Johnson Outdoors Inc. fiscal second quarter ended March 30, 2007 net sales were $122.1 million, a 14% increase compared to net sales of $107.4 million for the prior year quarter. Net earnings were $1.6 million, or 17 cents per diluted share, for the second quarter of 2007 compared to net earnings of $4.2 million, or 46 cents per diluted share in the prior year quarter.

Second quarter sales reflect initial shipments to customers in anticipation of the primary consumer retail selling period for the Company's seasonal outdoor products. Gains in Marine Electronics, Watercraft and Diving business units more than offset the anticipated continued slowing of military sales. Excluding the $2.4 million military sales decline, total Company net sales would have increased $17.1 million or 16 percent. Key drivers during the quarter included:

  • Marine Electronics revenues rose 25 percent above last year due to favorable reception to new products across all brands in what has become one of the world's leading marine electronic fishing system portfolios.

    Watercraft sales were 12 percent ahead of last year led by strong performances across the entire paddle sport brand portfolio. Key international markets posted double-digit growth year-over-year led by market and distribution expansion in Europe.

  • Diving revenues increased 14 percent based on the strong performance of the SCUBAPRO® brand internationally. Excluding the impact of currency, Diving revenues would have grown 9% compared with the previous quarter.
  • Outdoor Equipment revenues were down 16 percent due to a 25 percent decline in military sales versus the prior year quarter.

Total Company operating profit was $4.1 million compared to operating profit of $8.3 million in the prior year quarter. Net income was $1.6 million, or $0.17 per diluted share, compared to net earnings of $4.2 million, or $0.46 per diluted share, in the same quarter last year. Key drivers behind the comparisons were:

  • Lower military sales
  • Operational inefficiency in UWATEC® and Marine Electronics
  • One-time corporate investment of $1.8 million in strategic future growth initiatives

“Corporate spending during the quarter was critical to help generate long-term value for shareholders and sustainable, profitable growth. We have been testing new go-to-market strategies to drive sales and enhance brand equity. We have also completed a comprehensive analysis of the outdoor recreational landscape to identify new growth platforms and targeted acquisition opportunities,” said Helen Johnson-Leipold, Chairman and Chief Executive Officer. “All in all, we feel very good about the topline growth, the success of our investments in innovation, the consumer demand for our products, and we are working to address the supply chain challenges which led to operational inefficiencies in Diving and Marine Electronics. We continue to be very excited for the future of Johnson Outdoors.”

Net sales in the first six months of fiscal 2007 were $193.8 million versus $179.9 million in the same six-month period last year, an increase of 8 percent. Excluding the anticipated $4.8 million decline in military sales, total Company net sales would have increased 10 percent. Consistent with second quarter, key drivers in the year-to-date period were:

  • Successful new product launches in Marine Electronics, particularly Humminbird® and Cannon® brands which posted double-digit revenue growth during the six-month period.
  • Strong demand behind new paddle sport product launches and international market expansion in Watercraft.
  • Growth in SCUBAPRO® brand sales in Europe, Asia and developing markets. Favorable currency translation added 5 percent to year-to-date revenues in Diving.

Total Company operating profit was $1.4 million during the first six months compared to $7.5 million during the prior year-to-date period. Net loss for the first six months of the year was $0.5 million, or ($0.06) per diluted share, versus net income of $3.1 million, or $0.34 per diluted share, in the first six months of the prior year. Consistent with the second quarter, primary drivers behind the year-to-date comparison were:

  • The significant drop in military sales versus the prior year six-month period.
  • Reduced margins in Marine Electronics and Diving.
  • Significant corporate investments in current and future growth initiatives.

The Company's debt to total capitalization stood at 33 percent at the end of the second quarter versus 31 percent at March 30, 2006 as a result of increased working capital levels. Debt, net of cash and short-term investments, was $56.1 million at the end of this quarter versus $45.1 million at the end of the prior year quarter. Depreciation and amortization is $4.5 million year-to-date compared to $4.7 million last year. Capital spending totaled $5.7 million year-to-date, compared with $4.0 million in the prior year first six months.

“We continue to expect revenue growth in 2007 equal to last year, and improvement in core consumer brand operating margins. Strong growth in the quarter and continued high product demand has resulted in higher working capital. Orders are pacing well-ahead of last year at this time, and working capital levels should decline significantly by the end of the year,” said David W. Johnson, Vice President and Chief Financial Officer.

New products represent one-third of total Company net sales for the past three years. Strong new product growth continues to bolster the Company's already robust existing brands and differentiate the Company in the industry. Among the 2007 innovations from Marine Electronics are:

  • Humminbird® CannonLink(TM) Downrigger Control System allows anglers to control up to six downriggers from one central 900, 700 or Matrix Series fishing system, and offers multiple convenience features, including automatic deployment and retrieval, on-screen downrigger depth monitoring and measurement of water temperature, water clarity and speed, among others. The revolutionary technology won the prestigious Innovation Award from the National Marine Manufacturers Association in the Consumer Electronics and Software category at the recent 2007 Miami International Boat Show, the largest consumer boating show in the world.
  • The Minn Kota® Powerdrive(TM) V2 is an enhanced design of one of the most popular trolling motors ever made. The V2, an electric steer bow-mount motor, features an improved deployment mechanism, and new ergonomically designed foot pedal and digital electronics. Among the new features is a speed control slide on the foot pedal offering easier access and more precise speed selection. A cordless foot pedal is optional, and utilizes the award-winning CoPilot(TM) technology that captured the coveted ICAST Award for Innovation when first introduced five years ago. 


                        JOHNSON OUTDOORS INC.

(thousands, except per share amounts)
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Operating Results              THREE MONTHS ENDED   SIX MONTHS ENDED
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                               March 30  March 31  March 30  March 31
                                  2007      2006      2007      2006
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Net sales                      $122,124  $107,374  $193,824  $179,937
Cost of sales                    75,039    63,033   118,258   106,167
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Gross profit                     47,085    44,341    75,566    73,770
Operating expenses               43,014    36,070    74,135    66,310
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Operating profit                  4,071     8,271     1,431     7,460
Interest expense, net             1,344     1,218     2,197     2,120
Other (income) expense, net        (131)      222      (130)      293
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Income (loss) before income
 taxes                            2,858     6,831      (636)    5,047
Income tax expense (benefit)      1,265     2,657      (117)    1,968
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Net income (loss)                $1,593    $4,174     $(519)   $3,079
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Basic earnings (loss) per
 common share                     $0.18     $0.46    $(0.06)    $0.34
Diluted earnings (loss) per
 common share                     $0.17     $0.46    $(0.06)    $0.34
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Diluted average common shares
 outstanding                      9,181     9,127     9,017     9,135
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Segment Results
Net sales:
  Marine electronics            $64,538   $51,572   $94,004   $81,546
  Outdoor equipment              15,584    18,514    29,274    33,037
  Watercraft                     22,729    20,244    34,470    32,528
  Diving                         19,530    17,119    36,449    32,937
  Other/eliminations               (257)      (75)     (373)     (111)
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Total                          $122,124  $107,374  $193,824  $179,937
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Operating profit (loss):
  Marine electronics             $8,804    $8,445    $9,008   $10,861
  Outdoor equipment               1,232     2,970     2,875     4,618
  Watercraft                       (501)   (1,140)   (2,894)   (3,631)
  Diving                            125       969       755     1,035
  Other/eliminations             (5,589)   (2,973)   (8,313)   (5,423)
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Total                            $4,071    $8,271    $1,431    $7,460
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