##### Table of Contents



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, 2007
 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: 0-23800
 LaCrosse Footwear, Inc.
 (Exact name of registrant as specified in its charter)
 Wisconsin
 39-1446816
 (I.R.S. Employer Identification No.)
 17634 NE Airport Way  Portland, Oregon
  97230
 (Zip code)
   Title of Class:
    
    Exchange on which securities are registered:Common Stock, $.01 par value
    
    NASDAQ Global Market
  o þ
 o þ
 þ o
 o
  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




---



##### 



TABLE OF CONTENTS
 PagePART IITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    8ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    14ITEM 2. PROPERTIES
    
    
    14ITEM 3. LEGAL PROCEEDINGS
    
    
    14ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    15PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
    
    
    15ITEM 6. SELECTED FINANCIAL DATA
    
    
    17ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    18ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    25ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    26ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    26ITEM 9A. CONTROLS AND PROCEDURES (Including Managements
Annual Report on Internal Control Over Financial
Reporting)
    
    
    26ITEM 9B. OTHER INFORMATION
    
    
    27PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT,
AND CORPORATE GOVERNANCE
    
    
    27ITEM 11. EXECUTIVE COMPENSATION
    
    
    27ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    28ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
    
    
    28ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    28PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    29SIGNATURES
    
    
    30EXHIBITS INDEX
    
    
    34CONSOLIDATED FINANCIAL STATEMENTS
    
    F-1 to F-22EXHIBIT 10.14EXHIBIT 10.15EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




---



##### Table of Contents



PART I
 
 Item 1. Business
  General
 ® ®
 Company history
   Corporate strategy
  
    
    Build, position and capitalize on the strengths of established brands
    
    Develop innovative products and relevant technologies that will differentiate our
products, footwear and apparel
    
    Offer superior customer service,and
    
    Expand and enhance our strong distribution network of sales representatives and retail
and industrial customers
 Brand Positioning
 ® ® ® ® ®
 -1-




---



##### Table of Contents



Products
  Danner
 ®
 LaCrosse
  Styles
  Product Design and Development
   -2-




---



##### Table of Contents



Customers, Sales, and Distribution
  ® ®
  ® ® 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.
  -3-




---



##### Table of Contents



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
  -4-




---



##### Table of Contents



® ® ® ®
  Employees
  Trademarks and Trade Names; Patents
 ® ® ® ® ® ® ® ® ® TM ® TM ® ® ® ® ®
 ® TM ® TM
 Seasonality
  -5-




---



##### Table of Contents



Foreign Operations and Sales Outside of the United States
   Environmental Matters
  Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJoseph P. Schneider
    
    48
    
    President, Chief Executive Officer and DirectorDavid P. Carlson
    
    52
    
    Executive Vice President, Chief Financial Officer, and SecretaryCraig P. Cohen
    
    41
    
    Vice President of Demand PlanningC. Kirk Layton
    
    52
    
    Vice President of Finance, Corporate Controller and Assistant SecretaryKirk S. Nichols
    
    39
    
    Vice President of Sales and MarketingJ. Gary Rebello
    
    56
    
    Vice President of Human ResourcesRobert G. Rinehart, Jr.
    
    55
    
    Vice President of Product Development
 -6-




---



##### Table of Contents



Where You Can Find More Information
 www.sec.gov www.lacrossefootwearinc.com
 Forward Looking Statements
    -7-




---



##### Table of Contents



Item 1A. Risk Factors
  A decline in consumer spending due to unfavorable economic and consumer credit conditions could
hinder our product revenues and earnings.
  Our business is substantially affected by the 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.
  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 could disrupt our supply of product to
customers.
 ®
 
 
 
 
 
 
 -8-




---



##### Table of Contents




 
 
 
 
 
 
 
 
  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 domestic retailers, and their capital requirements to fund growth,
increases and concentrates our credit risk.
  -9-




---



##### Table of Contents



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.
   Labor disruptions or disruptions due to natural disasters or casualty losses at one of our three
distribution facilities or our domestic manufacturing facility could have a material adverse effect
on our operations.
  -10-




---



##### Table of Contents



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.
   
    
    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 than we do.
  -11-




---



##### Table of Contents



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 . Also, our product costs are subject to risks associated with foreign
currency fluctuations (particularly with respect to the Euro and Chinese Renminbi), oil price
increases and higher foreign labor costs. If we are unable to increase our selling prices to
offset such product cost increases, our revenues and earnings would be negatively impacted.
  Our failure or inability to protect our intellectual property could significantly harm our
competitive position and reduce future revenues.
  -12-




---



##### Table of Contents



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 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
  -13-




---



##### Table of Contents



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 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
  -14-




---



##### Table of Contents



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
  2007
    
    2006High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    16.48
    
    
    $
    12.72
    
    
    $
    12.15
    
    
    $
    9.70Second Quarter
    
    $
    18.99
    
    
    $
    15.06
    
    
    $
    13.98
    
    
    $
    11.30Third Quarter
    
    $
    22.99
    
    
    $
    16.26
    
    
    $
    13.50
    
    
    $
    11.49Fourth Quarter
    
    $
    18.83
    
    
    $
    16.78
    
    
    $
    13.71
    
    
    $
    11.63
  Dividends
    Sales of Unregistered Securities
  -15-




---



##### Table of Contents



Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Equity Compensation Plan Information
  Market Price of the Registrants Common Equity
  
 12/31/2002
    
    
    12/31/2003
    
    
    12/31/2004
    
    
    12/31/2005
    
    
    12/31/2006
    
    
    12/31/2007LaCrosse Footwear, Inc.
    
    
    $
    100
    
    
    
    $
    303
    
    
    
    $
    415
    
    
    
    $
    417
    
    
    
    $
    510
    
    
    
    $
    680NASDAQ Global Market Index
    
    
    $
    100
    
    
    
    $
    150
    
    
    
    $
    163
    
    
    
    $
    167
    
    
    
    $
    184
    
    
    
    $
    202Hemscott Group Index
    
    
    $
    100
    
    
    
    $
    146
    
    
    
    $
    195
    
    
    
    $
    210
    
    
    
    $
    258
    
    
    
    $
    257
 -16-




---



##### Table of Contents



Item 6. Selected Financial Data
 Selected Income Statement Data
 Year Ended December 31
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003(in thousands, except per share data)Net sales
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378
    
    
    $
    105,470
    
    
    $
    95,687Operating income
    
    $
    10,983
    
    
    $
    8,834
    
    
    $
    8,609
    
    
    $
    7,640
    
    
    $
    3,666Net income
    
    $
    7,300
    
    
    $
    6,344
    
    
    $
    5,234
    
    
    $
    6,973
    
    
    $
    2,630Net income per common shareBasic
    
    $
    1.20
    
    
    $
    1.05
    
    
    $
    0.88
    
    
    $
    1.18
    
    
    $
    0.45Diluted
    
    $
    1.15
    
    
    $
    1.02
    
    
    $
    0.85
    
    
    $
    1.15
    
    
    $
    0.44Weighted average common shares outstandingBasic
    
    
    6,087
    
    
    
    6,022
    
    
    
    5,954
    
    
    
    5,891
    
    
    
    5,874Diluted
    
    
    6,357
    
    
    
    6,213
    
    
    
    6,166
    
    
    
    6,070
    
    
    
    5,939
 Selected Balance Sheet Data
 Year Ended December 31
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003(in thousands)Inventories
    
    $
    27,131
    
    
    $
    22,038
    
    
    $
    24,865
    
    
    $
    16,962
    
    
    $
    24,042Total assets
    
    $
    83,547
    
    
    $
    73,533
    
    
    $
    64,583
    
    
    $
    57,788
    
    
    $
    55,241Note payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,319Long-term debt, including current maturities
    
    $
    394
    
    
    $
    506
    
    
    
    
    
    
    
    
    
    
    $
    2,219Shareholders equity
    
    $
    65,985
    
    
    $
    57,344
    
    
    $
    50,477
    
    
    $
    45,151
    
    
    $
    37,876Inventory turns
    
    
    2.7
    
    
    
    2.8
    
    
    
    3.0
    
    
    
    3.4
    
    
    
    2.8Days sales outstanding
    
    
    62
    
    
    
    56
    
    
    
    50
    
    
    
    49
    
    
    
    44
   -17-




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
   ® ®
    -18-




---



##### Table of Contents



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 bpsOperating Expenses
    
    $
    35.9
    
    
    $
    33.5
    
    
    $
    2.4
    
    
    
    7
    %% of Net Sales
    
    
    30.4
    %
    
    
    31.0
    %
    
    
    
    
    
    (60 bps)Non-Operating Income
    
    $
    0.3
    
    
    $
    0.1
    
    
    $
    0.2
    
    
    
    190
    %Income Before Income Taxes
    
    $
    11.3
    
    
    $
    8.9
    
    
    $
    2.4
    
    
    
    27
    %Income Tax Provision
    
    $
    4.0
    
    
    $
    2.6
    
    
    $
    1.4
    
    
    
    53
    %Net Income
    
    $
    7.3
    
    
    $
    6.3
    
    
    $
    1.0
    
    
    
    16
    %
 Consolidated Net Sales:
 Gross Profit:
 Operating Expenses:
 Non-operating Income:
 Income Before Income Taxes:
 Income Taxes:
 Net Income:
 -19-




---



##### Table of Contents



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
    %
    
    
    
    
    
    260 bpsOperating Expenses
    
    $
    33.5
    
    
    $
    27.7
    
    
    $
    5.7
    
    
    
    21
    %% of Net Sales
    
    
    31.0
    %
    
    
    27.9
    %
    
    
    
    
    
    310 bpsNon-Operating Income (Expense)
    
    $
    0.1
    
    
    
    ($0.3
    )
    
    $
    0.4
    
    
    
    (133
    %)Income Before Income Taxes
    
    $
    8.9
    
    
    $
    8.3
    
    
    $
    0.6
    
    
    
    8
    %Income Tax Provision
    
    $
    2.6
    
    
    $
    3.1
    
    
    
    ($0.5
    )
    
    
    (16
    %)Net Income
    
    $
    6.3
    
    
    $
    5.2
    
    
    $
    1.1
    
    
    
    21
    %
 Consolidated Net Sales:
 Gross Profit:
 Operating Expenses:
 Non-operating Income:
 Income Before Income Taxes:
 Income Taxes:
 -20-




---



##### Table of Contents



Net Income:
 LIQUIDITY AND CAPITAL RESOURCES
         -21-




---



##### Table of Contents



OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
   (In Thousands)
    
    Payments due by periodContractual Obligations
    
    Total
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterLong-term debt (1)
    
    $
    394
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    394Operating leases (2)
    
    
    10,255
    
    
    
    2,105
    
    
    
    1,344
    
    
    
    990
    
    
    
    1,012
    
    
    
    1,012
    
    
    
    3,792Total Contractual Obligations
    
    $
    10,649
    
    
    $
    2,105
    
    
    $
    1,344
    
    
    $
    990
    
    
    $
    1,012
    
    
    $
    1,012
    
    
    $
    4,186
 
 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.    Other Commercial Commitment
    
    Maximum Amount Committed
    
    Outstanding at 12/31/07
    
    Date of ExpirationLine of credit
    
    $
    30,000
    
    
    $
    
    
    
    June 2009
  -22-




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Allowances for Doubtful Accounts, Cash Discounts and Non-Defective Returns:
   Allowance for Slow-Moving Inventory:
 Product Warranty:
 Valuation of Long-Lived and Intangible Assets:
   -23-




---



##### Table of Contents



Pension and Other Postretirement Benefit Plans:
 Deferred Tax Asset Valuation Allowance:
 Stock-Based Compensation: Share-Based Payment
  -24-




---



##### Table of Contents



Recently Issued Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option For Financial Assets and
Financial Liabilities
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   -25-




---



##### Table of Contents



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
 Managements Annual Report on Internal Control over Financial Reporting
 Internal Control  Integrated
Framework
 -26-




---



##### Table of Contents



Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers of the Registrant, and Corporate Governance
  www.lacrossefootwearinc.com
 
 Item 11. Executive Compensation
  27




---



##### Table of Contents



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
    
    
    788,579
    
    
    $
    8.94
    
    
    
    550,000Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    788,579
    
    
    $
    8.94
    
    
    
    550,000
 
 (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 439,000 shares of the Companys Common Stock available for issuance under
the 2007 Long Term Incentive Plan and 111,000 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
  28




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Financial 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, 2007 and 2006
    
    
    F-2Consolidated Statements of Income for the Years ended December 31,
2007, 2006, and 2005
    
    
    F-4Consolidated Statements of Shareholders Equity for the Years ended
December 31, 2007, 2006, and 2005
    
    
    F-5Consolidated Statements of Cash Flows for the Years ended December 31,
2007, 2006, and 2005
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 2.
    
    Financial Statement ScheduleThe financial statement schedule for the years ended December 31, 2007, 2006 and 2005
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
    
    
    31Schedule II Valuation and Qualifying Accounts
    
    
    32-33
 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.
 29




---



##### 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 7, 2008/s/ David P. Carlson

David P. Carlson
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
    
    March 7, 2008/s/ Richard A. Rosenthal

Richard A. Rosenthal
    
    Chairman of the Board and Director
    
    March 7, 2008/s/ Stephen F. Loughlin
Stephen F. Loughlin
    
    Director
    
    March 7, 2008/s/ Luke E. Sims

Luke E. Sims
    
    Director
    
    March 7, 2008/s/ Charles W. Smith

Charles W. Smith
    
    Director
    
    March 7, 2008/s/ John D. Whitcombe

John D. Whitcombe
    
    Director
    
    March 7, 2008/s/ William H. Williams

William H. Williams
    
    Director
    
    March 7, 2008
 30




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE
   /s/ McGladrey & Pullen, LLP 
 31




---



##### Table of Contents



AdditionsBalance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    
    Charged to Costs
    
    
    Charged To
    
    
    
    
    
    
    at Endof Year
    
    
    and Expenses
    
    
    Other Accounts
    
    
    Deductions
    
    
    of YearYear 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
    
    
    
    75
    
    
    
    
    
    
    
    55
    
    
    
    353Total
    
    $
    520
    
    
    $
    4,333
    
    
    $
    
    
    
    $
    4,078
    
    
    $
    775Allowance for slow-moving inventory
    
    $
    1,698
    
    
    $
    302
    
    
    $
    
    
    
    $
    1,282
    
    
    $
    718Deferred tax asset valuation allowance
    
    $
    1,088
    
    
    $
    3
    
    
    $
    
    
    
    $
    
    
    
    $
    1,091Allowance for warranties
    
    $
    846
    
    
    $
    1,494
    
    
    $
    
    
    
    $
    1,578
    
    
    $
    762Year 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
    
    
    $
    772
 32




---



##### 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, 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




---



##### 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. 2008 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 27, 2007)(10.9)*
    
    Summary of 2008 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 27, 2007))
 
 *
    
    A management contract or compensatory plan or arrangement. 34




---



##### 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)
    
    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)(10.14)
    
    Certified Manufacturer Agreement, dated as of March 5, 2003, between W.L. Gore
& Associates, Inc. and LaCrosse Footwear, Inc.
[Confidential treatment has been requested with respect to a portion of
this Agreement](10.15)
    
    Trademark License, dated as of February 25, 2003, between W.L. Gore & Associates,
Inc. and LaCrosse Footwear, Inc.
[Confidential treatment has been requested with respect to a portion of
this Agreement](10.16)
    
    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)(10.17)
    
    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)(10.18)
    
    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)(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(99.1)
    
    Proxy Statement for the 2008 Annual Meeting of ShareholdersThe Proxy Statement for the 2008 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 2008 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




---



##### Table of Contents



INDEX
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1CONSOLIDATED 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-22




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F - 1




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31, 2007 and 2006
 (In Thousands, except share and per share data)
 ASSETS
    
    2007
    
    2006CURRENT ASSETSCash and
cash equivalents (Note 8)
    
    $
    15,385
    
    
    $
    12,702Trade accounts receivable, less allowances of
$0.7 million in 2007 and $0.6 million in 2006 (Note 8)
    
    
    22,593
    
    
    
    19,912Inventories (Note 2)
    
    
    27,131
    
    
    
    22,038Prepaid expenses and other
    
    
    1,068
    
    
    
    987Deferred tax assets (Note 3)
    
    
    1,201
    
    
    
    1,223Total current assets
    
    
    67,378
    
    
    
    56,862PROPERTY AND EQUIPMENTLeasehold improvements
    
    
    2,042
    
    
    
    2,018Machinery and equipment
    
    
    13,800
    
    
    
    14,21015,842
    
    
    
    16,228Less accumulated depreciation
    
    
    10,879
    
    
    
    10,786Property and equipment, net
    
    
    4,963
    
    
    
    5,442OTHER ASSETSGoodwill
    
    
    10,753
    
    
    
    10,753Other assets
    
    
    453
    
    
    
    476Total other assets
    
    
    11,206
    
    
    
    11,229TOTAL ASSETS
    
    $
    83,547
    
    
    $
    73,533
 See accompanying notes to consolidated financial statements.
 F - 2




---



##### Table of Contents



LIABILITIES AND SHAREHOLDERS EQUITY
    
    2007
    
    2006CURRENT LIABILITIESAccounts payable
    
    $
    7,456
    
    
    $
    5,427Accrued compensation
    
    
    3,324
    
    
    
    3,183Other accruals
    
    
    1,982
    
    
    
    1,575Total current liabilities
    
    
    12,762
    
    
    
    10,185LONG-TERM DEBT (Note 4)
    
    
    394
    
    
    
    506DEFERRED REVENUE (Note 4)
    
    
    131
    
    
    
    169COMPENSATION AND BENEFITS (Note 7)
    
    
    1,993
    
    
    
    4,041DEFERRED TAX LIABILITIES (Note 3)
    
    
    2,282
    
    
    
    1,288Total liabilities
    
    
    17,562
    
    
    
    16,189COMMITMENTS AND CONTINGENCIES (Notes 5 and 8)SHAREHOLDERS EQUITY (Notes 6, 7 and 12)Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 6,717,627 shares
    
    
    67
    
    
    
    67Additional paid-in capital
    
    
    27,473
    
    
    
    26,458Accumulated other comprehensive loss
    
    
    (1,011
    )
    
    
    (1,684
    )Retained earnings
    
    
    42,328
    
    
    
    35,952Less cost of 600,362 and 675,104 shares of treasury stock
    
    
    (2,872
    )
    
    
    (3,449
    )Total shareholders equity
    
    
    65,985
    
    
    
    57,344TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    83,547
    
    
    $
    73,533
 See accompanying notes to consolidated financial statements.
 F - 3




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
 Years Ended December 31, 2007, 2006, and 2005
 (In Thousands, except share and per share data)
 2007
    
    2006
    
    2005Net sales (Note 9)
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378Cost of goods sold
    
    
    71,273
    
    
    
    65,502
    
    
    
    63,032Gross profit
    
    
    46,906
    
    
    
    42,296
    
    
    
    36,346Selling and administrative expenses
    
    
    35,923
    
    
    
    33,462
    
    
    
    27,737Operating income
    
    
    10,983
    
    
    
    8,834
    
    
    
    8,609Non-operating income (expense)
    
    
    289
    
    
    
    88
    
    
    
    (311
    )Income before income taxes
    
    
    11,272
    
    
    
    8,922
    
    
    
    8,298Income tax provision (Note 3)
    
    
    3,972
    
    
    
    2,578
    
    
    
    3,064Net income
    
    $
    7,300
    
    
    $
    6,344
    
    
    $
    5,234Net income per common share:Basic
    
    $
    1.20
    
    
    $
    1.05
    
    
    $
    0.88Diluted
    
    $
    1.15
    
    
    $
    1.02
    
    
    $
    0.85Weighted average number of common shares outstanding:Basic
    
    
    6,087,224
    
    
    
    6,022,349
    
    
    
    5,954,119Diluted
    
    
    6,357,235
    
    
    
    6,213,016
    
    
    
    6,165,547
 See accompanying notes to consolidated financial statements.
 F - 4




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 AND COMPREHENSIVE INCOME
 Years Ended December 31, 2007, 2006, and 2005
 (In Thousands)
 AccumulatedAdditional
    
    Other
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    Paid-In
    
    Comprehensive
    
    Retained
    
    Treasury
    
    Shareholders
    
    ComprehensiveStock
    
    Capital
    
    Loss
    
    Earnings
    
    Stock
    
    Equity
    
    IncomeBalance, December 31, 2004
    
    $
    67
    
    
    $
    26,255
    
    
    $
    (1,015
    )
    
    $
    24,374
    
    
    $
    (4,530
    )
    
    $
    45,151Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,234
    
    
    
    
    
    
    
    5,234
    
    
    $
    5,234Minimum pension liability,
net of tax benefit of $310
    
    
    
    
    
    
    
    
    
    
    (291
    )
    
    
    
    
    
    
    
    
    
    
    (291
    )
    
    
    (291
    )Exercise of stock options
    
    
    
    
    
    
    (268
    )
    
    
    
    
    
    
    
    
    
    
    651
    
    
    
    383Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,943Balance, 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
FIN 48 (Note 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    )
    
    $
    65,985
 See accompanying notes to consolidated financial statements.
 F - 5




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2007, 2006, and 2005
 (In Thousands)
 2007
    
    2006
    
    2005Cash Flows from Operating ActivitiesNet income
    
    $
    7,300
    
    
    $
    6,344
    
    
    $
    5,234Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    1,761
    
    
    
    1,662
    
    
    
    1,500(Gain) loss on disposal or impairment of property and equipment
    
    
    97
    
    
    
    46
    
    
    
    (30
    )Stock-based compensation expense
    
    
    549
    
    
    
    508
    
    
    
    Deferred income taxes
    
    
    586
    
    
    
    565
    
    
    
    895Changes in current assets and liabilities:Trade accounts receivable
    
    
    (2,681
    )
    
    
    (3,228
    )
    
    
    (1,071
    )Inventories
    
    
    (5,093
    )
    
    
    2,827
    
    
    
    (7,903
    )Accounts payable
    
    
    2,029
    
    
    
    25
    
    
    
    2,054Accrued expenses and other
    
    
    (488
    )
    
    
    974
    
    
    
    (1,285
    )Net cash provided by (used in) operating activities
    
    
    4,060
    
    
    
    9,723
    
    
    
    (606
    )Cash Flows from Investing ActivitiesPurchases of property and equipment
    
    
    (1,508
    )
    
    
    (4,089
    )
    
    
    (1,423
    )Proceeds from sales of property and equipment
    
    
    2
    
    
    
    
    
    
    
    610Net cash used in investing activities
    
    
    (1,506
    )
    
    
    (4,089
    )
    
    
    (813
    )Cash Flows from Financing ActivitiesProceeds from issuance of long-term debt
    
    
    
    
    
    
    562
    
    
    
    Cash dividends paid
    
    
    (914
    )
    
    
    
    
    
    
    Proceeds from exercise of stock options
    
    
    1,043
    
    
    
    393
    
    
    
    383Net cash provided by financing activities
    
    
    129
    
    
    
    955
    
    
    
    383Increase (decrease) in cash and cash equivalents
    
    
    2,683
    
    
    
    6,589
    
    
    
    (1,036
    )Cash and cash equivalents:Beginning
    
    
    12,702
    
    
    
    6,113
    
    
    
    7,149Ending
    
    $
    15,385
    
    
    $
    12,702
    
    
    $
    6,113SUPPLEMENTAL INFORMATIONCash payments of:Interest
    
    $
    
    
    
    $
    
    
    
    $
    323Income taxes
    
    $
    2,903
    
    
    $
    2,251
    
    
    $
    1,984Non-cash deferred income tax expense (benefit) benefit from
adjustment to pension liability (Note 7)
    
    $
    430
    
    
    $
    (317
    )
    
    $
    (310
    )
 See accompanying notes to consolidated financial statements.
 F - 6




---



##### 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 
 Reclassifications 
 Cash and cash equivalents 
 Revenue recognition
 Fair value of financial instruments Disclosures About Fair Value of Financial Instruments
 F - 7




---



##### 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




---



##### 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 31,2007
    
    2006Balance, beginning
    
    $
    772
    
    
    $
    762Accruals for products sold
    
    
    2,197
    
    
    
    1,837Costs incurred
    
    
    (2,028
    )
    
    
    (1,827
    )Balance, ending
    
    $
    941
    
    
    $
    772
 Stock-based compensation Share-Based Payment
 Income taxes
 Research and development costs 
 Advertising and promotion
 F - 9




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENT
 Note 1. Nature of Business and Significant Accounting Policies, Continued
 Net income per common share Earnings per Share,
  December 31,2007
    
    
    2006
    
    
    2005Basic weighted average shares outstanding
    
    
    6,087,224
    
    
    
    6,022,349
    
    
    
    5,954,119Dilutive securities: stock options
    
    
    270,011
    
    
    
    190,667
    
    
    
    211,428Diluted weighted average shares outstanding
    
    
    6,357,235
    
    
    
    6,213,016
    
    
    
    6,165,547
 Note 2. Inventories
  December 31,2007
    
    
    2006Raw materials
    
    $
    1,691
    
    
    $
    1,433Work in process
    
    
    183
    
    
    
    182Finished goods
    
    
    25,631
    
    
    
    20,913Subtotal
    
    
    27,505
    
    
    
    22,528Less: provision for obsolete and slow-moving inventory
    
    
    (374
    )
    
    
    (490
    )Total
    
    $
    27,131
    
    
    $
    22,038
 Note 3. Income Tax Matters
  F -10




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
   December 31,2007
    
    
    2006Deferred tax assets:Trade receivable allowances
    
    $
    201
    
    
    $
    197Inventory differences
    
    
    677
    
    
    
    728Compensation and benefits
    
    
    811
    
    
    
    1,613Warranty reserves and other
    
    
    1,094
    
    
    
    849Net operating loss carryforwards
    
    
    1,140
    
    
    
    1,182Valuation allowance
    
    
    (1,028
    )
    
    
    (1,028
    )Total deferred tax assets
    
    
    2,895
    
    
    
    3,541Deferred tax liabilitiesGoodwill amortization
    
    
    3,754
    
    
    
    3,377Property and equipment
    
    
    42
    
    
    
    59Prepaid expenses and other
    
    
    180
    
    
    
    170Total deferred tax liabilities
    
    
    3,976
    
    
    
    3,606Net deferred tax liabilities
    
    $
    (1,081
    )
    
    $
    (65
    )
  December 31,2007
    
    
    2006Current assets
    
    $
    1,201
    
    
    $
    1,223Noncurrent liabilities
    
    
    (2,282
    )
    
    
    (1,288
    )Net deferred tax liabilities
    
    $
    (1,081
    )
    
    $
    (65
    )
  December 31,2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    3,071
    
    
    $
    1,898
    
    
    $
    2,141State
    
    
    315
    
    
    
    115
    
    
    
    28Deferred
    
    
    586
    
    
    
    565
    
    
    
    895Provision for income taxes
    
    $
    3,972
    
    
    $
    2,578
    
    
    $
    3,064
 F -11




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Income Tax Matters, Continued
  December 31,2007
    
    2006
    
    2005Statutory federal tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State rate, net of federal tax effect
    
    
    3.2
    %
    
    
    3.1
    %
    
    
    2.3
    %Federal & state research and experimentation credits
    
    
    (1.7
    %)
    
    
    (7.7
    %)
    
    
    0.0
    %Other, net
    
    
    (0.3
    %)
    
    
    (0.5
    %)
    
    
    0.6
    %Effective income tax rate
    
    
    35.2
    %
    
    
    28.9
    %
    
    
    36.9
    %
    Balance at January 1, 2007
    
    $
    163Additions for tax positions of prior years
    
    
    9Additions based on tax positions related to the current year
    
    
    43Balance at December 31, 2007
    
    $
    215
    F -12




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Financing Arrangements
  
  Note 5. Lease Commitments and Contingencies
 Lease Commitments
 Contingencies
 F -13




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options
  Accounting for
Stock-Based Compensation
   F -14




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Stock Options, Continued
  December 31,2007
    
    2006
    
    2005Expected dividend yield *
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected stock price volatility
    
    
    42
    %
    
    
    42
    %
    
    
    40
    %Risk-free interest rate
    
    
    4.7
    %
    
    
    4.8
    %
    
    
    4.1
    %Expected life of options
    
    3.2
    years
    
    3.75
    years
    
    4
    yearsWeighted average fair value of options
    
    $
    4.57
    
    
    $
    4.06
    
    
    $
    4.07
 
 *
    
    see Note 12 which will impact future assumptions regarding dividend yields  Common Shares
    
    
    Weighted Average
    
    
    Average RemainingUnder Options
    
    
    Exercise Price
    
    
    Contract LifeOptions outstanding December 31, 2004
    
    
    591,191
    
    
    $
    5.23Granted
    
    
    207,050
    
    
    
    11.03Canceled
    
    
    (64,562
    )
    
    
    6.87Exercised
    
    
    (82,881
    )
    
    
    4.48Options 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
    
    
    $
    8.94
    
    
    5.7  years
 F -15




---



##### 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
    
    
    189,308
    
    
    $
    3.03
    
    
    
    4.2
    
    
    
    166,238
    
    
    $
    3.09
    
    
    
    4.1$7.70 - $10.50
    
    
    152,335
    
    
    
    7.81
    
    
    
    5.6
    
    
    
    84,495
    
    
    
    7.85
    
    
    
    5.3>$10.50
    
    
    446,936
    
    
    
    11.83
    
    
    
    6.3
    
    
    
    92,664
    
    
    
    11.07
    
    
    
    6.5788,579
    
    
    
    8.94
    
    
    
    5.7
    
    
    
    343,397
    
    
    
    6.42
    
    
    
    5.0
  Number ofSharesNonvested stock options at beginning of year
    
    
    487,307Vested
    
    
    (155,724
    )Canceled
    
    
    (54,051
    )Granted
    
    
    167,650Nonvested stock options at end of year
    
    
    445,182
  Note 7. Compensation and Benefit Agreements
    F -16




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Compensation and Benefit Agreements, Continued
   Pension Benefits
    
    
    Other BenefitsSummary of pension and other postretirement
    
    December 31,
    
    
    December 31,benefit plans (in thousands):
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Changes in benefit obligations:Obligations at beginning of year
    
    $
    16,778
    
    
    $
    16,002
    
    
    $
    294
    
    
    $
    282Interest cost
    
    
    934
    
    
    
    963
    
    
    
    17
    
    
    
    17Benefits paid
    
    
    (1,050
    )
    
    
    (1,050
    )
    
    
    (17
    )
    
    
    (17
    )Actuarial (gains) losses
    
    
    (942
    )
    
    
    863
    
    
    
    (12
    )
    
    
    12Obligations at end of year
    
    $
    15,720
    
    
    $
    16,778
    
    
    $
    282
    
    
    $
    294Changes in plan assets:Fair value of assets at beginning of year
    
    $
    13,020
    
    
    $
    12,270
    
    
    $
    
    
    
    $
    Actual return on assets
    
    
    1,064
    
    
    
    1,191
    
    
    
    
    
    
    
    Company contributions
    
    
    975
    
    
    
    609
    
    
    
    17
    
    
    
    17Benefits paid
    
    
    (1,050
    )
    
    
    (1,050
    )
    
    
    (17
    )
    
    
    (17
    )Fair value of assets at end of year
    
    $
    14,009
    
    
    $
    13,020
    
    
    $
    
    
    
    $
    Funded status at end of year:Plan assets less than obligations
    
    $
    (1,711
    )
    
    $
    (3,758
    )
    
    $
    (283
    )
    
    $
    (294
    )Unrecognized loss
    
    
    1,550
    
    
    
    2,638
    
    
    
    1
    
    
    
    11Unrecognized prior service cost
    
    
    108
    
    
    
    123
    
    
    
    
    
    
    
    Accrued benefit cost
    
    $
    (53
    )
    
    $
    (997
    )
    
    $
    (282
    )
    
    $
    (283
    )Total compensation and benefits liabilities
    
    $
    1,711
    
    
    $
    3,758
    
    
    $
    282
    
    
    $
    283
 F -17




---



##### 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, 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
    )
    
    
    1,684Incurred 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
    )
    
    $
    1,011To be recognized as component of
net period (cost) in 2008
    
    $
    (15
    )
    
    $
    
  Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005
    
    
    2007
    
    
    2006
    
    
    2005Cost recognized during the year:Interest cost
    
    $
    934
    
    
    $
    963
    
    
    $
    972
    
    
    $
    17
    
    
    $
    17
    
    
    $
    16Expected return on plan assets
    
    
    (1,024
    )
    
    
    (940
    )
    
    
    (976
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of loss
    
    
    107
    
    
    
    41
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    15
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Net period cost
    
    $
    32
    
    
    $
    79
    
    
    $
    14
    
    
    $
    17
    
    
    $
    17
    
    
    $
    16
 Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2007
    
    2006
    
    2005
    
    2007
    
    2006
    
    2005Assumptions used in computations:Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    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




---



##### 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
    
    2008
    
    2007
    
    2006Equity securities
    
    
    50%  -  60
    %
    
    
    53
    %
    
    
    57
    %Debt securities
    
    
    40%  -  50
    %
    
    
    47
    
    
    
    43Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
   Year(s)
    
    Pension Benefits
    
    Other Benefits2008
    
    $1,015
    
    $192009
    
    1,003
    
    202010
    
    989
    
    212011
    
    1,006
    
    222012
    
    1,013
    
    232013-2017
    
    5,484
    
    120
 F -19




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Significant Risks and Uncertainties
 Concentrations of Credit Risk  Cash
 Concentration of Credit Risk  Accounts Receivable
 Note 9. Enterprise-wide Disclosures
   Years Ended December 31,Net sales:
    
    2007
    
    
    2006
    
    
    2005Work Market
    
    $
    60,893
    
    
    $
    54,660
    
    
    $
    50,436Outdoor Market
    
    
    57,286
    
    
    
    53,138
    
    
    
    48,942Total
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378
  Years Ended December 31,Net sales:
    
    2007
    
    
    2006
    
    
    2005United States
    
    $
    109,989
    
    
    $
    101,041
    
    
    $
    94,149Foreign Countries
    
    
    8,190
    
    
    
    6,757
    
    
    
    5,229Total
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378
   F -20




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10. Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option For Financial Assets and
Financial Liabilities
  F -21




---



##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 11. Quarterly Selected Financial Data (Unaudited)
  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
 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 provision (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
 Note 12. Subsequent Event
  F -22