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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 March 28, 2003
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)
555 Main Street, Racine, Wisconsin 53403
(Address of principal executive offices)
(262) 631-6600
(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 [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
As of April 24, 2003, 7,194,649 shares of Class A and 1,222,647 shares of Class
B common stock of the Registrant were outstanding.
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JOHNSON OUTDOORS INC.
Index Page No.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - Three months
and six months ended March 28, 2003 and March 29, 2002 1
Consolidated Balance Sheets - March 28, 2003,
September 27, 2002 and March 29, 2002 2
Consolidated Statements of Cash Flows - Six months
ended March 28, 2003 and March 29, 2002 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 17
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
Certifications 19
Exhibit Index 21
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
JOHNSON OUTDOORS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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(thousands, except per share data) Three Months Ended Six Months Ended
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March 28 March 29 March 28 March 29
2003 2002 2003 2002
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Net sales $ 83,265 $ 97,718 $ 138,160 $ 157,456
Cost of sales 47,072 56,977 78,284 91,425
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Gross profit 36,193 40,741 59,876 66,031
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Operating expenses:
Marketing and selling 19,034 20,983 33,485 35,998
Administrative management, finance and
information systems 8,372 8,001 15,806 14,933
Research and development 1,638 1,643 3,163 3,258
Amortization and write-down of intangibles 87 93 164 176
Profit sharing 938 1,073 968 1,266
Strategic charges -- 690 -- 1,151
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Total operating expenses 30,069 32,483 53,586 56,782
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Operating profit 6,124 8,258 6,290 9,249
Interest income (225) (230) (578) (376)
Interest expense 1,339 1,909 2,710 3,461
Other (income) expense, net (2,115) 92 (2,471) 337
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Income from continuing operations before income
taxes and cumulative effect of change in
accounting principle 7,125 6,487 6,629 5,827
Income tax expense 2,828 2,598 2,612 2,334
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Income from continuing operations before cumulative
effect of change in accounting principle
4,297 3,889 4,017 3,493
Gain on disposal of discontinued operations, net of
tax of $255 -- 495 -- 495
Cumulative effect of change in accounting principle,
net of tax of $(2,200) -- -- -- (22,876)
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Net income (loss) $ 4,297 $ 4,384 $ 4,017 $ (18,888)
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BASIC EARNINGS (LOSS) PER COMMON SHARE:
Continuing operations $ 0.51 $ 0.48 $ 0.48 $ 0.43
Discontinued operations -- 0.06 -- 0.06
Cumulative effect of change in accounting
principle -- -- -- (2.80)
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Net income (loss) $ 0.51 $ 0.54 $ 0.48 $ (2.31)
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DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Continuing operations $ 0.50 $ 0.46 $ 0.47 $ 0.42
Discontinued operations -- 0.06 -- 0.06
Cumulative effect of change in accounting
principle -- -- -- (2.76)
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Net income (loss) $ 0.50 $ 0.52 $ 0.47 $ (2.28)
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The accompanying notes are an integral part of the consolidated financial statements.
-1-
JOHNSON OUTDOORS INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
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March 28 September 27 March 29
(thousands, except share data) 2003 2002 2002
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ASSETS
Current assets:
Cash and temporary cash investments $ 44,821 $ 100,830 $ 13,794
Accounts receivable, less allowance for doubtful accounts of
$4,110, $4,028 and $3,662, respectively 71,520 39,972 76,944
Inventories 62,655 42,231 68,378
Deferred income taxes 4,985 5,083 5,014
Other current assets 6,245 4,021 5,726
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Total current assets 190,226 192,137 169,856
Property, plant and equipment 29,795 29,611 30,358
Deferred income taxes 19,520 19,588 21,835
Intangible assets 28,930 27,139 29,434
Other assets 2,822 2,810 1,012
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Total assets $ 271,293 $ 271,285 $ 252,495
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt $ 9,538 $ 8,058 $ 44,765
Accounts payable 20,715 13,589 19,210
Accrued liabilities:
Salaries and wages 7,119 9,428 6,188
Income taxes 5,009 6,567 1,523
Other 18,629 24,005 13,140
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Total current liabilities 61,010 61,647 84,826
Long-term debt, less current maturities 68,488 80,195 78,256
Other liabilities 5,599 5,298 4,558
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Total liabilities 135,097 147,140 167,640
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Shareholders' equity:
Preferred stock: none issued -- -- --
Common stock:
Class A shares issued:
March 28, 2003, 7,194,649;
September 27, 2002, 7,112,155;
March 29, 2002, 6,963,203 360 355 347
Class B shares issued (convertible into Class A):
March 28, 2003, 1,222,647;
September 27, 2002, 1,222,729;
March 29, 2002, 1,222,729 61 61 61
Capital in excess of par value 48,277 47,583 46,188
Retained earnings 92,105 88,089 61,274
Contingent compensation 5 (22) 7
Accumulated other comprehensive loss: (4,612) (11,921) (23,022)
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Total shareholders' equity 136,196 124,145 84,855
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Total liabilities and shareholders' equity $ 271,293 $ 271,285 $ 252,495
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The accompanying notes are an integral part of the consolidated financial statements.
-2-
JOHNSON OUTDOORS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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(thousands) Six Months Ended
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March 28 March 29
2003 2002
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CASH USED FOR OPERATIONS
Net income (loss) $ 4,017 $ (18,888)
Less gain from discontinued operations -- 495
Less loss from cumulative effect of change in accounting principle -- (22,876)
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Income from continuing operations before cumulative effect of change in accounting
principle 4,017 3,493
Adjustments to reconcile income from continuing operations before cumulative
effect of change in accounting principle to net cash used for operating
activities of continuing operations:
Depreciation and amortization 3,981 4,472
Deferred income taxes 139 262
Change in assets and liabilities, net of effect of businesses acquired or sold:
Accounts receivable (30,186) (32,529)
Inventories (18,933) (7,915)
Accounts payable and accrued liabilities (5,413) 4,491
Other, net (5,159) (2,156)
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(51,554) (29,387)
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CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment -- 4,982
Net additions to property, plant and equipment (3,351) (4,150)
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(3,351) 832
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CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES
Issuance of senior notes -- 50,000
Principal payments on senior notes and other long-term debt (8,000) (11,604)
Net change in short-term debt (38) (12,793)
Common stock transactions 620 1,172
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(7,418) 26,775
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Effect of foreign currency fluctuations on cash 6,314 (495)
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Decrease in cash and temporary cash investments (56,009) (2,275)
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 100,830 16,069
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End of period $ 44,821 $ 13,794
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The accompanying notes are an integral part of the consolidated financial statements.
-3-
JOHNSON OUTDOORS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1 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
March 28, 2003 and the results of operations and cash flows for the three
months and six months ended March 28, 2003. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 2002 Annual Report
on Form 10-K.
Because of seasonal and other factors, the results of operations for the
three months and six months ended March 28, 2003 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 to
the current period presentation.
2 Change in Accounting Principle
Effective September 29, 2001, the Company adopted SFAS 142. In accordance
with the adoption of this new standard, the Company ceased the amortization
of goodwill.
As required under SFAS 142, the Company performed an assessment of the
carrying value of goodwill using a number of criteria, including the value
of the overall enterprise as of September 29, 2001. This assessment
resulted in a write off of goodwill during the quarter ended December 28,
2001 totaling $22,876, net of tax ($2.76 per diluted share) and was
reflected as a change in accounting principle. The write off was associated
with the Watercraft ($12,900) and Diving ($10,000) business units. Future
impairment charges from existing operations or other acquisitions, if any,
will be reflected as an operating expense in the statement of operations.
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 at the end of the respective periods consist of the following:
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March 28 September 27 March 29
2003 2002 2002
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Raw materials $ 24,719 $ 17,709 $ 22,514
Work in process 1,339 1,072 2,418
Finished goods 39,452 25,633 46,537
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65,510 44,414 71,469
Less reserves 2,855 2,183 3,091
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$ 62,655 $ 42,231 $ 68,378
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-4-
JOHNSON OUTDOORS INC.
5 Warranties
The Company has recorded product warranty accruals of $1,947 as of March
28, 2003. The Company provides for warranties of certain products as they
are sold in accordance with SFAS No. 5, Accounting for Contingencies. The
following table summarizes the warranty activity for the six months ended
March 28, 2003.
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Balance at September 27, 2002 $ 1,571
Expense accruals for warranties issued during the year 1,144
Less current year warranty claims paid 767
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Balance at March 28, 2003 $ 1,947
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6 Earnings per Share
The following table sets forth the computation of basic and diluted
earnings per common share from continuing operations before cumulative
effect of change in accounting principle:
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Three Months Ended Six Months Ended
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March 28 March 29 March 28 March 29
2003 2002 2003 2002
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Income from continuing operations before
cumulative effect of change in
accounting principle for basic and
diluted earnings per share $ 4,297 $ 3,889 $ 4,017 $ 3,493
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Weighted average common shares outstanding 8,402,851 8,173,716 8,379,135 8,171,325
Less nonvested restricted stock 6,895 12,803 7,813 13,498
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Basic average common shares 8,395,956 8,160,913 8,371,322 8,157,827
Dilutive stock options and restricted stock 164,925 220,505 153,679 131,612
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Diluted average common shares 8,560,881 8,381,418 8,525,001 8,289,439
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Basic earnings per common share from continuing
operations before cumulative effect of
change in accounting principle $ 0.51 $ 0.48 $ 0.48 $ 0.43
Diluted earnings per common share from
continuing operations before cumulative
effect of change in accounting principle $ 0.50 $ 0.46 $ 0.47 $ 0.42
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7 Stock Ownership Plans/Accounting for Stock-Based Compensation
The Company's current stock ownership plans provide for issuance of options
to acquire shares of Class A common stock by key executives and
non-employee directors. All stock options have been granted at a price not
less than fair market value at the date of grant and become exercisable
over periods of one to four years from the date of grant. Stock options
generally have a term of 10 years. Current plans also allow for issuance of
restricted stock or stock appreciation rights in lieu of options. Grants of
restricted shares are not significant in any year presented.
The Company adopted a phantom stock plan during fiscal 2003. Under this
plan, certain employees earn cash bonus awards based upon the performance
of the Company's Class A common stock.
-5-
JOHNSON OUTDOORS INC.
A summary of stock option activity related to the Company's plans is as
follows:
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Weighted Average
Shares Exercise Price
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Outstanding at September 28, 2001 1,086,795 $ 10.20
Granted 277,755 7.64
Exercised (148,952) 10.15
Cancelled (151,579) 13.54
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Outstanding at September 27, 2002 1,064,019 9.06
Granted 20,750 10.36
Exercised (67,997) 7.25
Cancelled (22,721) 12.39
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Outstanding at March 28, 2003 994,051 $ 9.12
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Options to purchase 1,243,977 shares of common stock with a weighted
average exercise price of $9.14 per share were outstanding at March 29,
2002.
The Company accounts for its stock-based compensation plans under
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees. The pro forma information below was determined using
the fair value method based on provisions of Statement of Financial
Accounting Standard (SFAS) No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, issued in December 2002.
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Three Months Ended Six Months Ended
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March 28 March 29 March 28 March 29
2003 2002 2003 2002
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Income from continuing operations before
cumulative effect of change in accounting
principle $ 4,297 $ 3,889 $ 4,017 $ 3,493
Total stock-based employee compensation expense
determined under fair value method for all
awards, net of tax (79) (137) (144) (259)
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Pro forma income from continuing operations
before cumulative effect of change in
accounting principle $ 4,218 $ 3,752 $ 3,873 $ 3,234
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Basicearnings per common share from
continuing operations before cumulative
effect of change in accounting principle
As reported $ 0.51 $ 0.48 $ 0.48 $ 0.43
Pro forma $ 0.50 $ 0.46 $ 0.46 $ 0.40
Diluted earnings per common share from
continuing operations before cumulative
effect of change in accounting principle
As reported $ 0.50 $ 0.46 $ 0.47 $ 0.42
Pro forma $ 0.50 $ 0.46 $ 0.46 $ 0.40
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-6-
JOHNSON OUTDOORS INC.
8 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:
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Three Months Ended Six Months Ended
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March 28 March 29 March 28 March 29
2003 2002 2003 2002
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Net income (loss) $ 4,297 $ 4,384 $ 4,017 $ (18,888)
Translation adjustment 1,320 (452) 7,309 (3,684)
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Comprehensive income (loss) $ 5,617 $ 3,932 $ 11,326 $ (22,572)
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9 Discontinued Operations
The Company recognized a gain from discontinued operations of $495, net of
tax, for the three months ended March 29, 2002 related to the final
accounting for the sale of the Fishing business.
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. The Company does not believe it has
unusual risk related to concentrations in volume of business with a
particular customer or supplier, or concentrations in revenue from a
particular product.
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.
-7-
JOHNSON OUTDOORS INC.
A summary of the Company's operations by business unit is presented below:
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Three Months Ended Six Months Ended
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March 28 March 29 March 28 March 29
2003 2002 2003 2002
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Net sales:
Outdoor equipment:
Unaffiliated customers $ 18,809 $ 32,815 $ 30,666 $ 55,530
Interunit transfers 11 13 44 23
Motors:
Unaffiliated customers 27,088 25,545 41,817 38,037
Interunit transfers 243 204 520 265
Watercraft:
Unaffiliated customers 19,599 21,945 31,333 32,648
Interunit transfers 350 154 525 187
Diving:
Unaffiliated customers 17,673 17,469 34,132 31,292
Interunit transfers 13 -- 29 --
Other 96 (56) 212 (51)
Eliminations (617) (371) (1,118) (475)
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$ 83,265 $ 97,718 $ 138,160 $ 157,456
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Operating profit (loss):
Outdoor equipment $ 3,039 $ 4,867 $ 4,440 $ 7,453
Motors 4,296 3,190 5,873 3,740
Watercraft (1,111) 842 (3,040) (506)
Diving 3,157 2,508 5,183 3,992
Other (3,257) (3,149) (6,166) (5,430)
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$ 6,124 $ 8,258 $ 6,290 $ 9,249
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Identifiable assets (end of period):
Outdoor equipment $ 28,855 $ 55,075
Motors 41,738 36,411
Watercraft 74,379 66,765
Diving 87,409 71,596
Other 38,912 22,648
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$ 271,293 $ 252,495
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11 LITIGATION
The Company is subject to various legal actions and proceedings in the
normal course of business, including those related to environmental
matters. The Company is insured against loss for certain of these matters.
Although litigation is subject to many uncertainties and the ultimate
exposure with respect to these matters cannot be ascertained, management
does not believe the final outcome of any pending litigation will have a
material adverse effect on the financial condition, results of operations,
liquidity or cash flows of the Company.
On February 21, 2003, the competition department of the European Commission
initiated formal proceedings in a case concerning certain provisions in the
former distribution arrangements of the Company's European Scubapro/Uwatec
subsidiaries. The Company is currently reviewing the Commission's initial
views. The Company has been and will respond accordingly, aggressively
pursuing its position. At this preliminary stage in the procedure, the
Commission has indicated that it is considering imposing an unspecified
fine on the Company and its European Scubapro/Uwatec subsidiaries. The
Company cannot currently predict the outcome of the investigation.
-8-
Item 2 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
six months ended March 28, 2003 and March 29, 2002. 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 2002 Annual
Report on Form 10-K.
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, the success of suppliers and customers, the
ability of the Company to deploy its capital successfully, unanticipated
outcomes related to outstanding litigation matters and the European Commission
investigation, 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.
Non-GAAP Financial Measures
Included in this Form 10-Q are certain non-GAAP financial measures related to
the Company's results excluding the Jack Wolfskin business, which was sold in
the fourth quarter of fiscal 2002. The Company believes that excluding the Jack
Wolfskin business is useful to the readers of this Form 10-Q because it provides
comparable year over year financial information to evaluate performance of the
Company's underlying and continuing business. The presentation of the non-GAAP
financial information should not be considered in isolation or in lieu of the
results prepared in accordance with GAAP, but should be considered in
conjunction with these results.
Results of Operations
Net sales for the three months ended March 28, 2003 totaled $83.3 million, a
decrease of 14.8% or $14.4 million, compared to $97.7 million in the three
months ended March 29, 2002. Excluding the results of the Company's Jack
Wolfskin subsidiary, which was sold in the fourth quarter of the prior year,
sales of the Company's continuing business increased $1.6 million, or 1.8%, for
the quarter over the prior year. A reconciliation of the Company's sales
excluding Jack Wolfskin to sales as reported in the statement of operations is
set forth below. Foreign currency translations favorably impacted quarterly
sales by $2.7 million. Three of the Company's continuing business units had
sales growth over the prior year. The Outdoor Equipment business as a whole saw
sales decline $14.0 million, or 42.7%. This year over year decline for the
quarter is directly attributable to the disposition of the Company's Jack
Wolfskin subsidiary. Sales for the continuing portion of the Company's Outdoor
Equipment business increased $2.0 million, or 11.6%, to $18.8 million. Military
sales in the current fiscal year contributed to these results; however, the
Company does not necessarily expect the same level of growth in this channel in
future years. The Motors business sales increased $1.6 million, or 6.1%, to
$27.3 million as a result of strength in new products as well as continued
market share gains. The Diving business sales increased $0.2 million, or 1.2%,
to $17.7 million helped by the strengthening of the Euro against the U.S.
Dollar. The Watercraft business sales declined $2.1 million, or 9.7%, to $19.9
million. The Watercraft business has experienced continued
-9-
market softness. For the quarter, these soft market conditions were compounded
by an operating issue associated with system integration at one of the
Watercraft business locations.
Net sales for the six months ended March 28, 2003 totaled $138.2 million, a
decrease of 12.3% or $19.3 million, compared to $157.5 million in the six months
ended March 29, 2002. Excluding the results of the Company's Jack Wolfskin
subsidiary, which was sold in the fourth quarter of the prior year, sales of the
Company's continuing business increased $8.6 million, or 6.7%, year-to-date over
the prior year. Foreign currency translations favorably impacted year-to-date
sales by $3.8 million. Three of the Company's continuing business units had
sales growth over the prior year. The Outdoor Equipment business as a whole saw
sales decline $24.8 million, or 44.7%. This decline is directly attributable to
the disposition of the Company's Jack Wolfskin subsidiary. Sales for the
continuing portion of the Company's Outdoor Equipment business increased $3.1
million, or 11.4%, to $30.4 million mainly as a result of strength in military
sales. The Motors business sales increased $4.0 million, or 10.5%, to $42.3
million as a result of strength in new products as well as continued market
share gains. The Diving business sales increased $2.9 million, or 9.2%, to $34.2
million as a result of new product sales as well as currency impacts helped by
the strengthening of the Euro against the U.S. Dollar. The Watercraft business
sales declined $1.0 million, or 3.0%, to $31.9 million, primarily related to the
current quarter shortfall.
Relative to the U.S. dollar, the average values of most currencies of the
countries in which the Company has operations were higher for the three months
and six months ended March 28, 2003 as compared to the corresponding period of
the prior year. The Diving business was favorably impacted by foreign currency
movements. Excluding the impact of fluctuations in foreign currencies, net sales
for the Company's continuing businesses decreased 1.4% for the three months
ended March 28, 2003 and increased 3.8% for the six months ended March 28, 2003.
Gross profit as a percentage of sales was 43.5% for the three months ended March
28, 2003 compared to 41.7% in the corresponding period in the prior year.
Margins in the Diving, Outdoor Equipment and Motors businesses were improved
over the prior year, while the Watercraft business saw margins decline by 4.4
percentage points due to continued market softness. The Motors business improved
margins by 3.0 percentage points over the year ago quarter primarily from new
products and product mix. The Diving business improved margins by 7.5 percentage
points over the year ago quarter, primarily through manufacturing efficiencies
and currency gains. Forecasting for the Diving business remains difficult in
light of the impact of the war in Iraq and uncertainty relating to the timing of
the economic recovery.
Gross profit as a percentage of sales was 43.3% for the six months ended March
28, 2003 compared to 41.9% in the corresponding period in the prior year. Margin
improvements in the Motors and Diving businesses helped to offset declines in
margins in the Outdoor Equipment and Watercraft businesses.
The Company recognized operating profit of $6.1 million for the three months
ended March 28, 2003 compared to an operating profit of $8.3 million for the
corresponding period of the prior year. On a continuing business basis operating
profit rose 8.0% from the corresponding period a year ago.
For the six months ended March 28, 2003 operating profit declined when compared
to the prior year period at $6.3 million versus $9.2 million. On a continuing
business basis operating profit rose 19.6% from the corresponding period a year
ago. Strong gross profits in the Motors and Diving businesses drove the increase
in operating profits. Watercraft operating profit was substantially below prior
year, due to soft market conditions and operating issues associated with the
implementation of a new operating system.
Interest expense totaled $1.3 million for the three months ended March 28, 2003
compared to $1.9 million for the corresponding period of the prior year. In the
current year, the Company benefited from reductions in overall debt due to
reductions in working capital. In addition, the Company benefited from declining
interest rates on the floating rate facilities. Interest expense totaled $2.7
million for the six months ended March 28, 2003 compared to $3.5 million for the
corresponding period of the prior year.
The Company's other income of $2.1 million for the three months ended March 28,
2003 resulted primarily from the currency gains on the settlement of an
intercompany loan related to the sale of Jack Wolfskin.
The Company's effective tax rate for the six months ended March 28, 2003 was
39.7%, down from 40.1% for the corresponding period of the prior year, primarily
due to the geographic mix of earnings.
-10-
The Company recognized income from continuing operations before cumulative
effect of change in accounting principle of $4.3 million in the three months
ended March 28, 2003, compared to income of $3.9 million in the corresponding
period of the prior year. Diluted earnings per common share from continuing
operations before cumulative effect of change in accounting principle totaled
$0.50 for the three months ended March 28, 2003 compared to $0.46 in the prior
year. The Company recognized income from continuing operations before cumulative
effect of change in accounting principle of $4.0 million in the six months ended
March 28, 2003, compared to income of $3.5 million in the corresponding period
of the prior year. Diluted earnings per common share from continuing operations
before cumulative effect of change in accounting principle totaled $0.47 for the
six months ended March 28, 2003 compared to $0.42 in the prior year.
Discontinued Operations
The Company recognized a gain from discontinued operations of $0.5 million, net
of tax ($0.06 per diluted share), for the three months ended March 29, 2002
related to the final accounting for the sale of the Company's Fishing business.
Change in Accounting Principle
Effective September 29, 2001, the Company adopted SFAS 142. In accordance with
the adoption of this new standard, the Company ceased the amortization of
goodwill.
As required under SFAS 142, the Company performed an assessment of the carrying
value of goodwill using a number of criteria, including the value of the overall
enterprise as of September 29, 2001. This assessment resulted in a write off of
goodwill during the quarter ended December 28, 2001 totaling $22.9 million, net
of tax ($2.76 per diluted share) and was reflected as a change in accounting
principle. The write off was associated with the Watercraft ($12.9 million) and
Diving ($10.0 million) business units. Future impairment charges from existing
operations or other acquisitions, if any, will be reflected as an operating
expense in the statement of operations.
Net Income (Loss)
Net income for the three months ended March 28, 2003 was $4.3 million, or $0.50
per diluted share, compared to $4.4 million, or $0.52 per diluted share, for the
corresponding period of the prior year.
Net income for the six months ended March 28, 2003 was $4.0 million, or $0.47
per diluted share, compared to a loss of $18.9 million, or $2.28 per diluted
share, for the corresponding period of the prior year.
-11-
Results on a Continuing Business Basis
The following tables show second quarter and year-to-date comparisons of as
reported results and results from continuing business basis for the Company.
Second Quarter Comparisons - As Reported and on Continuing Business Basis
(Amounts in millions, except per share data)
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended March 28, 2003 Three Months Ended March 29, 2002
- --------------------------------------------------------------------------------------------------------------------
As Jack Continuing As Jack Continuing
Reported Wolfskin Business(1) Reported Wolfskin Business(1)
- --------------------------------------------------------------------------------------------------------------------
Net sales $ 83.3 $ - $ 83.3 $ 97.7 $ 16.0 $ 81.7
Gross profit 36.2 - 36.2 40.7 6.7 34.0
Operating profit 6.1 - 6.1 8.3 2.6 5.7
Income (2) 4.3 - 4.3 3.9 1.7 2.2
Earnings per share (2) $ 0.50 $ - $ 0.50 $ 0.46 $ 0.20 $ 0.26
- --------------------------------------------------------------------------------------------------------------------
(1) Continuing Business for the second quarter of both years excludes results
from the Jack Wolfskin operation, which was sold in the fourth quarter of
fiscal 2002, but was not treated as a discontinued operation according to
GAAP.
(2) Income and earnings per share are from continuing operations.
Six Month Comparisons - As Reported and on Continuing Business Basis (Amounts in
millions, except per share data)
- --------------------------------------------------------------------------------------------------------------------
Six Months Ended March 28, 2003 Six Months Ended March 29, 2002
- --------------------------------------------------------------------------------------------------------------------
As Jack Continuing As Jack Continuing
Reported Wolfskin Business(1) Reported Wolfskin Business(1)
- --------------------------------------------------------------------------------------------------------------------
Net sales $ 138.2 $ 0.4 $ 137.8 $ 157.5 $ 28.3 $ 129.2
Gross profit 59.9 - 59.9 66.0 11.4 54.6
Operating profit (loss) 6.3 (0.1) 6.4 9.2 3.9 5.3
Income (loss) (2) 4.0 (0.1) 4.1 3.5 2.4 1.1
Earnings (loss) per
share (2) $ 0.47 $ (0.01) $ 0.48 $ 0.42 $ 0.29 $ 0.13
- --------------------------------------------------------------------------------------------------------------------
(1)Continuing Business for the six months of both years excludes results from
the Jack Wolfskin operation, which was sold in the fourth quarter of fiscal
2002, but was not treated as a discontinued operation according to GAAP.
(2) Income and earnings per share are from continuing operations before
cumulative effect of change in accounting principle.
The following tables show second quarter and year to date comparisons of as
reported results and results from a continuing business basis for the Outdoor
Equipment business unit.
Outdoor Equipment Segment
Second Quarter Comparisons - As Reported and on Continuing Business Basis
(Amounts in millions)
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended March 28, 2003 Three Months Ended March 29, 2002
- --------------------------------------------------------------------------------------------------------------------
As Jack Continuing As Jack Continuing
Reported Wolfskin Business(1) Reported Wolfskin Business(1)
- --------------------------------------------------------------------------------------------------------------------
Net sales $ 18.8 $ - $ 18.8 $ 32.8 $ 16.0 $ 16.8
Operating profit (loss) 3.0 - 3.0 4.9 2.6 2.3
- --------------------------------------------------------------------------------------------------------------------
(1) Continuing Business for the second quarter of both years excludes results
from the Jack Wolfskin operation, which was sold in the fourth quarter of
fiscal 2002, but was not treated as a discontinued operation according to
GAAP.
-12-
Outdoor Equipment Segment
Six Month Comparisons - As Reported and on Continuing Business Basis
(Amounts in millions)
- --------------------------------------------------------------------------------------------------------------------
Six Months Ended March 28, 2003 Six Months Ended March 29, 2002
- --------------------------------------------------------------------------------------------------------------------
As Jack Continuing As Jack Continuing
Reported Wolfskin Business(1) Reported Wolfskin Business(1)
- --------------------------------------------------------------------------------------------------------------------
Net sales $ 30.7 $ 0.4 $ 30.3 $ 55.6 $ 28.3 $ 27.3
Operating profit (loss) 4.4 (0.1) 4.5 7.5 3.9 3.6
- --------------------------------------------------------------------------------------------------------------------
(1)Continuing Business for the six months of both years excludes results from
the Jack Wolfskin operation, which was sold in the fourth quarter of fiscal
2002, but was not treated as a discontinued operation according to GAAP.
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 $51.6 million for the six months ended
March 28, 2003 and $30.0 million for the corresponding period of the prior year.
Accounts receivable seasonally increased $30.2 million for the six months ended
March 28, 2003, compared to an increase of $32.5 million in the year ago period.
Inventories seasonally increased by $18.9 million for the six months ended March
28, 2003 compared to an increase of $7.9 million in the prior year period. The
additional build in the current year is primarily related to operational issues
in the Watercraft segment and timing of orders in the Outdoor Equipment
business. The Company believes it is producing products at levels adequate to
meet expected consumer demand for the upcoming outdoor season.
Accounts payable and accrued liabilities decreased $5.4 million for the six
months ended March 28, 2003 versus an increase of $4.5 million for the
corresponding period of the prior year.
Depreciation and amortization charges were $4.0 million for the six months ended
March 28, 2003 and $4.5 million for the corresponding period of the prior year.
Investing Activities
Cash used for investing activities totaled $3.4 million for the six months ended
March 28, 2003 versus cash provided by investing activities of $0.8 million for
the corresponding period of the prior year.
Expenditures for property, plant and equipment were $3.4 million for the six
months ended March 28, 2003 and $2.4 million for the corresponding period of the
prior year. The Company's recurring investments are made primarily for tooling
for new products and enhancements. In 2003, capitalized expenditures are
anticipated to approach $10.0 million. These expenditures are expected to be
funded by working capital or existing credit facilities. The Company sold its
former headquarters facility to a related party in the first quarter of the
prior year. Proceeds from the sale were $5.0 million.
Financing Activities
Cash flows used for financing activities totaled $7.4 million for the six months
ended March 28, 2003 versus cash provided by financing activities of $26.8
million for the corresponding period of the prior year. The Company made
principal payments on senior notes of $8.0 million in the current year and $11.6
million in the prior year. The Company consummated a private placement of
long-term debt totaling $50.0 million during the first quarter of the prior
year. Proceeds from the debt were used to reduce outstanding indebtedness under
the Company's primary revolving credit facility.
-13-
Litigation
The Company is subject to various legal actions and proceedings in the normal
course of business, including those related to environmental matters. The
Company is insured against loss for certain of these matters. Although
litigation is subject to many uncertainties and the ultimate exposure with
respect to these matters cannot be ascertained, management does not believe the
final outcome of any pending litigation will have a material adverse effect on
the financial condition, results of operations, liquidity or cash flows of the
Company.
On February 21, 2003, the competition department of the European Commission
initiated formal proceedings in a case concerning certain provisions in the
former distribution arrangements of the Company's European Scubapro/Uwatec
subsidiaries. The Company is currently reviewing the Commission's initial views.
The Company has been and will respond accordingly, aggressively pursuing its
position. At this preliminary stage in the procedure, the Commission has
indicated that it is considering imposing an unspecified fine on the Company and
its European Scubapro/Uwatec subsidiaries. The Company cannot currently predict
the outcome of the investigation.
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 Euros, Swiss francs, 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
foreign operations, as reported in the Company's Consolidated Financial
Statements, increase or decrease, accordingly. The Company may mitigate 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, plastics 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
-14-
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 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 March 28, 2003:
- --------------------------------------------------------------------------
(millions) Estimated Impact on
- --------------------------------------------------------------------------
Earnings Before
Fair Value Income Taxes
- --------------------------------------------------------------------------
Interest rate instruments $1.9 $0.8
- --------------------------------------------------------------------------
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 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.
Critical Accounting Policies and Estimates
The Company's management discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
footnote disclosures. On an on-going basis, the Company evaluates its estimates,
including those related to customer programs and incentives, product returns,
bad debts, inventories, intangible assets, income taxes, warranty obligations,
pensions and other post-retirement benefits, and litigation. The Company bases
its estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.
Allowance for Doubtful Accounts
The Company recognizes revenue when title and risk of ownership have passed to
the buyer. Allowances for doubtful accounts are estimated at the individual
operating companies based on estimates of losses related to customer receivable
balances. Estimates are developed by using standard quantitative measures based
on historical losses, adjusting for current economic conditions and, in some
cases, evaluating specific customer accounts for risk of loss. The establishment
of reserves requires the use of judgment and assumptions regarding the potential
for losses on receivable balances. Though the Company considers these balances
adequate and proper, changes in economic conditions in specific markets in which
the Company operates could have a favorable or unfavorable effect on reserve
balances required.
-15-
Inventories
The Company values inventory at the lower of cost (determined using the first-in
first-out method) or market. Management judgment is required to determine the
reserve for obsolete or excess inventory. Inventory on hand may exceed future
demand either because the product is outdated or because the amount on hand is
more than can be used to meet future needs. Inventory reserves are estimated at
the individual operating companies using standard quantitative measures based on
criteria established by the Company. The Company also considers current forecast
plans, as well as, market and industry conditions in establishing reserve
levels. Though the Company considers these balances to be adequate, changes in
economic conditions, customer inventory levels or competitive conditions could
have a favorable or unfavorable effect on reserve balances required.
Deferred Taxes
The Company records a valuation allowance to reduce its deferred tax assets to
the amount that is more likely than not to be realized. While the Company has
considered future taxable income and ongoing prudent and feasible tax planning
strategies in assessing the need for the valuation allowance, in the event the
Company were to determine that it would not be able to realize all or part of
its net deferred tax asset in the future, an adjustment to the deferred tax
asset would be charged to income in the period such determination was made.
Likewise, should the Company determine that it would be able to realize its
deferred tax assets in the future in excess of its net recorded amount, an
adjustment to the deferred tax asset would increase income in the period such
determination was made.
Goodwill and Intangible Impairment
In assessing the recoverability of the Company's goodwill and other intangibles
the Company must make assumptions regarding estimated future cash flows and
other factors to determine the fair value of the respective assets. If these
estimates or their related assumptions change in the future, the Company may be
required to record impairment charges for these assets not previously recorded.
On September 29, 2001 the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," and was required to
analyze its goodwill for impairment issues during the first six months of fiscal
2002, and then on a periodic basis thereafter. As a result of this analysis, the
Company recorded a goodwill impairment charge of $22.9 million, net of tax, in
the first quarter of fiscal 2002.
Warranties
The Company accrues a warranty reserve for estimated costs to provide warranty
services. The Company's estimate of costs to service its warranty obligations is
based on historical experience, expectation of future conditions and known
product issues. To the extent the Company experiences increased warranty claim
activity or increased costs associated with servicing those claims, revisions to
the estimated warranty reserve would be required. The Company engages in product
quality programs and processes, including monitoring and evaluating the quality
of its suppliers, to help minimize warranty obligations.
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."
-16-
Item 4. Controls and Procedures
(a) Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our
management, including the Company's principal executive officer and
principal financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange
Act Rule 13a-15. Based upon that evaluation, the Company's principal
executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective in alerting them in a
timely manner to material information relating to our Company (including
our consolidated subsidiaries) required to be included in our periodic SEC
filings.
(b) There have been no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to
the date we carried out this evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On February 21, 2003, the competition department of the European Commission
initiated formal proceedings in a case concerning certain provisions in the
former distribution arrangements of the Company's European Scubapro/Uwatec
subsidiaries. The Company is currently reviewing the Commission's initial views.
The Company has been and will respond accordingly, aggressively pursuing its
position. At this preliminary stage in the procedure, the Commission has
indicated that it is considering imposing an unspecified fine on the Company and
its European Scubapro/Uwatec subsidiaries. The Company cannot currently predict
the outcome of the investigation.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting on February 19, 2003, the shareholders voted to
elect the following individuals as directors for terms that expire at the next
annual meeting:
- -------------------------------------------------------------------------------------------------------------------
Votes Cast For Votes Withheld Broker Non-Votes
- -------------------------------------------------------------------------------------------------------------------
Class A Directors:
Terry E. London 6,674,777 124,956 0
John M. Fahey, Jr. 6,674,762 124,971 0
Class B Directors:
Samuel C. Johnson 1,203,969 0 0
Helen P. Johnson-Leipold 1,203,969 0 0
Thomas F. Pyle, Jr. 1,203,969 0 0
Gregory E. Lawton 1,203,969 0 0
- -------------------------------------------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this Form 10-Q
10.1 Johnson Outdoors Inc. Worldwide Key Executive Phantom Share Long-Term
Incentive Plan
10.2 Johnson Outdoors Inc. Worldwide Key Executives' Discretionary
Bonus Plan
99.1 Certification of Chairman and CEO pursuant to 18 U.S.C.ss.1350
99.2 Certification of Vice President and CFO pursuant to 18 U.S.C.ss.1350
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the second quarter.
-17-
JOHNSON OUTDOORS INC.
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: May 12, 2003
/s/ Helen P. Johnson-Leipold
---------------------------------------------
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
/s/ Paul A. Lehmann
---------------------------------------------
Paul A. Lehmann
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
-18-
I, Helen P. Johnson-Leipold, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Johnson Outdoors
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Helen P. Johnson-Leipold
- -----------------------------------------------------
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
May 12, 2003
I, Paul A. Lehmann, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Johnson Outdoors
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
/s/ Paul A. Lehmann
- -----------------------------------------------------
Paul A. Lehmann
Vice President and Chief Financial Officer
May 12, 2003
Exhibit Index to Quarterly Report on Form 10-Q
Exhibit
Number Description
- ------ -----------
10.1 Johnson Outdoors Inc. Worldwide Key Executive Phantom Share
Long-Term Incentive Plan
10.2 Johnson Outdoors Inc. Worldwide Key Executives' Discretionary
Bonus Plan
99.1 Certification of Chairman and CEO pursuant to 18 U.S.C.ss.1350
99.2 Certification of Vice President and CFO pursuant to 18 U.S.C.ss.1350
Exhibit 10.1
PLAN DOCUMENT
Johnson Outdoors Inc.
WORLDWIDE KEY EXECUTIVE
PHANTOM SHARE LONG-TERM INCENTIVE PLAN
1. PURPOSE
The purpose of the Johnson Outdoors Inc. Worldwide Key Executive Phantom Share
Long-Term Incentive Plan (the "Plan") is to promote the best interests of
Johnson Outdoors Inc. (the "Company") by enhancing the ability to attract and
retain key employees of the Company and its subsidiaries who are expected to
make substantial contributions to the Company's long-term growth plans by giving
such key employees an opportunity to receive additional compensation based on
the performance of the Company's Class A common stock ("Common Stock").
2. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective as of December 16, 2002 and shall remain in effect
until terminated by the Compensation Committee of the Board of Directors (the
"Committee") in accordance with Section 7(a).
3. ADMINISTRATION
The Plan shall be administered by the Committee. Subject to the terms of the
Plan, the Committee shall have the sole discretion and full power and authority
to: (i) select the key employees to whom awards will be granted under the Plan
(the "Participants"); (ii) establish dollar denominated cash target awards
("cash target award") to serve as the basis for conversion into phantom shares
as contemplated by Section 5; (iii) determine the basis on which awards may be
earned or vest and whether an award is earned or vested; and (iv) adopt such
rules and regulations and make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. Subject to the express terms of the Plan, all designations,
determinations, interpretations and other decisions with respect to the Plan or
any award shall be made by the Committee in its sole discretion and shall be
final, conclusive and binding on all parties.
4. PARTICIPANTS
The list of eligible Participants shall initially be limited to the Company's
Chairman and Chief Executive Officer, those Vice Presidents or Presidents who
report to the Chairman and Chief Executive Officer, the Group Vice Presidents
for Motors, Watercraft, OEG,
and Diving, the President of NA Diving, and the
Vice President of Operations. Other key employees may be selected as
Participants at the sole discretion of the Committee.
5. AWARDS & VESTING
(a) On an annual basis, a cash target award will be fixed by the Committee for
each Participant. A Participant will earn such cash target award (assuming such
Participant remains employed by the Company or one of its subsidiaries) subject
to the achievement of such performance goals as are selected by the Committee in
its sole discretion. The earned cash target award for a Participant in any year
may be equal to, or less or greater than, the cash target award established by
the Committee for such Participant for that year under the Plan, but under no
circumstance shall such earned cash target award for a Participant be less than
75% or greater than 125% of the cash target award established by the Committee
for such Participant for that year. That portion, if any, of a cash target award
unearned by a Participant in the year the award was granted will be forfeited by
such Participant. In no event shall a Participant be entitled to earn a cash
target award if such Participant does not remain employed by the Company or one
of its subsidiaries through the date on which such award is scheduled to be
earned.
(b) On the date that a cash target award is earned, such earned award shall be
immediately converted into that number of phantom shares (rounded up to the
nearest whole number) equal to (i) the aggregate dollar value of the earned cash
target award divided by (ii) the "fair market value" of one share of Common
Stock on that date. For purposes of the Plan, the term "fair market value" of
one share of Common Stock on any given date shall be the weighted average of the
closing sales prices of the Common Stock during the 90-day trailing trading
period immediately preceding the date of determination, as reported on the
Nasdaq National Market or on such other exchange or market on which shares of
Common Stock are then traded.
(c) The phantom shares held by a Participant will become 100% vested on the
third anniversary of the date on which such phantom shares are issued; provided
that, except as otherwise contemplated by Section 6(f) of the Plan, the
Participant remains continuously employed by the Company or one of its
subsidiaries during that period; and provided further that if the fair market
value of the Common Stock on the date of vesting has declined by more than 25%
as compared with the fair market value on the date the cash target award was
earned, then vesting will be suspended for one year, and if the fair market
value on the fourth anniversary of the date the phantom shares were issued is at
least 75% of the fair market value on the date the cash target award was earned,
then vesting will occur; otherwise the phantom shares will not vest and will be
forfeited. In the event that phantom shares granted under the Plan vest, the
Participant holding such phantom shares shall be entitled to receive, within 30
days of the vesting date and in full satisfaction of the vested phantom shares,
a cash payment equal the product of (i) the number of vested phantom shares
multiplied by (ii) the fair market value of one share of
Common Stock on the date of vesting; provided, however, that, in determining the
cash payment to be made, the amount, if any, by which the fair market value of
one share of Common Stock on the date of vesting exceeds three times the fair
market value of such share on the date the cash target award was earned shall
not be considered.
6. GENERAL PROVISIONS
(a) Transferability. Except as otherwise provided by the Committee, no award
subject to the Plan shall be assignable, alienable, saleable or otherwise
transferable by the Participant other than by will or the applicable laws of
descent and distribution.
(b) Phantom Share Agreements. All awards of phantom shares under the Plan shall
be evidenced by written agreements in such form as the Committee shall
determine.
(c) Tax Withholding. The Company shall have the right to deduct and withhold
from any cash otherwise payable to a Participant such amounts as may be required
to satisfy any federal, state, or local withholding taxes, and to take such
other actions as may be required to satisfy such withholding obligations.
(d) Settlement. Subject to the terms of the Plan, the Committee may permit a
Participant to defer all or any portion of a payment under the Plan, including
the crediting of interest on deferred amounts.
(e) Change in Control. Notwithstanding any other provisions of the Plan, in
order to preserve a Participant's rights in the event of a Change in Control (as
defined below) of the Company, the Committee in its discretion may take any
action that it deems to be in the best interest of the Company and the
Participant which could include but is not limited to the following actions: (i)
provide for accelerated vesting of outstanding phantom shares; (ii) adjust the
terms under which an established cash target award shall be earned; (iii) or any
other action that is equitable and in the best interest of the Company. For the
purposes of this Plan, a Change in Control shall be deemed to have occurred if
the Johnson Family (as defined below) shall at any time fail to own stock of the
Company having, in the aggregate, votes sufficient to elect at least fifty-one
percent (51%) majority of the directors of the Company. Johnson Family shall
mean at any time, collectively, Samuel C. Johnson, his wife and their children
and grandchildren, the executor or administrators of the estate or other legal
representative of any such person, all trusts for the benefit of the foregoing
or their heirs or any one or more of them, and all partnerships, corporations,
or other entities directly or indirectly controlled by the foregoing or any one
or more or them.
(f) Termination of Employment.
(i) In the event a Participant's employment with the Company or any of its
subsidiaries is terminated for any reason, except death, retirement (in
accordance with the Company's retirement policies) or total and permanent
disability, all rights relating to unvested phantom shares under the Plan shall
be immediately forfeited.
(ii) In the event a Participant's employment terminates by reason of death,
retirement or total and permanent disability, any unvested phantom shares shall
vest under normal timing in accordance with the Plan as though the Participant
had remained employed by the Company or one of its subsidiaries, and then be
paid in accordance with the Plan to the Participant or, in the event of a
Participant's death, to the person to whom the phantom shares have been
transferred by will or by the applicable laws of descent and distribution or
otherwise as permitted by the Committee.
7. MISCELLANEOUS
(a) Plan Amendment. The Committee may at any time amend, alter, suspend,
discontinue or terminate the Plan as it deems necessary or appropriate;
provided, however, that any cash target award established or earned or phantom
share issued under the Plan may not be adversely affected without the consent of
the Participant.
(b) No Right to Employment. No person shall have any claim or right to be
granted a cash target award or phantom shares, and the grant of a cash target
award or phantom shares shall not be construed as giving the Participant the
right to continued employment. The Company expressly reserves the right at any
time to dismiss a Participant free from any liability or claim under the Plan.
(c) Other Company Benefit and Compensation Programs. Except as expressly
determined by the Committee, cash target awards earned or phantom shares issued
under this Plan shall not be deemed as part of the Participant's regular,
recurring compensation for the purposes of calculating payments or benefits from
any Company benefit or severance program (or severance pay law of any country).
The above notwithstanding, the Company may adopt other compensation programs,
plans or arrangements as it deems appropriate or necessary.
(d) Successors and Assignees. The Plan shall be binding on all successors and
assigns of a Participant, including without limitation, the estate of such
Participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Participant's
creditors.
(e) Adjustment Provisions. In the event of a stock split, stock dividend (other
than a stock dividend declared in lieu of an ordinary cash dividend), spin-off,
merger, consolidation, recapitalization, split-up, combination or exchange of
shares, or similar transaction, the Committee shall have the discretion to make
appropriate adjustments relating to the Plan and awards hereunder that the
Committee deems fair and equitable to both the Company and the Participants.
(f) No Rights of a Shareholder. Phantom shares shall be utilized solely as a
device for ultimately converting an earned and vested award into a cash payment
as provided in the Plan. Neither the establishment of a cash target award, the
earning of a cash target award or the vesting of phantom shares shall be
construed in any way as giving a Participant any interest other than as provided
in the Plan. As such, a Participant shall
have no rights as a shareholder with respect to the number of phantom shares
covered by any award, whether vested or unvested.
(g) Unfunded Plan. This Plan shall be unfunded, and phantom shares shall not
constitute or be treated as outstanding stock nor as a trust fund of any kind.
All amounts at any time credited to a Participant shall be and remain the sole
property of the Company and its subsidiaries, and the Participant shall have no
ownership rights with respect thereto. Participants shall have the status of
general unsecured creditors of the Company and its subsidiaries and the Plan
constitutes a mere promise by the Company and its subsidiaries to make payments
in the future if such payments become due under the Plan guidelines.
(h) Governing Law. The validity, construction and effect of the Plan and any
actions taken under or relating to the Plan shall be determined in accordance
with laws of the State of Wisconsin and applicable federal law.
Exhibit 10.2
PLAN DOCUMENT
Johnson Outdoors Inc.
WORLDWIDE
KEY EXECUTIVES' DISCRETIONARY BONUS PLAN
I. ADOPTION OF PLAN
Johnson Outdoors Inc. (the "Company") hereby adopts this Plan effective
October 1, 2000 for key executives (the "Participants") of its worldwide
operations. The Plan shall be ongoing until terminated by the Chief
Executive Officer, the Board of Directors of the Company or the
Compensation Committee (the "CC") of the Board of Directors. Awards shall
be made under this Plan, if, and only if, authorized by the Chief Executive
Officer and approved by the CC where applicable, and shall be made in
accordance with the Plan.
II. PURPOSES OF THE DISCRETIONARY BONUS PLAN
To provide incentive compensation to Participants which indirectly relates
the financial reward to an increase in the value of the Company to our
shareholders. The key philosophy behind the Plan is that value must
continue to be created over time in order for bonuses to be paid.
Additionally, the Plan is intended to:
A. Motivate Participants to achieve individual/team results.
B. Motivate Participants to develop maximum resourcefulness and
resiliency in planning and directing their organizations in the face
of changing competitive, economic, political and other conditions.
C. Provide an incentive for Participants to constructively assist other
organizations in the Company to meet current and future challenges.
D. Encourage Participants to develop realistic yet challenging annual key
objectives that will stretch their organization's capabilities.
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III. DISCRETIONARY BONUS PLAN
A. Eligibility
Each year, or more frequently as may be required, the Chief Executive
Officer shall select those Participants who shall be eligible for this
Plan.
Eligibility of a position in the Plan in a given year is not a
guarantee that a payout will be made to an incumbent for that year.
Incumbents in approved eligible key executive positions will be
notified of their selection as a Participant prior to the beginning of
the fiscal year. Additional Participants may be added during the
fiscal year by the Chief Executive Officer and/or the CC.
B. Administration of the Plan
1. Basis for Awards
Individual bonus awards shall be based on the total base salary
received by the Participant during the fiscal year. For this
purpose, the term "base salary" shall not include profit sharing,
expense allowances or any other payments or benefits, whether
legally required or not.
Target bonus amounts will be established by the CEO before the
start of each fiscal year for all eligible Participants. These
target bonus amounts are not intended to limit the Chief
Executive Officer's complete flexibility in exercising his/her
discretion in any way. The target bonus amount can range from 10%
to 100% of base salary, depending upon the Participant's
position. The bonus range for purposes of payout is 0% to 200% of
the target bonus amount (as example, a Participant with a bonus
target of 25% will have a payout range of 0% to 50% of base
salary).
Each Participant will have his/her target bonus split, with a
portion allocated to achievement of revenue growth and income in
excess of the cost-of-capital (the "Return and Growth Matrix")
AND a portion allocated to achievement of individual objectives
(the "MBOs"). In all cases, the minimum percentage of the target
bonus allocated to the Return and Growth Matrix will be 60% for
all Participants.
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2. Cost
When target bonuses are established in each year, the cost of the
Plan for that year shall be estimated for the Chief Executive
Officer's approval. However, regardless of the performance level
of individual Participants, overall Company financial performance
shall be considered in determining the degree to which the sum
total of all bonuses is deemed affordable and justified and bonus
awards may be adjusted to reflect that determination.
3. Determination of Return and Growth Matrix Award
For each fiscal year, a Return and Growth Matrix will be
developed for the following levels: Johnson Outdoors, each Group
(i.e. - Watercraft or Global Diving), and each subsidiary (i.e.
Ocean Kayak or Old Town Canoe).
Depending on the Participant's position, the Return and Growth
Matrix performance goals will be determined at one or more levels
as described above. As an example, corporate staff will be based
on Johnson Outdoors, whereas a Participant at the subsidiary
level will have their award based on a combination of their
subsidiary, Group, and Johnson Outdoors performance.
For all Participants, of the portion of the target bonus
allocated to the Return and Growth Matrix, at least 10% will be
based on Total Johnson Outdoors performance.
4. Determination of Individual Awards
Each Participant will develop individual objectives (MBOs) that
are aligned with one or more of the following areas:
a) Business or position specific financial
b) Cross-business partnerships (networking)
c) New product innovation
d) People development/organization capacity
Depending on the Participant's position, he/she may have
objectives in one or more of the aforementioned areas. In all
cases, so as to not diminish the importance of these objectives,
no Participant may establish more than 4 MBOs in aggregate.
3
In determining MBO awards, the following factors will be
assessed:
o results against all annual objectives
o retrospective assessment of the degree of stretch required
to accomplish the objectives
o overall performance
IV. ADMINISTRATIVE
A. Termination Prior to Payout
Should the employment of a Participant terminate for any reason before
payout under this Plan is made, the Chief Executive Officer or other
designated final approval authorities will consider the circumstances
of his/her termination and may, in his/her or their sole discretion,
adjust or eliminate such bonus award as deemed appropriate.
B. Awards Fully Discretionary
It is expected that individual awards will vary and that overall
performance differences will be reflected in differing awards. There
is neither a fixed formula nor a guarantee that awards will be made to
Participants under this Plan; nor is there any commitment whatsoever
by the Company that it shall make any payments in a given year.
C. Detailed Plan Administration
Two levels of approvals are normally required for performance
objectives and awards, including a signature of an Executive Officer.
Awards require the final approval of the Executive Officer to whom the
Participant directly or indirectly reports, subject to review by the
CEO.
D. Process for Preparing & Securing Approval of Individual Objectives
(MBOs)
Participants and their superiors establish annual objectives for the
next fiscal year in conjunction with the adoption of the annual budget
for that year.
The format for objective setting is distributed to Participants by
their superiors prior to the start of the fiscal year. Each
Participant drafts his/her objectives; the Participant then discusses
them with the superior and together they reach a mutual agreement on
objectives. The objectives
4
receive final approval from the Executive Officer to whom the
Participant reports. Following their approval, the finally approved
objectives are then returned to each Participant.
E. Reviewing Year End Results
At the close of the fiscal year, the superior evaluates the
Participant's performance against the annual objectives established
for such year. This information is discussed with the Participant, who
is given an opportunity to provide additional information or evidence
of completion. The superior submits his/her evaluation of performance
against objectives and assessment of overall performance to the next
level of management.
F. Recommended Bonus Awards
Based on the year end results reported in E. above, bonus award
recommendations are made to the CEO by the Executive Officer to whom
the eligible participant reports. In the absence of the appropriate
officer to recommend a bonus award, the Chief Executive Officer can
act.
G. Reserved Authority of the Chief Executive Officer
The Chief Executive Officer shall have final authority to approve or
change any recommended individual bonuses. He/she may, at his/her sole
discretion, reduce, eliminate or increase such recommended bonuses,
regardless of anything contained in this Plan.
H. New Hires/Promotion
An individual who is hired/promoted into a position that is eligible
to participate in the Plan may be granted a bonus award in the year of
entry in such an amount as may be deemed appropriate by the Chief
Executive Officer
I. Transfers
A Participant who transfers from one operation to another during the
Plan year will have his/her performance goals modified to reflect the
time spent working in each operation.
J. No Guarantee
Participation in the Plan provides no guarantee that a bonus under the
Plan will be paid.
5
K. Withholding of Taxes
The Company shall have the right to withhold the amount of taxes
which, in the sole determination of the Company, are required to be
withheld under law with respect to any amount due or paid under the
Plan.
L. No Prior Right or Offer
Except and until expressly granted pursuant to the Plan, nothing in
the Plan shall be deemed to give any employee any contractual or other
right to participate in the benefits of the Plan. No award to any such
Participant in any Plan Period shall be deemed to create a right to
receive any award or to participate in the benefits of the Plan in any
subsequent fiscal year
M. No Continued Employment
Neither the establishment of the Plan or the grant of an award
thereunder shall be deemed to constitute an express or implied
contract of employment on any Participant for any period of time or in
any way abridge the rights of the Company to determine the terms and
conditions of employment or to terminate the employment of any
employee with or without cause at any time.
N. Not Part of Other Benefits
The benefits provided in this Plan shall not be deemed a part of any
other benefit provided by the Company to its employees. The Company
assumes and shall have no obligation to Participants except as
expressly provided in the Plan.
V. METHOD OF PAYMENT OF DISCRETIONARY BONUS AWARDS
A. Bonus Not Counted As Compensation
Bonus payments shall be excluded from the computation of other parts
of the Participant's personal benefit and compensation packages, such
as, for example, that Participant's retirement contributions and life
insurance.
B. Normal Payout
Unless a Participant has elected to defer payment under C. below, all
bonus payouts shall be paid in cash no later than January 31 following
the fiscal year close.
6
C. Deferral of Bonus Payments
1. Election to Defer - Prior to the beginning of a fiscal year, or
for a newly eligible Participant, within the first thirty (30)
days of the Plan participation, Participants may elect to defer
all or part of any bonus that may be awarded to that executive
for such year by action of the Chief Executive Officer, provided
the amount deferred is a minimum of $15,000.00 (fifteen thousand
dollars). Such election shall be irrevocable during the full
period of deferral unless the Chief Executive Officer, at his/her
sole discretion, decides to modify it upon a clear showing of
financial hardship suffered or likely to be suffered by that
Participant. Amounts deferred will be allocated to a "Deferred
Bonus Account" which will be a bookkeeping account established in
the Participant's name. The Company makes no representation about
the tax consequences to Participants as a result of making a
deferral election hereunder. Each Participant is advised to seek
their own personal tax advice.
2. Period of Deferral - Normally, all deferrals shall be for the
full term of employment; e.g. until termination or death.
However, each Participant may elect to defer his/her bonus award
for a set period of years subject to the approval of the Chief
Executive Officer. If the Participant who chose deferral for a
specific period terminates employment before the end of such
period, the Deferred Bonus Account of that Participant shall,
upon termination, be distributed in accordance with the
distribution provisions in Paragraph C.4. below.
3. Interest Rate - Deferred bonus awards shall increase in value
during the years prior to distribution at a rate to be
established at the discretion of the Chief Executive Officer.
Such increase in value shall be credited to the Participant's
Deferred Bonus Account as of the end of each quarter and shall
thereafter become part of that Participant's Deferred Bonus
Account.
4. Distribution from Deferred Bonus Accounts - Upon termination of
the Participant's employment or the end of the set period of
deferral, the Deferred Bonus Account of that Participant shall be
paid to that Participant in full in a single cash payment or in
installments over a period of up to ten (10) years (as elected by
the Participant), as detailed below:
7
If the Participant's employment with the Company terminates for
any reason other than death or retirement, the entire unpaid
balance of the Deferred Bonus Account, plus any added value or
accrued interest, shall be paid within ninety (90) days following
the effective date of termination of employment.
If the Participant's employment with the Company terminates due
to his/her retirement, payment of the Deferred Bonus Account
shall be made as elected by the Participant on his/her "Request
for Payment" form and as previously approved by the Chief
Executive Officer. Bonuses paid in installments shall bear
interest on the unpaid amount during the installment payment
period at a rate to be established at the discretion of the Chief
Executive Officer.
If the Participant dies before he/she receives the entire bonus,
the entire unpaid balance of the bonus, plus any accrued
interest, shall be paid either within one hundred twenty (120)
days following receipt of notice of his/her death by the Director
- Human Resources of the Company, or in such installments over a
period of not more than ten (10) years following his/her death,
as determined by the Chief Executive Officer. Bonuses paid in
installments shall bear interest on the unpaid amount during the
installment payment period at a rate to be established at the
discretion of the Chief Executive Officer.
Bonuses awarded to a Participant may not be assigned,
transferred, or pledged by the Participant either voluntarily or
involuntarily.
The Participant may, however, submit a written designation of
beneficiary of the Deferred Bonus Account to the Director - Human
Resources of the Company at any time. In the absence of a
properly designated beneficiary, payment shall be made to the
Participant's estate.
VI. CLAIMS PROCEDURES
If for any reason a claim for benefits under this Plan is denied by the
Chief Executive Officer, the Chief Executive Officer shall deliver to the
claimant a written explanation setting forth the specific reasons for the
denial, pertinent references to the section of the Plan on which the denial
is based, such other data as may be pertinent, and information on the
procedures to be followed by the claimant
8
in obtaining a review of this claim, all written in a manner calculated to
be understood by the claimant. For this purpose, the claimant's claim shall
be deemed filed when presented in writing to the Chief Executive Officer,
and the Chief Executive Officer's explanation shall be in writing delivered
to the claimant within 90 days of the date the claim is filed. The claimant
shall have 60 days following his receipt of the denial of the claim to file
with the Chief Executive Officer a written request for review of the
denial. For such review, the claimant or his representative may submit
pertinent documents and written issues and comments. The Chief Executive
Officer shall decide the issue on review and furnish the claimant with a
copy of such decision within 60 days of receipt of the claimant's request
for review of his claim. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, as well as specific references
to the pertinent provisions of the Plan on which the decision is based. If
a copy of the decision is not so furnished to the claimant within such 60
days, the claim shall be deemed denied on review.
VII. GOVERNING LAW
Except to the extent preempted by the Employee Retirement Income Security
Act of 1974 (ERISA), this Plan shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without reference to
conflict of law principles thereof.
VIII. NO TRUST CREATED
Nothing contained in this Plan and no action taken pursuant to its terms
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company or the Chief Executive Officer and any
Participant, his designated beneficiary(ies), or any other person.
Participant and the beneficiaries thereof have the status of general
unsecured creditors of the Company. The Plan constitutes a mere promise by
the Company to make benefit payments in the future. To the extent that any
person acquires a right a receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured
general creditor of the Company. It is the intention of the parties that
the arrangements hereunder be unfunded for tax purposes and for purposes of
Title I of ERISA.
IX. OFFSET PERMITTED
Notwithstanding any provision of the Plan to the contrary, the Company
shall have the right to reduce and offset any payment to which Participant
or beneficiary is entitled hereunder by the
9
amount of any debt or other amount owed to the Company by Participant at
the time of such payment.
X. TERMINATION AND AMENDMENT
This plan may be amended, modified, terminated or otherwise altered at any
time and from time to time by the Chief Executive Officer, the Compensation
Committee, or the Board of Directors without written consent of any
Participant or beneficiary.
10
JOHNSON OUTDOORS INC.
Written Statement of the Chairman and Chief Executive Officer
Pursuant to 18 U.S.C. ss.1350
Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned
Chairman and Chief Executive Officer of Johnson Outdoors Inc. (the "Company"),
hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of
the Company for the quarter ended March 28, 2003 (the "Report") fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934
and that information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Helen P. Johnson-Leipold
-----------------------------------------------------
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
May 12, 2003
A signed original of this written statement required by 18 U.S.C. ss.1350 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
JOHNSON OUTDOORS INC.
Written Statement of the Vice President and Chief Financial Officer
Pursuant to 18 U.S.C. ss.1350
Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned
Vice President and Chief Financial Officer of Johnson Outdoors Inc. (the
"Company"), hereby certify, based on my knowledge, that the Quarterly Report on
Form 10-Q of the Company for the quarter ended March 28, 2003 (the "Report")
fully complies with the requirements of Section 13(a) of the Securities Exchange
Act of 1934 and that information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ Paul A. Lehmann
-----------------------------------------------------
Paul A. Lehmann
Vice President and Chief Financial Officer
May 12, 2003
A signed original of this written statement required by 18 U.S.C. ss.1350 has
been provided to the Company and will be retained by the Company and furnished
to the Securities and Exchange Commission or its staff upon request.
