductions
    
    
    of YearYear ended December 31, 2006Accounts receivable allowances:Allowance for discounts
    
    $
    344
    
    
    $
    2,137
    
    
    $
    
    
    
    $
    2,232
    
    
    $
    249Allowance for nondefective product
    
    
    78
    
    
    
    2,132
    
    
    
    
    
    
    
    2,109
    
    
    
    101Allowance for doubtful accounts
    
    
    353
    
    
    
    (63
    )
    
    
    
    
    
    
    34
    
    
    
    256Total
    
    $
    775
    
    
    $
    4,206
    
    
    $
    
    
    
    $
    4,375
    
    
    $
    606Allowance for slow-moving inventory
    
    $
    718
    
    
    $
    601
    
    
    $
    
    
    
    $
    829
    
    
    $
    490Deferred tax asset valuation allowance
    
    $
    1,091
    
    
    $
    
    
    
    $
    
    
    
    $
    63
    
    
    $
    1,028Allowance for warranties
    
    $
    762
    
    
    $
    1,837
    
    
    $
    
    
    
    $
    1,827
    
    
    $
    772Year ended December 31, 2007Accounts receivable allowances:Allowance for discounts
    
    $
    249
    
    
    $
    2,687
    
    
    $
    
    
    
    $
    2,633
    
    
    $
    303Allowance for nondefective product
    
    
    101
    
    
    
    2,752
    
    
    
    
    
    
    
    2,697
    
    
    
    156Allowance for doubtful accounts
    
    
    256
    
    
    
    (21
    )
    
    
    
    
    
    
    24
    
    
    
    211Total
    
    $
    606
    
    
    $
    5,418
    
    
    $
    
    
    
    $
    5,354
    
    
    $
    670Allowance for slow-moving inventory
    
    $
    490
    
    
    $
    978
    
    
    $
    
    
    
    $
    1,094
    
    
    $
    374Deferred tax asset valuation allowance
    
    $
    1,028
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,028Allowance for warranties
    
    $
    772
    
    
    $
    2,197
    
    
    $
    
    
    
    $
    2,028
    
    
    $
    941
 -33-




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##### Table of Contents



(In Thousands)AdditionsBalance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    
    Charged to Costs
    
    
    Charged To
    
    
    
    
    
    
    at Endof Year
    
    
    and Expenses
    
    
    Other Accounts
    
    
    Deductions
    
    
    of YearYear ended December 31, 2008Accounts receivable allowances:Allowance for discounts
    
    $
    303
    
    
    $
    3,129
    
    
    $
    
    
    
    $
    3,207
    
    
    $
    225Allowance for nondefective product
    
    
    156
    
    
    
    2,605
    
    
    
    
    
    
    
    2,626
    
    
    
    135Allowance for doubtful accounts
    
    
    211
    
    
    
    312
    
    
    
    
    
    
    
    74
    
    
    
    449Total
    
    $
    670
    
    
    $
    6,046
    
    
    $
    
    
    
    $
    5,907
    
    
    $
    809Allowance for slow-moving inventory
    
    $
    374
    
    
    $
    630
    
    
    $
    
    
    
    $
    555
    
    
    $
    449Deferred tax asset valuation allowance
    
    $
    1,028
    
    
    $
    42
    
    
    $
    
    
    
    $
    
    
    
    $
    1,070Allowance for warranties
    
    $
    941
    
    
    $
    2,832
    
    
    $
    
    
    
    $
    2,507
    
    
    $
    1,266
  -34-




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Description(3.1)
    
    Restated Articles of Incorporation of LaCrosse Footwear, Inc. (Incorporated by
reference to Exhibit (3.0) to LaCrosse Footwear, Inc.s Form S-1 Registration
Statement (Registration No. 33-75534))(3.2)
    
    Amended and Restated By-Laws of LaCrosse Footwear, Inc. (Incorporated by reference
to Exhibit (3.1) to LaCrosse Footwear, Inc.s Current Report on Form 8-K filed with
the Commission on November 3, 2005)(3.3)
    
    Amendment to Amended and Restated By-Laws of LaCrosse Footwear, Inc. (Incorporated
by reference to Exhibit (3.1) to LaCrosse Footwear, Inc.s Current Report on Form
8-K filed with the Commission on February 6, 2006)(10.1)*
    
    LaCrosse Footwear, Inc. Retirement Plan (Incorporated by reference to Exhibit
(10.18) to LaCrosse Footwear, Inc.s Form S-1 Registration Statement (Registration
No. 33-75534))(10.2)*
    
    LaCrosse Footwear, Inc. Employees Retirement Savings Plan (Incorporated by
reference to Exhibit (10.19) to LaCrosse Footwear, Inc.s Form S-1 Registration
Statement (Registration No. 33-75534))(10.3)*
    
    LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan (Incorporated by
reference to Exhibit (10.20) to LaCrosse Footwear, Inc.s Form S-1 Registration
Statement (Registration No. 33-75534))(10.4)*
    
    LaCrosse Footwear, Inc. 1997 Employee Stock Incentive Plan (Incorporated by
reference to Exhibit (10.17) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K
for the year ended December 31, 1996)(10.5)*
    
    LaCrosse Footwear, Inc. 2001 Stock Incentive Plan, as amended (Incorporated by
reference to Exhibit (10.1) of LaCrosse Footwear, Inc.s Current Report on Form 8-K
as filed with the Commission on May 9, 2005)(10.6)*
    
    Amended and Restated LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option
Plan, as amended (Incorporated by reference to Exhibit 4.1 of LaCrosse Footwear,
Inc.s Registration Statement on Form S-8 as filed with the Commission on May 3,
2007 (Registration No. 333-142598))(10.7)*
    
    LaCrosse Footwear, Inc. 2007 Long Term Incentive Plan (Incorporated by reference to
Exhibit 4.1 of LaCrosse Footwear, Inc.s Registration Statement on Form S-8 as filed
with the Commission on May 3, 2007 (Registration No. 333-142597))(10.8)*
    
    LaCrosse Footwear, Inc. 2009 Annual Incentive Compensation Plan Document
(Incorporated by reference to LaCrosse Footwear, Inc.s Current Report on Form 8-K
as filed with the Commission on December 23, 2008)(10.9)*
    
    Summary of 2009 Compensation of Executive Officers (Incorporated by reference to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
December 23, 2008))
 
 *
    
    A management contract or compensatory plan or
arrangement. -35-




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description(10.10)*
    
    Schedule of Fees for Non-Employee Directors (Incorporated by Reference to LaCrosse
Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on January
6, 2005)(10.11)
    
    Lease, dated as of March 14, 1994, between JEPCO Development Co. and LaCrosse
Footwear, Inc. (Incorporated by reference to Exhibit (10.22) to LaCrosse Footwear,
Inc.s Form S-1 Registration Statement (Registration No. 33-75534))(10.12)
    
    Amendment, dated as of March 17, 1998, to Lease between JEPCO Development Co., LLC
and LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit (10.17) to
LaCrosse Footwear, Inc.s Annual Report on Form 10-K for the year ended December 31,
1998)(10.13)
    
    Second Amendment, dated as of November 24, 2008 between JEPCO Development Co., LLC
and LaCrosse Footwear, Inc.(10.14)
    
    Single-Tenant Industrial Triple Net Lease, by and between LaCrosse Footwear, Inc.
and ProLogis, dated October 14, 2005 (Incorporated by reference to Exhibit (10.2) to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
October 20, 2005)(10.15)
    
    Single Tenant Industrial Triple Net Lease between LaCrosse Footwear, Inc. and 267
Associates, L.L.C. dated June 11, 2008 (Incorporated by reference to Exhibit (10.1)
to LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission
on June 13, 2008)(10.16)
    
    Certified Manufacturer Agreement, dated as of March 5, 2003, between W.L. Gore &
Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by
reference to Exhibit (10.14) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K filed with the Commission on March 7, 2008) [Confidential treatment has been
granted with respect to a portion of this Agreement](10.17)
    
    Trademark License, dated as of February 25, 2003, between W.L. Gore & Associates,
Inc. and LaCrosse Footwear, Inc.  (Incorporated by reference to
Exhibit (10.15) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K filed with the Commission on March 7, 2008) [Confidential treatment has been granted with
respect to a portion of this Agreement](10.18)
    
    Amendment to Contractual
Agreements, dated as of November 17, 2008, between W.L. Gore &
Associates, Inc. and LaCrosse Footwear, Inc. [Confidential
treatment has been requested with respect to a portion of this
Agreement](10.19)
    
    Amended and Restated Credit
Agreement, dated September 6, 2006, by and among LaCrosse Footwear,
Inc. as borrower, and Wells Fargo Bank, National Association, as
lender. (Incorporated by reference to Exhibit (4.1) to LaCrosse
Footwear, Inc.s Current Report on Form 8-K as filed with the
Commission on September 12, 2006)(10.20)
    
    Revolving Credit Note, dated as of
September 8, 2006, issued by LaCrosse Footwear, Inc.
in favor of Wells Fargo Bank, National Association (Incorporated by
reference to Exhibit 10.2 to LaCrosse
Footwear, Inc.s Current Report on Form 8-K as filed with the
Commission on September 12, 2006)(10.21)
    
    First Amendment To Credit Agreement
and Waiver, dated February 25, 2008, by and among LaCrosse Footwear, Inc.
as borrower, and Wells Fargo Bank, National Association, as lender. (Incorporated by
reference to Exhibit (10.1) to LaCrosse
Footwear Inc.s Form 8-K as filed with the
Commission on February 27, 2008)(10.22)
    
    Second Amendment to Credit Agreement
and Waiver, dated October 3, 2008, by and among LaCrosse Footwear, Inc.
as borrower, and Wells Fargo Bank, National Association, as lender (Incorporated by
reference to exhibit (10.1) to LaCrosse Footwear, Inc.s
Quarterly Report on Form 10-Q as filed with the
Commission on October 28, 2008)(21.1)
    
    List of subsidiaries of LaCrosse Footwear, Inc.(23.1)
    
    Consent of McGladrey & Pullen, LLP(31.1)
    
    Certification of the President & Chief Executive Officer pursuant to Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934(31.2)
    
    Certification of the Executive Vice President & Chief Financial Officer pursuant to
Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934(32.1)
    
    Certification of the President & Chief Executive Officer pursuant to 18 U.S.C. § 1350(32.2)
    
    Certification of the Executive Vice President & Chief Financial Officer pursuant to
18 U.S.C. § 1350
 -36-




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description(99.1)
    
    Proxy Statement for the 2009Annual Meeting of ShareholdersThe Proxy Statement for the 2009 Annual Meeting of Shareholders will be filed with
the Securities and Exchange Commission under Regulation 14A within 120 days after
the end of the Companys fiscal year. Except to the extent specifically
incorporated by reference, the Proxy Statement for the 2009 Annual Meeting of
Shareholders shall not be deemed to be filed with the Securities and Exchange
Commission as part of this Annual Report on Form 10-K.
 -37-




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##### Table of Contents



INDEX
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-1
 CONSOLIDATED FINANCIAL STATEMENTSConsolidated balance sheets
    
    F-2 and F-3Consolidated statements of income
    
    F-4Consolidated statements of shareholders equity and
comprehensive income
    
    F-5Consolidated statements of cash flows
    
    F-6Notes to consolidated financial statements
    
    F-7  F-23




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ McGLADREY & PULLEN, LLP 
 F - 1




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##### Table of Contents



LACROSSE
FOOTWEAR, INC. AND SUBSIDIARIES
 
 LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
(In thousands, except share and per share data)
 ASSETS
    
    2008
    
    
    2007CURRENT ASSETSCash and cash equivalents (Note 8)
    
    $
    13,683
    
    
    $
    15,385Trade accounts and other receivables, less allowances of
$809 in 2008 and $670 in 2007 (Note 8)
    
    
    22,449
    
    
    
    22,593Inventories (Notes 2 and 10)
    
    
    28,618
    
    
    
    27,131Prepaid expenses and other
    
    
    1,402
    
    
    
    1,068Deferred tax assets (Note 3)
    
    
    1,364
    
    
    
    1,201Total current assets
    
    
    67,516
    
    
    
    67,378PROPERTY AND EQUIPMENTLeasehold improvements
    
    
    2,415
    
    
    
    2,042Machinery and equipment
    
    
    15,490
    
    
    
    13,800Gross property and equipment
    
    
    17,905
    
    
    
    15,842Less accumulated depreciation
    
    
    11,768
    
    
    
    10,879Property and equipment, net
    
    
    6,137
    
    
    
    4,963OTHER ASSETSGoodwill
    
    
    10,753
    
    
    
    10,753Other assets
    
    
    159
    
    
    
    453Total other assets
    
    
    10,912
    
    
    
    11,206TOTAL ASSETS
    
    $
    84,565
    
    
    $
    83,547
 See accompanying notes to consolidated financial statements.
 F - 2




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##### Table of Contents



2008
    
    
    2007LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    10,478
    
    
    $
    7,456Accrued compensation
    
    
    3,151
    
    
    
    3,324Other accruals
    
    
    2,528
    
    
    
    1,982Total current liabilities
    
    
    16,157
    
    
    
    12,762LONG-TERM DEBT (Note 4)
    
    
    
    
    
    
    394DEFERRED REVENUE (Note 4)
    
    
    375
    
    
    
    131COMPENSATION AND BENEFITS (Note 7)
    
    
    5,844
    
    
    
    1,993DEFERRED TAX LIABILITIES (Note 3)
    
    
    777
    
    
    
    2,282Total liabilities
    
    
    23,153
    
    
    
    17,562COMMITMENTS AND CONTINGENCIES (Notes 5 and 8)SHAREHOLDERS EQUITY (Notes 6, 7, 13 and 15)Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 6,717,627 shares
    
    
    67
    
    
    
    67Additional paid-in capital
    
    
    28,247
    
    
    
    27,473Accumulated other comprehensive loss
    
    
    (4,029
    )
    
    
    (1,011
    )Retained earnings
    
    
    39,173
    
    
    
    42,328Less cost of 464,496 and 600,362 shares of treasury stock
    
    
    (2,046
    )
    
    
    (2,872
    )Total shareholders equity
    
    
    61,412
    
    
    
    65,985TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    84,565
    
    
    $
    83,547
 See accompanying notes to consolidated financial statements.
 F - 3




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2008, 2007, and 2006
(In thousands, except share and per share data)
 2008
    
    
    2007
    
    
    2006Net sales (Note 9)
    
    $
    127,956
    
    
    $
    118,179
    
    
    $
    107,798Cost of goods sold
    
    
    77,295
    
    
    
    71,273
    
    
    
    65,502Gross profit
    
    
    50,661
    
    
    
    46,906
    
    
    
    42,296Selling and administrative expenses
    
    
    40,541
    
    
    
    35,923
    
    
    
    33,462Operating income
    
    
    10,120
    
    
    
    10,983
    
    
    
    8,834Non-operating income (expense)
    
    
    (24
    )
    
    
    289
    
    
    
    88Income before income taxes
    
    
    10,096
    
    
    
    11,272
    
    
    
    8,922Income tax provision (Note 3)
    
    
    3,929
    
    
    
    3,972
    
    
    
    2,578Net income
    
    $
    6,167
    
    
    $
    7,300
    
    
    $
    6,344Net income per common share:Basic
    
    $
    0.99
    
    
    $
    1.20
    
    
    $
    1.05Diluted
    
    $
    0.96
    
    
    $
    1.15
    
    
    $
    1.02Weighted average number of
common shares outstanding:Basic
    
    
    6,215,049
    
    
    
    6,087,224
    
    
    
    6,022,349Diluted
    
    
    6,416,731
    
    
    
    6,357,235
    
    
    
    6,213,016
 See accompanying notes to consolidated financial statements.
 F - 4




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
AND COMPREHENSIVE INCOME
Years Ended December 31, 2008, 2007, and 2006
(In thousands)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    Treasury
    
    
    Shareholders
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    Stock
    
    
    Equity
    
    
    IncomeBalance, December 31, 2005
    
    $
    67
    
    
    $
    25,987
    
    
    $
    (1,306
    )
    
    $
    29,608
    
    
    $
    (3,879
    )
    
    $
    50,477Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,344
    
    
    
    
    
    
    
    6,344
    
    
    $
    6,344Minimum pension liability,
net of tax benefit of $317
    
    
    
    
    
    
    
    
    
    
    (255
    )
    
    
    
    
    
    
    
    
    
    
    (255
    )
    
    
    (255
    )Adoption of SFAS No. 158
    
    
    
    
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    
    
    
    
    (123
    )Stock based compensation
expense
    
    
    
    
    
    
    508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    508Exercise of stock options
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    430
    
    
    
    393Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,089Balance, December 31, 2006
    
    
    67
    
    
    
    26,458
    
    
    
    (1,684
    )
    
    
    35,952
    
    
    
    (3,449
    )
    
    
    57,344Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,300
    
    
    
    
    
    
    
    7,300
    
    
    
    7,300Adoption of FIN48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )Minimum pension liability net of tax
expense of $430
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    673Stock based compensation
expense
    
    
    
    
    
    
    549
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    549Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (914
    )
    
    
    
    
    
    
    (914
    )Exercise of stock options
    
    
    
    
    
    
    466
    
    
    
    
    
    
    
    
    
    
    
    577
    
    
    
    1,043Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,973Balance, December 31, 2007
    
    
    67
    
    
    
    27,473
    
    
    
    (1,011
    )
    
    
    42,328
    
    
    
    (2,872
    )
    
    
    65,985Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,167
    
    
    
    
    
    
    
    6,167
    
    
    
    6,167Minimum pension liability net of tax
benefit of $1,731
    
    
    
    
    
    
    
    
    
    
    (2,709
    )
    
    
    
    
    
    
    
    
    
    
    (2,709
    )
    
    
    (2,709
    )Stock based compensation
expense
    
    
    
    
    
    
    577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    577Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,322
    )
    
    
    
    
    
    
    (9,322
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )Exercise of stock options
    
    
    
    
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    921
    
    
    
    1,118Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    (309
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,149Balance, December 31, 2008
    
    $
    67
    
    
    $
    28,247
    
    
    $
    (4,029
    )
    
    $
    39,173
    
    
    $
    (2,046
    )
    
    $
    61,412
 See accompanying notes to consolidated financial statements.
 F - 5




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2008, 2007, and 2006
(In thousands)
 2008
    
    
    2007
    
    
    2006Cash Flows from Operating ActivitiesNet income
    
    $
    6,167
    
    
    $
    7,300
    
    
    $
    6,344Adjustments to reconcile net income to net cash
provided by operating activities, net of effects of acquisition
in 2008:Depreciation and amortization
    
    
    1,891
    
    
    
    1,761
    
    
    
    1,662Loss on disposal or impairment of property and equipment
    
    
    5
    
    
    
    97
    
    
    
    46Stock-based compensation expense
    
    
    577
    
    
    
    549
    
    
    
    508Deferred income taxes
    
    
    64
    
    
    
    586
    
    
    
    565Changes in current assets and liabilities:Trade accounts and other receivables
    
    
    144
    
    
    
    (2,681
    )
    
    
    (3,228
    )Inventories
    
    
    1,682
    
    
    
    (5,093
    )
    
    
    2,827Accounts payable
    
    
    3,022
    
    
    
    2,029
    
    
    
    25Accrued expenses and other
    
    
    (301
    )
    
    
    (488
    )
    
    
    974Net cash provided by operating activities
    
    
    13,251
    
    
    
    4,060
    
    
    
    9,723Cash Flows from Investing ActivitiesPurchases of property and equipment
    
    
    (3,176
    )
    
    
    (1,508
    )
    
    
    (4,089
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    2
    
    
    
    Acquisition payment (Note 10)
    
    
    (3,169
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (6,345
    )
    
    
    (1,506
    )
    
    
    (4,089
    )Cash Flows from Financing ActivitiesProceeds from issuance of long-term debt
    
    
    
    
    
    
    
    
    
    
    562Cash dividends paid
    
    
    (9,322
    )
    
    
    (914
    )
    
    
    Purchase of treasury stock
    
    
    (95
    )
    
    
    
    
    
    
    Proceeds from exercise of stock options
    
    
    1,118
    
    
    
    1,043
    
    
    
    393Net cash provided by (used in) financing activities
    
    
    (8,299
    )
    
    
    129
    
    
    
    955Effect of foreign currency exchange rate changes on cash and
cash equivalents
    
    
    (309
    )
    
    
    
    
    
    
    Increase (decrease) in cash and cash equivalents
    
    
    (1,702
    )
    
    
    2,683
    
    
    
    6,589Cash and cash equivalents:Beginning
    
    
    15,385
    
    
    
    12,702
    
    
    
    6,113Ending
    
    $
    13,683
    
    
    $
    15,385
    
    
    $
    12,702SUPPLEMENTAL INFORMATIONCash payments of:Income taxes
    
    $
    3,692
    
    
    $
    2,903
    
    
    $
    2,251Non-cash minimum pension liability adjustment, net of tax (Note 7)
    
    $
    (2,709
    )
    
    $
    673
    
    
    $
    (378
    )Non-cash deferred income tax expense (benefit) from
adjustment to pension liability (Note 7)
    
    $
    (1,731
    )
    
    $
    430
    
    
    $
    (317
    )
 See accompanying notes to consolidated financial statements.
 
 F - 6




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies
 Nature of business:
 LaCrosse Footwear, Inc. is a leading developer and marketer of branded, premium and innovative
footwear for expert work and outdoor users. The Companys Danner® and LaCrosse® brands are
distributed domestically through a nationwide network of specialty retailers and distributors,
and internationally through distributors and retailers in Asia, Europe and Canada.The Company markets its two brands through five channels of distribution: (1) retail, (2) safety
and industrial, (3) government, (4) direct, and (5) international.
 
    
    Within the retail channel, the LACROSSE® and DANNER® brands are
marketed through independent representative agencies and our in-house sales staff
directly to sporting goods and outdoor retailers, general merchandise and independent
shoe stores.
    
    The Companys safety and industrial channel focuses on end users who view their
footwear and apparel as critical tools for the job.
    
    The government channel provides performance footwear built to meet the demands and
specific requirements for multiple branches of the Armed Forces.
    
    Through the direct channels of distribution, the Company currently operates four
Internet websites for use by consumers and retailers. The Company also has a retail
outlet store at the factory in Portland, Oregon.
    
    International sales are primarily derived through independent distributors and dealer
networks in Japan and Canada as well as LaCrosse Europe ApS which was established to
strengthen the Companys direct sales and marketing support to customers in Europe.
 Summary of significant accounting policies:Principles of consolidation The consolidated financial statements include the accounts of
LaCrosse Footwear, Inc. and its wholly owned subsidiaries, Danner, Inc., LaCrosse International,
Inc., and LaCrosse Europe, Inc. (collectively the Company). LaCrosse Europe, Inc. and its
wholly-owned subsidiary, LaCrosse Europe ApS, were formed during the third quarter of 2008. All
material intercompany accounts and transactions have been eliminated in consolidation.Use of estimates in the preparation of financial statements The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying footnotes. Significant items subject to
estimates and assumptions include valuation allowances for trade accounts receivable,
inventories, and deferred tax assets, as well as pension obligations, product warranties,
stock-based compensation, and estimated future cash flows used together with the Companys market
capitalization in the annual impairment test of goodwill. Actual results could differ from those
estimates.Cash and cash equivalents The Company considers all highly liquid debt instruments purchased
with maturities of three months or less to be cash equivalents. The carrying amounts of such
assets are a reasonable estimate of their fair value due to the short term to maturity and
readily available market for the investments. The Company maintains its cash in money market
accounts and U.S. Government money
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies, Continued
 market accounts, which may, at times, exceed federally insured limits. The Company has not
experienced any losses in such accounts.Revenue recognition- Revenue is recognized when products are shipped, the customer takes title
and assumes risk of loss, collection of related receivables are probable, persuasive evidence of
an arrangement exists, and the sales price is fixed or determinable. Outlet store revenues are
recorded at the time of sale. Allowances for estimated returns and discounts are provided when
the related revenue is recorded. Amounts billed for shipping and handling costs are recorded as a
component of net sales, while the related costs paid to third-party shipping companies are
recorded as a cost of goods sold.Foreign currency translation and foreign currency transactions-The assets and liabilities of the
Companys foreign subsidiaries have been translated into U.S. dollars using the exchange rates in
effect at period end, and the net sales and expenses have been translated into U.S. dollars using
average exchange rates in effect during the period. The foreign currency translation adjustments
are included as a separate component of accumulated other comprehensive loss within shareholders
equity.Any gains or losses generated by foreign currency transactions are recorded in non-operating
income (expense) in the consolidated statement of income in the period in which they occur.Fair value of financial instruments- Pursuant to Statement of Financial Accounting Standards
(SFAS) No. 107, Disclosures About Fair Value of Financial Instruments, the Company estimated
the fair value of all financial instruments included on its consolidated balance sheets as of
December 31, 2008 and 2007. The Companys financial instruments, including cash and cash
equivalents, trade accounts receivable, accounts payable, and accrued compensation are estimated
to approximate their fair value due to their short maturities.Trade accounts receivable and allowance for doubtful accounts- Trade accounts receivable are
carried at original invoice amount less estimated allowances for doubtful accounts, cash
discounts and non-defective returns. The Company maintains an allowance for doubtful accounts for
the uncertainty of its customers ability to make required payments. In determining the amount
of the allowance, the Company considers historical levels of credit losses and makes judgments
about the creditworthiness of customers based upon ongoing credit evaluations. The Company
analyzes its cash discount programs and returns policies and ongoing rates of non-defective
returns to assess the adequacy of allowance levels and adjusts such allowances as necessary.Inventories -Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out (FIFO) method. Provision for potentially slow-moving or excess inventories
is made based on managements analysis of inventory levels, future sales forecasts, and current
estimated market values.Property and equipment- Property and equipment are carried at cost and are depreciated using
straight-line and accelerated methods over their estimated useful lives. Depreciable lives range
from five to ten years for leasehold improvements and from three to seven years for machinery and
equipment.Goodwill- Goodwill represents the excess of the purchase price over the fair value of the net
tangible and identified intangible assets of Danner, Inc. Goodwill is not amortized, but is
subject to impairment tests at least annually in accordance with SFAS No. 142, Goodwill and Other
Intangible Assets. The Company also reviews the carrying amount of goodwill for impairment if an
event occurs or circumstances change that would indicate the carrying amount may be impaired. An
impairment loss would generally be
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies, Continued
 recognized if the carrying amount of Danner, Inc.s net assets exceeds the estimated fair value
of its net assets, which is established based upon a projection of Danner, Inc.s profitability
which has been reconciled to the total market capitalization of the Company. Using these
procedures, the Company determined that the fair value of Danner, Inc.s net assets exceeded its
carrying value at December 31, 2008 and 2007, and therefore goodwill was not impaired.Recoverability and impairment of intangible assets and other long-lived assets Pursuant to SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews
long-lived assets and certain identifiable intangibles for impairment whenever events or changes
indicate the carrying value may be impaired. In these cases, the Company estimates the future
undiscounted net cash flows to be derived from the assets to determine whether a potential
impairment exists. If the carrying value exceeds the estimate of future undiscounted cash flows,
the Company then calculates the impairment as the excess of the carrying value of the asset over
the estimate of its fair value. The Company determined that its long-lived assets at December 31,
2008 and 2007 were not impaired.Product warranties- The Company provides a limited warranty for the replacement of defective
products sold for a specified time period after sale. The Company estimates the costs that may be
incurred under its limited warranty and records a liability in the amount of such costs at the
time product revenue is recognized. Factors that affect the Companys warranty liability include
the number of units sold, and historical and anticipated future rates of warranty claims. The
Company also utilizes historical trends and information received from its customers to assist in
determining the appropriate warranty accrual levels.Accruals for product warranties are included in other accruals in the accompanying consolidated
balance sheets. Changes in the carrying amount of accrued product warranty cost for the years
ended December 31, 2008 and 2007 are summarized as follows (in thousands):
 December 31,2008
    
    
    2007Accrued product warranties, beginning
    
    $
    941
    
    
    $
    772Accruals for products sold
    
    
    2,832
    
    
    
    2,197Costs incurred
    
    
    (2,507
    )
    
    
    (2,028
    )Accrued product warranties, ending
    
    $
    1,266
    
    
    $
    941
 Stock-based compensation The Companys consolidated financial statements reflect the impact of
SFAS No. 123(R), Share-Based Paymentwhich was adopted in 2006. Stock-based compensation expense
recognized under SFAS 123R was $0.6 million ($0.05 per diluted share) for 2008, $0.5 million
($0.06 per diluted share) for 2007 and $0.5 million ($0.05 per diluted share) for 2006. See Note
6, Stock Options for additional information.Income taxes- The provision for income taxes is based on earnings reported in the consolidated
financial statements. Deferred tax assets and liabilities are determined by applying anticipated
future tax rates to the cumulative temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies, Continued
 changes in tax laws and rates on the date of enactment. See Note 3, Income Tax Matters for
additional
information.Research and development costs -Expenditures relating to the development of new products and
processes are expensed as incurred. These costs include expenditures for compensation, materials,
facilities, and other costs.Advertising and promotion- The Company advertises and promotes its products through national and
regional media, displays, and catalogs and through cooperative advertising programs with
retailers. Costs for these advertising and promotional programs are charged to expense as
incurred. Advertising and promotional expenses included in the consolidated statements of income
for the years ended December 31, 2008, 2007, and 2006 were $2.4 million, $2.9 million, and $2.4
million, respectively.Net income per common share Pursuant to SFAS No. 128, Earnings per Share, and SFAS 123R, the
Company presents its net income on a per share basis for both basic and diluted common shares.
Basic earnings per common share excludes all dilutive stock options and is computed using the
weighted average number of common shares outstanding during the period. The diluted earnings per
common share calculation assumes that all stock options were exercised and converted into common
stock at the beginning of the period, unless their effect would be anti-dilutive.A reconciliation of the shares used in the basic and diluted earnings per common share is as
follows:
 December 31,2008
    
    
    2007
    
    
    2006Basic weighted average common shares outstanding
    
    
    6,215,049
    
    
    
    6,087,224
    
    
    
    6,022,349Dilutive securities: stock options
    
    
    201,682
    
    
    
    270,011
    
    
    
    190,667Diluted weighted average common shares
outstanding
    
    
    6,416,731
    
    
    
    6,357,235
    
    
    
    6,213,016
 Note 2. Inventories
 A summary of inventories is as follows (in thousands):
 December 31,2008
    
    
    2007Raw materials
    
    $
    3,590
    
    
    $
    1,691Work in process
    
    
    316
    
    
    
    183Finished goods
    
    
    25,161
    
    
    
    25,631Subtotal
    
    
    29,067
    
    
    
    27,505Less: provision for obsolete and slow-moving
inventories
    
    
    (449
    )
    
    
    (374
    )Total
    
    $
    28,618
    
    
    $
    27,131
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters
 As of December 31, 2008 and 2007, the Company recorded a valuation allowance of $1.1 million and
$1.0 million, respectively, related to the state of Wisconsin net operating loss (NOL)
carryforwards of which the realization of such carryforwards is dependent on the Company having
taxable income in Wisconsin in future periods. Given the Companys planned relocation of its
Midwest distribution centers out of Wisconsin in 2009 (See Note 11, Exit Costs for Distribution
Centers), the net deferred tax asset, after such valuation allowances, of $0.02 million and $0.1
million at December 31, 2008 and 2007 respectively, represents the portion of the Wisconsin NOLs
which management believes is more likely than not to be realized. The total state NOLs as of
December 31, 2008 are approximately $21.8 million, which will expire as follows: $2.7 million in
2015, $5.3 million in 2016, $9.2 million in 2017, $2.5 million in 2018, $1.6 million in 2019, and
$.5 million in 2020.The Company also has recorded a deferred tax asset associated with its European subsidiary
losses. The total foreign NOLs as of December 31, 2008 are $1.4 million and have an indefinite
carryforward. No valuation allowance has been provided as management believes realization of
such carryforward is more likely than not.Income before income taxes consist of the following (in thousands):
 Years Ending December 31,2008
    
    
    2007
    
    
    2006United States
    
    $
    11,536
    
    
    $
    11,272
    
    
    $
    8,922Foreign
    
    
    (1,440
    )
    
    
    
    
    
    
    $
    10,096
    
    
    $
    11,272
    
    
    $
    8,922
 Net deferred tax assets and liabilities consist of the following components (in thousands):
 December 31,2008
    
    
    2007Deferred tax assets:Trade receivable allowances
    
    $
    242
    
    
    $
    201Inventory allowances
    
    
    641
    
    
    
    677Compensation and benefits
    
    
    2,897
    
    
    
    1,180Warranty reserves and other
    
    
    782
    
    
    
    725Net operating loss carryforwards
    
    
    1,388
    
    
    
    1,140Valuation allowance
    
    
    (1,070
    )
    
    
    (1,028
    )Total deferred tax assets
    
    
    4,880
    
    
    
    2,895Deferred tax liabilities:Goodwill amortization
    
    
    4,131
    
    
    
    3,754Property and equipment
    
    
    131
    
    
    
    42Prepaid expenses and other
    
    
    31
    
    
    
    180Total deferred tax liabilities
    
    
    4,293
    
    
    
    3,976Net deferred tax assets (liabilities)
    
    $
    587
    
    
    $
    (1,081
    )
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
 The components giving rise to the net deferred tax assets (liabilities) described above have been
included in the accompanying consolidated balance sheets as follows (in thousands):
 December 31,2008
    
    
    2007Current assets
    
    $
    1,364
    
    
    $
    1,201Noncurrent liabilities
    
    
    (777
    )
    
    
    (2,282
    )Net deferred tax assets (liabilities)
    
    $
    587
    
    
    $
    (1,081
    )
 The components of the provision for income taxes are as follows (in thousands):
 December 31,2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    3,542
    
    
    $
    3,071
    
    
    $
    1,898State
    
    
    323
    
    
    
    315
    
    
    
    115DeferredFederal
    
    
    379
    
    
    
    526
    
    
    
    507State
    
    
    43
    
    
    
    60
    
    
    
    58Foreign
    
    
    (358
    )
    
    
    
    
    
    
    Provision for income
taxes
    
    $
    3,929
    
    
    $
    3,972
    
    
    $
    2,578
 The differences between statutory federal tax rates and the effective tax rates reflected in the
consolidated statements of income are as follows:
 December 31,2008
    
    2007
    
    2006Statutory federal tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State rate, net of federal tax effect
    
    
    3.2
    %
    
    
    3.2
    %
    
    
    3.1
    %Valuation allowance
    
    
    0.4
    %
    
    
    0.0
    %
    
    
    (0.7
    %)Federal
& state research and experimentation credits
    
    
    (1.9
    %)
    
    
    (1.7
    %)
    
    
    (7.7
    %)Foreign rate differential
    
    
    1.8
    %
    
    
    0.0
    %
    
    
    0.0
    %Other, net
    
    
    1.4
    %
    
    
    (0.3
    %)
    
    
    0.2
    %Effective income tax rate
    
    
    38.9
    %
    
    
    35.2
    %
    
    
    28.9
    %
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
 A reconciliation of the beginning and ending liability for unrecognized income tax benefits for
2008 and 2007 is shown below (in thousands):
 December 31,2008
    
    2007Balance, beginning of year
    
    $
    215
    
    
    $
    163Additions for tax positions of prior years
    
    
    87
    
    
    
    9Additions based on tax positions related to the current year
    
    
    47
    
    
    
    43Balance, end of year
    
    $
    349
    
    
    $
    215
 As of December 31, 2008, the Companys $0.3 million of net uncertain tax benefit positions would
reduce the Companys effective income tax rate if recognized.The Companys policy is to accrue interest related to potential underpayment of income taxes
within the provision for income taxes. The liability for accrued interest as of December 31,
2008 and December 31, 2007 was $0.05 million and $0.03 million, respectively. Interest is
computed on the difference between the Companys uncertain tax benefit positions under the
provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes  an
Interpretation of FASB Statement 109 (FIN 48) and the amount deducted or expected to be
deducted in the Companys tax returns.The Company files a consolidated U.S. federal income tax return as well as foreign and state tax
returns on a consolidated, combined, or stand-alone basis (depending upon the jurisdiction). The
Company is no longer subject to U.S. federal income tax examinations by tax authorities for years
prior to the tax year ended December 2004. Depending on the jurisdiction, the Company is no
longer subject to state examinations by tax authorities for years prior to the December 2003 and
2004 tax years. The Company is not subject to foreign tax examinations prior to the year ended
December 2008. The Company is currently undergoing a routine U.S. federal tax examination. It
is reasonably possible that the amounts of unrecognized tax benefits could change in the next 12
months as a result of the examination; however, the Company cannot reasonably estimate the
ultimate outcome of such examination.
 Note 4. Financing Arrangements
 In September 2006, the Company entered into an amended and restated line of credit agreement
which is effective through June 30, 2009. It provides for an interest rate at the Companys
option of the prime rate minus 0.50%, or LIBOR plus 1.50%. The maximum aggregate principal amount
of borrowings allowed from January 1 to May 31 is $17.5 million, and from June 1 to December 31
is $30 million. Amounts borrowed under the agreement are secured by substantially all of the
Companys assets and there are no borrowing base limitations. The agreement contains certain
restrictive covenants, which among other things, require the Company to meet certain tangible net
worth and earnings requirements as well as limitations on dividend payments. At December 31, 2008
and 2007, the Company had no outstanding balances due under this financing agreement.In June 2006, the Company received a grant of $0.2 million and a non-interest bearing loan of
$0.6 million from the Portland Development Commission, which were used to finance certain
leasehold improvements
 F - 13




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Financing Arrangements, Continued
 at the Companys Portland distribution facility. The grant is recorded as deferred revenue and is
being
amortized as a reduction of operating expenses on a straight-line basis over five years, which is
the estimated useful life of the associated leasehold improvements. In the third quarter of
2008, the loan was forgiven by the Portland Development Commission as the Company met certain
facility usage requirements and employment criteria, including maintaining a minimum number of
employees in the city of Portland, Oregon and paying those employees a competitive specified wage
and benefits package. Given the forgiveness of this loan, the Company has reclassified the
remaining unamortized long-term debt to deferred revenue and will continue to amortize the
balance until 2011. Deferred revenue was $0.4 million and $0.1 million at December 31, 2008 and
2007, respectively. The loan balance was $0.4 million at December 31, 2007.
 Note 5. Lease Commitments and Contingencies
 Lease Commitments The Company has real estate operating leases for office space, retail stores,
and manufacturing and distribution space under non-cancelable lease agreements expiring on
various dates through 2019. The total rental expense included in the consolidated statements of
income for the years ended December 31, 2008, 2007, and 2006 is $2.2 million, $2.1 million, and
$1.8 million, respectively. The future minimum lease payments required under non-cancelable
operating leases at December 31, 2008 are: $2.2 million in 2009, $2.3 million in 2010, $2.1
million in 2011, $2.1 million in 2012, $2.2 million in 2013 and $9.3 million thereafter.Contingencies In the normal course of business, the Company is subject to claims and
litigation. Management believes that such matters will not have a material adverse effect on the
Companys results of operations, liquidity or financial condition.
 Note 6. Stock Options
 The Company has outstanding stock options under certain employee stock option plans. Outstanding
employee stock options are subject to the provisions of the 1993 Employee Stock Incentive Plan,
1997 Employee Stock Incentive Plan, 2001 Stock Incentive Plan, 2007 Long Term Incentive Plan.
The Board of Directors stock options are subject to the provisions of the 2001 Non-Employee
Director Stock Option Plan, as Amended and Restated. Prior to 2006, employee stock options
vested over a period of five years and had a maximum term of ten years. Beginning in 2006, the
employee stock option issuances vest over four years and have a maximum term of seven years.
Prior to 2008, the directors stock options vested over a period of five years and had a maximum
term of ten years. Beginning in 2008, the directors stock option issuances vest over four years
and have a maximum term of seven years.In adopting SFAS No. 123R as of January 1, 2006, the Company used the modified prospective
transition method. Under this method, awards that are granted, modified or settled after the
date of adoption will be measured and accounted for in accordance with SFAS 123R. Compensation
cost for awards granted prior to, but not vested, as of the date SFAS 123R was adopted were based
on the grant date attributes originally used to value those awards for pro forma purposes under
SFAS 123, Accounting for Stock-Based Compensation(SFAS 123).SFAS 123R requires companies to estimate the fair value of share-based awards on the date of
grant using an option-pricing model. The value of the portion of the award that is ultimately
expected to vest is recognized as expense in the Companys consolidated statements of income over
the requisite service periods. Because share-based compensation expense is based on awards that
are ultimately expected to
 F - 14




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
 vest, share-based compensation expense is reduced for estimated forfeitures. SFAS 123R requires
forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates.To calculate the share-based compensation expense under SFAS 123R, the Company uses the
Black-Scholes option-pricing model. The Companys determination of fair value of option-based
awards on the date of grant is impacted by the Companys stock price as well as assumptions
regarding certain highly subjective variables. These variables include, but are not limited to,
the Companys expected stock price volatility over the term of the awards, the anticipated
risk-free interest rate, anticipated future dividend yields and the expected life of the options.
The anticipated risk-free interest rate is based on a treasury instrument whose term is
consistent with the expected life of the stock options granted. The expected volatility, life of
options and dividend yield are based on historical experience.The following table lists the assumptions used by the Company in determining the fair value of
stock options and the resulting fair value for the years ended December 31, 2008, 2007, and 2006:
 December 31,2008
    
    2007
    
    2006Expected dividend yield
    
    
    2.9
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    31
    %
    
    
    42
    %
    
    
    42
    %Risk-free interest rate
    
    
    3.2
    %
    
    
    4.7
    %
    
    
    4.8
    %Expected life of options
    
    4.4 years
    
    3.2 years
    
    3.75 yearsWeighted average fair value of options
    
    $
    3.76
    
    
    $
    4.57
    
    
    $
    4.06
 The following table represents stock option activity for the three years ended December 31, 2008:
 Common Shares
    
    Weighted Average
    
    Average RemainingUnder Options
    
    Exercise Price
    
    Contract LifeOptions outstanding December 31, 2005
    
    
    650,798
    
    
    $
    7.01Granted
    
    
    212,700
    
    
    
    11.01Canceled
    
    
    (60,510
    )
    
    
    10.08Exercised
    
    
    (53,266
    )
    
    
    4.97Options outstanding December 31, 2006
    
    
    749,722
    
    
    
    8.04Granted
    
    
    167,650
    
    
    
    13.52Canceled
    
    
    (54,051
    )
    
    
    11.81Exercised
    
    
    (74,742
    )
    
    
    8.17Options outstanding December 31, 2007
    
    
    788,579
    
    
    
    8.94Granted
    
    
    193,175
    
    
    
    16.72Canceled
    
    
    (43,749
    )
    
    
    13.83Exercised
    
    
    (141,166
    )
    
    
    5.78Options outstanding December 31, 2008
    
    
    796,839
    
    
    $
    11.12
    
    
    5.2 years
 F - 15




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
  Outstanding Options
    
    Exercisable OptionsWeighted
    
    
    
    
    
    WeightedNumber of
    
    Weighted
    
    Average
    
    Number of
    
    Weighted
    
    AverageRange of
    
    Outstanding
    
    Average
    
    Remaining
    
    Outstanding
    
    Average
    
    RemainingExercise Price
    
    Options
    

Exercise Price
    
    Life
    
    Options
    
    Exercise Price
    
    Life< $7.70
    
    105,910
    
    $3.03
    
    3.1
    
    105,910
    
    $3.03
    
    3.1$7.70 - $10.50
    
    118,447
    
    7.73
    
    5.0
    
    88,387
    
    7.73
    
    5.0> $10.50
    
    572,482
    
    13.32
    
    5.6
    
    155,149
    
    11.42
    
    5.3796,839
    
    11.12
    
    5.2
    
    349,446
    
    7.94
    
    4.6
 The Companys nonvested stock option activity for the year ended December 31, 2008 is as follows:
 Number ofSharesNonvested stock options at beginning of year
    
    
    445,182Vested
    
    
    (147,215
    )Canceled
    
    
    (43,749
    )Granted
    
    
    193,175Nonvested stock options at end of year
    
    
    447,393
 Shares available for future stock grants to employees and directors under existing plans were
approximately 396,000 at December 31, 2008. The aggregate intrinsic value of options outstanding
at December 31, 2008 was $2.0 million, and the aggregate intrinsic value of exercisable options
was $1.6 million. The total intrinsic value of options exercised during 2008 was $1.6 million.
At December 31, 2008, there was approximately $0.4 million of unrecognized compensation cost
related to share-based payments to be recognized over a weighted-average period of approximately
1.1 years. The total fair value of options vesting in 2008 was approximately $0.6 million. A
tax benefit of $0.3 million was recognized in 2008 from the exercise of stock options.
 Note 7. Compensation and Benefit Agreements
 The Company has a defined benefit pension plan covering eligible past employees and approximately
8% of its current employees. Eligible participants are entitled to monthly pension benefits
beginning at normal retirement age (65). The monthly benefit payable at normal retirement date
under the plan is equal to a specified dollar amount or percentage of average monthly
compensation, as defined in the plan, multiplied by years of benefit service (maximum of 38
years). The Companys funding policy is to make not less than the minimum contribution required
by applicable regulations, plus such amounts as the Company may determine to be appropriate from
time to time. The Company froze the plan during 2003 and participants do not accrue any
additional years of service regardless of any increases in their compensation or completion of
additional years of credited service.The Company also sponsors an unfunded defined benefit postretirement death benefit plan that
covers eligible past employees. The Company funds this postretirement benefit obligation as the
benefits are paid.
 F - 16




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Compensation and Benefit Agreements, Continued
 Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Summary of pension and other postretirement
benefit plans (in thousands):Changes in benefit obligations:Obligations at beginning of year
    
    $
    15,720
    
    
    $
    16,778
    
    
    $
    282
    
    
    $
    294Interest cost
    
    
    951
    
    
    
    934
    
    
    
    17
    
    
    
    17Benefits paid
    
    
    (1,089
    )
    
    
    (1,050
    )
    
    
    (19
    )
    
    
    (17
    )Actuarial (gains) losses
    
    
    4
    
    
    
    (942
    )
    
    
    (1
    )
    
    
    (12
    )Obligations at end of year
    
    $
    15,586
    
    
    $
    15,720
    
    
    $
    279
    
    
    $
    282Changes in plan assets:Fair value of assets at beginning of year
    
    $
    14,009
    
    
    $
    13,020
    
    
    $
    
    
    
    $
    Actual return on assets
    
    
    (3,355
    )
    
    
    1,064
    
    
    
    
    
    
    
    Company contributions
    
    
    456
    
    
    
    975
    
    
    
    19
    
    
    
    17Benefits paid
    
    
    (1,089
    )
    
    
    (1,050
    )
    
    
    (19
    )
    
    
    (17
    )Fair value of assets at end of year
    
    $
    10,021
    
    
    $
    14,009
    
    
    $
    
    
    
    $
    Funded status at end of year:Plan assets less than obligations
    
    $
    (5,565
    )
    
    $
    (1,711
    )
    
    $
    (278
    )
    
    $
    (283
    )Unrecognized (gain) loss
    
    
    6,004
    
    
    
    1,550
    
    
    
    (1
    )
    
    
    1Unrecognized prior service cost
    
    
    94
    
    
    
    108
    
    
    
    
    
    
    
    Accrued benefit (cost)
    
    $
    533
    
    
    $
    (53
    )
    
    $
    (279
    )
    
    $
    (282
    )Total compensation and benefits liabilities
    
    $
    5,565
    
    
    $
    1,711
    
    
    $
    279
    
    
    $
    282
  December 31,2008
    
    
    2007Pension benefits
    
    $
    5,565
    
    
    $
    1,711Other benefits
    
    
    279
    
    
    
    282Total compensation and benefits
    
    $
    5,844
    
    
    $
    1,993
 F - 17




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Compensation and Benefit Agreements, Continued
 Changes to Accumulated Other Comprehensive Loss pertaining to the defined benefit pension plan
for the years ended December 31, 2008, 2007, and 2006 are shown below (in thousands):
 AccumulatedPrior
    
    
    
    
    
    
    
    
    
    Deferred
    
    OtherService
    
    Unrecognized
    
    
    
    
    
    Tax
    
    ComprehensiveCost
    
    Losses
    
    Total
    
    Amount
    
    Loss *Balance, December 31, 2005
    
    $
    138
    
    
    $
    1,928
    
    
    $
    2,066
    
    
    $
    (760
    )
    
    $
    1,306Incurred in the current year
    
    
    
    
    
    
    751
    
    
    
    751
    
    
    
    (337
    )
    
    
    414Recognized as component of
net period (cost)
    
    
    (15
    )
    
    
    (41
    )
    
    
    (56
    )
    
    
    20
    
    
    
    (36
    )Balance, December 31, 2006
    
    
    123
    
    
    
    2,638
    
    
    
    2,761
    
    
    
    (1,077
    )
    
    
    1,684Incurred in the current year
    
    
    
    
    
    
    (981
    )
    
    
    (981
    )
    
    
    382
    
    
    
    (599
    )Recognized as component of
net period (cost)
    
    
    (15
    )
    
    
    (107
    )
    
    
    (122
    )
    
    
    48
    
    
    
    (74
    )Balance, December 31, 2007
    
    
    108
    
    
    
    1,550
    
    
    
    1,658
    
    
    
    (647
    )
    
    
    1,011Incurred in the current year
    
    
    
    
    
    
    4,454
    
    
    
    4,454
    
    
    
    (1,736
    )
    
    
    2,718Recognized as component of
net period (cost)
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )
    
    
    5
    
    
    
    (9
    )Balance, December 31, 2008
    
    $
    94
    
    
    $
    6,004
    
    
    $
    6,098
    
    
    $
    (2,378
    )
    
    $
    3,720To be recognized as
component of
net period (cost) in 2009
    
    $
    14
    
    
    $
    200
 
 *
    
    Excludes $0.3 million of foreign currency translation adjustment as of December 31, 2008. The components of Net Period Cost for the years ended December 31 are shown below (in thousands):
 Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2008
    
    2007
    
    2006
    
    2008
    
    2007
    
    2006Cost (income) recognized during the year:Interest cost
    
    $
    951
    
    
    $
    934
    
    
    $
    963
    
    
    $
    17
    
    
    $
    17
    
    
    $
    17Expected return on plan assets
    
    
    (1,095
    )
    
    
    (1,024
    )
    
    
    (940
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of loss
    
    
    
    
    
    
    107
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    14
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Net period cost (income)
    
    $
    (130
    )
    
    $
    32
    
    
    $
    79
    
    
    $
    17
    
    
    $
    17
    
    
    $
    17
 Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2008
    
    2007
    
    2006
    
    2008
    
    2007
    
    2006Assumptions used in determining
net period cost (income):Discount rate
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    5.75
    %Expected return on plan assets
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    *
    
    
    
    *
    
    
    
    *
 
 *
    
    This plan does not have separate assets, as a result there is no actual or
expected return on plan assets. F - 18




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Compensation and Benefit Agreements, Continued
 The discount rate used is based on an assumed portfolio of high quality bonds with cash flows
matching the timing of expected benefit payments. The expected return on plan assets is based on the asset
allocation mix and historical returns, taking into account current and expected market
conditions. The actual returns on pension plan assets were approximately (24%) in 2008, 8% in
2007, and 11% in 2006. The historical annualized ten-year rate of return on pension plan assets
is approximately 2 %.The Companys pension plan asset allocation at December 31, 2008 and 2007 and target allocation
for 2009 are as follows:
 Target
    
    Percentage of Plan AssetsAllocation
    
    December 31,Asset Category
    
    2009
    
    2008
    
    2007Equity securities
    
    
    50% - 60
    %
    
    
    52
    %
    
    
    53
    %Debt securities
    
    
    40% - 50
    %
    
    
    48
    %
    
    
    47
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
 The pension plan investment strategy is to maintain a diversified portfolio designed to achieve
an average long-term rate of return of 8%. The assets of the plan are strategically allocated
between asset categories according to the target minimum and maximum allocations. Asset
allocation target ranges for each asset category are monitored and may be changed from time to
time based on asset allocation studies performed by the plans investment advisor, with
evaluations of the risk and return expectations for various weightings of the authorized asset
categories. Additional asset categories may also be added to the plan within the context of the
investment objectives.The Company expects to contribute $1.3 million to the pension plan in 2009. The following
benefit payments are expected to be paid from the plan over the next ten years (in thousands):
 Year(s)
    
    Pension Benefits
    
    Other Benefits2009
    
    $
    1,024
    
    
    $
    202010
    
    
    1,012
    
    
    
    212011
    
    
    997
    
    
    
    222012
    
    
    1,015
    
    
    
    232013
    
    
    1,018
    
    
    
    232014-2018
    
    
    5,476
    
    
    
    120
 The Company has an employee retirement savings plan, which is classified as a defined
contribution plan under Section 401(k) of the Internal Revenue Code. The plan allows employees
to defer a portion of their annual compensation through pre-tax contributions.For this plan, the Company matches 100% of the first 3% and 50% of the next 2% of an
employees contributions, up to a maximum of 4% of the employees compensation. Matching
contributions for the years ended December 31, 2008, 2007, and 2006 were $0.4 million, $0.4
million, and $0.2 million, respectively. The Companys Board of Directors may also approve
discretionary annual contributions to employees 401(k) retirement accounts. The discretionary
contributions for the years ended December 31, 2008, 2007 and 2006 were $0.1 million, $0.2
million and $0.1 million, respectively.
 F - 19




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Significant Risks and Uncertainties
 Concentrations of Credit Risk  Cash-At December 31, 2008 and 2007, the Company had $13.7
million and $15.4 million, respectively, in cash, money market accounts, and U.S. Government
money market accounts at financial institutions, which included amounts in excess of the
federally insured limits.Concentration of Credit Risk  Accounts ReceivableThe industry in which the Company operates
continues to experience consolidation, resulting in a smaller number of primary retailers. The
Company has a relatively small number of key retailers that comprise a significant portion of its
total accounts receivable balance. Generally, the Company does not require collateral or other
security to support customer receivables. However, the Company continually monitors and evaluates
customers creditworthiness to minimize potential credit risks associated with its accounts
receivable. Any accounts receivable credit risk exposure beyond the current allowance for
uncollectible accounts is not material to the consolidated financial statements.
 Note 9. Enterprise-wide Disclosures
 The Company operates as two brands in the marketplace, LaCrosse and Danner. For financial
reporting purposes, the Company considers these two brands to constitute one operating segment.The Company focuses on two market categories, work and outdoor. The following table presents
information about the Companys revenue attributed to these two market categories (in thousands):
 Years Ended December 31,2008
    
    2007
    
    2006Net sales:Work Market
    
    $
    74,902
    
    
    $
    60,893
    
    
    $
    54,660Outdoor Market
    
    
    53,054
    
    
    
    57,286
    
    
    
    53,138Total
    
    $
    127,956
    
    
    $
    118,179
    
    
    $
    107,798
 The following table presents information about the Companys revenue attributed to countries
based on the location of the customer (in thousands):
 Years Ended December 31,2008
    
    2007
    
    2006Net sales:United States
    
    $
    120,039
    
    
    $
    109,989
    
    
    $
    101,041Foreign Countries
    
    
    7,917
    
    
    
    8,190
    
    
    
    6,757Total
    
    $
    127,956
    
    
    $
    118,179
    
    
    $
    107,798
 Included in the Companys consolidated balance sheets at December 31, 2008 are the net assets of
the Companys European subsidiary which total approximately $1.4 million. The net book value of
long-lived assets located outside of the United States totaled $0.5 million and $0.3 million at
December 31, 2008 and 2007, respectively.Sales to the U.S. Government accounted for approximately 11%, 1%, and less than 1%, of
consolidated net sales in 2008, 2007, and 2006, respectively. No other single customer provided
revenue of 10% or more of consolidated net sales in any of the years presented.
 F - 20




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LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10. Acquisition
 On July 21, 2008, the Company announced the formation of LaCrosse Europe ApS, a new subsidiary
based in Denmark. In establishing this company, LaCrosse Europe ApS purchased certain assets for
$3.2 million in cash from the Companys former European distributor, Gateway Footgear. The
acquired assets included inventory and sales order backlog. The results of operations since the
date of acquisition have been included in the consolidated financial statements. Proforma
results of prior years to include the acquired entity are not included since management
determined they are not material to the consolidated financial statements.
 Note 11. Exit Costs for Distribution Centers
 On June 19, 2008, the Company announced that it will be relocating from two distribution centers
in La Crosse, Wisconsin to a new distribution center in Indianapolis, Indiana. The Company will
operate these two distributions centers through April 30, 2009. The Company will incur exit
costs related to compensation incentives and other costs of approximately $0.3 million through
the exit time. In accordance with SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities(SFAS 146), these exit costs will be expensed ratably through April 2009.
Through December 31, 2008, the Company has expensed $0.2 million.
 Note 12. Quarterly Selected Financial Data (Unaudited)
 The following reflects the Companys unaudited quarterly results of operations for 2008 and 2007
(in thousands except per share data):
 2008Q1
    
    Q2
    
    Q3
    
    Q4Net sales
    
    $
    24,732
    
    
    $
    27,810
    
    
    $
    40,265
    
    
    $
    35,149Gross profit
    
    
    10,061
    
    
    
    11,242
    
    
    
    15,787
    
    
    
    13,571Operating income
    
    
    1,093
    
    
    
    2,304
    
    
    
    4,553
    
    
    
    2,170Income tax provision
    
    
    473
    
    
    
    820
    
    
    
    1,731
    
    
    
    905Net income
    
    
    779
    
    
    
    1,436
    
    
    
    2,768
    
    
    
    1,184Basic income per common share
    
    $
    0.13
    
    
    $
    0.23
    
    
    $
    0.44
    
    
    $
    0.19Diluted income per common share
    
    $
    0.12
    
    
    $
    0.22
    
    
    $
    0.43
    
    
    $
    0.18
 2007Q1
    
    Q2
    
    Q3
    
    Q4Net sales
    
    $
    23,691
    
    
    $
    24,929
    
    
    $
    36,876
    
    
    $
    32,683Gross profit
    
    
    9,610
    
    
    
    9,769
    
    
    
    14,412
    
    
    
    13,115Operating income
    
    
    830
    
    
    
    1,434
    
    
    
    4,947
    
    
    
    3,772Income tax provision
    
    
    347
    
    
    
    551
    
    
    
    1,684
    
    
    
    1,390Net income
    
    
    604
    
    
    
    976
    
    
    
    3,311
    
    
    
    2,409Basic income per common share
    
    $
    0.10
    
    
    $
    0.16
    
    
    $
    0.54
    
    
    $
    0.39Diluted income per common share
    
    $
    0.10
    
    
    $
    0.15
    
    
    $
    0.52
    
    
    $
    0.38
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND lSUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13. Cash Dividends
 On February 4, 2008, the Company announced a special cash dividend of one dollar ($1.00) per
share of common stock and a first quarter cash dividend of twelve and one-half cents ($0.125) per
share of common stock. These dividends were paid together ($1.125 per common share) on March 18,
2008 and totaled $7.0 million.In addition, quarterly dividends of $0.8 million ($0.125 per common share) were paid on June 18,
2008, September 18, 2008, and December 18, 2008, totaling $2.3 million.
 Note 14. Recent Accounting Pronouncements
 In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations, which
replaces SFAS No. 141 and SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51. SFAS 141R establishes principles and requirements for
how an acquirer recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill
acquired. SFAS 141R and SFAS 160 are effective as of the beginning of an entitys fiscal year
beginning after December 15, 2008.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS 157). SFAS 157
defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. SFAS 157 was
effective for financial instruments for 2008 but had no impact on the financial statements
presented herein. For nonfinancial instruments, it will be effective for the Company in 2009.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option For Financial Assets and
Financial Liabilities. SFAS 159 was effective for the Company in 2008 but the Company did not
elect to apply its fair value reporting to any of its accounts.In December 2008, the FASB issued FSP FAS 132(R)-1, Employers Disclosures about Postretirement
Benefit Plan Assets. FSP FAS 132(R)-1 requires more detailed disclosures about employers plan
assets in a defined benefit pension or other postretirement plan, including employers investment
strategies, major categories of plan assets, concentrations of risk within plan assets, and
inputs and valuation techniques used to measure the fair value of plan assets. FSP FAS 132(R)-1
also requires, for fair value measurements using significant unobservable inputs (Level 3),
disclosure of the effect of the measurements on changes in plan assets for the period. The
disclosures about plan assets required by FSP FAS 132(R)-1 must be provided for fiscal years
ending after December 15, 2009. As this pronouncement is only disclosure-related, it will not
have an impact on the financial position and results of operations but will affect the
disclosures within the Companys financial statements.
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 15. Subsequent Event
 On February 2, 2009, the Company announced a first quarter cash dividend of twelve and one-half
cents ($0.125) per share of the Companys common stock. This dividend will be paid on March 18,
2009 to shareholders of record as of the close of business on February 22, 2009. The total cash
payment for this dividend will approximate $0.8 million.
 F - 23