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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 2431, ~~2011~~2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-23800

LaCrosse Footwear, Inc.

(Exact name of Registrant as specified in its charter)

17634 NE Airport Way

Portland, Oregon 97230

(Address, zip code of principal executive offices)

(503) 262-0110

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller Reporting Company ¨ (Do not check if a smaller reporting company) ~~Smaller Reporting Company ¨~~

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value, outstanding as of ~~October 18~~April 24, ~~2011~~2012: 6,~~503~~509,~~999~~562 shares

LACROSSE FOOTWEAR, INC.

Form 10-Q Index

			Page
PART I.	Financial Information
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of September 24, 2011 (Unaudited) and September 25, 2010 (Unaudited) and December 31, 2010	3
		Condensed Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and March 26, 2011 (Unaudited) and December 31, 2011		3
		Condensed Consolidated Statements of Operations (Unaudited) for the quarters and three quarters ended September 24, 2011 and September 25, 2010	4
		Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) for the quarters ended March 31, 2012 and March 26, 2011		4
		Condensed Consolidated Statements of Cash Flows (Unaudited) for three quarters ended September 24, 2011 and September 25, 2010	5
		Condensed Consolidated Statements of Cash Flows (Unaudited) for the quarters ended March 31, 2012 and March 26, 2011		5
		Notes to Interim Unaudited Condensed Consolidated Financial Statements	6	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11	11
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14	14
	Item 4.	Controls and Procedures	14	14
PART II.	Other Information
	Item 1.	Legal Proceedings	15	14
	Item 1A.	Risk Factors	15	14
	Item 6.	Exhibits	16	15
Signatures			17	16

- 2 -

PART I –FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements

LACROSSE FOOTWEAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

~~September~~March 2431,~~2011~~2012

December 31,~~2010~~2011

~~September~~March 2526,~~2010~~2011

Assets:

Current Assets:

Cash and cash equivalents (Note 2)

~~506~~402

~~4,274~~774

~~3,618~~527

Trade and other accounts receivable, less allowances of $660, $517, and $625, respectively

24,860

22,834

26,694

Trade and other accounts receivable, less allowances of $464, $679, and $426, respectively

18,059

22,726

15,666

Inventories, net (Note 3)

5743,~~970~~070

4048,~~071~~648

3446,~~678~~869

Prepaid expenses and other

~~789~~1,276

1,~~321~~398

~~1,063~~984

Deferred tax assets

1,~~813~~711

1,~~614~~771

1,~~364~~675

Total current assets

8564,~~938~~518

7075,~~114~~317

6765,~~417~~721

Property and equipment, net of accumulated depreciation of $14,264, $12,588, and $13,389, respectively

15,802

16,154

15,607

Property and equipment, net of accumulated depreciation of $15,995, $15,092, and $12,675, respectively

16,353

16,143

16,000

Goodwill

10,753

Other assets

~~229~~271

~~249~~222

~~256~~243

Total assets

~~112~~91,~~722~~895

97102,~~270~~435

9492,~~033~~717

Liabilities and Shareholders’ Equity:

Current Liabilities:

Short-term borrowings (Notes 2 and 6)

258,~~689~~643

—16,869

—6,247

Accounts payable

106,~~688~~593

167,~~477~~463

1910,~~472~~553

Accrued compensation

1,~~621~~977

41,~~261~~789

21,~~897~~301

Product warranty and other accruals (Note 4)

21,~~347~~640

32,~~356~~939

21,~~213~~994

Total current liabilities

4018,~~345~~853

2429,~~094~~060

2420,~~582~~095

Long-term debt

~~174~~107

~~263~~138

~~300~~225

Deferred revenue

~~531~~565

~~566~~550

~~588~~548

Deferred lease obligations

~~868~~923

~~782~~895

~~750~~813

Compensation and benefits (Note 8)

36,~~731~~981

47,~~385~~214

4,~~119~~146

Deferred tax liabilities

31,~~136~~189

21,~~732~~450

23,~~360~~053

Total liabilities

4828,~~785~~618

3239,~~822~~307

3228,~~699~~880

Shareholders’ Equity:

Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 6,717,627 shares

Additional paid-in capital

31,~~441~~830

3031,~~536~~600

3031,~~364~~122

Accumulated other comprehensive loss (Note 9)

(35,~~734~~906

)

(36,~~731~~058

)

(3,~~488~~640

)

Retained earnings (Note 11)

3738,~~187~~284

38,~~789~~538

3537,~~624~~327

Less cost of 214,178, 258,775 and 263,355 shares of treasury stock, respectively

(1,024

)

(1,213

)

(1,233

)

Less cost of 208,065, 213,003 and 217,759 shares of treasury stock, respectively

(998

)

(1,019

)

(1,039

)

Total shareholders’ equity

63,~~937~~277

6463,~~448~~128

6163,~~334~~837

Total liabilities and shareholders’ equity

~~112~~91,~~722~~895

97102,~~270~~435

9492,~~033~~717

See notes to interim unaudited condensed consolidated financial statements.

- 3 -

LACROSSE FOOTWEAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except per share data)
	Quarter Ended						~~Three Quarters Ended~~
	September 24,2011			September 25,2010			September 24,2011			September 25,2010
	March 31,2012			March 26,2011
Net sales	$	3533,~~250~~285		$	3725,~~682~~188		$	~~87,494~~		$	~~98,462~~
Cost of goods sold		2120,~~258~~654			2314,~~666~~751			~~52,655~~			~~59,815~~
Gross profit		1312,~~992~~631			1410,~~016~~437			~~34,839~~			~~38,647~~
Selling and administrative expenses		11,~~043~~577			11,~~962~~384			~~33,030~~			~~33,667~~
Operating income		2,949			2,054			1,809			4,980
Operating income (loss)		1,054			(947	)
Non-operating expense, net		(~~195~~123	)		(51125	)		~~(433~~	)		~~(106~~	)
Income before income taxes		2,754			2,003			1,376			4,874
Income (loss) before income taxes		931			(1,072	)
Income tax provision (Note 5)		1,084			857			541			1,965
Income tax provision (benefit) (Note 5)		371			(422	)
Net income	$	1,670		$	1,146		$	835		$	2,909
Net income (loss)	$	560		$	(650	)
Net income per common share (Note 1):
Net income (loss) per common share (Note 1):
Basic	$	0.2609		$	(0.1810	)	$	~~0.13~~		$	~~0.45~~
Diluted	$	0.2508		$	(0.1710	)	$	~~0.13~~		$	~~0.44~~
Weighted average number of common shares outstanding:
Basic		6,~~503~~508			6,~~453~~485			~~6,497~~			~~6,419~~
Diluted		6,~~624~~608			6,~~598~~485			~~6,648~~			~~6,584~~
Other comprehensive income (Note 9)
Foreign currency translation gain		152			91
Other comprehensive income		152			91
Comprehensive income (loss)	$	712		$	(559	)

See notes to interim unaudited condensed consolidated financial statements.

- 4 -

LACROSSE FOOTWEAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Quarters Ended
(in thousands)	Quarter Ended
(in thousands)	September 24,2011			September 25,2010
	March 31,2012			March 26,2011
Cash flows from operating activities:
Net income	$	835		$	2,909
Net income (loss)	$	560		$	(650	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		~~2,720~~945			~~2,205~~883
Stock-based compensation expense (Note 7)		~~547~~201			~~455~~257
Deferred income taxes		~~205~~(200	)		~~165~~260
Loss on disposal of property and equipment		~~102~~—			774
Changes in operating assets and liabilities:
Trade and other accounts receivable		(24,~~054~~684	)		(47,~~621~~190	)
Inventories		~~(17~~5,~~927~~669	)		(76,~~743~~724	)
Accounts payable		(~~5,634~~798	)		9(5,~~764~~993	)
Accrued expenses and other		(31,~~628~~263	)		(24,~~297~~163	)
Net cash provided by (used in) operating activities		~~(24~~9,~~834~~798	)		~~844~~(8,866	)
Cash flows from investing activities:
Purchases of property and equipment		(21,~~717~~243	)		(~~7,773~~791	)
Proceeds from sale of property and equipment		2			1
Net cash used in investing activities		(2,715	)		(7,772	)
Cash flows from financing activities:
Net proceeds from short-term borrowings (Note 6)		25,689			—
Net proceeds from (reductions in) short-term borrowings (Note 2)		(8,226	)		6,247
Net proceeds from long-term debt		—			300
Cash dividends paid		(814	)		(812	)
Cash dividends paid		(2,438	)		(8,813	)
Proceeds from exercise of stock options		53			451
Purchase of treasury stock		—			(59	)
Net cash provided by (used in) financing activities		(8,987	)		5,886
Proceeds from exercise of stock options		499			1,393
Effect of foreign currency exchange rate changes on cash and cash equivalents		60			24
Net cash provided by (used in) financing activities		23,750			(7,179	)
Net decrease in cash and cash equivalents		(372	)		(3,747	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		31			(14	)
Net decrease in cash and cash equivalents		(3,768	)		(14,121	)
Cash and cash equivalents:
Beginning of period		~~4,274~~774			174,~~739~~274
End of period	$	~~506~~402		$	~~3,618~~527
Supplemental information:
Cash payments for income taxes	$	1,~~418~~546		$	~~4,219~~870
Cash payments for interest	$	~~137~~86		$	—7

See notes to interim unaudited condensed consolidated financial statements.

- 5 -

LACROSSE FOOTWEAR, INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements

~~NOTE~~Note 1. ~~INTERIM~~Interim ~~FINANCIAL~~Financial ~~REPORTING~~Reporting

Basis of Presentation – LaCrosse Footwear, Inc. (NASDAQ: BOOT) is referred to as “we,” “us,” or “our” in this report. The accompanying condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we have condensed or omitted certain information and footnote disclosures that are included in our annual financial statements. These ~~condensed~~ unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011. These ~~condensed~~unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary for a fair presentation of the financial position, results of operations and comprehensive income, and cash flows for the periods presented.

These unaudited condensed consolidated financial statements include the accounts of LaCrosse Footwear, Inc., and our wholly- owned subsidiaries. All ~~material~~ inter-company accounts and transactions have been eliminated in consolidation.

We report our quarterly interim financial information based on 13-week periods. The nature of the 13-week calendar requires that the first three quarters end on a Saturday and the year end on December 31. As a result, every first quarter and every fourth quarter have a different number of days than in the prior year’s quarters. The results of the interim periods are not necessarily indicative of the results for the full year. Historically, our net sales and our operating income have been more heavily weighted to the second half of the year.

Use of Estimates – We are required to make certain estimates and assumptions which affect the amounts of assets, liabilities, revenues, and expenses we have reported, and our disclosure of any contingent assets and liabilities at the date of the financial statements. Actual results could differ materially from these estimates and assumptions.

Net Income (Loss) per Common Share – We present our net income (loss) on a per share basis for both basic and diluted common shares. Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding during the period. The diluted net income (loss) per common share calculation assumes all stock options were exercised and converted into common stock at the beginning of the period, unless their effect would be anti-dilutive. For the quarter ended March 26, 2011, common stock equivalents of 176,000 shares were excluded from the calculation of diluted weighted average shares outstanding as their inclusion would have been anti-dilutive given the net loss for the period. A reconciliation of the shares used in the basic and diluted net income (loss) per common share is as follows (in thousands):

Quarter Ended

~~Three Quarters Ended~~

September 24,2011

September 25,2010

September 24,2011

September 25,2010

March 31,2012

March 26,2011

Basic weighted average shares outstanding

6,~~503~~508

6,~~453~~485

~~6,497~~

~~6,419~~

Dilutive stock options

~~121~~100

~~145~~—

~~151~~

~~165~~

Diluted weighted average shares outstanding

6,~~624~~608

6,~~598~~485

~~6,648~~

~~6,584~~

~~NOTE~~Note 2. ~~FAIR~~Fair ~~VALUE~~Value OFof ~~FINANCIAL~~Financial ~~INSTRUMENTS~~Instruments

Cash and cash equivalents at ~~September~~March 2431, ~~2011~~2012, December 31, ~~2010~~2011, and ~~September~~March 2526, ~~2010~~2011 were $0.5 4 million, $40.38 million, and $30.65 million, respectively. Short-term borrowings on the line of credit at ~~September~~March 2431, 2012, December 31, 2011, and March 26, 2011 were $258.76 million, ~~(see~~$16.9 ~~Note~~and $6).2 Wemillion; ~~had no short-term borrowings at December 31, 2010 or September 25, 2010~~respectively. We have categorized our cash and cash equivalents and short-term borrowings as Level 1 financial instruments, measured at fair value based on quoted prices in active markets of identical assets. We did not have any transfers between the fair value ~~hierarchy~~ hierarchy during the ~~third~~first quarter of ~~2011~~2012. We do not have any additional financial assets or liabilities that were measured at fair value on a recurring basis at ~~September~~March 2431, ~~2011~~2012.

- 6 -

~~NOTE~~Note 3. ~~INVENTORIES~~Inventories

A summary of inventories is presented below (in thousands):

September 24,2011

December 31,2010

September 25,2010

March 31,2012

December 31,2011

March 26,2011

Raw materials

53,~~596~~363

84,~~186~~893

67,~~511~~644

Work in process

~~705~~550

~~637~~650

~~443~~567

Finished goods

5239,~~536~~678

3143,~~646~~714

2839,~~111~~165

Subtotal

5843,~~837~~591

4049,~~469~~257

3547,~~065~~376

Less: provision for obsolete and slow-moving inventories

(~~867~~521

)

(~~398~~609

)

(~~387~~507

)

Total

5743,~~970~~070

4048,~~071~~648

3446,~~678~~869

~~NOTE~~Note 4. ~~PRODUCT~~Product ~~WARRANTY~~Warranty

We provide a limited warranty for the replacement of defective products for a specified time period after sale. We estimate the costs that may be incurred under the limited warranty and record a liability in the amount of such anticipated costs at the time product revenue is recognized. Factors that affect our warranty liability include ~~historical~~ sales volumes along with ~~prior~~ historical and anticipated future rates of warranty claims.

Changes in the accrued product warranty costs during the quarters ~~and three~~ ~~quarters~~ ended ~~September~~March 2431, ~~2011~~2012 and ~~September~~March 2526, ~~2010~~2011 are summarized as follows (in thousands):

Quarter Ended

~~Three Quarters Ended~~

September 24,2011

September 25,2010

September 24,2011

September 25,2010

March 31,2012

March 26,2011

Balance, beginning of period

1,~~563~~263

1,~~338~~588

~~1,588~~

~~1,409~~

Accruals for products sold

~~569~~792

~~637~~756

~~2,039~~

~~2,196~~

Warranty claims

(~~616~~834

)

(~~502~~773

)

~~(2,111~~

)

~~(2,132~~

)

Balance, end of period

1,~~516~~221

1,~~473~~571

~~1,516~~

~~1,473~~

~~NOTE~~Note 5. ~~INCOME~~Income ~~TAXES~~Taxes

On a quarterly basis, we estimate what our effective tax rate will be for the full fiscal year and record a quarterly income tax provision (benefit) based on the anticipated rate. As the year progresses, we refine our estimate based on the facts and circumstances of each tax jurisdiction. The effective tax rates for the quarters ended ~~September~~March 2431, ~~2011~~ 2012 and ~~September~~March 2526, ~~2010~~2011 were 39.48% and 4239.84%, respectively. The ~~year-to-date~~net ~~effective~~increase ~~tax~~in ~~rates~~our ~~for~~first ~~the~~quarter ~~three~~2012 ~~quarters~~effective ~~ended~~tax ~~September 24,~~rate ~~2011~~from ~~and~~the ~~September 25,~~first ~~2010~~quarter ~~were~~of ~~39.3% and 40.3%, respectively. The decrease in effective tax rate in~~ 2011 is primarily due to the impact of ~~estimated~~the ~~annual~~expiration ~~permanent~~of ~~book-to-tax~~the ~~differences~~federal research and experimentation ~~credits~~tax incredit ~~relation~~as toof ~~the~~December 31, ~~projected annual pre-tax income~~2011.

We file a consolidated U.S. federal income tax return as well as ~~foreign and~~ state tax returns on a consolidated, combined, or stand-alone basis, depending upon the jurisdiction. We have concluded tax examinations for U.S. federal and Oregon state filings through the tax years ended December 31, 2007 and December 31, 2006, respectively. Depending on the jurisdiction, we are no longer subject to state examinations by tax authorities other than Oregon for years prior to the ~~2005~~2006 and ~~2006~~2007 tax years. We are not subject to foreign tax examinations prior to the year ended December 31, 2008.

~~NOTE~~Note 6. ~~FINANCING~~Financing ~~ARRANGEMENTS~~Arrangements

WeOn ~~have~~December 22, 2011, we entered into a 3-year extension of our previous line of credit agreement with Wells Fargo Bank, N.A., which expires ~~June~~May 301, ~~2012~~2015, ifunless ~~not~~ renewed. Amounts borrowed under the agreement are secured by substantially all of our assets. The maximum aggregate principal amount of borrowings ~~available~~allowed from January 1 to May 31 is $22.5 million, and ~~$35.0 million~~ from June 1 to December 31., ~~There~~the ~~are~~total ~~no borrowing~~available ~~base~~is ~~limitations under the credit agreement~~$35 million. The credit agreement provides for an interest rate of LIBOR plus 1.75% and an annual commitment fee of 0.152% on the unused balance. AtThe ~~September 24,~~line ~~2011,~~of credit ~~$25.7~~agreement ~~million~~contains infinancial ~~borrowings~~covenants ~~were outstanding~~as well as restrictions on annual dividends and capital expenditures. There are no borrowing base limitations under the ~~line~~credit agreement. We are in compliance with all covenants as of ~~credit~~March 31, 2012. At March 31, 2012, December 31, ~~2010~~2011 and ~~September~~March 2526, ~~2010,~~2011 we had no outstanding balances ~~under~~on ~~our~~the line of credit ~~agreement~~of $8.6 million, $16.9 million and $6.2 million, respectively.

- 7 -

On January 31, 2011, we entered into a letter amendment to the Second Amended and Restated Credit Agreement with Wells Fargo Bank, N.A. to amend the allowable capital expenditures for the remainder of the credit agreement term. On September 16, 2011, we entered into a Third Amendment to the Second Amended and Restated Credit Agreement (“Third Amendment”) with Wells Fargo Bank, N.A. to amend the maximum amount of borrowings available for the remainder of the credit agreement term from $17.5 million to $22.5 million during the period of January 1 to May 31 and from $30 million to $35 million during the period of June 1 to December 31. In connection with the Third Amendment, we executed and delivered a new revolving line of credit note (the “Note”) ~~reflecting the increase in available borrowing~~7. ~~The~~ ~~Note~~Share-Based ~~supersedes~~Compensation ~~and replaces the revolving line of credit note delivered in connection with the second restatement of the Credit Agreement in March 2009.~~

~~NOTE~~We 7recognized $0.2 ~~SHARE~~million and $0.3 million of share-~~BASED~~based ~~COMPENSATION~~compensation expense in the quarters ended March 31, 2012 and March 26, 2011, respectively. We use the Black-Scholes option-pricing model to calculate the fair value of share-based awards. Our determination of fair value of share-based awards on the date of grant is affected by assumptions regarding certain variables. These variables include, but are not limited to, our expected dividend yield, our expected stock price volatility over the expected term of the awards, the risk-free interest rate, and the expected term of the options. The anticipated risk-free interest rate is based on treasury instruments whose terms are consistent with the expected term of the stock options granted. The expected volatility, term of options and dividend yield are based on historical experience.

WeThe ~~recognized~~following ~~$0.1~~table ~~million~~includes ~~of share-based compensation expense for~~ the ~~quarters~~assumptions ~~ended~~we ~~September 24,~~used ~~2011 and September 25, 2010. We recognized $0.5 million of share-based compensation expense~~ in ~~the~~determining ~~three quarters ended September 24, 2011 and September 25, 2010. We use~~ the ~~Black-Scholes option-pricing model to calculate the~~ fair value of ~~share-based~~ awards. Our determination of fair value of share-based awards on the date of grant is affected by assumptions regarding certain variables. These variables include, but are not limited to, our expected dividend yield, our expected stock ~~price~~ ~~volatility over the expected term of the awards~~options, the ~~risk-free~~resulting ~~interest~~weighted average ~~rate,~~fair ~~and~~value ~~the expected term~~ of ~~the~~ options. ~~The anticipated risk-free interest rate is based on treasury instruments whose terms are consistent with the expected term of the stock options~~ granted~~. The expected volatility~~, ~~term of options~~ and ~~dividend~~estimated ~~yield~~forfeiture ~~are~~rates: ~~based on historical experience.~~

The following table includes the assumptions we used in determining the fair value of stock options, the resulting weighted average fair value of options granted, and the applicable estimated forfeiture rates:


	Quarters Ended
	March 31, 2012	March 26, 2011
Expected dividend yield	3.9%	3.2%
Expected stock price volatility	52%	51%
Risk-free interest rate	0.8%	1.7%
Expected term of options	4.4 years	4.4 years
Estimated forfeiture rate	13%	13%

Weighted average fair value of options granted	$3.97	$5.57

	Three Quarters Ended
	September 24, 2011	September 25, 2010
Expected dividend yield	3.2%	4.1%
Expected stock price volatility	51%	50%
Risk-free interest rate	1.7%	2.4%
Expected term of options	4.4 years	4.7 years
Estimated forfeiture rate	13%	15%
Weighted average fair value of options granted	$5.54	$4.19

The following table represents stock option activity for the quarter ended March 31, 2012:

The following table represents stock option activity for the quarter ended September 24, 2011:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contract Life
Outstanding options at beginning of period		887,699		$	12.80
Granted		177,300			12.79
Exercised		(4,938	)		10.13
Canceled		(28,348	)		14.17

Outstanding options at end of period		1,031,713			12.77	4.0 years

Outstanding exercisable at end of period		635,792			12.07	2.8 years

	Numberof Shares			WeightedAverageExercisePrice		WeightedAverageRemainingContract Life
Outstanding options at beginning of period		903,254		$	12.84
Granted		5,250			14.09
Exercised		(1,606	)		10.84
Canceled		(14,936	)		14.90
Outstanding options at end of period		891,962			12.82		4.0 years
Outstanding exercisable at end of period		523,002			11.42		3.0 years

At March 31, 2012, the aggregate intrinsic value of options outstanding was $1.3 million, and the aggregate intrinsic value of exercisable options was $1.2 million. The intrinsic value of options exercised during the quarter ended March 31, 2012 was less than $0.1 million.

AtNote ~~September 24, 2011, the aggregate intrinsic value of options outstanding was $1~~8.1 ~~million,~~Compensation and ~~the~~ ~~aggregate~~Benefit ~~intrinsic~~Plans ~~value of exercisable options was $1.1 million.~~

~~NOTE~~We 8have a defined benefit pension plan covering eligible past employees and less than 1% of current employees. ~~COMPENSATION~~We ~~AND~~also sponsor ~~BENEFIT~~an ~~PLANS~~unfunded defined benefit post-retirement death benefit plan that covers eligible past employees. Information regarding these two plans is presented below (in thousands).

We have a defined benefit pension plan covering eligible past employees and less than 1% of current employees. We also sponsor an unfunded defined benefit post-retirement death benefit plan that covers eligible past employees. Information regarding these two plans is presented below (in thousands):

- 8 -

	Pension Plan						Other Plan
	Quarter Ended						Quarter Ended
	Quarter Ended:						Quarter Ended:
	September 24,2011			September 25,2010			September 24,2011		September 25,2010
	March 31, 2012			March 26, 2011			March 31, 2012		March 26, 2011
Cost (income) recognized during the quarter:
Interest cost	$	~~218~~188		$	~~227~~218		$	43	$	4
Expected return on plan assets		(~~254~~245	)		(~~235~~254	)		—		—
Amortization of prior loss		4586			3845			—		—
Net periodic pension cost	$	929		$	309		$	43	$	4

	Pension Plan						Other Plan
	Three Quarters Ended						Three Quarters Ended
	September 24,2011			September 25,2010			September 24,2011		September 25,2010
Cost (income) recognized in the first three quarters:
Interest cost	$	654		$	681		$	12	$	12
Expected return on plan assets		(762	)		(705	)		—		—
Amortization of prior loss		136			114			—		—
Net periodic pension cost	$	28		$	90		$	12	$	12

The following is a reconciliation to the compensation and benefits financial statement line item on the accompanying condensed consolidated balance sheets (in thousands):

September 24,2011

December 31,2010

September 25,2010

March 31,2012

December 31,2011

March 26,2011

Pension Plan

36,~~451~~718

46,~~116~~954

3,~~832~~874

Other Plan

~~280~~263

~~269~~260

~~287~~272

Total compensation and benefits

36,~~731~~981

47,~~385~~214

4,~~119~~146

We contributed $0.73 million to our defined benefit pension plan during the first ~~three~~quarter ~~quarters~~ of ~~2011 and~~2012 we and anticipate contributing an additional $0.28 million during the remainder of ~~2011~~2012.

~~NOTE~~Note 9. ~~COMPREHENSIVE~~Comprehensive ~~INCOME~~Income (~~LOSS~~Loss)

Comprehensive Income (Loss): Comprehensive income (loss) represents net income (loss) plus revenue, expenses, gains and losses that are specifically excluded from net income (loss) and recognized directly as a component of shareholders’ equity. Comprehensive income (loss) is presented on the Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited).

Accumulated Other Comprehensive ~~income~~Loss: ~~represents~~Accumulated ~~net~~other ~~income~~comprehensive ~~plus~~loss ~~revenue,~~reported on ~~expenses,~~our ~~gains~~condensed ~~and~~consolidated ~~losses~~balance ~~that~~sheets ~~are~~consists ~~specifically~~of ~~excluded~~adjustments ~~from~~related ~~net~~to ~~income~~foreign currency translation and ~~recognized~~liabilities ~~directly~~for aspension abenefits. ~~component~~The components of ~~shareholders’~~accumulated ~~equity.~~ other comprehensive loss are as follows (in thousands):

The reconciliation from net income to comprehensive income is as follows (in thousands):


	March 31, 2012			December 31, 2011			March 26, 2011
Pension actuarial loss, net of tax	$	(5,574	)	$	(5,574	)	$	(3,308	)
Foreign currency translation adjustment		(332	)		(484	)		(332	)

Accumulated other comprehensive loss	$	(5,906	)	$	(6,058	)	$	(3,640	)

	Quarter Ended					Three Quarters Ended
	September 24,2011			September 25,2010		September 24,2011			September 25,2010
Net income	$	1,670		$	1,146	$	835		$	2,909
Other comprehensive income (loss):
Foreign currency translation adjustment		(111	)		157		(4	)		(140	)
Comprehensive income	$	1,559		$	1,303	$	831		$	2,769

Note 10. Recent Accounting Pronouncements

In May 2011, the FASB issued an Accounting Standards Update (“ASU”) that amends the presentation of comprehensive income in the financial statements. This ASU increases the prominence of comprehensive income in financial statements while eliminating the option in U.S. GAAP to present comprehensive income in the statement of changes in shareholders’ equity. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires full retrospective application. We have adopted this ASU in the current year by presenting the comparative components of comprehensive income within our Condensed Consolidated Statements of Operations (unaudited).

In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with earlier adoption permitted. We do not expect that adoption of this accounting standard will have a material impact on our financial statements.

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~~Accumulated~~Note ~~Other~~11. ~~Comprehensive~~Subsequent ~~Loss:~~Event

~~Accumulated~~On ~~other~~April 26, ~~comprehensive~~2012, ~~loss~~we ~~reported~~announced ona ~~our~~second ~~condensed~~quarter ~~consolidated~~cash ~~balance~~dividend ~~sheets~~of ~~consists~~twelve and one-half cents ($0.125) per share of our ~~adjustments~~common ~~related~~stock. This dividend will be paid on June 18, 2012 to ~~foreign currency~~shareholders ~~translation~~of ~~and~~record ~~liabilities~~as ~~for~~of ~~pension~~the ~~benefits~~close of business on May 22, 2012. The ~~components~~total ofcash ~~accumulated~~payment ~~other~~for ~~comprehensive~~this ~~loss~~dividend ~~are~~will asbe ~~follows~~approximately ~~(in~~$0.8 ~~thousands):~~million.

	September 24,2011			December 31,2010			September 25,2010
Pension actuarial loss, net of tax	$	(3,308	)	$	(3,308	)	$	(3,079	)
Foreign currency translation adjustment		(426	)		(423	)		(409	)
Accumulated other comprehensive loss	$	(3,734	)	$	(3,731	)	$	(3,488	)

NOTE 10. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued an accounting update that amends the presentation of comprehensive income in the financial statements. This ASU increases the prominence of comprehensive income in financial statements while eliminating the option in U.S. GAAP to present comprehensive income in the statement of changes in equity. Under this ASU, an entity will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and requires full retrospective application. Upon adoption, we will be required to reclassify prior-period reported amounts for comprehensive income in accordance with the amended standards.

In September 2011, the FASB issued an accounting update that gives companies the option to make a qualitative evaluation about the likelihood of goodwill impairment. Companies will be required to perform the two-step impairment test only if it concludes that the fair value of a reporting unit is more likely than not less than its carrying value. The accounting update is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. We do not expect that adoption of this accounting standard will have a material impact on our financial statements.

NOTE 11. SUBSEQUENT EVENTS

On October 20, 2011, we announced a fourth quarter cash dividend of twelve and one-half cents ($0.125) per share of our common stock. This dividend will be paid on December 18, 2011 to shareholders of record as of the close of business on November 22, 2011. The total cash payment for this dividend will be $0.8 million.

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ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements relate to future events and typically address ~~the~~our ~~Company’s~~ expected future business and financial performance. Words such as “plan,” “expect,” “aim,” “believe,” “project,” “target,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other terms of similar meaning, typically identify such forward-looking statements. ~~The~~We ~~Company~~assume ~~assumes~~ no obligation to update or revise any forward-looking statements to reflect the occurrence or non-occurrence of future events or circumstances.

The forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements ~~regarding~~of our expectations related to ~~stronger~~demand for our footwear products, our seasonal demand being stronger in the second half of the year, ~~our future sales performance with~~ the ~~U.S.~~impact ~~government,~~of ~~the~~weather ~~sufficiency~~on of our ~~inventory~~ ~~position~~sales ~~to ensure product availability and meet at-once demand~~performance, ~~our~~future ~~expectation~~sales ~~that~~volumes ~~inventory~~with ~~levels will decline during~~ the ~~fourth~~U.S. ~~quarter of 2011~~government, future cash dividend policies, capital expenditure plans for the balance of ~~2011~~2012, and the adequacy of our ~~line of credit,~~ existing ~~cash~~resources and ~~cash equivalents and~~ anticipated cash flows from operations to satisfy our future working capital needs. Forward-looking statements are based on certain assumptions and expectations of future events and trends that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those reflected in any such forward-looking statements depending on a variety of factors, including without limitation, ~~weaker than anticipated demand and/or slower than expected reductions in inventory as well as other~~ economic, competitive and governmental factors outside of our control. For more information concerning these factors and other risks and uncertainties that could materially affect our results of operations, please refer to Part I, Item 1A—Risk Factors, of our ~~2010~~2011 Annual Report on Form 10-K, as may be supplemented or amended in our ~~2011~~2012 quarterly reports on Form 10-Q, which information is incorporated herein by reference.

Overview

Our mission is to ~~focus~~maximize onthe ~~sustainable,~~work ~~profitable~~and ~~growth~~outdoor byexperience ~~managing~~for aour ~~portfolio of brands that keep lives in motion~~consumers. To achieve this, we design, develop, manufacture, and market premium-quality, high-performance footwear, supported by compelling marketing and superior customer service. Our trusted DANNER® and LACROSSE® brands are sold through four channels of distribution: (1) wholesale, (2) government, (3) direct, and (4) international. We focus on two types of consumers for our footwear lines: work and outdoor. Work consumers include people in military services, law enforcement, transportation, mining, oil and gas exploration and extraction, construction, and other occupations that require high-performance and protective footwear as a critical tool for the job. Outdoor consumers include people active in hunting, outdoor cross-training, hiking, and other outdoor recreational activities as well as urban consumers attracted to footwear reflecting an outdoor lifestyle.

Weather, especially in the fall and winter, has recently been, and will likely continue to be, a significant contributing factor impacting our financial performance. ~~Our~~Also, our sales are typically higher in the second half of the year due to stronger demand for our cold and wet weather outdoor product offerings. We augment these offerings by infusing innovative technology into all product categories with the intent to create additional demand in all four quarters of the year. Our overall sales performance continues to be driven by the success of our new product lines, our ability to meet at-once demand, and our ability to diversify and strengthen our portfolio of sales channels.

~~Our~~We sales performance continues to be driven by the success of our new product lines, our ability to meet at-once demand, and our ability to diversify and strengthen our portfolio of distribution channels. However, we have experienced, and may continue to experience, significant fluctuations in our quarterly revenue performance due to ~~our~~the ~~ability~~timing toand ~~successfully~~volume ~~procure~~of orders for U.S. government contract ~~orders, the timing of those orders and the related requested delivery dates~~purchases. ~~Our~~Future ~~ability to procure future~~ U.S. government ~~contracts~~sales isare dependent upon a wide range of factors, some of which are outside of our control., ~~Such~~including ~~factors include~~ the U.S. government’s policies regarding troop deployments in global regions requiring our specialized footwear, our ability to meet aggressive delivery schedules, and increased competition from other footwear suppliers.

Results of Operations

The following table sets forth selected financial information derived from our interim unaudited condensed consolidated financial statements. The discussion that follows the table should be read in conjunction with the interim unaudited condensed consolidated financial statements. In addition, please see Management’s Discussion and Analysis of Financial Condition and Results of Operations, our consolidated annual financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2011.

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Results of Operations


(in thousands)	Quarter Ended
	March 31, 2012			March 26, 2011			% Change
Net Sales	$	33,285		$	25,188			32	%
Gross Profit		12,631			10,437			21	%
Gross Margin %		37.9	%		41.4	%		(350 bps	)
Selling and Administrative Expenses		11,577			11,384			2	%
% of Net Sales		34.8	%		45.2	%		(1040 bps	)
Non-Operating Expense, net		(123	)		(125	)		(2	%)
Income (Loss) Before Income Taxes		931			(1,072	)		(187	%)
Income Tax Provision (Benefit)		371			(422	)		(188	%)
Net Income (Loss)		560			(650	)		(186	%)
Trade and other accounts receivable, net		18,059			15,666			15	%
Inventories, net		43,070			46,869			(8	%)

~~The~~Quarter ~~following~~Ended table sets forth selected financial information derived from our interim unaudited condensed consolidated financial statements. The discussion that follows the table should be read in conjunction with the interim unaudited condensed consolidated financial statements. In additionMarch 31, ~~please~~2012 ~~see~~Compared ~~Management’s~~to ~~Discussion~~Quarter ~~and~~Ended ~~Analysis of Financial Condition and Results of Operations, our consolidated annual financial statements and related notes included in our Annual Report on Form 10-K for the year ended December~~March 3126, ~~2010.~~2011:

	Quarter Ended									Three Quarters Ended
(in thousands)	September 24,2011			September 25,2010			% Change			September 24,2011			September 25,2010			% Change
Net Sales	$	35,250		$	37,682			(6%	)	$	87,494		$	98,462			(11%	)
Gross Profit		13,992			14,016			(0%	)		34,839			38,647			(10%	)
Gross Margin %		39.7%			37.2%			250 bps			39.8%			39.3%			50 bps
Selling and Administrative Expenses		11,043			11,962			(8%	)		33,030			33,667			(2%	)
% of Net Sales		31.3%			31.7%			(40 bps	)		37.8%			34.2%			360 bps
Non-Operating Expense, net		(195	)		(51	)		282%			(433	)		(106	)		308%
Income Before Income Taxes		2,754			2,003			37%			1,376			4,874			(72%	)
Income Tax Provision		1,084			857			26%			541			1,965			(72%	)
Net Income		1,670			1,146			46%			835			2,909			(71%	)
Trade and other accounts receivable, net		24,860			26,694			(7%	)
Inventories, net		57,970			34,678			67%

Net Sales: Net sales for the first quarter of 2012 increased 32%, to $33.3 million, from $25.2 million in the same period of 2011. Our first quarter 2012 sales results benefitted from our fiscal calendar which provided four additional business days compared to the first quarter of 2011.

~~Quarter~~Sales ~~Ended~~to ~~September~~ the work market were $24.0 million for the first quarter of 2012, up 50% from $16.1 million for the same period of 2011. ~~Compared~~The growth in work market sales was primarily due to ~~Quarter~~an ~~Ended~~increase in ~~September~~military contract sales. Excluding the Company’s contract military and discontinued work apparel sales, core work sales in the first quarter of 2012 increased 9% from the same period in 2011. Sales to the outdoor market were $9.3 25million for the first quarter of 2012, ~~2010:~~up 2% from $9.1 million for the same period in 2011. The growth in the outdoor market reflects increased sales of our outdoor rubber products partially offset by lower sales of cold weather products.

~~Net~~Gross ~~Sales~~Margin: ~~Net~~ ~~sales~~Gross margin for the ~~third~~first quarter of ~~2011~~2012 ~~decreased~~was ~~6% to $35.3 million, from $~~37.79% ~~million~~of innet ~~the~~sales, ~~same~~compared ~~period of 2010. Sales~~ to ~~the work market were $16~~41.~~1 million for the third quarter of 2011, down 14~~4% ~~from $18.7 million~~ in the same period of ~~2010~~2011. The ~~decline~~decrease in ~~work~~gross ~~market~~margin ~~sales~~of is350 ~~primarily~~basis ~~due~~points was attributable to aan ~~decline~~increase ofin ~~large~~military contract ~~delivery~~sales ~~orders~~ to the U.S. ~~government~~ ~~and~~Government ~~associated~~(220 ~~suppliers and our exit of the apparel business~~bps), ~~partially offset by growth in the other areas of the work market. Excluding the contract military and the work apparel sales, work sales in the third quarter of 2011~~ increased ~~12%~~ ~~from~~volume ~~the same period in 2010. Sales to the outdoor market were $19.2 million for the third quarter~~ of ~~2011,~~close upout ~~1% from $19.0 million in the same period of 2010. The quarterly increase in outdoor~~ sales ~~was~~(50 ~~driven~~bps) ~~by sales of both our hiking~~ and ~~cold~~other ~~weather~~items ~~product~~(80 ~~offerings~~bps).

~~Gross~~Selling ~~Margin~~and Administrative Expenses: Selling ~~Gross~~and ~~margin~~administrative ~~for~~expenses in the ~~third~~first quarter of ~~2011~~2012 ~~was~~increased ~~39.7~~2% ~~of net sales~~, ~~compared~~ to $11.6 million 37from $11.2%4 million in the same period of ~~2010~~2011. The increase in ~~gross~~selling ~~margin~~and ofadministrative ~~250~~expenses ~~basis points is~~ primarily ~~attributable~~relates to ~~one-time~~investments ~~costs incurred~~ in ~~the~~product ~~third~~development ~~quarter of 2010 related to the relocation of our domestic factory and other domestic manufacturing inefficiencies experienced during that quarter related to the move~~ (~~160 basis points~~$0.3 million) ~~and~~partially anoffset ~~improved~~by ~~sales~~reduced ~~mix~~marketing ~~and~~expense and other ~~favorable~~ items ~~during the third quarter of 2011~~ (~~90 basis points~~$0.1 million).

~~Selling~~Income ~~and~~Tax ~~Administrative Expenses~~Provision: ~~Selling~~We ~~and~~recognized ~~administrative~~income ~~expenses~~tax inexpense ~~the~~at ~~third~~an ~~quarter~~effective rate of ~~2011 decreased~~ 39.8%, tofor ~~$11.0~~the first ~~million~~quarter ~~from $12.0~~of ~~million~~2012 incompared ~~the~~to ~~same~~an ~~period~~income oftax ~~2010.~~benefit ~~The~~at ~~decrease~~rate inof ~~selling~~39.4% ~~and~~in ~~administrative~~the ~~expenses~~same ~~relates~~period toof a2011. The ~~reduction~~increase in ~~compensation~~our ~~expense~~first ~~($0.4~~quarter ~~million),~~2012 ~~the~~effective ~~settlement~~tax ofrate afrom ~~legal~~the ~~proceeding,~~first ~~net~~quarter of ~~other~~2011 ~~legal~~is ~~fees~~primarily ~~($0.9~~due ~~million)~~to ~~and~~the ~~other~~impact ~~items ($0.2~~of ~~million),~~the ~~partially~~expiration ~~offset~~of the byfederal ~~investments~~research inand ~~marketing~~experimentation ~~and~~tax ~~product~~credit ~~development~~as ~~initiatives~~of ~~($0.5~~December 31, ~~million)~~2011.

Net Income ~~Tax Provision~~(Loss): We ~~recognized~~Net an income ~~tax~~for ~~provision~~the first atquarter anof ~~effective~~2012 ~~rate~~was of$0.6 39million, or $0.4%08 ~~for~~diluted ~~the~~net ~~third~~income ~~quarter~~per ofcommon ~~2011~~share, compared to annet ~~income~~loss ~~tax~~of ~~provision~~$0.7 atmillion, anor ~~effective~~$0.10 ~~rate~~diluted ofnet ~~42.8%~~loss per common share in the same period of ~~2010~~2011. The ~~decrease~~increase in ~~our~~net ~~third~~income ~~quarter 2011 effective tax rate from the third quarter~~ of ~~2010~~$1.2 ismillion ~~due~~was attributable to the ~~impact~~net ofsales, ~~estimated~~gross ~~annual~~profit, ~~permanent~~expense, ~~book-to-tax differences~~ and ~~credits~~tax inrate ~~relation~~changes todiscussed ~~the projected annual pre-tax income~~above.

~~Net~~Trade ~~Income:~~and ~~Net~~Other ~~income~~Accounts ~~for~~Receivable, Net: Trade ~~the~~and ~~third~~other ~~quarter~~accounts ofreceivable ~~2011~~were ~~was~~ $118.71 million, orat ~~$0.25~~the ~~diluted~~end ~~net~~of ~~income~~the ~~per~~first ~~common~~quarter ~~share~~of 2012, ~~compared~~up ~~to net income of~~ $12.14 million, or 15%, from $015.177 ~~diluted~~million ~~net income per common share~~ in the ~~same~~first ~~period~~quarter of ~~2010.~~2011 ~~The~~primarily ~~increase~~due into ~~net~~higher ~~income~~first ofquarter ~~$0.6 million is attributable to the~~ net sales, ~~gross~~in ~~margin, selling and administrative expenses, and tax rate changes discussed above~~2012.

~~Trade and Other Accounts Receivable~~Inventories, Net: ~~Trade~~Inventories ~~and~~decreased ~~other accounts receivable were~~ $243.98 million ~~for~~from the ~~third~~first quarter of 2011, ~~down~~ to $143.81 million, orat ~~7%,~~the ~~from~~first ~~$26~~quarter of 2012.7 ~~million~~The reduction in ~~the~~inventories ~~third~~was ~~quarter~~primarily ofdue ~~2010~~to ~~primarily~~a ~~due~~$4.4 million reduction to ~~lower~~raw ~~sales~~materials ~~volumes~~related to the completion during the ~~third~~first quarter of ~~2011~~2012 of a previously announced large contract military order.

Inventories, Net: Inventories increased $23.3 million from the third quarter of 2010 to $58.0 million. Year-over-year changes affecting the inventory balance include abnormally low inventories at the end of the third quarter of 2010 due to

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supply constraints, and increased finished goods to fulfill at-once demand and U.S. military delivery orders. Our inventory levels typically peak at the end of the third quarter during a normal business cycle and we expect inventory levels to follow our normal pattern, declining during the fourth quarter of 2011.

First Three Quarters of 2011 Compared to the First Three Quarters of 2010:

Net Sales: Net sales for the first three quarters of 2011 decreased 11%, to $87.5 million, from $98.5 million in the same period of 2010. Sales to the work market were $49.7 million for the first three quarters of 2011, down 22% from $63.6 million for the same period of 2010. The decline in work market sales is primarily due to a decline of large contract delivery orders to the U.S. government and associated suppliers and our exit of the apparel business, which more than offset the growth in the other areas of the work market. Excluding the contract military and apparel sales, work sales in the first three quarters of 2011 increased 14% from the same period in 2010. Sales to the outdoor market were $37.7 million during the first three quarters of 2011, up 8% from $34.9 million for the same period of 2010. The growth in outdoor market sales primarily reflects gains in sales of our outdoor hiking product lines.

Gross Margin: Gross margin for the first three quarters of 2011 was 39.8% of net sales, compared to 39.3% in the same period of 2010. The increase in gross margin of 50 basis points is primarily attributable more favorable sales mix (210 basis points), partially offset by domestic manufacturing inefficiencies related to production mix and volumes (120 basis points), and other items (40 basis points).

Selling and Administrative Expenses: Selling and administrative expenses for the first three quarters of 2011 decreased 2%, to $33.0 million from $33.7 million in the same period of 2010. The decrease in selling and administrative expenses relates to a reduction in compensation expense ($1.1 million) and the settlement of a legal proceeding, net of other legal fees ($0.8 million), partially offset by investments in marketing and product development initiatives and other items ($1.2 million).

Income Tax Provision: We recognized an income tax provision at an effective rate of 39.3% for the first three quarters of 2011 compared to an income tax provision at an effective rate of 40.3% in the same period of 2010. The decrease in our year to date 2011 effective tax rate from the year to date 2010 effective tax rate is due to the impact of estimated annual permanent book-to-tax differences and credits in relation to the projected annual pre-tax income.

Net Income: Net income for the first three quarters of 2011 was $0.8 million, or $0.13 diluted net income per common share, compared to net income of $2.9 million, or $0.44 diluted net income per common share in the same period of 2010. The decrease in net income of $2.1 million is attributable to the net sales, gross margin, selling and administrative expenses, and tax rate changes discussed above.

LIQUIDITY AND CAPITAL RESOURCES

Summary

We ~~ended the third quarter of 2011 with cash and cash equivalents of $0.5 million compared to $3.6 million in the same period in 2010. In recent years, we~~ have historically funded working capital requirements, capital expenditures, and dividends principally with cash generated from operations. ~~Beginning~~During ~~in the first quarter of~~ 2011, we ~~used~~utilized our bank line of credit to fund working capital requirements, ~~primarily~~which ~~higher~~were ~~inventory~~primarily ~~levels.~~directed ~~Working~~to ~~capital~~increased ~~requirements in our historical business cycles are generally the lowest in the first quarter and the highest during the third quarter. We expect that our~~ inventory levels. ~~and~~However, ~~short-term~~in ~~borrowings will decline over~~ the ~~fourth quarter of 2011 and the~~ first quarter of 2012., we Wegenerated ~~believe~~$9.8 ~~that~~million ~~our~~of ~~anticipated~~working ~~future~~capital ~~cash flows~~ from operations ~~and~~as ~~our~~we ~~existing~~reduced ~~line of credit will be sufficient to satisfy~~ our ~~working~~inventory ~~capital~~levels ~~needs~~during ~~for~~ the ~~foreseeable~~quarter ~~future~~by $5.6 million.

~~Operating~~Working capital ~~Activities: Cash~~requirements ~~used~~ in ~~operating~~our ~~activities~~historical ~~was~~business ~~$24.8 million~~cycles ~~for~~are generally the ~~first~~lowest ~~three~~in ~~quarters~~the offirst ~~2011~~quarter ~~compared~~and tothe ~~cash~~highest ~~provided of $0.8 million~~ during the ~~same~~third ~~period~~quarter. ofWe ~~2010.~~believe ~~The~~that ~~use~~our ofanticipated ~~operating~~future cash ~~was~~flows ~~primarily~~from ~~related~~operations toand aour ~~planned~~existing ~~increase~~line inof ~~inventories to~~credit ~~meet~~will ~~anticipated~~be sufficient ~~at-once demand and decreases in accounts payable related~~ to asatisfy ~~reduction~~our inworking ~~inventory~~capital ~~purchases~~needs ~~during~~for the ~~latter~~foreseeable ~~part of the third quarter of 2011 and accrued expenses~~future.

~~Investing~~Operating Activities: Cash ~~used~~provided inby operating ~~investing~~ activities was $29.78 million ~~and~~for the first quarter of 2012 compared to cash used in operating activities of $7.8.9 million induring the ~~first~~same ~~three~~period ~~quarters~~ of 2011. ~~and~~The ~~2010,~~cash ~~respectively.~~provided ~~Cash~~by ~~used~~operations inwas ~~investing activities~~primarily ~~was~~related ~~greater~~to decreases in ~~the~~our inventories ~~first~~and ~~three~~accounts ~~quarters~~receivable. ofThe ~~2010~~decrease ~~than~~in inventories in the first ~~three~~quarter ~~quarters~~ of ~~2011~~2012 ~~due~~is primarily attributable to ~~the~~our ~~initial~~normal ~~investments~~seasonal ~~made~~business incycle, ~~our~~sales ~~new~~of ~~factory~~close-outs ~~facility~~during the quarter and ~~new~~utilization ~~factory~~of ~~store~~raw materials associated with the completion during ~~2010~~the quarter of a previously announced large contract military order. WeThe ~~expect~~decrease ~~total~~in ~~2011~~accounts ~~capital~~receivable ~~expenditures~~is also due to ~~be approximately~~the $4normal business cycle.~~0 million.~~

~~Financing~~Investing Activities: Cash ~~provided~~used byin ~~financing~~investing activities, which relates exclusively to capital expenditures, was $231.2 million and $0.8 million ~~for~~ in the first ~~three~~quarter ~~quarters~~ of 2012 and 2011, ~~compared~~respectively. toThe ~~cash~~increase ~~used~~ in ~~financing~~capital ~~activities~~expenditures ofincludes ~~$7.2 million~~capitalized ~~during~~costs ~~the~~associated ~~same~~with ~~period~~our ofproject ~~2010~~to upgrade our internal financial and operational business systems. ~~Cash~~We ~~provided~~expect bytotal ~~financing~~2012 ~~activities~~capital ~~for~~expenditures ~~the~~to be approximately $5.5 million.

Financing Activities: Cash used in financing activities was $9.0 million for the first quarter of 2012 compared to $5.9 million provided by financing activities during the same period of 2011. Cash used in financing activities for the first quarter of 2012 was primarily attributable to reductions in borrowings outstanding under our line of credit of $8.2 million and payment of a $0.8 million cash dividend. Cash provided by financing activities for the first quarter of 2011 was primarily attributable to $6.2 million of borrowings on our line of credit, which was partially offset by a payment of a $0.8 million cash dividend.

We are in compliance with all covenants as of March 31, 2012. At March 31, 2012, December 31, 2011 and March 26, 2011 we had outstanding balances on the line of credit of $8.6 million, $16.9 million and $6.2 million, respectively.

A summary of our contractual cash obligations at March 31, 2012 is as follows (in thousands):


	Payments due by year:
Contractual Obligations	Total		Remaining in 2012		2013		2014		2015		2016		Thereafter
Operating leases (1)	$	15,250	$	1,977	$	2,652	$	2,713	$	2,642	$	1,795	$	3,471

Product purchase obligations (2)		11,958		11,958		—		—		—		—		—

Pension contributions (3)		795		795		—		—		—		—		—

(1)

See Part I, Item 2 – Properties in our Annual Report on Form 10-K for the year ended December 31, 2011 for a description of our leased facilities.

(2)

From time to time, we enter into purchase commitments with our suppliers and third-party manufacturers under customary purchase order terms. Any significant losses implicit in these contracts are recognized at the time such losses are incurred.

(3)

Pension obligations reflect only anticipated pension contributions for the remainder of 2012. Required contributions are calculated on an annual basis and required funding beyond 2012 has not yet been determined.

At March 31, 2012 and March 26, 2011, our pension plan had accumulated benefit obligations in excess of the respective plan assets and accrued pension liabilities. These obligations in excess of plan assets and accrued pension liabilities have resulted in cumulative direct charges to shareholders’ equity (accumulated other comprehensive loss) net of tax of $5.6 million and $3.3 million as of March 31, 2012 and March 26, 2011, respectively. We contributed $0.3 million to our defined benefit pension plan during the first quarter of 2012 and anticipate contributing an additional $0.8 million during the remainder of 2012.

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first three quarters of 2011 was primarily attributable to short-term borrowings of $25.7 million on our line of credit. Cash used in financing activities for the first three quarters of 2010 was primarily attributable to a one-time, special dividend of $1.00 per share, which was partially offset by cash receipts from the exercise of stock options.

A summary of our contractual cash obligations at September 24, 2011 is as follows (in thousands):

	Payments due by year:
			Remaining in2011
Contractual Obligations	Total				2012		2013		2014		2015		Thereafter
Operating leases (1)	$	16,407	$	648	$	2,600	$	2,596	$	2,686	$	2,615	$	5,262
Product purchase obligations (2)		8,971		6,668		2,303		—		—		—		—

(1) See Part I, Item 2 – Properties in our Annual Report on Form 10-K for the year ended December 31, 2010 for a description of our leased facilities.

(2) From time to time, we enter into purchase commitments with our suppliers and third-party manufacturers under customary purchase order terms. Any significant losses implicit in these contracts would be recognized in accordance with generally accepted accounting principles. At September 24, 2011, no such losses existed.

At September 24, 2011 and September 25, 2010, our pension plan had accumulated benefit obligations in excess of the respective plan assets and accrued pension liabilities. These obligations in excess of plan assets and accrued pension liabilities have resulted in cumulative direct charges to shareholders’ equity (accumulated other comprehensive loss) net of tax of $3.3 million and $3.1 million as of September 24, 2011 and September 25, 2010, respectively. We contributed $0.7 million to our pension plan during the first three quarters of 2011 and anticipate contributing an additional $0.2 million during the remainder of 2011.

On September 16, 2011, we entered into a Third Amendment to the Second Amended and Restated Credit Agreement (“Third Amendment”) with Wells Fargo Bank, N.A. to amend the maximum amount of borrowings available for the remainder of the credit agreement term from $17.5 million to $22.5 million during the period of January 1 to May 31 and from $30 million to $35 million during the period of June 1 to December 31. In connection with the Third Amendment, we executed and delivered a new revolving line of credit note (the “Note”) reflecting the increase in available borrowing. The Note supersedes and replaces the revolving line of credit note delivered in connection with the second restatement of the Credit Agreement in March 2009.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies and estimates are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011. There have been no significant changes in these critical accounting policies since December 31, ~~2010~~2011. Some of our accounting policies require us to exercise significant judgment in selecting the appropriate assumptions for calculating financial estimates. Such judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, ~~known trends in our industry,~~ terms of existing contracts and other information from outside sources, as appropriate. Actual results could differ ~~materially~~ from these estimates.

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our disclosures regarding market risk since December 31, ~~2010~~2011. See also Item 7A in our Annual Report on Form 10-K for the year ended December 31, ~~2010~~2011 for further sensitivity analysis regarding our market risk related to interest rates, pension liability and foreign currencies.

ITEM 4.

Controls and Procedures

(a) Evaluation of disclosure controls and procedures. In accordance with Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q, our management evaluated, with the participation of our President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a- 15(e) and Rule 15d-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer have concluded the disclosure controls and procedures were effective as of the end of the period covered by this report.

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13a- 15(e) and Rule 15d-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in internal control over financial reporting. There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II ~~– OTHER INFORMATION~~

ITEM 1.

Legal Proceedings

From time to time, we become involved in regulatory or legal proceedings incidental or routine to our business. When a loss is deemed probable to occur and the amount of such loss can be reasonably estimated, a liability is recorded in our financial statements.

ITEM 1A.

Risk Factors

There ~~have~~has been no material ~~changes~~change to the risk factors as set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2010 and as supplemented by our quarterly reports on Form 10-Q for~~ 2011.

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ITEM 6.

Exhibits

The following exhibits are filed herewith and this list is intended to constitute the exhibit index:

(10.1)	Third Amendment to Second Amended and Restated Credit Agreement, dated September 16, 2011, by and between LaCrosse Footwear, Inc. as borrower, and Wells Fargo Bank, National Association, as lender.
	(31.1)	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
(10.2)	Revolving Line of Credit Note, dated as of September 16, 2011, issued by LaCrosse Footwear, Inc. in favor of Wells Fargo Bank, National Association.
	(31.2)	Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
(31.1)	Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
	(32.1)	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
(31.2)	Certification of Executive Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
	(32.2)	Certification of the Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
(32.1)	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
	(101)	The following financial statements from LaCrosse Footwear, Inc.’s Form 10-Q for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (Unaudited), (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited), (iii) Condensed Consolidated Statements of Cash Flows (Unaudited), and (iv) Notes to Interim Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text. Information is furnished and not filed and is not incorporated by reference in any registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
(32.2)	Certification of the Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
(101)	The following financial statements from LaCrosse Footwear, Inc.’s Form 10-Q for the quarter ended September 24, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (Unaudited), (ii) Condensed Consolidated Statements of Operations (Unaudited), (iii) Condensed Consolidated Statements of Cash Flows (Unaudited), and (iv) Notes to Interim Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text. Information is furnished and not filed and is not incorporated by reference in any registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			~~LACROSSE FOOTWEAR, INC. (Registrant)~~	LACROSSE FOOTWEAR, INC. (Registrant)
Date: October 20, 2011		By:	/s/ Joseph P. Schneider
Date:	April 26, 2012		By:	/s/ Joseph P. Schneider
			~~Joseph P. Schneider~~	Joseph P. Schneider
			~~President and Chief Executive Officer~~	President and Chief Executive Officer
			~~(Principal Executive Officer)~~	(Principal Executive Officer)
Date:	April 26, 2012		By:	/s/ David P. Carlson
				David P. Carlson Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Date: October 20, 2011	By:	/s/ David P. Carlson
		David P. Carlson Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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~~39-1446816~~

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~(I.R.S. Employer Identification No.)~~

17634 NE Airport Way Portland, Oregon 97230

(Address, zip code of principal executive offices)

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