SEC Filing | Johnson Outdoors Inc.

View:




================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549


                                    FORM 10-Q


         [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934


                  For the quarterly period ended June 30, 2000

                                       OR

         [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________ to _________

                         Commission file number 0-16255

                              JOHNSON OUTDOORS INC.
             (Exact name of Registrant as specified in its charter)


               Wisconsin                             39-1536083
    (State or other jurisdiction of     (I.R.S. Employer Identification No.)
    incorporation or organization)


                  1326 Willow Road, Sturtevant, Wisconsin 53177
                    (Address of principal executive offices)


                                 (262) 884-1500
              (Registrant's telephone number, including area code)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes [X]  No [ ]

As of July 17, 2000, 6,924,630 shares of Class A and 1,222,729 shares of Class B
common stock of the Registrant were outstanding.


================================================================================






                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)


                         Index                                      Page No.
- -----------------------------------------------------           ----------------

PART I   FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Consolidated Statements of Operations
                  - Three months and nine months ended
                  June 30, 2000 and July 2, 1999                               1

                  Consolidated Balance Sheets - June 30,
                  2000, October 1, 1999 and July 2, 1999                       2

                  Consolidated Statements of Cash Flows
                  - Nine months ended June 30, 2000 and
                  July 2, 1999                                                 3

                  Notes to Consolidated Financial Statements                   4

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations               10

         Item 3.  Quantitative and Qualitative Disclosures
                  About Market Risk                                           14

PART II  OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K                            14

                  Signatures






                                           JOHNSON OUTDOORS INC.
                               (formerly Johnson Worldwide Associates, Inc.)


                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (unaudited)



- ----------------------------------------------------------------------------------------------------------
(thousands, except per share data)                         Three Months Ended          Nine Months Ended
- ----------------------------------------------------------------------------------------------------------
                                                          June 30       July 2       June 30       July 2
                                                            2000         1999          2000         1999
- ----------------------------------------------------------------------------------------------------------
                                                                                      
Net sales                                                $114,003      $101,134     $266,906      $233,922
Cost of sales                                              68,666        59,027      160,587       139,374
- ----------------------------------------------------------------------------------------------------------
Gross profit                                               45,337        42,107      106,319        94,548
- ----------------------------------------------------------------------------------------------------------
Operating expenses:
  Marketing and selling                                    19,025        17,232       50,558        45,752
  Administrative management, finance and
    information systems                                     7,324         7,465       20,497        18,864
  Research and development                                  2,273         1,673        5,744         4,852
  Amortization of acquisition costs                           723           727        2,224         2,147
  Profit sharing                                            1,465         1,271        2,325         1,953
  Strategic charges                                           615            49        1,336         2,123
- ----------------------------------------------------------------------------------------------------------
Total operating expenses                                   31,425        28,417       82,684        75,691
- ----------------------------------------------------------------------------------------------------------
Operating profit                                           13,912        13,690       23,635        18,857
Interest income                                              (101)          (53)        (350)         (202)
Interest expense                                            2,423         2,577        7,608         7,362
Other expense, net                                            289            96          164           183
- ----------------------------------------------------------------------------------------------------------
Income from continuing operations
  before income taxes                                      11,301        11,070       16,213        11,514
Income tax expense                                          5,343         4,711        7,395         4,973
- ----------------------------------------------------------------------------------------------------------
Income from continuing operations                           5,958         6,359        8,818         6,541
Income (loss) from discontinued operations, net of
  income tax expense (benefit) of $483,
  $(563) and $1,340, respectively                              --           725         (941)        1,900
Loss on disposal of discontinued operations, net of
  income tax benefit of $(1,840)                               --            --      (24,418)           --
- ----------------------------------------------------------------------------------------------------------
Net income (loss)                                        $  5,958      $  7,084     $(16,541)     $  8,441
==========================================================================================================
BASIC EARNINGS (LOSS) PER COMMON SHARE:
  Continuing operations                                  $   0.73      $   0.79     $   1.09      $   0.81
  Discontinued operations                                      --          0.09        (3.12)         0.23
- ----------------------------------------------------------------------------------------------------------
Net income (loss)                                        $   0.73      $   0.88     $  (2.03)     $   1.04
==========================================================================================================
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
  Continuing operations                                  $   0.73      $   0.78     $   1.08      $   0.81
  Discontinued operations                                      --          0.09        (3.12)         0.23
- ----------------------------------------------------------------------------------------------------------
Net income (loss)                                        $   0.73      $   0.87     $  (2.04)     $   1.04
==========================================================================================================

     The accompanying notes are an integral part of the consolidated financial statements.





                                                    1



                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)

                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

- ------------------------------------------------------------------------------
                                               June 30    October 1    July 2
(thousands, except share data)                  2000        1999        1999
- ------------------------------------------------------------------------------
ASSETS
Current assets:
  Cash and temporary cash investments         $  6,806    $  9,974    $  8,609
  Accounts receivable, less allowance
    for doubtful accounts of $3,727,
    $3,236 and $2,885, respectively             78,144      49,302      68,929
  Inventories                                   71,537      59,981      60,626
  Deferred income taxes                          7,804       4,718       4,864
  Other current assets                           3,252       5,644       6,261
  Net assets of discontinued operations          1,038      56,114      60,205
- ------------------------------------------------------------------------------
Total current assets                           168,581     185,733     209,494
Property, plant and equipment                   37,940      35,323      32,474
Deferred income taxes                           15,492      11,277      11,127
Intangible assets                               60,450      65,599      60,140
Other assets                                     1,381       1,093       1,950
- ------------------------------------------------------------------------------
Total assets                                  $283,844    $299,025    $315,185
==============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short-term debt and current
    maturities of long-term debt              $ 76,382    $ 49,327    $ 73,078
  Accounts payable                              18,286      16,034      14,468
  Accrued liabilities:
    Salaries and wages                           6,821       6,912       5,655
    Other                                       23,412      22,126      21,625
- ------------------------------------------------------------------------------
Total current liabilities                      124,901      94,399     114,826
Long-term debt, less current maturities         48,013      72,744      71,563
Other liabilities                                4,871       4,704       4,656
- ------------------------------------------------------------------------------
Total liabilities                              177,785     171,847     191,045
- ------------------------------------------------------------------------------
Shareholders' equity:
  Preferred stock: none issued                      --          --          --
  Common stock:
  Class A shares issued:
    June 30, 2000, 6,924,630;
    October 1, 1999, 6,910,577;
    July 2, 1999, 6,910,577                        346         345         345
  Class B shares issued
   (convertible into Class A):
    June 30, 2000, 1,222,729;
    October 1, 1999, 1,222,861;
    July 2, 1999, 1,222,861                         61          61          61
  Capital in excess of par value                44,291      44,205      44,068
  Retained earnings                             75,240      91,832      93,388
  Contingent compensation                          (96)       (134)       (153)
  Other comprehensive income
    - cumulative  foreign currency
    translation adjustment                     (13,783)     (9,049)    (13,487)
  Treasury stock: Class A shares,
   at cost:
    October 1, 1999, 5,280;
       July 2, 1999, 5,280                          --         (82)        (82)
- ------------------------------------------------------------------------------
Total shareholders' equity                     106,059     127,178     124,140
- ------------------------------------------------------------------------------
Total liabilities and
  shareholders' equity                        $283,844    $299,025    $315,185
==============================================================================

     The accompanying notes are an integral part of the consolidated financial
statements.




                                       2



                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


- --------------------------------------------------------------------------------
(thousands)                                                 Nine Months Ended
- --------------------------------------------------------------------------------
                                                          June 30       July 2
                                                           2000          1999
- -------------------------------------------------------------------------------
CASH USED FOR OPERATIONS
Net income (loss)                                        $(16,541)     $  8,441
Less income (loss) from discontinued operations           (25,359)        1,900
- -------------------------------------------------------------------------------
Income from continuing operations                           8,818         6,541
Adjustments to reconcile income from
 continuing operations to net cash used
 for operating activities of continuing
 operations :
  Depreciation and amortization                             9,241         9,262
  Deferred income taxes                                    (2,631)          580
Change in assets and liabilities, net of
 effect of businesses acquired or sold:
  Accounts receivable                                     (30,875)      (22,954)
  Inventories                                             (14,377)         (958)
  Accounts payable and accrued liabilities                  5,373         3,180
  Other, net                                                4,047           765
- -------------------------------------------------------------------------------
Net cash used for operating activities
 of continuing operations                                 (20,404)       (3,584)
- -------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
Proceeds from sale of business, net of cash                33,126            --
Net assets of businesses acquired, net of cash               (835)      (10,210)
Net additions to property, plant and equipment             (9,895)       (7,457)
- -------------------------------------------------------------------------------
Net cash provided by (used for) investing
 activities of continuing operations                       22,396       (17,667)
- -------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES
Principal payments on senior notes
 and other long-term debt                                 (21,500)           --
Net change in short-term debt                              25,048        22,127
Common stock transactions                                      98            91
- -------------------------------------------------------------------------------
Net cash provided by financing activities
 of continuing operations                                   3,646        22,218
- -------------------------------------------------------------------------------
Effect of foreign currency fluctuations on cash              (805)         (790)
Net cash used for discontinued operations                  (8,001)       (1,898)
- -------------------------------------------------------------------------------
Decrease in cash and temporary cash investments            (3,168)       (1,721)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period                                         9,974        10,330
- -------------------------------------------------------------------------------
End of period                                            $  6,806      $  8,609
===============================================================================

     The accompanying notes are an integral part of the consolidated financial
statements.




                                       3



                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


1    Name Change

     In February 2000, the shareholders approved a change in the name of the
     Company to Johnson Outdoors Inc. The change is intended to better represent
     the nature of the Company's business.


2    Basis of Presentation

     The consolidated financial statements included herein are unaudited. In the
     opinion of management, these statements contain all adjustments (consisting
     of only normal recurring items) necessary to present fairly the financial
     position of Johnson Outdoors Inc. and subsidiaries (the Company) as of June
     30, 2000 and the results of operations and cash flows for the three months
     and nine months ended June 30, 2000. These consolidated financial
     statements should be read in conjunction with the consolidated financial
     statements and notes thereto included in the Company's 1999 Annual Report.

     Because of seasonal and other factors, the results of operations for the
     three months and nine months ended June 30, 2000 are not necessarily
     indicative of the results to be expected for the full year.

     All monetary amounts, other than share and per share amounts, are stated in
     thousands.

     Certain amounts as previously reported have been reclassified to conform
     with the current period presentation. See Note 7.


3    Income Taxes

     The provision for income taxes includes deferred taxes and is based upon
     estimated annual effective tax rates in the tax jurisdictions in which the
     Company operates.


4    Inventories

     Inventories related to continuing operations at the end of the respective
     periods consist of the following:

     --------------------------------------------------------------------------
                                          June 30       October 1       July 2
                                           2000           1999           1999
     --------------------------------------------------------------------------
     Raw materials                       $ 27,659       $ 22,702       $ 21,427
     Work in process                        2,865          3,176          2,713
     Finished goods                        45,749         39,014         41,305
     --------------------------------------------------------------------------
                                           76,273         64,892         65,445
     Less reserves                         (4,736)        (4,911)        (4,819)
     --------------------------------------------------------------------------
                                         $ 71,537       $ 59,981       $ 60,626
     ==========================================================================




                                       4



5    Earnings Per Share

     The following table sets forth the computation of basic and diluted
     earnings from continuing operations per common share:



     --------------------------------------------------------------------------------------------------------------
                                                                Three Months Ended             Nine Months Ended
     --------------------------------------------------------------------------------------------------------------
                                                         June 30        July 2        June 30         July 2
                                                           2000          1999           2000           1999
     --------------------------------------------------------------------------------------------------------------
                                                                                        
     Income from continuing operations for basic
      and diluted earnings per share                   $    5,958     $    6,359     $    8,818     $    6,541
     ==============================================================================================================
     Weighted average common shares outstanding
                                                        8,147,359      8,112,455      8,136,665      8,102,320
     Less nonvested restricted stock                      (14,632)       (20,203)       (18,187)        (9,366)
     -----------------------------------------------------------------------------------------------------------
     Basic average common shares                        8,132,727      8,092,252      8,118,478      8,092,954
     Dilutive stock options and restricted stock            9,618         17,122         10,423          6,983
     -----------------------------------------------------------------------------------------------------------
     Diluted average common shares                      8,142,345      8,109,374      8,128,901      8,099,937
     ==============================================================================================================
     Basic earnings per common share                   $     0.73     $     0.79     $     1.09     $     0.81
     ==============================================================================================================
     Diluted earnings per common share                 $     0.73     $     0.78     $     1.08     $     0.81
     ==============================================================================================================



6    Stock Ownership Plans

     A summary of stock option activity related to the Company's plans is as
     follows:

     ---------------------------------------------------------------------------
                                                                Weighted Average
                                                      Shares     Exercise Price
     ---------------------------------------------------------------------------
     Outstanding at October 1, 1999                  778,837         $14.02
     Granted                                         250,500           7.66
     Cancelled                                       (72,108)         15.43
     ---------------------------------------------------------------------------
     Outstanding at June 30, 2000                    957,229         $12.25
     ===========================================================================

     Options to purchase 795,005 shares of common stock with a weighted average
     exercise price of $14.06 per share were outstanding at July 2, 1999.


7    Sale of Fishing Business

     In January 2000, the Company entered into an agreement for the sale of its
     Fishing business. As a result, operations of the Fishing group have been
     classified as discontinued for all periods presented herein. The sale price
     totaled $47,300, including $14,100 of accounts receivable retained by the
     Company and $2,400 of debt assumed by the buyer. The Company recorded a
     loss of $24,418 related to the sale of the business, taking into account
     operating results from the measurement date to the date of disposal. Since
     the plan to divest the business was approved prior to the formal issuance
     of the Company's first quarter financial statements, the loss was
     recognized in first quarter results to the extent determinable. The
     transaction closed in March 2000.

     Net sales of the Fishing group totaled $10,994 for the three months ended
     December 31, 1999, and $18,707 and $50,130 for the three months and nine
     months ended July 2, 1999, respectively. Interest expense of $36, $43 and
     $189, respectively, that is directly attributable to the Fishing business
     is allocated to discontinued operations.



                                       5



8    Strategic Charges

     In the second and third quarters of fiscal 2000, the Company recorded
     severance and other exit costs totaling $1,336, relating primarily to the
     closure and relocation of a manufacturing facility in the Motors business.
     The Company expects charges related to this action will total approximately
     $1,700 in fiscal 2000. Approximately 90 employees are impacted.


9    Comprehensive Income

     Comprehensive income includes net income and changes in shareholders'
     equity from non-owner sources. For the Company, the elements of
     comprehensive income excluded from net income are represented primarily by
     the cumulative foreign currency translation adjustment.

     Comprehensive income (loss) for the respective periods consists of the
     following:

     --------------------------------------------------------------------------
                                     Three Months Ended      Nine Months Ended
     --------------------------------------------------------------------------
                                      June 30   July 2       June 30     July 2
                                        2000     1999          2000       1999
     --------------------------------------------------------------------------
     Net income (loss)                $5,958   $ 7,084      $(16,541)   $ 8,441
     Translation adjustment              332    (3,676)       (4,734)    (8,836)
     --------------------------------------------------------------------------
     Comprehensive income (loss)      $6,290   $ 3,408      $(21,275)   $  (395)
     ==========================================================================




                                       6



10   Segments of Business

     The Company conducts its worldwide operations through separate global
     business units, each of which represent major product lines. Operations are
     conducted in the United States and various foreign countries, primarily in
     Europe, Canada and the Pacific Basin.

     Net sales and operating profit include both sales to customers, as reported
     in the Company's consolidated statements of operations, and interunit
     transfers, which are priced to recover cost plus an appropriate profit
     margin. Identifiable assets represent assets that are used in the Company's
     operations in each business unit at the end of the periods presented.

     A summary of the Company's operations by business unit is presented below:

     --------------------------------------------------------------------------
                                     Three Months Ended      Nine Months Ended
     --------------------------------------------------------------------------
                                      June 30     July 2    June 30     July 2
                                        2000       1999       2000       1999
     --------------------------------------------------------------------------
     Net sales:
       Outdoor equipment:
         Unaffiliated customers      $ 31,069   $ 28,749    $ 78,471   $ 69,885
         Interunit transfers               18        (16)         41         14
       Watercraft:
         Unaffiliated customers        33,070     28,442      64,762     50,097
         Interunit transfers               93         57         362        237
       Motors:
         Unaffiliated customers        26,085     21,283      62,015     52,710
         Interunit transfers              183        498       1,366      1,482
       Diving:
         Unaffiliated customers        23,769     22,327      60,520     59,886
         Interunit transfers                1         --           3          9
       Other                               10        333       1,138      1,344
       Eliminations                      (295)      (539)     (1,772)    (1,742)
     --------------------------------------------------------------------------
                                     $114,003   $101,134    $266,906   $233,922
     ==========================================================================
     Operating profit (loss):
       Outdoor equipment             $  3,208   $  2,092    $  6,825   $  2,927
       Watercraft                       6,648      7,741      10,670     11,063
       Motors                           2,807      1,797       5,043      4,177
       Diving                           3,607      3,493       7,011      3,645
       Other                           (2,358)    (1,433)     (5,914)    (2,955)
     --------------------------------------------------------------------------
                                     $ 13,912   $ 13,690    $ 23,635   $ 18,857
     ==========================================================================
     Identifiable assets
      (end of period):
       Outdoor equipment                                    $ 54,635   $ 52,745
       Watercraft                                             74,367     54,306
       Motors                                                 37,736     27,910
       Diving                                                 91,080     93,577
       Discontinued operations,
        net                                                    1,038     60,205
       Other                                                  24,993     26,442
     --------------------------------------------------------------------------
                                                            $283,844   $315,185
     ==========================================================================




                                       7



11   Selected Financial Data

     A summary of the Company's operating results and key balance sheet data for
     each of the years in the four-year period ended October 1, 1999 is
     presented below. All years have been reclassified to reflect the Company's
     Fishing business as a discontinued operation.



     ------------------------------------------------------------------------------------------------------------
                                                                                                      Year Ended
     ------------------------------------------------------------------------------------------------------------
                                                       October 1       October 2      October 3     September 27
                                                            1999            1998           1997             1996
     ------------------------------------------------------------------------------------------------------------
                                                                                          
     OPERATING RESULTS (1)
     Net sales                                        $  305,094      $  270,017     $  239,322       $  274,637
     Gross profit                                        120,670         106,801         91,118          102,041
     Operating expenses (2)                              101,157          88,445         77,237           91,138
     ------------------------------------------------------------------------------------------------------------
     Operating profit                                     19,513          18,356         13,881           10,903
     Interest expense                                      9,565           9,631          8,413            9,563
     Other income, net                                       (71)           (539)          (624)            (498)
     ------------------------------------------------------------------------------------------------------------
     Income from continuing operations before
      income taxes                                        10,019           9,264          6,092            1,838
     Income tax expense                                    4,158           3,885          2,721            2,740
     ------------------------------------------------------------------------------------------------------------
     Income (loss) from continuing operations              5,861           5,379          3,371             (902)
     Income (loss) from discontinued operations
                                                           1,161            (167)        (1,315)         (10,453)
     ------------------------------------------------------------------------------------------------------------
     Net income (loss)                                $    7,022      $    5,212     $    2,056       $  (11,355)
     ============================================================================================================
     Basic earnings (loss) per common share:
       Continuing operations                          $     0.72      $    0.66      $     0.42       $    (0.11)
       Discontinued operations                              0.14          (0.02)          (0.17)           (1.29)
     ------------------------------------------------------------------------------------------------------------
     Net income (loss)                                $     0.87      $    0.64      $     0.25       $    (1.40)
     ============================================================================================================
     Diluted earnings (loss) per common share:
       Continuing operations                          $     0.72      $    0.66      $     0.42       $    (0.11)
       Discontinued operations                              0.14          (0.02)          (0.17)           (1.29)
     ------------------------------------------------------------------------------------------------------------
     Net income (loss)                                $     0.87      $    0.64      $     0.25       $    (1.40)
     ============================================================================================================
     Average common shares outstanding:
       Basic                                           8,096,575       8,094,906      8,102,100        8,101,564
       Diluted                                         8,108,228       8,113,830      8,115,318        8,129,543
     ============================================================================================================
     BALANCE SHEET DATA
     Current assets (3)                               $  185,733      $  188,224     $  184,555       $  221,798
     Total assets                                        299,025         292,380        272,605          272,119
     Current liabilities (4)                              45,072          39,448         36,772           41,773
     Long-term debt, less current maturities              72,744          81,508         87,926           60,194
     Total debt                                          122,071         124,001        113,676           99,485
     Shareholders' equity                                127,178         124,386        117,731          126,424
     ============================================================================================================
(1)  The year ended October 3, 1997 includes 53 weeks. All other years include 52 weeks.
(2)  Includes strategic charges of $2,773, $1,388, $335 and $4,487 in 1999, 1998, 1997 and 1996, respectively.
(3)  Includes net assets of discontinued operations of $56,114, $58,462, $66,057 and $84,851 in 1999, 1998,
     1997 and 1996, respectively.
(4)  Excludes short-term debt and current maturities of long-term debt.





                                       8



12   Quarterly Financial Summary

     The following summarizes quarterly operating results for the year ended
     October 1, 1999. All periods have been reclassified to reflect the
     Company's Fishing business as a discontinued operation.

     -------------------------------------------------------------------------
                                        First     Second     Third     Fourth
                                       Quarter    Quarter   Quarter    Quarter
     -------------------------------------------------------------------------
     Net sales                         $48,144    $84,644   $101,134   $71,172
     Gross profit                       17,811     34,629     42,107    26,123
     Operating expenses (1)             20,932     26,341     28,417    25,466
     Operating profit (loss)            (3,121)     8,288     13,690       656
     Income (loss) from
      continuing operations             (3,038)     3,220      6,359      (680)
     Income (loss) from
      discontinued operations               19      1,157        725      (740)
     -------------------------------------------------------------------------
     Net income (loss)                 $(3,019)   $ 4,377   $  7,084   $(1,420)
     =========================================================================
     Basic earnings (loss)
      per common share:
       Continuing operations           $ (0.37)   $  0.40   $   0.79   $ (0.09)
       Discontinued operations              --       0.14       0.09     (0.09)
     -------------------------------------------------------------------------
     Net income (loss)                 $ (0.37)   $  0.54   $   0.88   $ (0.18)
     =========================================================================
     Diluted earnings (loss)
      per common share:
       Continuing operations           $ (0.37)   $  0.40   $   0.78   $ (0.09)
       Discontinued operations              --       0.14       0.09     (0.09)
     -------------------------------------------------------------------------
     Net income (loss)                 $ (0.37)   $  0.54   $   0.87   $ (0.18)
     =========================================================================

(1)  Includes strategic charges of $942, $1,133, $49 and $649, respectively.




                                       9



                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations


The following discussion includes comments and analysis relating to the
Company's results of operations and financial condition for the three months and
nine months ended June 30, 2000 and July 2, 1999. This discussion should be read
in conjunction with the consolidated financial statements and related notes that
immediately precede this section, as well as the Company's 1999 Annual Report.


Forward Looking Statements

Certain matters discussed in this Form 10-Q 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 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
the Company, the Company's success in managing inventory, movements in foreign
currencies or interest rates, and 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 Form 10-Q and the Company
undertakes no obligations to publicly update such forward-looking statements to
reflect subsequent events or circumstances.


Results of Continuing Operations

Net sales for the three months ended June 30, 2000 totaled $114 million, an
increase of 13%, or $12.9 million, compared to $101.1 million in the three
months ended July 2, 1999. Net sales for the nine months ended June 30, 2000
totaled $266.9 million, an increase of 14%, or $33 million, over the nine months
ended July 2, 1999. Sales of all businesses exhibited growth. The Company also
continues to experience strong sales growth excluding recently acquired
businesses, totaling 12% for both the three month and nine month periods of the
current year. Timing of acquisitions consummated in 2000 and 1999 accounted for
$1.6 million and $6 million of the growth in sales for the three months and nine
months ended June 30, 2000, respectively.

The Diving business and, to a lesser extent, the Outdoor Equipment business were
adversely impacted by foreign currency movements, resulting in more moderate
increases in sales for the three months ended June 30, 2000, and year to date.
Relative to the U.S. dollar, the average values of most currencies of the
countries in which the Company has operations were lower for the three months
and nine months ended June 30, 2000 as compared to the corresponding periods of
the prior year. Excluding the impact of fluctuations in foreign currencies, net
sales increased 15% and 17% for the three months and nine months ended June 30,
2000, respectively.

Gross profit as a percentage of sales was 39.8% for the three months ended June
30, 2000 compared to 41.6% in the corresponding period in the prior year. Gross
profit for the nine months ended June 30, 2000 decreased to 39.8% from 40.4% in
the prior year. Margin decline in the Watercraft business accounts for the
overall decline, due to an unfavorable overall sales mix and inability to
efficiently meet strong demand.



                                       10



The Company recognized an operating profit of $13.9 million for the three months
ended June 30, 2000, compared to an operating profit of $13.7 million for the
corresponding period of the prior year. For the nine months ended June 30, 2000,
operating profit increased to $23.6 million, or 8.9% of sales, an 80 basis point
improvement, from $18.9 million in the prior year. Year to date operating
expense growth of 10.6%, excluding strategic charges, was less than the growth
rate of sales, which contributed to the improved operating results, as did sales
growth. Decreased strategic charges related to closure and relocation of a
manufacturing facility in the current year and integration of acquired
businesses in the prior year, also contributed to the improvement in
profitability for the nine month period.

Interest expense totaled $7.6 million for the nine months ended June 30, 2000
compared to $7.4 million for the corresponding period of the prior year.
Increased debt levels due to acquisitions consummated in 1999, an unfavorable
interest rate environment and higher working capital all contributed to the
increase. The Company's effective tax rate is increasing due to the geographic
mix of earnings occurring in higher tax jurisdictions..

The Company recognized income from continuing operations of $6 million in the
three months ended June 30, 2000 compared to $6.4 million in the corresponding
period of the prior year. Diluted earnings per common share from continuing
operations totaled $0.73 for the three months ended June 30, 2000 compared to
$0.78 in the prior year. The Company recognized income from continuing
operations of $8.8 million in the nine months ended June 30, 2000 compared to
$6.5 million in the corresponding period of the prior year. Year to date diluted
earnings per common share from continuing operations increased to $1.08 from
$0.81 in the prior year.


Discontinued Operations

In January 2000, the Company entered into an agreement for the sale of its
Fishing business. As a result, operations of the Fishing group have been
classified as discontinued for all periods presented herein. The sale price
totaled $47.3 million, including $14.1 million of accounts receivable retained
by the Company and $2.4 million of debt assumed by the buyer. The Company
recorded a loss of $24.4 million related to the sale of the business, taking
into account operating results from the measurement date to the date of
disposal. Since the plan to divest the business was approved prior to the formal
issuance of the Company's first quarter financial statements, the loss was
recognized in first quarter results to the extent determinable. The transaction
closed in March 2000.

Net sales of the Fishing group totaled $11.0 million for the three months ended
December 31, 1999, and $18.7 million and $50.1 million for the three months and
nine months ended July 2, 1999, respectively. Interest expense of $36 thousand,
$43 thousand and $189 thousand, respectively, that is directly attributable to
the Fishing business is allocated to discontinued operations.


Financial Condition

The following discusses changes in the Company's liquidity and capital resources
related to continuing operations.


                                   Operations

Cash flows used for operations totaled $20.4 million for the nine months ended
June 30, 2000 and $3.6 million for the corresponding period of the prior year.

Accounts receivable seasonally increased $30.9 million for the nine months ended
June 30, 2000 and $23.0 million for the corresponding period of the prior year
due to strong sales growth. Average days of



                                       11



sales outstanding are improved over the prior year. Seasonal growth in
inventories of $14.4 million for the nine months ended June 30, 2000 and $1
million for the corresponding period of the prior year also accounted for a
significant portion of the net usage of funds. Inventory turns increased for the
nine month period ended June 30, 2000 compared to the corresponding period of
the prior year. The Company has increased production of its products over the
prior year level in order to meet seasonal demand, primarily in Watercraft and
Outdoor Equipment.

Depreciation and amortization charges were $9.2 million for the nine months
ended June 30, 2000 compared to $9.3 million for the corresponding period of the
prior year.

Accounts payable and accrued liabilities increased $5.4 million for the nine
months ended June 30, 2000, decreasing the net outflow of cash from operations,
and increased $3.2 million for the corresponding period of the prior year.

Deferred income tax assets increased $2.6 million for the nine months ended June
30, 2000 due primarily to losses incurred from the sale of the Fishing business
which have been tax benefited.


                              Investing Activities

Expenditures for property, plant and equipment were $9.9 million for the nine
months ended June 30, 2000 and $7.5 million for the corresponding period of the
prior year. The Company's recurring investments are made primarily for tooling
for new products and enhancements. The increase in capital expenditures in the
current year is due primarily to investments to increase manufacturing capacity
in the Company's Watercraft business. In 2000, capitalized expenditures are
anticipated to total approximately $13 million. These expenditures are expected
to be funded by working capital or existing credit facilities. The Company
completed the acquisition of two businesses in the corresponding period of the
prior year, which increased tangible and intangible assets by $10.2 million, net
of cash and liabilities assumed.


                              Financing Activities

Cash flows from financing activities totaled $3.6 million for the nine months
ended June 30, 2000 and $22.2 million for the corresponding period of the prior
year. The closing of the sale of the Fishing business resulted in a $14.0
million reduction of short-term debt and a $15.2 million reduction of long-term
debt. The buyer assumed an additional $2.4 million of debt.


Market Risk Management

The Company is exposed to market risk stemming from changes in foreign exchange
rates, interest rates and, to a lesser extent, commodity prices. Changes in
these factors could cause fluctuations in earnings and cash flows. In the normal
course of business, exposure to certain of these market risks is managed by
entering into hedging transactions authorized under Company policies that place
controls on these activities. Hedging transactions involve the use of a variety
of derivative financial instruments. Derivatives are used only where there is an
underlying exposure: not for trading or speculative purposes.


                               Foreign Operations

The Company has significant foreign operations, for which the functional
currencies are denominated primarily in Swiss and French francs, German marks,
Italian lire, Japanese yen and Canadian dollars. As the values of the currencies
of the foreign countries in which the Company has operations increase or
decrease relative to the U.S. dollar, the sales, expenses, profits, assets and
liabilities of the Company's



                                       12



foreign operations, as reported in the Company's consolidated financial
statements, increase or decrease, accordingly. The Company mitigates a portion
of the fluctuations in certain foreign currencies through the purchase of
foreign currency swaps, forward contracts and options to hedge known
commitments, primarily for purchases of inventory and other assets denominated
in foreign currencies.


                                 Interest Rates

The Company's debt structure and interest rate risk are managed through the use
of fixed and floating rate debt. The Company's primary exposure is to United
States interest rates. The Company also periodically enters into interest rate
swaps, caps or collars to hedge its exposure and lower financing costs.


                                   Commodities

Certain components used in the Company's products are exposed to commodity price
changes. The Company manages this risk through instruments such as purchase
orders and non-cancelable supply contracts. Primary commodity price exposures
are metals, resins and packaging materials.


                         Sensitivity to Changes in Value

The estimates that follow are intended to measure the maximum potential fair
value or earnings the Company could lose in one year from adverse changes in
foreign exchange rates or market interest rates under normal market conditions.
The calculations are not intended to represent actual losses in fair value or
earnings that the Company expects to incur. The estimates do not consider
favorable changes in market rates. Further, since the hedging instrument (the
derivative) inversely correlates with the underlying exposure, any loss or gain
in the fair value of derivatives would be generally offset by an increase or
decrease in the fair value of the underlying exposures. The positions included
in the calculations are foreign exchange forwards, currency swaps and fixed rate
debt. The calculations do not include the underlying foreign exchange positions
that are hedged by these market risk sensitive instruments. The table below
presents the estimated maximum potential one year loss in fair value and
earnings before income taxes from a 10% movement in foreign currencies and a 100
basis point movement in interest rates on market risk sensitive instruments
outstanding at June 30, 2000:

- --------------------------------------------------------------------------------
(millions)                                                   Estimated Impact on
- --------------------------------------------------------------------------------
                                                                 Earnings Before
                                              Fair Value            Income Taxes
- --------------------------------------------------------------------------------
Foreign exchange rate instruments                $2.4                    $0.7
Interest rate instruments                         1.5                     0.5
================================================================================

Other Factors

The Company has not been significantly impacted by inflationary pressures over
the last several years. The Company anticipates that changing costs of basic raw
materials may impact future operating costs and, accordingly, the prices and
margins of its products. The Company is involved in continuing programs to
mitigate the impact of cost increases through changes in product design and
identification of sourcing and manufacturing efficiencies. Price increases and,
in certain situations, price decreases are implemented for individual products,
when appropriate.




                                       13



Item 3.   Quantitative and Qualitative Disclosures About Market Risk

Information with respect to this item is included in Management's Discussion and
Analysis of Financial Condition and Results of Operations under the heading
"Market Risk Management."


Item 6.   Exhibits and Reports on Form 8-K

     (a)  The following documents are filed as part of this Form 10-Q

          Exhibit 27    Financial Data Schedule for the nine months ended
                        June 30, 2000

     (b)  Reports on Form 8-K.

          On April 17, 2000, the Company filed a Current Report on Form 8-K
          dated March 31, 2000 to reflect (under Item 2 of Form 8-K) the
          Company's disposition of substantially all of the operating assets and
          properties held directly or indirectly by the Company of its worldwide
          Fishing business to Berkley Inc. pursuant to a Stock Purchase
          Agreement, dated as of January 12, 2000, as amended. The report
          included (under Item 7 of Form 8-K) the following financial
          statements: Unaudited Pro Forma Condensed Consolidated Balance Sheet
          at December 31, 1999 and Pro Forma Condensed Consolidated Statements
          of Operations for the year ended October 1, 1999 and three months
          ended December 31, 1999.




                                       14



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                   JOHNSON OUTDOORS INC.
Date: August 14, 2000
                                   /s/ Helen P. Johnson-Leipold
                                   ---------------------------------------------
                                   Helen P. Johnson-Leipold
                                   Chairman and Chief Executive Officer



                                   /s/ Scott M. Vos
                                   ---------------------------------------------
                                   Scott M. Vos
                                   Director of Financial Reporting
                                   (Principal Accounting Officer)




                                       15



                              JOHNSON OUTDOORS INC.
                  (formerly Johnson Worldwide Associates, Inc.)

                                  EXHIBIT INDEX



                                                                          Page
Exhibit    Description                                                   Number
- --------------------------------------------------------------------------------

  27       Financial Data Schedule for the                                  -
           nine months ended June 30, 2000




                                       16

  


                     5
                                   1,000

                             
                   9-MOS
                              SEP-29-2000
                                 OCT-02-2000
                                   JUN-30-2000
                                         6,750
                                   56
                                  81,871
                                   (3,727)
                                    71,537
                               168,581
                                         104,036
                                 (66,096)
                                 283,844
                          124,901
                                        48,013
                          0
                                    0
                                       407
                                     105,652
                   283,844
                                        266,396
                               266,906
                                          160,587
                                  160,587
                               0
                               1,239
                             7,608
                                16,213
                                   7,395
                            8,818
                                 (25,359)
                                0
                                      0
                                   (16,541)
                                    (2.03)
                                  (2.04)