Johnson Outdoors plans to reduce the Company’s workforce by more than 70 positions at its Binghamton, New York facility due to a significant decline in military tent sales. The Company has formally notified employees and state and local officials of the pending permanent reduction in accordance with the WARN Act.
Jerry Perkins, President and Chief Operating Officer of Johnson Outdoors, said, “While we knew military tent sales would decline, we now know the rate of decline is greater than previously expected. With no indication that new orders or decisions on new contracts are coming soon, military tent sales will decline at least 40% this year, and significantly more than that in fiscal 2006. It is unfortunate, but business conditions require that we take this difficult step, which regrettably affects our talented and dedicated workforce.”
The Company also noted that financial projections included in the Company’s definitive proxy were based on historical levels of military tent sales, approximately $30 million per year, but that current expectations for military tent sales are significantly lower. As a result, management’s financial projections for future years have been adversely affected. The Company now anticipates that military tent sales may contribute as little as $8 to $10 million in annual revenue unless new contracts are secured in future years. The decrease in revenue is expected to result in a corresponding reduction in net income of approximately $5 million in 2006, from approximately $14.7 million to $10 million.
In accordance with Johnson Outdoors practice, affected employees will receive appropriate severance packages and outplacement services.
