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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, 2006
 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: 0-238001
 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
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 þ o
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DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IITEM 1.
    
    BUSINESS
    
    
    1ITEM 1A.
    
    RISK FACTORS
    
    
    9ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    15ITEM 2.
    
    PROPERTIES
    
    
    16ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    16ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17PART IIITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
    
    
    17ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    19ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    28ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    29ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    29ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
    
    29ITEM 9B.
    
    OTHER INFORMATION
    
    
    29PART IIIITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT,
AND CORPORATE GOVERNANCE
    
    
    30ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    30ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    31ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
    
    
    31ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    31PART IVITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    32SIGNATURES
    
    
    
    
    36EXHIBITS FILED AS PART OF FORM 10-K
    
    
    40FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    F-1 to F-21EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART I
 
 Item 1. Business
  General
 ® ®
  ®
  Strategy
  
    
    build, position and capitalize on the strength of established brands;
    
    develop innovative products and relevant technologies that will differentiate our
footwear and apparel products;
    
    offer superior customer service; and
    
    expand and enhance our strong network of sales channels and customer base.
 Brand Positioning
 ® ® ® ® ®
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Products
  Rubber Footwear
 ®
  Leather Footwear
 ® ® ® ® ®
 Rainwear and Protective Clothing
   Accessories
 ® ®
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Product Design and Development
  Customers, Sales, and Distribution
  ® ®
  ® ® www.lacrossefootwearinc.com
 ® ®
  Advertising and Promotion
  -3-




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Manufacturing and Sourcing
     ® ® ®
 Competition
  -4-




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® ® ® ® ®
 Employees
  Trademarks and Trade Names; Patents
 ® ® ® ® ® ® ® ® ® TM ® TM ® ® ® ® ®
 ® TM ® TM
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Seasonality
   Foreign Operations and Export Sales
  Environmental Matters
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Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJoseph P. Schneider
    
    
    47
    
    
    President, Chief Executive Officer and DirectorDavid P. Carlson
    
    
    51
    
    
    Executive Vice President, Chief Financial Officer,
and SecretaryJ. Gary Rebello
    
    
    55
    
    
    Vice President of Human ResourcesC. Kirk Layton
    
    
    51
    
    
    Corporate ControllerCraig P. Cohen
    
    
    40
    
    
    Vice President of Demand PlanningErron S. Sorensen
    
    
    37
    
    
    Vice President of MarketingKirk S. Nichols
    
    
    38
    
    
    Vice President of SalesRobert G. Rinehart, Jr.
    
    
    54
    
    
    Vice President of Product Development
 Where You Can Find More Information
 www.sec.gov www.lacrossefootwearinc.com
 Forward Looking Statements
   -7-




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Item 1A. Risk Factors
  We conduct a significant portion of our manufacturing activities and a certain portion of our net
sales outside the U.S. Therefore we are subject to the risks of international commerce, including
the following:
 ®
 
    
    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;
    
    increased transportation costs due to rising energy prices, more burdensome port
security procedures, or other factors;
    
    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 for 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 represent 5% of our net sales
in 2006.
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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.
   The continued consolidation of retailers, and the leveraged growth in the overall number of stores,
increases and concentrates our credit risk.
  Our business is substantially affected by the weather, and sustained periods of warm and/or dry
weather can negatively impact our sales.
  A decline in consumer spending due to unfavorable economic conditions could hinder our product
revenues and earnings.
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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.
    Failure to efficiently import foreign sourced products could result in decreased margins, cancelled
orders and unanticipated inventory accumulation.
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Labor disruptions or disruptions due to natural disasters or casualty losses at one of our two
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.
   We face significant competition and if we are unable to compete effectively, sales of our products
may decline and our business could be harmed.
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
    
    have significantly greater financial resources than we have;
    
    have more comprehensive product lines than ours;
    
    have broader market presence than we have in retail outlets, or have their own retail outlets;
    
    have longer-standing relationships with retailers than we have;
    
    have greater distribution capabilities than we have;
    
    have stronger brand recognition than we have; and
    
    spend substantially more on product advertising and sales than we do.
   We may be unable to meet changing consumer preferences and demands.
  Changes in the price or availability of raw materials could disrupt our operations and adversely
affect our financial results .
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Our failure or inability to protect our intellectual property could significantly harm our
competitive position and reduce future revenues.
  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.
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If we fail to comply with the covenants contained in our revolving credit facility we may be unable
to 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.
  
 Item 1B. Unresolved Staff Comments
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Item 2.
    
    Properties
  PROPERTIESApproximate FloorLocation
    
    Owned or Leased
    
    Area in Square Feet
    
    Principal UsesPortland, OR
    
    Leased(1)
    
    145,000
    
    New 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 facilityZhongshan, China
    
    Leased
    
    1,400
    
    Office space
 
 (1)
    
    In June 2006, we moved our corporate headquarters and distribution center for
our Danner line of footwear products to a newly constructed, 145,000 square foot building
in Portland, Oregon. The monthly base rent on the Single Tenant Industrial Lease is
scheduled for 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 March 2009; however, we have the option to
extend the term for an additional five years.(3)
    
    In August 2006, we signed a first amendment and extension of lease for this facility.
The amendment extends the term of the lease through May 2009 and removes all sublease
agreements. The previous sublessees now pay rent directly to the lessor.(4)
    
    In August 2006, we extended our lease on this facility through April 2009.  
 Item 3.
    
    Legal Proceedings
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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
  2006
    
    2005High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    12.15
    
    
    $
    9.70
    
    
    $
    13.67
    
    
    $
    10.06Second Quarter
    
    
    13.98
    
    
    
    11.30
    
    
    
    13.19
    
    
    
    8.00Third Quarter
    
    
    13.50
    
    
    
    11.49
    
    
    
    12.80
    
    
    
    9.58Fourth Quarter
    
    
    13.71
    
    
    
    11.63
    
    
    
    12.78
    
    
    
    9.51
  Dividends
  Sales of Unregistered Securities
  -17-




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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Equity Compensation Plan Information
  Market Price of the Registrants Common Equity
  5-year Cumulative Total Return
 
 12/31/2001
    
    
    
    12/31/2002
    
    
    
    12/31/2003
    
    
    
    12/31/2004
    
    
    
    12/31/2005
    
    
    
    12/31/2006LaCrosse Footwear, Inc.
    
    
    $
    100
    
    
    
    $
    81
    
    
    
    $
    246
    
    
    
    $
    337
    
    
    
    $
    338
    
    
    
    $
    415NASDAQ Global Market Index
    
    
    $
    100
    
    
    
    $
    70
    
    
    
    $
    105
    
    
    
    $
    114
    
    
    
    $
    116
    
    
    
    $
    128Hemscott Group Index
    
    
    $
    100
    
    
    
    $
    99
    
    
    
    $
    144
    
    
    
    $
    192
    
    
    
    $
    207
    
    
    
    $
    254
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Item 6.
Selected Financial Data
 Selected Income Statement Data
 Year Ended December 31
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(in thousands, except per share data)Net sales
    
    $
    107,798
    
    
    $
    99,378
    
    
    $
    105,470
    
    
    $
    95,687
    
    
    $
    97,785Operating income (loss)
    
    
    8,834
    
    
    
    8,609
    
    
    
    7,640
    
    
    
    3,666
    
    
    
    (3,999
    )Net income (loss)
    
    
    6,344
    
    
    
    5,234
    
    
    
    6,973
    
    
    
    2,630
    
    
    
    (5,086
    )Net income (loss) per common shareBasic
    
    $
    1.05
    
    
    $
    0.88
    
    
    $
    1.18
    
    
    $
    0.45
    
    
    ($
    0.87
    )Diluted
    
    $
    1.02
    
    
    $
    0.85
    
    
    $
    1.15
    
    
    $
    0.44
    
    
    ($
    0.87
    )Weighted average common shares outstandingBasic
    
    
    6,022
    
    
    
    5,954
    
    
    
    5,891
    
    
    
    5,874
    
    
    
    5,874Diluted
    
    
    6,213
    
    
    
    6,166
    
    
    
    6,070
    
    
    
    5,939
    
    
    
    5,874
 Selected Balance Sheet Data
 Year Ended December 31
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(in thousands)Inventories
    
    $
    22,038
    
    
    $
    24,865
    
    
    $
    16,962
    
    
    $
    24,042
    
    
    $
    23,460Total assets
    
    
    73,533
    
    
    
    64,583
    
    
    
    57,788
    
    
    
    55,241
    
    
    
    60,845Note payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,319
    
    
    
    8,378Long-term debt, including current maturities
    
    
    506
    
    
    
    
    
    
    
    
    
    
    
    2,219
    
    
    
    4,432Shareholders equity
    
    
    57,344
    
    
    
    50,477
    
    
    
    45,151
    
    
    
    37,876
    
    
    
    35,089
  -19-




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Item 7.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
 Overview
         -20-




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RESULTS OF OPERATIONS  FISCAL 2006 COMPARED TO FISCAL 2005
 Financial Summary  2006 versus 2005
  ($ in millions)
    
    2006
    
    2005
    
    $ Change
    
    % ChangeNet Sales
    
    $
    107.8
    
    
    $
    99.4
    
    
    $
    8.4
    
    
    
    8
    %Gross Profit
    
    
    42.3
    
    
    
    36.3
    
    
    
    6.0
    
    
    
    17
    %Gross Margin %




    
    39.2
    %
    
    
    36.6
    %SG&A
    
    $
    33.5
    
    
    $
    27.7
    
    
    $
    5.7
    
    
    
    21
    %% of Net Sales


    
    31.0
    %
    
    
    27.9
    %Non-Operating Income (Expense)
    
    $
    0.1
    
    
    $
    (0.3
    )
    
    $
    0.4
    
    
    
    -133
    %Income Before Income Taxes
    
    
    8.9
    
    
    
    8.3
    
    
    
    0.6
    
    
    
    8
    %Income Tax Expense
    
    
    2.6
    
    
    
    3.1
    
    
    
    (0.5
    )
    
    
    -16
    %Net Income
    
    
    6.3
    
    
    
    5.2
    
    
    
    1.1
    
    
    
    21
    %
 Consolidated Net Sales:
 Gross Profit:
 Sales, General and Administrative Expenses (SG&A):
 Non-operating Income:
 -21-




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Income Before Income Taxes:
 Income Taxes:
 Net Income:
 RESULTS OF OPERATIONS  FISCAL 2005 COMPARED TO FISCAL 2004
 Financial Summary  2005 versus 2004
  2005
    
    2004
    
    $ Change
    
    % Change($ in millions)Net Sales
    
    $
    99.4
    
    
    $
    105.5
    
    
    $
    (6.1
    )
    
    
    -6
    %Gross Profit
    
    
    36.3
    
    
    
    35.6
    
    
    
    0.7
    
    
    
    2
    %Gross Margin %
    
    
    36.6
    %
    
    
    33.8
    %SG&A
    
    
    27.7
    
    
    
    28.0
    
    
    
    (0.3
    )
    
    
    -1
    %% of Net Sales
    
    
    27.9
    %
    
    
    26.5
    %Non-Operating Expenses
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    0.1
    
    
    
    -25
    %Income Before Income Taxes
    
    
    8.3
    
    
    
    7.2
    
    
    
    1.1
    
    
    
    15
    %Income Tax Expense
    
    
    3.1
    
    
    
    0.3
    
    
    
    2.8
    
    
    
    1052
    %Net Income
    
    $
    5.2
    
    
    $
    7.0
    
    
    $
    (1.8
    )
    
    
    -26
    %
 Consolidated Net Sales:
 -22-




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Gross Profit:
 Sales, General and Administrative Expenses (SG&A):
 Non-operating Expenses:
 Net Income Before Taxes:
 Income Taxes:
 Net Income:
 -23-




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LIQUIDITY AND CAPITAL RESOURCES
       -24-




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OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
   (In Thousands)
    
    Payments due by periodContractual Obligations
    
    Total
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    ThereafterLong-term debt (1)
    
    $
    506
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    506Operating leases (2)
    
    
    12,258
    
    
    
    2,035
    
    
    
    2,070
    
    
    
    1,324
    
    
    
    990
    
    
    
    1,012
    
    
    
    4,827Total Contractual Obligations
    
    $
    12,764
    
    
    $
    2,035
    
    
    $
    2,070
    
    
    $
    1,324
    
    
    $
    990
    
    
    $
    1,012
    
    
    $
    5,333
 
 (1)
    
    As long as we meet certain employment and facility usage requirements
through July 1, 2008, this loan will be forgiven and will not result in a cash
outflow. See Note 4, Financing Arrangements to the accompanying consolidated
financial statements for additional information.(2)
    
    See Part I, Item 2  Properties for a description of our leased facilities.   (In Thousands)Other Commercial
    
    Maximum AmountCommitment
    
    Committed
    
    Outstanding at 12/31/06
    
    Date of ExpirationLine of credit
    
    $30,000
    
    $
    
    June 2009
  -25-




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Allowances for Doubtful Accounts, Discounts and Non-Defective Returns:
   Allowance for Slow-Moving Inventory:
 Product Warranty:
 Valuation of Long-Lived and Intangible Assets:
 -26-




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Pension and Other Postretirement Benefit Plans:
 Deferred Tax Asset Valuation Allowance:
 Stock-Based Compensation: Share-Based Payment
 -27-




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Recently Issued Accounting Pronouncements
 Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements
 Accounting for Uncertainty in Income Taxes-an
Interpretation of FASB Statement 109
 
 Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
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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
 
 Item 9B.
    
    Other Information
  -29-




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PART
III
 
 Item 10.
    
    Directors, Executive Officers of the Registrant, and Corporate Governance
  www.lacrossefootwearinc.com
 
 Item 11.
    
    Executive Compensation
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Item 12.Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
   Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    Weighted-average
    
    equity compensationbe issued upon exercise
    
    exercise price of
    
    plans (excludingof outstanding options,
    
    outstanding options,
    
    securities reflected inPlan Category
    
    warrants and rights (1)
    
    warrants and rights
    
    the first column) (2)Equity compensation plans
approved by security holders
    
    
    749,722
    
    
    $
    8.04
    
    
    
    261,000Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    749,722
    
    
    $
    8.04
    
    
    
    261,000
 
 (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) and 2001 Non-Employee
Director Stock Option Plan (the Director Plan).(2)
    
    Includes 220,000 shares of the Companys Common Stock available for issuance
under the 2001 Plan and 41,000 shares of the Companys Common Stock available for
issuance under the Director Plan. 
 Item 13.Certain Relationships, Related Transactions, and Director Independence
  
 Item 14.Principal Accountant Fees and Services
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PART IV
 
 Item 15.Exhibits and Financial Statement SchedulesFinancial Statements
 1.
    
    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, 2006 and 2005
    
    F-2Consolidated Statements of Operations for the Years ended December 31,2006, 2005, and 2004
    
    F-4Consolidated Statements of Shareholders Equity for the Years endedDecember 31, 2006, 2005, and 2004
    
    F-5Consolidated Statements of Cash Flows for the Years ended December 31,2006,
2005, and 2004
    
    F-6Notes to Consolidated Financial Statements for the Years endedDecember 31, 2006, 2005, and 2004
    
    F-7
 2.
    
    Financial Statement ScheduleThe financial statement schedule for the years ended December 31, 2006, 2005 and 2004
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 FinancialStatement Schedule
    
    37Schedule II Valuation and Qualifying Accounts
    
    38
 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.
 - 32 -




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##### Table of Contents



3.
    
    ExhibitsThe following exhibits are filed herewith:
 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)*
    
    LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option Plan, as amended
(Incorporated by reference to Exhibit 10.2 of LaCrosse Footwear, Inc.s Current
Report on Form 8-K as filed with the Commission on May 9, 2005).(10.7)*
    
    Summary of 2007 Incentive Compensation Program (Incorporated by reference to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
December 22, 2006)(10.8)*
    
    Summary of 2007 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 22, 2006)
 
 * A management contract or
compensatory plan or arrangement. - 33 -




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description(10.9)*
    
    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)(10.10)
    
    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)
    
    Lease Termination Agreement, by and among LaCrosse Footwear, Inc., Danner, Inc., and
ProLogis, dated October 17, 2005 (Incorporated by reference to Exhibit (10.1) to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
October 20, 2005)(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)
    
    Manufacturing Certification Agreement, dated as of October 19, 1993, between W.L.
Gore & Associates, Inc. and Danner Shoe Manufacturing Co. (Incorporated by
reference to Exhibit (10.23) to LaCrosse Footwear, Inc.s Form S-1 Registration
Statement (Registration No. 33-75534))(10.16)
    
    Trademark License, dated as of October 19, 1993, between W.L. Gore & Associates,
Inc. and Danner Shoe Manufacturing Co. (Incorporated by reference to Exhibit
(10.24) to LaCrosse Footwear, Inc.s Form S-1 Registration Statement (Registration
No. 33-75534))(10.17)
    
    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)(10.18)
    
    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.(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
 - 34 -




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##### Table of Contents



ExhibitNumber
    
    Exhibit Description(99.1)
    
    Proxy Statement for the 2007 Annual Meeting of Shareholders[The Proxy Statement for the 2007 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 2007 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.]
 - 35 -




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##### Table of Contents



SIGNATURES
  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 20, 2007/s/ David P. Carlson

David P. Carlson
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
    
    March 20, 2007/s/ Richard A. Rosenthal

Richard A. Rosenthal
    
    Chairman of the Board and Director
    
    March 20, 2007/s/Stephen F. Loughlin

Stephen F. Loughlin
    
    Director
    
    March 20, 2007/s/ Luke E. Sims

Luke E. Sims
    
    Director
    
    March 20, 2007/s/ Charles W. Smith

Charles W. Smith
    
    Director
    
    March 20, 2007/s/ John D. Whitcombe

John D. Whitcombe
    
    Director
    
    March 20, 2007/s/ William H. Williams

William H. Williams
    
    Director
    
    March 20, 2007
 - 36 -




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE
 
  /s/ McGladrey & Pullen, LLPMcGLADREY & PULLEN, LLP 
 - 37 -




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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, 2004Accounts receivable allowances:Allowance for discounts
    
    $
    47
    
    
    $
    2,125
    
    
    $
    
    
    
    $
    1,985
    
    
    $
    187Allowance for doubtful accounts
    
    
    351
    
    
    
    108
    
    
    
    
    
    
    
    126
    
    
    
    333Total
    
    $
    398
    
    
    $
    2,233
    
    
    $
    
    
    
    $
    2,111
    
    
    $
    520Inventory allowance:Allowance for slow-moving inventory
    
    $
    1,674
    
    
    $
    1,068
    
    
    $
    
    
    
    $
    1,044
    
    
    $
    1,698Deferred income taxes:Deferred tax asset valuation allowance
    
    $
    3,560
    
    
    $
    
    
    
    $
    
    
    
    $
    2,472
    
    
    $
    1,088Allowance for warranties
    
    $
    852
    
    
    $
    1,840
    
    
    $
    
    
    
    $
    1,846
    
    
    $
    846Year ended December 31, 2005Accounts receivable allowances:Allowance for discounts
    
    $
    187
    
    
    $
    2,335
    
    
    $
    
    
    
    $
    2,178
    
    
    $
    344Allowance for nondefective product
    
    
    
    
    
    
    1,923
    
    
    $
    
    
    
    
    1,845
    
    
    
    78Allowance for doubtful accounts
    
    
    333
    
    
    
    129
    
    
    
    
    
    
    
    109
    
    
    
    353Total
    
    $
    520
    
    
    $
    4,387
    
    
    $
    
    
    
    $
    4,132
    
    
    $
    775Inventory allowance:Allowance for slow-moving inventory
    
    $
    1,698
    
    
    $
    302
    
    
    $
    
    
    
    $
    1,282
    
    
    $
    718Deferred income taxes:Deferred tax asset valuation allowance
    
    $
    1,088
    
    
    $
    3
    
    
    $
    
    
    
    $
    
    
    
    $
    1,091Allowance for warranties
    
    $
    846
    
    
    $
    1,494
    
    
    $
    
    
    
    $
    1,578
    
    
    $
    762
 - 38 -




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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, 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
    
    
    
    400
    
    
    
    
    
    
    
    497
    
    
    
    256Total
    
    $
    775
    
    
    $
    4,669
    
    
    $
    
    
    
    $
    4,838
    
    
    $
    606Inventory allowance:Allowance for slow-moving inventory
    
    $
    718
    
    
    $
    601
    
    
    $
    
    
    
    $
    829
    
    
    $
    490Deferred income taxes:Deferred tax asset valuation allowance
    
    $
    1,091
    
    
    $
    
    
    
    $
    
    
    
    $
    63
    
    
    $
    1,028Allowance for warranties
    
    $
    762
    
    
    $
    1,837
    
    
    $
    
    
    
    $
    1,827
    
    
    $
    772
  - 39 -




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##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    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)*
    
    LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option Plan, as amended
(Incorporated by reference to Exhibit 10.2 of LaCrosse Footwear, Inc.s Current
Report on Form 8-K as filed with the Commission on May 9, 2005).(10.7)*
    
    Summary of 2007 Incentive Compensation Program (Incorporated by reference to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
December 22, 2006)(10.8)*
    
    Summary of 2007 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 22, 2006)(10.9)*
    
    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)
 
 * A management contract or
compensatory plan or arrangement. - 40 -




---



##### Table of Contents



Exhibit Number
    
    Exhibit Description(10.10)
    
    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)
    
    Lease Termination Agreement, by and among LaCrosse Footwear, Inc., Danner, Inc., and
ProLogis, dated October 17, 2005 (Incorporated by reference to Exhibit (10.1) to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
October 20, 2005)(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)
    
    Manufacturing Certification Agreement, dated as of October 19, 1993, between W.L.
Gore & Associates, Inc. and Danner Shoe Manufacturing Co. (Incorporated by
reference to Exhibit (10.23) to LaCrosse Footwear, Inc.s Form S-1 Registration
Statement (Registration No. 33-75534))(10.16)
    
    Trademark License, dated as of October 19, 1993, between W.L. Gore & Associates,
Inc. and Danner Shoe Manufacturing Co. (Incorporated by reference to Exhibit
(10.24) to LaCrosse Footwear, Inc.s Form S-1 Registration Statement (Registration
No. 33-75534))(10.17)
    
    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)(10.18)
    
    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.(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
 - 41 -




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##### Table of Contents



Exhibit Number
    
    Exhibit Description(99.1)
    
    Proxy Statement for the 2007 Annual Meeting of Shareholders[The Proxy Statement for the 2007 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 2007 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.]
 - 42 -




---



##### 



INDEX
  
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1CONSOLIDATED FINANCIAL STATEMENTSConsolidated balance sheets
    
    F-2 and F-3Consolidated statements of operations
    
    
    F-4Consolidated statements of shareholders equity
    
    
    F-5Consolidated statements of cash flows
    
    
    F-6Notes to consolidated financial statements
    
    
    F-7  F-21




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F - 1




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
(In Thousands, except share and per share data)
 ASSETS
    
    2006
    
    
    2005CURRENT ASSETSCash and cash equivalents
    
    $
    12,702
    
    
    $
    6,113Trade accounts receivable, less allowances of
$0.6 million in 2006 and $0.8 million in 2005
    
    
    19,912
    
    
    
    16,684Inventories (Note 2)
    
    
    22,038
    
    
    
    24,865Prepaid expenses and other
    
    
    987
    
    
    
    955Deferred tax assets (Note 3)
    
    
    1,223
    
    
    
    1,351Total current assets
    
    
    56,862
    
    
    
    49,968PROPERTY AND EQUIPMENTLeasehold improvements
    
    
    2,463
    
    
    
    1,713Machinery and equipment
    
    
    13,765
    
    
    
    12,76216,228
    
    
    
    14,475Less accumulated depreciation
    
    
    10,786
    
    
    
    11,428Net property and equipment
    
    
    5,442
    
    
    
    3,047OTHER ASSETSGoodwill
    
    
    10,753
    
    
    
    10,753Other assets
    
    
    476
    
    
    
    815Total other assets
    
    
    11,229
    
    
    
    11,568TOTAL ASSETS
    
    $
    73,533
    
    
    $
    64,583
 See Notes to Consolidated Financial Statements.
 F - 2




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##### Table of Contents



LIABILITIES AND SHAREHOLDERS EQUITY
    
    2006
    
    
    2005CURRENT LIABILITIESAccounts payable
    
    
    5,427
    
    
    
    5,402Accrued compensation
    
    
    3,183
    
    
    
    1,507Other accruals
    
    
    1,575
    
    
    
    2,014Total current liabilities
    
    
    10,185
    
    
    
    8,923LONG-TERM DEBT (Note 4)
    
    
    506
    
    
    
    DEFERRED REVENUE (Note 4)
    
    
    169
    
    
    
    COMPENSATION AND BENEFITS (Note 7)
    
    
    4,041
    
    
    
    4,015DEFERRED TAX LIABILITIES (Note 3)
    
    
    1,288
    
    
    
    1,168Total liabilities
    
    
    16,189
    
    
    
    14,106COMMITMENTS AND CONTINGENCIES (Note 5)
    
    
    
    
    
    
    SHAREHOLDERS EQUITY (Notes 6 and 7)Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 6,717,627 shares
    
    
    67
    
    
    
    67Additional paid-in capital
    
    
    26,458
    
    
    
    25,987Accumulated other comprehensive loss
    
    
    (1,684
    )
    
    
    (1,306
    )Retained earnings
    
    
    35,952
    
    
    
    29,608Less cost of 675,104 and 728,370 shares of treasury stock
    
    
    (3,449
    )
    
    
    (3,879
    )Total shareholders equity
    
    
    57,344
    
    
    
    50,477TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    73,533
    
    
    $
    64,583
 F - 3




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2006, 2005, and 2004
(In Thousands, except share and per share data)
 2006
    
    
    2005
    
    
    2004Net sales (Notes 9 and 10)
    
    $
    107,798
    
    
    $
    99,378
    
    
    $
    105,470Cost of goods sold
    
    
    65,502
    
    
    
    63,032
    
    
    
    69,822Gross profit
    
    
    42,296
    
    
    
    36,346
    
    
    
    35,648Selling and administrative expenses
    
    
    33,462
    
    
    
    27,737
    
    
    
    28,008Operating income
    
    
    8,834
    
    
    
    8,609
    
    
    
    7,640Non-operating income (expense):Interest income (expense)
    
    
    130
    
    
    
    (317
    )
    
    
    (543
    )Other income (expense)
    
    
    (42
    )
    
    
    6
    
    
    
    145Total non-operating income (expense)
    
    
    88
    
    
    
    (311
    )
    
    
    (398
    )Income before income tax expense
    
    
    8,922
    
    
    
    8,298
    
    
    
    7,242Income tax expense (Note 3)
    
    
    2,578
    
    
    
    3,064
    
    
    
    269Net income
    
    $
    6,344
    
    
    $
    5,234
    
    
    $
    6,973Net income per common share:Basic
    
    $
    1.05
    
    
    $
    0.88
    
    
    $
    1.18Diluted
    
    $
    1.02
    
    
    $
    0.85
    
    
    $
    1.15Weighted average number of common shares outstanding:Basic
    
    
    6,022,349
    
    
    
    5,954,119
    
    
    
    5,890,721Diluted
    
    
    6,213,016
    
    
    
    6,165,547
    
    
    
    6,070,167
 See Notes to Consolidated Financial Statements.
 F - 4




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
Years Ended December 31, 2006, 2005, and 2004
(In Thousands)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    Stock
    
    
    EquityBalance, December 31, 2003
    
    $
    67
    
    
    $
    26,430
    
    
    $
    (1,215
    )
    
    $
    17,401
    
    
    $
    (4,807
    )
    
    $
    37,876Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,973
    
    
    
    
    
    
    
    6,973Minimum pension liability,
net of tax benefit of $450
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    200Exercise of stock options
    
    
    
    
    
    
    (175
    )
    
    
    
    
    
    
    
    
    
    
    277
    
    
    
    102Balance, December 31, 2004
    
    
    67
    
    
    
    26,255
    
    
    
    (1,015
    )
    
    
    24,374
    
    
    
    (4,530
    )
    
    
    45,151Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,234
    
    
    
    
    
    
    
    5,234Minimum pension liability,
net of tax benefit of $310
    
    
    
    
    
    
    
    
    
    
    (291
    )
    
    
    
    
    
    
    
    
    
    
    (291
    )Exercise of stock options
    
    
    
    
    
    
    (268
    )
    
    
    
    
    
    
    
    
    
    
    651
    
    
    
    383Balance, December 31, 2005
    
    
    67
    
    
    
    25,987
    
    
    
    (1,306
    )
    
    
    29,608
    
    
    
    (3,879
    )
    
    
    50,477Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,344
    
    
    
    
    
    
    
    6,344Adjustment to pension liability
net of tax benefit of $317
    
    
    
    
    
    
    
    
    
    
    (378
    )
    
    
    
    
    
    
    
    
    
    
    (378
    )Stock based compensation expense
    
    
    
    
    
    
    508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    508Exercise of stock options
    
    
    
    
    
    
    (37
    )
    
    
    
    
    
    
    
    
    
    
    430
    
    
    
    393Balance, December 31, 2006
    
    $
    67
    
    
    $
    26,458
    
    
    $
    (1,684
    )
    
    $
    35,952
    
    
    $
    (3,449
    )
    
    $
    57,344
 See 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, 2006, 2005, and 2004
(In Thousands)
 2006
    
    
    2005
    
    
    2004Cash Flows from Operating ActivitiesNet income
    
    $
    6,344
    
    
    $
    5,234
    
    
    $
    6,973Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation
    
    
    1,648
    
    
    
    1,353
    
    
    
    1,255Amortization
    
    
    14
    
    
    
    147
    
    
    
    216(Gain) loss on disposal or impairment of property and equipment
    
    
    46
    
    
    
    (30
    )
    
    
    540Stock-based compensation expense
    
    
    508
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    565
    
    
    
    895
    
    
    
    (318
    )Changes in current assets and liabilities:Trade accounts receivable
    
    
    (3,228
    )
    
    
    (1,071
    )
    
    
    (2,201
    )Inventories
    
    
    2,827
    
    
    
    (7,903
    )
    
    
    7,080Accounts payable
    
    
    25
    
    
    
    2,054
    
    
    
    621Accrued expenses and other
    
    
    1,102
    
    
    
    (1,285
    )
    
    
    1,344Net cash provided by (used in) operating activities
    
    
    9,851
    
    
    
    (606
    )
    
    
    15,510Cash Flows from Investing ActivitiesPurchases of property and equipment
    
    
    (4,089
    )
    
    
    (1,423
    )
    
    
    (934
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    610
    
    
    
    226Net cash used in investing activities
    
    
    (4,089
    )
    
    
    (813
    )
    
    
    (708
    )Cash Flows from Financing ActivitiesProceeds from long-term debt
    
    
    562
    
    
    
    
    
    
    
    Principal payments on long-term obligations
    
    
    
    
    
    
    
    
    
    
    (2,219
    )Net payments on short-term borrowings
    
    
    
    
    
    
    
    
    
    
    (5,319
    )Payment of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (217
    )Proceeds from exercise of stock options
    
    
    265
    
    
    
    383
    
    
    
    102Net cash provided by (used in) financing activities
    
    
    827
    
    
    
    383
    
    
    
    (7,653
    )Increase (decrease) in cash and cash equivalents
    
    
    6,589
    
    
    
    (1,036
    )
    
    
    7,149Cash and cash equivalents:Beginning
    
    
    6,113
    
    
    
    7,149
    
    
    
    Ending
    
    $
    12,702
    
    
    $
    6,113
    
    
    $
    7,149SUPPLEMENTAL INFORMATIONCash payments of:Interest
    
    $
    
    
    
    $
    323
    
    
    $
    602Income taxes
    
    $
    2,251
    
    
    $
    1,984
    
    
    $
    318Non-cash deferred income tax benefit from adjustment to
pension liability (Note 7)
    
    $
    (317
    )
    
    $
    (310
    )
    
    $
    (450
    )
 See 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:
  Summary of significant accounting policies:
 Principles of consolidation 
 Use of estimates in the preparation of financial statements 
 Cash and cash equivalents 
 Revenue recognition
 Fair
value of financial instruments Disclosures About Fair Value of Financial Instruments
 F - 7




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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
 Trade accounts receivable and allowance for doubtful accounts
 Inventories 
 Property and equipment
 Goodwill Goodwill and Other Intangible Assets
 Recoverability and impairment of intangible assets and other long-lived assets Accounting for the Impairment or Disposal of Long-Lived Assets
 F - 8




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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
 Product warranties
  December 31,2006
    
    
    2005Balance, beginning
    
    $
    762
    
    
    $
    846Accruals for products sold
    
    
    1,837
    
    
    
    1,494Costs incurred
    
    
    (1,827
    )
    
    
    (1,578
    )Balance, ending
    
    $
    772
    
    
    $
    762
 Stock-based compensation Share-Based Payment
 Income taxes
 Research and development costs 
 Advertising and promotion
 F - 9




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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
 Net income per common share Earnings per Share
  December 31,2006
    
    
    2005
    
    
    2004Basic weighted average shares outstanding
    
    
    6,022,349
    
    
    
    5,954,119
    
    
    
    5,890,721Dilutive securities:Stock options
    
    
    190,667
    
    
    
    211,428
    
    
    
    179,446Diluted weighted average shares outstanding
    
    
    6,213,016
    
    
    
    6,165,547
    
    
    
    6,070,167
 Note 2. Inventories
  December 31,2006
    
    
    2005Raw materials
    
    $
    1,433
    
    
    $
    1,218Work in process
    
    
    182
    
    
    
    145Finished goods
    
    
    20,913
    
    
    
    24,220Subtotal
    
    
    22,528
    
    
    
    25,583Less: provision for obsolete and slow-moving inventory
    
    
    (490
    )
    
    
    (718
    )Total
    
    $
    22,038
    
    
    $
    24,865
 Note 3. Income Tax Matters
  F - 10




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
   2006
    
    
    2005Deferred tax assets:Receivable allowances
    
    $
    197
    
    
    $
    301Inventory differences
    
    
    728
    
    
    
    669Compensation and benefits
    
    
    1,613
    
    
    
    1,605Warranty reserves and other
    
    
    849
    
    
    
    597Net operating loss carryforwards
    
    
    1,182
    
    
    
    1,253Valuation allowance
    
    
    (1,028
    )
    
    
    (1,091
    )Total deferred tax assets
    
    
    3,541
    
    
    
    3,334Deferred tax liabilitiesIntangibles
    
    
    3,377
    
    
    
    3,000Property and equipment
    
    
    59
    
    
    
    23Other
    
    
    170
    
    
    
    128Total deferred tax liabilities
    
    
    3,606
    
    
    
    3,151Net deferred tax assets (liabilities)
    
    $
    (65
    )
    
    $
    183
  December 31,2006
    
    
    2005Current assets
    
    $
    1,223
    
    
    $
    1,351Noncurrent liabilities
    
    
    (1,288
    )
    
    
    (1,168
    )Net deferred tax assets (liabilities)
    
    $
    (65
    )
    
    $
    183
  F - 11




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
  December 31,2006
    
    
    2005
    
    
    2004CurrentFederal
    
    $
    1,898
    
    
    $
    2,141
    
    
    $
    587State
    
    
    115
    
    
    
    28
    
    
    
    Deferred
    
    
    565
    
    
    
    895
    
    
    
    (318
    )Provision for income taxes
    
    $
    2,578
    
    
    $
    3,064
    
    
    $
    269
  December 31,2006
    
    
    2005
    
    
    2004Statutory federal tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State rate, net of federal tax effect
    
    
    3.1
    %
    
    
    2.3
    %
    
    
    4.2
    %Benefit of net operating loss carryforwards
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    (18.0
    %)Valuation allowance
    
    
    (0.7
    %)
    
    
    0.0
    %
    
    
    (15.9
    %)Federal and
state research and experimentation credits
    
    
    (7.7
    %)
    
    
    0.0
    %
    
    
    0.0
    %Other, net
    
    
    (0.8
    %)
    
    
    (0.4
    %)
    
    
    (1.6
    %)Effective tax rate
    
    
    28.9
    %
    
    
    36.9
    %
    
    
    3.7
    %
  Note 4. Financing Arrangements
   F - 12




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Financing Arrangements, Continued
  Note 5. Lease Commitments and Contingencies
 Lease Commitments 
 Contingencies 
 Note 6. Stock Options
   Accounting for Stock-Based Compensation
 F - 13




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
 Transition Election Related to Accounting for Tax Effects of
Share-Based Payment Awards
 Accounting for Stock Issued to Employees
 2005
    
    
    2004Net income as reported
    
    $
    5,234
    
    
    $
    6,973Deduct: Total stock-based employee compensation expense determined
under the fair value based method for all awards, net of the related
tax effects
    
    
    (310
    )
    
    
    (386
    )Pro forma net income
    
    $
    4,924
    
    
    $
    6,587Net income per common share:Basic  as reported
    
    $
    0.88
    
    
    $
    1.18Diluted  as reported
    
    $
    0.85
    
    
    $
    1.15Basic  pro forma
    
    $
    0.83
    
    
    $
    1.12Diluted  pro forma
    
    $
    0.80
    
    
    $
    1.09
   F - 14




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
  December 31,2006
    
    
    2005
    
    
    2004Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    42
    %
    
    
    40
    %
    
    
    55
    %Risk-free interest rate
    
    
    4.8
    %
    
    
    4.1
    %
    
    
    3.6
    %Expected life of options
    
    3.75 years
    
    4 years
    
    4 years
  Common Shares
    
    
    Weighted Average
    
    
    Average RemainingUnder Options
    
    
    Exercise Price
    
    
    Contract LifeDecember 31, 2003
    
    
    457,094
    
    
    $
    4.14Granted
    
    
    249,350
    
    
    
    7.78Canceled
    
    
    (84,050
    )
    
    
    7.61Exercised
    
    
    (31,203
    )
    
    
    3.29December 31, 2004
    
    
    591,191
    
    
    
    5.23Granted
    
    
    207,050
    
    
    
    11.03Canceled
    
    
    (64,562
    )
    
    
    6.87Exercised
    
    
    (82,881
    )
    
    
    4.48December 31, 2005
    
    
    650,798
    
    
    
    7.01Granted
    
    
    212,700
    
    
    
    11.01Canceled
    
    
    (60,510
    )
    
    
    10.08Exercised
    
    
    (53,266
    )
    
    
    4.97December 31, 2006
    
    
    749,722
    
    
    $
    8.04
    
    
    6.6 years
  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
    
    209,122
    
    $
    3.02
    
    
    5.2
    
    146,840
    
    $
    3.11
    
    
    5.0$7.70 - $10.50
    
    182,370
    
    $
    7.89
    
    
    6.8
    
    73,435
    
    $
    7.93
    
    
    6.3> $10.50
    
    358,230
    
    $
    11.04
    
    
    7.2
    
    42,140
    
    $
    11.23
    
    
    7.7749,722
    
    $
    8.04
    
    
    6.6
    
    262,415
    
    $
    5.76
    
    
    5.8
 F - 15




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
  Number ofSharesNonvested stock options at beginning of period
    
    
    455,643Vested
    
    
    (120,526
    )Canceled
    
    
    (60,510
    )Granted
    
    
    212,700Nonvested stock options at end of period
    
    
    487,307
  Note 7. Compensation and Benefit Agreements
    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 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Changes in benefit obligations:Obligations at beginning of year
    
    $
    16,002
    
    
    $
    15,889
    
    
    $
    282
    
    
    $
    281Interest cost
    
    
    963
    
    
    
    972
    
    
    
    17
    
    
    
    16Benefits paid
    
    
    (1,050
    )
    
    
    (1,039
    )
    
    
    (17
    )
    
    
    (15
    )Actuarial losses
    
    
    863
    
    
    
    180
    
    
    
    12
    
    
    
    Obligations at end of year
    
    $
    16,778
    
    
    $
    16,002
    
    
    $
    294
    
    
    $
    282Changes in plan assets:Fair value of assets at beginning of year
    
    $
    12,270
    
    
    $
    12,575
    
    
    $
    
    
    
    $
    Actual return on assets
    
    
    1,191
    
    
    
    552
    
    
    
    
    
    
    
    Company contributions
    
    
    609
    
    
    
    182
    
    
    
    17
    
    
    
    15Benefits paid
    
    
    (1,050
    )
    
    
    (1,039
    )
    
    
    (17
    )
    
    
    (15
    )Fair value of assets at end of year
    
    $
    13,020
    
    
    $
    12,270
    
    
    $
    
    
    
    $
    Funded status at end of year:Plan assets less than obligations
    
    $
    (3,758
    )
    
    $
    (3,732
    )
    
    $
    (294
    )
    
    $
    (268
    )Unrecognized (gain) loss
    
    
    2,638
    
    
    
    2,066
    
    
    
    11
    
    
    
    (14
    )Unrecognized prior service cost
    
    
    123
    
    
    
    138
    
    
    
    
    
    
    
    Accrued benefit cost
    
    $
    (997
    )
    
    $
    (1,528
    )
    
    $
    (283
    )
    
    $
    (282
    )
  Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans
 December 31, 2006Before
    
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    
    Application ofSFAS 158
    
    
    Adjustments
    
    
    SFAS 158
    
    
    Dec 31, 2005Pension intangible asset
    
    $
    123
    
    
    $
    (123
    )
    
    $
    
    
    
    $
    138Pension liability
    
    
    (3,758
    )
    
    
    
    
    
    
    (3,758
    )
    
    
    (3,732
    )Accumulated other comp. loss
    
    
    2,638
    
    
    
    123
    
    
    
    2,761
    
    
    
    2,066Amount recorded as a deferred tax asset
    
    
    1,077
    
    
    
    
    
    
    
    1,077
    
    
    
    760Cumulative equity reduction component
    
    $
    1,561
    
    
    $
    123
    
    
    $
    1,684
    
    
    $
    1,306
 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
  Recorded inPrior
    
    
    
    
    
    
    
    
    
    Deferred
    
    AccumulatedService
    
    Unrecognized
    
    
    
    
    
    Tax
    
    Other Comp.Cost
    
    Losses
    
    Total
    
    Amount
    
    LossBalance, December 31, 2003
    
    $
    168
    
    
    $
    1,747
    
    
    $
    1,915
    
    
    $
    (700
    )
    
    $
    1,215Incurred in the current year
    
    
    
    
    
    
    (435
    )
    
    
    (435
    )
    
    
    244
    
    
    
    (191
    )Recognized as component of
net period cost
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )
    
    
    6
    
    
    
    (9
    )Balance, December 31, 2004
    
    
    153
    
    
    
    1,312
    
    
    
    1,465
    
    
    
    (450
    )
    
    
    1,015Incurred in the current year
    
    
    
    
    
    
    619
    
    
    
    619
    
    
    
    (317
    )
    
    
    302Recognized as component of
net period cost
    
    
    (15
    )
    
    
    (3
    )
    
    
    (18
    )
    
    
    7
    
    
    
    (11
    )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
    )
    
    $
    1,684To be recognized as component of
net period cost in 2007
    
    
    (15
    )
    
    
    (101
    )
  Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Cost recognized during the year:Interest cost
    
    $
    963
    
    
    $
    972
    
    
    $
    999
    
    
    $
    17
    
    
    $
    16
    
    
    $
    18Expected return on plan assets
    
    
    (940
    )
    
    
    (976
    )
    
    
    (989
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of loss
    
    
    41
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Net period cost
    
    $
    79
    
    
    $
    14
    
    
    $
    25
    
    
    $
    17
    
    
    $
    16
    
    
    $
    18
 Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2006
    
    2005
    
    2004Assumptions used in computations:Discount Rate
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %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
   Target
    
    
    Percentage of Plan AssetsAllocation
    
    
    December 31,Asset Category
    
    2007
    
    
    2006
    
    
    2005Equity securities
    
    
    50% - 60
    %
    
    
    57
    %
    
    
    58
    %Debt securities
    
    
    40% - 50
    %
    
    
    43
    %
    
    
    42
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
   Year(s)
    
    Pension Benefits
    
    
    Other Benefits2007
    
    $
    1,015
    
    
    $
    182008
    
    
    1,010
    
    
    
    192009
    
    
    995
    
    
    
    202010
    
    
    985
    
    
    
    212011
    
    
    970
    
    
    
    222012-2016
    
    
    5,175
    
    
    
    116
 Note 8. Comprehensive Income
  December 31,2006
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    6,344
    
    
    $
    5,234
    
    
    $
    6,973Adjustment to pension liability
    
    
    (378
    )
    
    
    (291
    )
    
    
    200Comprehensive income
    
    $
    5,966
    
    
    $
    4,943
    
    
    $
    7,173
 F - 19




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9. Significant Risks and Uncertainties
 Concentrations of Credit Risk  Cash -
 Concentration of Credit Risk  Accounts Receivable -
 Major Customer
 Note 10. Enterprise-wide Disclosures
  Years Ended December 31,2006
    
    2005
    
    2004Footwear
    
    $
    101,846
    
    
    $
    95,054
    
    
    $
    100,969Protective Clothing and Apparel
    
    
    5,952
    
    
    
    4,324
    
    
    
    4,501$
    107,798
    
    
    $
    99,378
    
    
    $
    105,470
  Years Ended December 31,2006
    
    2005
    
    2004United States
    
    $
    102,245
    
    
    $
    94,310
    
    
    $
    101,644Foreign Countries
    
    
    5,553
    
    
    
    5,068
    
    
    
    3,826$
    107,798
    
    
    $
    99,378
    
    
    $
    105,470
 F - 20




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 11. Recent Accounting Pronouncements
 Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
 Fair Value Measurements
 Accounting for Uncertainty in Income Taxes-an
Interpretation of FASB Statement 109
 Note 12. Quarterly Selected Financial Data (Unaudited)
  2006Q1
    
    Q2
    
    Q3
    
    Q4Net sales
    
    $
    21,401
    
    
    $
    21,822
    
    
    $
    32,840
    
    
    $
    31,735Gross profit
    
    
    8,384
    
    
    
    8,684
    
    
    
    12,669
    
    
    
    12,559Operating income
    
    
    563
    
    
    
    996
    
    
    
    3,933
    
    
    
    3,342Income tax expense (benefit)
    
    
    221
    
    
    
    (98
    )
    
    
    1,365
    
    
    
    1,090Net income
    
    
    392
    
    
    
    1,179
    
    
    
    2,548
    
    
    
    2,225Basic income per common share
    
    
    0.07
    
    
    
    0.20
    
    
    
    0.42
    
    
    
    0.37Diluted income per common share
    
    
    0.06
    
    
    
    0.19
    
    
    
    0.41
    
    
    
    0.36
 2005Q1
    
    Q2
    
    Q3
    
    Q4Net sales
    
    $
    18,866
    
    
    $
    19,752
    
    
    $
    31,021
    
    
    $
    29,739Gross profit
    
    
    7,004
    
    
    
    7,066
    
    
    
    11,381
    
    
    
    10,895Operating income
    
    
    551
    
    
    
    690
    
    
    
    4,016
    
    
    
    3,352Income tax expense
    
    
    186
    
    
    
    222
    
    
    
    1,416
    
    
    
    1,239Net income
    
    
    318
    
    
    
    408
    
    
    
    2,463
    
    
    
    2,045Basic income per common share
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.41
    
    
    
    0.34Diluted income per common share
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.40
    
    
    
    0.33
 F - 21