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.

“Importantly, significant improvement in operating efficiency enabled us to grow profits faster than sales, a key objective of our strategic plan,” she continued. “Continued industry recovery and focused, disciplined execution of our strategic plan are key to realizing ongoing marketplace success and sustained profitable growth in the year ahead.”

Year-to-Date Results

Total net sales grew 7% to $382.4 million in fiscal 2010 versus $356.5 million in fiscal 2009. On a constant currency basis, net sales grew 6%. Key contributing factors in the year-over-year increase were:

  • 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

Due to the seasonality of the warm-weather outdoor recreational products industry, the company's fourth quarter results historically reflect an industry-wide slowing of sales and production. Total company net sales continued a year-long positive upward trend to increase 15 percent compared to the prior year quarter. Key factors behind the results were:

  • 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.


(thousands, except per share amounts)

Operating Results October 1
October 2
October 1
October 2
Net sales $ 75,121 $ 65,287 $ 382,432 $ 356,523
Cost of sales 44,827 43,674 228,909 223,741
Gross profit 30,294 21,613 153,523 132,782
Operating expenses 33,592 32,496 138,969 132,510
Operating (loss) profit (3,298) (10,883) 14,554 272
Interest expense, net 1,027 2,553 4,995 9,756
Other expense, net 273 392 367 594
(Loss) income before income taxes (4,598) (13,828) 9,192 (10,078)
Income tax expense (benefit) 1,242 398 2,653 (407)
Net (loss) income (5,840) (14,226) 6,539 (9,671)
Less: undistributed earnings reallocated to non-vested stock 201
Diluted earnings $ (5,840) $ (14,226) $ 6,338 $ (9,671)
Diluted average common shares outstanding 9,409 9,191 9,267 9,165
Net (loss) income per common share – Diluted $ (0.62) $ (1.55) $ 0.68 $ (1.06)

Segment Results
Net sales:

Marine electronics $ 28,337 $ 22,091 $ 185,494 $ 165,343
Outdoor equipment 10,612 8,830 48,690 41,387
Watercraft 12,927 11,201 64,001 69,422
Diving 23,393 23,277 85,076 80,835
Other/eliminations (148) (112) (829) (464)
Total $ 75,121 $ 65,287 $ 382,432 $ 356,523
Operating (loss) profit:

Marine electronics $ (2,443) $ (3,670) $ 13,938 $ 9,265
Outdoor equipment 726 101 5,881 3,360
Watercraft (37) (5,864) 1,826 (6,149)
Diving 1,009 96 3,030 1,620
Other/eliminations (2,553) (1,546) (10,121) (7,824)
Total $ (3,298) $ (10,883) $ 14,554 $ 272