LaCrosse Footwear, Inc reported a net loss of $5,910,000 or $1.01 per share for the second quarter of 2001 compared to a net loss of $461,000 or $.08 per share for the same period last year.

Net sales for the current quarter decreased to $26.1m from $31.4m for the second quarter of 2000. Through the first six months of 2001, the net loss was $7,398,000 or $1.26 per share, compared to a net loss of $783,000 or $.13 per share for the same period last year. Net sales for the first six months of 2001 were $55.2m compared to $62.4m for the first half of 2000.

As previously reported, the company recorded a sourcing realignment and impairment charge of $4.3m during the second quarter of 2001 related to the elimination of manufacturing at the LaCrosse, Wisconsin manufacturing facility.

This charge is included in the net loss for the second quarter and for the first six months of 2001. The charge related to writedowns of raw materials, components, finished goods, equipment, facilities, employee related costs and a partial curtailment of the union pension plan. These charges were primarily included in cost of sales, however, a portion was included in operating expenses.

While shipments of Danner products were up four per cent during the second quarter, shipments through the industrial channel of distribution and the retail channel of distribution both declined.

The decline in the industrial (Rainfair brand) channel of distribution was a result of softness in the industrial sector and short-term shortages in certain key products. The decline in the retail (LaCrosse brand) channel of distribution was a result of the softness in retail sales and shortages in certain products.

Gross profit as a percentage of net sales (before a sourcing realignment and impairment charge) in the second quarter of 2001 was 26.9 per cent of net sales compared to 25.7 per cent in the second quarter of 2000. The increase in gross profit as a percentage of net sales was primarily the result of higher margins on the increasing volume of sourced product. This is consistent with the Company's long-term strategy of shifting from a manufacturing base to a marketing-driven brand.

Operating expenses in the second quarter of 2001 were $7,900,000 (before a sourcing realignment and impairment charge) compared to $8,066,000 during the second quarter of 2000.

The decrease in operating expenses for the second quarter of 2001 compared to the second quarter of 2000 was primarily attributable to the cost reductions implemented during the past year coupled with a reduction in the variable expenses related to the decreased sales. This reduction was partially offset by increased spending for upgrades in information technology and systems support, and for the development and launch of a business-to-business website.

Joseph P. Schneider, LaCrosse Footwear, Inc president and CEO, said: "While I am disappointed with the results for the quarter and with the sluggishness in the economy in general, we are seeing some positive progress in other areas. In addition, the recent sale of our factory in La Crosse, Wisconsin will help us reduce costs and bring our expenses closer in line with demand, in addition to furthering our transition to a marketing-driven company."

"We are beginning to see the impact of the cost reduction initiatives implemented over the past twelve months, as well as an improvement in margins. While it will take some time to realize the impact on costs from the recently announced sale of our La Crosse, Wisconsin facility and the relocation of company headquarters, we are making progress."


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