0001042167-14-000024.txt : 20140131 0001042167-14-000024.hdr.sgml : 20140131 20140131164913 ACCESSION NUMBER: 0001042167-14-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20131227 FILED AS OF DATE: 20140131 DATE AS OF CHANGE: 20140131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSON OUTDOORS INC CENTRAL INDEX KEY: 0000788329 STANDARD INDUSTRIAL CLASSIFICATION: [3949] IRS NUMBER: 391536083 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16255 FILM NUMBER: 14565348 BUSINESS ADDRESS: STREET 1: 555 MAIN STREET CITY: RACINE STATE: WI ZIP: 53403-1015 BUSINESS PHONE: 2626316600 MAIL ADDRESS: STREET 1: 555 MAIN STREET STREET 2: STE 023 CITY: RACINE STATE: WI ZIP: 53403-1015 FORMER COMPANY: FORMER CONFORMED NAME: JOHNSON WORLDWIDE ASSOCIATES INC DATE OF NAME CHANGE: 19920703 10-Q 1 form10q.htm FORM 10-Q form10q.htm
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 December 27, 2013

OR

[  ]  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 0-16255

JOHNSON OUTDOORS INC.
(Exact name of Registrant as specified in its charter)

Wisconsin
(State or other jurisdiction of
incorporation or organization)
 
39-1536083
(I.R.S. Employer Identification No.)

555 Main Street, Racine, Wisconsin 53403
(Address of principal executive offices)

(262) 631-6600
(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 a smaller reporting company. See the definitions of “large accelerated filer," "accelerated filer” and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer [  ] Accelerated filer [X] Non-accelerated filer (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 ]
 
As of January 24, 2014, 8,750,149 shares of Class A and 1,212,420 shares of Class B common stock of the Registrant were outstanding.
 

 
 

 
 
JOHNSON OUTDOORS INC.
 

Index
 
Page No.
     
PART I
FINANCIAL INFORMATION
   
       
 
Item 1.
Financial Statements
   
         
   
Condensed Consolidated Statements of Operations – Three
months ended December 27, 2013 and December 28, 2012
 
 
1
         
   
Condensed Consolidated Statements of Comprehensive
Income – Three months ended December 27, 2013 and
December 28, 2012
 
 
2
         
   
Condensed Consolidated Balance Sheets – December 27, 2013,
September 27, 2013 and December 28, 2012
 
 
3
         
   
Condensed Consolidated Statements of Cash Flows – Three
months ended December 27, 2013 and December 28, 2012
 
 
4
         
   
Notes to Condensed Consolidated Financial Statements
 
5
         
 
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
 
 
22
         
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
 
29
         
 
Item 4.
Controls and Procedures
 
30
         
PART II
OTHER INFORMATION
   
       
 
Item 1.
Legal Proceedings
 
31
         
 
Item 1A.
Risk Factors
 
31
         
 
Item 6.
Exhibits
 
31
         
   
Signatures
 
31
         
   
Exhibit Index
 
32

 
 
 

 

PART I     FINANCIAL INFORMATION
Item 1.      Financial Statements
JOHNSON OUTDOORS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
       
   
Three Months Ended
 
   
December 27
   
December 28
 
(thousands, except per share data)
 
2013
   
2012
 
Net sales
  $ 79,100     $ 87,274  
Cost of sales
    49,171       53,460  
Gross profit
    29,929       33,814  
Operating expenses:
               
Marketing and selling
    18,972       19,218  
Administrative management, finance and information systems
    10,018       9,445  
Research and development
    3,847       3,625  
Total operating expenses
    32,837       32,288  
Operating (loss) profit
    (2,908 )     1,526  
Interest income
    (31 )     (21 )
Interest expense
    202       439  
Other (income) expense, net
    (159 )     498  
(Loss) Income before income taxes
    (2,920 )     610  
Income tax (benefit) expense
    (727 )     363  
Net (loss) income
  $ (2,193 )   $ 247  
                 
Weighted average common shares - Basic:
               
Class A
    8,362       8,221  
Class B
    1,212       1,214  
Participating securities
    371       -  
Dilutive stock options and restricted stock units
    -       4  
Weighted average common shares - Dilutive
    9,945       9,439  
Net (loss) income per common share - Basic:
               
Class A
  $ (0.22 )   $ 0.03  
Class B
  $ (0.22 )   $ 0.02  
Net (loss) income per common share - Diluted:
               
Class A
  $ (0.22 )   $ 0.02  
Class B
  $ (0.22 )   $ 0.02  
Dividends Declared:
               
Class A
  $ 0.1500     $ -  
Class B
  $ 0.1364     $ -  

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 
 
1

 



JOHNSON OUTDOORS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
             
   
Three Months Ended
 
   
December 27
   
December 28
 
(thousands, except per share data)
 
2013
   
2012
 
Comprehensive (loss) income:
           
Net (loss) income
  $ (2,193 )   $ 247  
Other comprehensive income:
               
Foreign currency translation gain
    124       872  
Change in pension plans, net of tax of $63 and $0, respectively
    104       -  
Amortization of unrealized loss on interest rate swap
    -       138  
Total other comprehensive income
    228       1,010  
Total comprehensive (loss) income
  $ (1,965 )   $ 1,257  
                 

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 
2

 

JOHNSON OUTDOORS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

                   
                   
   
December 27
   
September 27
   
December 28
 
(thousands, except share data)
 
2013
   
2013
   
2012
 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  $ 45,944     $ 55,694     $ 48,084  
Accounts receivable, net
    62,982       44,104       62,811  
Inventories
    87,653       76,363       77,360  
Deferred income taxes
    8,598       7,869       8,805  
Other current assets
    6,018       4,542       8,094  
Total current assets
    211,195       188,572       205,154  
Property, plant and equipment, net of accumulated
depreciation of $105,031, $103,314 and $101,525, respectively
    44,443       43,394       37,847  
Deferred income taxes
    7,955       8,039       14,671  
Goodwill
    21,036       21,053       21,048  
Other intangible assets, net
    14,987       15,068       14,591  
Other assets
    13,270       12,224       10,918  
Total assets
  $ 312,886     $ 288,350     $ 304,229  
LIABILITIES AND SHAREHOLDERS' EQUITY
                       
Current liabilities:
                       
Short-term debt
  $ -     $ -     $ 30,733  
Current maturities of long-term debt
    470       539       535  
Accounts payable
    30,163       26,466       32,129  
Accrued liabilities:
                       
Salaries, wages and benefits
    11,808       17,702       11,399  
Accrued warranty
    4,439       5,214       4,902  
Income taxes payable
    994       1,300       1,732  
Other
    12,511       12,151       13,050  
Total current liabilities
    60,385       63,372       94,480  
Long-term debt, less current maturities
    37,960       7,794       8,196  
Deferred income taxes
    1,112       1,114       4,951  
Retirement benefits
    6,245       6,346       11,667  
Other liabilities
    13,161       12,056       10,519  
Total liabilities
    118,863       90,682       129,813  
Shareholders' equity:
                       
Preferred stock:  none issued
    -       -       -  
Common stock:
                       
Class A shares issued and outstanding:
    438       438       437  
December 27, 2013:  8,750,149  
September 27, 2013:  8,724,984
December 28, 2012:  8,714,178
                       
Class B shares issued and outstanding:
    61       61       61  
December 27, 2013:  1,212,420
September 27, 2013:  1,212,420
December 28, 2012:  1,213,664
                       
Capital in excess of par value
    65,810       66,374       64,460  
Retained earnings
    108,476       112,144       93,064  
Accumulated other comprehensive income
    19,594       19,366       17,127  
        Treasury stock at cost, shares of Class A common
stock:  14,511, 34,766 and 35,680 respectively
    (356 )     (715 )     (733 )
Total shareholders' equity
    194,023       197,668       174,416  
Total liabilities and shareholders' equity
  $ 312,886     $ 288,350     $ 304,229  

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

 
3

 

JOHNSON OUTDOORS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
             
   
Three Months Ended
 
(thousands)
 
December 27
2013
   
December 28
2012
 
             
CASH USED FOR OPERATING ACTIVITIES
 
 
       
Net (loss) income
  $ (2,193 )   $ 247  
Adjustments to reconcile net (loss) income to net cash used for
operating activities:
               
Depreciation
    2,273       2,292  
Amortization of intangible assets
    116       50  
Amortization of deferred financing costs
    29       60  
Stock based compensation
    395       355  
Amortization of deferred loss on interest rate swap
    -       138  
Deferred income taxes
    (776 )     (126 )
Change in operating assets and liabilities, net of effects of acquired business:
               
Accounts receivable, net
    (19,002 )     (20,866 )
Inventories, net
    (11,265 )     (7,806 )
Accounts payable and accrued liabilities
    (3,678 )     3,575  
Other current assets
    (1,481 )     (234 )
Other non-current assets
    (1,068 )     (569 )
Other long-term liabilities
    1,165       146  
Other, net
    77       4  
 
    (35,408 )     (22,734 )
CASH USED FOR INVESTING ACTIVITIES
               
Payments for purchase of business
    -       (15,420 )
Capital expenditures
    (3,355 )     (3,027 )
 
    (3,355 )     (18,447 )
CASH PROVIDED BY FINANCING ACTIVITIES
               
Net borrowings from short-term notes payable and revolving credit lines
    30,233       30,733  
Principal payments on senior notes and other long-term debt
    (136 )     (130 )
Deferred financing costs paid to lenders
    (18 )     -  
Common stock transactions
    38       86  
Dividends paid
    (737 )     -  
Purchases of treasury stock
    (638 )     (886 )
      28,742       29,803  
Effect of foreign currency rate changes on cash
    271       558  
Decrease in cash and cash equivalents
    (9,750 )     (10,820 )
CASH AND CASH EQUIVALENTS
               
Beginning of period
    55,694       58,904  
End of period
  $ 45,944     $ 48,084  
 
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.


 
4

 


JOHNSON OUTDOORS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
 
1         BASIS OF PRESENTATION
 
The Condensed Consolidated Financial Statements included herein are unaudited. In the opinion of management, these statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Johnson Outdoors Inc. and subsidiaries (collectively, the “Company”) as of December 27, 2013 and December 28, 2012, and the results of operations and cash flows for the three month periods then ended. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 27, 2013 which was filed with the Securities and Exchange Commission on December 6, 2013.
 
Due to seasonal variations and other factors, the results of operations for the three months ended December 27, 2013 are not necessarily indicative of the results to be expected for the Company's full 2014 fiscal year.  See “Seasonality” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein for additional information.
 
Certain amounts in the Condensed Consolidated Balance Sheet and Statement of Cash Flows and related footnotes for the three month period ended December 28, 2012 have been adjusted to reflect the effect of measurement period adjustments related to the acquisition of Jetboil as of the date of acquisition.  Additional information on this acquisition can be found in Note 10.
 
All monetary amounts, other than share and per share amounts, are stated in thousands. 
 
2         ACCOUNTS RECEIVABLE
 
Accounts receivable are stated net of allowances for doubtful accounts of $3,325, $3,759 and $3,959 as of the periods ended December 27, 2013, September 27, 2013 and December 28, 2012, respectively. The increase in net accounts receivable to $62,982 as of December 27, 2013 from $44,104 as of September 27, 2013 is attributable to the seasonal nature of the Company's business. The determination of the allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns on a receivable exist, a reserve is established to value the affected account receivable at an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of accounts receivable outstanding for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable.
 
3         EARNINGS PER SHARE (“EPS”)
 
Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method.  Grants of restricted stock which receive non-forfeitable dividends are classified as participating securities and are required to be included as part of the basic weighted average share calculation under the two-class method.
 
 
 
5

 
JOHNSON OUTDOORS INC.
 
Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above.  As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.
 
Basic EPS
 
Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding, respectively.  In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.  In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities.
 
For the three month period ended December 27, 2013, basic loss per share for Class A and Class B shares has been presented using the two class method described above and is the same due to the cumulative net loss incurred in the period. For the three month period ended December 28, 2012, basic net income per share for Class A and Class B shares has been presented using the two class method and reflects the allocation of undistributed income as described above.
 
Diluted EPS
 
Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units (“stock units” or “units”) and non-vested restricted stock.  Anti-dilutive stock options, units and non-vested stock are excluded from the calculation of diluted EPS.  The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock.  Therefore, diluted net income per share is the same for both Class A and Class B common shares.  In periods where the Company reports a net loss, the effect of anti-dilutive stock options and units is excluded and diluted loss per share is equal to basic loss per share.
 
For the three month period ended December 27, 2013, the effect of stock options and non-vested restricted stock units is excluded from the diluted loss per share calculation as its inclusion would be anti-dilutive.  For the three month period ended December 28, 2012, diluted net income per share reflects the effect of dilutive stock options and units and assumes the conversion of Class B common stock into Class A common stock, therefore diluted earnings per share for Class A and Class B common stock is the same.
 
Stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 13,116 and 0 for the three months ended December 27, 2013 and December 28, 2012, respectively.  Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled  319,632 and 468,081 shares for the three months ended December 27, 2013 and December 28, 2012, respectively.  Restricted stock units that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 6,600 and 0 for the three months ended December 27, 2013 and December 28, 2012, respectively.
 
 
 
6

 
JOHNSON OUTDOORS INC.
 
4         STOCK-BASED COMPENSATION AND STOCK OWNERSHIP PLANS
 
The Company’s current stock ownership plans allow for issuance of stock options to acquire shares of Class A common stock by key executives and non-employee directors. Current plans also allow for issuance of shares of restricted stock, units or stock appreciation rights in lieu of stock options.
 
Under the Company’s 2010 Long-Term Stock Incentive Plan and the 2012 Non-Employee Director Stock Ownership Plan there were 716,124 shares of the Company’s Class A common stock available for grant to key executives and non-employee directors at December 27, 2013.
 
           Stock Options
 
All stock options have been granted at a price not less than fair market value at the date of grant and all outstanding options are currently exercisable.  Stock options generally have a term of 10 years.
 
All of the Company’s stock options outstanding are fully vested, with no further compensation expense to be recorded. There were no grants of stock options during either of the three month periods ended December 27, 2013 or December 28, 2012.
 
A summary of stock option activity for the three months ended December 27, 2013 is shown below:
                         
   
Shares
 
Weighted Average Exercise Price
 
Aggregate Intrinsic Value
   
Weighted Average Remaining Contractual Term (Years)
 
Outstanding and exercisable at September 27, 2013
    15,066     $ 18.16              
Exercised
    (1,950 )     19.88              
Outstanding and exercisable at December 27, 2013
    13,116       17.91     $ 129       1.2  
 
The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $27.77 as of December 27, 2013, which would have been received by the option holders had those option holders exercised their stock options as of that date.
 
The Company received cash proceeds from stock option exercises totaling $38 and $86 for the three month periods ending December 27, 2013 and December 28, 2012, respectively.  The fair value of the stock received upon exercise of such options at their date of exercise during the three month periods ended December 27, 2013 and December 28, 2012 was $52 and $171, respectively.
 
Non-vested Stock
 
All shares of non-vested stock awarded by the Company have been granted at their fair market value on the date of grant and vest either immediately or within five years after the grant date.  The fair value at date of grant is based on the number of shares granted and the average of the Company’s high and low Class A common stock price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock price on the last preceding date on which the Company’s shares traded.
 
 
 
7

 
JOHNSON OUTDOORS INC.
 
A summary of non-vested stock activity for the three months ended December 27, 2013 related to the Company’s stock ownership plans is as follows:
             
       
Weighted Average
 
   
Shares
 
Grant Price
 
Non-vested stock at September 27, 2013
    386,409     $ 13.78  
Non-vested stock grants
    47,934       27.70  
Restricted stock vested
    (114,711 )     10.32  
Non-vested stock at December 27, 2013
    319,632       17.10  
 
Non-vested stock grantees may elect to reimburse the Company for withholding taxes due as a result of the vesting of shares by tendering a portion of the vested shares back to the Company. Shares tendered back to the Company were 24,719 and 43,464 during the three month periods ended December 27, 2013 and December 28, 2012, respectively.
 
Stock compensation expense, net of forfeitures, related to non-vested stock was $357 and $355 for the three month periods ended December 27, 2013 and December 28, 2012, respectively.  Unrecognized compensation cost related to non-vested stock as of December 27, 2013 was $3,274, which amount will be amortized to expense through November 2017 or adjusted for changes in future estimated or actual forfeitures.
 
The fair value of restricted stock vested during the three month periods ended December 27, 2013 and December 28, 2012 was $2,961 and $3,628, respectively.
 
Restricted Stock Units
 
All stock units awarded by the Company have been granted at their fair market value on the date of grant and vest within one year after the grant date.  The fair value at date of grant is based on the number of units granted and the average of the Company’s high and low Class A common stock price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock trading price on the last preceding date on which the Company’s shares traded.  There were 6,600 restricted stock units unvested and outstanding as of December 27, 2013.
 
Stock compensation expense, net of forfeitures, related to stock units was $38 for the three month period ended December 27, 2013.  There was no stock compensation expense related to the issuance of stock units during the three month period ended December 28, 2012.  Unrecognized compensation cost related to non-vested stock units as of December 27, 2013 was $25, which amount will be amortized to expense through February 2014 or adjusted for changes in future estimated or actual forfeitures.
 
The Company recognized an income tax benefit on stock-based compensation expense of $150 and $135 for the three month periods ended December 27, 2013 and December 28, 2012, respectively.
 
The Company recognized no income tax benefit (expense) on exercises of stock options and vesting of non-vested stock for either of the three month periods ended December 27, 2013 and December 28, 2012.
 
 
 
8

 
JOHNSON OUTDOORS INC.
 
Employees’ Stock Purchase Plan
 
The Company’s shareholders have adopted the Johnson Outdoors Inc. 2009 Employees’ Stock Purchase Plan which provides for the issuance of shares of Class A common stock at a purchase price of not less than 85% of the fair market value of such shares on the date of grant or at the end of the offering period, whichever is lower.
 
The Company did not issue any shares under the Employees’ Stock Purchase Plan during the three month periods ended December 27, 2013 and December 28, 2012.
 
5         PENSION PLANS
 
The Company has non-contributory defined benefit pension plans covering certain U.S. employees. Retirement benefits are generally provided based on the employees’ years of service and average earnings. Normal retirement age is 65, with provisions for earlier retirement.   
 
The components of net periodic benefit cost related to Company sponsored defined benefit plans for the three month periods ended December 27, 2013 and December 28, 2012 were as follows:
             
 
Three Months Ended
 
 
December 27
 
December 28
 
 
2013
 
2012
 
Components of net periodic benefit cost:
           
Service cost
  $ -     $ -  
Interest on projected benefit obligation
    249       259  
Less estimated return on plan assets
    244       236  
Amortization of unrecognized losses
    167       84  
    $ 172     $ 107  

6         INCOME TAXES
 
For the three months ended December 27, 2013 and December 28, 2012, the Company’s loss (earnings) before tax, tax (benefit) expense and effective income tax rate attributable to earnings before income taxes was as follows:
             
 
Three Months Ended
 
 
December 27
 
December 28
 
(thousands, except tax rate data)
2013
 
2012
 
(Loss) Income before income taxes
  $ (2,920 )   $ 610  
Income tax (benefit) expense
  $ (727 )   $ 363  
Effective income tax rate
    24.9 %     59.5 %
                 
 
 
 
9

 
JOHNSON OUTDOORS INC.
 
The change in the Company’s effective tax rate for the three months ended December 27, 2013 versus the prior year period was primarily due to variances in income or loss as of December 27, 2013 for entities that have a valuation allowance.  The tax jurisdictions that such entities were located in were as follows for the three month periods ended December 27, 2013 and December 28, 2012, respectively:
 
   
Three Months Ended
December 27
December 28
2013
2012
   
Japan
 
Japan
France   France
Indonesia   Indonesia
Italy   Italy
Netherlands   Netherlands
New Zealand   New Zealand
Spain   Spain
United Kingdom   United Kingdom
 
The Company would ordinarily recognize a tax expense or benefit on operating income or loss in these jurisdictions; however, due to the recent cumulative losses for book purposes and the uncertainty of the realization of certain deferred tax assets in these jurisdictions, the Company continues to adjust its valuation allowances resulting in effectively no recorded tax expense or benefit in these jurisdictions.
 
The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes.  As a result, the Company may adjust the reserves for unrecognized tax benefits for the impact of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities, and lapses of statutes of limitation.  The Company’s 2014 fiscal year tax expense is anticipated to include approximately $350 related to uncertain income tax positions.
 
In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company is projecting accrued interest, for the Company’s fiscal year ending October 3, 2014 of $100.
 
The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions.   The Company is currently undergoing an income tax examination in Italy.  The following tax years remain subject to examination by the respective tax jurisdictions:
 
       
Jurisdiction
 
Fiscal Years
 
United States
    2010-2013  
Canada
    2009-2013  
France
    2009-2013  
Germany
    2009-2013  
Italy
    2009-2013  
Japan
    2012-2013  
Switzerland
    2002-2013  


 
10

 
JOHNSON OUTDOORS INC.

 
7         INVENTORIES

Inventories at the end of the respective periods consisted of the following:
 
   
December 27
   
September 27
   
December 28
 
   
2013
   
2013
   
2012
 
Raw materials
  $ 33,780     $ 27,935     $ 31,217  
Work in process
    344       198       304  
Finished goods
    53,529       48,230       45,839  
    $ 87,653     $ 76,363     $ 77,360  
 
8         GOODWILL

The changes in goodwill during the three months ended December 27, 2013 and December 28, 2012 were as follows:
             
   
December 27
2013
   
December 28
2012
 
Balance at beginning of period
  $ 21,053     $ 14,466  
Jetboil® acquisition
    -       6,475  
Amount attributable to movements in
               
foreign currency rates
    (17 )     107  
Balance at end of period
  $ 21,036     $ 21,048  

9         WARRANTIES

The Company provides for warranties of certain products as they are sold. The following table summarizes the Company's warranty activity for the three months ended December 27, 2013 and December 28, 2012.
             
   
December 27
2013
   
December 28
2012
 
Balance at beginning of period
  $ 5,214     $ 4,751  
Expense accruals for warranties issued during the period
    822       947  
Less current period warranty claims paid
    1,597       796  
Balance at end of period
  $ 4,439     $ 4,902  

 
 
11

 
JOHNSON OUTDOORS INC.
 
10       ACQUISITION
 
On November 14, 2012, the Company acquired all of the outstanding common and preferred stock of Jetboil, Inc. (“Jetboil”) in a purchase transaction with Jetboil’s founders and other shareholders (the “Sellers”).  Jetboil, founded and based in Manchester, New Hampshire, designs and manufactures the world’s top brand of portable outdoor cooking systems.
 
The $15,420 of consideration paid in this acquisition was funded with existing cash and credit facilities. Approximately $3,200 of the purchase price was paid into a segregated escrow account which was set aside to fund potential indemnity claims that may be made by the Company against the Sellers in connection with the inaccuracy of certain representations and warranties made by Sellers or related to the breach or nonperformance of certain other actions or conditions related to the acquisition, for a period of 15 months from the acquisition date.  The Company is currently evaluating potential indemnity claims but cannot estimate the amount at this time.  The remaining escrow balance, if any, net of any indemnity claims then pending, will be released to the Sellers once the 15 month period has lapsed. 
 
The Company believes that sales of Jetboil’s innovative cooking products can be expanded through the Company’s U.S. and Canadian marketing and distribution networks and that the Company’s other camping and paddling brands will benefit from Jetboil’s strong presence in the Specialty trade channel and from its international sales network.  The Jetboil acquisition, including acquired goodwill, is included in the Company’s Outdoor Equipment segment.
 
The Company completed its valuations of the assets acquired and liabilities assumed in the business combination resulting in the following measurement period adjustments to the provisional amounts since the acquisition date.  The effect of these measurement period adjustments has been reflected in the condensed consolidated financial statements for the period ended December 28, 2012.

       
Provisional amount adjustments increase (decrease)
 
Financial assets
  $ (33 )
Inventories
    (159 )
Property, plant and equipment
    80  
Identifiable intangible assets and goodwill
    3,865  
Deferred tax liabilities
    4,257  
Financial liabilities
    (390 )
         
 
The following table summarizes the final fair values of the assets acquired and liabilities assumed, and the resulting goodwill acquired at the date of the Jetboil acquisition.

   
Recognized amounts of identifiable assets acquired and liabilities assumed
 
Accounts receivable
  $ 1,184  
Inventories
    2,232  
Other current assets
    167  
Property, plant and equipment
    314  
Identifiable intangible assets
    10,400  
Less, accounts payable and accruals
    1,111  
Less, deferred tax liabilities
    4,241  
Total identifiable net assets
    8,945  
Goodwill
    6,475  
Net assets acquired
  $ 15,420  

 
 
12

 
JOHNSON OUTDOORS INC.
 
The goodwill resulting from this acquisition reflects the strong cash flow expected from the acquisition due primarily to expanded distribution and growth in all Outdoor Equipment brands.  This goodwill is not deductible for tax purposes.  Transaction costs incurred for the acquisition during the three months ended December 28, 2012 were $177 and were included in the “Administrative management, finance and information systems” line in the Company’s accompanying Condensed Consolidated Statements of Operations in the Other/Corporate segment.
 
The fair value assigned to finite lived intangible assets is as follows:
             
     
Useful
 
Description
Amount
 
Life (yrs)
 
Patents
  $ 240       7  
Noncontractual customer relationships
    3,700       15  
Non-compete agreements
    1,060       4  
                 
The weighted average useful life at the date of acquisition of total amortizable intangible assets acquired in the acquisition was 12.3 years.  The acquisition included an indefinite lived tradename valued at $5,400.
 
11       RESTRUCTURING

On July 11, 2012, the Company announced plans to restructure certain operations related to its Watercraft segment.  Specifically, the Company restructured its product sales and distribution in Europe and consolidated all of its U.S. operations at a single location in Old Town, Maine. The Company believes this plan will enhance the competitiveness and profit potential of its Watercraft business.  This action resulted in the closure of two sales offices in the U.K. and France, the closure of a marketing and R&D facility in Bellingham, Washington and the elimination of approximately 24 positions in the U.S. and Europe.  The related charges are included in the “Administrative management, finance and information systems” line in the Company’s accompanying Condensed Consolidated Statements of Operations in the Watercraft segment.  The restructuring accrual is included in the “Other current liabilities” line in the Company’s accompanying Condensed Consolidated Balance Sheets.  The planned actions related to this restructuring were completed in 2013 and the Company expects the total cost of this restructuring to be approximately $2,610.  The remaining restructuring liabilities should be settled by the end of 2014.
 
 
 
13

 
JOHNSON OUTDOORS INC.

 
Changes in the accrual related to this restructuring project for the three month period ended December 27, 2013 were as follows:
                         
   
Employee Termination Costs
   
Contract Exit Costs
   
Other Exit Costs
   
Total
 
Accrued restructuring liabilities as of September 27, 2013
    84       219       203       506  
Activity during the period ended December 27, 2013:
                               
Settlement payments
    (39 )     (148 )     (107 )     (294 )
Accrued restructuring liabilities as of December 27, 2013
  $ 45     $ 71     $ 96     $ 212  

12       LITIGATION

The Company is subject to various legal actions and proceedings in the normal course of business, including those related to commercial disputes, product liability, intellectual property and environmental matters. The Company is insured against loss for certain of these matters. Although litigation is subject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management does not believe the final outcome of any pending litigation will have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

13       INDEBTEDNESS

Debt was comprised of the following at December 27, 2013, September 27, 2013, and December 28, 2012:
                   
   
December 27
2013
   
September 27
2013
   
December 28
2012
 
Term loans
  $ 8,060     $ 8,142     $ 8,379  
Revolvers
    30,234       -       30,733  
Other
    136       191       352  
Total debt
    38,430       8,333       39,464  
Less current portion of long term debt
    470       539       535  
Less short term notes debt
    -       -       30,733  
Total long-term debt
  $ 37,960     $ 7,794     $ 8,196  
 
Term Loans
The Company’s term loans have a maturity date of September 29, 2029.  Each term loan requires monthly payments of principal and interest. Interest on the aggregate outstanding amount of the term loans is based on the prime rate plus an applicable margin.  The interest rate in effect on the term loans was 5.25% at December 27, 2013.

The term loans are guaranteed in part under the United States Department of Agriculture Rural Development program and are secured with a first priority lien on land, buildings, machinery and equipment of the Company’s domestic subsidiaries and a second lien on working capital and certain patents and trademarks of the Company and its subsidiaries.  Any proceeds from the sale of secured property are first applied against the related term loans and then against the Revolvers (as defined below). The Company’s term loans include covenants related to its current ratio, debt to net worth ratio, fixed charge ratio, minimum net worth and capital expenditures.
 
 
 
14

 
 
JOHNSON OUTDOORS INC.
 
The aggregate term loan borrowings are subject to a pre-payment penalty.  The penalty is currently 6% of the pre-payment amount, and the penalty will decrease by 1% annually on the anniversary date of the effective date of the loan agreement.

Revolvers
On September 16, 2013, the Company and certain of its subsidiaries entered into a new credit facility with PNC Bank National Association and certain other lenders which terminated the Amended Revolving Credit and Security agreement with PNC Bank National Association and the other lenders named therein, dated as of November 16, 2010.  The new credit facility consists of a Revolving Credit Agreement dated September 16, 2013 among the Company, certain of the Company’s subsidiaries, PNC Bank National Association, as lender and as administrative agent, and the other lenders named therein (the “Revolving Credit Agreement” or “Revolver”).  The Revolver has an expiration date of September 16, 2018 and provides for borrowing of up to an aggregate principal amount not to exceed $90,000 with an accordion feature that gives the Company the option to increase the maximum seasonal financing availability subject to the conditions of the Revolving Credit Agreement and subject to the approval of the lenders.  The Revolver imposes a seasonal borrowing limit such that borrowings may not exceed $60,000 from the period June 30th through October 31st of each year under the agreement.

The interest rate on the Revolver resets each quarter and is based on LIBOR plus an applicable margin.  The applicable margin ranges from 1.25 percent to 2.00 percent and is dependent on the Company’s leverage ratio for the trailing twelve month period.  The interest rate on the Revolver at December 27, 2013 was approximately 1.4%.

The Revolver is secured with a first priority lien on working capital assets and certain patents and trademarks of the Company and its subsidiaries and a second priority lien on land, buildings, machinery and equipment of the Company’s domestic subsidiaries.  Under the terms of the Revolver, the Company is required to comply with certain financial and non-financial covenants.  The Revolving Credit Agreement limits asset or stock acquisitions to no more than $20,000 in the event that the Company’s consolidated leverage ratio is greater than 2.5 times.  No limits are imposed if the Company’s consolidated leverage ratio is less than 2.5 times and the remaining borrowing availability under the Revolver is greater than $10,000 at the time of the acquisition.  The Revolving Credit Agreement limits the amount of restricted payments (primarily dividends and repurchases of common stock) made during each fiscal year.  The Company may declare, and pay, dividends in accordance with historical practices, but in no event may the aggregate amount of all dividends or repurchases of common stock exceed $10,000 in any fiscal year.  The Revolving Credit Agreement restricts the Company’s ability to incur additional debt and includes maximum leverage ratio and minimum interest coverage ratio covenants.

Other Borrowings
The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of December 27, 2013 or December 28, 2012.  The Company utilizes letters of credit primarily as security for the payment of future claims under its workers’ compensation insurance, which totaled $811 and $1,469 at December 27, 2013 and December 28, 2012, respectively.  The Company had no unsecured lines of credit as of December 27, 2013 or December 28, 2012.
 
 
 
15

 
 
JOHNSON OUTDOORS INC.
Aggregate scheduled maturities of long-term debt as of December 27, 2013, for the remainder of fiscal 2014 and subsequent fiscal years, were as follows:
       
Fiscal Year
     
2014
  $ 406  
2015
    360  
2016
    368  
2017
    389  
2018
    30,644  
Thereafter
    6,263  
Total
  $ 38,430  
 
Balances carried on the Revolving Credit Agreement not in excess of the seasonal borrowing limit may be repaid at the Company’s discretion at any time through the maturity date.  Accordingly, this balance has been classified as long term.
 
Interest paid for the three month periods ended December 27, 2013 and December 28, 2012 was $138 and $211, respectively.

The weighted average borrowing rate for short-term debt was approximately 1.4% and 2.5% for the three months ended December 27, 2013 and December 28, 2012, respectively.

Based on the borrowing rates currently available to the Company for debt with similar terms and maturities, the fair value of the Company’s long-term debt as of December 27, 2013 and December 28, 2012 approximated its carrying value.

14       DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following disclosures describe the Company’s objectives in using derivative instruments, the business purpose or context for using derivative instruments, and how the Company believes the use of derivative instruments helps achieve the stated objectives.  In addition, the following disclosures describe the effects of the Company’s use of derivative instruments and hedging activities on its financial statements.
 
Foreign Exchange Risk
 
The Company has significant foreign operations, for which the functional currencies are denominated primarily in euros, Swiss francs, Japanese yen, Hong Kong dollars and Canadian dollars. As the values of the currencies of the foreign countries in which the Company has operations increase or decrease relative to the U.S. dollar, the sales, expenses, profits, losses, assets and liabilities of the Company’s foreign operations, as reported in the Company’s consolidated financial statements, increase or decrease, accordingly. Approximately 21% of the Company’s revenues for the three month period ended December 27, 2013 were denominated in currencies other than the U.S. dollar. Approximately 11% were denominated in euros, with the remaining revenues denominated in various other foreign currencies. Changes in foreign currency exchange rates can cause unexpected financial losses or cash flow needs.
 
The Company may mitigate a portion of the fluctuations in certain foreign currencies through the use of foreign currency forward contracts.  Foreign currency forward contracts enable the Company to lock in the foreign currency exchange rate to be paid or received for a fixed amount of currency at a specified date in the future. The Company may use such foreign currency forward contracts to mitigate the risk associated with changes in foreign currency exchange rates on financial instruments and known commitments, including commitments for inventory purchases, denominated in foreign currencies. As of December 27, 2013, the Company held no foreign currency forward contracts.
 
 
 
16

 
JOHNSON OUTDOORS INC.
 
Interest Rate Risk
 
The Company operates in a seasonal business and experiences significant fluctuations in operating cash flow as working capital needs increase in advance of the Company’s primary selling and cash generation season, and decline as accounts receivable are collected and cash is accumulated or debt is repaid.  The Company’s goal in managing its interest rate risk is to maintain a mix of floating rate and fixed rate debt such that permanent non-equity capital needs are largely funded with long term fixed rate debt and seasonal working capital needs are funded with short term floating rate debt.
 
When the appropriate mix of fixed rate or floating rate debt cannot be directly obtained in a cost effective manner, the Company may enter into interest rate swap contracts in order to change floating rate interest into fixed rate interest or vice versa for a specific amount of debt in order to achieve the desired proportions of floating rate and fixed rate debt.
 
The Company held no interest rate swap contracts during the three month periods ended December 27, 2013 and December 28, 2012 and as of December 27, 2013, the Company was unhedged with respect to interest rate risk on its floating rate debt.  The Company has fully amortized the unrealized loss related to the formerly effective interest rate swap that had subsequently become ineffective on January 2, 2009.
 
The following table discloses the location of loss reclassified from accumulated other comprehensive income (“AOCI”) into net income related to derivative instruments during the three month periods ended December 27, 2013 and December 28, 2012.
     
 
Three Months Ended
 
 
December 27
 
December 28
 
Loss reclassified from AOCI into:
2013
 
2012
 
             
Interest expense
  $ -     $ 138  

The effect of derivative instruments on the Condensed Consolidated Statements of Operations for the three months
ended December 27, 2013 and December 28, 2012 was:
       
 
Location of  loss (gain)
Three Months Ended
 
Derivatives not designated as
recognized in statement
December 27
 
December 28
 
hedging instruments
of operations
2013
 
2012
 
               
Foreign exchange forward contracts
Other expense (income), net
  $ -     $ (122 )


 
17

 
 
JOHNSON OUTDOORS INC.
15       FAIR VALUE MEASUREMENTS
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable. 
 
    Level 1 - Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets or liabilities.
     
    Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments.
     
    Level 3 - Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.
 
The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at December 27, 2013, September 27, 2013 and December 28, 2012 due to the short term maturities of these instruments. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

Valuation Techniques

Rabbi Trust Assets
Rabbi trust assets are classified as trading securities and are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.  The rabbi trust assets are used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan.  The mark to market adjustments are recorded in “Other expense (income), net” in the accompanying Condensed Consolidated Statements of Operations.

Goodwill and Other Intangible Assets
In assessing the recoverability of the Company’s goodwill and other indefinite lived intangible assets, the Company estimates the future discounted cash flows of the businesses to which such goodwill and intangibles relate.  When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any.  In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings, and other factors to determine the fair value of the respective assets.  This calculation is highly sensitive to changes in key assumptions and could result in a future impairment charge.  The Company will continue to evaluate whether circumstances and events have changed to the extent that they require the Company to conduct an interim test of goodwill.  In particular, if the Company’s business units do not achieve short term revenue and gross margin goals, an interim impairment test may be triggered which could result in a goodwill impairment charge in future periods.
 
The following table summarizes the Company's financial assets measured at fair value as of December 27, 2013:
                         
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                       
     Rabbi trust assets
  $ 10,024     $ -     $ -     $ 10,024  
 
 
 
18

 
JOHNSON OUTDOORS INC.
 
The following table summarizes the Company's financial assets measured at fair value as of September 27, 2013:
 
                         
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                       
     Rabbi trust assets
  $ 8,948     $ -     $ -     $ 8,948  
                                 
                                 
The following table summarizes the Company's financial assets and liabilities measured at fair value as of December 28, 2012:
 
                                 
   
Level 1
   
Level 2
   
Level 3
   
Total
 
Assets:
                               
     Rabbi trust assets
  $ 7,617     $ -     $ -     $ 7,617  
     Foreign currency forward contracts
    -       106       -       106  
                                 
The effect of changes in the fair value of financial instruments on the Condensed Consolidated Statements of Operations for the three months ended December 27, 2013 and December 28, 2012 was:
               
 
Location of (income) loss
Three Months Ended
 
 
recognized in Statement of
December 27
 
December 28
 
 
Operations
2013
 
2012
 
               
Rabbi trust assets
Other expense (income), net
  $ (392 )   $ 129  
Foreign currency forward contracts
Other expense (income), net
    -       (122 )

There were no assets and liabilities measured at fair value on a non-recurring basis in periods subsequent to their initial recognition for the three month periods ended December 27, 2013 and December 28, 2012.

16       NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (“FASB”) issued authoritative guidance in February 2013 that amends the presentation of accumulated other comprehensive income and clarifies how to report the effect of significant reclassifications out of accumulated other comprehensive income.  The guidance requires footnote disclosures regarding the changes in accumulated other comprehensive income by component and the line items affected in the statements of operations.  The Company adopted this updated authoritative guidance effective as of September 28, 2013, the beginning of its first quarter of fiscal 2014.  The adoption of this updated authoritative guidance resulted in an additional footnote disclosure but had no effect on our financial condition, results of operations or cash flows.
 
 
 
19

 
JOHNSON OUTDOORS INC.
 
17       SEGMENTS OF BUSINESS

The Company conducts its worldwide operations through separate business units, each of which represents major product lines. Operations are conducted in the United States and various foreign countries, primarily in Europe, Canada and the Pacific Basin. The Company had no single customer that represented more than 10% of its total net sales during any of the three month periods ended December 27, 2013 and December 28, 2012.
 
Net sales and operating profit include both sales to customers, as reported in the Company's accompanying Condensed Consolidated Statements of Operations, and interunit transfers, which are priced to recover cost plus an appropriate profit margin. Total assets represent assets that are used in the Company's operations in each business segment at the end of the periods presented.
 
A summary of the Company’s operations by business unit is presented below:
               
   
Three Months Ended
   
   
December 27
   
December 28
 
September 27
   
2013
   
2012
 
2013
Net sales:
             
Marine Electronics:
             
Unaffiliated customers
  $ 48,173     $ 53,632    
Interunit transfers
    12       19    
Outdoor Equipment:
                 
Unaffiliated customers
    8,378       8,433    
Interunit transfers
    5       7    
Watercraft:
                 
Unaffiliated customers
    5,425       6,807    
Interunit transfers
    24       7    
Diving
                 
Unaffiliated customers
    17,058       18,347    
Interunit transfers
    266       136    
Other / Corporate
    66       55    
Eliminations
    (307 )     (169 )  
Total
  $ 79,100     $ 87,274    
Operating profit (loss):
                 
Marine Electronics
  $ 2,332     $ 4,746    
Outdoor Equipment
    (188 )     224    
Watercraft
    (1,636 )     (1,682 )  
Diving
    149       702    
Other / Corporate
    (3,565 )     (2,464 )  
    $ (2,908 )   $ 1,526    
Total assets (end of period):
                 
Marine Electronics
  $ 140,140     $ 124,792   $111,459
Outdoor Equipment
    41,986       44,823  
 43,630 
Watercraft
    28,379       34,970  
 27,810 
Diving
    72,593       70,839  
 70,810 
Other / Corporate
    29,788       28,805  
 34,641 
    $ 312,886     $ 304,229   $288,350

 
 
20

 
JOHNSON OUTDOORS INC.
 
18       ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in Accumulated OCI by component, net of tax, for the three months ended December 27, 2013 are as follows:
                   
(thousands)
 
Foreign Currency Translation Adjustment
   
Unamortized loss on defined benefit pension plans
   
Accumulated
Other Comprehensive Income (Loss)
 
BALANCE AT SEPTEMBER 27, 2013
  $ 23,789     $ (4,423 )   $ 19,366  
Other comprehensive income before reclassifications
    124       -       124  
Amounts reclassified from accumulated other comprehensive income
    -       167       167  
Tax effects
    -       (63 )     (63 )
                         
BALANCE AT DECEMBER 27, 2013
    23,913       (4,319 )     19,594  

The reclassifications out of Accumulated OCI for the three month period ended December 27, 2013 is as follows:
         
       
Statement of Operations
Details about Accumulated OCI Components
     
Presentation
(thousands)
  Three Months Ended
December 27, 2013
   
         
Unamortized loss on defined benefit pension plans
       
Amortization of loss
  $ 167  
Cost of sales / Operating expense
    Tax effects     (63 )
Income tax expense
Total reclassifications for the period
  $ 104    

 
 
21

 
 
JOHNSON OUTDOORS INC.
 
Item 2     Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc. and its subsidiaries (collectively, the “Company”) as of and for the three month periods ended December 27, 2013 and December 28, 2012. All monetary amounts, other than share and per share amounts, are stated in thousands.
 
Our MD&A is presented in the following sections:
 
    Forward Looking Statements
    Trademarks
    Overview
    Results of Operations
    Liquidity and Financial Condition
    Contractual Obligations and Off Balance Sheet Arrangements
    Critical Accounting Policies and Estimates
 
This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related notes that immediately precede this section, as well as the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2013 which was filed with the Securities and Exchange Commission on December 6, 2013.
 
Forward Looking Statements
 
Certain matters discussed in this Form 10-Q are “forward-looking statements,” and the Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of those safe harbor provisions. These forward-looking statements can generally be identified as such because they include phrases such as the Company “expects,” “believes,” “anticipates,” “intends” or other words of similar meaning. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking 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 the matters described under the caption "Risk Factors" in Item 1A of the Company’s Form 10-K which was filed with the Securities and Exchange Commission on December 6, 2013 and the following:  changes in economic conditions, consumer confidence levels and discretionary spending patterns in key markets; the Company’s success in implementing its strategic plan, including its targeted sales growth platforms and focus on innovation; litigation costs related to actions of and disputes with third parties, including competitors; the Company’s continued success in its working capital management and cost-structure reductions; the Company’s ongoing success in meeting financial covenants in its credit arrangements with its lenders; the Company’s success in integrating strategic acquisitions; the risk of future writedowns of goodwill or other long-lived assets; the ability of the Company’s customers to meet payment obligations; movements in foreign currencies, interest rates or commodity costs; fluctuations in the prices of raw materials or the availability of raw materials used by the Company; the success of the Company’s suppliers and customers; the ability of the Company to deploy its capital successfully; unanticipated outcomes related to outsourcing certain manufacturing processes; unanticipated outcomes related to litigation matters; and adverse weather conditions. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this filing. The Company assumes no obligation, and disclaims any obligation, to update such forward-looking statements to reflect subsequent events or circumstances.
 
 
 
22

 
JOHNSON OUTDOORS INC.
 
Trademarks
 
We have registered the following trademarks, which may be used in this report: Minn Kota®, Cannon®, Humminbird®, LakeMaster®, Silva®, Eureka!®, Jetboil®, Old Town®, Ocean Kayak, Necky®,  Extrasport®, Carlisle®, SCUBAPRO® and SUBGEAR®.
 
Overview
 
The Company is a leading global manufacturer and marketer of branded seasonal outdoor recreation products used primarily for fishing, diving, paddling and camping.  The Company’s portfolio of well-known consumer brands has attained leading market positions due to continuous innovation, marketing excellence, product performance and quality.  The Company’s values and culture support innovation in all areas, promoting and leveraging best practices and synergies within and across its subsidiaries to advance the Company’s strategic vision set by executive management and approved by the Company’s Board of Directors.  The Company is controlled by Helen P. Johnson-Leipold, the Company’s Chairman and Chief Executive Officer, members of her family and related entities.
 
Highlights
 
Net sales of $79,100 for the first fiscal quarter of 2014 declined by 9% from the same period in the prior year.  Delayed shipments of new products and challenging economic conditions across all segments contributed to the year over year decline.
 
Seasonality
 
The Company’s business is seasonal in nature. The second and third fiscal quarters fall within the Company’s primary selling season for its outdoor recreation products.  The table below sets forth a historical view of the Company’s seasonality during the last three fiscal years.
                                     
   
Year Ended
 
   
2013
   
2012
   
2011
 
Quarter Ended
 
Net
Sales
   
Operating
Profit
   
Net
Sales
   
Operating
Profit
   
Net
Sales
   
Operating
Profit
 
December
    21 %     6 %     19 %     -17 %     19 %     -8 %
March
    31 %     49 %     31 %     65 %     32 %     65 %
June
    30 %     63 %     31 %     66 %     30 %     67 %
September
    18 %     -18 %     19 %     -14 %     19 %     -24 %
      100 %     100 %     100 %     100 %     100 %     100 %
 

 
 
23

 
JOHNSON OUTDOORS INC.
 
Results of Operations
 
The Company’s net sales and operating profit (loss) by segment for the periods shown below were as follows:
       
   
Three Months Ended
 
   
December 27
   
December 28
 
   
2013
   
2012
 
Net sales:
           
Marine Electronics
  $ 48,185     $ 53,651  
Outdoor Equipment
    8,383       8,440  
Watercraft
    5,449       6,814  
Diving
    17,324       18,483  
Other / Eliminations
    (241 )     (114 )
Total
  $ 79,100     $ 87,274  
Operating profit (loss):
               
Marine Electronics
  $ 2,332     $ 4,746  
Outdoor Equipment
    (188 )     224  
Watercraft
    (1,636 )     (1,682 )
Diving
    149       702  
Other / Eliminations
    (3,565 )     (2,464 )
Total
  $ (2,908 )   $ 1,526  
 
See “Note 17 – Segments of Business” of the notes to the accompanying Condensed Consolidated Financial Statements for the definition of segment net sales and operating profit.
 
Net Sales
 
Consolidated net sales for the three months ended December 27, 2013 were $79,100, a decrease of $8,174, or 9%, compared to $87,274 for the three months ended December 28, 2012.  Overall, a shift in timing of shipments of new products and challenging economic conditions in our markets during the first quarter of 2014 were the primary drivers of the decrease in net sales from the prior year.
 
Net sales for the three months ended December 27, 2013 for the Marine Electronics business were $48,185, down $5,466, or 10%, from $53,651 during the first three months of the prior year.  Significant pre-season shipments in the prior year and pacing of new product shipments in the current year were the primary drivers of the decrease.
 
Net sales for the Outdoor Equipment business were $8,383 for the current year to date period, a decrease of $57, or less than 1%, from the prior year net sales during the same period of $8,440.  Declines in sales of military tents more than offset incremental Jetboil sales resulting from a full quarter of activity in the current year compared to only half a quarter in the prior year.
 
Net sales for the first three months of fiscal 2014 for the Watercraft business were $5,449, a decrease of $1,365, or 20%, compared to $6,814 in the prior year period.  The decrease was driven in part by the loss of international sales resulting from global restructuring.
 
Diving net sales were $17,324 for the three months ended December 27, 2013 versus $18,483 for the three months ended December 28, 2012, a decrease of $1,159, or 6%.  Delayed shipments of new products and challenging economic conditions in European markets contributed to the year over year decrease.
 
 
 
24

 
JOHNSON OUTDOORS INC.
 
Cost of Sales
 
Cost of sales for the three months ended December 27, 2013 was $49,171, a decrease of $4,289 over the same prior year period.  The decrease was largely driven by lower sales volume offset in part by modest material and labor cost increases in the current year.
 
Gross Profit Margin
 
Gross profit as a percentage of net sales declined from 38.7% in the prior year to date period to 37.8% during the three months ended December 27, 2013.  New pricing strategies in certain segments to enhance our competitive position, modest cost increases and inefficiencies resulting from producing at less than optimal capacity drove the decrease in gross profit as a percentage of sales.
 
Operating Expenses
 
Operating expenses were $32,837 for the three months ended December 27, 2013 compared to $32,288 in the prior year three month period.  This $549 increase was driven in large part by higher health care costs, a full quarter of Jetboil operating expenses in the current year versus half a quarter in the prior year, and higher deferred compensation expense resulting from market gains on the Company’s deferred compensation plan assets.  The higher deferred compensation expense is offset by the market gains reported in Other income.
 
Operating (Loss) Profit
 
Operating loss on a consolidated basis for the three months ended December 27, 2013 was $2,908 compared to operating profit of $1,526 in the prior year period, a decrease of $4,434.  Lower gross profit for the three months ended December 27, 2013 as a result of the factors described above, was the primary driver of the decline in operating profit.
 
Interest
 
For the three months ended December 27, 2013, interest expense totaled $202 compared to $439 for the three months ended December 28, 2012.  This decrease in interest expense was primarily due to the absence of interest rate swap amortization expense in the three month period ended December 27, 2013 compared to expense of $138 reported in the prior year period.  The swap became fully amortized during the first quarter of fiscal 2013.
 
Interest income for both the three month periods ended December 27, 2013 and December 28, 2012 was less than $100.
 
Other (Income)Expense
 
Other income for the three months ended December 27, 2013 was $159 compared to expense of $498 for the three months ended December 28, 2012.  For the three months ended December 27, 2013, foreign currency exchange losses were $321 compared to losses of $567 for the three months ended December 28, 2012.  The Company had no foreign currency forward contracts during the first quarter of fiscal 2014.  The Company’s foreign currency forward contracts resulted in gains of $122 for the three months ended December 28, 2012.  Net investment gains and earnings on the rabbi trust assets related to the Company’s non-qualified deferred compensation plan were $568 in the three month period ended December 27, 2013 compared to $42 in the three month period ended December 28, 2012.
 
Income Tax (Benefit) Expense
 
The Company’s provision for income taxes is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates.  The effective tax rate for the three months ended December 27, 2013 was 24.9%, compared to 59.5% in the corresponding period of the prior year.  Variances in income or loss for entities that have a valuation allowance, primarily in non-U.S. tax jurisdictions will drive fluctuations in the effective tax rate.  The decrease in the Company’s effective tax rate for the three months ended December 27, 2013 versus the prior year period was primarily due to income in tax jurisdictions with deferred tax valuation allowances in the current period versus losses in the prior year period.
 
 
 
25

 
 
JOHNSON OUTDOORS INC.
 
Net (Loss) Income
 
Net loss for the three months ended December 27, 2013 was $2,193 or $ (0.22) per diluted common class A and B share, compared to net income of $247, or $0.02 per diluted common class A and B share, for the corresponding period of the prior year.  As noted above, lower gross profit and slightly higher operating expenses were offset in part by lower interest expense.
 
Liquidity and Financial Condition
 
Cash, net of debt, was $7,514 as of December 27, 2013 compared to $8,620 as of December 28, 2012.  The Company's debt to total capitalization ratio was 17% as of December 27, 2013 compared to 18% as of December 28, 2012.  The Company’s total debt balance was $38,430 as of December 27, 2013 compared to $39,464 as of December 28, 2012.  See “Note 13 – Indebtedness” in the notes to the Company’s accompanying Condensed Consolidated Financial Statements for further discussion.
 
Accounts receivable, net of allowance for doubtful accounts, were $62,982 as of December 27, 2013, an increase of $171 compared to $62,811 as of December 28, 2012.
 
Inventories, net of inventory reserves, were $87,653 as of December 27, 2013, an increase of $10,293 compared to $77,360 as of December 28, 2012.  The increase was driven primarily by additional inventory of new products in Marine Electronics.
 
Accounts payable were $30,163 at December 27, 2013, a decrease of $1,966 compared to $32,129 as of December 28, 2012.  The decrease was driven primarily by decreased production volumes.
 
The Company’s cash flow from operating, investing and financing activities, as reflected in the Company’s accompanying Condensed Consolidated Statements of Cash Flows, is summarized in the following table:

   
Three Months Ended
 
(thousands)
 
December 27
2013
   
December 28
2012
 
             
Cash (used for) provided by:
 
 
       
Operating activities
  $ (35,408 )   $ (22,734 )
Investing activities
    (3,355 )     (18,447 )
Financing activities
    28,742       29,803  
Effect of foreign currency rate changes on cash
    271       558  
Decrease in cash and cash equivalents
  $ (9,750 )   $ (10,820 )

Operating Activities
 
Cash used for operations totaled $35,408 for the three months ended December 27, 2013 compared with $22,734 during the corresponding period of the prior fiscal year.  Lower net income in the current period and increased inventory levels related to production of new products were the primary drivers of the change.
 
Amortization of deferred financing costs, depreciation and other amortization charges were $2,418 for the three month period ended December 27, 2013 compared to $2,402 for the corresponding period of the prior year.
 
 
 
26

 
JOHNSON OUTDOORS INC.
 
Investing Activities
 
Cash used for investing activities totaled $3,355 for the three months ended December 27, 2013 and $18,447 for the corresponding period of the prior year.  The Company used cash of $15,420 for the purchase of Jetboil during the three months ended December 28, 2012.  There were no such acquisitions in the current year period.  Cash usage in the current and prior year three month periods related to capital expenditures was $3,355 and $3,027, respectively.  The Company’s recurring investments are made primarily for software development and tooling for new products and enhancements on existing products. Any additional expenditures in fiscal 2014 are expected to be funded by working capital or existing credit facilities.
 
Financing Activities
 
Cash flows provided by financing activities totaled $28,742 for the three months ended December 27, 2013 compared to $29,803 for the three month period ended December 28, 2012. The Company made principal payments on senior notes and other long-term debt of $136 during the three month period ended December 27, 2013.  For the three month period ended December 28, 2012, the Company made principal payments on senior notes and other long-term debt of $130.
 
The Company’s term loans have a maturity date of September 29, 2029.  Each term loan requires monthly payments of principal and interest. Interest on the aggregate outstanding amount of the terms loans is based on the prime rate plus an applicable margin.  The interest rate in effect on the term loans was 5.25% at December 27, 2013.
 
The aggregate term loan borrowings are subject to a pre-payment penalty.  The penalty is currently 6% of the pre-payment amount, and the penalty will decrease by 1% annually on the anniversary date of the effective date of the loan agreement.
 
On September 16, 2013, the Company and certain of its subsidiaries entered into a new credit facility with PNC Bank National Association and certain other lenders which terminated the Amended Revolving Credit and Security agreement with PNC Bank National Association and the other lenders named therein, dated as of November 16, 2010.  The new credit facility consists of a Revolving Credit Agreement dated September 16, 2013 among the Company, certain of the Company’s subsidiaries, PNC Bank National Association, as lender and as administrative agent, and the other lenders named therein (the “Revolving Credit Agreement” or “Revolver”).  The Revolver has an expiration date of September 16, 2018 and provides for borrowing of up to an aggregate principal amount not to exceed $90,000 with an accordion feature that gives the Company the option to increase the maximum seasonal financing availability subject to the conditions of the Revolving Credit Agreement and subject to the approval of the lenders.  The Revolver imposes a seasonal borrowing limit such that borrowings may not exceed $60,000 from the period June 30th through October 31st of each year under the agreement.  Balances carried on the Revolving Credit Agreement of $60,000 or less may be repaid at the Company’s discretion at any time through the maturity date.  Accordingly, this balance has been classified as long term as of December 27, 2013.
 
The interest rate on the Revolver resets each quarter and is based on LIBOR plus an applicable margin.  The applicable margin ranges from 1.25 percent to 2.00 percent and is dependent on the Company’s leverage ratio for the trailing twelve month period.  The interest rate on the Revolver at December 27, 2013 was approximately 1.4%.
 
The Revolver is secured with a first priority lien on working capital assets and certain patents and trademarks of the Company and its subsidiaries and a second priority lien on land, buildings, machinery and equipment of the Company’s domestic subsidiaries.  Under the terms of the Revolver, the Company is required to comply with certain financial and non-financial covenants.  The Revolving Credit Agreement limits asset or stock acquisitions to no more than $20,000 in the event that the Company’s consolidated leverage ratio is greater than 2.5 times.  No limits are imposed if the Company’s consolidated leverage ratio is less than 2.5 times and the remaining borrowing availability under the Revolver is greater than $10,000 at the time of the acquisition.  The Revolving Credit Agreement limits the amount of restricted payments (primarily dividends and repurchases of common stock) made during each fiscal year.  The Company may declare, and pay, dividends in accordance with historical practices, but in no event may the aggregate amount of all dividends or repurchases of common stock exceed $10,000 in any fiscal year.  The Revolving Credit Agreement restricts the Company’s ability to incur additional debt and includes maximum leverage ratio and minimum interest coverage ratio covenants.
 

 
27

 
 
JOHNSON OUTDOORS INC.
 
The Company had short-term debt of $470 as of December 27, 2013 consisting entirely of current maturities of its term loans.  As of December 28, 2012, the Company had short-term debt of $31,268 consisting of $30,733 outstanding on revolving credit facilities and current maturities of its term loans of $535.  The Company had long-term debt of $37,960 consisting of $30,234 outstanding on its Revolving Credit Agreement, $7,590 of term loans net of current maturities and $136 of other long-term debt as of December 27, 2013.  As of December 28, 2012, the Company had long-term debt of $8,196 consisting of term loans net of current maturities of $7,844 and $352 of other long-term debt.
 
As of December 27, 2013 the Company held approximately $45,900 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.
 
Contractual Obligations and Off Balance Sheet Arrangements
 
The Company has contractual obligations and commitments to make future payments under its existing credit facilities, including interest, operating leases and open purchase orders.  The following schedule details these significant contractual obligations existing at December 27, 2013.
                               
   
Total
   
Less than 1 year
   
2-3 years
   
4-5 years
   
After 5 years
 
Long-term debt
  $ 38,430     $ 406     $ 728     $ 31,033     $ 6,263  
Short-term debt
    -       -       -       -       -  
Operating lease obligations
    18,281       4,985       9,853       2,807       636  
Open purchase orders
    71,372       71,372       -       -       -  
Contractually obligated interest payments
    5,383       631       1,629       1,126       1,997  
Total contractual obligations
  $ 133,466     $ 77,394     $ 12,210     $ 34,966     $ 8,896  

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers compensation insurance.  Letters of credit outstanding were $811 and $1,469 at December 27, 2013 and December 28, 2012, respectively.

The Company anticipates making contributions of $382 to its defined benefit pension plans through the end of fiscal 2014.
 
The Company has no other off-balance sheet arrangements.
 
Critical Accounting Policies and Estimates
 
The Company’s critical accounting policies are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending September 27, 2013 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Estimates.” There were no significant changes to the Company’s critical accounting policies during the three months ended December 27, 2013.
 
 
 
28

 
JOHNSON OUTDOORS INC.
 
Item 3.   Quantitative and Qualitative Disclosures about Market Risk
 
Our exposure to market risk is limited to fluctuations in raw material commodity prices, interest rate fluctuations on borrowings under our secured credit facilities and foreign currency exchange rate risk associated with our foreign operations.  We do not utilize financial instruments for trading purposes.
 
Foreign Exchange Risk
 
The Company has significant foreign operations, for which the functional currencies are denominated primarily in euros, Swiss francs, Hong Kong dollars, Japanese yen and Canadian dollars. As the values of the currencies of the foreign countries in which the Company has operations increase or decrease relative to the U.S. dollar, the sales, expenses, profits, losses, assets and liabilities of the Company’s foreign operations, as reported in the Company’s consolidated financial statements, increase or decrease, accordingly. Approximately 21% of the Company’s revenues for the three month period ended December 27, 2013 were denominated in currencies other than the U.S. dollar. Approximately 11% were denominated in euros, with the remaining revenues denominated in various other foreign currencies. Changes in foreign currency exchange rates can cause unexpected financial losses or cash flow needs.  The Company may mitigate a portion of the fluctuations in certain foreign currencies through the use of foreign currency forward contracts.  Foreign currency forward contracts enable the Company to lock in the foreign currency exchange rate to be paid or received for a fixed amount of currency at a specified date in the future. The Company may use such foreign currency forward contracts to mitigate the risk associated with changes in foreign currency exchange rates on financial instruments and known commitments, including commitments for inventory purchases, denominated in foreign currencies. As of December 27, 2013, the Company held no foreign currency forward contracts.
 
Interest Rate Risk
 
The Company operates in a seasonal business and experiences significant fluctuations in operating cash flow as working capital needs increase in advance of the Company’s primary selling and cash generation season, and decline as accounts receivable are collected and cash is accumulated or debt is repaid.  The Company’s goal in managing its interest rate risk is to maintain a mix of floating rate and fixed rate debt such that permanent non-equity capital needs are largely funded with long term fixed rate debt and seasonal working capital needs are funded with short term floating rate debt.  When the appropriate mix of fixed rate or floating rate debt cannot be directly obtained in a cost effective manner, the Company may enter into interest rate swap contracts in order to change floating rate interest into fixed rate interest or vice versa for a specific amount of debt in order to achieve the desired proportions of floating rate and fixed rate debt.   The Company held no interest rate swap contracts during the three month periods ended December 27, 2013 and December 28, 2012 and as of December 27, 2013, the Company was unhedged with respect to interest rate risk on its floating rate debt.
 
Commodities
 
Certain components used in the Company’s products are exposed to commodity price changes.  The Company manages this risk through instruments such as purchase orders and non-cancelable supply contracts.  Primary commodity price exposures include costs associated with metals, resins and packaging materials.
 
Impact of Inflation
 
The Company anticipates that changing costs of basic raw materials may impact future operating costs and, accordingly, the prices of its products.  The Company is involved in continuing programs to mitigate the impact of cost increases through changes in product design and identification of sourcing and manufacturing efficiencies.  Price increases and, in certain situations, price decreases are implemented for individual products, when appropriate.  The Company’s results of operations and financial condition are presented based on historical cost.  The Company does not believe that inflation has significantly affected its results of operations.
 
Sensitivity to Changes in Value
 
The estimates that follow are intended to measure the maximum potential fair value or earnings the Company could lose in one year from adverse changes in market interest rates.  The calculations are not intended to represent actual losses in fair value or earnings that the Company expects to incur.  The estimates do not consider favorable changes in market rates.  The table below presents the estimated maximum potential loss in fair value and annual income before income taxes from a 100 basis point movement in interest rates on the Company’s outstanding interest bearing debt at December 27, 2013:
 
 
 
29

 
JOHNSON OUTDOORS INC.

             
 
Estimated Impact on
 
(thousands)
Fair Value
 
Income Before Income Taxes
 
Interest rate instruments
  $ -     $ 384  

Item 4.  Controls and Procedures
 
The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective at reaching a level of reasonable assurance. It should be noted that in designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. The Company has designed its disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.
 
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 

 
30

 
JOHNSON OUTDOORS INC.

 
PART II    OTHER INFORMATION

Item 1.  Legal Proceedings

In the normal course of business, we may be involved in various legal proceedings from time to time.  We do not believe we are currently involved in any claim or action the ultimate disposition of which would have a material adverse effect on our financial statements.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in our Form 10-K as filed with the Securities and Exchange Commission on December 6, 2013.

Item 6. Exhibits

See Exhibit Index to this Form 10-Q report.

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.


   
   
 
JOHNSON OUTDOORS INC.
Signatures Dated: January 31, 2014
 
  Helen P. Johnson-Leipold                                          
 
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
(Principal Executive Officer)
   
  /s/ David W. Johnson                                                 
 
David W. Johnson
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)



 
31

 

JOHNSON OUTDOORS INC.

Exhibit Index to Quarterly Report on Form 10-Q


Exhibit
Number
 
Description
31.1
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 (1)
 
101
Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following materials from Johnson Outdoors Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 2013 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements




(1) This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
 
32


EX-31.1 2 ex311toform10q.htm EXHIBIT 31.1 ex311toform10q.htm
Exhibit 31.1
Certification of Chief Executive Officer
 
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
 
I, Helen P. Johnson-Leipold, certify that:
 
 1)   I have reviewed this Quarterly Report on Form 10-Q of Johnson Outdoors Inc.;
     
 2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
 3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
 4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
     
    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
    b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
    c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
    d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5)   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
     
    a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Date:
January 31, 2014
  /s/ Helen P. Johnson-Leipold                                                      
     
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer


EX-31.2 3 ex312toform10q.htm EXHIBIT 31.2 ex312toform10q.htm
Exhibit 31.2
Certification of Chief Financial Officer
 
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
 
I, David W. Johnson, certify that:
 
1)   I have reviewed this Quarterly Report on Form 10-Q of Johnson Outdoors Inc.;
     
2)   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
3)   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
4)   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
     
    a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
    b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
    c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
    d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
5)   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
     
    a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
January 31, 2014
  /s/ David W. Johnson                                                       
     
David W. Johnson
Vice President and Chief Financial Officer
Treasurer


EX-32.1 4 ex321toform10q.htm EXHIBIT 32.1 ex321toform10q.htm
Exhibit 32.1
Written Statement of the Chairman and Chief Executive Officer
 
Pursuant to 18 U.S.C. Section 1350
 
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer of Johnson Outdoors Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarter ended December 27, 2013 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
/s/ Helen P. Johnson-Leipold                                               
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
January 31, 2014

 
Written Statement of the Vice President and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350
 
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Vice President and Chief Financial Officer of Johnson Outdoors Inc. (the “Company”), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarter ended December 27, 2013 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 
/s/ David W. Johnson                                                       
David W. Johnson
Vice President and Chief Financial Officer
Treasurer
January 31, 2014



The above certifications are made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

 


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