LaCrosse Footwear Q2 Income Slips on 14% Sales Gain

LaCrosse Footwear, Inc. second quarter consolidated net sales were $24.9 million, up 14% from $21.8 million in the second quarter of 2006.Operating income was $1.4 million in the second quarter of 2007, up 44% from $1.0 million in the second quarter of 2006. Net income was $1.0 million or 15 cents per diluted share in the second quarter of 2007, compared to $1.2 million or 19 cents per diluted share in the second quarter of 2006, which included an income tax benefit for research and development of approximately $500,000 or eight cents per diluted share.

For the first half of 2007, consolidated net sales were $48.6 million, up 12% from $43.2 million in the same period of 2006. For the first half of 2007, operating income was $2.3 million, up 45% from $1.6 million in the same period of 2006.

For the first half of 2007, net income was $1.6 million or $0.25 income per diluted share, comparable to the same period in 2006.

Sales to the work market were $13.2 million for the second quarter of 2007, up 6% from $12.5 million for the same period of 2006. Year-over-year growth in work sales reflects continued penetration into a variety of general and specialized work boot markets. Sales to the outdoor market were $11.8 million for the second quarter of 2007, up 26% from $9.4 million for the same period of 2006. Year-over-year growth in the outdoor market primarily reflects increased penetration into the hunting and rugged outdoor boot markets.

The Company continued to maintain strong gross margins. For the second quarter of 2007, its gross margin was 39.2% of net sales, compared to 39.8% in the same period of 2006. While the success of new products and price increases in recent periods have continued to strengthen gross margins, this trend was offset in the second quarter of 2007 by an increase in inventory reserves.

LaCrosse's total operating expenses were $8.3 million or 33% of net sales in the second quarter of 2007, compared to $7.7 million or 35% of net sales in the second quarter of 2006. While operating expenses grew at a slower rate than net sales, the year-over-year increase primarily reflects added marketing and product development expenses, and expenses related to the Company's new Portland office.

During the second quarter of 2007, the Company paid cash dividends totaling $0.9 million to its shareholders of record as of the close of business on May 31, 2007. At the end of the second quarter of 2007, LaCrosse had cash and cash equivalents of $13.9 million, up 9% from $12.7 million at the end of 2006 and up 20% from $11.6 million at the end of the second quarter of 2006.

“We are pleased with our execution and financial performance for the second quarter, and see strong momentum going into the second half of the year,” said Joseph P. Schneider, president and CEO of LaCrosse Footwear, Inc. “Our sales growth continued to be driven by the success of our new fall product lines and our ability to meet at-once demand to capitalize on favorable weather conditions. We continued to maintain our strong gross margins, moderate our operating expenses as a percent of sales and leverage our operating model, and to strengthen our balance sheet.”

“We are particularly encouraged by the positive customer response to our new spring lines of Danner and LaCrosse products. Our spring 2008 lines offer far more breadth and depth, with exciting new products for every climate, every season and every part of the day, on the job or in the field. We are well-positioned to increase our brand equity and capture market share in work and outdoor markets by continuing to focus on target markets where our premium products, innovative technology and outstanding customer service create opportunities for sustainable and profitable growth.”

                       LaCrosse Footwear, Inc.
             Condensed Consolidated Statements of Income
           (Amounts in thousands, except per share amounts)

                                 Quarter Ended   First Half Year Ended
                               June 30, July 1,   June 30,   July 1,
                                 2007     2006      2007       2006
                               ——– ——– ———- ———-

Net sales                      $ 24,929 $21,822  $   48,619 $   43,223
Cost of goods sold               15,160  13,138      29,240     26,155
                               ——– ——– ———- ———-
  Gross profit                    9,769   8,684      19,379     17,068
Operating expenses                8,335   7,688      17,114     15,509
                               ——– ——– ———- ———-
  Operating income                1,434     996       2,265      1,559
Non-operating income                 93      85         213        135
                               ——– ——– ———- ———-
  Income before income taxes      1,527   1,081       2,478      1,694
Income tax provision (benefit)      551     (98)        898        123
                               ——– ——– ———- ———-
  Net income                   $    976 $ 1,179  $    1,580 $    1,571
                               ======== ======== ========== ==========

Net income per common share:
  Basic                        $   0.16 $  0.20  $     0.26 $     0.26
  Diluted                      $   0.15 $  0.19  $     0.25 $     0.25

Weighted average number of
 common shares outstanding:
  Basic                           6,082   6,020       6,069      6,009
  Diluted                         6,349   6,213       6,323      6,196

Supplemental Product Line
 Information

Work Market Sales              $ 13,161 $12,463  $   28,579 $   26,108
Outdoor Market Sales             11,768   9,359      20,040     17,115
                               ——– ——– ———- ———-
                               $ 24,929 $21,822  $   48,619 $   43,223
                               ======== ======== ========== ==========