Johnson Outdoors Inc. reported fiscal third quarter sales were $108.5 million compared with $116.7 million in last year's third quarter, while operating profit was $8.9 million compared with $13.0 million. Included in this year's third quarter operating profit were a total of $3.6 million in unusual charges related to a voluntary product recall of an UWATEC dive computer ($2.8 million) and a discontinued acquisition ($0.8 million). Net income for the third quarter was $5.1 million or $0.59 per diluted share versus $6.4 million or $0.75 per diluted share in the prior year quarter. The earnings impact of the unusual charges mentioned above were $2.5 million or $0.29 per diluted share. Last year's third quarter results included approximately $12.2 million in sales and $1.0 million in operating profit from Jack Wolfskin.
On a continuing business basis and excluding unusual charges, Johnson Outdoors' third quarter sales increased 4% to $108.5 million from $104.5 million a year ago, driven by strong military tent sales in the Outdoor Equipment business segment. Operating profit increased 4% to $12.5 million from $12.0 million, as strong profit growth in Outdoor Equipment and Motors plus a modest improvement in Diving was partially offset by a sharp decrease at Watercraft. The favorable impact of currency translations added approximately $2.9 million to sales and $0.6 million to operating profit in this year's third quarter. Net income increased to $7.6 million compared with $6.5 million in the year-ago quarter. Earnings rose to $0.88 per diluted share in this year's third quarter compared with $0.76 per diluted share a year ago.
Third Quarter Comparisons - As Reported and on Continuing Business Basis
Excluding Unusual Charges
(Amounts in millions, except per share data)
Three Months Ended June 27, 2003
Less Plus
As Jack Unusual Adjusted
Reported Wolfskin Charges(2)
Results(1)
Net sales $108.5 $- $- $108.5
Gross profit 43.5 - 1.8 45.3
Operating profit 8.9 - 3.6 12.5
Net income 5.1 - 2.5 7.6
Diluted earnings per share $0.59 $- $ 0.29 $0.88
Three Months Ended June 28, 2002
Less Plus
As Jack Unusual Adjusted
Reported Wolfskin Charges(2)
Results(1)
Net sales $116.7 $12.2 $- $104.5
Gross profit 49.4 4.9 - 44.5
Operating profit 13.0 1.0 - 12.0
Net income (loss) 6.4 (0.1) - 6.5
Diluted earnings per share $0.75 $(0.01) $- $0.76
(1) Adjusted results for the third quarter of both years exclude results
from the Jack Wolfskin operation, which was sold in the fourth quarter
of fiscal 2002, but was not treated as a discontinued operation
according to GAAP and certain unusual charges incurred during the
third quarter of fiscal 2003.
(2) Unusual charges consist of $0.8 million pretax related to a
discontinued acquisition and $2.8 million pretax related to costs of a
recall announced during the third quarter of 2003.
Helen Johnson-Leipold, Chairman & CEO of Johnson Outdoors Inc. provided the Company's perspective on third quarter results. “We are pleased with our continued adjusted earnings improvement, especially given the difficult market conditions and the business interruptions we have experienced. We have made significant progress this year in creating an infrastructure capable of driving substantially greater growth and operating efficiency in the future. Our brands are strong, our new product pipeline is growing and our balance sheet is healthy. While we remain cautious in the short term, we are very encouraged by our Company's long-term prospects.”
Nine-Month Results
As reported, for the nine months ended June 27, 2003, net sales were $246.7 million compared with $274.2 million in the comparable period last year. Operating profit decreased to $15.2 million from $22.2 million in last year's nine-month period. The decrease in sales was entirely due to the sale of Jack Wolfskin in last year's fourth quarter. The decrease in operating profit was due to the unusual charges previously mentioned as well as the sale of Jack Wolfskin. Earnings from continuing operations for the nine-month period decreased to $1.06 per diluted share versus $1.18 per diluted share in the first nine months of fiscal 2002. Last year, Johnson Outdoors reported a net loss of $1.49 per diluted share for the nine-month period, which included a non-cash after-tax charge of $2.73 per diluted share for goodwill impairment from a change in accounting due to the adoption of SFAS No. 142.
On a continuing business basis and excluding unusual charges, nine-month sales rose to $246.3 million from $233.6 million and operating profit increased to $18.9 million from $17.4 million. Income from continuing operations rose to $11.7 million from $7.6 million, due to a reduction in interest expense and an increase in other income, mainly related to currency gains. Earnings from continuing operations increased to $1.36 per diluted share from $0.90 per diluted share in last year's nine-month period. Results were driven by higher sales and double-digit profit growth in Motors, Outdoor Equipment and Diving, which more than offset lower sales and profits at Watercraft.
Nine Month Comparisons - As Reported and on Continuing Business Basis
Excluding Unusual Charges
(Amounts in millions, except per share data)
Nine Months Ended June 27, 2003
Less Plus
As Jack Unusual Adjusted
Reported Wolfskin Charges(3) Results(1)
Net sales $246.7 $0.4 $- $246.3
Gross profit 103.4 - 1.8 105.2
Operating profit (loss) 15.2 (0.1) 3.6 18.9
Income (loss) (2) 9.1 (0.1) 2.5 11.7
Diluted earnings (loss)
per share (2) $1.06 $(0.01) $0.29 $1.36
Nine Months Ended June 28, 2002
Less Plus
As Jack Unusual Adjusted
Reported Wolfskin Charges(3)
Results(1)
Net sales $274.2 $40.6 $- $233.6
Gross profit 115.4 16.3 - 99.1
Operating profit (loss) 22.2 4.8 - 17.4
Income (2) 9.9 2.3 - 7.6
Diluted earnings per
share(2) $1.18 $0.28 $- $0.90
(1) Adjusted results for the nine months of both years exclude results
from the Jack Wolfskin operation, which was sold in the fourth
quarter of fiscal 2002, but was not treated as a discontinued
operation according to GAAP and certain unusual charges incurred
during the third quarter of fiscal 2003.
(2) Income and diluted earnings per share are from continuing operations
before cumulative effect of change in accounting principle.
(3) Unusual charges consist of $0.8 million pretax related to a
discontinued acquisition and $2.8 million pretax related to costs of a
recall announced during the third quarter of 2003.
Financial Condition
At June 27, 2003, cash and short-term investments totaled $62.7 million compared with $27.3 million at the close of last year's third quarter. The Company's debt to total capital was 35%, well below last year's 50% level and the 42% level at the close of fiscal 2002. Among key working capital items, receivables increased $1.2 million and inventories decreased $9.0 million compared with last year's third quarter. The prior year included Jack Wolfskin receivables of $8.7 million and inventory of $15.4 million.
Depreciation and amortization totaled $1.8 million for the third quarter, and $5.8 million for this year's nine-month period compared with $2.4 and $6.8 million in last year's third quarter and first nine months, respectively. Capital expenditures were $5.9 million year to date compared with $5.2 million in fiscal 2002's first nine months. The increased capital spending was primarily due to investments to upgrade information systems in the Watercraft business.
“We continue to focus on improving margins and returns, while maintaining a strong balance sheet,” said Paul Lehmann, Chief Financial Officer. “Our cash position is high for Johnson Outdoors from a historical perspective, providing operating flexibility, capital to improve our businesses and the ability to consider potential acquisitions.”
Webcast
Johnson Outdoors will hold its quarterly conference call on July 24, 2003 at 11:00 a.m. Eastern Time. The call will be webcast at www.johnsonoutdoors.com and www.companyboardroom.com . A replay will be available on both web sites for at least 30 days, and by telephone through July 31st by dialing 800-405-2236 or 303-590-3000 and providing confirmation code 544597.
About Johnson Outdoors Inc. (JOUT/Nasdaq)
Johnson Outdoors is a leading global outdoor recreation company that turns ideas into adventure with innovative, top-quality products. The company designs, manufactures and markets a portfolio of winning, consumer-preferred brands across four categories: Watercraft, Motors, Diving and Outdoor Equipment. Johnson Outdoors' familiar brands include, among others: Old Town(R) canoes and kayaks; Ocean(TM), Necky(TM) and Dimension(R) kayaks; Minn Kota(R) motors; Scubapro(R) and SnorkelPro; Uwatec(R); and Eureka(R) tents. Helen Johnson-Leipold is Chairman & CEO of the company which has more than 25 locations around the world and employs 1,400 people.
Visit Johnson Outdoors online at www.johnsonoutdoors.com .
Certain matters discussed in this press release are “forward-looking statements,” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as the Company “expects,” “believes” or other words of similar meaning. Similarly, statements that describe the Company's future outlook, plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include changes in consumer spending patterns, actions of companies that compete with Johnson Outdoors, the Company's success in managing inventory, movements in foreign currencies or interest rates, the success of suppliers and customers, the ability of Johnson Outdoors' to deploy its capital successfully as well as adverse weather conditions. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this press release and the Company undertakes no obligations to publicly update such forward-looking statements to reflect subsequent events or circumstances.
JOHNSON OUTDOORS INC. AND SUBSIDIARIES
(thousands, except per share amounts)
Operating Results
THREE MONTHS ENDED NINE MONTHS ENDED
June 27 June 28 June 27 June 28
2003 2002 2003 2002
Net sales $108,546 $116,699 $246,706 $274,155
Cost of sales 65,038 67,317 143,322 158,742
Gross profit 43,508 49,382 103,384 115,413
Operating expenses 34,589 36,342 88,175 91,973
Strategic charges - 66 - 1,217
Operating profit 8,919 12,974 15,209 22,223
Interest expense, net 1,191 1,615 3,323 4,700
Other (income) expense, net (644) 872 (3,115) 1,209
Income from continuing operations
before cumulative effect of
change in accounting principle
and income taxes 8,372 10,487 15,001 16,314
Income tax expense 3,312 4,054 5,924 6,388
Income from continuing operations
before cumulative effect of
change in accounting principle 5,060 6,433 9,077 9,926
Income on disposal of discontinued
operations, net of tax - - - 495
Cumulative effect of change
in accounting principle,
net of tax - - - (22,876)
Net income (loss) $5,060 $6,433 $9,077 $(12,455)
Basic earnings (loss) per
common share:
Income from continuing
operations before cumulative
effect of change in
accounting principle $0.60 $0.78 $1.08 $1.21
Income on disposal of
discontinued operations,
net of tax - - - 0.06
Cumulative effect of change
in accounting principle,
net of tax - - - (2.79)
Net income (loss) $0.60 $0.78 $1.08 $(1.52)
Diluted earnings (loss) per
common share:
Income from continuing
operations before cumulative
effect of change in
accounting principle $0.59 $0.75 $1.06 $1.18
Income on disposal of
discontinued operations,
net of tax - - - 0.06
Cumulative effect of change in
accounting principle,
net of tax - - - (2.73)
Net income (loss) $0.59 $0.75 $1.06 $(1.49)
Diluted average common shares
outstanding 8,579 8,561 8,545 8,384
Segment Results
Net sales:
Outdoor equipment $25,148 $31,752 $55,859 $87,305
Motors 29,821 29,990 72,158 68,293
Watercraft 31,557 33,849 63,415 66,684
Diving 22,425 21,606 56,585 52,898
Other/eliminations (405) (498) (1,311) (1,025)
Total $108,546 $116,699 $246,706 $274,155
Operating profit (loss):
Outdoor equipment $4,416 $3,449 $8,855 $10,902
Motors 5,454 4,283 11,327 8,023
Watercraft 1,759 4,530 (1,281) 4,024
Diving 1,123 3,892 6,306 7,884
Other/eliminations (3,833) (3,180) (9,998) (8,610)
Total $8,919 $12,974 $15,209 $22,223
Balance Sheet Information (End of Period)
Cash and short-term investments $62,696 $27,297
Accounts receivable, net 75,888 74,678
Inventories, net 51,606 60,718
Total current assets 200,589 172,253
Total assets 283,006 258,097
Short-term debt 9,591 23,233
Total current liabilities 64,290 73,441
Long-term debt 68,444 78,496
Shareholders' equity 144,621 101,309
The following tables show third quarter and year to date comparisons of as reported results and results from a continuing business basis for the Outdoor Equipment business unit.
Outdoor Equipment Segment
Third Quarter Comparisons - As Reported and on Continuing Business Basis
(Amounts in millions)
Three Months Ended June 27, 2003
Less
As Jack Adjusted
Reported Wolfskin Results(1)
Net sales $25.1 $- $25.1
Operating profit 4.4 - 4.4
Three Months Ended June 28, 2002
Less
As Jack Adjusted
Reported Wolfskin Results(1)
Net sales $31.8 $12.2 $19.6
Operating profit 3.4 1.0 2.4
(1) Adjusted results for the third quarter of both years exclude results
from the Jack Wolfskin operation, which was sold in the fourth quarter
of fiscal 2002, but was not treated as a discontinued operation
according to GAAP.
Outdoor Equipment Segment
Nine Month Comparisons - As Reported and on Continuing Business Basis
(Amounts in millions)
Nine Months Ended June 27, 2003
Less
As Jack Adjusted
Reported Wolfskin Results(1)
Net sales $55.9 $0.4 $55.5
Operating profit (loss) 8.9 (0.1) 9.0
Nine Months Ended June 28, 2002
Less
As Jack Adjusted
Reported Wolfskin Results(1)
Net sales $87.3 $40.6 $46.7
Operating profit 10.9 4.8 6.1
(1) Adjusted results for the nine months of both years exclude results
from the Jack Wolfskin operation, which was sold in the fourth quarter
of fiscal 2002, but was not treated as a discontinued operation
according to GAAP.
The following tables show third quarter and year to date comparisons of as reported results and results excluding an unusual charge for the Diving business unit.
Diving Segment
Third Quarter Comparisons - As Reported and Excluding Unusual Charges
(Amounts in millions)
Three Months Ended June 27, 2003
Plus
As Unusual Adjusted
Reported Charges(2) Results(1)
Net sales $22.4 $- $22.4
Operating profit 1.1 2.8 3.9
(1) Adjusted results for the third quarter ended June 27, 2003 exclude
certain unusual charges incurred during the third quarter of fiscal
2003.
(2) Unusual charges consist of $2.8 million pretax related to costs of a
recall announced during the third quarter of 2003.
Diving Segment
Nine Month Comparisons - As Reported and Excluding Unusual Charges
(Amounts in millions)
Nine Months Ended June 27, 2003
Plus
As Unusual Adjusted
Reported Charges(2) Results(1)
Net sales $56.6 $- $56.6
Operating profit 6.3 2.8 9.1
(1) Adjusted results for the nine months ended June 27, 2003 exclude
certain unusual charges incurred during the third quarter of fiscal
2003.
(2) Unusual charges consist of $2.8 million pretax related to costs of a
recall announced during the third quarter of 2003.
