Johnson Outdoors Inc. announced stronger results on a continuing business basis for its first fiscal quarter ended December 27, 2002. Comparisons of continuing business results exclude the company’s Jack Wolfskin subsidiary, as that business was sold in last year’s fourth quarter.

As reported, including the results of Jack Wolfskin, Johnson Outdoors net sales decreased 8% to $54.9 million, and operating profit declined by $0.8 million to $0.2 million. Due to reductions in interest costs and favorable foreign currency movement, the reported loss before cumulative effect of change in accounting principle improved to $0.3 million or $0.03 per share compared to a loss of $0.4 million or $0.05 per share in the year-ago quarter. Last year’s first quarter net loss was $23.3 million or $2.85 per share, which included the effect of a $22.9 million or $2.80 per share charge for a change in accounting principle related to the adoption of SFAS 142.

On a continuing business basis, first quarter sales rose 15% to $54.6 million from $47.4 million in last year’s first quarter, as all four business segments delivered double-digit increases. Gross profit for this year’s first quarter was 43.4% compared with 43.5% in last year’s quarter and operating expenses decreased to 43.0% of sales from 44.3% of sales a year ago. Last year’s first quarter also included $0.5 million in strategic charges related to the consolidation of facilities in the Watercraft business. With steady gross profit and lower expenses as a percentage of sales, overall operating profit improved to $0.2 million versus an operating loss of $0.4 million in the year-ago quarter, and three of the four segments posted solid improvements in operating profit. This year’s first quarter loss before cumulative effect of change in accounting principle was reduced to $0.3 million or $0.03 per share compared with a loss of $1.1 million or $0.14 per share in last year’s first quarter. The loss in the first quarter is consistent with past experience and reflects the seasonality of the company’s business.

First Quarter Comparisons – As Reported and on Continuing Business Basis (Amounts in thousands, except per share data and percentages)

                          As Reported               Continuing Business
                                              %            Basis (a)       %
                      12/27/02  12/28/01   Change   12/27/02  12/28/01  Change

    Net sales          $54,895   $59,738     (8)     $54,576   $47,419     15
    Gross profit       $23,683   $25,290     (6)     $23,687   $20,631     15
    Operating profit
     (loss)               $166      $991    (83)        $234     $(354)    NM
    Loss (b)            $(280)     $(396)    NM       $(277)   $(1,143)    NM
    Loss per share (b) $(0.03)    $(0.05)    NM      $(0.03)    $(0.14)    NM

    (a) Continuing Business Basis from the first quarter of both years
        excludes results from the Jack Wolfskin operation, which was sold in
        the fourth quarter of fiscal 2002.
    (b) Loss and loss per share is before cumulative effect of change in
        accounting principle.

“We are pleased with the breadth of our first quarter sales growth,” commented Helen Johnson-Leipold, Chairman and CEO of Johnson Outdoors, “but we recognize that our first fiscal quarter is a seasonal low period for the industry and its results may not be predictive of the key selling season, which typically follows in the second and third quarters. It also compares to a prior year quarter that was adversely affected by the events of September, 2001.”

Johnson-Leipold emphasized, “However, we do have a lot of positives going into this season, including innovative new products, cost savings opportunities, a stronger balance sheet and a solid cash position. Thus we are entering our selling season with an appropriate level of cautious optimism.”

Outdoor Equipment

Including the results of Jack Wolfskin sales declined 48% to $11.9 million in the first quarter and operating profit was $1.4 million, down $1.2 million from the prior year quarter. However, for our continuing business in this segment, first quarter sales increased 11% to $11.6 million, led by continued growth in military tents. Operating profit rose 18% to $1.5 million, as operating margin also improved.


Sales rose 11% to $11.9 million in the first quarter, as sales grew in all components of the segment, particularly Pacific Kayak and the combined Ocean/Necky Kayak operations. However, continued integration costs for the Ocean/Necky combination and investment in improvements for Old Town Canoe, including the JD Edwards implementation, raised the first quarter operating loss to $1.9 million from $1.3 million a year ago.

Johnson-Leipold commented, “We are very pleased to see the first quarter sales growth at Watercraft. This segment has strong brands and customer acceptance; our challenge continues to be in improving operational productivity across the key businesses. The good news is these are problems that can be resolved and we are investing in systems and talent to continue to improve our processes. In the interim, our focus has been on meeting customer demand and improving services levels that negatively affected results in prior quarters. The productivity gains are coming, and we expect to see more progress in future quarters.”


Sales increased 20% to $15.0 million in the first quarter, continuing the strong performance of the Motors segment. Operating profit nearly tripled to $1.6 million from $0.6 million in the year-ago quarter, driven by volume gains, a gross profit improvement of more than 3 percentage points and improved operating expense leverage.


First quarter sales grew 19% to $16.5 million, contributing to a 36% rise in operating profit to $2.0 million. Comparisons were against weak results in the prior year, which had been negatively affected by the decline in travel in the wake of September 11, 2001. Looking back two years for comparison purposes, first quarter fiscal 2003 sales and operating profit exceeded those of fiscal 2001, with a solid improvement in operating margin.

Financial Condition

Johnson Outdoors continues to operate from a stronger financial position than a year ago, bolstered by reductions in debt, more effective working capital management and the fiscal 2002 fourth quarter sale of Jack Wolfskin. At December 27, 2002, cash and short-term investments totaled $66.1 million. The company’s debt to total capital ratio was reduced to 38% compared with 57% in last year’s first quarter and 42% at the close of fiscal 2002.

Among key working capital items, receivables declined in absolute terms by $1.9 million, but were up $4.7 million for continuing businesses, primarily due to the higher sales volume. Inventories were lower by $18.5 million versus a year ago, and were also reduced $6.0 million for continuing businesses.

EBITDA (earnings before interest, taxes, depreciation and amortization), on a continuing business basis, was $2.5 million in the first quarter compared with $1.6 million in the year-ago quarter. First quarter capital expenditures were $1.8 million compared with $1.1 million (excluding Jack Wolfskin) in last year’s first quarter. This increase was primarily due to investments to upgrade information systems in the Watercraft business. For the full year, management expects capital expenditures to approach $10.0 million compared with $7.7 million in fiscal 2002.

“In recent quarters, weve communicated our focus on improving Johnson Outdoors market position versus our competitors, and building the financial strength necessary to fuel our long-term growth objectives,” said Paul Lehmann, Chief Financial Officer. “To date, were pleased with the progress weve made on several fronts, including cost reduction, cash generation and expense management. We believe we are well positioned to leverage additional gains in sales volume as the markets turn more favorable.”