Johnson Outdoors Inc. announced declines in operating profit and earnings on increased net sales driven by military tents for the fiscal quarter ended October 1, 2004 as compared with the comparable quarter in the prior year. Due to the seasonality of the Company’s markets, quarterly net sales are historically slower during the first and fourth fiscal quarters. Fourth quarter operating profits in the Company’s Outdoor Equipment business were offset by sizeable losses in Marine Electronics and Watercraft, and a sharp decline in Diving profitability. Increased net sales, operating profit and earnings for the 2004 fiscal year resulted primarily from strong military tent and Minn Kota(R) sales.

Total company net sales increased 9.2% for the quarter, driven by the Marine Electronics and Outdoor Equipment business units. The Company’s acquisition of the Humminbird(R) brand added $5.7 million in net sales to the quarter, while related integration activities had a negative impact on operating profit. Outdoor Equipment showed increased net sales (36.1%) and improved operating profits (42.4%) over the same period in the prior year due to increased military tent sales. Although strong in the 2004 fourth quarter, military tent sales are expected to drop 40% to 50% in fiscal 2005. Soft market conditions resulted in lower sales and a decline in profitability in Diving. A drop in sales and restructuring costs resulted in losses in the Watercraft business unit.

The Company realized a net loss for the fourth quarter of $3.8 million or $0.44 per diluted share compared with a net loss of $3.7 million or $0.43 per diluted share in the comparable period last year. A number of one-time items had a net unfavorable impact on earnings of $0.09 per diluted share. These items included (per diluted share): charges related to Watercraft restructuring (-$0.17); litigation related expenses (-$0.07); year-end accounting adjustments (+$0.03); and, recognition of a favorable price modification on military tents (+$0.12).

“Fourth quarter results reflect the variability and unpredictability of our seasonal markets, particularly during times of economic uncertainty, coupled with adverse and unseasonable weather. Continued investment is needed to lessen the impact of soft consumer markets and ensure better, more balanced performance across our portfolio,” observed Helen Johnson-Leipold, Chairman and Chief Executive Officer.

Total net sales increased 12.5% over the prior fiscal year due to growth in the Minn Kota(R) brand (11.1%) and military tent sales (40.8%). Growth in Minn Kota(R) slowed considerably during the fourth quarter, consistent with the Company’s guidance that the pace of growth in prior fiscal quarters was not sustainable. For the full year, Marine Electronics net sales grew 26.8% over the prior year as a result of above average growth in fishing motors and the addition of the Humminbird(R) brand. Military tent sales are expected to return to lower historical levels in 2005 as current contracts and emergency orders come to an end. Diving net sales increased slightly (2.6%) as a result of favorable currency exchange throughout the year. Watercraft sales declined 4.9% versus the prior year due in part to soft markets that were further impacted by hurricanes and their aftereffects in the southeast and other parts of the U.S., as well as unseasonably cool temperatures during the year.

Improved operating profit over the prior fiscal year (64.7%) was driven by the performance of two businesses: Marine Electronics and Outdoor Equipment which offset significant losses in the Company’s Watercraft business. Costs associated with a dive computer recall in the prior fiscal year and favorable one-time items in the current year accounted for the year-on-year favorable comparison in operating profit for Diving. From February 20, 2004 through October 1, 2004, a total of $1.5 million in costs were incurred for the evaluation of the outstanding proposal to take the Company private. Earnings of $8.7 million or $0.99 per diluted share increased 60.3% from $5.4 million or $0.63 per diluted share in the prior fiscal year.

“We made the right choice to expand into Marine Electronics with the addition of Humminbird(R) and to restructure the Watercraft business. We continue to address the challenges in Diving and in balancing the Outdoor Equipment portfolio with the same commitment to strengthen the competitiveness of all of our businesses to ensure sustainable, profitable growth over the long-term,” said Ms. Johnson-Leipold.

Debt-to-total capital stands at 29.4% at year end, well below historical levels. Working capital excluding cash and debt fell $30.8 million during the quarter, moving to its annual low at the end of September. Compared to year ago levels, the increases in Trade Receivables and Inventories primarily reflect the addition of Humminbird(R) business during the Company’s third fiscal quarter and the impact of currency fluctuation in the Company’s foreign operations. Additional growth in inventory occurred in the Minn Kota(R) business, which saw fourth quarter revenues fall unexpectedly by 23.4% from last year’s fourth quarter.

“Overall, Im pleased with our continued success improving asset management,” commented Paul Lehmann, Vice President and Chief Financial Officer. “Most of our businesses ended the year with significantly lower inventories and in most cases, lower accounts receivable. This reflects improving inventory controls and collection efforts in all our operations.”


  (thousands, except per share amounts)
  Operating Results        Three Months Ended       Twelve Months Ended
                           Oct 1        Oct 3        Oct 1        Oct 3
                            2004         2003         2004         2003

  Net sales              $75,572      $69,186     $355,274     $315,892
  Cost of sales           47,405       44,581      207,656      187,903
  Gross profit            28,167       24,605      147,618      127,989
  Operating expenses      32,756       28,201      128,490      116,376
  Operating profit
   (loss)                 (4,589)      (3,596)      19,128       11,613
  Interest expense, net    1,176        1,044        4,598        4,367
  Other expenses
   (income), net            (299)         659         (206)      (2,456)
  Income (loss) before
   income taxes           (5,466)      (5,299)      14,736        9,702
  Income tax expense
   (benefit)              (1,708)      (1,643)       6,047        4,281
  Net income (loss)      $(3,758)     $(3,656)      $8,689       $5,421
  Basic earnings (loss)
   per common share       $(0.44)      $(0.43)       $1.01        $0.64
  Diluted earnings
   (loss) per common
   share                  $(0.44)      $(0.43)       $0.99        $0.63

  Segment Results
  Net sales:
    Marine electronics   $16,774      $14,412     $109,778      $86,570
    Outdoor equipment     23,019       16,928       90,193       72,786
    Watercraft            14,802       16,502       75,964       79,917
    Diving                20,857       21,427       80,074       78,012
    Other/eliminations       120          (83)        (735)      (1,393)
  Total                  $75,572      $69,186     $355,274     $315,892
  Operating profit
    Marine electronics   $(1,239)        $667      $17,762      $11,993
    Outdoor equipment      4,673        3,282       16,365       12,136
    Watercraft            (4,853)      (7,703)      (9,787)      (8,983)
    Diving                   263        2,274        9,949        8,579
    Other/eliminations    (3,433)      (2,116)     (15,161)     (12,112)
  Total                  $(4,589)     $(3,596)     $19,128      $11,613