Johnson Outdoors Inc. saw net sales decline 3.2% to $72.6 million for the first quarter ended December 30, 2005 from $75.0 million for the prior year quarter. The net loss fro the period widened a bit to $1.1 million, or a loss of 12 cents per diluted share, compared with a net loss of $1.0 million, or a loss of 12 cents per diluted share, in the year-ago quarter.

Quarterly sales are historically lowest during the first fiscal quarter when the Company is ramping up for the primary selling period of its seasonal outdoor recreation products. Excluding the anticipated $4.6 million decline in military tent revenue, total company sales would have been up $2.2 million.

Key changes included:

  • Watercraft continued its positive momentum with sales 2% ahead of last year's first quarter due to the favorable reception of new products.
  • Marine Electronics had an 8% increase in quarterly sales due primarily to the continued growth of Humminbird®, and the acquisition of Cannon® and Bottomline® brands completed on October 3, 2005 which added $1.2 million in sales to the division during the period.
  • Diving revenues declined 3% due to unfavorable currency translation.
  • Outdoor Equipment revenues decreased 23% due entirely to a 29% decline in military sales from the prior year quarter.

The total Company operating loss of $0.8 million in the first quarter compared unfavorably to an operating loss of $0.1 million in the prior year quarter.

Key impacts were from:

  • The significant drop in military sales compared with the prior year quarter, resulting in a $1.8 million decline in Outdoor Equipment operating profits.
  • Increased spending in R&D and marketing in Marine Electronics, which has now fully integrated the Cannon® and Bottomline® brands.
  • JOUT reported a net loss during the seasonally slow first quarter of $1.1 million or 12 cents per diluted share. This compares to a net loss of $1.0 million, or 12 cents per diluted share, in the same quarter last year.
  • The company's tax rate was 38.7% versus 1.4% in the prior year quarter due to the non-deductibility of expenses associated with the terminated buy-out proposal in the prior year quarter.

“While first quarter results are not indicative of the year's overall performance, we are very pleased with the favorable reception to-date for our 2006 new product line-up. Overall, about a third of total Company net sales this quarter came from new products in our core consumer brands, which is helping to offset the anticipated decline in the non-core military segment. We have built capability and capacity to strengthen operations, and a healthy new product pipeline to help drive profitable growth and enhance long-term shareholder value. I remain excited about the future of Johnson Outdoors,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer. “Importantly, our strong cash position continues to enable us to capitalize on strategic growth opportunities when they arise, such as the acquisition of Cannon® and Bottomline® brands this quarter. We added brands and sales without adding complexity or infrastructure ensuring a rapid and efficient integration to better capture and maximize existing synergies.”

The Company's debt to total capitalization stood at 29% at the end of the quarter versus 25% at December 31, 2004. Debt, net of cash, was $20.6 million at the end of this quarter versus $19.8 million in the prior year quarter. Depreciation and amortization was $2.2 million year-to-date, slightly lower than last year's $2.6 million in the first quarter. Capital spending totaled $1.5 million in the quarter compared with $1.7 million in the same period last year.

“A healthy balance sheet and solid cash position give us a strong financial foundation on which to build as we enter our main selling season. Strict inventory management is a key focus across all divisions, which, aided in part by favorable currency translation, resulted in a $2.8 million reduction in total Company inventory this quarter despite the addition of the Cannon® and Bottomline® brand assets. Overall, currency translation had a net unfavorable impact on sales of -1.4% and a negligible unfavorable impact on profit. While the prior year quarter included $0.9 million of expenses associated with the terminated buy-out proposal, there were no one-time items that had a material impact on earnings this quarter,” said David W. Johnson, Vice President and Chief Financial Officer.

MILITARY UPDATE

The quarterly decline in military sales is consistent with the Company's stated projections throughout fiscal 2004 and 2005. No military tent orders or contracts were received during the first quarter of fiscal 2006. At this time, the Company continues to expect fiscal 2006 military sales to be in the $30 – $40 million range.

INNOVATION UPDATE

Johnson Outdoors delivers meaningful innovation to the outdoor recreation marketplace driven by unique consumer insights. The Company's new product designers utilize sophisticated, rapid-prototyping technology to ensure continuous consumer feedback from product concept to commercialization. Smart innovation also delivers meaningful results, with new products this quarter representing about a third of total Company revenue. This was led by the Marine Electronics and Watercraft divisions, both of which reported about 40% of net sales from new products.

               JOHNSON OUTDOORS INC. AND SUBSIDIARIES

(thousands, except per share amounts)
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Operating Results                                   THREE MONTHS ENDED
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                                                     Dec 30    Dec 31
                                                      2005      2004
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Net sales                                           $72,563   $74,982
Cost of sales                                        43,134    44,710
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Gross profit                                         29,429    30,272
Operating expenses                                   30,241    30,347
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Operating loss                                         (812)      (75)
Interest expense, net                                   903     1,090
Other expenses (income), net                             69      (119)
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Loss before income taxes                             (1,784)   (1,046)
Income tax benefit                                     (690)      (15)
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Net loss                                            $(1,094)  $(1,031)
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Net loss basic and diluted per common share          $(0.12)   $(0.12)