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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, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 000-23800
 LaCrosse Footwear, Inc.
 (Exact name of registrant as specified in its charter)
 Wisconsin
 39-1446816
  17634 NE Airport Way
 Portland, Oregon
  97230
  Registrants telephone number, including area code:
    
    (503) 262-0110
  Title of Class:
    
    Exchange on which securities are registered:Common Stock, $.01 par value
    
    NASDAQ Global Market
  o þ
 o þ
 þ o
 Yes o No o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ(Do not check if a smaller reporting company )
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IITEM 1.
    
    BUSINESS
    
    
    1ITEM 1A.
    
    RISK FACTORS
    
    
    8ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    15ITEM 2.
    
    PROPERTIES
    
    
    15ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    16PART IIITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    16ITEM 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
    
    
    26ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    27ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    27ITEM 9A(T).
    
    CONTROLS AND PROCEDURES (Including
Managements Annual Report on Internal Control
Over Financial Reporting)
    
    
    27ITEM 9B.
    
    OTHER INFORMATION
    
    
    28PART IIIITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT, AND CORPORATE GOVERNANCE
    
    
    28ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    28ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    29ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    29ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    29PART IVITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    30SIGNATURES
    
    
    
    
    31EXHIBIT INDEX
    
    
    34CONSOLIDATED FINANCIAL STATEMENTS
    
    F-1 to F-25EX-10.15EX-10.28EX-10.29EX-10.30EX-10.31EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2




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




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®
 Corporate Strategy
  
    
    Build identity, expand awareness and create demand for the Danner and LaCrosse brands.
    
    Identify and develop new products and technologies that can be leveraged across multiple
market segments.
    
    Increase demand through our four distribution channels and two market categories.
    
    Improve operational efficiency.
    
    Maximize return on human capital.
 Brand Positioning
 ® ® ® ®
 ® ®
 Products
  -2-




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




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




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




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




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Foreign Operations and Sales Outside of the United States
   Environmental Matters
   Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJoseph P. Schneider
        

    50    

    
    President, Chief Executive Officer and DirectorDavid P. Carlson
    
    
    54
    
    
    Executive Vice President, Chief Financial Officer, and SecretaryRoss M. Vonhoff
    
    
    44
    
    
    Senior Vice President OperationsC. Kirk Layton
    
    
    54
    
    
    Vice President of Finance and Assistant SecretaryJ. Gary Rebello
    
    
    58
    
    
    Vice President of Human ResourcesKirk S. Nichols
    
    
    41
    
    
    Vice President of Sales
 Where You Can Find More Information
  -7-




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




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Changes in the price or availability of raw materials could disrupt our operations and adversely
affect our financial results, particularly our gross margins.
    We are experiencing consolidation in our raw materials supply base for outsoles and leather, which
presents overall risks in our supply base.
  Our European subsidiary, LaCrosse Europe ApS, increases our exposure to risks associated with
foreign operations and the outsourcing of our European distribution center.
  Our profitability is significantly dependent upon future effective tax rates for federal, state and
international taxing jurisdictions.
  -9-




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We conduct a significant portion of our manufacturing activities and a certain portion of our net
sales occurs outside the U.S.; 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 NAFTA countries and the European Union could disrupt our supply of
product to customers.
 ®
 
    
    delays associated with the manufacture, transportation and delivery of
foreign-sourced products;
    
    tariffs, import and export controls and other non-tariff barriers such as quotas and
local content rules;
    
    delays in the transportation and delivery of goods due to increased security
concerns;
    
    foreign currency fluctuations (particularly with respect to the Chinese Renminbi and
Euro), a risk which we do not currently seek to mitigate through hedging transactions;
    
    restrictions on the transfer of funds;
    
    changing economic conditions;
    
    restrictions, due to privacy laws, on the handling and transfer of consumer and other
personal information;
    
    changes in governmental policies and regulations;
    
    political unrest, terrorism or war, any of which can interrupt commerce;
    
    expropriation and nationalization;
    
    difficulties in managing foreign operations effectively and efficiently from the
U.S.;
    
    difficulties in understanding and complying with local laws, regulations and customs
in foreign jurisdictions;
    
    limited capital of foreign distributors and the possibility that such distributors
may terminate their operations or their relationships with us; and
    
    concentration of credit risk, currency, and political risks associated with
international distributors.
  -10-




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




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




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




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




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Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  PROPERTIESOwned or
    
    Approximate FloorLocation
    
    Leased
    
    Area in Square Feet
    
    Principal UsesPortland, OR
    
    Leased (1)
    
    
    145,000
    
    
    Principal sales,
marketing and executive
offices and
distribution facilityPortland, OR
    
    Leased (2)
    
    
    36,000
    
    
    Manufacturing
operations and factory
storeIndianapolis, IN
    
    Leased (3)
    
    
    380,000
    
    
    Distribution facilityZhongshan, China
    
    Leased (4)
    
    
    1,400
    
    
    Office spaceCopenhagen, Denmark
    
    Leased (5)
    
    
    2,300
    
    
    Office spacePortland, OR
    
    Leased (6)
    
    
    1,800
    
    
    Office spacePortland, OR
    
    Leased (7)
    
    
    59,000
    
    
    Manufacturing operationsPortland, OR
    
    Leased (8)
    
    
    17,500
    
    
    Factory store
 
 (1)
    
    The lease term on the Single Tenant Industrial Lease is 120 months from August 1,
2006 and the Lease provides for potential term extensions of up to 60 months after the
original term.(2)
    
    In December 2009, we signed a two month lease extension. The lease for this facility
expires on July 31, 2010.(3)
    
    In June 2008, we signed a Single Tenant Industrial Lease for 124 months beginning
March 1, 2009.(4)
    
    The lease for this facility expires November, 2010.(5)
    
    The lease for this facility expires June, 2012.(6)
    
    The lease for this facility expires in September 2010. This facility is currently
being sub-let to another tenant. -15-




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(7)
    
    In February 2010, we signed a multi-tenant lease to relocate our Danner factory. The
lease has an initial term of 64 months, and includes provision for three successive
extension terms of five years each. The initial term of the Lease commences on May 1,
2010.(8)
    
    In January 2010, we signed a lease to move our Danner Factory Store to a new
facility in Portland. The lease has an initial term of 64 months and includes provision
for three successive extension terms of five years each. The initial term of the lease
commences on March 1, 2010. 
 Item 3. Legal Proceedings
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Price Range of Common Stock
  2009
    
    
    2008High
    
    
    Low
    
    
    High
    
    
    LowFirst Quarter
    
    $
    13.40
    
    
    $
    7.00
    
    
    $
    18.98
    
    
    $
    14.05Second Quarter
    
    $
    10.84
    
    
    $
    7.10
    
    
    $
    16.71
    
    
    $
    13.00Third Quarter
    
    $
    12.25
    
    
    $
    9.22
    
    
    $
    17.63
    
    
    $
    14.50Fourth Quarter
    
    $
    15.09
    
    
    $
    11.34
    
    
    $
    17.00
    
    
    $
    9.47
  -16-




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Dividends
     Sales of Unregistered Securities
  Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Equity Compensation Plan Information
  -17-




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Market Price of the Registrants Common Equity
  
 12/31/2004
    
    
    12/31/2005
    
    
    12/31/2006
    
    
    12/31/2007
    
    
    12/31/2008
    
    
    12/31/2009LACROSSE FOOTWEAR, INC.
    
    $
    100
    
    
    $
    100
    
    
    $
    123
    
    
    $
    164
    
    
    $
    128
    
    
    $
    134HEMSCOTT GROUP INDEX
    
    $
    100
    
    
    $
    108
    
    
    $
    132
    
    
    $
    132
    
    
    $
    93
    
    
    $
    139NASDAQ MARKET INDEX
    
    $
    100
    
    
    $
    102
    
    
    $
    113
    
    
    $
    124
    
    
    $
    73
    
    
    $
    105
 -18-




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Item 6. Selected Financial Data
 Selected Income Statement Data
 Year Ended December 31
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005(in thousands, except per share data)Net sales
    
    $
    139,152
    
    
    $
    127,956
    
    
    $
    118,179
    
    
    $
    107,798
    
    
    $
    99,378Operating income
    
    $
    8,585
    
    
    $
    10,120
    
    
    $
    10,983
    
    
    $
    8,834
    
    
    $
    8,609Net income
    
    $
    5,510
    
    
    $
    6,167
    
    
    $
    7,300
    
    
    $
    6,344
    
    
    $
    5,234Net income per common shareBasic
    
    $
    0.87
    
    
    $
    0.99
    
    
    $
    1.20
    
    
    $
    1.05
    
    
    $
    0.88Diluted
    
    $
    0.86
    
    
    $
    0.96
    
    
    $
    1.15
    
    
    $
    1.02
    
    
    $
    0.85Weighted average common shares outstandingBasic
    
    
    6,303
    
    
    
    6,215
    
    
    
    6,087
    
    
    
    6,022
    
    
    
    5,954Diluted
    
    
    6,375
    
    
    
    6,417
    
    
    
    6,357
    
    
    
    6,213
    
    
    
    6,166
 Selected Balance Sheet Data
 Year Ended December 31
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005(in thousands)Cash and cash equivalents
    
    $
    17,739
    
    
    $
    13,683
    
    
    $
    15,385
    
    
    $
    12,702
    
    
    $
    6,113Inventories
    
    $
    27,031
    
    
    $
    28,618
    
    
    $
    27,131
    
    
    $
    22,038
    
    
    $
    24,865Total assets
    
    $
    88,585
    
    
    $
    84,565
    
    
    $
    83,547
    
    
    $
    73,533
    
    
    $
    64,583Long-term debt, including current maturities
    
    
    
    
    
    
    
    
    
    $
    394
    
    
    $
    506
    
    
    
    Shareholders equity
    
    $
    65,595
    
    
    $
    61,412
    
    
    $
    65,985
    
    
    $
    57,344
    
    
    $
    50,477Dividends paid
    
    $
    3,154
    
    
    $
    9,322
    
    
    $
    914
    
    
    $
    0
    
    
    $
    0Dividends paid per common share
    
    $
    0.50
    
    
    $
    1.50
    
    
    $
    0.15
    
    
    $
    0.00
    
    
    $
    0.00Inventory turns
    
    
    3.1
    
    
    
    2.8
    
    
    
    2.9
    
    
    
    2.8
    
    
    
    3.0Days sales outstanding
    
    
    46
    
    
    
    57
    
    
    
    62
    
    
    
    56
    
    
    
    50
 -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
 Financial Summary  2009 versus 2008
  ($ in millions)
    
    2009
    
    2008
    
    $ Change
    
    % ChangeNet Sales
    
    $
    139.2
    
    
    $
    128.0
    
    
    $
    11.2
    
    
    
    9
    %Gross Profit
    
    $
    54.1
    
    
    $
    50.7
    
    
    $
    3.4
    
    
    
    7
    %Gross Margin %
    
    
    38.9
    %
    
    
    39.6
    %
    
    
    
    
    
    (70 bps
    )Selling and Administrative Expenses
    
    $
    45.5
    
    
    $
    40.5
    
    
    $
    5.0
    
    
    
    12
    %% of Net Sales
    
    
    32.7
    %
    
    
    31.7
    %
    
    
    
    
    
    100 bpsNon-Operating Expense, Net
    
    $
    (0.4
    )
    
    $
    (0.0
    )
    
    $
    (0.4
    )
    
    
    Income Before Income Taxes
    
    $
    8.2
    
    
    $
    10.1
    
    
    $
    (1.9
    )
    
    
    (19
    %)Income Tax Provision
    
    $
    2.7
    
    
    $
    3.9
    
    
    $
    (1.2
    )
    
    
    (31
    %)Net Income
    
    $
    5.5
    
    
    $
    6.2
    
    
    $
    (0.7
    )
    
    
    (11
    %)
 Consolidated Net Sales:
 Gross Profit:
 Selling and Administrative Expenses:
 Non-operating
Expense, Net:
 Income Taxes:
 Net Income:
 -21-




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Financial Summary  2008 versus 2007
  ($ in millions)
    
    2008
    
    2007
    
    $ Change
    
    % ChangeNet Sales
    
    $
    128.0
    
    
    $
    118.2
    
    
    $
    9.8
    
    
    
    8
    %Gross Profit
    
    $
    50.7
    
    
    $
    46.9
    
    
    $
    3.8
    
    
    
    8
    %Gross Margin %
    
    
    39.6
    %
    
    
    39.7
    %
    
    
    
    
    
    (10 bps
    )Selling and Administrative Expenses
    
    $
    40.5
    
    
    $
    35.9
    
    
    $
    4.6
    
    
    
    13
    %% of Net Sales
    
    
    31.7
    %
    
    
    30.4
    %
    
    
    
    
    
    130 bpsNon-Operating Income (Expense)
    
    $
    (0.0
    )
    
    $
    0.3
    
    
    $
    (0.3
    )
    
    
    (108
    %)Income Before Income Taxes
    
    $
    10.1
    
    
    $
    11.3
    
    
    $
    (1.2
    )
    
    
    (10
    %)Income Tax Provision
    
    $
    3.9
    
    
    $
    4.0
    
    
    $
    (0.1
    )
    
    
    (1
    %)Net Income
    
    $
    6.2
    
    
    $
    7.3
    
    
    $
    (1.1
    )
    
    
    (15
    %)
 Consolidated Net Sales:
  Gross Profit:
 Selling and Administrative Expenses:
 Non-operating Income (Expense):
 Income Taxes:
 Net Income:
 -22-




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LIQUIDITY AND CAPITAL RESOURCES
         -23-




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®
 OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
   (In Thousands)
    
    Payments due by periodContractual Obligations
    
    Total
    
    2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    ThereafterOperating leases (1)
    
    $
    21,106
    
    
    $
    2,618
    
    
    $
    2,583
    
    
    $
    2,594
    
    
    $
    2,605
    
    
    $
    2,695
    
    
    $
    8,011Product purchase obligations (2)
    
    
    7,104
    
    
    
    7,104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  
 (1)
    
    see Notes (7) and (8) in Item 2. Obligations related to the new leases that were
executed subsequent to December 31, 2009, have been included in the table above. See Note
15. Subsequent Events in the accompanying consolidated financial statements for
additional information).(2)
    
    From time to time, we enter into purchase commitments with our suppliers and third
party manufacturers under customary purchase order terms. Any significant losses implicit
in these contracts would be recognized in accordance with generally accepted accounting
principles. At December 31, 2009, no such losses existed.  Other Commercial
    
    Maximum AmountCommitment
    
    Committed
    
    
    Outstanding at 12/31/09
    
    
    Date of ExpirationLine of credit
    
    $
    30,000,000
    
    
    $
    
    
    
    June 30, 2012
  -24-




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CRITICAL ACCOUNTING ESTIMATES
  Revenue Recognition, Allowances for Doubtful Accounts, Cash Discounts and Non-Defective Returns:
  Allowance for Slow-Moving Inventory:
 Product Warranty:
 Valuation of Long-Lived and Intangible Assets:
  Pension and Other Postretirement Benefit Plans:
 -25-




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Deferred Tax Asset Valuation Allowance:
 Stock-Based Compensation:
  Recently Issued Accounting Pronouncements
 Employers Disclosures about
Postretirement Benefit Plan Assets Employers Disclosures about Pensions and Other Postretirement Benefits
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   -26-




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




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##### Table of Contents



Managements Annual Report on Internal Control over Financial Reporting
   Internal Control  Integrated
Framework
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers of the Registrant, and Corporate Governance
  www.lacrossefootwearinc.com
 
 Item 11. Executive Compensation
  -28-




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##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
   Approximate number ofsecurities remainingavailable for futureNumber of securities to
    
    
    
    
    
    
    issuance under equitybe issued upon
    
    
    Weighted-average
    
    
    compensation plansexercise of outstanding
    
    
    exercise price of
    
    
    (excluding securitiesoptions, warrants and
    
    
    outstanding options,
    
    
    reflected in the firstPlan Category
    
    rights (1)
    
    
    warrants and rights
    
    
    column) (2)Equity compensation
plans approved by
security holders
    
    
    809,523
    
    
    $
    11.57
    
    
    
    295,000Equity compensation
plans not approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    809,523
    
    
    $
    11.57
    
    
    
    295,000
 
 (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 244,000 shares of the Companys Common Stock available for issuance under
the 2007 Long Term Incentive Plan and 51,000 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
  -29-




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Financial Statements1.
    
    The following financial statements are included in this Annual Report on Form 10-K beginning
on the pages indicated below:
 Report of Independent Registered Public Accounting Firm
    
    F-1Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    F-2Consolidated Statements of Income for the Years ended December 31,
2009, 2008, and 2007
    
    F-4Consolidated Statements of Shareholders Equity and Comprehensive Income for
the Years ended December 31, 2009, 2008, and 2007
    
    F-5Consolidated Statements of Cash Flows for the Years ended December 31, 2009,
2008, and 2007
    
    F-6Notes to Consolidated Financial Statements
    
    F-7
 2.
    
    Financial Statement ScheduleThe financial statement schedule for the years ended December 31, 2009 and 2008 is
included in this Annual Report on Form 10-K and should be read in conjunction with the
Consolidated Financial Statements.
 Report of Independent Registered Public Accounting Firm on Financial
Statement Schedule
    
    
    32Schedule II Valuation and Qualifying Accounts
    
    
    33
 All other financial statement schedules are omitted since the required information is
not present or is not present in amounts sufficient to require submission of the
schedules, or because the information required is included in the consolidated
financial statements and notes thereto.3.
    
    See the Exhibit Index for a description of exhibits filed with or incorporated by reference
in this report.
 -30-




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##### Table of Contents



SIGNATURES
 th
 LACROSSE FOOTWEAR, INC.By
    /s/ Joseph P. SchneiderJoseph P. SchneiderPresident and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Joseph P. Schneider
    
    President, Chief Executive
Officer and Director (Principal
    
    March 5, 2010Joseph P. Schneider
    
    Executive Officer)/s/ David P. Carlson
    
    Executive Vice President and
Chief Financial Officer
    
    March 5, 2010David P. Carlson
    
    (Principal Financial and
Accounting Officer)/s/ Richard A. Rosenthal
    
    Chairman of the Board and Director
    
    March 5, 2010Richard A. Rosenthal/s/Stephen F. Loughlin
    
    Director
    
    March 5, 2010Stephen F. Loughlin/s/ Charles W. Smith
    
    Director
    
    March 5, 2010Charles W. Smith/s/ John D. Whitcombe
    
    Director
    
    March 5, 2010John D. Whitcombe/s/ William H. Williams
    
    Director
    
    March 5, 2010William H. Williams
 
 -31-




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##### Table of Contents



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




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##### Table of Contents



AdditionsBalance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BalanceBeginning
    
    
    Charged to Costs
    
    
    Charged To
    
    
    
    
    
    
    at Endof Year
    
    
    and Expenses
    
    
    Other Accounts
    
    
    Deductions
    
    
    of YearYear ended December 31, 2009Accounts receivable allowances:Allowance for discounts
    
    $
    225
    
    
    $
    953
    
    
    $
    
    
    
    $
    980
    
    
    $
    198Allowance for nondefective product
    
    
    135
    
    
    
    1,623
    
    
    
    
    
    
    
    1,587
    
    
    
    171Allowance for doubtful accounts
    
    
    449
    
    
    
    306
    
    
    
    
    
    
    
    461
    
    
    
    294Total
    
    $
    809
    
    
    $
    2,882
    
    
    $
    
    
    
    $
    3,028
    
    
    $
    663Allowance for slow-moving inventory
    
    $
    449
    
    
    $
    1,167
    
    
    $
    
    
    
    $
    819
    
    
    $
    797Deferred tax asset valuation allowance
    
    $
    1,070
    
    
    $
    
    
    
    $
    
    
    
    $
    53
    
    
    $
    1,017Year ended December 31, 2008Accounts receivable allowances:Allowance for discounts
    
    $
    303
    
    
    $
    1,200
    
    
    $
    
    
    
    $
    1,278
    
    
    $
    225Allowance for nondefective product
    
    
    156
    
    
    
    1,565
    
    
    
    
    
    
    
    1,586
    
    
    
    135Allowance for doubtful accounts
    
    
    211
    
    
    
    312
    
    
    
    
    
    
    
    74
    
    
    
    449Total
    
    $
    670
    
    
    $
    3,077
    
    
    $
    
    
    
    $
    2,938
    
    
    $
    809Allowance for slow-moving inventory
    
    $
    374
    
    
    $
    630
    
    
    $
    
    
    
    $
    555
    
    
    $
    449Deferred tax asset valuation allowance
    
    $
    1,028
    
    
    $
    42
    
    
    $
    
    
    
    $
    
    
    
    $
    1,070
 
 The accounts receivable, inventory, and deferred tax asset allowances above are deducted from the applicable asset accounts
in the accompanying consolidated balance sheets. -33-




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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)*
    
    
    Amended and Restated LaCrosse Footwear, Inc. 2001 Non-Employee Director Stock Option
Plan, as amended (Incorporated by reference to Exhibit 4.1 of LaCrosse Footwear,
Inc.s Registration Statement on Form S-8 as filed with the Commission on May 3,
2007 (Registration No. 333-142598))(10.7)*
    
    
    LaCrosse Footwear, Inc. 2007 Long Term Incentive Plan (Incorporated by reference to
Exhibit 4.1 of LaCrosse Footwear, Inc.s Registration Statement on Form S-8 as filed
with the Commission on May 3, 2007 (Registration No. 333-142597))(10.8)*
    
    
    LaCrosse Footwear, Inc. 2009 Annual Incentive Compensation Plan Document
(Incorporated by reference to Exhibit (10.1) of LaCrosse Footwear, Inc.s Current
Report on Form 8-K as filed with the Commission on December 23, 2008)(10.9)*
    
    
    Summary of 2009 Compensation of Executive Officers (Incorporated by reference to
LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with the Commission on
December 23, 2008))(10.10)*
    
    
    LaCrosse Footwear, Inc. 2010 Annual Incentive Compensation Plan Document
(Incorporated
 
 *
    
    A management contract or
compensatory plan or arrangement. -34-




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##### Table of Contents



Exhibit Number
    
    Exhibit Descriptionby reference to Exhibit (10.1) of LaCrosse Footwear, Inc.s Current
Report on Form 8-K as filed with the Commission on December 11, 2009(10.11)*
    
    
    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)(10.12
    )
    
    Lease, dated as of March 14, 1994, by and 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))(10.13
    )
    
    Amendment, dated as of March 17, 1998, to Lease by and 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)(10.14
    )
    
    Second Amendment, dated as of November 24, 2008, to lease by and between JEPCO
Development Co., LLC and LaCrosse Footwear, Inc. (Incorporated by reference to
Exhibit (10.13) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K for the year
ended December 31, 2008)(10.15
    )
    
    Third Amendment, dated as of December 4, 2009, to lease by and between JEPCO
Development Co., LLC and LaCrosse Footwear, Inc.(10.16
    )
    
    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)(10.17
    )
    
    Single Tenant Industrial Triple Net Lease, dated June 11, 2008, by and between
LaCrosse Footwear, Inc. and 267 Associates, L.L.C. (Incorporated by reference to
Exhibit (10.1) to LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with
the Commission on June 13, 2008)(10.18
    )
    
    Multi-Tenant Industrial Triple Net Lease, dated February 9, 2010, by and among
LaCrosse Footwear, Inc., Danner, Inc., and DP Partners Portland I, LLC (Incorporated
by reference to Exhibit (10.1) to LaCrosse Footwear, Inc.s Current Report on Form
8-K as filed with the Commission on February 10, 2010(10.19
    )
    
    Parking Lot Lease, dated February 9, 2010, by and among LaCrosse Footwear, Inc., ,
Danner, Inc., and DP Partners Portland I, LLC (Incorporated by reference to
Exhibit (10.2) to LaCrosse Footwear, Inc.s Current Report on Form 8-K as filed with
the Commission on February 10, 2010)(10.20
    )
    
    Certified Manufacturer Agreement, dated as of March 5, 2003, by and between W.L.
Gore & Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by reference to
Exhibit (10.14) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K filed with
the Commission on March 7, 2008) [Confidential treatment has been granted with
respect to a portion of this Agreement](10.21
    )
    
    Trademark License, dated as of February 25, 2003, by and between W.L. Gore &
Associates, Inc. and LaCrosse Footwear, Inc. (Incorporated by reference to Exhibit
(10.15) to LaCrosse Footwear, Inc.s Annual Report on Form 10-K filed with the
Commission on March 7, 2008) [Confidential treatment has been granted with respect
to a portion of this Agreement](10.22
    )
    
    Amendment to Contractual Agreements, dated as of November 17, 2008, by and between
W.L. Gore & Associates, Inc. and LaCrosse Footwear, Inc.
(Incorporated by reference to Exhibit 10.18 to LaCrosse
Footwear, Inc.s Annual Report on Form 10-K Filed with the
Commission on March 7, 2008) [Confidential treatment has
been granted with respect to a portion of this Agreement](10.23
    )
    
    Amended and Restated Credit Agreement, dated September 6, 2006, by and between
LaCrosse
 -35-




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##### Table of Contents



Exhibit Number
    
    Exhibit DescriptionFootwear, 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)(10.24
    )
    
    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)(10.25
    )
    
    First Amendment To Credit Agreement and Waiver, dated February 25, 2008, by and
between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank, National
Association, as lender. (Incorporated by reference to Exhibit (10.1) to LaCrosse
Footwear Inc.s Form 8-K as filed with the Commission on February 27, 2008)(10.26
    )
    
    Second Amendment to Credit Agreement and Waiver, dated October 3, 2008, by and
between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank, National
Association, as lender (Incorporated by reference to exhibit (10.1) to LaCrosse
Footwear, Inc.s Quarterly Report on Form 10-Q as filed with the Commission on
October 28, 2008)(10.27
    )
    
    Second Amended and Restated Credit Agreement, dated March 1, 2009, by and between
LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank, National Association, as
lender (Incorporated by reference to exhibit (10.1) to LaCrosse Footwear, Inc.s
Quarterly Report on Form 10-Q as filed with the Commission on April 4, 2009)(10.28
    )
    
    Letter Amendment to Second Amended and Restated Credit Agreement, dated November 30,
2009, by and between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank,
National Association, as lender.(10.29
    )
    

Letter Amendment to Second Amended and Restated Credit Agreement, dated January 26,
2010, by and between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank,
National Association, as lender.(10.30
    )
    

Second Amendment to Third Party Security Agreement, dated January 26, 2010, by and
between LaCrosse Footwear, Inc. and Wells Fargo Bank, National Association.(10.31
    )
    

Second Amendment to Third Party Security Agreement, dated January 26, 2010, by and
between Danner, Inc. and Wells Fargo Bank, National Association.(21.1
    )
    
    List of subsidiaries of LaCrosse Footwear, Inc.(23.1
    )
    
    Consent of McGladrey & Pullen, LLP(31.1
    )
    
    Certification of the President & Chief Executive Officer pursuant to Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934(31.2
    )
    
    Certification of the Executive Vice President & Chief Financial Officer pursuant to
Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934(32.1
    )
    
    Certification of the President & Chief Executive Officer pursuant to 18 U.S.C. § 1350(32.2
    )
    
    Certification of the Executive Vice President & Chief Financial Officer pursuant to
18 U.S.C. § 1350
 -36-




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##### Table of Contents



INDEX
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    F-1
 
  Consolidated 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-25




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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, 2009 and 2008  (In thousands, except share and per share data)
 ASSETS
    
    2009
    
    
    2008CURRENT ASSETSCash and cash equivalents (Notes 2 and 9)
    
    $
    17,739
    
    
    $
    13,683Trade accounts and other receivables, less allowances of
$663 in 2009 and $809 in 2008 (Note 9)
    
    
    21,635
    
    
    
    22,449Inventories (Note 3)
    
    
    27,031
    
    
    
    28,618Prepaid expenses and other
    
    
    1,129
    
    
    
    1,402Deferred tax assets (Note 4)
    
    
    1,503
    
    
    
    1,364Total current assets
    
    
    69,037
    
    
    
    67,516PROPERTY AND EQUIPMENTLeasehold improvements
    
    
    1,772
    
    
    
    2,415Machinery and equipment
    
    
    18,584
    
    
    
    15,490Gross property and equipment
    
    
    20,356
    
    
    
    17,905Less accumulated depreciation
    
    
    11,874
    
    
    
    11,768Property and equipment, net
    
    
    8,482
    
    
    
    6,137OTHER ASSETSGoodwill
    
    
    10,753
    
    
    
    10,753Other assets
    
    
    313
    
    
    
    159Total other assets
    
    
    11,066
    
    
    
    10,912TOTAL ASSETS
    
    $
    88,585
    
    
    $
    84,565
 See accompanying notes to consolidated financial statements.
 F - 2




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##### Table of Contents



LIABILITIES AND SHAREHOLDERS EQUITY
    
    2009
    
    
    2008CURRENT LIABILITIESAccounts payable
    
    $
    8,036
    
    
    $
    10,288Accrued compensation
    
    
    3,343
    
    
    
    3,151Other accruals
    
    
    3,755
    
    
    
    2,528Total current liabilities
    
    
    15,134
    
    
    
    15,967DEFERRED REVENUE (Note 5)
    
    
    225
    
    
    
    375DEFERRED LEASE OBLIGATIONS
    
    
    614
    
    
    
    190COMPENSATION AND BENEFITS (Note 8)
    
    
    4,680
    
    
    
    5,844DEFERRED TAX LIABILITIES (Note 4)
    
    
    2,337
    
    
    
    777Total liabilities
    
    
    22,990
    
    
    
    23,153COMMITMENTS AND CONTINGENCIES (Notes 6, 8, 9 and 15)SHAREHOLDERS EQUITY (Notes 7, 8, 13 and 15)Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 6,717,627 shares
    
    
    67
    
    
    
    67Additional paid-in capital
    
    
    29,041
    
    
    
    28,247Accumulated other comprehensive loss
    
    
    (3,348
    )
    
    
    (4,029
    )Retained earnings
    
    
    41,529
    
    
    
    39,173Less cost of 381,829 and 464,496 shares of treasury stock
    
    
    (1,694
    )

    
    
    (2,046
    )Total shareholders equity
    
    
    65,595
    
    
    
    61,412TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    88,585
    
    
    $
    84,565
 See accompanying notes to consolidated financial statements.
 F - 3




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2009, 2008, and 2007  (In thousands, except share and per share data)
 2009
    
    
    2008
    
    
    2007Net sales (Note 10)
    
    $
    139,152
    
    
    $
    127,956
    
    
    $
    118,179Cost of goods sold
    
    
    85,062
    
    
    
    77,295
    
    
    
    71,273Gross profit
    
    
    54,090
    
    
    
    50,661
    
    
    
    46,906Selling and administrative expenses
    
    
    45,505
    
    
    
    40,541
    
    
    
    35,923Operating income
    
    
    8,585
    
    
    
    10,120
    
    
    
    10,983Non-operating income (expense)
    
    
    (375
    )
    
    
    (24
    )
    
    
    289Income before income taxes
    
    
    8,210
    
    
    
    10,096
    
    
    
    11,272Income tax provision (Note 4)
    
    
    2,700
    
    
    
    3,929
    
    
    
    3,972Net income
    
    $
    5,510
    
    
    $
    6,167
    
    
    $
    7,300Net income per common share:Basic
    
    $
    0.87
    
    
    $
    0.99
    
    
    $
    1.20Diluted
    
    $
    0.86
    
    
    $
    0.96
    
    
    $
    1.15Weighted average number of common
shares outstanding:Basic
    
    
    6,303,473
    
    
    
    6,215,049
    
    
    
    6,087,224Diluted
    
    
    6,374,936
    
    
    
    6,416,731
    
    
    
    6,357,235
 See accompanying notes to consolidated financial statements.
 F - 4




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY  AND COMPREHENSIVE INCOME
Years Ended December 31, 2009, 2008, and 2007
(In thousands)
 AccumulatedCommon
    
    
    Additional Paid-In
    
    
    Other Comprehensive
    
    
    Retained
    
    
    Treasury
    
    
    Total Shareholders
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    Stock
    
    
    Equity
    
    
    IncomeBalance, December 31, 2006
    
    $
    67
    
    
    $
    26,458
    
    
    
    ($1,684
    )
    
    $
    35,952
    
    
    
    ($3,449
    )
    
    $
    57,344Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,300
    
    
    
    
    
    
    
    7,300
    
    
    $
    7,300Adoption of FASB ASC Subtopic 740-10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (10
    )Minimum pension liability net of tax
expense of $430
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    673Stock based compensation
expense
    
    
    
    
    
    
    549
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    549Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (914
    )
    
    
    
    
    
    
    (914
    )Exercise of stock options
    
    
    
    
    
    
    466
    
    
    
    
    
    
    
    
    
    
    
    577
    
    
    
    1,043Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,973Balance, December 31, 2007
    
    
    67
    
    
    
    27,473
    
    
    
    (1,011
    )
    
    
    42,328
    
    
    
    (2,872
    )
    
    
    65,985Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,167
    
    
    
    
    
    
    
    6,167
    
    
    
    6,167Minimum pension liability net of tax
benefit of $1,731
    
    
    
    
    
    
    
    
    
    
    (2,709
    )
    
    
    
    
    
    
    
    
    
    
    (2,709
    )
    
    
    (2,709
    )Stock based compensation
expense
    
    
    
    
    
    
    577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    577Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,322
    )
    
    
    
    
    
    
    (9,322
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95
    )
    
    
    (95
    )Exercise of stock options
    
    
    
    
    
    
    197
    
    
    
    
    
    
    
    
    
    
    
    921
    
    
    
    1,118Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    
    
    
    
    
    
    
    
    (309
    )
    
    
    (309
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,149Balance, December 31, 2008
    
    
    67
    
    
    
    28,247
    
    
    
    (4,029
    )
    
    
    39,173
    
    
    
    (2,046
    )
    
    
    61,412Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,510
    
    
    
    
    
    
    
    5,510
    
    
    
    5,510Minimum pension liability net of tax
expense of $411
    
    
    
    
    
    
    
    
    
    
    641
    
    
    
    
    
    
    
    
    
    
    
    641
    
    
    
    641Stock based compensation
expense
    
    
    
    
    
    
    581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    581Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,154
    )
    
    
    
    
    
    
    (3,154
    )Exercise of stock options
    
    
    
    
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    352
    
    
    
    565Foreign currency translation
adjustment
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    40Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,191Balance, December 31, 2009
    
    $
    67
    
    
    $
    29,041
    
    
    
    ($3,348
    )
    
    $
    41,529
    
    
    
    ($1,694
    )
    
    $
    65,595
 See accompanying notes to consolidated financial statements.
 F - 5




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2009, 2008, and 2007  (In thousands)
 2009
    
    
    2008
    
    
    2007| | |Cash Flows from Operating ActivitiesNet income
    
    $
    5,510
    
    
    $
    6,167
    
    
    $
    7,300Adjustments to reconcile net income to net cash
provided by operating activities, net of effects of
acquisitions:Depreciation and amortization
    
    
    2,705
    
    
    
    1,891
    
    
    
    1,761Loss on disposal of property and equipment
    
    
    225
    
    
    
    5
    
    
    
    97Stock-based compensation expense
    
    
    581
    
    
    
    577
    
    
    
    549Deferred income taxes
    
    
    1,011
    
    
    
    64
    
    
    
    586Changes in current assets and liabilities, net of effects
of acquisitions:Trade accounts and other receivables
    
    
    814
    
    
    
    144
    
    
    
    (2,681
    )Inventories
    
    
    1,740
    
    
    
    1,682
    
    
    
    (5,093
    )Accounts payable
    
    
    (2,252
    )
    
    
    3,022
    
    
    
    2,029Accrued expenses and other
    
    
    1,872
    
    
    
    (301
    )
    
    
    (488
    )Net cash provided by operating activities
    
    
    12,206
    
    
    
    13,251
    
    
    
    4,060Cash Flows from Investing ActivitiesPurchases of property and equipment
    
    
    (5,254
    )
    
    
    (3,176
    )
    
    
    (1,508
    )Proceeds from sales of property and equipment
    
    
    41
    
    
    
    
    
    
    
    2Acquisition payment (Note 11)
    
    
    (388
    )
    
    
    (3,169
    )
    
    
    Net cash used in investing activities
    
    
    (5,601
    )
    
    
    (6,345
    )
    
    
    (1,506
    )Cash Flows from Financing ActivitiesCash dividends paid
    
    
    (3,154
    )
    
    
    (9,322
    )
    
    
    (914
    )Purchase of treasury stock
    
    
    
    
    
    
    (95
    )
    
    
    Proceeds from exercise of stock options
    
    
    565
    
    
    
    1,118
    
    
    
    1,043Net cash provided by (used in) financing activities
    
    
    (2,589
    )
    
    
    (8,299
    )
    
    
    129Effect of foreign currency exchange rate changes on cash and
cash equivalents
    
    
    40
    
    
    
    (309
    )
    
    
    Increase (decrease) in cash and cash equivalents
    
    
    4,056
    
    
    
    (1,702
    )
    
    
    2,683Cash and cash equivalents:Beginning
    
    
    13,683
    
    
    
    15,385
    
    
    
    12,702Ending
    
    $
    17,739
    
    
    $
    13,683
    
    
    $
    15,385SUPPLEMENTAL INFORMATIONCash payments for income taxes
    
    $
    438
    
    
    $
    3,692
    
    
    $
    2,903Non-cash minimum pension liability adjustment, net of tax
(Note 8)
    
    $
    641
    
    
    $
    (2,709
    )
    
    $
    673Non-cash deferred income tax expense (benefit) from
adjustment to pension liability (Note 8)
    
    $
    411
    
    
    $
    (1,731
    )
    
    $
    430
 See accompanying notes to consolidated financial statements.
 F - 6




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business and Significant Accounting Policies
 Nature of business:
   
    
    Within the wholesale channel, the LACROSSE® and DANNER® brands
are marketed through our employee field sales staff directly to sporting goods and
outdoor retailers, general merchandisers, industrial distributors, and independent shoe
stores.
    
    The government channel provides performance footwear built to meet the demands and
specific requirements for multiple branches of the U.S. military, as well as federal,
state and other governmental agencies.
    
    Through the consumer direct channels of distribution, the Company operates four
Internet websites for use by consumers and our wholesale partners. The Company also has a
factory store in Portland, Oregon.
    
    International sales are primarily derived through independent distributors and dealer
networks in Japan and Canada as well as our subsidiary LaCrosse Europe ApS, which was
established to strengthen the Companys direct sales and marketing support to customers
in Europe.
 Summary of significant accounting policies:
 Principles of consolidation 
 Use of estimates in the preparation of financial statements 
 Reclassifications
 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
 Cash and cash equivalents 
 Revenue recognition
 Foreign currency translation and foreign currency transactions -
  Fair value of financial instruments
 Trade accounts receivable and allowance for doubtful accounts
 Inventories 
 Property and equipment
 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
 Goodwill
 Recoverability and impairment of intangible assets and other long-lived assets
 Product warranties
  December 31,2009
    
    
    2008Accrued product warranties, beginning
    
    $
    1,266
    
    
    $
    941Accruals for products sold
    
    
    2,890
    
    
    
    2,832Warranty claims
    
    
    (2,747
    )
    
    
    (2,507
    )Accrued product warranties, ending
    
    $
    1,409
    
    
    $
    1,266
 Stock-based compensation
 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
  Income taxes
 Research and development costs 
 Advertising and promotion
 Net income per common share
  December 31,2009
    
    
    2008
    
    
    2007Basic weighted average common shares outstanding
    
    
    6,303,473
    
    
    
    6,215,049
    
    
    
    6,087,224Dilutive stock options
    
    
    71,463
    
    
    
    201,682
    
    
    
    270,011Diluted weighted average common shares
outstanding
    
    
    6,374,936
    
    
    
    6,416,731
    
    
    
    6,357,235
 Segment reporting
 F - 10




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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
 its resources and assesses its performance on an enterprise-wide basis.
 Note 2. Fair Value of Financial Instruments
 Cash and cash equivalents at December 31, 2009 and 2008 were $17.7 and $13.7 million,
respectively. The Company has categorized its cash and cash equivalents as a Level 1 financial
asset, measured at fair value based on quoted prices in active markets of identical assets, in
accordance with Accounting Standards Codification Topic 820 Fair Value Measurements and
Disclosures. The Company does not have any other financial assets or liabilities that are
measured at fair value.
 Note 3. Inventories
 A summary of inventories is as follows (in thousands):
 December 31,2009
    
    
    2008Raw materials
    
    $
    4,094
    
    
    $
    3,590Work in process
    
    
    388
    
    
    
    316Finished goods
    
    
    23,346
    
    
    
    25,161Subtotal
    
    
    27,828
    
    
    
    29,067Less: provision for obsolete and slow-moving inventories
    
    
    (797
    )
    
    
    (449
    )Total
    
    $
    27,031
    
    
    $
    28,618
 Note 4. Income Tax Matters
 As of December 31, 2009 and 2008, the Company recorded a valuation allowance of $1.0 million and
$1.1 million, respectively, related to the state of Wisconsin net operating loss (NOL)
carryforwards of which the realization of such carryforwards is dependent on having taxable
income in Wisconsin in future periods.
In future periods of earnings, the Company will report income tax expense offset by any further
reductions in the valuation allowance based on an ongoing assessment of the future realization of
the state NOL deferred tax assets.The total state NOLs as of December 31, 2009 are approximately $21.0 million, which will expire
as follows: $1.9 million in 2015, $5.3 million in 2016, $9.2 million in 2017, $2.5 million in
2018, $1.6 million in 2019, at $0.5 million in 2020.Income before income taxes consist of the following (in thousands):
 Years Ending December 31,2009
    
    
    2008
    
    
    2007United States
    
    $
    7,983
    
    
    $
    11,536
    
    
    $
    11,272Foreign
    
    
    227
    
    
    
    (1,440
    )
    
    
    Total
    
    $
    8,210
    
    
    $
    10,096
    
    
    $
    11,272
 F - 11




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Income Tax Matters, Continued
 Net deferred tax assets and liabilities consist of the following components (in thousands):
 December 31,2009
    
    
    2008Deferred tax assets:Trade receivable allowances
    
    $
    147
    
    
    $
    242Inventory allowances
    
    
    800
    
    
    
    641Compensation and benefits
    
    
    2,615
    
    
    
    2,897Warranty reserves and other
    
    
    849
    
    
    
    782Net operating loss carryforwards
    
    
    1,058
    
    
    
    1,388Valuation allowance
    
    
    (1,017
    )
    
    
    (1,070
    )Total deferred tax assets
    
    
    4,452
    
    
    
    4,880Deferred tax liabilities:Goodwill amortization
    
    
    4,194
    
    
    
    4,131Property and equipment
    
    
    1,012
    
    
    
    131Prepaid expenses and other
    
    
    80
    
    
    
    31Total deferred tax liabilities
    
    
    5,286
    
    
    
    4,293Net deferred tax
assets (liabilities)
    
    $
    (834
    )
    
    $
    587
 The components giving rise to the net deferred tax assets (liabilities) described above have been
included in the accompanying consolidated balance sheets as follows (in thousands):
 December 31,2009
    
    
    2008Current assets
    
    $
    1,503
    
    
    $
    1,364Noncurrent liabilities
    
    
    (2,337
    )
    
    
    (777
    )Net deferred tax
assets (liabilities)
    
    $
    (834
    )
    
    $
    587
 F - 12




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Income Tax Matters, Continued
 The components of the provision for income taxes are as follows (in thousands):
 December 31,2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    1,714
    
    
    $
    3,542
    
    
    $
    3,071State
    
    
    431
    
    
    
    323
    
    
    
    315Foreign
    
    
    (372
    )
    
    
    
    
    
    
    Deferred:Federal
    
    
    545
    
    
    
    379
    
    
    
    526State
    
    
    (15
    )
    
    
    43
    
    
    
    60Foreign
    
    
    397
    
    
    
    (358
    )
    
    
    Provision for income taxes
    
    $
    2,700
    
    
    $
    3,929
    
    
    $
    3,972
 The differences between statutory federal tax rates and the effective tax rates reflected in the
consolidated statements of income are as follows:
 December 31,2009
    
    
    2008
    
    
    2007Statutory federal tax rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State rate, net of federal tax effect
    
    
    5.1
    %
    
    
    3.2
    %
    
    
    3.2
    %Federal & state research and experimentation credits
    
    
    (2.0
    %)
    
    
    (2.3
    %)
    
    
    (2.1
    %)Liability for unrecognized tax benefits
    
    
    (3.1
    %)
    
    
    1.3
    %
    
    
    0.5
    %Foreign rate differential
    
    
    (1.8
    %)
    
    
    1.8
    %
    
    
    0.0
    %Other, net
    
    
    0.7
    %
    
    
    0.9
    %
    
    
    (0.4
    %)Effective income tax rate
    
    
    32.9
    %
    
    
    38.9
    %
    
    
    35.2
    %
 A reconciliation of the beginning and ending liability for unrecognized income tax benefits for
2009 and 2008 is shown below (in thousands):
 December 31,2009
    
    
    2008Balance, beginning of year
    
    $
    349
    
    
    $
    215Additions for tax positions of prior years
    
    
    
    
    
    
    87Additions based on tax positions related to the current year
    
    
    8
    
    
    
    47Reductions for tax positions of prior years
    
    
    (265
    )
    
    
    Settlements
    
    
    (75
    )
    
    
    Balance, end of year
    
    $
    17
    
    
    $
    349
 As of December 31, 2009, the Companys balance of net uncertain tax benefit positions would
reduce the Companys effective income tax rate if recognized.
 The Companys policy is to accrue interest related to potential underpayment of income taxes
within the
 F - 13




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4. Income Tax Matters, Continued
 provision for income taxes. The liability for accrued interest as of December 31, 2009 and
December 31, 2008 was insignificant. Interest is computed on the difference between the
Companys uncertain tax benefit positions under the provisions FASB ASC Subtopic 740-10 and the
amount deducted or expected to be deducted in the Companys tax returns.
 The Company files a consolidated U.S. federal income tax return as well as foreign and state tax
returns on a consolidated, combined, or stand-alone basis (depending upon the jurisdiction). The
Company has concluded tax examinations for U.S. federal and Oregon state filings through the tax
year ended December, 2007 and December 2006, respectively. Depending on the jurisdiction, the
Company is no longer subject to state examinations by tax authorities other than Oregon for years
prior to the December 2004 and 2005 tax years. The Company is not subject to foreign tax
examinations prior to the year ended December 2008.
 Note 5. Financing Arrangements
 On March 9, 2009, the Company entered into a new line of credit agreement with Wells Fargo Bank,
N.A., which expires June 30, 2012. This line of credit agreement represents a 3-year extension of
the Companys previous line of credit agreement with Wells Fargo Bank, N.A. Amounts borrowed
under the agreement are secured by substantially all of the Companys assets. The maximum
aggregate principal amount of borrowings allowed from January 1 to May 31 is $17.5 million and
from June 1 to December 31, the total available is $30 million. There are no borrowing base
limitations under the credit agreement. The credit agreement provides for an interest rate of
LIBOR plus 1.75% and an annual commitment fee of 0.15% on the unused balance. At December 31,
2009 and 2008, the Company had no outstanding balances due under this financing agreement. See
Note 15. Subsequent Events, for information regarding a
January 26, 2010 amendment to this
credit agreement.
 In June 2006, the Company received a grant of $0.2 million and a non-interest bearing loan of
$0.6 million from the Portland Development Commission, which were used to finance certain
leasehold improvements at the Companys Portland distribution facility. The grant is recorded as
deferred revenue and is being amortized as a reduction of operating expenses on a straight-line
basis over five years, which is the estimated useful life of the associated leasehold
improvements. In the third quarter of 2008, the loan was forgiven by the Portland Development
Commission and accordingly, the Company reclassified the remaining unamortized long-term debt to
deferred revenue and will continue to amortize the balance until 2011. Deferred revenue was $0.2
million and $0.4 million at December 31, 2009 and 2008, respectively.
 Note 6. Lease Commitments and Contingencies
 Lease Commitments The Company has real estate operating leases for office space, factory store,
and manufacturing and distribution space under non-cancelable lease agreements expiring on
various dates through 2019. The total rental expense included in the consolidated statements of income for
the years ended December 31, 2009, 2008, and 2007 is $2.9 million, $2.2 million, and $2.1
million, respectively. The future minimum lease payments required under non-cancelable operating
leases at December 31, 2009 are: $2.6 million in each of years 2010 through 2013, $2.7 million
in 2014, and $8.0 million thereafter. Obligations related to the new leases that were executed
subsequent to December 31, 2009, have been included in the future minimum lease payments above
(see Note 15. Subsequent Events).
 Contingencies In the normal course of business, the Company is subject to claims and
litigation. Management believes that such matters which are currently known will not have a
material adverse effect
 F - 14




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 6. Lease Commitments and Contingencies, Continued
 on the Companys results of operations, liquidity or financial condition.
 Note 7. Stock Options
 The Company has outstanding stock options under certain employee and director stock option plans.
Outstanding employee stock options are subject to the provisions of the 1993 Employee Stock
Incentive Plan, 1997 Employee Stock Incentive Plan, 2001 Stock Incentive Plan, and 2007 Long Term
Incentive Plan. The Board of Directors stock options are subject to the provisions of the 2001
Non-Employee Director Stock Option Plan, as Amended and Restated. Prior to 2006, employee stock
options vested over a period of five years and had a maximum term of ten years. Beginning in
2006, the employee stock option issuances vest over four years and have a maximum term of seven
years. Prior to 2008, the directors stock options vested over a period of five years and had a
maximum term of ten years. Beginning in 2008, the directors stock option issuances vest over
four years and have a maximum term of seven years.FASB Accounting Standards Codification Topic 718 Compensation  Stock Compensation requires
companies to estimate the fair value of share-based awards on the date of grant using an
option-pricing model. The value of the portion of the award that is ultimately expected to vest
is recognized as expense in the Companys consolidated statements of income over the requisite
service periods. Because share-based compensation expense is based on awards that are ultimately
expected to vest, share-based compensation expense is reduced for estimated forfeitures. FASB
ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in
subsequent periods if actual forfeitures differ from those estimates.To calculate the share-based compensation expense, the Company uses the Black-Scholes
option-pricing model. The Companys determination of fair value of option-based awards on the
date of grant is impacted by the Companys stock price as well as assumptions regarding certain highly subjective
variables. These variables include, but are not limited to, the Companys expected stock price
volatility over the term of the awards, the anticipated risk-free interest rate, anticipated
future dividend yields and the expected life of the options. The anticipated risk-free interest
rate is based on a treasury instrument whose term is consistent with the expected life of the
stock options granted. The expected volatility, life of options and dividend yield are based on
historical experience.
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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Stock Options, Continued
 The following table lists the assumptions used by the Company in determining the fair value of
stock options and the resulting fair value for the years ended December 31, 2009, 2008, and 2007:
 December 31,2009
    
    
    2008
    
    
    2007Expected dividend yield
    
    
    3.7
    %
    
    
    2.9
    %
    
    
    0
    %Expected stock price volatility
    
    
    46
    %
    
    
    31
    %
    
    
    42
    %Risk-free interest rate
    
    
    1.4
    %
    
    
    3.2
    %
    
    
    4.7
    %Expected life of options
    
    4.6 years
    
    4.4 years
    
    3.2 yearsWeighted average fair value of options
    
    $
    3.26
    
    $
    3.76
    
    $
    4.57
 The following table represents stock option activity for the three years ended December 31, 2009:
 Common Shares
    
    
    Weighted Average
    
    
    Average RemainingUnder Options
    
    
    Exercise Price
    
    
    Contract LifeOptions outstanding December 31, 2006
    
    
    749,722
    
    
    $
    8.04Granted
    
    
    167,650
    
    
    
    13.52Canceled
    
    
    (54,051
    )
    
    
    11.81Exercised
    
    
    (74,742
    )
    
    
    8.17Options outstanding December 31, 2007
    
    
    788,579
    
    
    
    8.94Granted
    
    
    193,175
    
    
    
    16.72Canceled
    
    
    (43,749
    )
    
    
    13.83Exercised
    
    
    (141,166
    )
    
    
    5.78Options outstanding December 31, 2008
    
    
    796,839
    
    
    
    11.12Granted
    
    
    193,150
    
    
    
    11.46Canceled
    
    
    (97,799
    )
    
    
    12.80Exercised
    
    
    (82,667
    )
    
    
    5.52Options outstanding December 31, 2009
    
    
    809,523
    
    
    $
    11.57
    
    
    4.7 years
 F - 16




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7. Stock Options, Continued
 Options outstanding under the option plans on December 31, 2009 by price range are as follows:
 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
    
    
    51,000
    
    
    $
    2.77
    
    
    
    2.8
    
    
    
    51,000
    
    
    $
    2.77
    
    
    
    2.8$7.70 - $10.50
    
    
    127,207
    
    
    
    7.93
    
    
    
    4.4
    
    
    
    106,257
    
    
    
    7.72
    
    
    
    4.0> $10.50
    
    
    631,316
    
    
    
    13.01
    
    
    
    4.9
    
    
    
    271,884
    
    
    
    12.36
    
    
    
    4.3809,523
    
    
    
    11.57
    
    
    
    4.7
    
    
    
    429,141
    
    
    
    10.07
    
    
    
    4.1
 The Companys nonvested stock option activity for the year ended December 31, 2009 is as follows:
 Number ofSharesNonvested stock options at beginning of year
    
    
    447,393Vested
    
    
    (162,362
    )Canceled
    
    
    (97,799
    )Granted
    
    
    193,150Nonvested stock options at end of year
    
    
    380,382
 Shares available for future stock grants to employees and directors under existing plans
were approximately 295,000 at December 31, 2009. The aggregate intrinsic value of options
outstanding at December 31, 2009 was $1.5 million, and the aggregate intrinsic value of
exercisable options was $1.3 million. The total intrinsic value of options exercised during 2009
was $0.4 million. At December 31, 2009, there was approximately $0.4 million of unrecognized
compensation cost related to share-based payments to be recognized over a weighted-average period
of approximately 1.1 years. The total fair value of options vesting in 2009 was approximately
$0.6 million. A tax benefit of $0.1 million was recognized in 2009 from the exercise of stock
options.
 Note 8. Compensation and Benefit Agreements
 The Company has a defined benefit pension plan covering eligible past employees and less than 1%
of its current employees. Eligible participants are entitled to monthly pension benefits
beginning at normal retirement age sixty-five (65). The monthly benefit payable at normal
retirement date under the plan is equal to a specified dollar amount or percentage of average
monthly compensation, as defined in the plan, multiplied by years of benefit service (maximum of
38 years). The Companys funding policy is to make not less than the minimum contribution
required by applicable regulations, plus such amounts as the Company may determine to be
appropriate from time to time. The Company froze the plan during 2003 and
as a result, participants do not accrue any additional years of service regardless of any
increases in their compensation or completion of additional years of credited service.
 The Company also sponsors an unfunded defined benefit postretirement death benefit plan that
covers eligible past employees. The Company funds this postretirement benefit obligation as the
benefits are paid.
 F - 17




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Compensation and Benefit Agreements, Continued
 Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,Summary of pension and other postretirement benefit plans (in thousands):
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Changes in benefit obligations:Obligations at beginning of year
    
    $
    15,586
    
    
    $
    15,720
    
    
    $
    279
    
    
    $
    282Interest cost
    
    
    944
    
    
    
    951
    
    
    
    17
    
    
    
    17Benefits paid
    
    
    (1,088
    )
    
    
    (1,089
    )
    
    
    (21
    )
    
    
    (19
    )Actuarial (gains) losses
    
    
    895
    
    
    
    4
    
    
    
    
    
    
    
    (1
    )Obligations at end of year
    
    $
    16,337
    
    
    $
    15,586
    
    
    $
    275
    
    
    $
    279Changes in plan assets:Fair value of assets at beginning of year
    
    $
    10,021
    
    
    $
    14,009
    
    
    $
    
    
    
    $
    Actual return on assets
    
    
    2,405
    
    
    
    (3,355
    )
    
    
    
    
    
    
    Company contributions
    
    
    594
    
    
    
    456
    
    
    
    21
    
    
    
    19Benefits paid
    
    
    (1,088
    )
    
    
    (1,089
    )
    
    
    (21
    )
    
    
    (19
    )Fair value of assets at end of year
    
    $
    11,932
    
    
    $
    10,021
    
    
    $
    
    
    
    $
    Funded status at end of year:Plan assets less than obligations
    
    $
    (4,405
    )
    
    $
    (5,565
    )
    
    $
    (290
    )
    
    $
    (278
    )Unrecognized (gain) loss
    
    
    5,046
    
    
    
    6,004
    
    
    
    15
    
    
    
    (1
    )Unrecognized prior service cost
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    Accrued benefit (cost)
    
    $
    641
    
    
    $
    533
    
    
    $
    (275
    )
    
    $
    (279
    )Total compensation and benefits liabilities
    
    $
    4,405
    
    
    $
    5,565
    
    
    $
    275
    
    
    $
    279
 The following is a reconciliation to the compensation and benefits financial statement line item on the accompanying balance sheets:
 December 31,2009
    
    
    2008Pension benefits
    
    $
    4,405
    
    
    $
    5,565Other benefits
    
    
    275
    
    
    
    279Total compensation and benefits
    
    $
    4,680
    
    
    $
    5,844
 F - 18




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Compensation and Benefit Agreements, Continued
  AccumulatedPrior
    
    
    
    
    
    
    
    
    
    Deferred
    
    OtherService
    
    Unrecognized
    
    
    
    
    
    Tax
    
    ComprehensiveCost
    
    Losses
    
    Total
    
    Amount
    
    Loss *Balance, December 31, 2006
    
    $
    123
    
    
    $
    2,638
    
    
    $
    2,761
    
    
    $
    (1,077
    )
    
    $
    1,684Incurred in the current year
    
    
    
    
    
    
    (981
    )
    
    
    (981
    )
    
    
    382
    
    
    
    (599
    )Recognized as component of
net period (cost)
    
    
    (15
    )
    
    
    (107
    )
    
    
    (122
    )
    
    
    48
    
    
    
    (74
    )Balance, December 31, 2007
    
    
    108
    
    
    
    1,550
    
    
    
    1,658
    
    
    
    (647
    )
    
    
    1,011Incurred in the current year
    
    
    
    
    
    
    4,454
    
    
    
    4,454
    
    
    
    (1,736
    )
    
    
    2,718Recognized as component of
net period (cost)
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )
    
    
    5
    
    
    
    (9
    )Balance, December 31, 2008
    
    
    94
    
    
    
    6,004
    
    
    
    6,098
    
    
    
    (2,378
    )
    
    
    3,720Incurred in the current year
    
    
    
    
    
    
    (764
    )
    
    
    (764
    )
    
    
    299
    
    
    
    (465
    )Recognized as component of
net period (cost)
    
    
    (94
    )
    
    
    (194
    )
    
    
    (288
    )
    
    
    112
    
    
    
    (176
    )Balance, December 31, 2009
    
    $
    
    
    
    $
    5,046
    
    
    $
    5,046
    
    
    $
    (1,967
    )
    
    $
    3,079To be recognized as component of
net period (cost) in 2010
    
    $
    
    
    
    $
    149
 
 *
    
    Excludes $0.3 million of foreign currency translation adjustment as of December 31, 2009.  December 31,2009
    
    
    2008Minimum pension liability, net of tax
    
    $
    3,079
    
    
    $
    3,720Foreign currency translation adjustment
    
    
    269
    
    
    
    309Accumulated other comprehensive loss
    
    $
    3,348
    
    
    $
    4,029
 F - 19




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Compensation and Benefit Agreements, Continued
  Pension Benefits
    
    Other BenefitsDecember 31,
    
    December 31,2009
    
    2008
    
    2007
    
    2009
    
    2008
    
    2007Cost (income) recognized during the year:Interest cost
    
    $
    944
    
    
    $
    951
    
    
    $
    934
    
    
    $
    17
    
    
    $
    17
    
    
    $
    17Expected return on plan assets
    
    
    (798
    )
    
    
    (1,095
    )
    
    
    (1,024
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of loss
    
    
    194
    
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    
    
    
    
    14
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    Curtailment
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net period cost (income)
    
    $
    486
    
    
    $
    (130
    )
    
    $
    32
    
    
    $
    17
    
    
    $
    17
    
    
    $
    17
 Pension Benefits
    
    
    Other BenefitsDecember 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Assumptions used in determining net
period cost (income):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.   Target
    
    
    Percentage of Plan AssetsAllocation
    
    
    December 31,Asset Category
    
    2010
    
    
    2009
    
    
    2008Equity securities  mutual funds
    
    
    50% - 60
    %
    
    
    56
    %
    
    
    52
    %Debt securities  mutual funds
    
    
    40% - 50
    %
    
    
    44
    %
    
    
    48
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
  F - 20




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Compensation and Benefit Agreements, Continued
  Year(s)
    
    Pension Benefits
    
    Other Benefits2010
    
    $
    1,066
    
    
    $
    222011
    
    
    1,049
    
    
    
    232012
    
    
    1,041
    
    
    
    242013
    
    
    1,044
    
    
    
    242014
    
    
    1,032
    
    
    
    252015-2019
    
    
    5,578
    
    
    
    121
    
    
    Quoted prices for similar assets in active markets;
    
    Quoted prices for identical or similar assets in inactive markets;
    
    Inputs other than quoted prices that are observable for the asset;
    
    Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
    F - 21




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 8. Compensation and Benefit Agreements, Continued
  (in thousands)
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalEquity securities- mutual funds
    
    $
    6,625
    
    
    $
    
    
    
    $
    
    
    
    $
    6,625Debt securities  mutual funds
    
    
    5,307
    
    
    
    
    
    
    
    
    
    
    
    5,307Total
    
    $
    11,932
    
    
    $
    
    
    
    $
    
    
    
    $
    11,932
   Note 9. Significant Risks and Uncertainties
 Concentrations of Credit Risk  Cash -
 Concentration of Credit Risk  Accounts Receivable 
 F - 22




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LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10. Enterprise-wide Disclosures
 The Company focuses on two market categories, work and outdoor. The following table presents
information about the Companys net sales attributed to these two market categories (in
thousands):
 Years Ended December 31,Net sales:
    
    2009
    
    
    2008
    
    
    2007Work Market
    
    $
    88,200
    
    
    $
    74,902
    
    
    $
    60,893Outdoor Market
    
    
    50,952
    
    
    
    53,054
    
    
    
    57,286Total
    
    $
    139,152
    
    
    $
    127,956
    
    
    $
    118,179
 The following table presents information about the Companys net sales by geography based on the
location of the customer (in thousands):
 Years Ended December 31,Net sales:
    
    2009
    
    
    2008
    
    
    2007United States
    
    $
    131,897
    
    
    $
    120,039
    
    
    $
    109,989Foreign Countries
    
    
    7,255
    
    
    
    7,917
    
    
    
    8,190Total
    
    $
    139,152
    
    
    $
    127,956
    
    
    $
    118,179
 Included in the Companys consolidated balance sheets at December 31, 2009 and 2008 are the
net assets located outside of the United States of approximately $2.7 million and $1.4 million,
respectively. The net book value of long-lived assets located outside of the United States
totaled $0.5 million and $0.6 million at December 31, 2009 and 2008, respectively.The Company sells its products to a large number of customers in different markets across
multiple product categories. One customer accounted for 20%, 9% and 1%, respectively, of total
revenues for the years ended December 31, 2009, 2008 and 2007.
 Note 11. Acquisitions
 On May 8, 2009, the Company announced the formation of Environmentally Neutral Design Outdoor,
Inc. (END). END was formed in the second quarter of 2009 when the Company acquired
substantially all the assets of the predecessor company doing business as END Footwear for $0.4
million. The assets acquired included inventory, intellectual property, and property and
equipment. ENDs results of operations since the date of acquisition have been included in the
consolidated financial statements. On August 7, 2009, the Company announced its plans to
discontinue END as a standalone footwear brand and to integrate its platform of lightweight
footwear designs into the Danner brand.On July 21, 2008, the Company announced the formation of LaCrosse Europe ApS, a subsidiary based
in Denmark. In establishing this company, LaCrosse Europe ApS purchased certain assets for $3.2
million in cash from the Companys former European distributor, Gateway Footgear. The acquired
assets included inventory and sales order backlog. The results of operations since the date of
acquisition have been included in the consolidated financial statements. Proforma results of
periods prior to the date of
 F - 23




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 11. Acquisitions, Continued
 acquisition to include the acquired entity are not included since management has determined they
are not material to the consolidated financial statements.
 Note 12. Quarterly Selected Financial Data (Unaudited)
 The following reflects the Companys unaudited quarterly results of operations for 2009 and 2008
(in thousands except per share data):
 2009Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4Net sales
    
    $
    25,910
    
    
    $
    29,976
    
    
    $
    40,761
    
    
    $
    42,505Gross profit
    
    
    9,831
    
    
    
    12,218
    
    
    
    15,721
    
    
    
    16,320Operating income
    
    
    (1,038
    )
    
    
    1,990
    
    
    
    3,906
    
    
    
    3,727Income tax provision (benefit)
    
    
    (398
    )
    
    
    315
    
    
    
    1,450
    
    
    
    1,333Net income (loss)
    
    
    (692
    )
    
    
    1,658
    
    
    
    2,221
    
    
    
    2,323Basic income (loss) per common share
    
    
    ($0.11
    )
    
    $
    0.26
    
    
    $
    0.35
    
    
    $
    0.37Diluted income (loss) per common share
    
    
    ($0.11
    )
    
    $
    0.26
    
    
    $
    0.35
    
    
    $
    0.36
 2008Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4Net sales
    
    $
    24,732
    
    
    $
    27,810
    
    
    $
    40,265
    
    
    $
    35,149Gross profit
    
    
    10,061
    
    
    
    11,242
    
    
    
    15,787
    
    
    
    13,571Operating income
    
    
    1,093
    
    
    
    2,304
    
    
    
    4,553
    
    
    
    2,170Income tax provision
    
    
    473
    
    
    
    820
    
    
    
    1,731
    
    
    
    905Net income
    
    
    779
    
    
    
    1,436
    
    
    
    2,768
    
    
    
    1,184Basic income per common share
    
    $
    0.13
    
    
    $
    0.23
    
    
    $
    0.44
    
    
    $
    0.19Diluted income per common share
    
    $
    0.12
    
    
    $
    0.22
    
    
    $
    0.43
    
    
    $
    0.18
 Note 13. Cash Dividends
 On February 4, 2008, the Company announced a special cash dividend of one dollar ($1.00) per
share of common stock and a first quarter cash dividend of twelve and one-half cents ($0.125) per
share of common stock. These dividends were paid together ($1.125 per common share) on March 18,
2008 and totaled $7.0 million. Subsequently, quarterly dividends totaling $2.3 million, in the
amount of $0.125 per common share, were paid on June 18, 2008, September 18, 2008, and December
18, 2008, respectively.In 2009, the Company paid quarterly dividends of $0.8 million ($0.125 per common share) on March
18, 2009, June 18, 2009, September 18, 2009, and December 18, 2009, totaling $3.2 million.
 F - 24




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##### Table of Contents



LACROSSE FOOTWEAR, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 14. Recent Accounting Pronouncements
 On December 30, 2008, the FASB issued FSP SFAS No. 132(R)-1, Employers Disclosures about
Postretirement Benefit Plan Assets(FSP SFAS No. 132(R)-1) which is included in the new FASB
Accounting Standards Codification as FASB ASC Section 715-20-65. This FSP amends FASB Statement
No. 132 (Revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefits
(SFAS No. 132(R)), to provide guidance on an employers disclosures about plan assets of a
defined benefit pension or other postretirement plan. The disclosures about plan assets required
by FSP SFAS No. 132(R)-1 is required for fiscal years ending after December 15, 2009 (fiscal 2009
for the Company). The additional disclosure under the standard does not require years prior to
fiscal 2009 to be presented for comparative purpose, and only requires additional disclosures
concerning plan assets. The adoption of this standard was effective for the Company in the
current period, and the Company has complied with such provisions in the financial statements
presented herein.
 Note 15. Subsequent Events
 On February 1, 2010, the Company announced a special cash dividend of one dollar ($1.00) per
share of common stock and a first quarter cash dividend of twelve and one-half cents ($0.125) per
share of common stock. This special and first quarter dividend will be paid together on March
18, 2010 to shareholders of record as of the close of business on February 22, 2010. The total
cash payment for this dividend will be approximately $7.1 million.On February 10, 2010, the Company announced its plans to move into a new Danner® factory in
Portland, Oregon. The new Danner® facility will be located in an industrial building
approximately one mile from the Companys corporate headquarters. The new factory will be
approximately 59,000 square feet, representing a significant increase in the square footage of
the Companys existing Portland-based factory which is being replaced. The lease has an initial
term of approximately five years, and includes provision for three successive extension terms of
five years each. The initial term of the lease commences on May 1, 2010, and monthly base rent of
$0.03 million becomes payable beginning September 1, 2010.On January 26, 2010, the Company entered into an Amended and Restated Credit Agreement with Wells
Fargo Bank, N.A. which amends the allowable capital expenditures and cash dividends for the year
ended December 31, 2010.
 F - 25