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Johnson Outdoors Inc. Announces Fiscal 2008 Fourth Quarter and Full Year Results
RACINE, Wis., Dec 5, 2008 (GlobeNewswire via COMTEX News Network) -- Johnson Outdoors Inc. (Nasdaq:JOUT), a leading global outdoor recreation company, today announced that while economic pressure on its markets led to lower sales and operating profit, non-cash charges had the greatest impact on 2008 fiscal fourth quarter and full year financial results. In addition, the Company announced it was intensifying efforts to reduce operating costs, working capital and capital spending by more than $30 million combined.
"This was a challenging year and given the 2009 economic outlook, we are acting quickly to protect profitability going forward while making smart investments behind future growth opportunities. While we work to scale back our cost-structure, we remain focused on leveraging our marketing and innovation expertise to create consumer demand and drive increased volume in the year ahead. We have tremendous brand equities that held or gained share throughout 2008 due to innovative new products that generated a third or more of total company sales for the fifth straight year," observed Helen Johnson-Leipold, Chairman and Chief Executive Officer.
RESULTS SUMMARY
The Company recorded non-cash goodwill and other intangible asset impairment charges of $41.0 million and a non-cash deferred tax asset valuation allowance of $29.5 million during the fourth quarter ended October 3, 2008. Net sales for the seasonally slow fourth quarter were $81.8 million compared to $87.3 million in the prior year quarter. Net loss for the quarter was $74.6 million ($8.18 per diluted share) compared to net income of $0.9 million ($0.10 per diluted share) for the prior year quarter.
For the full year, the Company reported net sales of $420.8 million compared to the record revenues of $430.6 million in the prior year. Net loss for the year was $71.0 million ($7.81 per diluted share) compared to the prior year's net income of $9.2 million ($1.00 per diluted share.) The chart below shows the impact of these non-cash items on 2008 operating profit and net income.
2008 RECONCILIATION OPERATING PROFIT, NET INCOME EX. NON-CASH ITEMS
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Operating Net
Profit Income*
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2008 as reported $ (38,053) $ (71,034)
Intangible asset impairment 41,008 35,739
Deferred tax asset valuation charge -- 29,500
Inventory write downs 3,528 2,210
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2008 excluding non-cash items $ 6,484 $ (3,585)
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* Net income after tax
The Company believes the non-GAAP financial measures included in this press release allow management and investors to understand and compare the Company's operating results in a more consistent manner for 2008. These non-GAAP measures should be considered supplemental and not a substitute for the Company's financial results that were recorded in accordance with generally accepted accounting principles for the periods presented.
FINANCIAL IMPACT
While intangible asset impairment charges and the deferred tax asset valuation allowance are non-cash charges with no impact on the Company's day to day operations, they are reflected on the Company's balance sheet and are used to help calculate various financial performance measures included under the Company's debt agreements. Although the Company remains current with scheduled principal and interest payments, as a result of these non-cash charges, the Company is in breach of the net worth covenant in its debt agreements, and is working with its banks to amend the agreements. Unless these agreements are amended or the Company receives a waiver through 2009 on this and other covenants, the debt would be reclassified as short-term as of October 3, 2008.
COST-REDUCTION PLANS
"The outdoor recreational industry is particularly volatile during uncertain economic times, which is why we have moved decisively to align operations for greater flexibility in addressing the ebb and flow of our markets and by doing so, enhance profitability and cash flow. Importantly, targeted cost savings and spending reductions are highly strategic, intended to scale our cost structure to the current environment while maintaining our competitive position in the coming year and beyond," stated Ms. Johnson-Leipold.
The Company's cost-reduction plans reflect the impact of the current unprecedented economic and financial environment on seasonal outdoor recreational markets. Key elements of the plans are:
* $20 million in cost-saving projects * 26 percent reduction in capital expenditures * 12 percent reduction in peak working capital
Aggressive cost-saving initiatives include, among others: consolidation of dive computer manufacturing, 20 percent reduction in SKUs across all businesses, 7 percent reduction in headcount and wage freeze. Peak working capital reduction is expected to result from investments in improved forecasting, production planning and inventory control processes and systems. Capital spending plans reflect the Company's on-going commitment to be the innovation leader in its markets.
FOURTH QUARTER RESULTS
Fourth quarter results historically reflect a loss due to the slowing of sales and production of the Company's seasonal outdoor recreation products. The rapid and steep economic downturn led to a 6.4 percent decline in sales and a higher than normal operating loss during the quarter. Key drivers during the quarter were:
* Marine Electronics Group revenues fell 10.6 percent behind last year's fourth quarter due to the effect of weak boat markets. The Geonav acquisition added $2.1 million to Marine Electronic sales for the quarter. * Diving revenues dipped 3 percent below last year as continued growth of the Seemann brand in Germany and favorable currency translation were not enough to offset softening sales in other key international markets. * Watercraft revenues compared unfavorably to the prior year quarter as customers held back reorders due to mounting economic uncertainties, diminishing solid gains for the segment during the first six months of the year. * Outdoor Equipment revenues increased 6.4 percent due to limited growth in military, commercial and consumer sectors.
Total Company operating loss was $51.7 million in the fourth quarter compared to operating profit of $2.9 million in the same period last year. The unfavorable comparison was due primarily to non-cash goodwill impairment charges of $41.0 million and inventory impairment charges of $3.5 million.
The Company reported a net loss of $74.6 million ($8.18 per diluted share) during the seasonally slow fourth quarter versus net income of $0.9 million in the prior year quarter.
FULL YEAR RESULTS
Total Company net sales dipped 2.3 percent below last year's record annual net sales. Key factors impacting the year-over-year sales results included:
* Deteriorating economic conditions during the fourth quarter which impacted all brands and all channels * Lower domestic sales in Marine Electronics due to a weak boat market * A $6.6 million decline in military sales * Lower-than-normal reorders in Watercraft * Successful new products, growth in Seemann and favorable currency in Diving
Operating loss for the year was $38.1 million compared to operating income of $20.0 million in 2007. Key factors driving the year-over-year changes included:
* Goodwill impairment charges of $41.0 million in the fourth quarter * Restructuring charges in Outdoor Equipment, Diving and Watercraft * Significant decline in military sales * Reversal of accruals related to the Company's discretionary bonus and compensation plans * Reduced margins in Marine Electronics due to lower volume, product and geographic mix, and start-up investments in Geonav
Net loss was $71.0 million, or $7.81 per diluted share compared to net income of $9.2 million, or $1.00 per diluted share, in the prior year. In addition, net loss was impacted by tax expense resulting from deferred tax asset valuation allowance of $29.5 million in the fourth quarter.
Further commenting, Ms. Johnson-Leipold said: "Across every business there is an outstanding line-up of new products for 2009 which will be critical in an economically challenging year. The inherent challenge of doing business amid such economic volatility demands our readiness and commitment to take actions necessary to preserve the long-term sustainability of the enterprise. We believe in the future of Johnson Outdoors, and are doing the right things to ensure we weather the storm, maintain our market leadership positions and prepare for growth once the economy and marketplace rebound."
OTHER FINANCIAL INFORMATION
The Company's debt to total capitalization stood at 32.9 percent at the end of the year versus 17.6 percent at September 28, 2007. Debt, net of cash, was $18.2 million at year-end. Depreciation and amortization was $10.1 million year-to-date compared with $9.4 million in the prior year. Capital spending totaled $12.4 million in 2008 compared with last year's $13.4 million.
"In recent months, projected future cash flows have been negatively impacted by the turbulent economy and declining markets, hitting their lowest level concurrent with our annual goodwill evaluation in accordance with SFAS No. 142. Importantly, this non-cash charge does not reflect our strong belief in the power of our brands or their future potential," said David W. Johnson, Vice-President and Chief Financial Officer.
On December 4, 2008, the Board of Directors voted to suspend quarterly dividends to shareholders.
WEBCAST
The Company will host a conference call and audio web cast on Friday, December 5, 2008 at 11:00 a.m. Eastern Time. A live listen-only web cast of the conference call may be accessed at Johnson Outdoors' home page. A replay will also be available on Johnson Outdoors' home page for 30 days on the Internet.
ABOUT JOHNSON OUTDOORS INC.
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, Marine Electronics, Diving and Outdoor Equipment. Johnson Outdoors' familiar brands include, among others: Old Town(r) canoes and kayaks; Ocean Kayak(tm) and Necky(r) kayaks; Lendal(r) paddles; Carlisle(r) and Extrasport(r) paddling accessories; Minn Kota(r) motors; Cannon(r) downriggers; Humminbird(r) fishfinders; GEONAV(r) marine electronics; SCUBAPRO(r) UWATEC(r) and Seemann(r) dive equipment; Silva(r) compasses; Tech4O(r) digital instruments; and Eureka!(r) tents.
Visit Johnson Outdoors at http://www.johnsonoutdoors.com
SAFE HARBOR STATEMENT
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. Statements other than statements of historical fact are considered 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; the Company's success in implementing its strategic plan, including its focus on innovation; actions of and disputes with companies that compete with the Company; the Company's success in managing inventory; the Company's ability to secure financing; movements in foreign currencies or interest rates; the Company's success in restructuring of its European Diving operations; unanticipated issues related to the Company's military sales; the success of suppliers and customers; the ability of the Company to deploy its capital successfully; adverse weather conditions; and other risks and uncertainties identified in the Company's filings with the Securities and Exchange Commission. 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 obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
JOHNSON OUTDOORS INC.
(thousands, except per share amounts)
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Operating Results THREE MONTHS ENDED TWELVE MONTHS ENDED
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October 3 Sept 28 October 3 Sept 28
2008 2007 2008 2007
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Net sales $ 81,765 $ 87,337 $420,789 $430,604
Cost of sales 54,060 51,257 261,238 255,108
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Gross profit 27,705 36,080 159,551 175,496
Goodwill and other intangible
asset impairment charges 41,008 -- 41,008 --
Other operating expenses 38,385 33,212 197,604 155,469
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Operating profit (loss) (51,688) 2,868 (38,053) 20,027
Interest expense, net 1,326 762 4,929 4,424
Other (income) expense, net 258 464 1,315 (192)
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Income (Loss) before income
taxes (53,272) 1,642 (44,297) 15,795
Income tax expense 21,194 47 25,125 5,246
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Income (Loss) from continuing
operations (74,466) 1,595 (69,422) 10,549
Loss from discontinued
operations, net of income tax
benefit 123 653 1,613 1,315
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Net income (loss) $(74,589) $ 942 $(71,034) $ 9,234
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(Loss) income from continuing
operations per common share -
Basic:
Class A ($8.17) $0.18 ($7.63) $1.18
Class B ($8.17) $0.16 ($7.63) $1.06
Loss from discontinued
operations per common share -
Basic:
Class A ($0.01) ($0.07) ($0.18) ($0.15)
Class B ($0.01) ($0.07) ($0.18) ($0.13)
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Net (loss) income per common
share - Basic:
Class A ($8.18) $0.11 ($7.81) $1.03
Class B ($8.18) $0.09 ($7.81) $0.93
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Income from continuing
operations per common Class A
and B share - Dilutive ($8.17) $0.17 ($7.63) $1.14
Loss from discontinued
operations per common Class A
and B share - Dilutive ($0.01) ($0.07) ($0.18) ($0.14)
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Net income per common Class A
and B share - Dilutive ($8.18) $0.10 ($7.81) $1.00
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Weighted average common shares
- Basic:
Class A 7,897 7,844 7,876 7,848
Class B 1,217 1,218 1,217 1,218
Dilutive stock options and
restricted stock -- 174 -- 188
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Weighted average common shares
- Dilutive 9,114 9,236 9,093 9,254
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(thousands, except per share amounts)
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Segment Results THREE MONTHS ENDED TWELVE MONTHS ENDED
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October 3 Sept 28 October 3 Sept 28
2008 2007 2008 2007
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Net sales:
Marine electronics $ 29,537 $ 33,040 $186,723 $198,050
Outdoor equipment 9,972 9,369 48,315 55,863
Watercraft 16,254 18,359 88,087 88,848
Diving 25,978 26,769 98,246 88,679
Other/eliminations 24 (200) (582) (836)
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Total $ 81,765 $ 87,337 $420,789 $430,604
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Operating (loss) / profit :
Marine electronics $(13,027) $ 1,374 $ 414 $ 22,933
Outdoor equipment (802) 2,783 1,982 8,464
Watercraft (9,522) (1,177) (8,282) (4,219)
Diving (25,098) 3,164 (21,520) 6,933
Other/eliminations (3,239) (3,276) (10,647) (14,084)
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Total $(51,688) $ 2,868 $(38,053) $ 20,027
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Balance Sheet Information
(End of Period)
Cash and short-term
investments $ 41,791 $ 39,232
Accounts receivable, net 52,710 57,275
Inventories, net 85,999 87,726
Total current assets 189,715 205,221
Total assets 255,069 319,684
Total current liabilities,
excluding debt 55,386 66,260
Total debt 60,003 42,806
Shareholders' equity 122,284 200,165
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2008 Reconciliation Operating
Profit, Net Income Excluding FOURTH QUARTER FULL YEAR
Non-Cash Items
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Operating Net Operating Net
Profit Income Profit Income
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2008 as reported $(51,688) $(74,589) $(38,053) $(71,034)
Intangible asset impairment 41,008 35,739 41,008 35,739
Inventory writedowns 3,528 2,210 3,528 2,210
Deferred tax asset valuation
charge -- 29,500 -- 29,500
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2008 excluding non-cash items $ (7,152) $ (7,140) $ 6,484 $ (3,585)
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This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Johnson Outdoors
Johnson Outdoors Inc.
David Johnson, VP & Chief Financial Officer
262-631-6600
Cynthia Georgeson, VP - Worldwide Communication
262-631-6600
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