Johnson Outdoors Motors to Sales and Profit Gains in FY10

Johnson Outdoors Inc. closed out fiscal 2010 with increased revenues and earnings, the company reported. Operating profit rose substantially as the company benefited from sustained cost reduction initiatives implemented over the past 18 months. Net income rose to $6.5 million or 68 cents per diluted share in the current fiscal year compared to a net loss of $9.7 million, or ($1.06) per diluted share, in the prior fiscal year.

“We have transformed Johnson Outdoors, taking aggressive, strategic action to enhance competitiveness and profitability now and in the future,” said Helen Johnson-Leipold, chairman and chief executive officer.  “We streamlined operations, simplified processes and kept working capital within target levels while investing strategically in innovative new products and programs to strengthen our market-leading positions. As a result, this year's revenue growth outpaced our markets as we gained share and outperformed the competition.

Year-to-Date Results

• Initial recovery of key outdoor recreational markets.
  
• Double-digit growth in Minn Kota(R) and Humminbird(R) brands in all channels and markets.
  
• Double-digit growth in Eureka!(R) across consumer and military segments.
  
• Increased revenues in Diving, which nearly offset declines in Watercraft sales.
  
• Successful new products in all businesses which generated more than a third of total company revenues.

Total company operating profit grew significantly to $14.6 million for fiscal 2010 compared to operating profit of $300,000 in fiscal 2009. Primary drivers behind the year-over-year comparison were:

• Improved cost absorption as a result of higher sales.
  
• Nonrecurring items, including restructuring costs of $7.5 million in the prior fiscal year versus $2.0 million in the current fiscal year.
  
• Ongoing cost savings of $10.7 million, including more than $5.0 million in savings related to Watercraft consolidation, which were in addition to sustained cost reductions realized in fiscal 2009.
  
• Discretionary bonus and retirement contributions in the current year versus no related expenses in the prior fiscal year.

Net income for the year was $6.5 million or 68 cents per diluted share, versus a net loss of $9.7 million, or ($1.06) per diluted share, in the prior year. The Company's interest expense was reduced by about half due primarily to new debt agreements secured last fall. On November 18, 2010 the Company announced those agreements had been amended and are expected to reduce fiscal 2011 borrowing costs by 15 percent below fiscal 2010 levels.

Fourth Quarter Results

• Double-digit increases in Marine Electronics and Outdoor Equipment sales.
  
• Positive response across the specialty channel to new Watercraft products and programs.
  
• Unfavorable currency translation of 2.6% impacted Diving sales.

Total company operating loss declined 70% to ($3.3) million for the fourth fiscal quarter from an operating loss of ($10.9) million in the prior year quarter. Key factors contributing to the comparison were:

• Higher sales in all businesses.
  
• Gross margin improvement in all businesses yielding a 7.2 point gain in total Company margins.
  
• Discretionary bonus, profit sharing and retirement contributions added $2.4 million in operating expense versus no related expenses in the prior year quarter.

The company reported a 60% decline in its quarterly net loss of $5.8 million, or ($0.62) per diluted share, during the fourth fiscal quarter, compared to a net loss from continuing operations of $14.2 million, or ($1.55) per diluted share, in the same quarter last year. Interest expense for the quarter was 60 percent below the prior year period. Increased tax expense was largely due to a deferred tax asset valuation allowance in Italy.

The company's debt to total capitalization stood at 16 percent at the end of the year versus 21 percent at October 2, 2009. Cash, net of debt, was $9.5 million at year-end versus debt, net of cash, of $3.7 million at October 2, 2009. Depreciation and amortization was $10.0 million year-to-date compared with $12.9 million in the prior year. Capital spending totaled $10.0 million in 2010 compared with last year's $8.3 million.

“The strength of our balance sheet is reflected in our having ended fiscal 2010 with debt at an all-time low and a $19 million dollar improvement in cash flow year-over-year. Looking ahead, we will continue to carefully manage inventories to keep working capital in check while helping to ensure our ability to meet marketplace demand,” said David W. Johnson, VP and CFO.