Johnson Outdoors continued its reliance on Military and Marine Electronics through the third quarter, although some important new programs are being implemented to bring the rest of the company back to higher levels of performance. Total company net sales increased 11.6% to $121.2 million compared to $108.6 million last year. Net income climbed to $7.5 million, a 48.0% improvement over $5.1 million reported last year.

The Outdoor Equipment division posted an 8.2% sales increase to $27.2 million with an operating profit of $4.8 million, up 9.1% over last year. Operating margin in Q3 was up 10 basis points to 17.6%.

JOUT said consumer tent sales are flat to last year in a market where price is paramount for first-time tent buyers. The company expects the boost from military sales to dry up in 2005, so they are investing in innovation and brand equity to build on commercial and consumer sales going forward.

The Watercraft division is where the major operational changes are taking place this quarter. Sales in Q3 were down 8.2% to $29.0 million compared to $31.6 million last year. Operating profit plunged 63.7% in the division to $639,000 compared to $1.8 million last year. Operating margin was 2.2%, down 340 basis points compared to 5.6% last year.

As part of the transformation of the Watercraft division, Johnson Outdoors has decided to outsource manufacturing at its Grand Rapids, MI facility, and to shift production from Mansonville, Canada to its Old Town, Maine operation. The decision will result in the reduction of 69 positions across the two locations.

The Diving division has been seeing some very tough post-9/11 market conditions. Management said that sales in this market depend heavily on travel to “exotic locations,” and the threat of terror continues to curtail this type of recreation. Sales in the division fell 0.9% to $22.2 million, but operating profit skyrocketed 336% to $4.9 million, or 22.1% of sales, giving diving the highest margin in the company.

The Marine Electronics division was the company’s star performer for the quarter, posting a sales improvement of 44.6% to $43.1 million compared to $29.8 million last year. Operating profits surged 54.8% to $8.4 million or 19.5% of sales. Sales and profits in the division were bolstered by the acquisition of the Hummingbird brand, which added $7.8 million in net sales, $0.5 million in operating profit, and 4 cents in earnings per diluted share this quarter.