LaCrosse Footwear Reports Third Quarter Results

LaCrosse Footwear, Inc. (Nasdaq: BOOT), a leading provider of premium, branded footwear for work and outdoor users, today reported results for the third quarter ended September 24, 2011.

For the third quarter of 2011, LaCrosse reported net sales of $35.3 million, compared to $37.7 million in the third quarter of 2010. For the first three quarters of 2011, net sales were $87.5 million, compared to $98.5 million in the same period of 2010. The Company recently announced a new $15.4 million delivery order for the United States Marine Corps which it anticipates fulfilling during the fourth quarter of 2011 and the first quarter of 2012.

For the third quarter of 2011, net income was $1.7 million or $0.25 per diluted share, up from $1.1 million or $0.17 per diluted share in the third quarter of 2010. Results for the third quarter of 2011 included a net benefit of approximately $0.8 million or $0.07 per diluted share from a legal settlement. For the first three quarters of 2011, net income was $0.8 million or $0.13 per diluted share, compared to $2.9 million or $0.44 per diluted share in the same period of 2010.

Sales to the work market were $16.1 million in the third quarter of 2011, down 14% from the same period of 2010, reflecting a reduction of contract orders from the U.S. military and the Company's decision in 2010 to discontinue its work apparel products. Excluding its contract military and work apparel sales, the Company's core work sales in the third quarter of 2011 increased 12% from the same period in 2010. Sales to the outdoor market were $19.2 million in the third quarter of 2011, up 1% from the same period of 2010. The increase in outdoor revenue was primarily driven by sales of hiking and cold weather products.

Gross margins for the third quarter of 2011 were 39.7% of net sales, up from 37.2% in the same period of 2010. The year-over-year increase in gross margins primarily reflects a favorable product mix, increased at-once demand, fewer closeout sales of discontinued work apparel products and more favorable sourcing partnerships in Asia. Excluding the net benefit from the legal settlement, operating expenses in the third quarter of 2011 were comparable to the same period in 2010.

The Company's inventories were $58.0 million at the end of the third quarter of 2011, up from $34.7 million at the end of the same period in 2010. The year-over-year increase in inventory reflects low inventory levels in the third quarter of 2010 due to supply constraints and a strategic decision in 2011 to enhance the availability of core products in order to address future at-once demand and U.S. military delivery orders. In the fourth quarter, the Company has begun fulfilling the recent contract military order and seasonal at-once demand, and expects its inventory levels to decrease significantly.

“During the third quarter of 2011, we continued to see strong year-over-year sales growth in our core work business, as well as continued expansion of our direct and international channels,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “While our overall performance was impacted by the timing of military orders and a cautious retail spending environment in our wholesale channels, we have continued to maintain solid gross margins and profitability, as we control our operating expenses and gradually increase the flexibility of our operating model with new manufacturing partnerships in Asia.

“As we move into the fourth quarter, we're beginning to fulfill the largest single military delivery order in our company's history. While the contract military business remains competitive and unpredictable, we've established LaCrosse as a trusted partner to various branches of the U.S. military that can fulfill their time-sensitive needs for high-performance, all-terrain, all-weather boots.

“Despite consumer uncertainty in the retail spending environment, we continue to deepen our wholesale channel relationships, both in the U.S. and internationally, and we're very encouraged by the customer response to our wide range of innovative new products for Spring 2012. LaCrosse remains well-positioned to capture market share over the long term.”

Based on the Company's financial outlook, the Board of Directors today announced the approval of a quarterly dividend of $0.125 per share of common stock. The fourth quarter dividend will be paid on December 18, 2011 to shareholders of record as of the close of business on November 22, 2011. The Board of Directors, while not declaring future dividends to be paid, has established a quarterly dividend policy reflecting its intent to declare and pay a quarterly dividend of $0.125 per share of common stock.

Third Quarter 2011 Conference Call

LaCrosse will host a conference call to discuss its financial results today, October 20, 2011 at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call and accompanying slideshow presentation will be available at www.lacrossefootwearinc.com under “Investor Events” or by calling 800-941-0844 or +1 480-629-9835. A 48-hour replay will be available by calling 800-406-7325 or +1 303-590-3030 (Access Code: 4476294).

About LaCrosse Footwear, Inc.

LaCrosse Footwear, Inc. is a leading developer and marketer of branded, premium and innovative footwear for work and outdoor users. The Company's trusted Danner® and LaCrosse® brands are sold to a network of specialty retailers and distributors in the United States, Canada, Europe and Asia. Work consumers include people in law enforcement, transportation, mining, oil and gas exploration and extraction, construction, Government services and other occupations that require high-performance and protective footwear as a critical tool for the job. Outdoor consumers include people active in hunting, outdoor cross-training, hiking and other outdoor recreational activities. For more information about LaCrosse Footwear products, please visit our Internet websites at www.lacrossefootwear.com and www.danner.com. For additional investor information, see our corporate website at www.lacrossefootwearinc.com.

Forward-Looking Statements

All statements, other than statements of historical facts, included in this release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other terms of similar meaning, typically identify such forward-looking statements. Forward- looking statements include without limitation, statements regarding the anticipated success of new products, our ability to continue to innovate new products, our ability to capture market share in the future, our expectations concerning future demand for our products, our ability to fulfill orders within specified timeframes, and the Board of Directors' intent to declare and pay dividends in future periods. The Company assumes no obligation to update or revise any forward-looking statements to reflect the occurrence or non-occurrence of future events or circumstances.

The forward-looking statements included in this release are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Risk factors and other uncertainties which may adversely impact the outcome of such forward-looking statements include the potential impact on our financial position and results of operations of the risk factors set forth in our 2010 Annual Report on Form 10-K, as supplemented by our quarterly reports on Form 10-Q for 2011.