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By-laws - LACROSSE FOOTWEAR INC - 3-30-2000

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By-laws - LACROSSE FOOTWEAR INC - 3-30-2000 Powered By Docstoc
					BY-LAWS OF LACROSSE FOOTWEAR, INC. (a Wisconsin corporation)

ARTICLE I. OFFICES 1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. 1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of the shareholders shall be held on the fourth (4th) Friday in May of each year, or at such other time and place within thirty days before or after such date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is practicable. 2.02. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by the Wisconsin Business Corporation Law, may be called by the Chairman of the Board, the Vice Chairman of the Board, the Board of Directors or the President. The corporation shall call a special meeting of shareholders in the event that the holders of at least 10% of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing one or more purposes for which it is to be held. The corporation shall give notice of such a special meeting within thirty days after the date that the demand is delivered to the corporation. 2.03. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual or special meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the corporation. Any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. B-1

2.04. Notice of Meeting. Written notice stating the date, time and place of any meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the meeting (unless a different time is provided by the

ARTICLE I. OFFICES 1.01. Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time. 1.02. Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office. ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of the shareholders shall be held on the fourth (4th) Friday in May of each year, or at such other time and place within thirty days before or after such date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Wisconsin, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is practicable. 2.02. Special Meetings. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by the Wisconsin Business Corporation Law, may be called by the Chairman of the Board, the Vice Chairman of the Board, the Board of Directors or the President. The corporation shall call a special meeting of shareholders in the event that the holders of at least 10% of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing one or more purposes for which it is to be held. The corporation shall give notice of such a special meeting within thirty days after the date that the demand is delivered to the corporation. 2.03. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Wisconsin, as the place of meeting for any annual or special meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the corporation. Any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. B-1

2.04. Notice of Meeting. Written notice stating the date, time and place of any meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the meeting (unless a different time is provided by the Wisconsin Business Corporation Law or the articles of incorporation), either personally or by mail, by or at the direction of the Chairman of the Board, the Vice Chairman of the Board, the President or the Secretary, to each shareholder of record entitled to vote at such meeting and to such other persons as required by the Wisconsin Business Corporation Law. If mailed, such notice shall be deemed to be effective when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock record books of the corporation, with postage thereon prepaid. If an annual or special meeting of shareholders is adjourned to a different date, time or place, the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new record date for an adjourned meeting is or must be fixed, the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new record date.

2.04. Notice of Meeting. Written notice stating the date, time and place of any meeting of shareholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the meeting (unless a different time is provided by the Wisconsin Business Corporation Law or the articles of incorporation), either personally or by mail, by or at the direction of the Chairman of the Board, the Vice Chairman of the Board, the President or the Secretary, to each shareholder of record entitled to vote at such meeting and to such other persons as required by the Wisconsin Business Corporation Law. If mailed, such notice shall be deemed to be effective when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock record books of the corporation, with postage thereon prepaid. If an annual or special meeting of shareholders is adjourned to a different date, time or place, the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new record date for an adjourned meeting is or must be fixed, the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new record date. 2.05. Waiver of Notice. A shareholder may waive any notice required by the Wisconsin Business Corporation Law, the articles of incorporation or these by-laws before or after the date and time stated in the notice. The waiver shall be in writing and signed by the shareholder entitled to the notice, contain the same information that would have been required in the notice under applicable provisions of the Wisconsin Business Corporation Law (except that the time and place of meeting need not be stated) and be delivered to the corporation for inclusion in the corporate records. A shareholder's attendance at a meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting or promptly upon arrival objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. 2.06. Fixing of Record Date. The Board of Directors may fix in advance a date as the record date for the purpose of determining shareholders entitled to notice of and to vote at any meeting of shareholders, shareholders entitled to demand a special meeting as contemplated by Section 2.02 hereof, shareholders entitled to take any other action, or shareholders for any other purpose. Such record date shall not be more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If no record date is fixed by the Board of Directors or by the Wisconsin Business Corporation Law for the determination of shareholders entitled to notice of and to vote at a meeting of shareholders, the record date shall be the close of business on the day before the first notice is given to shareholders. If no record date is fixed by the Board of Directors or by the Wisconsin Business Corporation Law for the determination of shareholders entitled to demand a special meeting as contemplated in Section 2.02 hereof, the record date shall be the date that the first shareholder signs the demand. Except as provided by the Wisconsin Business Corporation Law for a court-ordered adjournment, a determination of shareholders entitled to notice of and to vote at a meeting of shareholders is effective for any B-2

adjournment of such meeting unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the corporation's shares) or a share dividend is the date on which the Board of Directors authorized the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date. 2.07. Shareholders' List for Meetings. After a record date for a special or annual meeting of shareholders has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the Wisconsin Business Corporation Law, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 2.07. The

adjournment of such meeting unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. The record date for determining shareholders entitled to a distribution (other than a distribution involving a purchase, redemption or other acquisition of the corporation's shares) or a share dividend is the date on which the Board of Directors authorized the distribution or share dividend, as the case may be, unless the Board of Directors fixes a different record date. 2.07. Shareholders' List for Meetings. After a record date for a special or annual meeting of shareholders has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing to the date of the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder or his or her agent may, on written demand, inspect and, subject to the limitations imposed by the Wisconsin Business Corporation Law, copy the list, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section 2.07. The corporation shall make the shareholders' list available at the meeting and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof. Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at a meeting of shareholders. 2.08. Quorum and Voting Requirements. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. If the corporation has only one class of common stock outstanding, such class shall constitute a separate voting group for purposes of this Section 2.08. Except as otherwise provided in the articles of incorporation or the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on the matter shall constitute a quorum of the voting group for action on that matter. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Wisconsin Business Corporation Law requires a greater number of affirmative votes. Unless otherwise provided in the articles of incorporation, each director shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at a meeting at which a quorum is present. Though less than a quorum of the outstanding votes of a voting group are represented at a meeting, a majority of the votes so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. B-3

2.09. Conduct of Meeting. The Chairman of the Board, and in his or her absence, the Vice Chairman of the Board, and in his or her absence, the President, and in his or her absence, a Vice President in the order provided under Section 4.08 hereof, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.10. Proxies. At all meetings of shareholders, a shareholder may vote his or her shares in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven months from the date of its signing unless a different period is expressly provided in the appointment form. 2.11. Voting of Shares. Except as provided in the articles of incorporation or in the Wisconsin Business Corporation Law, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a

2.09. Conduct of Meeting. The Chairman of the Board, and in his or her absence, the Vice Chairman of the Board, and in his or her absence, the President, and in his or her absence, a Vice President in the order provided under Section 4.08 hereof, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.10. Proxies. At all meetings of shareholders, a shareholder may vote his or her shares in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven months from the date of its signing unless a different period is expressly provided in the appointment form. 2.11. Voting of Shares. Except as provided in the articles of incorporation or in the Wisconsin Business Corporation Law, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a meeting of shareholders. 2.12. Action without Meeting. Any action required or permitted by the articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law to be taken at a meeting of the shareholders may be taken without a meeting and without action by the Board of Directors if a written consent or consents, describing the action so taken, is signed by all of the shareholders entitled to vote with respect to the subject matter thereof and delivered to the corporation for inclusion in the corporate records. 2.13. Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a shareholder, the corporation, if acting in good faith, may accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder if any of the following apply: (a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity. (b) The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (c) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status B-4

acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment. (e) Two or more persons are the shareholders as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. ARTICLE III. BOARD OF DIRECTORS

acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment. (e) Two or more persons are the shareholders as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. ARTICLE III. BOARD OF DIRECTORS 3.01. General Powers, Classification and Number. All corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation managed under the direction of, the Board of Directors. The number of directors of the corporation shall be eight (8), divided into three classes of three (3), two (2) and three (3) directors, respectively, and designated as Class I, Class II and Class III, respectively. At the 1994 annual meeting of shareholders, the directors of Class I shall be elected for a term to expire at the first annual meeting of shareholders after their election, and until their successors are duly elected and qualified, the directors of Class II shall be elected for a term to expire at the second annual meeting of shareholders after their election, and until their successors are duly elected and qualified, and the directors of Class III shall be elected for a term to expire at the third annual meeting of shareholders after their election, and until their successors are duly elected and qualified. At each annual meeting of shareholders after the 1994 annual meeting of shareholders the successors to the class of directors whose terms shall expire at the time of such annual meeting shall be elected to hold office until the third succeeding annual meeting of shareholders, and until their successors are duly elected and qualified. 3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders in the year in which such director's term expires and until his or her successor shall have been duly elected and, if necessary, qualified, or until there is a decrease in the number of directors which takes effect after the expiration of his or her term, or until his or her prior retirement, death, resignation or removal. A director may be removed from office only as provided in the articles of incorporation at a meeting of the shareholders called for the purpose of removing the director, and the meeting notice shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may resign at any time by delivering written notice which complies with the Wisconsin Business B-5

Corporation Law to the Board of Directors, to the Chairman of the Board, to the Vice Chairman of the Board or to the corporation. A director's resignation is effective when the notice is delivered unless the notice specifies a later effective date. Directors need not be residents of the State of Wisconsin or shareholders of the corporation. No other restrictions, limitations or qualifications may be imposed on individuals for service as a director. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors shall provide, by resolution, the date, time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings of the Board of Directors without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Vice Chairman of the Board, the President, Secretary or any two directors. The Chairman of the Board, the Vice Chairman of the Board, the President or Secretary may fix any place, either

Corporation Law to the Board of Directors, to the Chairman of the Board, to the Vice Chairman of the Board or to the corporation. A director's resignation is effective when the notice is delivered unless the notice specifies a later effective date. Directors need not be residents of the State of Wisconsin or shareholders of the corporation. No other restrictions, limitations or qualifications may be imposed on individuals for service as a director. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this by-law immediately after the annual meeting of shareholders and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors shall provide, by resolution, the date, time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings of the Board of Directors without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Vice Chairman of the Board, the President, Secretary or any two directors. The Chairman of the Board, the Vice Chairman of the Board, the President or Secretary may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors, and if no other place is fixed the place of the meeting shall be the principal business office of the corporation in the State of Wisconsin. 3.05. Notice; Waiver. Notice of each special meeting of the Board of Directors shall be given by written notice delivered or communicated in person, by telegraph, teletype, facsimile or other form of wire or wireless communication, or by mail or private carrier, to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less than forty-eight hours prior to the meeting. The notice need not prescribe the purpose of the special meeting of the Board of Directors or the business to be transacted at such meeting. If mailed, such notice shall be deemed to be effective when deposited in the United States mail so addressed, with postage thereon prepaid. If notice is given by telegram, such notice shall be deemed to be effective when the telegram is delivered to the telegraph company. If notice is given by private carrier, such notice shall be deemed to be effective when delivered to the private carrier. Whenever any notice whatever is required to be given to any director of the corporation under the articles of incorporation or these by-laws or any provision of the Wisconsin Business Corporation Law, a waiver thereof in writing, signed at any time, whether before or after the date and time of meeting, by the director entitled to such notice shall be deemed equivalent to the giving of such notice. The corporation shall retain any such waiver as part of the permanent corporate records. A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless the director at the beginning of the meeting or promptly upon his or her arrival objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. B-6

3.06. Quorum. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or these by-laws, a majority of the number of directors specified in Section 3.01 of these by-laws shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or by these by-laws, a quorum of any committee of the Board of Directors created pursuant to Section 3.12 hereof shall consist of a majority of the number of directors appointed to serve on the committee. A majority of the directors present (though less than such quorum) may adjourn any meeting of the Board of Directors or any committee thereof, as the case may be, from time to time without further notice. 3.07. Manner of Acting. The affirmative vote of a majority of the directors present at a meeting of the Board of Directors or a committee thereof at which a quorum is present shall be the act of the Board of Directors or such committee, as the case may be, unless the Wisconsin Business Corporation Law, the articles of incorporation or these bylaws require the vote of a greater number of directors. 3.08. Conduct of Meetings. The Chairman of the Board, and in his or her absence, the Vice Chairman of the Board, and in his or her absence, the President, and in his or her absence, a Vice President in the order provided under Section 4.08, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act

3.06. Quorum. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or these by-laws, a majority of the number of directors specified in Section 3.01 of these by-laws shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. Except as otherwise provided by the Wisconsin Business Corporation Law or by the articles of incorporation or by these by-laws, a quorum of any committee of the Board of Directors created pursuant to Section 3.12 hereof shall consist of a majority of the number of directors appointed to serve on the committee. A majority of the directors present (though less than such quorum) may adjourn any meeting of the Board of Directors or any committee thereof, as the case may be, from time to time without further notice. 3.07. Manner of Acting. The affirmative vote of a majority of the directors present at a meeting of the Board of Directors or a committee thereof at which a quorum is present shall be the act of the Board of Directors or such committee, as the case may be, unless the Wisconsin Business Corporation Law, the articles of incorporation or these bylaws require the vote of a greater number of directors. 3.08. Conduct of Meetings. The Chairman of the Board, and in his or her absence, the Vice Chairman of the Board, and in his or her absence, the President, and in his or her absence, a Vice President in the order provided under Section 4.08, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the corporation shall act as secretary of all meetings of the Board of Directors but in the absence of the Secretary, the presiding officer may appoint any other person present to act as secretary of the meeting. Minutes of any regular or special meeting of the Board of Directors shall be prepared and distributed to each director. 3.09. Vacancies. Any vacancies occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, shall be filled only as provided in the articles of incorporation. A vacancy that will occur at a specific later date, because of a resignation effective at a later date or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. 3.10. Compensation. The Board of Directors, irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the corporation. 3.11. Presumption of Assent. A director who is present and is announced as present at a meeting of the Board of Directors or any committee thereof created in accordance with Section 3.12 hereof, when corporate action is taken, assents to the action taken unless any B-7

of the following occurs: (a) the director objects at the beginning of the meeting or promptly upon his or her arrival to holding the meeting or transacting business at the meeting; (b) the director's dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) the director delivers written notice that complies with the Wisconsin Business Corporation Law of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. Such right of dissent or abstention shall not apply to a director who votes in favor of the action taken. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of all of the directors then in office may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any

of the following occurs: (a) the director objects at the beginning of the meeting or promptly upon his or her arrival to holding the meeting or transacting business at the meeting; (b) the director's dissent or abstention from the action taken is entered in the minutes of the meeting; or (c) the director delivers written notice that complies with the Wisconsin Business Corporation Law of his or her dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. Such right of dissent or abstention shall not apply to a director who votes in favor of the action taken. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of all of the directors then in office may create one or more committees, appoint members of the Board of Directors to serve on the committees and designate other members of the Board of Directors to serve as alternates. Each committee shall have two or more members who shall, unless otherwise provided by the Board of Directors, serve at the pleasure of the Board of Directors. A committee may be authorized to exercise the authority of the Board of Directors, except that a committee may not do any of the following: (a) authorize distributions; (b) approve or propose to shareholders action that the Wisconsin Business Corporation Law requires to be approved by shareholders; (c) fill vacancies on the Board of Directors or, unless the Board of Directors provides by resolution that vacancies on a committee shall be filled by the affirmative vote of the remaining committee members, on any Board committee; (d) amend the corporation's articles of incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of merger not requiring shareholder approval; (g) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; and (h) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits prescribed by the Board of Directors. Unless otherwise provided by the Board of Directors in creating the committee, a committee may employ counsel, accountants and other consultants to assist it in the exercise of its authority. 3.13. Telephonic Meetings. Except as herein provided and notwithstanding any place set forth in the notice of the meeting or these by-laws, members of the Board of Directors (and any committees thereof created pursuant to Section 3.12 hereof) may participate in regular or special meetings by, or through the use of, any means of communication by which all participants may simultaneously hear each other, such as by conference telephone. If a meeting is conducted by such means, then at the commencement of such meeting the presiding officer shall inform the participating directors that a meeting is taking place at which official business may be transacted. Any participant in a meeting by such means shall be deemed present in person at such meeting. If action is to be taken at any meeting held by such means on any of the following: (a) a plan of merger or share exchange; (b) a sale, lease, exchange or other disposition of substantial property or assets of the corporation; (c) a voluntary dissolution or the revocation of voluntary dissolution proceedings; or (d) a filing for bankruptcy, then the identity of each director participating in such meeting must be verified by the disclosure at such meeting by each such director of each such director's social security number to the secretary of the meeting before a vote may be taken on any of the foregoing B-8

matters. For purposes of the preceding clause (b), the phrase "sale, lease, exchange or other disposition of substantial property or assets" shall mean any sale, lease, exchange or other disposition of property or assets of the corporation having a net book value equal to 10% or more of the net book value of the total assets of the corporation on and as of the close of the fiscal year last ended prior to the date of such meeting and as to which financial statements of the corporation have been prepared. Notwithstanding the foregoing, no action may be taken at any meeting held by such means on any particular matter which the presiding officer determines, in his or her sole discretion, to be inappropriate under the circumstances for action at a meeting held by such means. Such determination shall be made and announced in advance of such meeting. 3.14. Action without Meeting. Any action required or permitted by the Wisconsin Business Corporation Law to be taken at a meeting of the Board of Directors or a committee thereof created pursuant to Section 3.12 hereof may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action shall be evidenced by one or more written consents describing the action taken, signed by each director or committee member and retained by the corporation. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date.

matters. For purposes of the preceding clause (b), the phrase "sale, lease, exchange or other disposition of substantial property or assets" shall mean any sale, lease, exchange or other disposition of property or assets of the corporation having a net book value equal to 10% or more of the net book value of the total assets of the corporation on and as of the close of the fiscal year last ended prior to the date of such meeting and as to which financial statements of the corporation have been prepared. Notwithstanding the foregoing, no action may be taken at any meeting held by such means on any particular matter which the presiding officer determines, in his or her sole discretion, to be inappropriate under the circumstances for action at a meeting held by such means. Such determination shall be made and announced in advance of such meeting. 3.14. Action without Meeting. Any action required or permitted by the Wisconsin Business Corporation Law to be taken at a meeting of the Board of Directors or a committee thereof created pursuant to Section 3.12 hereof may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action shall be evidenced by one or more written consents describing the action taken, signed by each director or committee member and retained by the corporation. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date. Article IV. OFFICERS 4.01. Number. The principal officers of the corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a President, the number of Vice Presidents as authorized from time to time by the Board of Directors, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. The Board of Directors may also authorize any duly authorized officer to appoint one or more officers or assistant officers. Any two or more offices may be held by the same person. 4.02. Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is practicable. Each officer shall hold office until his or her successor shall have been duly elected or until his or her prior death, resignation or removal. 4.03. Removal. The Board of Directors may remove any officer and, unless restricted by the Board of Directors or these by-laws, an officer may remove any officer or assistant officer appointed by that officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed. The appointment of an officer does not of itself create contract rights. B-9

4.04. Resignation. An officer may resign at any time by delivering notice to the corporation that complies with the Wisconsin Business Corporation Law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. 4.05. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. If a resignation of an officer is effective at a later date as contemplated by Section 4.04 hereof, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor may not take office until the effective date. 4.06. Chairman of the Board. The Chairman of the Board, subject to control of the Board of Directors, shall determine long-range, strategic direction and objectives and shall formulate major corporate policies. He or she shall preside at all meetings of the shareholders and the Board of Directors and shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint and remove such agents and employees of the corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation and to delegate authority to them. He or she shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, securities, contracts, leases, reports and all other documents necessary or

4.04. Resignation. An officer may resign at any time by delivering notice to the corporation that complies with the Wisconsin Business Corporation Law. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the corporation accepts the later effective date. 4.05. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. If a resignation of an officer is effective at a later date as contemplated by Section 4.04 hereof, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor may not take office until the effective date. 4.06. Chairman of the Board. The Chairman of the Board, subject to control of the Board of Directors, shall determine long-range, strategic direction and objectives and shall formulate major corporate policies. He or she shall preside at all meetings of the shareholders and the Board of Directors and shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint and remove such agents and employees of the corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation and to delegate authority to them. He or she shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, securities, contracts, leases, reports and all other documents necessary or proper to be executed in the course of the corporation's regular business, or which shall be authorized by the Board of Directors, and, except as otherwise provided by law or the Board of Directors, he or she may authorize the President or any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his or her place and stead. 4.06A. Vice Chairman of the Board. In the absence of the Chairman of the Board, the Vice Chairman shall perform the duties of the Chairman of the Board and, when so acting, shall have all of the powers of and be subject to all of the restrictions upon the Chairman of the Board. 4.07. President. The President shall be the Chief Executive Officer of the corporation and shall, in general, be responsible for meeting profit and growth objectives for the corporation's businesses and shall, in general, supervise and control the business and affairs of the corporation. He or she shall ensure that the corporation's management systems, structure and executive capabilities are effective and to that end he or she shall perform such other duties as may be delegated to him or her by the Chairman of the Board or the Vice Chairman of the Board. In the absence of the Chairman of the Board and the Vice Chairman of the Board, or in the event of the death, inability or refusal to act of either, the President shall perform the duties of the Chairman of the Board or the Vice Chairman of the Board and, when so acting, shall have all the powers and be subject to all restrictions upon the Chairman of the Board or the Vice Chairman of the Board. The execution of any instrument by the President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the Chairman of the Board and the Vice Chairman of the Board. B-10

4.08. The Vice Presidents. In the absence of the Chairman of the Board, the Vice Chairman of the Board and the President, or in the event of the death, inability or refusal to act of any of them, or in the event for any reason it shall be impracticable for the Chairman of the Board, the Vice Chairman of the Board and the President to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the Chairman of the Board, the Vice Chairman of the Board or the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board, the Vice Chairman of the Board or the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the Chairman of the Board, the Vice Chairman of the Board, the President or the Board of Directors. The execution of any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the Chairman of the Board, the Vice Chairman of the Board and the President. 4.09. The Secretary. The Secretary shall: (a) keep minutes of the meetings of the shareholders and of the Board of Directors (and of committees thereof) in one or more books provided for that purpose (including records of actions taken by the shareholders or the Board of Directors (or committees thereof) without a meeting); (b) see

4.08. The Vice Presidents. In the absence of the Chairman of the Board, the Vice Chairman of the Board and the President, or in the event of the death, inability or refusal to act of any of them, or in the event for any reason it shall be impracticable for the Chairman of the Board, the Vice Chairman of the Board and the President to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the Chairman of the Board, the Vice Chairman of the Board or the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board, the Vice Chairman of the Board or the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the Chairman of the Board, the Vice Chairman of the Board, the President or the Board of Directors. The execution of any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the Chairman of the Board, the Vice Chairman of the Board and the President. 4.09. The Secretary. The Secretary shall: (a) keep minutes of the meetings of the shareholders and of the Board of Directors (and of committees thereof) in one or more books provided for that purpose (including records of actions taken by the shareholders or the Board of Directors (or committees thereof) without a meeting); (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by the Wisconsin Business Corporation Law; (c) be custodian of the corporate records and of the seal of the corporation, if any, and see that the seal of the corporation, if any, is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) maintain a record of the shareholders of the corporation, in a form that permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder; (e) sign with the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned by the Chairman of the Board, the Vice Chairman of the Board, the President or by the Board of Directors. 4.10. The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned by the Chairman of the Board, the Vice Chairman of the Board, the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of B-11

his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.11. Controller. Subject to the control of the Board of Directors, the Controller shall have charge of the books of account of the corporation and he or she shall perform such other duties and exercise such other authority as from time to time may be delegated or assigned to him or her by the Board of Directors, the Chairman of the Board, the Vice Chairman of the Board, the President or the Vice President responsible for financial matters. 4.12. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board, the Vice Chairman of the Board, the President or the Board of

his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.11. Controller. Subject to the control of the Board of Directors, the Controller shall have charge of the books of account of the corporation and he or she shall perform such other duties and exercise such other authority as from time to time may be delegated or assigned to him or her by the Board of Directors, the Chairman of the Board, the Vice Chairman of the Board, the President or the Vice President responsible for financial matters. 4.12. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board, the Vice Chairman of the Board, the President or the Board of Directors. 4.13. Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint, or to authorize any duly appointed officer of the corporation to appoint, any person to act as assistant to any officer, or as agent for the corporation in his or her stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors or an authorized officer shall have the power to perform all the duties of the office to which he or she is so appointed to be an assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors or the appointing officer. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS 5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the Chairman of the Board, the Vice Chairman of the Board, the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the B-12

corporate seal, if any, thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors.

corporate seal, if any, thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors. 5.05. Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the Chairman of the Board of this corporation if he or she be present, or in his or her absence, the Vice Chairman of the Board of this corporation if he or she be present, or in his or her absence, the President of this corporation if he or she be present, or in his or her absence, by any Vice President of this corporation who may be present, and (b) whenever, in the judgment of the Chairman of the Board, or in his or her absence, of the Vice Chairman of the Board, or in his or her absence, of the President, or in his or her absence, of any Vice President, it is desirable for this corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the Chairman of the Board, the Vice Chairman of the Board, the President or one of the Vice Presidents of this corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal, if any, or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation. ARTICLE VI. CERTIFICATES FOR SHARES; TRANSFER OF SHARES 6.01. Certificates for Shares. Certificates representing shares of the corporation shall be in such form, consistent with the Wisconsin Business Corporation Law, as B-13

shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the corporation, if any, on any certificates for shares may be a facsimile. The signature of the Chairman of the Board, the Vice Chairman of the Board, the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation. 6.03. Signature by Former Officers. The validity of a share certificate is not affected if a person who signed the

shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the corporation, if any, on any certificates for shares may be a facsimile. The signature of the Chairman of the Board, the Vice Chairman of the Board, the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation. 6.03. Signature by Former Officers. The validity of a share certificate is not affected if a person who signed the certificate (either manually or in facsimile) no longer holds office when the certificate is issued. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that such endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares. 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that certificates for shares have been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, (b) files with the corporation a sufficient indemnity bond if required by the Board of Directors or any principal officer, and (c) satisfies such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. B-14

6.07. Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation. Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable. The corporation may place in escrow shares issued in whole or in part for a contract for future services or benefits, a promissory note, or otherwise for property to be issued in the future, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits or property are received or the promissory note is paid. If the services are not performed, the benefits or property are not received or the promissory note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. 6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations, not inconsistent with law, as it may deem expedient concerning the issue, transfer and registration of shares of the corporation.

6.07. Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation. Before the corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable. The corporation may place in escrow shares issued in whole or in part for a contract for future services or benefits, a promissory note, or otherwise for property to be issued in the future, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the benefits or property are received or the promissory note is paid. If the services are not performed, the benefits or property are not received or the promissory note is not paid, the corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. 6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations, not inconsistent with law, as it may deem expedient concerning the issue, transfer and registration of shares of the corporation. ARTICLE VII. SEAL 7.01. The Board of Directors may provide for a corporate seal for the corporation. ARTICLE VIII. INDEMNIFICATION 8.01. Provision of Indemnification. The corporation shall, to the fullest extent permitted or required by Sections 180.0850 to 180.0859, inclusive, of the Wisconsin Business Corporation Law, including any amendments thereto (but in the case of any such amendment, only to the extent such amendment permits or requires the corporation to provide broader indemnification rights than prior to such amendment), indemnify its Directors and Officers against any and all Liabilities, and advance any and all reasonable Expenses, incurred thereby in any Proceeding to which any such Director or Officer is a Party because he or she is or was a Director or Officer of the corporation. The corporation shall also indemnify an employee who is not a Director or Officer, to the extent that the employee has been successful on the merits or otherwise in defense of a Proceeding, for all Expenses incurred in the Proceeding if the employee was a Party because he or she is or was an employee of the corporation. The rights to indemnification granted hereunder shall not be deemed exclusive of any other rights to indemnification against Liabilities or the advancement of Expenses which a Director, Officer or employee may be entitled under any written agreement, Board resolution, vote of shareholders, the Wisconsin Business Corporation Law or otherwise. The corporation may, B-15

but shall not be required to, supplement the foregoing rights to indemnification against Liabilities and advancement of Expenses under this Section 8.01 by the purchase of insurance on behalf of any one or more of such Directors, Officers or employees, whether or not the corporation would be obligated to indemnify or advance Expenses to such Director, Officer or employee under this Section 8.01. All capitalized terms used in this Article VIII and not otherwise defined herein shall have the meaning set forth in Section 180.0850 of the Wisconsin Business Corporation Law. ARTICLE IX. AMENDMENTS 9.01. By Shareholders. These by-laws may be amended or repealed and new by-laws may be adopted by the shareholders at any annual or special meeting of the shareholders at which a quorum is in attendance.

but shall not be required to, supplement the foregoing rights to indemnification against Liabilities and advancement of Expenses under this Section 8.01 by the purchase of insurance on behalf of any one or more of such Directors, Officers or employees, whether or not the corporation would be obligated to indemnify or advance Expenses to such Director, Officer or employee under this Section 8.01. All capitalized terms used in this Article VIII and not otherwise defined herein shall have the meaning set forth in Section 180.0850 of the Wisconsin Business Corporation Law. ARTICLE IX. AMENDMENTS 9.01. By Shareholders. These by-laws may be amended or repealed and new by-laws may be adopted by the shareholders at any annual or special meeting of the shareholders at which a quorum is in attendance. 9.02. By Directors. Except as otherwise provided by the Wisconsin Business Corporation Law or the articles of incorporation, these by-laws may also be amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; provided, however, that the shareholders in adopting, amending or repealing a particular by-law may provide therein that the Board of Directors may not amend, repeal or readopt that by-law. 9.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors which would be inconsistent with the by-laws then in effect, but which is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the by-laws so that the bylaws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. B-3

Five-Year Summary of Selected Financial Data
Selected Income Statement Data Year Ended December 31

(In Thousands) 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Net sales $124,328 $133,405 $145,503 $121,997 $98,57 Operating income (loss) (2,208) 5,598 13,156 10,088 6,66 Net income (loss) (2,637) 2,260 6,779 5,386 3,32

Selected Balance Sheet Data Year Ended December 31

(In Thousands) 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Working capital $40,792 $44,801 $48,413 $46,811 $34,53 Total assets 98,020 98,615 101,920 92,286 74,86 Long-term obligations 10,702 9,827 12,499 16,002 4,89 Shareholders' equity 56,388 63,035 61,848 55,936 51,32

Selected Share Data Year Ended December 31 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Basic earnings (loss) per share $ (.41) $ .34 $ 1.02 $ .80 $ .4 Diluted earnings (loss) per share $ (.41) $ .34 $ 1.01 $ .80 $ .4 Dividends per share $ .13 $ .13 $ .13 $ .11 $ .0 Shares used in basic

Five-Year Summary of Selected Financial Data
Selected Income Statement Data Year Ended December 31

(In Thousands) 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Net sales $124,328 $133,405 $145,503 $121,997 $98,57 Operating income (loss) (2,208) 5,598 13,156 10,088 6,66 Net income (loss) (2,637) 2,260 6,779 5,386 3,32

Selected Balance Sheet Data Year Ended December 31

(In Thousands) 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Working capital $40,792 $44,801 $48,413 $46,811 $34,53 Total assets 98,020 98,615 101,920 92,286 74,86 Long-term obligations 10,702 9,827 12,499 16,002 4,89 Shareholders' equity 56,388 63,035 61,848 55,936 51,32

Selected Share Data Year Ended December 31 1999 1998 1997 1996 199 --------------------------------------------------------------------------------------------------------Basic earnings (loss) per share $ (.41) $ .34 $ 1.02 $ .80 $ .4 Diluted earnings (loss) per share $ (.41) $ .34 $ 1.01 $ .80 $ .4 Dividends per share $ .13 $ .13 $ .13 $ .11 $ .0 Shares used in basic per share calculation (000's) 6,465 6,662 6,668 6,668 6,68 Shares used in diluted per share calculation (000's) 6,465 6,676 6,713 6,674 6,68

04

Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain matters discussed below in this 1999 Annual Report (and, thereby, the 1999 Form 10-K) are "forwardlooking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as the Company "believes," "expects" or other words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forwardlooking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation: o Weather conditions o Dealer inventory levels o Actions of Company competitors o Changes in consumer buying patterns o Loss of a material customer o Imports of competitive foreign-sourced products Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forwardlooking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are made only as of the date of this 1999 Annual Report. The Company is

Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain matters discussed below in this 1999 Annual Report (and, thereby, the 1999 Form 10-K) are "forwardlooking statements" intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as the Company "believes," "expects" or other words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forwardlooking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation: o Weather conditions o Dealer inventory levels o Actions of Company competitors o Changes in consumer buying patterns o Loss of a material customer o Imports of competitive foreign-sourced products Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forwardlooking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are made only as of the date of this 1999 Annual Report. The Company is not obligated to publicly update such forward-looking statements to reflect subsequent events or circumstances. Overview The Company markets and distributes its products through both the industrial and retail channels of distribution. The less weather sensitive industrial channel of distribution accounts for approximately 30% of total net sales and serves the food processing, mining, construction and industrial end use markets with protective footwear and clothing. In order to build the less weather dependent industrial business, the Company in 1996 acquired Rainfair, Inc., a manufacturer and marketer of rainwear and protective clothing. In addition, the Company is gradually shifting its retail product mix to become less dependent on winter weather. This is being accomplished through the faster growth of the Danner leather product line and the addition of leather and protective clothing product offerings under the LaCrosse brand. Net sales generated during the last five months of the year can account for over 55% of the Company's net sales and have a significant impact on the Company's results of operations. Because consumers generally purchase a large percentage of the Company's products from September through January, retail dealers generally want delivery of products from June through October for advance orders and from October through December for restocking (or "fill-in") orders. Generally mild or dry weather during the late fall and early winter has a negative impact on the Company's net sales for the current year, while cold or wet weather during such time has a favorable impact. Further, weather conditions in one season can affect future net sales, particularly where weather contributes to high or low dealer inventory levels at the season's end. To satisfy demands for its products and to provide for uniform production levels, the Company generally manufactures its footwear products year-round. To assist in production scheduling, the Company's sales force calls on retail dealers from January to June to present the product line, review inventory levels and prepare an advance order. The Company offers price discounts for orders placed prior to July, although advance orders may be canceled at any time. To attempt to balance the flow of shipments and the need for warehouse space, the Company offers extended terms on receivables relating to advance orders to induce retail dealers to allow some shipments of seasonal products prior to the peak shipment period. The advance order terms provide for payment by December 1 (January 1 in the case of Southern dealers). Because of seasonal fluctuations, inventory levels are highest at mid-year and accounts receivable levels are highest during the fourth quarter.

The Company is gradually shifting more of its production to offshore facilities. This will result in decreased domestically produced products and thereby lower investments in plant and equipment, and provide a more competitively priced product in the marketplace. However, the use of offshore sourcing facilities will require placement of orders 4 to 6 months in advance of the date the customer requires delivery, thus increasing the

The Company is gradually shifting more of its production to offshore facilities. This will result in decreased domestically produced products and thereby lower investments in plant and equipment, and provide a more competitively priced product in the marketplace. However, the use of offshore sourcing facilities will require placement of orders 4 to 6 months in advance of the date the customer requires delivery, thus increasing the emphasis on forecasting capabilities. Each year, the Company introduces a number of new products. A new product, if successful, can generate growing amounts of net sales during the first two to four years. In some cases, net sales of new products will help to offset adverse factors, such as mild or dry weather or adverse economic conditions. 05

Results of Operations The following table shows the percentage relationship to net sales of items derived from the Consolidated Statements of Operations and the percentage change from year to year.
Percentage of Net Sales Percentage of Increase (Decr --------------------------------------------------------------------------------------------------------Year Ended December 31 1999 1998 1997 1999 vs. 1998 1998 vs. --------------------------------------------------------------------------------------------------------Net sales 100.0% 100.0% 100.0% (7)% ( Cost of goods sold 76.5 74.1 72.0 (4) ( Gross profit 23.5 25.9 28.0 (16) (1 Selling and administrative expenses (25.3) (21.7) (19.0) 8 Operating income (loss) (1.8) 4.2 9.0 -(5 Interest expense (1.8) (1.7) (1.4) (2) 1 Other income .1 .3 .4 (76) (3 Income (loss) before income taxes (3.5) 2.8 8.0 -(6 Income taxes 1.4 (1.1) (3.1) -(6 Minority interest --(.2) -Net income (loss) (2.1)% 1.7% 4.7% -(6

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 Net Sales. Net sales in 1999 decreased $9.1 million, or 7%, to $124.3 million from $133.4 million in 1998. The warm, dry weather across most of the country during the fourth quarter of 1998 and the first and fourth quarters of 1999 resulted in reduced demand for weather-related boots and protective clothing. In addition, shipments to L.L. Bean were down approximately $1.6 million as compared to 1998 as a result of L.L. Bean's July 1998 decision to replace their handcrafted rubber bottoms purchased from the Company with molded bottoms from another vendor. The Company antici-pates no further reduction in net sales from L.L. Bean. Consumer rainwear shipments were down approximately $1.0 million, largely as a result of a $1.5 million shipment to a large mass merchant in 1998 which did not reoccur in 1999. The Company anticipates shipments of approximately $2.0 million to this mass merchant in 2000. Partially offsetting these declines was a $2.4 million increase in shipments of LaCrosse brand leather boots, driven largely by the introduction of the Gamemaster(TM) series. Gross Profit. Gross profit as a percentage of net sales decreased to 23.5% in 1999 from 25.9% in 1998. The lower gross profit margins were driven largely by a $1.8 million charge taken in the fourth quarter of 1999 in connection with the reduction of the LaCrosse rubber product line, the discontinuation of the Lake of the Woods brand and the tighter focus of the Red Ball brand. The charge, based on managements' best estimate (subject to change), relates to anticipated disposition costs on equipment and raw material used in the production of these products and discontinued finished goods inventory. In addition, there was $.4 million of LIFO expense in 1999, compared to $.8 million of income in 1998. This LIFO expense in 1999 was driven by inventory mix (a higher proportion of goods with low base year costs) as compared to 1998, when lower inventory levels in the LIFO pool resulted in income. In addition, gross margins were adversely affected by unabsorbed factory overhead (the result of lower production levels in response to lower demand) and start-up costs associated with the commencement of leather footwear production in the Company's Clintonville, Wisconsin manufacturing plant.

Results of Operations The following table shows the percentage relationship to net sales of items derived from the Consolidated Statements of Operations and the percentage change from year to year.
Percentage of Net Sales Percentage of Increase (Decr --------------------------------------------------------------------------------------------------------Year Ended December 31 1999 1998 1997 1999 vs. 1998 1998 vs. --------------------------------------------------------------------------------------------------------Net sales 100.0% 100.0% 100.0% (7)% ( Cost of goods sold 76.5 74.1 72.0 (4) ( Gross profit 23.5 25.9 28.0 (16) (1 Selling and administrative expenses (25.3) (21.7) (19.0) 8 Operating income (loss) (1.8) 4.2 9.0 -(5 Interest expense (1.8) (1.7) (1.4) (2) 1 Other income .1 .3 .4 (76) (3 Income (loss) before income taxes (3.5) 2.8 8.0 -(6 Income taxes 1.4 (1.1) (3.1) -(6 Minority interest --(.2) -Net income (loss) (2.1)% 1.7% 4.7% -(6

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998 Net Sales. Net sales in 1999 decreased $9.1 million, or 7%, to $124.3 million from $133.4 million in 1998. The warm, dry weather across most of the country during the fourth quarter of 1998 and the first and fourth quarters of 1999 resulted in reduced demand for weather-related boots and protective clothing. In addition, shipments to L.L. Bean were down approximately $1.6 million as compared to 1998 as a result of L.L. Bean's July 1998 decision to replace their handcrafted rubber bottoms purchased from the Company with molded bottoms from another vendor. The Company antici-pates no further reduction in net sales from L.L. Bean. Consumer rainwear shipments were down approximately $1.0 million, largely as a result of a $1.5 million shipment to a large mass merchant in 1998 which did not reoccur in 1999. The Company anticipates shipments of approximately $2.0 million to this mass merchant in 2000. Partially offsetting these declines was a $2.4 million increase in shipments of LaCrosse brand leather boots, driven largely by the introduction of the Gamemaster(TM) series. Gross Profit. Gross profit as a percentage of net sales decreased to 23.5% in 1999 from 25.9% in 1998. The lower gross profit margins were driven largely by a $1.8 million charge taken in the fourth quarter of 1999 in connection with the reduction of the LaCrosse rubber product line, the discontinuation of the Lake of the Woods brand and the tighter focus of the Red Ball brand. The charge, based on managements' best estimate (subject to change), relates to anticipated disposition costs on equipment and raw material used in the production of these products and discontinued finished goods inventory. In addition, there was $.4 million of LIFO expense in 1999, compared to $.8 million of income in 1998. This LIFO expense in 1999 was driven by inventory mix (a higher proportion of goods with low base year costs) as compared to 1998, when lower inventory levels in the LIFO pool resulted in income. In addition, gross margins were adversely affected by unabsorbed factory overhead (the result of lower production levels in response to lower demand) and start-up costs associated with the commencement of leather footwear production in the Company's Clintonville, Wisconsin manufacturing plant.

Selling and Administrative Expenses. Selling and administrative expenses increased $2.4 million, or 8%, in 1999 as compared to 1998. The increase in selling and administrative expenses was driven by a $.5 million increase in product development spending due to the emphasis on new product introductions for the LaCrosse and Danner brands, a $.6 million increase in distribution costs in support of the retail/industrial channels of distribution ($.3 million of the increase was a result of allocating facility costs from manufacturing to warehousing), a $.6 million increase in marketing and selling costs in support of the Danner brand and the industrial channel of distribution and a $.4 million increase in consulting services (primarily in support of a LaCrosse brand strategic marketing study, the layout and functionality of the distribution center and IT support for the implementation of a new Enterprise Resource Planning system currently in progress). The Company does not expect significant increases in product development or distribution costs in 2000.

Selling and Administrative Expenses. Selling and administrative expenses increased $2.4 million, or 8%, in 1999 as compared to 1998. The increase in selling and administrative expenses was driven by a $.5 million increase in product development spending due to the emphasis on new product introductions for the LaCrosse and Danner brands, a $.6 million increase in distribution costs in support of the retail/industrial channels of distribution ($.3 million of the increase was a result of allocating facility costs from manufacturing to warehousing), a $.6 million increase in marketing and selling costs in support of the Danner brand and the industrial channel of distribution and a $.4 million increase in consulting services (primarily in support of a LaCrosse brand strategic marketing study, the layout and functionality of the distribution center and IT support for the implementation of a new Enterprise Resource Planning system currently in progress). The Company does not expect significant increases in product development or distribution costs in 2000. Interest Expense. Interest expense decreased $55,000, or 2%, in 1999 as compared to 1998. A slightly lower average borrowing cost was the primary reason for the decrease. Income Tax Expense. The Company's effective income tax rate in 1999 was 39.0%, compared to 39.2% in 1998. 06

Year Ended December 31, 1998 Compared To Year Ended December 31, 1997 Net Sales. Net sales in 1998 decreased $12.1 million, or 8.3%, to $133.4 million from $145.5 million in 1997. The mild winter weather across most of the country from December 1997 through the first quarter of 1998 significantly reduced fill-in orders in early 1998 and also reduced advance orders for shipment in the third quarter. In addition, the extremely warm and dry weather from mid-November through December 1998 lowered retail demand and nearly eliminated late 1998 fill-in orders. While the Company's dealers ended 1998 with excessive inventory, it is believed the favorable weather conditions in January 1999 reduced inventory levels below last year's levels. Shipments to L.L. Bean were also down approximately $1.3 million as compared to 1997, the result of a decision by L.L. Bean effective July 1998 to replace their handcrafted rubber bottoms purchased from the Company with molded bottoms from another vendor. Further, consumer rainwear shipments were down approximately $1.0 million, primarily as a result of lower shipments to a large discount mass merchant. These decreases were partially offset by a 10% increase in shipments of our less weather sensitive Danner brand leather products, largely a result of new products. Gross Profit. Gross profit as a percentage of net sales decreased to 25.9% in 1998 from 28.0% in 1997. Gross profit margins were adversely affected by unabsorbed factory overhead (the result of lower production levels in response to lower demand), a higher level of closeout sales (primarily related to the transition of the Lake of the Woods brand product line to the LaCrosse brand) and a reduced volume of higher margin fill-in orders in both the first and fourth quarters. In addition, production was discontinued at the Company's factory in Virginia and transferred to another Company facility, which negatively impacted margins by approximately .2%. Selling and Administrative Expenses. Selling and administrative expenses increased $1.3 million, or 5%, in 1998 as compared to 1997. The increase in selling and administrative expenses was a result of a planned increase in consumer advertising, increased selling and marketing expenses in support of the growth of the Danner brand, increased spending on product development and increased warehousing costs to support the Lake of the Woods brand and as a result of the consolidation of the Company's industrial warehousing. These increases more than offset sales volume related decreases in variable expense. As a percent of net sales, selling and administrative expenses increased from 19.0% in 1997 to 21.7% in 1998, largely as a result of higher planned expenses and lower sales volume. Interest Expense. Interest expense increased $220,000, or 11%, in 1998 as compared to 1997. The increase was primarily the result of $2.4 million in additional short-term borrowings for the January 1998 purchase of all Rainfair, Inc. common stock held by the former principal owner. In addition, higher inventory levels throughout the year, primarily the result of lower fill-in sales during the winter of 1997-98, contributed to increased borrowings. Income Tax Expense. The Company's effective income tax rate in 1998 was 39.2%, the same as the 1997 income tax rate.

Year Ended December 31, 1998 Compared To Year Ended December 31, 1997 Net Sales. Net sales in 1998 decreased $12.1 million, or 8.3%, to $133.4 million from $145.5 million in 1997. The mild winter weather across most of the country from December 1997 through the first quarter of 1998 significantly reduced fill-in orders in early 1998 and also reduced advance orders for shipment in the third quarter. In addition, the extremely warm and dry weather from mid-November through December 1998 lowered retail demand and nearly eliminated late 1998 fill-in orders. While the Company's dealers ended 1998 with excessive inventory, it is believed the favorable weather conditions in January 1999 reduced inventory levels below last year's levels. Shipments to L.L. Bean were also down approximately $1.3 million as compared to 1997, the result of a decision by L.L. Bean effective July 1998 to replace their handcrafted rubber bottoms purchased from the Company with molded bottoms from another vendor. Further, consumer rainwear shipments were down approximately $1.0 million, primarily as a result of lower shipments to a large discount mass merchant. These decreases were partially offset by a 10% increase in shipments of our less weather sensitive Danner brand leather products, largely a result of new products. Gross Profit. Gross profit as a percentage of net sales decreased to 25.9% in 1998 from 28.0% in 1997. Gross profit margins were adversely affected by unabsorbed factory overhead (the result of lower production levels in response to lower demand), a higher level of closeout sales (primarily related to the transition of the Lake of the Woods brand product line to the LaCrosse brand) and a reduced volume of higher margin fill-in orders in both the first and fourth quarters. In addition, production was discontinued at the Company's factory in Virginia and transferred to another Company facility, which negatively impacted margins by approximately .2%. Selling and Administrative Expenses. Selling and administrative expenses increased $1.3 million, or 5%, in 1998 as compared to 1997. The increase in selling and administrative expenses was a result of a planned increase in consumer advertising, increased selling and marketing expenses in support of the growth of the Danner brand, increased spending on product development and increased warehousing costs to support the Lake of the Woods brand and as a result of the consolidation of the Company's industrial warehousing. These increases more than offset sales volume related decreases in variable expense. As a percent of net sales, selling and administrative expenses increased from 19.0% in 1997 to 21.7% in 1998, largely as a result of higher planned expenses and lower sales volume. Interest Expense. Interest expense increased $220,000, or 11%, in 1998 as compared to 1997. The increase was primarily the result of $2.4 million in additional short-term borrowings for the January 1998 purchase of all Rainfair, Inc. common stock held by the former principal owner. In addition, higher inventory levels throughout the year, primarily the result of lower fill-in sales during the winter of 1997-98, contributed to increased borrowings. Income Tax Expense. The Company's effective income tax rate in 1998 was 39.2%, the same as the 1997 income tax rate. Liquidity and Capital Resources The Company has historically financed its operations with cash generated from operations, long-term lending arrangements and short-term borrowings under its line of credit. The Company requires working capital primarily to support fluctuating accounts receivable and inventory levels caused by the Company's seasonal business cycle. The Company's working capital needs are lowest in the first quarter and highest from August through October. The Company invests excess cash balances in short-term commercial paper or money market investments.

In May 1999, the Company renegotiated its unsecured credit agreement with Firstar Bank, N.A. as the lead bank. Under the terms of the revised agreement, the maximum amount of borrowings were increased to $75.0 million, including a $12.5 million term loan, from the previous maximum level of $62.5 million. The $12.5 million term loan was primarily used to repay the balance due under the prior term loan and requires quarterly payments of $.4 million which commenced in August 1999. The credit agreement expires on May 28, 2002. Cash generated by operations in 1999 amounted to $4.2 million compared to $5.5 million in 1998. Net income in 1999 decreased $4.9 million from the 1998 level, however, this was more than offset by a $2.4 million increase in accounts payable (primarily due to timing) as compared to a $2.9 million decrease in 1998. Accounts receivable decreased $2.7 million in 1999 as compared to a $4.2 million decrease in 1998. The reduction in

In May 1999, the Company renegotiated its unsecured credit agreement with Firstar Bank, N.A. as the lead bank. Under the terms of the revised agreement, the maximum amount of borrowings were increased to $75.0 million, including a $12.5 million term loan, from the previous maximum level of $62.5 million. The $12.5 million term loan was primarily used to repay the balance due under the prior term loan and requires quarterly payments of $.4 million which commenced in August 1999. The credit agreement expires on May 28, 2002. Cash generated by operations in 1999 amounted to $4.2 million compared to $5.5 million in 1998. Net income in 1999 decreased $4.9 million from the 1998 level, however, this was more than offset by a $2.4 million increase in accounts payable (primarily due to timing) as compared to a $2.9 million decrease in 1998. Accounts receivable decreased $2.7 million in 1999 as compared to a $4.2 million decrease in 1998. The reduction in receivables in both years was a result of lower fourth quarter net sales, primarily as a result of the warm, dry weather in the fourth quarter of both years. In 1998, cash generated by operations amounted to $5.5 million compared to $2.1 million in 1997. Net income in 1998 decreased $4.5 million from the 1997 level, however this was more than offset by a $4.2 million reduction in receivables (as compared to a $4.0 million increase in 1997). The reduction in receivables as of December 31, 1998 was primarily the result of a 25% reduction in sales in December 1998 as compared to the prior year. During 1998, inventories increased $.6 million, primarily as a result of lower than anticipated net sales during November and December 1998. Accounts payable decreased $2.9 million from the 1997 level, reflecting lower production levels during December 1998. 07

Net cash used in investing activities during 1999 was $4.2 million, down from $6.6 million in 1998. During 1999, the Company spent $2.5 million for capital expenditures, which was down $1.8 million from the 1998 level. The reduced level of sales the last two years and the absence of any new major projects were the primary reasons for the decrease. Also contributing to the usage of cash in 1999 was a $1.1 million payment to the former shareholders of Danner to satisfy a guarantee agreement and $.5 million of other payments. In addition to $4.3 million of capital expenditures in 1998, the Company also paid $2.4 million to purchase all of the Rainfair, Inc. common stock held by the former principal owner which made Rainfair, Inc. a 100% owned subsidiary of the Company. It is anticipated that capital expenditures during 2000 will be at about the same level as in 1998. During 1998, net cash used in investing activities was $6.6 million, up from $3.7 million in 1997. During 1998, spending on property and equipment was up approxi-mately $.9 million from the prior year, primarily as a result of the construction of a product design/development center and the purchase of Enterprise Resource Planning (ERP) software. The Company commenced installation of the ERP software during 1999 and several phases will be completed during 2000. Also contributing to the 1998 increase in cash used in investing activities was the January 1998 purchase of the balance of Rainfair, Inc. common stock not already owned for approximately $2.4 million. Net cash provided by financing activities was $1.6 million in 1999 as compared to $1.1 million in 1998. During 1999, $4.6 million of short-term borrowings were used to purchase treasury stock ($2.0 million), pay dividends ($.9 million) and repay long-term debt ($.1 million). In 1998, $5.5 million of short-term borrowings were used to repay long-term debt ($3.3 million), pay cash dividends ($.9 million) and purchase treasury stock ($.2 million). In March 1995, the Company announced plans to repurchase up to 130,000 shares of common stock in the open market. During 1999, 55,000 shares were repurchased which completed this authorization. In April 1999, the Company also announced plans to repurchase up to an additional 375,000 shares of common stock in the open market. During 1999, the Company repurchased 79,800 shares at a cost of $587,000. In April 1999, the Company reported that it had repurchased in a private transaction, at the current market price, all of the 135,178 shares of common stock issued in connection with the Company's 1994 acquisition of Danner Shoe Manufacturing Co. for a total cost of $1,042,000. In March 2000, the Company repurchased, at the current market price, 500,000 shares of common stock for a total cost of $2,125,000. In March 1994, the Company acquired substantially all of the assets of Danner Shoe Manufacturing Co., in part by issuing 277,778 shares of common stock as a portion of the purchase price. In the acquisition, the Company guaranteed the holders of this common stock a market price of at least $16.20 per share by March 1, 1999. In

Net cash used in investing activities during 1999 was $4.2 million, down from $6.6 million in 1998. During 1999, the Company spent $2.5 million for capital expenditures, which was down $1.8 million from the 1998 level. The reduced level of sales the last two years and the absence of any new major projects were the primary reasons for the decrease. Also contributing to the usage of cash in 1999 was a $1.1 million payment to the former shareholders of Danner to satisfy a guarantee agreement and $.5 million of other payments. In addition to $4.3 million of capital expenditures in 1998, the Company also paid $2.4 million to purchase all of the Rainfair, Inc. common stock held by the former principal owner which made Rainfair, Inc. a 100% owned subsidiary of the Company. It is anticipated that capital expenditures during 2000 will be at about the same level as in 1998. During 1998, net cash used in investing activities was $6.6 million, up from $3.7 million in 1997. During 1998, spending on property and equipment was up approxi-mately $.9 million from the prior year, primarily as a result of the construction of a product design/development center and the purchase of Enterprise Resource Planning (ERP) software. The Company commenced installation of the ERP software during 1999 and several phases will be completed during 2000. Also contributing to the 1998 increase in cash used in investing activities was the January 1998 purchase of the balance of Rainfair, Inc. common stock not already owned for approximately $2.4 million. Net cash provided by financing activities was $1.6 million in 1999 as compared to $1.1 million in 1998. During 1999, $4.6 million of short-term borrowings were used to purchase treasury stock ($2.0 million), pay dividends ($.9 million) and repay long-term debt ($.1 million). In 1998, $5.5 million of short-term borrowings were used to repay long-term debt ($3.3 million), pay cash dividends ($.9 million) and purchase treasury stock ($.2 million). In March 1995, the Company announced plans to repurchase up to 130,000 shares of common stock in the open market. During 1999, 55,000 shares were repurchased which completed this authorization. In April 1999, the Company also announced plans to repurchase up to an additional 375,000 shares of common stock in the open market. During 1999, the Company repurchased 79,800 shares at a cost of $587,000. In April 1999, the Company reported that it had repurchased in a private transaction, at the current market price, all of the 135,178 shares of common stock issued in connection with the Company's 1994 acquisition of Danner Shoe Manufacturing Co. for a total cost of $1,042,000. In March 2000, the Company repurchased, at the current market price, 500,000 shares of common stock for a total cost of $2,125,000. In March 1994, the Company acquired substantially all of the assets of Danner Shoe Manufacturing Co., in part by issuing 277,778 shares of common stock as a portion of the purchase price. In the acquisition, the Company guaranteed the holders of this common stock a market price of at least $16.20 per share by March 1, 1999. In March of 1999, the Company made a payment of $1.1 million to satisfy this guarantee. The Company's debt to total capital ratio was 32.0% at December 31, 1999, 25.9% at December 31, 1998 and 24.3% at December 31, 1997. Currently available funds, including the line of credit, together with the anticipated cash flows generated from future operations, are believed to be adequate to cover the Company's anticipated capital and working capital needs during 2000.

From time to time, the Company evaluates acquisitions of businesses or product lines that could complement the Company's business. The Company has no present understandings, commitments or agreements with respect to any acquisition. However, if the Company makes significant future acquisitions, it may be required to raise funds through additional bank financing or the issuance of debt or equity securities. Year 2000 The year 2000 issue is the result of computer programs using two digits (rather than four) to define years. Computers or other equipment with date sensitive software may recognize "00" as the year 1900 rather than 2000. This could result in system failures or miscalculations. If the Company or its significant customers or suppliers fail to correct year 2000 issues, the Company's ability to operate could be adversely affected.

From time to time, the Company evaluates acquisitions of businesses or product lines that could complement the Company's business. The Company has no present understandings, commitments or agreements with respect to any acquisition. However, if the Company makes significant future acquisitions, it may be required to raise funds through additional bank financing or the issuance of debt or equity securities. Year 2000 The year 2000 issue is the result of computer programs using two digits (rather than four) to define years. Computers or other equipment with date sensitive software may recognize "00" as the year 1900 rather than 2000. This could result in system failures or miscalculations. If the Company or its significant customers or suppliers fail to correct year 2000 issues, the Company's ability to operate could be adversely affected. The Company spent approximately $250,000 during the years 1997 through 1999 to address the year 2000 issue. The Company did not experience any significant malfunctions or errors in its information or non-information technology systems when the date changed from 1999 to 2000, and the Company has not experienced any significant problems with its suppliers or customers as a result of the date change. Based on operations since January 1, 2000, the Company does not expect any significant impact on its business as a result of the year 2000 issue. Because it is possible that the full impact of the date change has not been fully recognized, the Company will continue to monitor the year 2000 situation through additional key dates. The Company believes, however, that any potential problems are likely to be minor and correctable. 08

LaCrosse Footwear Financial Statements Consolidated Balance Sheets December 31, 1999 and 1998
(In Thousands, except for share data) 1999 199 --------------------------------------------------------------------------------------------------------Assets --------------------------------------------------------------------------------------------------------Current Assets Cash and cash equivalents $2,022 $36 Trade accounts receivable, less allowances of $.9 and $1.0 million 20,445 23,15 Inventories (Note 3) 40,337 39,69 Prepaid expenses, deferred tax assets and other (Note 4) 5,725 4,28 --------------------------Total current assets 68,529 67,50 --------------------------Property and Equipment Land, land improvements and buildings 8,319 7,99 Machinery and equipment 31,478 29,38 --------------------------39,797 37,38 Less accumulated depreciation 26,986 23,38 12,811 14,00 --------------------------Other Assets Goodwill, net of amortization of $3.3 and $2.6 million (Note 2) 13,446 14,12 Deferred tax and other assets (Note 4) 3,234 2,98 --------------------------16,680 17,11 --------------------------$98,020 $98,61 =========================== Liabilities and Shareholders' Equity --------------------------------------------------------------------------------------------------------Current Liabilities Current maturities of long-term obligations (Note 5) $1,712 $2,66 Notes payable, bank (Note 5) 14,088 9,50 Accounts payable 5,910 3,46 Accrued compensation 2,383 3,00 Accrued other 3,644 4,06 Total current liabilities 27,737 22,70 --------------------------Long-Term Obligations (Note 5) 10,702 9,82

LaCrosse Footwear Financial Statements Consolidated Balance Sheets December 31, 1999 and 1998
(In Thousands, except for share data) 1999 199 --------------------------------------------------------------------------------------------------------Assets --------------------------------------------------------------------------------------------------------Current Assets Cash and cash equivalents $2,022 $36 Trade accounts receivable, less allowances of $.9 and $1.0 million 20,445 23,15 Inventories (Note 3) 40,337 39,69 Prepaid expenses, deferred tax assets and other (Note 4) 5,725 4,28 --------------------------Total current assets 68,529 67,50 --------------------------Property and Equipment Land, land improvements and buildings 8,319 7,99 Machinery and equipment 31,478 29,38 --------------------------39,797 37,38 Less accumulated depreciation 26,986 23,38 12,811 14,00 --------------------------Other Assets Goodwill, net of amortization of $3.3 and $2.6 million (Note 2) 13,446 14,12 Deferred tax and other assets (Note 4) 3,234 2,98 --------------------------16,680 17,11 --------------------------$98,020 $98,61 =========================== Liabilities and Shareholders' Equity --------------------------------------------------------------------------------------------------------Current Liabilities Current maturities of long-term obligations (Note 5) $1,712 $2,66 Notes payable, bank (Note 5) 14,088 9,50 Accounts payable 5,910 3,46 Accrued compensation 2,383 3,00 Accrued other 3,644 4,06 Total current liabilities 27,737 22,70 --------------------------Long-Term Obligations (Note 5) 10,702 9,82 Compensation and Benefits (Note 8) Commitments and Contingencies (Notes 6, 7 and 8) Shareholders' Equity (Notes 7 and 10) Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares Additional paid-in capital Retained earnings Less cost of 343,178 and 73,200 shares of treasury stock Total shareholders' equity 3,193 3,05

67 6 26,434 27,58 32,575 36,04 (2,688) (655 --------------------------56,388 63,03 --------------------------$98,020 $98,61 ===========================

See Notes to Consolidated Financial Statements.

09

LaCrosse Footwear Financial Statements
Consolidated Statements of Operations Years Ended December 31, 1999, 1998 and 1997

(In Thousands, except for share and per share data)

1999

1998

199

LaCrosse Footwear Financial Statements
Consolidated Statements of Operations Years Ended December 31, 1999, 1998 and 1997

(In Thousands, except for share and per share data) 1999 1998 199 --------------------------------------------------------------------------------------------------------Net sales $ 124,328 $ 133,405 $ 145,50 Cost of goods sold 95,129 98,829 104,69 --------------------------------------------------------------------------------------------------------Gross profit 29,199 34,576 40,81 Selling and administrative expenses 31,407 28,978 27,65 --------------------------------------------------------------------------------------------------------Operating income (loss) (2,208) 5,598 13,15 Non-operating income (expense): Interest expense (2,208) (2,263) (2,04 Miscellaneous 92 381 59 --------------------------------------------------------------------------------------------------------(2,116) (1,882) (1,45 --------------------------------------------------------------------------------------------------------Income (loss) before income taxes (benefit) (4,324) 3,716 11,70 Provision for income taxes (benefit) (Note 4) (1,687) 1,456 4,58 --------------------------------------------------------------------------------------------------------Net income (loss) before minority interest (2,637) 2,260 7,11 Minority interest in net income of subsidiary --(33 --------------------------------------------------------------------------------------------------------Net income (loss) $ (2,637) $ 2,260 $ 6,77 --------------------------------------------------------------------------------------------------------Basic earnings (loss) per share $ (.41) $ .34 $ 1.0 --------------------------------------------------------------------------------------------------------Diluted earnings (loss) per share $ (.41) $ .34 $ 1.0 --------------------------------------------------------------------------------------------------------Weighted average shares outstanding: Basic earnings per share 6,464,685 6,661,683 6,667,70 Diluted earnings per share 6,464,685 6,675,708 6,712,97

See Notes to Consolidated Financial Statements. 10
Consolidated Statements of Shareholders' Equity Years Ended December 31, 1999, 1998 and 1997 Additional Tota (In Thousands, except for Common Paid-In Retained Treasury Shareholders share and per share data) Stock Capital Earnings Stock Equit --------------------------------------------------------------------------------------------------------Balance, December 31, 1996 $67 $27,579 $28,733 $(443) $55,93 Net income --6,779 -6,77 Dividends ($.13 per share) --(867) -(86 ---------------------------------------------------------------Balance, December 31, 1997 Net income Dividends ($.13 per share) Purchase of 25,000 shares of treasury stock Issuance of 1,700 shares of treasury stock 67 ---27,579 ---34,645 2,260 (864) -(443) --(227) 61,84 2,26 (86 (22

-3 -15 18 ---------------------------------------------------------------67 ---27,582 ---36,041 (2,637) (829) -(655) --(2,033) 63,03 (2,63 (82 (2,03

Balance, December 31, 1998 Net (loss) Dividends ($.13 per share) Purchase of 269,978 shares of treasury stock Settlement of Danner acquisition contingency (Note 7)

-(1,148) --(1,14 ---------------------------------------------------------------$67 $26,434 $32,575 $(2,688) $56,38 ================================================================

Balance, December 31, 1999

Consolidated Statements of Shareholders' Equity Years Ended December 31, 1999, 1998 and 1997 Additional Tota (In Thousands, except for Common Paid-In Retained Treasury Shareholders share and per share data) Stock Capital Earnings Stock Equit --------------------------------------------------------------------------------------------------------Balance, December 31, 1996 $67 $27,579 $28,733 $(443) $55,93 Net income --6,779 -6,77 Dividends ($.13 per share) --(867) -(86 ---------------------------------------------------------------Balance, December 31, 1997 Net income Dividends ($.13 per share) Purchase of 25,000 shares of treasury stock Issuance of 1,700 shares of treasury stock 67 ---27,579 ---34,645 2,260 (864) -(443) --(227) 61,84 2,26 (86 (22

-3 -15 18 ---------------------------------------------------------------67 ---27,582 ---36,041 (2,637) (829) -(655) --(2,033) 63,03 (2,63 (82 (2,03

Balance, December 31, 1998 Net (loss) Dividends ($.13 per share) Purchase of 269,978 shares of treasury stock Settlement of Danner acquisition contingency (Note 7)

-(1,148) --(1,14 ---------------------------------------------------------------$67 $26,434 $32,575 $(2,688) $56,38 ================================================================

Balance, December 31, 1999

See Notes to Consolidated Financial Statements. 11

LaCrosse Footwear Financial Statements
Consolidated Statements of Cash Flows Years Ended December 31, 1999, 1998 and 1997 (In Thousands) 1999 1998 199 --------------------------------------------------------------------------------------------------------Cash Flows from Operating Activities Net income (loss) $ (2,637) $ 2,260 $ 6,77 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 3,660 3,437 3,18 Amortization 679 680 57 Other154 126 386 Deferred income taxes (725) 207 8 Change in assets and liabilities, net of effects from acquisition in 1997: Trade accounts receivable 2,706 4,239 (4,03 Inventories (639) (625) (3,31 Accounts payable 2,441 (2,916) (1,06 Accrued expenses and other (1,405) (1,900) (46 -------------------------------------------Net cash provided by operating activities 4,234 5,508 2,12 Cash Flows from Investing Activities Settlement of Danner acquisition contingency Purchase of the minority interest in Rainfair, Inc. Acquisition of Pro-Trak Corporation, net of cash acquired Purchase of property and equipment Other Net cash (used in) investing activities Cash Flows from Financing Activities Proceeds from long-term obligations Principal payments on long-term obligations

(1,148) --

-(2,365)

-

--7 (2,513) (4,288) (3,36 (507) 11 (41 -------------------------------------------(4,168) (6,642) (3,70

12,755 (12,837)

-(3,352)

(7,98

LaCrosse Footwear Financial Statements
Consolidated Statements of Cash Flows Years Ended December 31, 1999, 1998 and 1997 (In Thousands) 1999 1998 199 --------------------------------------------------------------------------------------------------------Cash Flows from Operating Activities Net income (loss) $ (2,637) $ 2,260 $ 6,77 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 3,660 3,437 3,18 Amortization 679 680 57 Other154 126 386 Deferred income taxes (725) 207 8 Change in assets and liabilities, net of effects from acquisition in 1997: Trade accounts receivable 2,706 4,239 (4,03 Inventories (639) (625) (3,31 Accounts payable 2,441 (2,916) (1,06 Accrued expenses and other (1,405) (1,900) (46 -------------------------------------------Net cash provided by operating activities 4,234 5,508 2,12 Cash Flows from Investing Activities Settlement of Danner acquisition contingency Purchase of the minority interest in Rainfair, Inc. Acquisition of Pro-Trak Corporation, net of cash acquired Purchase of property and equipment Other Net cash (used in) investing activities Cash Flows from Financing Activities Proceeds from long-term obligations Principal payments on long-term obligations Net proceeds from short-term borrowings Cash dividends paid Purchase of treasury stock Other Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents: Beginning Ending Supplemental Information Cash payments for: Interest Income taxes

(1,148) --

-(2,365)

-

--7 (2,513) (4,288) (3,36 (507) 11 (41 -------------------------------------------(4,168) (6,642) (3,70

12,755 -(12,837) (3,352) (7,98 4,588 5,500 4,00 (864) (867) (73 (2,033) (209) (17) --------------------------------------------1,592 1,072 (4,71 -------------------------------------------1,658 (62) (6,29

364 426 6,71 -------------------------------------------$ 2,022 $ 364 $ 42 --------------------------------------------

$ $

2,032 610

$ 2,178 $ 2,101

$ 1,89 $ 4,05

See Notes to Consolidated Financial Statements. 12

Notes to Consolidated Financial Statements Note 1. Nature of Business and Significant Accounting Policies Nature of business The Company designs, manufactures and markets premium quality protective footwear and clothing for sale principally throughout the United States. Significant accounting policies

Notes to Consolidated Financial Statements Note 1. Nature of Business and Significant Accounting Policies Nature of business The Company designs, manufactures and markets premium quality protective footwear and clothing for sale principally throughout the United States. Significant accounting policies Principles of consolidation The 1999 and 1998 consolidated financial statements include the accounts of LaCrosse Footwear, Inc. and its wholly owned subsidiaries (the "Company"). The 1997 consolidated financial statements include a 50% owned subsidiary where the Company had board, operating and financial control. The Company acquired 100% ownership of its 50% owned subsidiary in January 1998 (Note 2). All material intercompany accounts and transactions have been eliminated in consolidation. Use of estimates in the preparation of financial statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair value of financial instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments: The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of those investments. The carrying amount of long-term debt approximates fair value based on the interest rates, maturities and collateral requirements currently available for similar financial instruments. The fair value of the interest rate swap agreements was not material to the financial position of the Company based upon the estimated amount the Company would pay or receive to terminate these agreements. Concentrations of credit risk The Company grants credit to its customers, who are primarily domestic retail stores, direct mail catalog merchants and wholesalers, based on an evaluation of the customer's financial condition. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company monitors its exposure for credit losses and maintains an allowance for anticipated losses. Cash and cash equivalents The Company considers all highly liquid debt instruments (including short-term investment grade securities and money market instruments) purchased with maturities of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. Inventories Inventories are stated at the lower of cost or market. All inventories, except for vinyl products, boot liners, leather boots, leather boot components and rainwear, are valued using the last-in, first-out (LIFO) method. Vinyl products, boot liners, leather boots, leather boot components and rainwear are valued using the first-in, first-out (FIFO) method.

Property and equipment Property and equipment are carried at cost and are being depreciated using straight-line and accelerated methods over their estimated useful lives as follows: land improvements, 15 years; buildings and improvements, 20 to 40 years; and machinery and equipment, 3 to 7 years.

Property and equipment Property and equipment are carried at cost and are being depreciated using straight-line and accelerated methods over their estimated useful lives as follows: land improvements, 15 years; buildings and improvements, 20 to 40 years; and machinery and equipment, 3 to 7 years. Intangible assets Goodwill, representing the excess of cost over net assets acquired, is being amortized on a straight-line basis over periods of 8 to 30 years. Trademarks are being amortized on a straight-line basis over 15 years. Impairment of long-lived assets The Company reviews its long-lived assets and intangibles periodically to determine potential impairment by comparing the carrying value of these assets with expected future net cash flows provided by operating activities of the business. Should the sum of the expected future net cash flows be less than the carrying value, the Company would determine whether an impairment loss should be recognized. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets and intangibles based on appraised market value. Interest rate swap agreements The Company uses interest rate swap agreements to manage its exposure to certain interest rate changes. As interest rates change, the differential paid or received is recognized in interest expense of the period. 13

Notes to Consolidated Financial Statements Revenue recognition and product warranty Revenue is recognized at the time products are shipped to customers. Revenue is recorded net of freight, estimated discounts and returns. The Company warrants its products against defects in design, materials and workmanship generally for one year. A provision for estimated future warranty costs is recorded when products are shipped. Income taxes Deferred taxes are provided on a liability method whereby deferred tax assets and liabilities are recognized for temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Advertising and promotion The Company advertises and promotes its products through national and regional media, displays, catalogs and through cooperative advertising programs with retailers. Costs for these advertising and promotional programs are generally charged to expense as incurred. Advertising and promotional expense included in the consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 is approximately $2.8, $2.9, and $2.2 million, respectively. Stock-based compensation The Company accounts for stock-based compensation using the intrinsic value method prescribed in APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, since the Company grants options where the exercise price is equal to the market price at the date of the grant, no compensation costs have been recognized. Earnings per share Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," requires the presentation of earnings per share by all entities that have common stock or potential common stock (such as options and convertible securities) outstanding that trade in a public market. Because the Company has potential common stock outstanding, as discussed in Note 7, the Company is required to present basic and diluted earnings per share. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock

Notes to Consolidated Financial Statements Revenue recognition and product warranty Revenue is recognized at the time products are shipped to customers. Revenue is recorded net of freight, estimated discounts and returns. The Company warrants its products against defects in design, materials and workmanship generally for one year. A provision for estimated future warranty costs is recorded when products are shipped. Income taxes Deferred taxes are provided on a liability method whereby deferred tax assets and liabilities are recognized for temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Advertising and promotion The Company advertises and promotes its products through national and regional media, displays, catalogs and through cooperative advertising programs with retailers. Costs for these advertising and promotional programs are generally charged to expense as incurred. Advertising and promotional expense included in the consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 is approximately $2.8, $2.9, and $2.2 million, respectively. Stock-based compensation The Company accounts for stock-based compensation using the intrinsic value method prescribed in APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, since the Company grants options where the exercise price is equal to the market price at the date of the grant, no compensation costs have been recognized. Earnings per share Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," requires the presentation of earnings per share by all entities that have common stock or potential common stock (such as options and convertible securities) outstanding that trade in a public market. Because the Company has potential common stock outstanding, as discussed in Note 7, the Company is required to present basic and diluted earnings per share. Diluted per share amounts assume the conversion, exercise or issuance of all potential common stock instruments unless the effect is to reduce the loss or increase the income per common share from continuing operations. The numerators are the same for the basic and diluted earnings per share computations for all years presented. The impact of the stock options on the denominators of the diluted earnings per share computation was to increase the shares outstanding by 0 shares, 14,025 shares, and 45,273 shares for the years ended December 31, 1999, 1998 and 1997, respectively. Options to purchase 415,863 shares of common stock at $7.63 to $14.50 per share were outstanding at December 31, 1999 but were not included in the computation of diluted earnings per share because to do so would be antidilutive. Recent accounting pronouncements In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. Management does not believe this will have a material effect on the Company's operations. Implementation of this standard has recently been delayed by the FASB for a 12-month period. The Company will adopt SFAS No. 133 as required for its first quarterly filing of fiscal year 2001.

Note 2. Acquisitions In July 1997, the Company acquired all of the outstanding shares of capital stock of Pro-Trak Corporation,

Note 2. Acquisitions In July 1997, the Company acquired all of the outstanding shares of capital stock of Pro-Trak Corporation, which operated under the Lake of the Woods trade name. The total purchase price was approximately $7.3 million which included the immediate paydown of liabilities of $6.6 million. The acquisition has been accounted for as a purchase. Accordingly, the purchase price has been allocated to assets and liabilities based on their estimated fair values as of the date of acquisition. In January 1998, the Company purchased all Rainfair, Inc. common stock held by the former principal owner for approxi-mately $2.4 million, which made Rainfair, Inc. a wholly owned subsidiary of the Company. Prior to January 1998, the Company owned 50% of Rainfair, Inc. Note 3. Inventories A summary of inventories is as follows:
December 31, (In Thousands) 1999 1998 -----------------------------------------------------Finished goods $32,487 $29,622 Work in process 1,496 1,536 Raw materials 6,354 8,540 ----------------------Total inventories $40,337 $39,698 -----------------------

If all inventories were valued on the FIFO method, total inventories for 1999 and 1998 would have been $43.8 and $42.5 million, respectively. 14

Note 4. Income Tax Matters Net deferred tax assets and liabilities consist of the following components:
December 31, (In Thousands) 1999 1998 -----------------------------------------------------Deferred tax assets: Receivable allowances $ 322 $ 455 Inventory differences 1,024 324 Compensation and benefits 2,055 1,997 Insurance reserves and other 713 453 ----------------------4,114 3,229 Deferred tax liabilities, principally intangibles 979 819 ----------------------$3,135 $2,410 -----------------------

The components giving rise to the net deferred tax assets described above have been included in the accompanying consolidated balance sheets as follows:
December 31, (In Thousands) 1999 1998 -----------------------------------------------------Current assets $2,747 $1,993 Noncurrent assets 388 417 ----------------------$3,135 $2,410

Note 4. Income Tax Matters Net deferred tax assets and liabilities consist of the following components:
December 31, (In Thousands) 1999 1998 -----------------------------------------------------Deferred tax assets: Receivable allowances $ 322 $ 455 Inventory differences 1,024 324 Compensation and benefits 2,055 1,997 Insurance reserves and other 713 453 ----------------------4,114 3,229 Deferred tax liabilities, principally intangibles 979 819 ----------------------$3,135 $2,410 -----------------------

The components giving rise to the net deferred tax assets described above have been included in the accompanying consolidated balance sheets as follows:
December 31, (In Thousands) 1999 1998 -----------------------------------------------------Current assets $2,747 $1,993 Noncurrent assets 388 417 ----------------------$3,135 $2,410 -----------------------

The provision for income taxes (benefit) consists of the following: Years Ended December 31,
(In Thousands) 1999 1998 1997 -----------------------------------------------------Current: Federal $ (820) $ 892 $3,684 State (142) 357 818 Deferred (725) 207 86 ----------------------------------$(1,687) $1,456 $4,588 -----------------------------------

The differences between statutory federal tax rates and the effective tax rates are as follows:
Years Ending December 31, 1999 1998 1997 ----------------------------------------------------------Statutory federal tax rate (35.0)% 35.0% 35.0% State taxes, net of federal tax benefit and other (4.0) 4.2 4.2 -------------------------------Effective tax rate (39.0)% 39.2% 39.2% --------------------------------

Note 5. Financing Arrangements

Credit agreement The Company has a $75 million unsecured credit agreement. Under the agreement, the Company has (1) a $62.5 million revolving line of credit which expires on May 28, 2002 ($12.5 million of which can be used to support letters of credit and $22.5 million which can be used to issue unsecured commercial paper) and (2) a $12.5 million term loan due May 28, 2004. At the Company's option, the interest rate is either the bank's prime rate or Eurodollar rate plus .75% or 1% for the revolving line of credit and Eurodollar rate plus 1.125% or 1.375% for the term loan, depending upon the Company's leverage ratio (Eurodollar rate plus .75% and Eurodollar rate plus 1.125% for the revolving line of credit and term loan, as of December 31, 1999). Interest is payable monthly on prime rate loans and at maturity on Eurodollar loans.

The credit agreement contains various covenants, including minimum consolidated tangible net worth, sale of assets, indebtedness, interest coverage ratio and leverage ratio. At December 31, 1999, the Company did not meet the interest coverage ratio, but this covenant violation was subsequently waived. At December 31, 1999 and 1998, there was $14.1 million and $9.5 million, respectively, outstanding under the revolving line of credit. In addition, at December 31, 1999 and 1998, there were letter of credit commitments outstanding of $3.3 million and $3.7 million, respectively. In 1998, the Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations on its floating rate debt. As of December 31, 1999, the Company had swap agreements in effect totaling $11.0 million, of which $7.0 million will mature in 2002 with the remaining $4.0 million maturing in 2003. The Company is exposed to credit loss in the event of nonperformance by the counterparty to the interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterparty. The variable rate borrowings not offset by swap agreements at December 31, 1999 and 1998 totaled $14.8 million and $9.4 million, respectively.
Long-term obligations December 31, (In Thousands) 1999 1998 -----------------------------------------------------Term loan under credit agreement, due in quarterly payments of $.4 million with a final principal payment of $4.9 million on May 28, 2004 $11,700 $ -Term loan under credit agreement -10,900 Notes payable, paid in 1999 -1,028 Other 714 568 -----------------------12,414 12,496 Less current maturities 1,712 2,669 -----------------------$10,702 $9,827 ------------------------

Maturities of long-term obligations for the next five years are as follows (in millions): 2000, $1.7; 2001, $1.7; 2002, $1.7; 2003, $1.7; 2004, $5.3; and $.3 thereafter. 15

Notes to Consolidated Financial Statements Note 6. Lease Commitments and Total Rental Expense The Company leases office space, retail stores, manufacturing facilities, equipment and warehouse space under non-cancelable agreements which expire on various dates through 2009 and are recorded as operating leases. The total rental expense included in the consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 is approximately $1.8, $1.9, and $1.8 million, respectively. Approximate future minimum lease payments are as follows (in millions): 2000, $1.8; 2001, $.9 , 2002, $.7; 2003, $.5; 2004, $.5 and $1.5 thereafter.

The credit agreement contains various covenants, including minimum consolidated tangible net worth, sale of assets, indebtedness, interest coverage ratio and leverage ratio. At December 31, 1999, the Company did not meet the interest coverage ratio, but this covenant violation was subsequently waived. At December 31, 1999 and 1998, there was $14.1 million and $9.5 million, respectively, outstanding under the revolving line of credit. In addition, at December 31, 1999 and 1998, there were letter of credit commitments outstanding of $3.3 million and $3.7 million, respectively. In 1998, the Company entered into interest rate swap agreements to manage its exposure to interest rate fluctuations on its floating rate debt. As of December 31, 1999, the Company had swap agreements in effect totaling $11.0 million, of which $7.0 million will mature in 2002 with the remaining $4.0 million maturing in 2003. The Company is exposed to credit loss in the event of nonperformance by the counterparty to the interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterparty. The variable rate borrowings not offset by swap agreements at December 31, 1999 and 1998 totaled $14.8 million and $9.4 million, respectively.
Long-term obligations December 31, (In Thousands) 1999 1998 -----------------------------------------------------Term loan under credit agreement, due in quarterly payments of $.4 million with a final principal payment of $4.9 million on May 28, 2004 $11,700 $ -Term loan under credit agreement -10,900 Notes payable, paid in 1999 -1,028 Other 714 568 -----------------------12,414 12,496 Less current maturities 1,712 2,669 -----------------------$10,702 $9,827 ------------------------

Maturities of long-term obligations for the next five years are as follows (in millions): 2000, $1.7; 2001, $1.7; 2002, $1.7; 2003, $1.7; 2004, $5.3; and $.3 thereafter. 15

Notes to Consolidated Financial Statements Note 6. Lease Commitments and Total Rental Expense The Company leases office space, retail stores, manufacturing facilities, equipment and warehouse space under non-cancelable agreements which expire on various dates through 2009 and are recorded as operating leases. The total rental expense included in the consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 is approximately $1.8, $1.9, and $1.8 million, respectively. Approximate future minimum lease payments are as follows (in millions): 2000, $1.8; 2001, $.9 , 2002, $.7; 2003, $.5; 2004, $.5 and $1.5 thereafter. Note 7. Stock Options and Shareholders' Equity Stock options The Company has granted stock options to officers and key employees under its 1993 and 1997 stock option plans pursuant to which options for up to 550,000 shares of common stock may be granted. The option price per share shall not be less than 100% of the fair market value at the date of grant and the options expire 10 years after grant or such shorter period as the compensation committee of the Board so determines. Substantially all of the options vest in equal increments over a five-year period.

Notes to Consolidated Financial Statements Note 6. Lease Commitments and Total Rental Expense The Company leases office space, retail stores, manufacturing facilities, equipment and warehouse space under non-cancelable agreements which expire on various dates through 2009 and are recorded as operating leases. The total rental expense included in the consolidated statements of operations for the years ended December 31, 1999, 1998 and 1997 is approximately $1.8, $1.9, and $1.8 million, respectively. Approximate future minimum lease payments are as follows (in millions): 2000, $1.8; 2001, $.9 , 2002, $.7; 2003, $.5; 2004, $.5 and $1.5 thereafter. Note 7. Stock Options and Shareholders' Equity Stock options The Company has granted stock options to officers and key employees under its 1993 and 1997 stock option plans pursuant to which options for up to 550,000 shares of common stock may be granted. The option price per share shall not be less than 100% of the fair market value at the date of grant and the options expire 10 years after grant or such shorter period as the compensation committee of the Board so determines. Substantially all of the options vest in equal increments over a five-year period. The following summarizes all stock options granted under the plans:
Common Weighted Average Shares Exercise Price -------------------------------------------------------December 31, 1996 208,125 $11.12 Granted 63,500 11.59 Canceled (3,300) 9.06 Exercised (100) 9.06 --------December 31, 1997 268,225 11.26 Granted 58,563 13.84 Canceled (23,275) 12.10 Exercised (1,700) 9.88 --------December 31, 1998 301,813 11.70 Granted 116,750 8.54 Canceled (2,700) 9.78 --------December 31, 1999 415,863 10.83

The weighted average remaining life of outstanding options is 6.7 years as of December 31, 1999. Options exercisable as of December 31 were approximately 189,000 shares in 1999, 128,000 shares in 1998 and 82,000 shares in 1997 at a weighted average exercise price of $11.63, $11.66 and $11.89, respectively. Compensation expense under the plans is accounted for following the provisions of APB Opinion No. 25 and its related interpretations. Accordingly, no compensation cost has been recognized for grants made to date. If the Company had elected to recognize compensation cost based on the fair value of the options granted at the grant date as provided by SFAS No. 123, the Company's net income (loss) for the years ended December 31, 1999, 1998 and 1997 would have been $(2,816), 2,124 and 6,678, respectively. Pro forma diluted earnings (loss) per share for the years ended December 31, 1999, 1998 and 1997 would have been $(.44), $.32 and $.99, respectively.

The weighted average fair value at date of grant for options granted during 1999, 1998 and 1997 was $3.87, $5.81 and $5.18 per share, respectively. The fair value of each option is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:
1999 1998 1997

The weighted average fair value at date of grant for options granted during 1999, 1998 and 1997 was $3.87, $5.81 and $5.18 per share, respectively. The fair value of each option is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:
1999 1998 1997 ------------------------------------------------------------------------------Expected dividend yield 1% 1% 1% Expected stock price volatility 20% 25% 25% Risk-free interest rate 6.5% 6.5% 6.5% Expected life of options 7 years 7 years 8 years

Settlement of acquisition contingency In 1994, the Company acquired substantially all of the assets of Danner Shoe Manufacturing Co. ("Danner") in part by issuing common stock as a portion of the purchase price. In the acquisition, the Company guaranteed the holders of this common stock a market price of at least $16.20 per share by March 1, 1999. The fair value of this guarantee was measured by the Company as of the date of acquisition. On March 1, 1999, the market price of the Company's common stock was less than $16.20 per share and the Company was required to make a cash payment of approximately $1.1 million to the former shareholders of Danner who were parties to the guarantee. As a result, additional paid-in capital was reduced by approximately $1.1 million. 16

Note 8. Compensation and Benefit Agreements The Company has defined benefit pension plans covering approximately 50% of its employees. Eligible employees are entitled to monthly pension benefits beginning at normal retirement age (65). The monthly benefit payable at the normal retirement date under the Company's pension plans is equal to a specified dollar amount or percentage of average monthly compensation, as defined in the plans, multiplied by years of benefit service (maximum of 38 years). The Company's funding policy is to make not less than the minimum contribution that is required by applicable regulations, plus such amounts as the Company may determine to be appropriate from time to time. In 1999, the Company's retirement plan was amended to increase the monthly benefit payable and the eligibility age for disability benefits. In 1998, the Company's union pension plan was amended to increase the benefit rate for participants retiring or terminating after September 30, 1998. These amendments resulted in increases of approximately $.7 and $1.0 million in both unrecognized prior service cost and projected benefit obligation as of December 31, 1999 and 1998, respectively. The Company sponsors an unfunded defined benefit postretirement medical and life insurance plan that covers a majority of its employees until they qualify for Medicare. The plan is contributory for retirees with contributions established annually as a specified dollar amount. The Company funds the postretirement benefit obligation as the costs are incurred. Information relative to the Company's defined pension and other postretirement benefit plans is presented below.
Pension Benefits Other Benefits December 31, December 31, (In Thousands) 1999 1998 1999 199 --------------------------------------------------------------------------------------------------------Changes in benefit obligations: Obligations at beginning of year $13,952 $12,568 $ 1,395 $ 79 Service cost 558 443 65 7 Interest cost 1,017 856 70 8 Plan amendment 662 996 370 Benefits paid (655) (603) (36) (3 Actuarial losses (gains) 245 (308) (746) 46 --------------------------------------------------------------------------------------------------------Obligations at end of year $15,779 $13,952 $ 1,118 $ 1,39 --------------------------------------------------------------------------------------------------------Changes in plan assets:

Note 8. Compensation and Benefit Agreements The Company has defined benefit pension plans covering approximately 50% of its employees. Eligible employees are entitled to monthly pension benefits beginning at normal retirement age (65). The monthly benefit payable at the normal retirement date under the Company's pension plans is equal to a specified dollar amount or percentage of average monthly compensation, as defined in the plans, multiplied by years of benefit service (maximum of 38 years). The Company's funding policy is to make not less than the minimum contribution that is required by applicable regulations, plus such amounts as the Company may determine to be appropriate from time to time. In 1999, the Company's retirement plan was amended to increase the monthly benefit payable and the eligibility age for disability benefits. In 1998, the Company's union pension plan was amended to increase the benefit rate for participants retiring or terminating after September 30, 1998. These amendments resulted in increases of approximately $.7 and $1.0 million in both unrecognized prior service cost and projected benefit obligation as of December 31, 1999 and 1998, respectively. The Company sponsors an unfunded defined benefit postretirement medical and life insurance plan that covers a majority of its employees until they qualify for Medicare. The plan is contributory for retirees with contributions established annually as a specified dollar amount. The Company funds the postretirement benefit obligation as the costs are incurred. Information relative to the Company's defined pension and other postretirement benefit plans is presented below.
Pension Benefits Other Benefits December 31, December 31, (In Thousands) 1999 1998 1999 199 --------------------------------------------------------------------------------------------------------Changes in benefit obligations: Obligations at beginning of year $13,952 $12,568 $ 1,395 $ 79 Service cost 558 443 65 7 Interest cost 1,017 856 70 8 Plan amendment 662 996 370 Benefits paid (655) (603) (36) (3 Actuarial losses (gains) 245 (308) (746) 46 --------------------------------------------------------------------------------------------------------Obligations at end of year $15,779 $13,952 $ 1,118 $ 1,39 --------------------------------------------------------------------------------------------------------Changes in plan assets: Fair value of assets at beginning of year $16,127 $14,719 $ -$ Actual return on assets 716 1,977 -Company contributions 5 34 36 3 Participant contributions --21 2 Benefits paid (655) (603) (57) (6 --------------------------------------------------------------------------------------------------------Fair value of assets at end of year $16,193 $16,127 $ -$ --------------------------------------------------------------------------------------------------------Funded status at end of year: Plan assets in excess of (less than) obligations $ 414 $2,175 $(1,118) $(1,39 Unrecognized gains (3,316) (4,267) (1,550) (91 Unrecognized prior service cost 1,816 1,291 318 Unrecognized transition obligation 61 112 777 84 --------------------------------------------------------------------------------------------------------Accrued benefit cost $(1,025) $ (689) $(1,573) $(1,46 ---------------------------------------------------------------------------------------------------------

17

Notes to Consolidated Financial Statements
Pension Benefits Other Benefits Years Ending December 31, Years Ending December 3 (In Thousands) 1999 1998 1997 1999 1998 --------------------------------------------------------------------------------------------------------Cost recognized during the year: Service cost $ 558 $ 443 $ 471 $ 65 $ 74 Interest cost 1,017 856 844 70 89 Expected return on plan assets (1,264) (1,156) (1,017) --Amortization of prior gains (159) (106) 30 (111) (101)

Notes to Consolidated Financial Statements
Pension Benefits Other Benefits Years Ending December 31, Years Ending December 3 (In Thousands) 1999 1998 1997 1999 1998 --------------------------------------------------------------------------------------------------------Cost recognized during the year: Service cost $ 558 $ 443 $ 471 $ 65 $ 74 Interest cost 1,017 856 844 70 89 Expected return on plan assets (1,264) (1,156) (1,017) --Amortization of prior gains (159) (106) 30 (111) (101) Amortization of prior service cost 137 47 31 53 -Amortization of transition obligation 51 51 51 70 70 ----------------------------------------------------------------Net periodic benefit cost $ 340 $ 135 $ 410 $ 147 $ 132 -----------------------------------------------------------------

Pension Benefits Other Benefits December 31, December 31, 1999 1998 1997 1999 1998 --------------------------------------------------------------------------------------------------------Assumptions used in computations: Discount rate 7.0% 7.0% 7.0% 7.0% 7.0% Rate of compensation increase 4.5% 4.5% 4.5% N/A N/A Expected return on plan assets 8.0% 8.0% 8.0% * * * This plan does not have separate assets, so there is no actual or expected return on plan assets.

For measurement purposes of other benefits, a 9.0% annual rate of increase in the cost of covered health care benefits was assumed for 1999. The rate was assumed to decrease gradually to 5.0% at 2007 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rates would have the following effects for the year ended December 31, 1999 (in thousands):
Increase Decrease -----------------------------------------------------------------Effect on total of service and interest cost components $14 $(12) Effect on postretirement benefit obligation 80 (71)

Note 9. Enterprise-wide Disclosures Segment information is not presented since all of the Company's revenue is attributed to a single reportable segment. Information about the Company's groups of products within its one segment is presented below. Years Ending December 31,
(In Thousands) 1999 1998 1997 ----------------------------------------------------------Footwear $108,314 $115,643 $126,750 Protective Clothing 16,014 17,762 18,753 ----------------------------------------------------------$124,328 $133,405 $145,503 -----------------------------------------------------------

The following table presents information about the Company's revenue attributed to countries based on the location of the customer.

For measurement purposes of other benefits, a 9.0% annual rate of increase in the cost of covered health care benefits was assumed for 1999. The rate was assumed to decrease gradually to 5.0% at 2007 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rates would have the following effects for the year ended December 31, 1999 (in thousands):
Increase Decrease -----------------------------------------------------------------Effect on total of service and interest cost components $14 $(12) Effect on postretirement benefit obligation 80 (71)

Note 9. Enterprise-wide Disclosures Segment information is not presented since all of the Company's revenue is attributed to a single reportable segment. Information about the Company's groups of products within its one segment is presented below. Years Ending December 31,
(In Thousands) 1999 1998 1997 ----------------------------------------------------------Footwear $108,314 $115,643 $126,750 Protective Clothing 16,014 17,762 18,753 ----------------------------------------------------------$124,328 $133,405 $145,503 -----------------------------------------------------------

The following table presents information about the Company's revenue attributed to countries based on the location of the customer. Years Ending December 31,
(In Thousands) 1999 1998 1997 -------------------------------------------------------United States $119,981 $128,570 $142,459 Foreign Countries 4,347 4,835 3,044 -------------------------------------------------------$124,328 $133,405 $145,503 --------------------------------------------------------

Long-lived assets located outside of the United States totaled approximately $.5 million at December 31, 1999. No single customer provided revenue of 10% or more of consolidated revenues in any of the years presented. Note 10. Subsequent Event On March 14, 2000, the Company repurchased 500,000 shares of its common stock for approximately $2.1 million. 18

Independent Auditors' Report To the Board of Directors and Shareholders of LaCrosse Footwear, Inc.

Independent Auditors' Report To the Board of Directors and Shareholders of LaCrosse Footwear, Inc. We have audited the accompanying consolidated balance sheets of LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LaCrosse Footwear, Inc. and Subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. McGLADREY & PULLEN, LLP La Crosse, Wisconsin February 10, 2000, except for Note 10, as to which the date is March 14, 2000 19

Quarterly Results of Operations (Unaudited) The Company reports its quarterly results of operations on the basis of 13-week periods for each of the first three quarters with the year ending on December 31st.
The following tabulation presents the Company's unaudited quarterly results of operations for 1999 and 19 Thousands of dollars except per share data-1999 First Quarter Second Quarter Third Quarter Fourth Quarte --------------------------------------------------------------------------------------------------------Net sales $27,946 $26,788 $37,024 $32,57 Gross profit 7,472 7,087 9,790 4,85 Operating income (loss) 102 (141) 1,959 (4,128 Net income (loss) (150) (320) 813 (2,980 Basic and diluted earnings (loss) per share (.02) (.05) .13 (.47 Thousands of dollars except per share data-1998 First Quarter Second Quarter Third Quarter Fourth Quarte --------------------------------------------------------------------------------------------------------Net sales $29,936 $29,461 $37,506 $36,50 Gross profit 7,767 7,689 10,160 8,96 Operating income 633 483 2,836 1,64 Net income 189 12 1,321 73 Basic and diluted earnings per share .03 .00 .20 .1

Market Information The Company's common stock trades on the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol BOOT. The following table shows the high and low transaction prices by calendar quarter for the past three years. On March 24, 2000, there were approximately 300 shareholders of record and approximately 2,000 beneficial owners of the Company's common stock.
1st 2nd 3rd 4th Year-end ---------------------------------------------------------------------------------------------------------

Quarterly Results of Operations (Unaudited) The Company reports its quarterly results of operations on the basis of 13-week periods for each of the first three quarters with the year ending on December 31st.
The following tabulation presents the Company's unaudited quarterly results of operations for 1999 and 19 Thousands of dollars except per share data-1999 First Quarter Second Quarter Third Quarter Fourth Quarte --------------------------------------------------------------------------------------------------------Net sales $27,946 $26,788 $37,024 $32,57 Gross profit 7,472 7,087 9,790 4,85 Operating income (loss) 102 (141) 1,959 (4,128 Net income (loss) (150) (320) 813 (2,980 Basic and diluted earnings (loss) per share (.02) (.05) .13 (.47 Thousands of dollars except per share data-1998 First Quarter Second Quarter Third Quarter Fourth Quarte --------------------------------------------------------------------------------------------------------Net sales $29,936 $29,461 $37,506 $36,50 Gross profit 7,767 7,689 10,160 8,96 Operating income 633 483 2,836 1,64 Net income 189 12 1,321 73 Basic and diluted earnings per share .03 .00 .20 .1

Market Information The Company's common stock trades on the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol BOOT. The following table shows the high and low transaction prices by calendar quarter for the past three years. On March 24, 2000, there were approximately 300 shareholders of record and approximately 2,000 beneficial owners of the Company's common stock.
1st 2nd 3rd 4th Year-end --------------------------------------------------------------------------------------------------------1997 $10 3/4 - 14 3/8 $11 - 13 1/2 $12 1/2 - 17 1/4 $14 - 16 $14 1/2 1998 $11 1/2 - 14 1/8 $11 3/8 - 12 1/2 $7 3/4 - 11 1/2 $7 3/4 - 10 $9 1/4 1999 $6 1/4 - 9 1/2 $6 5/8 - 9 $4 9/16 - 8 1/4 $4 1/4 - 6 23/32 $4 7/16

Cash Dividends Declared Per Share It is the Company's policy to pay annual cash dividends. The chart below shows annual cash dividends declared per share for the past three years: 1999 1998 1997 Dividends declared per share $.13 $.13 $.13 Market Risk Management The Company enters into interest rate swap agreements ("Swap Agreements") to reduce its exposure to interest rate fluctuations on its floating rate debt. The Swap Agreements exchange floating rate for fixed rate interest payments periodically over the life of the agreements without exchange of the underlying notional amounts. The notional amounts of interest rate agreements are used to measure interest to be paid or received and do not represent an amount of exposure to credit loss. For interest rate instruments that effectively hedge interest rate exposures, the net cash amounts paid or received on the agreements are accrued and recognized as an adjustment to interest expense. As of December 31, 1999, the Company had Swap Agreements in effect totaling $11.0 million notional amount, of which $7.0 million will mature in 2002 with another $4.0 million maturing in 2003. The variable rate borrowings not offset by Swap Agreements at December 31, 1999 totaled $14.8 million. Swap Agreement rates are based on the three-month LIBOR rate. Based on average floating rate borrowings outstanding throughout fiscal year 1999, a 100-basis point change in LIBOR would have caused the Company's monthly interest expense to change by approximately $16,500. The Company believes that these amounts are not material to the earnings of the Company. 20

EXHIBIT (21) SUBSIDIARIES OF LACROSSE FOOTWEAR, INC. as of January 1, 2000
Jurisdiction of Incorporation ----------------

Name ----

Percent Ownership ----------------Direct ------

Clintonville Products, Inc. Danner Shoe Manufacturing Co.

Wisconsin Wisconsin

100% 100%

EXHIBIT (23) CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), included in the 1999 Annual Report to Shareholders of LaCrosse Footwear, Inc. We also consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-77516, 33-77518 and 333-2702) pertaining to the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan, the LaCrosse Footwear, Inc. Union Employees' Retirement Savings Plan and the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 10, 2000 (except for Note 10 of the consolidated financial statements, as to which the date is March 14, 2000), with respect to the financial statement schedule included in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. for the year ended December 31, 1999. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2000

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS

YEAR DEC 31 1999 JAN 01 1999 DEC 31 1999 2,022 0 21,301 369 40,337 68,529 39,797 26,986 98,020

EXHIBIT (21) SUBSIDIARIES OF LACROSSE FOOTWEAR, INC. as of January 1, 2000
Jurisdiction of Incorporation ----------------

Name ----

Percent Ownership ----------------Direct ------

Clintonville Products, Inc. Danner Shoe Manufacturing Co.

Wisconsin Wisconsin

100% 100%

EXHIBIT (23) CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), included in the 1999 Annual Report to Shareholders of LaCrosse Footwear, Inc. We also consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-77516, 33-77518 and 333-2702) pertaining to the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan, the LaCrosse Footwear, Inc. Union Employees' Retirement Savings Plan and the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 10, 2000 (except for Note 10 of the consolidated financial statements, as to which the date is March 14, 2000), with respect to the financial statement schedule included in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. for the year ended December 31, 1999. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2000

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES

YEAR DEC 31 1999 JAN 01 1999 DEC 31 1999 2,022 0 21,301 369 40,337 68,529 39,797 26,986 98,020 27,737

EXHIBIT (23) CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), included in the 1999 Annual Report to Shareholders of LaCrosse Footwear, Inc. We also consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-77516, 33-77518 and 333-2702) pertaining to the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan, the LaCrosse Footwear, Inc. Union Employees' Retirement Savings Plan and the LaCrosse Footwear, Inc. 1993 Employee Stock Incentive Plan of our report dated February 10, 2000 (except for Note 10, as to which the date is March 14, 2000), with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 10, 2000 (except for Note 10 of the consolidated financial statements, as to which the date is March 14, 2000), with respect to the financial statement schedule included in this Annual Report on Form 10-K of LaCrosse Footwear, Inc. for the year ended December 31, 1999. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2000

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

YEAR DEC 31 1999 JAN 01 1999 DEC 31 1999 2,022 0 21,301 369 40,337 68,529 39,797 26,986 98,020 27,737 10,702 0 0 67 56,321 98,020 124,328 124,328 95,129 31,293 0 113 2,208 (4,324) (1,687) (2,637) 0 0 0 (2,637) (.41) (.41)

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LACROSSE FOOTWEAR, INC. AS OF AND FOR THE PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

YEAR DEC 31 1999 JAN 01 1999 DEC 31 1999 2,022 0 21,301 369 40,337 68,529 39,797 26,986 98,020 27,737 10,702 0 0 67 56,321 98,020 124,328 124,328 95,129 31,293 0 113 2,208 (4,324) (1,687) (2,637) 0 0 0 (2,637) (.41) (.41)