919443--3/6/2009--LACROSSE_FOOTWEAR

related topics

{customer, product, revenue}

{condition, economic, financial}

{product, market, service}

{operation, natural, condition}

{property, intellectual, protect}

{operation, international, foreign}

{personnel, key, retain}

{debt, indebtedness, cash}

{provision, law, control}

{tax, income, asset}

{cost, regulation, environmental}

Changes in the price or availability of raw materials could disrupt our operations and adversely affect our financial results, particularly our gross margins We are experiencing consolidation in our raw materials supply base for outsoles and leather, which presents overall risks in our supply base. Our business could be negatively affected by delays or disruptions in the transition to our new distribution facility. Our newly established European subsidiary, LaCrosse Europe ApS, increases our exposure to risks associated with foreign operations and the transition of customers to our new subsidiary may not be successful. Our profitability is significantly dependent upon future effective tax rates for federal, state and international taxing jurisdictions. We conduct a significant portion of our manufacturing activities and a certain portion of our net sales occurs outside the U.S., and therefore, we are subject to the risks of international commerce. Also, any adverse political conditions or governmental actions, including the imposition of duties and quotas, internally within China (where the majority of our third party manufacturers are concentrated) or externally with the United States and Europe could disrupt our supply of product to customers. Because we depend on third party manufacturers, we face challenges in maintaining a timely supply of goods to meet sales demand, and we may experience delay or interruptions in our supply chain. Any shortfall or delay in the supply of our products may decrease our sales and have an adverse impact on our customer relationships. Our business is substantially affected by weather conditions, and sustained periods of warm and/or dry weather can negatively impact our sales. Additionally, such weather conditions may negatively impact our inventory levels and subsequent period sales. Failure to efficiently import foreign sourced products could result in decreased margins, cancelled orders and unanticipated inventory accumulation. If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have greater difficulty filling our customers orders, either of which could adversely affect our business. Labor disruptions or disruptions due to natural disasters or casualty losses at one of our distribution facilities or our domestic manufacturing facility could have a material adverse effect on our operations. Our financial success may be limited by the strength of our relationships with our retail customers and by the success of such retail customers. We face significant competition and if we are unable to compete effectively, sales of our products may decline and our business could be harmed. We may be unable to meet changing consumer preferences and demands. Our failure or inability to protect our intellectual property could significantly harm our competitive position and reduce future revenues. We depend on a limited number of suppliers for key production materials, and any disruption in the supply of such materials could interrupt product manufacturing and increase product costs. In order to be successful, we must retain and motivate key employees, and the failure to do so could have an adverse impact on our business. If we fail to comply with the covenants contained in our revolving credit facility we may be unable to maintain existing, or secure additional financing, and repayment obligations on our outstanding indebtedness may be accelerated. Our articles of incorporation, bylaws and Wisconsin corporate law each contain provisions that could delay, defer or prevent a change in control of our company or changes in our management.

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919443--3/6/2009--LACROSSE_FOOTWEAR_INC