Severance Agreement - LACROSSE FOOTWEAR INC - 4-2-2001 by BOOT-Agreements

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									SEVERANCE AGREEMENT AND RELEASE Effective August 3, 2000, Patrick K. Gantert ("Gantert") resigned his employment with LaCrosse Footwear, Inc. and each of its affiliates ("LaCrosse"). Gantert continues as a director of LaCrosse. In consideration for this severance agreement and release ("Agreement"), LaCrosse agrees to provide Gantert with the following benefits: 1. LaCrosse will pay Gantert $287,900 in bi-weekly installments of approximately $5,537 from August 4, 2000 to August 3, 2002 (the "Payment Period"). LaCrosse will make such payments, minus all applicable deductions and withholdings, in accordance with its normal payroll policies. 2. LaCrosse has already paid Gantert all his unused vacation (16.5 days) for the vacation year July 1, 1999 through June 30, 2000, minus all applicable deductions and withholdings. 3. On January 2, 2001, LaCrosse will transfer to Gantert all of its rights in the "split dollar" life insurance policy ("Split Dollar Policy") which LaCrosse and Gantert established pursuant to the June 1, 1999 Employment Agreement between Gantert and LaCrosse ("Employment Agreement"). On January 2, 2001, concurrent with the transfer of the Split Dollar Policy, LaCrosse will relinquish its right under the Employment Agreement to be reimbursed from Gantert for the dollar amount of the premiums LaCrosse expended for the Split Dollar Policy. On January 2, 2001, all right, title and interest in and to the Split Dollar Policy shall vest in Gantert.

4. As of the date hereof, Gantert owes LaCrosse $70,000 in principal amount under the October 9, 1998 Promissory Note (the "Note") referred to in Paragraph 4(e) of the Employment Agreement. Within ten (10) business days after the date hereof, Gantert shall satisfy any unpaid obligation, including interest, to LaCrosse under the Note. 5. For the first six (6) months of the Payment Period (through February 4, 2001), or until Gantert becomes eligible for group health insurance from another employer, whichever is sooner, LaCrosse will continue to provide health insurance coverage to Gantert under the same terms that were applicable to him as a LaCrosse employee (family coverage). If, as of February 4, 2001, Gantert has not become eligible for group health insurance coverage from another employer, Gantert can elect to continue his group health insurance coverage with LaCrosse under COBRA (the Consolidated Omnibus Budget Reconciliation Act) for up to the balance of the Payment Period (through August 3, 2002). If Gantert elects to continue his health insurance coverage with LaCrosse under COBRA, LaCrosse will pay a share of the applicable COBRA premium equal to its share of the premium for his group heath insurance coverage if he were an employee, provided Gantert pays a share of the COBRA premium equal to his share of the premium for his group health insurance coverage if he were an employee. 6. At the first payroll date after the expiration of the seven (7) day revocation period, LaCrosse will make a lump sum payment to Gantert of $20,878.62, minus applicable deductions and withholdings. This payment -2-

represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan ("Savings Plan") if he were eligible to participate in the Savings Plan during the Payment Period. 7. At the first payroll date after the expiration of the seven (7) day revocation period, LaCrosse will make a lump sum payment to Gantert of $13,333.06, minus applicable deductions and withholdings. This payment represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Retirement Plan ("Retirement Plan") if he were eligible to participate in the Retirement Plan during the Payment Period. 8. During the Payment Period, LaCrosse will provide Gantert with outplacement services from Challenger, Gray & Christmas, Inc. LaCrosse's obligations to pay Challenger, Gray & Christmas, Inc. will be capped at a

4. As of the date hereof, Gantert owes LaCrosse $70,000 in principal amount under the October 9, 1998 Promissory Note (the "Note") referred to in Paragraph 4(e) of the Employment Agreement. Within ten (10) business days after the date hereof, Gantert shall satisfy any unpaid obligation, including interest, to LaCrosse under the Note. 5. For the first six (6) months of the Payment Period (through February 4, 2001), or until Gantert becomes eligible for group health insurance from another employer, whichever is sooner, LaCrosse will continue to provide health insurance coverage to Gantert under the same terms that were applicable to him as a LaCrosse employee (family coverage). If, as of February 4, 2001, Gantert has not become eligible for group health insurance coverage from another employer, Gantert can elect to continue his group health insurance coverage with LaCrosse under COBRA (the Consolidated Omnibus Budget Reconciliation Act) for up to the balance of the Payment Period (through August 3, 2002). If Gantert elects to continue his health insurance coverage with LaCrosse under COBRA, LaCrosse will pay a share of the applicable COBRA premium equal to its share of the premium for his group heath insurance coverage if he were an employee, provided Gantert pays a share of the COBRA premium equal to his share of the premium for his group health insurance coverage if he were an employee. 6. At the first payroll date after the expiration of the seven (7) day revocation period, LaCrosse will make a lump sum payment to Gantert of $20,878.62, minus applicable deductions and withholdings. This payment -2-

represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan ("Savings Plan") if he were eligible to participate in the Savings Plan during the Payment Period. 7. At the first payroll date after the expiration of the seven (7) day revocation period, LaCrosse will make a lump sum payment to Gantert of $13,333.06, minus applicable deductions and withholdings. This payment represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Retirement Plan ("Retirement Plan") if he were eligible to participate in the Retirement Plan during the Payment Period. 8. During the Payment Period, LaCrosse will provide Gantert with outplacement services from Challenger, Gray & Christmas, Inc. LaCrosse's obligations to pay Challenger, Gray & Christmas, Inc. will be capped at a maximum of $25,000.00. Because it is LaCrosse's policy not to offer cash in lieu of outplacement services, the cost of these services to LaCrosse will not be treated as income to Gantert. LaCrosse will be billed directly by the outplacement firm. 9. LaCrosse will pay directly to the lawyer(s) and accountant(s) of Gantert's choice up to $5,000 in the aggregate for fees he may incur in negotiating and finalizing this Agreement. Because it is LaCrosse's policy not to offer cash in lieu of legal or accounting fees, the cost of these fees will not be treated by LaCrosse to be income to Gantert. LaCrosse will be billed directly by Gantert's lawyer(s) and/or accountant(s). -3-

10. LaCrosse will reimburse Gantert for all reasonable and necessary business-related expenses he incurred as an employee prior to August 4, 2000, provided that Gantert submits the appropriate documentation for such expenses to LaCrosse prior to the expiration of the seven (7) day revocation period. 11. a. During the Payment Period, Gantert covenants and agrees that neither he nor any of his affiliates (including any corporation or entity in which he is an officer, director or partner, or in which he owns beneficially five percent (5%) or more of any class of equity securities) shall within the United States, Canada or Japan, whether directly or indirectly, with or without compensation, enter into, engage in or be employed by or act as a consultant to any corporation or other commercial enterprise which competes with LaCrosse (including, but not limited to, the design, development, marketing and/or manufacturing of protective footwear and/or rainwear), or solicit or do any business with any existing customers of LaCrosse.

represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Employees' Retirement Savings Plan ("Savings Plan") if he were eligible to participate in the Savings Plan during the Payment Period. 7. At the first payroll date after the expiration of the seven (7) day revocation period, LaCrosse will make a lump sum payment to Gantert of $13,333.06, minus applicable deductions and withholdings. This payment represents the present value of the benefits that Gantert would have accrued under the LaCrosse Footwear, Inc. Retirement Plan ("Retirement Plan") if he were eligible to participate in the Retirement Plan during the Payment Period. 8. During the Payment Period, LaCrosse will provide Gantert with outplacement services from Challenger, Gray & Christmas, Inc. LaCrosse's obligations to pay Challenger, Gray & Christmas, Inc. will be capped at a maximum of $25,000.00. Because it is LaCrosse's policy not to offer cash in lieu of outplacement services, the cost of these services to LaCrosse will not be treated as income to Gantert. LaCrosse will be billed directly by the outplacement firm. 9. LaCrosse will pay directly to the lawyer(s) and accountant(s) of Gantert's choice up to $5,000 in the aggregate for fees he may incur in negotiating and finalizing this Agreement. Because it is LaCrosse's policy not to offer cash in lieu of legal or accounting fees, the cost of these fees will not be treated by LaCrosse to be income to Gantert. LaCrosse will be billed directly by Gantert's lawyer(s) and/or accountant(s). -3-

10. LaCrosse will reimburse Gantert for all reasonable and necessary business-related expenses he incurred as an employee prior to August 4, 2000, provided that Gantert submits the appropriate documentation for such expenses to LaCrosse prior to the expiration of the seven (7) day revocation period. 11. a. During the Payment Period, Gantert covenants and agrees that neither he nor any of his affiliates (including any corporation or entity in which he is an officer, director or partner, or in which he owns beneficially five percent (5%) or more of any class of equity securities) shall within the United States, Canada or Japan, whether directly or indirectly, with or without compensation, enter into, engage in or be employed by or act as a consultant to any corporation or other commercial enterprise which competes with LaCrosse (including, but not limited to, the design, development, marketing and/or manufacturing of protective footwear and/or rainwear), or solicit or do any business with any existing customers of LaCrosse. b. Gantert agrees to disclose promptly to LaCrosse and does assign and agree to assign to LaCrosse, free from any obligation to him, all his right, title and interest in and to any and all ideas, concepts, processes, improvements and inventions made, conceived, written, acquired, disclosed or developed by him, solely or in concert with others, during the term of his employment by LaCrosse, which relate to the business, activities or facilities of LaCrosse, or resulting from or suggested by any work he performed for LaCrosse or at its request. Gantert further agrees to deliver to LaCrosse any and all drawings, -4-

notes, photographs, copies, outlines, specifications, memoranda and data relating to such ideas, concepts, processes, improvements and inventions, to cooperate fully in the securing of copyright, trademark or patent protection or other similar rights in the United States and foreign countries, and to give evidence and testimony and to execute and deliver to LaCrosse all documents requested by it in connection therewith. c. Except as expressly set forth below, Gantert agrees not to disclose to others, use for his benefit, copy or make notes of any confidential knowledge or trade secrets or any other knowledge or information of or relating to the business, activities or facilities of LaCrosse. Gantert shall not be bound to this obligation of confidentiality and nondisclosure if: i. the knowledge or information shall become part of the public domain by publication or otherwise through no fault of Gantert;

10. LaCrosse will reimburse Gantert for all reasonable and necessary business-related expenses he incurred as an employee prior to August 4, 2000, provided that Gantert submits the appropriate documentation for such expenses to LaCrosse prior to the expiration of the seven (7) day revocation period. 11. a. During the Payment Period, Gantert covenants and agrees that neither he nor any of his affiliates (including any corporation or entity in which he is an officer, director or partner, or in which he owns beneficially five percent (5%) or more of any class of equity securities) shall within the United States, Canada or Japan, whether directly or indirectly, with or without compensation, enter into, engage in or be employed by or act as a consultant to any corporation or other commercial enterprise which competes with LaCrosse (including, but not limited to, the design, development, marketing and/or manufacturing of protective footwear and/or rainwear), or solicit or do any business with any existing customers of LaCrosse. b. Gantert agrees to disclose promptly to LaCrosse and does assign and agree to assign to LaCrosse, free from any obligation to him, all his right, title and interest in and to any and all ideas, concepts, processes, improvements and inventions made, conceived, written, acquired, disclosed or developed by him, solely or in concert with others, during the term of his employment by LaCrosse, which relate to the business, activities or facilities of LaCrosse, or resulting from or suggested by any work he performed for LaCrosse or at its request. Gantert further agrees to deliver to LaCrosse any and all drawings, -4-

notes, photographs, copies, outlines, specifications, memoranda and data relating to such ideas, concepts, processes, improvements and inventions, to cooperate fully in the securing of copyright, trademark or patent protection or other similar rights in the United States and foreign countries, and to give evidence and testimony and to execute and deliver to LaCrosse all documents requested by it in connection therewith. c. Except as expressly set forth below, Gantert agrees not to disclose to others, use for his benefit, copy or make notes of any confidential knowledge or trade secrets or any other knowledge or information of or relating to the business, activities or facilities of LaCrosse. Gantert shall not be bound to this obligation of confidentiality and nondisclosure if: i. the knowledge or information shall become part of the public domain by publication or otherwise through no fault of Gantert; ii. the knowledge or information is known to the recipient prior to the receipt of the disclosure from Gantert; or iii. the knowledge or information is disclosed to the recipient by a third party who is in lawful possession of the knowledge or information and has the lawful right to make disclosure thereof. d. Gantert has delivered to LaCrosse all records, notes, data, memoranda, photographs, models and equipment of any nature which are in his possession or control and which are the property of LaCrosse or which related to his employment or to the business, activities or facilities of LaCrosse. -5-

e. The parties understand and agree that the remedies at law for LaCrosse for breach of the covenants in this Paragraph 11 would be inadequate and that LaCrosse shall be entitled to injunctive or such other equitable relief as a court may deem appropriate for any breach of these covenants. If any of these covenants shall at any time be adjudged invalid to any extent by any court of competent jurisdiction, such covenant shall be deemed modified to the extent necessary to render it enforceable. f. In consideration for Gantert's covenant not to compete and other covenants and obligations undertaken pursuant to this Paragraph 11, LaCrosse shall pay Gantert ratably on a semiannual basis the aggregate amount of $280,483 in four (4) semiannual installments of $70,120.75 each on the first (1st) payroll date in February and August during the Payment Period, commencing February, 2001. All amounts to be paid to Gantert pursuant this Paragraph 11 shall be reduced by all applicable deductions and withholdings.

notes, photographs, copies, outlines, specifications, memoranda and data relating to such ideas, concepts, processes, improvements and inventions, to cooperate fully in the securing of copyright, trademark or patent protection or other similar rights in the United States and foreign countries, and to give evidence and testimony and to execute and deliver to LaCrosse all documents requested by it in connection therewith. c. Except as expressly set forth below, Gantert agrees not to disclose to others, use for his benefit, copy or make notes of any confidential knowledge or trade secrets or any other knowledge or information of or relating to the business, activities or facilities of LaCrosse. Gantert shall not be bound to this obligation of confidentiality and nondisclosure if: i. the knowledge or information shall become part of the public domain by publication or otherwise through no fault of Gantert; ii. the knowledge or information is known to the recipient prior to the receipt of the disclosure from Gantert; or iii. the knowledge or information is disclosed to the recipient by a third party who is in lawful possession of the knowledge or information and has the lawful right to make disclosure thereof. d. Gantert has delivered to LaCrosse all records, notes, data, memoranda, photographs, models and equipment of any nature which are in his possession or control and which are the property of LaCrosse or which related to his employment or to the business, activities or facilities of LaCrosse. -5-

e. The parties understand and agree that the remedies at law for LaCrosse for breach of the covenants in this Paragraph 11 would be inadequate and that LaCrosse shall be entitled to injunctive or such other equitable relief as a court may deem appropriate for any breach of these covenants. If any of these covenants shall at any time be adjudged invalid to any extent by any court of competent jurisdiction, such covenant shall be deemed modified to the extent necessary to render it enforceable. f. In consideration for Gantert's covenant not to compete and other covenants and obligations undertaken pursuant to this Paragraph 11, LaCrosse shall pay Gantert ratably on a semiannual basis the aggregate amount of $280,483 in four (4) semiannual installments of $70,120.75 each on the first (1st) payroll date in February and August during the Payment Period, commencing February, 2001. All amounts to be paid to Gantert pursuant this Paragraph 11 shall be reduced by all applicable deductions and withholdings. 12. Gantert and LaCrosse understand and agree that this Agreement supersedes the Employment Agreement, which is null and void. Without limiting the generality of the foregoing in any way, Gantert acknowledges that he is not entitled to receive any deferred compensation pursuant to the terms of such Employment Agreement. 13. Any amounts due Gantert under this Agreement shall be reduced for any required withholding or deduction for Federal, state or local income, employment or other comparable legal requirement. Moreover, the -6-

Company shall have the right to be reimbursed (or to offset any amounts thereafter payable to Gantert) for any required withholding or deduction for Federal, state or local income, employment or other comparable legal requirement in connection with the transfer of the Split Dollar Policy. In consideration for the promises that LaCrosse makes above, Gantert on behalf of himself, his spouse, heirs, successors, assigns, executors and representatives of any kind, if any, hereby releases and forever discharges LaCrosse, its subsidiaries, related and affiliated companies, and its and their past and present employees, directors, officers, agents, shareholders, insurers, attorneys, executors, assigns and other representatives of any kind (the "Released Parties") from any and all claims, demands, rights, liabilities and causes of action of any kind or nature, known or unknown, arising prior to or through the date Gantert executes this Agreement, including, but not limited to, any claims, demands, rights, liabilities and causes of action arising out of or in connection with

e. The parties understand and agree that the remedies at law for LaCrosse for breach of the covenants in this Paragraph 11 would be inadequate and that LaCrosse shall be entitled to injunctive or such other equitable relief as a court may deem appropriate for any breach of these covenants. If any of these covenants shall at any time be adjudged invalid to any extent by any court of competent jurisdiction, such covenant shall be deemed modified to the extent necessary to render it enforceable. f. In consideration for Gantert's covenant not to compete and other covenants and obligations undertaken pursuant to this Paragraph 11, LaCrosse shall pay Gantert ratably on a semiannual basis the aggregate amount of $280,483 in four (4) semiannual installments of $70,120.75 each on the first (1st) payroll date in February and August during the Payment Period, commencing February, 2001. All amounts to be paid to Gantert pursuant this Paragraph 11 shall be reduced by all applicable deductions and withholdings. 12. Gantert and LaCrosse understand and agree that this Agreement supersedes the Employment Agreement, which is null and void. Without limiting the generality of the foregoing in any way, Gantert acknowledges that he is not entitled to receive any deferred compensation pursuant to the terms of such Employment Agreement. 13. Any amounts due Gantert under this Agreement shall be reduced for any required withholding or deduction for Federal, state or local income, employment or other comparable legal requirement. Moreover, the -6-

Company shall have the right to be reimbursed (or to offset any amounts thereafter payable to Gantert) for any required withholding or deduction for Federal, state or local income, employment or other comparable legal requirement in connection with the transfer of the Split Dollar Policy. In consideration for the promises that LaCrosse makes above, Gantert on behalf of himself, his spouse, heirs, successors, assigns, executors and representatives of any kind, if any, hereby releases and forever discharges LaCrosse, its subsidiaries, related and affiliated companies, and its and their past and present employees, directors, officers, agents, shareholders, insurers, attorneys, executors, assigns and other representatives of any kind (the "Released Parties") from any and all claims, demands, rights, liabilities and causes of action of any kind or nature, known or unknown, arising prior to or through the date Gantert executes this Agreement, including, but not limited to, any claims, demands, rights, liabilities and causes of action arising out of or in connection with Gantert's employment or his resignation from employment with LaCrosse; provided, however, that Gantert does not release any claim, demand, right, liability or cause of action in connection with any breach of this Agreement by LaCrosse. Gantert further agrees not to file, pursue or participate in any lawsuits of any kind in either state or federal court against LaCrosse or any of the Released Parties with respect to any claim released in this Agreement, including any claim arising out of or in connection with his employment with LaCrosse or his resignation from such employment. This release specifically includes, but is not limited to, any and all -7-

claims under the Wisconsin Fair Employment Act, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act, and any other federal, state or local laws or regulations of any kind, whether statutory or decisional. If Gantert breaches his promise not to file, pursue or participate in any lawsuits of any kind against LaCrosse or any of the Released Parties, he will be liable to return to LaCrosse the consideration he received from it under this Agreement and to pay the reasonable attorneys' fees and costs that LaCrosse or any of the Released Parties incurs in having to defend itself against such released claims. Gantert acknowledges that he is entering into this Agreement voluntarily, that he has been given at least twentyone (21) days to consider this Agreement and that LaCrosse has advised him to consult with an attorney prior to signing this Agreement. For a period of seven (7) days following his signing of this Agreement, Gantert may revoke this Agreement by doing so in writing, and this Agreement will not become enforceable or effective until the revocation period has expired. This Agreement embodies the entire agreement between Gantert and LaCrosse with respect to Gantert's

Company shall have the right to be reimbursed (or to offset any amounts thereafter payable to Gantert) for any required withholding or deduction for Federal, state or local income, employment or other comparable legal requirement in connection with the transfer of the Split Dollar Policy. In consideration for the promises that LaCrosse makes above, Gantert on behalf of himself, his spouse, heirs, successors, assigns, executors and representatives of any kind, if any, hereby releases and forever discharges LaCrosse, its subsidiaries, related and affiliated companies, and its and their past and present employees, directors, officers, agents, shareholders, insurers, attorneys, executors, assigns and other representatives of any kind (the "Released Parties") from any and all claims, demands, rights, liabilities and causes of action of any kind or nature, known or unknown, arising prior to or through the date Gantert executes this Agreement, including, but not limited to, any claims, demands, rights, liabilities and causes of action arising out of or in connection with Gantert's employment or his resignation from employment with LaCrosse; provided, however, that Gantert does not release any claim, demand, right, liability or cause of action in connection with any breach of this Agreement by LaCrosse. Gantert further agrees not to file, pursue or participate in any lawsuits of any kind in either state or federal court against LaCrosse or any of the Released Parties with respect to any claim released in this Agreement, including any claim arising out of or in connection with his employment with LaCrosse or his resignation from such employment. This release specifically includes, but is not limited to, any and all -7-

claims under the Wisconsin Fair Employment Act, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act, and any other federal, state or local laws or regulations of any kind, whether statutory or decisional. If Gantert breaches his promise not to file, pursue or participate in any lawsuits of any kind against LaCrosse or any of the Released Parties, he will be liable to return to LaCrosse the consideration he received from it under this Agreement and to pay the reasonable attorneys' fees and costs that LaCrosse or any of the Released Parties incurs in having to defend itself against such released claims. Gantert acknowledges that he is entering into this Agreement voluntarily, that he has been given at least twentyone (21) days to consider this Agreement and that LaCrosse has advised him to consult with an attorney prior to signing this Agreement. For a period of seven (7) days following his signing of this Agreement, Gantert may revoke this Agreement by doing so in writing, and this Agreement will not become enforceable or effective until the revocation period has expired. This Agreement embodies the entire agreement between Gantert and LaCrosse with respect to Gantert's employment and resignation from employment with LaCrosse. This Agreement shall be governed by and construed in accordance with the internal law of the State of Wisconsin. If any portion of this Agreement is found to be unenforceable, the parties desire that all other portions that can be separated from it, or appropriately limited in scope, shall remain fully valid and -8-

enforceable. Gantert understands that this Agreement contains a final release and that he can make no further claim of any kind against LaCrosse or any of the other Released Parties arising out of actions occurring through the date he executes this Agreement. Gantert agrees that he is entering into this Agreement knowingly and voluntarily and without any coercion.
/s/ Patrick K. Gantert (SEAL) --------------------------------Patrick K. Gantert ("Gantert") Date: September 26, 2000

LACROSSE FOOTWEAR, INC. ("LaCrosse")
By /s/ George W. Schneider ----------------------------Date: September 26, 2000

claims under the Wisconsin Fair Employment Act, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act, and any other federal, state or local laws or regulations of any kind, whether statutory or decisional. If Gantert breaches his promise not to file, pursue or participate in any lawsuits of any kind against LaCrosse or any of the Released Parties, he will be liable to return to LaCrosse the consideration he received from it under this Agreement and to pay the reasonable attorneys' fees and costs that LaCrosse or any of the Released Parties incurs in having to defend itself against such released claims. Gantert acknowledges that he is entering into this Agreement voluntarily, that he has been given at least twentyone (21) days to consider this Agreement and that LaCrosse has advised him to consult with an attorney prior to signing this Agreement. For a period of seven (7) days following his signing of this Agreement, Gantert may revoke this Agreement by doing so in writing, and this Agreement will not become enforceable or effective until the revocation period has expired. This Agreement embodies the entire agreement between Gantert and LaCrosse with respect to Gantert's employment and resignation from employment with LaCrosse. This Agreement shall be governed by and construed in accordance with the internal law of the State of Wisconsin. If any portion of this Agreement is found to be unenforceable, the parties desire that all other portions that can be separated from it, or appropriately limited in scope, shall remain fully valid and -8-

enforceable. Gantert understands that this Agreement contains a final release and that he can make no further claim of any kind against LaCrosse or any of the other Released Parties arising out of actions occurring through the date he executes this Agreement. Gantert agrees that he is entering into this Agreement knowingly and voluntarily and without any coercion.
/s/ Patrick K. Gantert (SEAL) --------------------------------Patrick K. Gantert ("Gantert") Date: September 26, 2000

LACROSSE FOOTWEAR, INC. ("LaCrosse")
By /s/ George W. Schneider ----------------------------George W. Schneider Chairman of the Board Date: September 26, 2000

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SEVERANCE AGREEMENT AND RELEASE LaCrosse Footwear, Inc. ("LaCrosse") has eliminated the position of Executive Vice President/Chief Operating Officer effective December 2000. As a result of the elimination of this position, LaCrosse has terminated the employment of Mark E. Leopold ("Leopold") effective December 13, 2000. In consideration for this Severance Agreement and Release, LaCrosse agrees to provide Leopold with the salary continuation benefits as provided in LaCrosse's June 15, 1999 Final at Will Employment Offer ("June 15, 1999 Offer") to Leopold, the terms of which are incorporated into the Agreement by reference. The salary continuation benefits provided in the June 15, 1999 Offer will be calculated based on Leopold's annual salary of $182, 700; and the amount of gross incentive compensation payments provided for in the June 15, 1999 Offer will be calculated based on Leopold's most recent incentive compensation payment for 1999 of $28, 438. LaCrosse further agrees to continue to pay its share of Leopold's premium for coverage under its group health insurance plan through March 31, 2001, during which time Leopold must continue to pay his applicable employee co-pay premium. After March 31, 2001, Leopold may elect to continue his group health insurance coverage under federal law (COBRA). All other

enforceable. Gantert understands that this Agreement contains a final release and that he can make no further claim of any kind against LaCrosse or any of the other Released Parties arising out of actions occurring through the date he executes this Agreement. Gantert agrees that he is entering into this Agreement knowingly and voluntarily and without any coercion.
/s/ Patrick K. Gantert (SEAL) --------------------------------Patrick K. Gantert ("Gantert") Date: September 26, 2000

LACROSSE FOOTWEAR, INC. ("LaCrosse")
By /s/ George W. Schneider ----------------------------George W. Schneider Chairman of the Board Date: September 26, 2000

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SEVERANCE AGREEMENT AND RELEASE LaCrosse Footwear, Inc. ("LaCrosse") has eliminated the position of Executive Vice President/Chief Operating Officer effective December 2000. As a result of the elimination of this position, LaCrosse has terminated the employment of Mark E. Leopold ("Leopold") effective December 13, 2000. In consideration for this Severance Agreement and Release, LaCrosse agrees to provide Leopold with the salary continuation benefits as provided in LaCrosse's June 15, 1999 Final at Will Employment Offer ("June 15, 1999 Offer") to Leopold, the terms of which are incorporated into the Agreement by reference. The salary continuation benefits provided in the June 15, 1999 Offer will be calculated based on Leopold's annual salary of $182, 700; and the amount of gross incentive compensation payments provided for in the June 15, 1999 Offer will be calculated based on Leopold's most recent incentive compensation payment for 1999 of $28, 438. LaCrosse further agrees to continue to pay its share of Leopold's premium for coverage under its group health insurance plan through March 31, 2001, during which time Leopold must continue to pay his applicable employee co-pay premium. After March 31, 2001, Leopold may elect to continue his group health insurance coverage under federal law (COBRA). All other fringe benefits that LaCrosse provides to Leopold will cease as of his termination date. In further consideration for this Severance Agreement and Release, LaCrosse will allow Leopold to transfer to his ownership the $500,000 life insurance policy that LaCrosse has in place for Leopold if the life insurance carrier agrees to the transfer and if Leopold assumes the financial responsibility for paying the premiums for the policy. LaCrosse will also transfer ownership to Leopold of the laptop computer that Leopold used as a LaCrosse employee after LaCrosse has removed or deleted from the computer any of its own or licensed intellectual property as well as any of its confidential or privileged information. In addition, LaCrosse will provide Leopold with outplacement services from Thompson Consulting up to July 15, 2001, or from an outplacement service of Leopold's choice, in the maximum of $5,000. Thompson Consulting or the outplacement service chosen by Leopold will bill LaCrosse directly for such services. Because it is LaCrosse's policy not to offer cash in lieu of outplacement services, the cost of these services to LaCrosse will not be treated as income to Leopold. Further, LaCrosse agrees to pay Leopold three weeks of vacation pay for the year 2000 on the next payroll date after the expiration of the seven day revocation period referred to below. Finally, LaCrosse will pay Leopold a bonus for the year 2001, the final amount of which will be determined with LaCrosse's year-end results, and will pay Leopold a year 2000 incentive compensation payment by March 15, 2001. Leopold further understands and agrees that LaCrosse's promises to him are contingent on his returning to LaCrosse all outstanding LaCrosse property in his possession and on Leopold not saying anything derogatory about LaCrosse. In addition, LaCrosse's obligations under this agreement are contingent on Leopold maintaining the confidentiality of any LaCrosse information which constitutes trade secrets of LaCrosse protected under the Uniform Trade Secrets Act, state or common law, and are further contingent on Leopold keeping the promises he made to LaCrosse in the Agreement Relating to Technology, Confidential Information, and Competition that

SEVERANCE AGREEMENT AND RELEASE LaCrosse Footwear, Inc. ("LaCrosse") has eliminated the position of Executive Vice President/Chief Operating Officer effective December 2000. As a result of the elimination of this position, LaCrosse has terminated the employment of Mark E. Leopold ("Leopold") effective December 13, 2000. In consideration for this Severance Agreement and Release, LaCrosse agrees to provide Leopold with the salary continuation benefits as provided in LaCrosse's June 15, 1999 Final at Will Employment Offer ("June 15, 1999 Offer") to Leopold, the terms of which are incorporated into the Agreement by reference. The salary continuation benefits provided in the June 15, 1999 Offer will be calculated based on Leopold's annual salary of $182, 700; and the amount of gross incentive compensation payments provided for in the June 15, 1999 Offer will be calculated based on Leopold's most recent incentive compensation payment for 1999 of $28, 438. LaCrosse further agrees to continue to pay its share of Leopold's premium for coverage under its group health insurance plan through March 31, 2001, during which time Leopold must continue to pay his applicable employee co-pay premium. After March 31, 2001, Leopold may elect to continue his group health insurance coverage under federal law (COBRA). All other fringe benefits that LaCrosse provides to Leopold will cease as of his termination date. In further consideration for this Severance Agreement and Release, LaCrosse will allow Leopold to transfer to his ownership the $500,000 life insurance policy that LaCrosse has in place for Leopold if the life insurance carrier agrees to the transfer and if Leopold assumes the financial responsibility for paying the premiums for the policy. LaCrosse will also transfer ownership to Leopold of the laptop computer that Leopold used as a LaCrosse employee after LaCrosse has removed or deleted from the computer any of its own or licensed intellectual property as well as any of its confidential or privileged information. In addition, LaCrosse will provide Leopold with outplacement services from Thompson Consulting up to July 15, 2001, or from an outplacement service of Leopold's choice, in the maximum of $5,000. Thompson Consulting or the outplacement service chosen by Leopold will bill LaCrosse directly for such services. Because it is LaCrosse's policy not to offer cash in lieu of outplacement services, the cost of these services to LaCrosse will not be treated as income to Leopold. Further, LaCrosse agrees to pay Leopold three weeks of vacation pay for the year 2000 on the next payroll date after the expiration of the seven day revocation period referred to below. Finally, LaCrosse will pay Leopold a bonus for the year 2001, the final amount of which will be determined with LaCrosse's year-end results, and will pay Leopold a year 2000 incentive compensation payment by March 15, 2001. Leopold further understands and agrees that LaCrosse's promises to him are contingent on his returning to LaCrosse all outstanding LaCrosse property in his possession and on Leopold not saying anything derogatory about LaCrosse. In addition, LaCrosse's obligations under this agreement are contingent on Leopold maintaining the confidentiality of any LaCrosse information which constitutes trade secrets of LaCrosse protected under the Uniform Trade Secrets Act, state or common law, and are further contingent on Leopold keeping the promises he made to LaCrosse in the Agreement Relating to Technology, Confidential Information, and Competition that he signed on July 26, 1999, the terms of which are also incorporated into this Agreement by reference. Leopold promises not to apply for reemployment with LaCrosse or with any of its affiliated or related companies in the future.

Page Two Leopold Severance Agreement and Release If Leopold breaches any of the promises he makes in this paragraph or in the next paragraph, he will be required to return the above consideration to LaCrosse and will be responsible to pay LaCrosse's attorney's fees and costs that it incurs as a result of Leopold's breach of such promise or promises. In exchange for the promises LaCrosse makes above, Leopold agrees to release and waive any and all claims that he may have against LaCrosse, its successors, assigns, subsidiaries, affiliates and related companies, executors, agents, officers, or board of directors, employees and former employees relating to his employment or termination from employment at LaCrosse. Leopold understands and agrees that his release specifically includes, but is not limited to, claims pursuant to the Wisconsin Fair Employment Act, s 111.31 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S. C. 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. s 621 et seq., and any other federal, state or local laws.

Page Two Leopold Severance Agreement and Release If Leopold breaches any of the promises he makes in this paragraph or in the next paragraph, he will be required to return the above consideration to LaCrosse and will be responsible to pay LaCrosse's attorney's fees and costs that it incurs as a result of Leopold's breach of such promise or promises. In exchange for the promises LaCrosse makes above, Leopold agrees to release and waive any and all claims that he may have against LaCrosse, its successors, assigns, subsidiaries, affiliates and related companies, executors, agents, officers, or board of directors, employees and former employees relating to his employment or termination from employment at LaCrosse. Leopold understands and agrees that his release specifically includes, but is not limited to, claims pursuant to the Wisconsin Fair Employment Act, s 111.31 et seq., Title VII of the Civil Rights Act of 1964, 42 U.S. C. 2000e et seq., the Age Discrimination in Employment Act, 29 U.S.C. s 621 et seq., and any other federal, state or local laws. Leopold acknowledges that he was given a copy of the Severance Agreement and Release and was given up to 21 days to review it and consider whether to sign it and that he was encouraged by LaCrosse to consult an attorney during this 21-day period about this Severance Agreement and Release. Leopold further understands that for a period of seven (7) days following his execution of this writing and that the Severance Agreement and Release will not become enforceable or effective until the revocation period has expired. This means that LaCrosse's promises to Leopold under this Agreement do not become effective until this 7-day revocation period ends.
/s/ Mark E. Leopold ------------------------------------Mark E. Leopold 1/4/01 --------------------------Date

/s/ Joseph P. Schneider By ---------------------------------LACROSSE FOOTWEAR, INC.

2/2/01 --------------------------Date

2 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA Selected Income Statement Data Year Ended December 31
(In Thousands ) Net sales Operating income (loss) Net income (loss) 2000 $138,161 (2,126) (4,769) 1999 $124,328 (2,208) (2,637) 1998 $133,405 5,598 2,260 1997 $145,503 13,156 6,779 1996 $121,997 10,088 5,386

Selected Balance Sheet Data Year Ended December 31 (In Thousands ) Working capital Total assets Long-term obligations (including current portion) Shareholders' equity

2000 $ 27,760 97,598 10,406 49,494

1999 $ 40,792 98,020 12,414 56,388

1998 $ 44,801 98,615 12,496 63,035

1997 $ 48,413 101,920 15,848 61,848

1996 $ 46,811 92,286 17,853 55,936

Selected Share Data Year Ended December 31 2000 Basic earnings (loss) per share 1999 1998 1997 1996

$

(.80)

$

(.41)

$

.34

$

1.02

$

.80

2 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA Selected Income Statement Data Year Ended December 31
(In Thousands ) Net sales Operating income (loss) Net income (loss) 2000 $138,161 (2,126) (4,769) 1999 $124,328 (2,208) (2,637) 1998 $133,405 5,598 2,260 1997 $145,503 13,156 6,779 1996 $121,997 10,088 5,386

Selected Balance Sheet Data Year Ended December 31 (In Thousands ) Working capital Total assets Long-term obligations (including current portion) Shareholders' equity

2000 $ 27,760 97,598 10,406 49,494

1999 $ 40,792 98,020 12,414 56,388

1998 $ 44,801 98,615 12,496 63,035

1997 $ 48,413 101,920 15,848 61,848

1996 $ 46,811 92,286 17,853 55,936

Selected Share Data Year Ended December 31 2000 Basic earnings (loss) per share Diluted earnings (loss) per share Dividends per share Shares share Shares share used in basic per calculation (000's) used in diluted per calculation (000's) 1999 1998 1997 1996

$ $ $

(.80) (.80) --

$ $ $

(.41) (.41) (.13)

$ $ $

.34 .34 .13

$ $ $

1.02 1.01 9.13

$ $ $

.80 .80 .11

5,974 5,974

6,465 6,465

6,662 6,676

6,668 6,713

6,668 6,674

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 3 AND RESULTS OF OPERATIONS Forward-Looking Statements Certain matters discussed below in this 2000 Annual Report (and, thereby, the 2000 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 Inventory levels required for sourced product o Lead times (or delays) for sourced product o Limited ability to resupply customer for fill-in orders for sourced product Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 3 AND RESULTS OF OPERATIONS Forward-Looking Statements Certain matters discussed below in this 2000 Annual Report (and, thereby, the 2000 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 Inventory levels required for sourced product o Lead times (or delays) for sourced product o Limited ability to resupply customer for fill-in orders for sourced product 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 2000 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-dependent 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. 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 product offerings under the LaCrosse brand. 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 during the fourth quarter, 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 assist in product sourcing and 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 advance orders. The Company offers price discounts for orders placed prior to June, although advance orders may be canceled at any time. In an 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 peak during the fourth quarter. The Company is shifting its leather and rubber footwear production to contract offshore facilities. In 2001, the Company expects to outsource over 60% of the products it sells. 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 four to six 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.

4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 (Decrease) 2000 1999 vs. 1999 vs. 1998 11% 10 16 14 4 48 (31) (46) (81)% (7)% (4) (16) 8 (2) (76) -

Year Ended December 31 Net sales Cost of goods sold Gross profit Selling and administrative expenses Operating income (loss) Interest expense Other income (expense) Income (loss) before income taxes Income taxes Net income (loss)

2000 100.0% 75.6 24.4 (25.9) (1.5) (2.4) (.2) (4.1) .6 (3.5)%

1999 100.0% 76.5 23.5 (25.3) (1.8) (1.8) .1 (3.5) 1.4 (2.1)%

1998 100.0% 74.1 25.9 (21.7) 4.2 (1.7) .3 2.8 (1.1) 1.7%

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999 Net Sales. Net sales in 2000 increased $13.9 million, or 11%, to $138.2 million from $124.3 million in 1999. The increase in net sales was driven by increases in Danner brand sales, LaCrosse brand sales and sales into the Industrial channel of distribution, with successful new product introductions and more favorable weather conditions contributing to the increase. Sales of Danner products were up 14% for the year, due largely to the success of the new Radical outdoor cross training product. Sales through the Retail channel of distribution were up 6% during the year with increased sales of LaCrosse brand leather boots and children's boots partially offset by a decline in shipments of traditional rubber footwear. Increased shipments of closeout merchandise also contributed to the increase. Sales through the Industrial channel of distribution were up 17% for the year with newly introduced products and increased placement of products at existing national accounts driving the increase. Gross Profit. Gross profit as a percentage of net sales increased to 24.4% in 2000 from 23.5% in 1999. The increase in gross margin as a percentage of net sales was driven by an increase in margin percentages for Danner brand shipments (driven by improved margins on sourced products), higher margins for product distributed in the Retail channel of distribution (largely due to improved margins on sourced items), and a net positive impact of $1.1 million due to a reduction in the LIFO inventory reserve. Offsetting the margin increases in the Retail channel, the Company incurred charges in 2000 for labor inefficiencies, severance costs and a $1.0 million charge for partial curtailment of the union pension plan as the Company reduced employment at its La Crosse, Wisconsin manufacturing facility. In addition, costs were incurred related to raw materials and component parts which were no longer required for domestic manufacturing. In 1999, the Company incurred a $1.8 million charge related to product line reductions. Selling and Administrative Expenses. Selling and administrative expenses increased $4.5 million, or 14%, in 2000 as compared to 1999. The increase in selling and administrative expenses was driven by the continued commitment to brand marketing for the LaCrosse and Danner brands, increased product development spending in support of the transition of products to an outsourced status, increased distribution expenses (partially as a

4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 (Decrease) 2000 1999 vs. 1999 vs. 1998 11% 10 16 14 4 48 (31) (46) (81)% (7)% (4) (16) 8 (2) (76) -

Year Ended December 31 Net sales Cost of goods sold Gross profit Selling and administrative expenses Operating income (loss) Interest expense Other income (expense) Income (loss) before income taxes Income taxes Net income (loss)

2000 100.0% 75.6 24.4 (25.9) (1.5) (2.4) (.2) (4.1) .6 (3.5)%

1999 100.0% 76.5 23.5 (25.3) (1.8) (1.8) .1 (3.5) 1.4 (2.1)%

1998 100.0% 74.1 25.9 (21.7) 4.2 (1.7) .3 2.8 (1.1) 1.7%

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999 Net Sales. Net sales in 2000 increased $13.9 million, or 11%, to $138.2 million from $124.3 million in 1999. The increase in net sales was driven by increases in Danner brand sales, LaCrosse brand sales and sales into the Industrial channel of distribution, with successful new product introductions and more favorable weather conditions contributing to the increase. Sales of Danner products were up 14% for the year, due largely to the success of the new Radical outdoor cross training product. Sales through the Retail channel of distribution were up 6% during the year with increased sales of LaCrosse brand leather boots and children's boots partially offset by a decline in shipments of traditional rubber footwear. Increased shipments of closeout merchandise also contributed to the increase. Sales through the Industrial channel of distribution were up 17% for the year with newly introduced products and increased placement of products at existing national accounts driving the increase. Gross Profit. Gross profit as a percentage of net sales increased to 24.4% in 2000 from 23.5% in 1999. The increase in gross margin as a percentage of net sales was driven by an increase in margin percentages for Danner brand shipments (driven by improved margins on sourced products), higher margins for product distributed in the Retail channel of distribution (largely due to improved margins on sourced items), and a net positive impact of $1.1 million due to a reduction in the LIFO inventory reserve. Offsetting the margin increases in the Retail channel, the Company incurred charges in 2000 for labor inefficiencies, severance costs and a $1.0 million charge for partial curtailment of the union pension plan as the Company reduced employment at its La Crosse, Wisconsin manufacturing facility. In addition, costs were incurred related to raw materials and component parts which were no longer required for domestic manufacturing. In 1999, the Company incurred a $1.8 million charge related to product line reductions. Selling and Administrative Expenses. Selling and administrative expenses increased $4.5 million, or 14%, in 2000 as compared to 1999. The increase in selling and administrative expenses was driven by the continued commitment to brand marketing for the LaCrosse and Danner brands, increased product development spending in support of the transition of products to an outsourced status, increased distribution expenses (partially as a result of increased volume and systems inefficiencies), increased information technology spending in support of the installation of the Enterprise Resource Planning System, increased selling expenses primarily due to the increased volume and an increase in severance-related expenses (including amounts related to the downsizing of domestic manufacturing). Interest Expense. Interest expense increased $1.0 million, or 48.0%, in 2000 as compared to 1999. The increase in interest expense was the result of higher interest rates (driven by higher market rates and higher rates pursuant

to an amended credit agreement entered into in March 2000) and higher average borrowings, primarily due to stock repurchases during 1999 and 2000 and higher levels of finished goods inventory. Income Tax Expense. The Company's effective income tax rate in 2000 was 16.0%, compared to 39.0% in 1999. The Company utilized all available tax loss carrybacks in 2000. In future years, the Company will be able to utilize the tax loss carryforward generated in 2000 against taxable income.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5 AND RESULTS OF OPERATIONS 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 anticipates 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. 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 management's 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 Information technology support for the implementation of a new Enterprise Resource Planning System). 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. 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.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5 AND RESULTS OF OPERATIONS 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 anticipates 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. 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 management's 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 Information technology support for the implementation of a new Enterprise Resource Planning System). 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. 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 credit agreement with Firstar Bank, N.A. as the lead bank. Under the terms of the revised agreement, the maximum amount of borrowings was increased to $75.0 million, including a $12.5 million term loan, from the previous maximum level of $62.5 million. The May 1999 term loan is due May 28, 2004 and calls for quarterly payments of $.4 million commencing in August 1999. At the Company's option, the interest rate on the revolving portion of the loan is either prime rate or LIBOR (for the applicable loan period) plus 1.5%. The rate for the term loan is .375% higher than the revolving loans. In October 2000, the amount available under the revolving portion of the loan was reduced by $10.0 million to $52.5 million.

At December 31, 1999, the Company did not meet the interest coverage ratio contained in its credit agreement. In March 2000, the Company and Firstar entered into an amendment to the credit agreement which changed certain financial covenants, changed the loan from unsecured to secured, increased the interest rate on LIBORbased loans by .75% and provided a waiver of the December 31, 1999 covenant violation. At September 30, 2000, the Company did not meet the interest coverage ratio contained in the credit agreement. In November 2000, the Company received a waiver of the September 30, 2000 violation. As part of receiving this waiver, the Company was required to pay a waiver fee of .1% of the loan commitment. At December 31, 2000, the Company was in violation of certain of the financial covenants under the credit agreement and as a result, the debt has been classified as a current liability in the financial statements. As a result of the violation, the Company plans to refinance its revolving line of credit with one or more asset-based lenders and to reduce and restructure the term loan with Firstar Bank, N.A. The Company currently expects these new credit facilities to be in place by early May, 2001 and be sufficient to enable the Company to execute its strategic plan.

6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cash used in operations in 2000 amounted to $1.8 million compared to cash generated by operations of $4.2 million in 1999. A $2.1 million increase in the net loss reported in 2000 (compared to 1999) coupled with a $6.4 million increase in accounts receivable (compared to a $2.7 million decrease in 1999) were the primary reasons for the usage of cash in 2000 as compared to generating cash in 1999. A decrease in inventories and an increase in accrued expenses partially offset this usage of cash. In 1999, cash generated by operations 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 decrease 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. Net cash used in investing activities during 2000 was $2.3 million, down from $4.2 million in 1999. During 2000, the Company spent $3.3 million on capital spending as compared to $2.5 million in 1999. The increase was largely driven by technology-related expenditures. This increase was more than offset by proceeds of $1.0 million from the sale of property and equipment, the majority of which was from the sale of the Clintonville, Wisconsin manufacturing facility. The 1999 spending on investing activities included a one-time payment of $1.1 million to the former shareholders of Danner to satisfy a guarantee agreement. It is anticipated that capital expenditures in 2001 will be about the same level as in 2000. During 1999, net cash used in investing activities 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. 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. Net cash provided by financing activities was $2.0 million in 2000 as compared to $1.6 million in 1999. During 2000, $6.7 million of short-term borrowings were used to purchase treasury stock ($2.1 million), repay longterm debt ($1.7 million) and pay cash dividends ($.8 million). In 1999, net cash provided by financing activities was $1.6 million 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 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 total cost of $587,000. In April 1999, in a separate private transaction, the Company repurchased 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.

6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cash used in operations in 2000 amounted to $1.8 million compared to cash generated by operations of $4.2 million in 1999. A $2.1 million increase in the net loss reported in 2000 (compared to 1999) coupled with a $6.4 million increase in accounts receivable (compared to a $2.7 million decrease in 1999) were the primary reasons for the usage of cash in 2000 as compared to generating cash in 1999. A decrease in inventories and an increase in accrued expenses partially offset this usage of cash. In 1999, cash generated by operations 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 decrease 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. Net cash used in investing activities during 2000 was $2.3 million, down from $4.2 million in 1999. During 2000, the Company spent $3.3 million on capital spending as compared to $2.5 million in 1999. The increase was largely driven by technology-related expenditures. This increase was more than offset by proceeds of $1.0 million from the sale of property and equipment, the majority of which was from the sale of the Clintonville, Wisconsin manufacturing facility. The 1999 spending on investing activities included a one-time payment of $1.1 million to the former shareholders of Danner to satisfy a guarantee agreement. It is anticipated that capital expenditures in 2001 will be about the same level as in 2000. During 1999, net cash used in investing activities 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. 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. Net cash provided by financing activities was $2.0 million in 2000 as compared to $1.6 million in 1999. During 2000, $6.7 million of short-term borrowings were used to purchase treasury stock ($2.1 million), repay longterm debt ($1.7 million) and pay cash dividends ($.8 million). In 1999, net cash provided by financing activities was $1.6 million 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 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 total cost of $587,000. In April 1999, in a separate private transaction, the Company repurchased 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. The Company's debt to total capital ratio was 38.7% at December 31, 2000, 32.0% at December 31, 1999 and 25.9% at December 31, 1998. Recently Issued Accounting Pronouncements The Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 on Revenue Recognition (SAB 101) in December of 1999. SAB 101 was effective for the Company in the fourth quarter of 2000. SAB 101 provides further guidance on revenue recognition and establishes criteria that must be met to recognize revenue. In addition, the SAB addresses whether revenue should be presented gross or net and provides guidance on the disclosures registrants should make about their revenue recognition policies and the impact of events and trends on revenue. Management believes that the adoption of SAB 101 has had no significant effect on the Company's consolidated financial statements. In June 1998, the Financial Accounting Standards Board issued Statement No. 133, Accounting for Derivative

Instruments and Hedging Activities, as amended, which was required to be adopted as of January 1, 2001. Because of the Company's minimal use of derivatives, it is not anticipated that the adoption of the new Statement will have a significant effect on the Company's results of operations or financial condition.

LACROSSE FOOTWEAR FINANCIAL STATEMENTS Consolidated Balance Sheets December 31, 2000 and 1999 (In Thousands, except for share data) Assets (Note 5) 2000 1999 -----------------------------------------------------------------------------Current Assets -----------------------------------------------------------------------------Cash and cash equivalents $ 11 $ 2,022 Trade accounts receivable, less allowances of $1.0 and $.9 million 26,820 20,445 Inventories (Note 3) 38,564 40,337 Prepaid expenses, deferred tax assets and other (Note 4) 4,852 5,725 -----------------------------Total current assets 70,247 68,529 Property and Equipment -----------------------------------------------------------------------------Land, land improvements and buildings 6,998 8,319 Machinery and equipment 33,138 31,478 -----------------------------40,136 39,797 Less accumulated depreciation 28,849 26,986 -----------------------------11,287 12,811 Other Assets -----------------------------------------------------------------------------Goodwill, net of amortization of $4.0 and $3.3 million (Note 2) 12,765 13,446 Deferred tax and other assets (Note 4) 3,299 3,234 -----------------------------16,064 16,680 -----------------------------$97,598 $98,020 Liabilities and Shareholders' Equity 2000 1999 -----------------------------------------------------------------------------Current Liabilities -----------------------------------------------------------------------------Current maturities of long-term obligations (Note 5) $10,217 $1,712 Notes payable, bank (Note 5) 20,840 14,088 Accounts payable 6,313 5,910 Accrued compensation 3,081 2,383 Accrued other 2,036 3,644 -----------------------------------------------------------------------------Total current liabilities 42,487 27,737 Long-Term Obligations (Note 5) 189 10,702 -----------------------------------------------------------------------------Compensation and Benefits (Note 8) Commitments (Notes 6, 7 and 8) Shareholders' Equity (Note 7) -----------------------------------------------------------------------------Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares 67 67 Additional paid-in capital 26,434 26,434 Retained earnings 27,806 32,575 5,428 3,193

7

LACROSSE FOOTWEAR FINANCIAL STATEMENTS Consolidated Balance Sheets December 31, 2000 and 1999 (In Thousands, except for share data) Assets (Note 5) 2000 1999 -----------------------------------------------------------------------------Current Assets -----------------------------------------------------------------------------Cash and cash equivalents $ 11 $ 2,022 Trade accounts receivable, less allowances of $1.0 and $.9 million 26,820 20,445 Inventories (Note 3) 38,564 40,337 Prepaid expenses, deferred tax assets and other (Note 4) 4,852 5,725 -----------------------------Total current assets 70,247 68,529 Property and Equipment -----------------------------------------------------------------------------Land, land improvements and buildings 6,998 8,319 Machinery and equipment 33,138 31,478 -----------------------------40,136 39,797 Less accumulated depreciation 28,849 26,986 -----------------------------11,287 12,811 Other Assets -----------------------------------------------------------------------------Goodwill, net of amortization of $4.0 and $3.3 million (Note 2) 12,765 13,446 Deferred tax and other assets (Note 4) 3,299 3,234 -----------------------------16,064 16,680 -----------------------------$97,598 $98,020 Liabilities and Shareholders' Equity 2000 1999 -----------------------------------------------------------------------------Current Liabilities -----------------------------------------------------------------------------Current maturities of long-term obligations (Note 5) $10,217 $1,712 Notes payable, bank (Note 5) 20,840 14,088 Accounts payable 6,313 5,910 Accrued compensation 3,081 2,383 Accrued other 2,036 3,644 -----------------------------------------------------------------------------Total current liabilities 42,487 27,737 Long-Term Obligations (Note 5) 189 10,702 -----------------------------------------------------------------------------Compensation and Benefits (Note 8) Commitments (Notes 6, 7 and 8) Shareholders' Equity (Note 7) -----------------------------------------------------------------------------Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares 67 67 Additional paid-in capital 26,434 26,434 Retained earnings 27,806 32,575 Less cost of 843,178 and 343,178 shares of treasury stock (4,813) (2,688) -----------------------------------------------------------------------------Total shareholders' equity 49,494 56,388 -----------------------------$97,598 $98,020 5,428 3,193

7

See Notes to Consolidated Financial Statements.

8 LACROSSE FOOTWEAR FINANCIAL STATEMENTS Consolidated Statements of Operations Years Ended December 31, 2000, 1999 and 1998 (In Thousands, except for share and per share data)
2000 1999 1998 -------------------------------------------------------------------------------Net sales $138,161 $124,328 $133,405 Cost of goods sold 104,413 95,129 98,829 --------------------------------------Gross profit 33,748 29,199 34,576 -------------------------------------------------------------------------------Selling and administrative expenses 35,874 31,407 28,978 --------------------------------------Operating income (loss) (2,126) (2,208) 5,598 Non-operating income (expense): Interest expense (3,246) (2,208) (2,263) Miscellaneous (303) 92 381 --------------------------------------(3,549) (2,116) (1,882) Income (loss) before income taxes (benefit) (5,675) (4,324) 3,716 -------------------------------------------------------------------------------Provision for income taxes (benefit) (Note 4) (906) (1,687) 1,456 --------------------------------------Net income (loss) Basic earnings (loss) per share Diluted earnings (loss) per share Weighted average shares outstanding: Basic earnings per share Diluted earnings per share $ (4,769) $ (.80) $ (.80) $ (2,637) $ (.41) $ (.41) $ $ $ 2,260 .34 .34

5,974,176 5,974,176

6,464,685 6,464,685

6,661,683 6,675,708

Consolidated Statements of Shareholders' Equity Years Ended December 31, 2000, 1999 and 1998 (In Thousands, except for share and per share data) Additional Total Common Paid-In Retained Treasury Shareholders' Stock Capital Earnings Stock Equity Balance, December 31, 1997 $67 $27,579 $34,645 $ (443) $61,848 Net income 2,260 2,260 Dividends ($.13 per share) (864) (864) Purchase of 25,000 shares of treasury stock (227) (227) Issuance of 1,700 shares of treasury stock 3 15 18 ------------------------------------------------------------Balance, December 31, 1998 67 27,582 36,041 (655) 63,035 Net (loss) (2,637) (2,637) Dividends ($.13 per share) (829) (829) Purchase of 269,978 shares of treasury stock (2,033) (2,033) Settlement of Danner acquisition contingency (1,148) (1,148) ------------------------------------------------------------Balance, December 31, 1999 67 26,434 32,575 (2,688) 56,388 Net (loss) (4,769) (4,769) Purchase of 500,000 shares of treasury stock (2,125) (2,125) -------------------------------------------------------------

8 LACROSSE FOOTWEAR FINANCIAL STATEMENTS Consolidated Statements of Operations Years Ended December 31, 2000, 1999 and 1998 (In Thousands, except for share and per share data)
2000 1999 1998 -------------------------------------------------------------------------------Net sales $138,161 $124,328 $133,405 Cost of goods sold 104,413 95,129 98,829 --------------------------------------Gross profit 33,748 29,199 34,576 -------------------------------------------------------------------------------Selling and administrative expenses 35,874 31,407 28,978 --------------------------------------Operating income (loss) (2,126) (2,208) 5,598 Non-operating income (expense): Interest expense (3,246) (2,208) (2,263) Miscellaneous (303) 92 381 --------------------------------------(3,549) (2,116) (1,882) Income (loss) before income taxes (benefit) (5,675) (4,324) 3,716 -------------------------------------------------------------------------------Provision for income taxes (benefit) (Note 4) (906) (1,687) 1,456 --------------------------------------Net income (loss) Basic earnings (loss) per share Diluted earnings (loss) per share Weighted average shares outstanding: Basic earnings per share Diluted earnings per share $ (4,769) $ (.80) $ (.80) $ (2,637) $ (.41) $ (.41) $ $ $ 2,260 .34 .34

5,974,176 5,974,176

6,464,685 6,464,685

6,661,683 6,675,708

Consolidated Statements of Shareholders' Equity Years Ended December 31, 2000, 1999 and 1998 (In Thousands, except for share and per share data) Additional Total Common Paid-In Retained Treasury Shareholders' Stock Capital Earnings Stock Equity Balance, December 31, 1997 $67 $27,579 $34,645 $ (443) $61,848 Net income 2,260 2,260 Dividends ($.13 per share) (864) (864) Purchase of 25,000 shares of treasury stock (227) (227) Issuance of 1,700 shares of treasury stock 3 15 18 ------------------------------------------------------------Balance, December 31, 1998 67 27,582 36,041 (655) 63,035 Net (loss) (2,637) (2,637) Dividends ($.13 per share) (829) (829) Purchase of 269,978 shares of treasury stock (2,033) (2,033) Settlement of Danner acquisition contingency (1,148) (1,148) ------------------------------------------------------------Balance, December 31, 1999 67 26,434 32,575 (2,688) 56,388 Net (loss) (4,769) (4,769) Purchase of 500,000 shares of treasury stock (2,125) (2,125) ------------------------------------------------------------Balance, December 31, 2000 $67 $26,434 $27,806 $(4,813) $49,494

See Notes to Consolidated Financial Statements.

LACROSSE FOOTWEAR FINANCIAL STATEMENTS 9 Consolidated Statements of Cash Flows Years Ended December 31, 2000, 1999 and 1998 (In Thousands)
2000 1999 1998 -------------------------------------------------------------------------------Cash Flows from Operating Activities Net income (loss) $(4,769) $(2,637) $2,260 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 3,310 3,660 3,437 Amortization 681 679 680 Other 692 154 126 Deferred income taxes (725) 207 Change in assets and liabilities: Trade accounts receivable (6,375) 2,706 4,239 Inventories 1,773 (639) (625) Accounts payable 403 2,441 (2,916) Accrued expenses and other 2,518 (1,405) (1,900) -------------------------------------------------------------------------------Net cash provided by (used in) operating activities (1,767) 4,234 5,508 Cash Flows from Investing Activities Settlement of Danner acquisition contingency (1,148) Purchase of the minority interest in Rainfair, Inc. (2,365) Purchase of property and equipment (3,269) (2,513) (4,288) Proceeds from sale of property and equipment 1,035 31 72 Other (96) (538) (61) -------------------------------------------------------------------------------Net cash (used in) investing activities (2,330) (4,168) (6,642) Cash Flows from Financing Activities Proceeds from long-term obligations 12,755 Principal payments on long-term obligations (1,712) (12,837) (3,352) Net proceeds from short-term borrowings 6,752 4,588 5,500 Cash dividends paid (829) (864) (867) Purchase of treasury stock (2,125) (2,033) (209) Other (17) -------------------------------------------------------------------------------Net cash provided by financing activities 2,086 1,592 1,072 Increase (decrease) in cash and cash equivalents Cash and cash equivalents: Beginning Ending Supplemental Information Cash payments (refunds) for: Interest Income taxes

(2,011)

1,658

(62)

2,022 364 426 -------------------------------------$11 $2,022 $364

$3,141 $ (913)

$2,032 $ 610

$2,178 $2,101

See Notes to Consolidated Financial Statements.

LACROSSE FOOTWEAR FINANCIAL STATEMENTS 9 Consolidated Statements of Cash Flows Years Ended December 31, 2000, 1999 and 1998 (In Thousands)
2000 1999 1998 -------------------------------------------------------------------------------Cash Flows from Operating Activities Net income (loss) $(4,769) $(2,637) $2,260 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 3,310 3,660 3,437 Amortization 681 679 680 Other 692 154 126 Deferred income taxes (725) 207 Change in assets and liabilities: Trade accounts receivable (6,375) 2,706 4,239 Inventories 1,773 (639) (625) Accounts payable 403 2,441 (2,916) Accrued expenses and other 2,518 (1,405) (1,900) -------------------------------------------------------------------------------Net cash provided by (used in) operating activities (1,767) 4,234 5,508 Cash Flows from Investing Activities Settlement of Danner acquisition contingency (1,148) Purchase of the minority interest in Rainfair, Inc. (2,365) Purchase of property and equipment (3,269) (2,513) (4,288) Proceeds from sale of property and equipment 1,035 31 72 Other (96) (538) (61) -------------------------------------------------------------------------------Net cash (used in) investing activities (2,330) (4,168) (6,642) Cash Flows from Financing Activities Proceeds from long-term obligations 12,755 Principal payments on long-term obligations (1,712) (12,837) (3,352) Net proceeds from short-term borrowings 6,752 4,588 5,500 Cash dividends paid (829) (864) (867) Purchase of treasury stock (2,125) (2,033) (209) Other (17) -------------------------------------------------------------------------------Net cash provided by financing activities 2,086 1,592 1,072 Increase (decrease) in cash and cash equivalents Cash and cash equivalents: Beginning Ending Supplemental Information Cash payments (refunds) for: Interest Income taxes

(2,011)

1,658

(62)

2,022 364 426 -------------------------------------$11 $2,022 $364

$3,141 $ (913)

$2,032 $ 610

$2,178 $2,101

See Notes to Consolidated Financial Statements.

10 NOTE 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 consolidated financial statements include the accounts of LaCrosse Footwear, Inc. and its wholly owned subsidiaries (the "Company"). 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. Significant items subject to estimates and assumptions include valuation allowances for inventories and deferred tax assets. 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. Concentrations of suppliers A significant portion of the Company's products are outsourced to foreign suppliers. Approximately 50% of the Company's sales in 2000 were of outsourced products. The Company is not aware of any matters that would affect its ability to outsource its products and does not believe it is dependent on any one supplier. 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, leather boots, leather boot components and rainwear, are valued using the last-in, first-out (LIFO) method. Vinyl products, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11 Note 1. Nature of Business and Significant Accounting Policies (continued) 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. 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. Amounts billed to customers relating to shipping and handling are classified as revenue. Costs incurred by the Company for shipping and handling are classified as cost of goods sold. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 on Revenue Recognition (SAB 101) in December of 1999. SAB 101 was effective for the Company in the fourth quarter of 2000. SAB 101 provides further guidance on revenue recognition and establishes criteria that must be met to recognize revenue. In addition, the SAB addresses whether revenue should be presented gross or net and provides guidance on the disclosures registrants should make about their revenue recognition policies and the impact of events and trends on revenue. The accompanying consolidated financial statements comply with the provisions of SAB 101. 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, and 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, 2000, 1999 and 1998 is approximately $3.3, $2.8, and $2.9 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11 Note 1. Nature of Business and Significant Accounting Policies (continued) 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. 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. Amounts billed to customers relating to shipping and handling are classified as revenue. Costs incurred by the Company for shipping and handling are classified as cost of goods sold. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 on Revenue Recognition (SAB 101) in December of 1999. SAB 101 was effective for the Company in the fourth quarter of 2000. SAB 101 provides further guidance on revenue recognition and establishes criteria that must be met to recognize revenue. In addition, the SAB addresses whether revenue should be presented gross or net and provides guidance on the disclosures registrants should make about their revenue recognition policies and the impact of events and trends on revenue. The accompanying consolidated financial statements comply with the provisions of SAB 101. 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, and 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, 2000, 1999 and 1998 is approximately $3.3, $2.8, and $2.9 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 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.

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Business and Significant Accounting Policies (continued) 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, 0 shares, and 14,025 shares for the years ended December 31, 2000, 1999 and 1998, respectively. Options to purchase shares of common stock were not included in the computation of diluted earnings per share in 2000 and 1999 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. Acquisition In January 1998, the Company purchased all Rainfair, Inc. common stock held by the former principal owner for approximately $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:
(In Thousands) December 31, 2000 1999 ---------------------------------------------Finished goods $33,638 $32,487 Work in process 1,046 1,496 Raw materials 3,880 6,354 ---------------------------------------------Total inventories $38,564 $40,337

If all inventories were valued on the FIFO method, total inventories for 2000 and 1999 would have been $40.7 and $43.8 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13 Note 4. Income Tax Matters Net deferred tax assets and liabilities consist of the following components:
(In Thousands) December 31, 2000 1999 -----------------------------------------------------------------Deferred tax assets:

12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Business and Significant Accounting Policies (continued) 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, 0 shares, and 14,025 shares for the years ended December 31, 2000, 1999 and 1998, respectively. Options to purchase shares of common stock were not included in the computation of diluted earnings per share in 2000 and 1999 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. Acquisition In January 1998, the Company purchased all Rainfair, Inc. common stock held by the former principal owner for approximately $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:
(In Thousands) December 31, 2000 1999 ---------------------------------------------Finished goods $33,638 $32,487 Work in process 1,046 1,496 Raw materials 3,880 6,354 ---------------------------------------------Total inventories $38,564 $40,337

If all inventories were valued on the FIFO method, total inventories for 2000 and 1999 would have been $40.7 and $43.8 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13 Note 4. Income Tax Matters Net deferred tax assets and liabilities consist of the following components:
(In Thousands) December 31, 2000 1999 -----------------------------------------------------------------Deferred tax assets: Receivable allowances $387 $322 Inventory differences 953 1,024 Compensation and benefits 2,598 2,055 Insurance reserves and other 777 713 Net operating loss carryforwards 878 Valuation allowance (1,290) -

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13 Note 4. Income Tax Matters Net deferred tax assets and liabilities consist of the following components:
(In Thousands) December 31, 2000 1999 -----------------------------------------------------------------Deferred tax assets: Receivable allowances $387 $322 Inventory differences 953 1,024 Compensation and benefits 2,598 2,055 Insurance reserves and other 777 713 Net operating loss carryforwards 878 Valuation allowance (1,290) -----------------------4,303 4,114 Deferred tax liabilities, principally intangibles 1,168 979 -----------------------$3,135 $3,135

At December 31, 2000 the Company has a valuation allowance of approximately $1.3 million to reduce its deferred tax assets to estimated realizable value. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the temporary differences are anticipated to reverse, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the valuation allowance at December 31, 2000. However, the amount of the deferred tax assets considered realizable could be adjusted in the future if estimates of taxable income are revised. The components giving rise to the net deferred tax assets described above have been included in the accompanying consolidated balance sheets as follows:
(In Thousands) December 31, 2000 1999 ----------------------------------------------------Current assets $2,460 $2,747 Noncurrent assets 675 388 -----------------------$3,135 $3,135

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4. Income Tax Matters (continued) The provision for income taxes (benefit) consists of the following:
(In Thousands) Years Ending December 31, 2000 1999 1998 -----------------------------------------------------Current: Federal $(957) $(820) $892 State 51 (142) 357 Deferred (725) 207 --------------------------------$(906) $(1,687) $1,456

14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4. Income Tax Matters (continued) The provision for income taxes (benefit) consists of the following:
(In Thousands) Years Ending December 31, 2000 1999 1998 -----------------------------------------------------Current: Federal $(957) $(820) $892 State 51 (142) 357 Deferred (725) 207 --------------------------------$(906) $(1,687) $1,456

The differences between statutory federal tax rates and the effective tax rates are as follows:
Years Ending December 31, 2000 1999 1998 ----------------------------------------------------------Statutory federal tax rate (35.0)% (35.0)% 35.0% State taxes, net of federal tax benefit and other (3.7) (4.0) 4.2 Valuation allowance 22.7 Effective tax rate (16.0)% (39.0)% 39.2%

At December 31, 2000, the Company has a federal net operating loss carryforward of approximately $1.5 million which will expire in the year 2015. In addition, the Company has state net operating loss carryforwards of approximately $6.2 million which will expire as follows: $1.9 million in the year 2014 and $4.3 million in the year 2015. Note 5. Financing Arrangements Credit agreement The Company has a secured credit agreement, under which it has (1) a revolving line of credit with a borrowing limit equal to the lesser of $52,500,000 or the sum of 80% of qualified receivables and 50% of qualified inventory and (2) a $12.5 million term loan. The revolving line of credit expires on May 28, 2002 and the term loan is due May 28, 2004. The agreement is primarily secured by accounts receivable, inventory and equipment. At the Company's option, the interest rate is either the prime rate or Eurodollar rate plus 1.50% for the revolving line of credit and Eurodollar rate plus 1.875% for the term loan. Interest is payable monthly on prime rate loans and at maturity on Eurodollar loans. At December 31, 2000 and 1999, there was $20.8 million and $14.1 million, respectively, outstanding under the revolving line of credit. In addition, at December 31, 2000 and 1999, there were letter of credit commitments outstanding of $2.3 million and $3.3 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, 2000, 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, 2000 and 1999 totaled $19.9 million and $14.8 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 15 Note 5. Financing Arrangements (continued) Credit agreement (continued) 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, 2000, the Company did not meet the net worth and interest coverage ratios and did not obtain a waiver. As a result, the $10.1 million term loan has been classified as a current liability. The Company plans to refinance its revolving line of credit with a group of asset-based lenders and to reduce and restructure its term loan. Management believes that new credit facilities will be in place before the end of the second quarter of 2001. In addition, management believes that the new financing will be adequate to meet the Company's needs for the foreseeable future. Long-term obligations
(In Thousands) December 31, 2000 1999 ---------------------------------------------------------------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 $10,100 $11,700 Other 306 714 ----------------------------10,406 12,414 Less current maturities 10,217 1,712 ----------------------------$189 $10,702

Maturities of long-term obligations for the next five years are as follows (in thousands): 2001, $10,217; 2002, $32; 2003, $34; 2004, $37; 2005, $41; and $45 thereafter. 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, 2000, 1999 and 1998 is approximately $1.9, $1.8, and $1.9 million, respectively. Approximate future minimum lease payments of $7.7 million are due as follows (in millions): 2001, $1.9; 2002, $1.7; 2003, $.9; 2004, $.8; 2005, $.8 and $1.6 thereafter. Note 7. 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.

16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Stock Options (continued) The following summarizes all stock options granted under the plans:
Common Weighted Average

16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Stock Options (continued) The following summarizes all stock options granted under the plans:
Common Weighted Average Shares Exercise Price ----------------------------------268,225 $11.26 58,563 13.84 (23,275) 12.10 (1,700) 9.88 ----------------------------------301,813 11.70 116,750 8.54 (2,700) 9.78 ----------------------------------415,863 10.83 104,950 4.43 (149,613) 9.72 ----------------------------------371,200 9.46

December 31, 1997 Granted Canceled Exercised December 31, 1998 Granted Canceled December 31, 1999 Granted Canceled December 31, 2000

The weighted average remaining life of outstanding options is 6.4 years as of December 31, 2000. Options exercisable as of December 31 were approximately 191,000 shares in 2000, 189,000 shares in 1999, and 128,000 shares in 1998 at a weighted average exercise price of $11.26, $11.63, and $11.66, 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, 2000, 1999 and 1998 would have been $(4,942), $(2,816) and $2,124, respectively. Pro forma basic/diluted earnings (loss) per share for the years ended December 31, 2000, 1999 and 1998 would have been $(.83), $(.44) and $.32, respectively. The weighted-average fair value at date of grant for options granted during 2000, 1999 and 1998 was $2.44, $3.87, and $5.81 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:
2000 1999 1998 ---------------------------------------------------------------------Expected dividend yield 0% 1% 1% Expected stock price volatility 25% 20% 25% Risk-free interest rate 6.5% 6.5% 6.5% Expected life of options 7 years 7 years 7 years

Note 8. Compensation and Benefit Agreements The Company has defined benefit pension plans covering approximately 40% 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. This amendment resulted in increases of approximately $.7 million in both unrecognized prior service cost and projected benefit obligation as of December 31, 1999. The Company sponsors an unfunded defined benefit postretirement medical and life insurance plan that covers

approximately 40% 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. As a result of workforce reductions in 2000, the Company incurred curtailment losses of approximately $.8 million and $.2 million during 2000 for the defined benefit pension and postretirement plans, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17 Note 8. Compensation and Benefit Agreements (continued) Information relative to the Company's defined pension and other postretirement benefit plans is presented below.
Pension Benefits Other Benefits (In Thousands) (In Thousands) December 31, December 31, 2000 1999 2000 1999 -------------------------------------------------------------------------------Changes in benefit obligations: Obligations at beginning of year $15,779 $13,952 $ 1,118 $ 1,395 Service cost 542 558 72 65 Interest cost 1,082 1,017 94 70 Plan amendment 662 370 Benefits paid (737) (655) (166) (36) Curtailment (141) (363) Actuarial losses (gains) 30 245 261 (746) -------------------------------------------------------------------------------Obligations at end of year $16,555 $15,779 $ 1,016 $ 1,118 Changes in plan assets: Fair value of assets at beginning of year $16,193 $16,127 $ $ Actual return on assets 1,127 716 Company contributions 5 166 36 Participant contributions 32 21 Benefits paid (737) (655) (198) (57) -------------------------------------------------------------------------------Fair value of assets at end of year $16,583 $16,193 $ $ Funded status at end of year: Plan assets in excess of (less than) obligations $28 $414 $(1,016) $(1,118) Unrecognized gains (3,047) (3,316) (1,204) (1,550) Unrecognized prior service cost 737 1,816 95 318 Unrecognized transition obligation 8 61 331 777 -------------------------------------------------------------------------------Accrued benefit cost $(2,274) $(1,025) $(1,794) $(1,573)

Pension Benefits Other Benefits (In Thousands) (In Thousands) Years Ending December 31, Years Ending December 31, 2000 1999 1998 2000 1999 1998 -------------------------------------------------------------------------------Cost recognized during the year: Service cost $ 542 $ 558 $ 443 $ 72 $ 65 $ 74 Interest cost 1,082 1,017 856 94 70 89 Expected return on plan assets (1,267) (1,264) (1,156) Amortization of prior gains (99) (159) (106) (85) (111) (101) Amortization of prior service cost 137 137 47 53 53 Amortization of transition obligation 45 51 51 70 70 70 Curtailment 809 183 -------------------------------------------------------------------------------Net periodic benefit cost $1,249 $ 340 $ 135 $387 $ 147 $ 132

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17 Note 8. Compensation and Benefit Agreements (continued) Information relative to the Company's defined pension and other postretirement benefit plans is presented below.
Pension Benefits Other Benefits (In Thousands) (In Thousands) December 31, December 31, 2000 1999 2000 1999 -------------------------------------------------------------------------------Changes in benefit obligations: Obligations at beginning of year $15,779 $13,952 $ 1,118 $ 1,395 Service cost 542 558 72 65 Interest cost 1,082 1,017 94 70 Plan amendment 662 370 Benefits paid (737) (655) (166) (36) Curtailment (141) (363) Actuarial losses (gains) 30 245 261 (746) -------------------------------------------------------------------------------Obligations at end of year $16,555 $15,779 $ 1,016 $ 1,118 Changes in plan assets: Fair value of assets at beginning of year $16,193 $16,127 $ $ Actual return on assets 1,127 716 Company contributions 5 166 36 Participant contributions 32 21 Benefits paid (737) (655) (198) (57) -------------------------------------------------------------------------------Fair value of assets at end of year $16,583 $16,193 $ $ Funded status at end of year: Plan assets in excess of (less than) obligations $28 $414 $(1,016) $(1,118) Unrecognized gains (3,047) (3,316) (1,204) (1,550) Unrecognized prior service cost 737 1,816 95 318 Unrecognized transition obligation 8 61 331 777 -------------------------------------------------------------------------------Accrued benefit cost $(2,274) $(1,025) $(1,794) $(1,573)

Pension Benefits Other Benefits (In Thousands) (In Thousands) Years Ending December 31, Years Ending December 31, 2000 1999 1998 2000 1999 1998 -------------------------------------------------------------------------------Cost recognized during the year: Service cost $ 542 $ 558 $ 443 $ 72 $ 65 $ 74 Interest cost 1,082 1,017 856 94 70 89 Expected return on plan assets (1,267) (1,264) (1,156) Amortization of prior gains (99) (159) (106) (85) (111) (101) Amortization of prior service cost 137 137 47 53 53 Amortization of transition obligation 45 51 51 70 70 70 Curtailment 809 183 -------------------------------------------------------------------------------Net periodic benefit cost $1,249 $ 340 $ 135 $387 $ 147 $ 132

18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8. Compensation and Benefit Agreements (continued)

18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 8. Compensation and Benefit Agreements (continued)
Pension Benefits Other Benefits December 31, December 31, 2000 1999 1998 2000 1999 1998 -------------------------------------------------------------------------------Assumptions used in computations: Discount rate 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Rate of compensation increase 4.5% 4.5% 4.5% N/A 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, an 8.5% annual rate of increase in the cost of covered healthcare benefits was assumed for 2000. 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 healthcare cost trend rates would have the following effects for the year ended December 31, 2000 (in thousands):
Increase Decrease --------------------------Effect on total of service and interest cost components Effect on postretirement benefit obligation $17 67 $(15) (61)

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.
(In Thousands) Years Ending December 31, 2000 1999 1998 ---------------------------------------------------------------------Footwear $119,064 $108,314 $115,643 Protective clothing 19,097 16,014 17,762 ----------------------------------$138,161 $124,328 $133,405

The following table presents information about the Company's revenue attributed to countries based on the location of the customer.
(In Thousands) Years Ending December 31, 2000 1999 1998 ---------------------------------------------------------------------United States $132,139 $119,981 $128,570 Foreign Countries 6,022 4,347 4,835 ----------------------------------$138,161 $124,328 $133,405

Long-lived assets located outside of the United States totaled approximately $.5 million at December 31, 2000 and December 31, 1999. No single customer provided revenue of 10% or more of consolidated revenues in any of the years presented.

INDEPENDENT AUDITORS' REPORT 19 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, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. 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, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles. McGLADREY & PULLEN, LLP LaCrosse, Wisconsin February 14, 2001

20 QUARTERLY RESULTS OF OPERATIONS 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 December 31. The following tabulation presents the Company's unaudited quarterly results of operations for 2000 and 1999. Thousands of dollars except per share data - 2000
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $31,029 $31,385 $37,239 $38,508 Gross profit 7,876 8,075 9,295 8,502 Operating income (loss) (117) 9 (318) (1,700) Net income (loss) (323) (461) (836) (3,149) Basic and diluted earnings (loss) per share (.05) (.08) (.14) (.54)

Thousands of dollars except per share data - 1999
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $27,946 $26,788 $37,024 $32,570 Gross profit 7,472 7,087 9,790 4,850 Operating income (loss) 102 (141) 1,959 (4,128) Net income (loss) (150) (320) 813 (2,980)

INDEPENDENT AUDITORS' REPORT 19 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, 2000 and 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. 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, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles. McGLADREY & PULLEN, LLP LaCrosse, Wisconsin February 14, 2001

20 QUARTERLY RESULTS OF OPERATIONS 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 December 31. The following tabulation presents the Company's unaudited quarterly results of operations for 2000 and 1999. Thousands of dollars except per share data - 2000
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $31,029 $31,385 $37,239 $38,508 Gross profit 7,876 8,075 9,295 8,502 Operating income (loss) (117) 9 (318) (1,700) Net income (loss) (323) (461) (836) (3,149) Basic and diluted earnings (loss) per share (.05) (.08) (.14) (.54)

Thousands of dollars except per share data - 1999
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $27,946 $26,788 $37,024 $32,570 Gross profit 7,472 7,087 9,790 4,850 Operating income (loss) 102 (141) 1,959 (4,128) Net income (loss) (150) (320) 813 (2,980)

20 QUARTERLY RESULTS OF OPERATIONS 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 December 31. The following tabulation presents the Company's unaudited quarterly results of operations for 2000 and 1999. Thousands of dollars except per share data - 2000
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $31,029 $31,385 $37,239 $38,508 Gross profit 7,876 8,075 9,295 8,502 Operating income (loss) (117) 9 (318) (1,700) Net income (loss) (323) (461) (836) (3,149) Basic and diluted earnings (loss) per share (.05) (.08) (.14) (.54)

Thousands of dollars except per share data - 1999
First Quarter Second Quarter Third Quarter Fourth Quarter -------------------------------------------------------------------------------Net sales $27,946 $26,788 $37,024 $32,570 Gross profit 7,472 7,087 9,790 4,850 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)

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 26, 2001 there were approximately 300 shareholders of record and approximately 2,000 beneficial owners of the Company's common stock.
1st $11.50 - 14.125 $6.25 - 9.50 $3.688 - 5.75 2nd $11.375 - 12.50 $6.625 - 9.00 $3.813 - 5.00 3rd $7.75 - 11.50 $4.563 - 8.25 $2.25 - 5.75 4th $7.75 - 10.00 $4.25 - 6.719 $2.50 - 4.00 Year-end $9.25 $4.438 $3.125

1998 1999 2000

Cash Dividends Declared Per Share The Company did not declare a cash dividend in 2000 because of operating results. The Company will reconsider the payment of cash dividends in the future when the profitability of the Company has improved. The chart below shows annual cash dividends declared per share for the past three years: 2000 1999 1998 Dividends declared per share $ -- $.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, 2000, 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, 2000, totaled $19.9 million. Swap Agreement rates are based on the three-month LIBOR rate. Based on average floating rate borrowings outstanding throughout fiscal year 2000, a 100-basis point change in LIBOR would have caused the Company's monthly interest expense to change by approximately $23,500. The Company believes that these amounts are not material to the earnings of the Company.

EXHIBIT (21) SUBSIDIARIES OF LACROSSE FOOTWEAR, INC. as of January 1, 2001
Jurisdiction of Incorporation

Name

Percent Ownership Direct 100%

Danner Shoe Manufacturing Co.

Wisconsin

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 14, 2001, included in the 2000 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 14, 2001, with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 14, 2001, 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, 2000. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2001

EXHIBIT (21) SUBSIDIARIES OF LACROSSE FOOTWEAR, INC. as of January 1, 2001
Jurisdiction of Incorporation

Name

Percent Ownership Direct 100%

Danner Shoe Manufacturing Co.

Wisconsin

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 14, 2001, included in the 2000 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 14, 2001, with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 14, 2001, 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, 2000. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2001

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 14, 2001, included in the 2000 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 14, 2001, with respect to the consolidated financial statements incorporated herein by reference, and our report dated February 14, 2001, 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, 2000. McGLADREY & PULLEN, LLP La Crosse, Wisconsin March 28, 2001


								
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