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Item 9A. Controls and Procedures

2020-12-11 compared with 2019-12-06 · 603 added, 554 removed, 725 unchanged (61% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information

required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate

to allow timely decisions regarding required disclosure.

The Company carried out an evaluation as of September 27, 2019, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief

Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.

Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s

disclosure controls and procedures were effective as of September 27, 2019 at reaching a level of reasonable assurance.

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no

matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls

and procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The Company carried out an evaluation as of October 2, 2020, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures.

Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of October 2, 2020 at reaching a level of reasonable assurance.

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company has designed its disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.

The report of management required under this Item 9A is included on page F-2 of the Company’s Consolidated Financial Statements attached to this Report under the heading “Management’s Report on Internal Control over

Financial Reporting” and is incorporated herein by reference.

Changes in Internal Control over Financial Reporting.

recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm

which is contained in the Company’s consolidated financial statements under the heading “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.”

(b) Changes in Internal Control over Financial Reporting.

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

RSM US LLP, the independent registered public accounting firm who audited the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting, which is contained in the Company’s consolidated financial statements under the heading “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.”

OTHER INFORMATION

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Information with respect to this item is incorporated herein by reference to the discussion under the headings “Proposal 1:

Election of Directors,” “Executive Officers,” “Delinquent Section 16(a) Reports,” “Directors Meetings and Committees -

Nominating and Corporate Governance Committee” and “Audit Committee Matters – Audit Committee Financial Expert” in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange

Commission on or before January 25, 2020.

Election of Directors,” “Executive Officers,” “Delinquent Section 16(a) Reports,” "Directors Meetings and Committees - Nominating and Corporate Governance Committee” and “Audit Committee Matters – Audit Committee Financial Expert” in the Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021.

Information regarding the Company’s Code of Business Ethics is incorporated herein by reference to the discussion under “Corporate Governance Matters – Employee Code of Conduct and Code of Ethics;

Governance Guidelines;

Corporate Governance Guidelines;

and Procedures for Reporting of Accounting Concerns” in the Company's Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021.

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London (Chairman), Thomas F.

Lang and Richard (“Casey”) Sheahan.

Pyle, Jr., Edward F.

Lang and Edward Stevens.

EXECUTIVE COMPENSATION

Statement for the 2020 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 25, 2020.

The information incorporated by reference from “Report of the Compensation Committee” in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before

January 25, 2020, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934,

except as shall be expressly set forth by specific reference in such filing.

Information with respect to this item is incorporated herein by reference to the discussion under the headings “Directors Compensation” and “Executive Compensation” and “CEO Pay Relative to Median Pay of our Employees” in the Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021.

The information incorporated by reference from “Report of the Compensation Committee” in the Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Stock Ownership of Management and Others” in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, which will be

filed with the Securities and Exchange Commission on or before January 25, 2020

Equity Compensation Plan Information

The following table summarizes share information, as of September 27, 2019, for the Company’s equity compensation plans, including the Johnson Outdoors Inc.

The following table summarizes share information, as of October 2, 2020, for the Company’s equity compensation plans, including the Johnson Outdoors Inc.

2012 Non-Employee Director Stock Ownership Plan, the Johnson Outdoors Inc.

2010 Long-Term

Stock Incentive Plan and the Johnson Outdoors Inc.

2010 Long-Term Stock Incentive Plan, the Johnson Outdoors Inc.

2020 Long-Term Stock Incentive Plan and the Johnson Outdoors Inc.

2009 Employee Stock Purchase Plan.

All of these plans have been approved by the Company’s shareholders.

Plan Category

Number of Common

Plan Category Number of Common

Shares to Be Issued

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Outstanding Options,

Warrants and Rights

Weighted-average

Warrants and Rights Weighted-average

Exercise Price of

Outstanding Options,

Warrants and Rights

Number of Common

Warrants and Rights Number of Common

Shares Available for

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2020 Long-Term Stock Incentive Plan — $ — 500,000

2010 Long-Term Stock Incentive Plan 71,453 (1) — 105,364 (2)

2012 Non-Employee Director Stock Ownership Plan 27,561 — 36,327

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Total All Plans 99,014 — 725,531

(1) Includes 67,821 performance stock unit awards previously awarded at their target values.

The ultimate amount of performance stock units that could vest can range from 0% to 150% of the target amount, or from 0 units to 101,732 units for all previously issued awards.

(2) Includes up to 101,732 shares of performance stock units that may be issued in shares of Class A Common Stock at the maximum earned level.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Certain Relationships and Related Transactions” in the Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, which will

be filed with the Securities and Exchange Commission on or before January 25, 2020.

Information regarding director independence is incorporated by reference to the discussions under “Corporate Governance Matters-Director Independence” in the

Company’s Proxy Statement for the 2020 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 25, 2020.

Information regarding director independence is incorporated by reference to the discussions under “Corporate Governance Matters-Director Independence” in the Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 25, 2020.

Information with respect to this item is incorporated herein by reference to the discussion under the heading “Audit Committee Matters – Fees of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 2021 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission on or before January 30, 2021.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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• Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations – Years ended September 27, 2019, September 28, 2018 and September 29, 2017

Consolidated Statements of Comprehensive Income – Years ended September 27, 2019, September 28, 2018 and September 29, 2017

Consolidated Balance Sheets – September 27, 2019 and September 28, 2018

Consolidated Statements of Shareholders’ Equity – Years ended September 27, 2019, September 28, 2018 and September 29, 2017

Consolidated Statements of Cash Flows – Years ended September 27, 2019, September 28, 2018 and September 29, 2017

• Consolidated Statements of Operations – Years ended October 2, 2020, September 27, 2019 and September 28, 2018

• Consolidated Statements of Comprehensive Income – Years ended October 2, 2020, September 27, 2019 and September 28, 2018

• Consolidated Balance Sheets – October 2, 2020 and September 27, 2019

• Consolidated Statements of Shareholders’ Equity – Years ended October 2, 2020, September 27, 2019 and September 28, 2018

• Consolidated Statements of Cash Flows – Years ended October 2, 2020, September 27, 2019 and September 28, 2018

• Notes to Consolidated Financial Statements

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FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Racine and State of

Wisconsin, on the 6 th day of December 2019.

JOHNSON OUTDOORS INC.

By /s/ Helen P.

Johnson-Leipold

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on the 11 th day of December 2020.

Johnson-Leipold

Chairman and Chief Executive Officer

Johnson-Leipold)

Johnson-Leipold Chairman and Chief Executive Officer

Johnson-Leipold) and Director

(Principal Executive Officer)

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Vice Chairman of the Board

and Lead Outside Director

/s/ Edward Stevens

Pyle, Jr.) and Lead Outside Director

London Director

/s/ Edward Stevens Director

(Edward Stevens)

/s/ Edward F.

/s/ Katherine Button Bell

Lang Director

/s/ Katherine Button Bell Director

(Katherine Button Bell)

/s/ Richard Sheahan

/s/ Richard Sheahan Director

(Richard (“Casey”) Sheahan)

/s/ William D.

Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

Perez Director

Johnson Vice President and Chief Financial Officer

Johnson) (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Title

3.1 Articles of Incorporation of the Company as amended through February 17, 2000.

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(Filed as Exhibit 3.2 to the Company’s Form 10-K for the year ended October 1, 2010 and incorporated herein by reference.)

Description of Registrant’s Securities.

4.1 Description of Registrant's Securities (Filed as Exhibit 4.1 to the Company's Form 10-K for the year ended September 27, 2019 and incorporated herein by reference.)

9.1 Johnson Outdoors Inc.

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14 to the Schedule 13D filed by Helen P.

Johnson-Leipold

on February 24, 2017 and incorporated herein by reference.)

Johnson-Leipold on February 24, 2017 and incorporated herein by reference.)

10.1 Registration Rights Agreement regarding Johnson Outdoors Inc.

common stock issued to the Johnson family prior to the acquisition of Johnson Diversified, Inc.

(Filed as Exhibit 10.1 to the Company’s Form 10-K dated

and filed with the Securities and Exchange Commission on December 8, 2017 and incorporated herein by reference.)

(Filed as Exhibit 10.1 to the Company’s Form 10-K dated and filed with the Securities and Exchange Commission on December 8, 2017 and incorporated herein by reference.)

10.2 Registration Rights Agreement regarding Johnson Outdoors Inc.

Class A common stock held by Mr.

(Filed as Exhibit 10.2 to the Company’s Form 10-K dated and filed with the Securities and Exchange

Commission on December 8, 2017 and incorporated herein by reference.)

(Filed as Exhibit 10.2 to the Company’s Form 10-K dated and filed with the Securities and Exchange Commission on December 8, 2017 and incorporated herein by reference.)

Johnson Outdoors Inc.

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Worldwide Key Executives’ Discretionary Bonus Plan.

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 13, 2014

and incorporated herein by reference.)

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 13, 2014 and incorporated herein by reference.)

Johnson Outdoors Inc.

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(Filed as Exhibit 4.2 to the Company’s Form S-8 Registration Statement No.

333-115298 and

incorporated herein by reference.)

333-115298 and incorporated herein by reference.)

Form of Stock Option Agreement under Johnson Outdoors Inc.

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(Filed as Exhibit 4.3 to the Company’s Form S-8 Registration Statement No.

333-115298 and incorporated

herein by reference.)

Amended and Restated Credit Agreement dated as of November 15, 2017 among Johnson Outdoors Inc., certain subsidiaries of Johnson Outdoors Inc., PNC Bank, National Association, as lender and administrative agent,

PNC Capital markets LLC, as sole lead arranger and bookrunner, and the other lender named therein (filed as Exhibit 99.1 to the current report on Form 8-K dated and filed with the Securities and Exchange Commission on November 20, 2017).

333-115298 and incorporated herein by reference.)

10.8 Amended and Restated Credit Agreement dated as of November 15, 2017 among Johnson Outdoors Inc., certain subsidiaries of Johnson Outdoors Inc., PNC Bank, National Association, as lender and administrative agent, PNC Capital markets LLC, as sole lead arranger and bookrunner, and the other lender named therein (filed as Exhibit 99.1 to the current report on Form 8-K dated and filed with the Securities and Exchange Commission on November 20, 2017).

Johnson Outdoors Inc.

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2010 Long Term Stock Incentive Plan.

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 15, 2015 and

incorporated herein by reference.)

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 15, 2015 and incorporated herein by reference.)

Johnson Outdoors Inc.

2012 Non-Employee Director Stock Ownership Plan.

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 13, 2017

and incorporated herein by reference.)

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 13, 2017 and incorporated herein by reference.)

Form of Restricted Stock Unit Agreement under Johnson Outdoors Inc.

2012 Non-Employee Director Stock Ownership Plan.

(Filed as Exhibit 10.31 to the annual report on Form 10-K dated and filed with the Securities

and Exchange Commission on December 5, 2014.)

(Filed as Exhibit 10.31 to the annual report on Form 10-K dated and filed with the Securities and Exchange Commission on December 5, 2014.)

Form of Restricted Stock Unit Agreement (Performance Based) under Johnson Outdoors Inc.

2010 Long Term Stock Incentive Plan.

(Filed as Exhibit 10.32 to the annual report on Form 10-K dated and filed with the

Securities and Exchange Commission on December 7, 2015.)

(Filed as Exhibit 10.32 to the annual report on Form 10-K dated and filed with the Securities and Exchange Commission on December 7, 2015.)

Form of Restricted Stock Agreement under Johnson Outdoors Inc.

2012 Non-Employee Director Stock Ownership Plan.

(Filed as Exhibit 10.14 to the annual report on Form 10-K dated and filed with the Securities and

Exchange Commission on December 7, 2018.)

Subsidiaries of the Company as of September 27, 2019.

(Filed as Exhibit 10.14 to the annual report on Form 10-K dated and filed with the Securities and Exchange Commission on December 7, 2018.)

Johnson Outdoors Inc.

2020 Long Term Stock Incentive Plan.

(Filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 10, 2020 and incorporated herein by reference.)

Form of Restricted Stock Unit Agreement (Performance Based) under Johnson Outdoors Inc.

2020 Long Term Stock Incentive Plan.

(Filed as Exhibit 99.2 to the registration statement on Form S-8 dated and filed with the Securities and Exchange Commission on May 5, 2020 and incorporated herein by reference.)

Form of Restricted Stock Agreement under Johnson Outdoors Inc.

2020 Long Term Stock Incentive Plan.

(Filed as Exhibit 99.3 to the registration statement on Form S-8 dated and filed with the Securities and Exchange Commission on May 5, 2020 and incorporated herein by reference.)

Subsidiaries of the Company as of October 2, 2020

Consent of Independent Registered Public Accounting Firm.

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Section 1350.

The following materials from Johnson Outdoors Inc.’s Annual Report on Form 10-K for the fiscal year ended September 27, 2019 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically

101 The following materials from Johnson Outdoors Inc.’s Annual Report on Form 10-K for the fiscal year ended October 2, 2020 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith:

(i) Consolidated Statements of Operations;

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+ A management contract or compensatory plan or arrangement.

This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange

Act of 1934, as amended.

(1) This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents Page

Management’s Report on Internal Control over Financial Reporting

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is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934.

The Company’s internal

control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

The Company’s internal control over

financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

generally accepted accounting principles, and that receipts and expenditures of the

Company are being made only in accordance with authorizations of management and directors of the Company;

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements.

The Company’s internal control over financial reporting includes those policies and procedures that:

(a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

(c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial

statement preparation and presentation.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 27, 2019.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of October 2, 2020.

In making this assessment, management used the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013.

Based on our assessment, management believes that,

as of September 27, 2019, the Company’s internal control over financial reporting was effective based on those criteria.

Johnson-Leipold

Chairman and Chief Executive Officer

Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

Based on our assessment, management believes that, as of October 2, 2020, the Company’s internal control over financial reporting was effective based on those criteria.

Johnson-Leipold /s/ David W.

Chairman and Chief Executive Officer Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Shareholders and the Board of Directors of Johnson Outdoors Inc.

Opinion on the Internal Control Over Financial Reporting

We have audited Johnson Outdoors Inc.’s internal control over financial reporting as of September 27, 2019, based on criteria established in Internal Control — Integrated Framework issued by the

Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 27, 2019, based on criteria established

in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have audited Johnson Outdoors Inc.'s internal control over financial reporting as of October 2, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 2, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of Johnson Outdoors Inc.

and our report dated December 6, 2019 expressed an

unqualified opinion.

and our report dated December 11, 2020 expressed an unqualified opinion.

Basis for Opinion

Johnson Outdoors Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management Report

on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to

be independent with respect to Johnson Outdoors Inc.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Johnson Outdoors Inc.

in accordance with U.S.

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We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in

all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal

control based on the assessed risk.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

1 unchanged sentence

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of Johnson Outdoors Inc.;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting

principles, and that receipts and expenditures of Johnson Outdoors Inc.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Johnson Outdoors Inc.;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Johnson Outdoors Inc.

are being made only in accordance with authorizations of management and directors of Johnson Outdoors Inc.;

and (3) provide reasonable assurance regarding prevention or timely

detection of unauthorized acquisition, use or disposition of Johnson Outdoors Inc.’s assets that could have a material effect on the financial statements.

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Johnson Outdoors Inc.'s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Johnson Outdoors Inc.

as of September 27, 2019 and September 28, 2018, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows

for each of the three years in the period ended September 27, 2019, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material

respects, the financial position of the Company as of September 27, 2019 and September 28, 2018, and the results of its operations and its cash flows for each of the three years in the period ended September 27, 2019, in conformity with accounting

principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 27, 2019, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated December 6, 2019 expressed an unqualified opinion on the

effectiveness of the Company’s internal control over financial reporting.

as of October 2, 2020 and September 27, 2019, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended October 2, 2020, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 2, 2020 and September 27, 2019, and the results of its operations and its cash flows for each of the three years in the period ended October 2, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 2, 2020, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated December 11, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on Johnson Outdoors Inc.'s financial statements based on our audits.

We are a public accounting firm registered

with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether

due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

5 unchanged sentences

(thousands, except per share data)

2020 September 27

2019 September 28

Net sales $ 594,209 $ 562,419 $ 544,268

Cost of sales 329,216 312,663 302,408

Gross profit 264,993 249,756 241,860

Operating expenses:

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Income tax expense 18,469 15,094 27,437

Net income $ 55,233 $ 51,413 $ 40,669

Weighted average common shares - Basic:

Class A 8,822 8,782 8,730

Class B 1,212 1,212 1,212

Dilutive stock options and restricted stock units 30 27 54

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Net income per common share - Basic:

Class A $ 5.54 $ 5.18 $ 4.12

Class B $ 5.04 $ 4.71 $ 3.74

Net income per common share - Diluted:

Class A $ 5.47 $ 5.11 $ 4.05

Class B $ 5.47 $ 5.11 $ 4.05

Dividends declared per common share:

Class A $ 0.72 $ 0.59 $ 0.48

Class B $ 0.65 $ 0.54 $ 0.44

The accompanying notes are an integral part of the Consolidated Financial Statements.

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(thousands, except per share data)

Other comprehensive (loss) income:

2020 September 27

2019 September 28

Net income $ 55,233 $ 51,413 $ 40,669

Other comprehensive income (loss):

Foreign currency translation:

Foreign currency translation 2,533 ( 2,245 ) ( 1,005 )

Reclassification adjustment for currency translation (gains) losses related to the liquidation of foreign entities included in net income

Reclassification adjustment for currency translation gains related to the liquidation of foreign entities included in net income — ( 761 ) ( 2,378 )

Defined benefit pension plan:

Change in pension plans, net of tax of $( 209 ), $( 288 ), and $( 593 ), respectively

Total other comprehensive (loss) income

626 1,077 1,877

Total other comprehensive income (loss) 3,159 ( 1,929 ) ( 1,506 )

Total comprehensive income $ 58,392 $ 49,484 $ 39,163

2 unchanged sentences

(thousands, except share data)

2020 September 27

Current assets:

Cash and cash equivalents $ 212,437 $ 172,382

Short-term investments

Accounts receivable, net 67,292 44,508

Inventories 97,437 94,298

Other current assets 11,372 11,340

1 unchanged sentence

Property, plant and equipment, net of accumulated depreciation of $ 156,541 and $ 143,028 , respectively

63,037 59,499

Right of use assets 40,666 —

Deferred income taxes 10,679 11,449

Goodwill 11,184 11,186

Other intangible assets, net 9,052 11,374

Other assets 22,870 20,408

Total assets $ 546,026 $ 436,444

LIABILITIES AND SHAREHOLDERS' EQUITY

1 unchanged sentence

Accounts payable 37,327 30,392

Current lease liability 6,587 —

Accrued liabilities:

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Accrued customer programs 4,426 4,440

Other 11,349 8,275

Total current liabilities 105,607 87,866

Non-current lease liability 34,931 —

Deferred income taxes 1,418 1,638

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Class A shares issued and outstanding:

September 27, 2019:

September 28, 2018:

8,873,235 and 8,834,169 , respectively

Class B shares issued and outstanding:

September 27, 2019:

September 28, 2018:

1,211,564 and 1,211,602 , respectively

Capital in excess of par value 78,668 75,856

3 unchanged sentences

36,316 and 29,225 , respectively

( 2,220 ) ( 1,761 )

Total shareholders' equity 378,100 324,534

2 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(thousands except for shares)

(thousands except for shares) Shares Common Stock Capital in

Excess of Par

Value Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Income (Loss) Treasury

BALANCE AT SEPTEMBER 29, 2017 9,996,199 $ 503 $ 72,801 $ 166,905 $ 4,993 $ ( 2,198 )

Net income — — — 40,669 — —

Dividends declared — — — ( 4,746 ) — —

5 unchanged sentences

Change in pension plans, net of tax of $ 593

— — — — 1,877 —

Non-vested stock forfeitures — — — — — —

1 unchanged sentence

BALANCE AT SEPTEMBER 28, 2018 9,999,046 503 75,025 202,828 3,487 ( 2,646 )

Net income — — — 51,413 — —

Dividends declared — — — ( 5,864 ) — —

5 unchanged sentences

Change in pension plans, net of tax of $ 288

— — — — 1,077 —

Non-vested stock forfeitures ( 4,290 ) — — — — —

Purchase of treasury stock at cost ( 9,890 ) — — — — ( 708 )

BALANCE AT SEPTEMBER 27, 2019 10,045,771 504 75,856 248,377 1,558 ( 1,761 )

Net income — — — 55,233 — —

Dividends declared — — — ( 7,179 ) — —

5 unchanged sentences

Change in pension plans, net of tax of $ 209

— — — — 626 —

Non-vested stock forfeitures — — — — —

Purchase of treasury stock at cost ( 7,129 ) — — — — ( 460 )

BALANCE AT SEPTEMBER 27, 2019

BALANCE AT OCTOBER 2, 2020 10,084,799 $ 504 $ 78,668 $ 296,431 $ 4,717 $ ( 2,220 )

The accompanying notes are an integral part of the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands) October 2

2020 September 27

2019 September 28

CASH PROVIDED BY OPERATING ACTIVITIES

Net income $ 55,233 $ 51,413 $ 40,669

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 12,592 12,933 11,994

Amortization of intangible assets 2,334 1,031 1,111

Amortization of deferred financing costs 27 27 58

Gain on sale of productive assets

Loss (gain) on sale of productive assets 217 ( 28 ) ( 1,134 )

Stock based compensation 2,686 2,346 2,297

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Other long-term liabilities 1,934 ( 117 ) 1,990

CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES

Other, net 296 ( 69 ) 243

61,493 45,844 63,358

CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES

Purchase of short-term investments — ( 7,124 ) ( 34,789 )

2 unchanged sentences

Proceeds from sale of productive assets 13 61 1,307

( 15,587 ) 11,989 48

CASH USED FOR FINANCING ACTIVITIES

Principal payments on term loans and other long-term debt

Debt issuance costs paid — — ( 63 )

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Purchases of treasury stock ( 460 ) ( 708 ) ( 675 )

( 7,107 ) ( 6,186 ) ( 4,935 )

Effect of foreign currency rate changes on cash 1,256 ( 1,142 ) ( 404 )

Increase (decrease) in cash and cash equivalents

Increase in cash and cash equivalents 40,055 50,505 58,067

CASH AND CASH EQUIVALENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 27, 2019

OCTOBER 2, 2020

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

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generally accepted accounting principles.

Intercompany accounts and transactions have

been eliminated upon consolidation.

Intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities.

results could differ significantly from those estimates.

Actual results could differ significantly from those estimates.

The Company’s fiscal year ends on the Friday nearest September 30.

The fiscal years ended September 27, 2019 (hereinafter 2019), September 28, 2018 (hereinafter 2018) and September 29, 2017 (hereinafter 2017) all comprised 52 weeks.

The fiscal year ended October 2, 2020 (hereinafter 2020) comprised 53 weeks.

The fiscal years ended September 27, 2019 (hereinafter 2019) and September 28, 2018 (hereinafter 2018) each comprised 52 weeks.

Coronavirus (COVID-19)

In March 2020, the World Health Organization recognized the current coronavirus (COVID-19) outbreak as a global pandemic.

In response to the COVID-19 outbreak, the governments of many countries, states, cities and other geographic regions imposed varying degrees of restrictions on social and commercial activity, including travel restrictions, quarantine guidelines and related actions, to promote social distancing and other similar programs all in an effort to slow the spread of the illness.

These measures have had a significant adverse impact upon many sectors of the economy, including manufacturing and retail commerce.

In response to these measures and for the protection of our employees, we temporarily closed our manufacturing locations and warehouses for a portion of our fiscal year, some of which fell during our primary selling season.

As of the end of fiscal 2020, we have resumed nearly all production and shipping activities under appropriate safety protocols, however, the period of suspended operations had an impact on the pacing of sales and operating profits between fiscal quarters.

While government mandates allowed us to re-open our manufacturing and distribution centers in the latter half of the fiscal year, these mandates continued to emphasize social distancing measures to the general public.

As such, the Company began to see growing demand and improved sales volumes in the latter part of the year for certain of its outdoor recreation businesses.

Nonetheless, the full extent to which the COVID-19 pandemic will impact our business, results of operations, and financial condition will depend on future developments, including any potential worsening of the pandemic, which are beyond our control and which remain highly uncertain and cannot be predicted.

This includes, but is not limited to, the duration, spread, severity and impact of the COVID-19 pandemic, or future waves, increasing outbreaks or hot spots of the pandemic in our areas of operations or in key markets, the effects of the pandemic on our customers, consumers, suppliers and vendors and the remedial actions and stimulus measures adopted by federal, state and local governments in reaction to the pandemic.

As the COVID-19 pandemic continues to impact various key regions of the world, even after it subsides, we may continue to experience adverse impacts to our business as a result of any economic recession that has occurred or may occur in the future.

As a result, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic on Company operations and profitability at this time as the situation is dynamic and constantly changing.

We continue to monitor evolving economic and general business conditions stemming from the COVID-19 pandemic and the actual and potential impacts on our financial position, results of operations and cash flows.

Cash, Cash Equivalents and Short-term Investments

The Company considers all short-term investments in interest-bearing bank accounts, and all securities and other instruments with an original maturity of three months or less, to be equivalent to cash.

Cash equivalents are stated at cost which

approximates market value.

Cash equivalents are stated at cost which approximates market value.

Short-term investments consist of certificates of deposit with original maturities greater than three months but less than one year.

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The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

As of September 27, 2019, the Company held approximately $41,110 of cash and cash equivalents in bank accounts in foreign jurisdictions.

As of October 2, 2020, the Company held approximately $ 47,886 of cash and cash equivalents in bank accounts in foreign jurisdictions.

Accounts Receivable

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The allowance for doubtful accounts is based on a combination of factors.

In circumstances where specific collection concerns exist, a reserve is established

to reduce the amount recorded to an amount the Company believes will be collected.

For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts

receivable for each business unit.

In circumstances where specific collection concerns exist (including as a result of the impact of COVID-19), a reserve is established to reduce the amount recorded to an amount the Company believes will be collected.

For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts receivable for each business unit.

Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted.

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Management’s 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 will be used to meet future needs.

Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on

criteria established by the Company.

Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs.

Inventory reserves are estimated by 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 reserve balances to be adequate, changes in

economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

Inventories at the end of the respective fiscal years consisted of the following:

2020 September 27

Raw materials $ 48,874 $ 45,168

1 unchanged sentence

Finished goods 48,524 48,978

$ 97,437 $ 94,298

Property, Plant and Equipment

1 unchanged sentence

Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:

Property improvements

Buildings and improvements

Furniture and fixtures, equipment and computer software

Property improvements 5 - 20 years

Buildings and improvements 20 - 40 years

Furniture and fixtures, equipment and computer software 3 - 10 years

Upon retirement or disposition of any of the foregoing types of assets, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the statements of operations.

3 unchanged sentences

Furniture and fixtures, equipment and computer software 194,573 178,708

219,578 202,527

Less accumulated depreciation 156,541 143,028

The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment

loss may have been incurred, on an interim basis.

$ 63,037 $ 59,499

The results of the impairment tests performed in 2020, 2019, and 2018 indicated no impairment to the Company’s goodwill.

In conducting its analysis, the Company uses the income approach to compare the reporting unit’s carrying value to its indicated fair value.

Fair value is determined primarily by using a discounted cash flow methodology that requires

considerable management judgment and long-term assumptions and is considered a Level 3 (unobservable) fair value determination in the fair value hierarchy (see Note 4 below).

Fair value is determined primarily by using a discounted cash flow methodology that requires considerable management judgment and long-term assumptions and is considered a Level 3 (unobservable) fair value determination in the fair value hierarchy (see Note 4 below).

The Company’s impairment analysis is based on management’s estimates.

Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, that discount rates will not increase or that projected

cash flows will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods, and accordingly, whether any impairment losses need to be recorded in future periods.

Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, that discount rates will not increase or that projected cash flows will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods, and accordingly, whether any impairment losses need to be recorded in future periods.

The changes in the carrying amount and the composition of the Company's goodwill for fiscal 2020 and 2019 were as follows:

Fishing Camping Watercraft Diving Total

Balance at September 28, 2018

Goodwill $ 17,428 $ 7,038 $ 6,242 $ 33,078 $ 63,786

Accumulated impairment losses ( 6,229 ) ( 7,038 ) ( 6,242 ) ( 33,078 ) ( 52,587 )

11,199 — — — 11,199

Currency translation ( 13 ) — — — ( 13 )

Balance at September 27, 2019

Goodwill 17,415 7,038 6,242 33,078 63,773

Accumulated impairment losses ( 6,229 ) ( 7,038 ) ( 6,242 ) ( 33,078 ) ( 52,587 )

11,186 — — — 11,186

Currency translation ( 2 ) — — — ( 2 )

Balance at September 27, 2019

Balance at October 2, 2020

Goodwill 17,413 7,038 6,242 33,078 63,771

Accumulated impairment losses ( 6,229 ) ( 7,038 ) ( 6,242 ) ( 33,078 ) ( 52,587 )

$ 11,184 $ — $ — $ — $ 11,184

Other Intangible Assets

Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis.

There were no impairment losses recognized in

fiscal 2019, 2018 or 2017.

There were no impairment losses recognized in fiscal 2020, 2019 or 2018.

Intangible assets with definite lives are stated at cost less accumulated amortization.

Amortization is computed using the straight-line method over periods ranging from 4 to 15 years.

Amortization of patents and other intangible assets with

definite lives was $1,031, $1,111 and $1,276 for 2019, 2018 and 2017, respectively.

Amortization of these definite-lived intangible assets is expected to be approximately $1,043, $823, $695, $695 and $277 for fiscal years 2020, 2021, 2022, 2023 and

2024, respectively.

Amortization of patents and other intangible assets with definite lives was $ 2,334 , $ 1,031 and $ 1,111 for 2020, 2019 and 2018, respectively.

Amortization of these definite-lived intangible assets is expected to be approximately $ 419 , $ 264 , $ 264 , $ 264 and $ 264 for fiscal years 2021, 2022, 2023, 2024, and 2025 respectively.

Intangible assets at the end of the last two years consisted of the following:

Intangible Accumulated

Amortization Net Gross

Intangible Accumulated

Amortization Net

Amortized other intangible assets:

2 unchanged sentences

Non-amortized trademarks 7,025 — 7,025 7,025 — 7,025

$ 22,435 $ ( 13,383 ) $ 9,052 $ 22,211 $ ( 10,837 ) $ 11,374

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in business circumstances such as unplanned negative cash flow indicate that the carrying amount of these assets may not be fully recoverable.

In such an event, the

carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets.

If impairment is determined to exist, any related impairment loss

is calculated based on the difference between the fair value and the carrying value on these assets.

During the fourth quarter of fiscal 2019, the Company performed an impairment analysis, in which the carrying value of

long-lived assets in its Watercraft segment exceeded the fair value of undiscounted and discounted cash flow analysis.

In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets.

If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets.

During the fourth quarter of fiscal 2019, the Company performed an impairment analysis, in which the carrying value of long-lived assets in its Watercraft segment exceeded the fair value of undiscounted and discounted cash flow analysis.

Accordingly, the Company evaluated the fair value of the underlying long-lived assets and determined there was no impairment.

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Warranty reserves are estimated using standard quantitative measures based on criteria established by the Company.

Estimates of costs to service its warranty obligations

are based on historical experience, expectation of future conditions and known product issues.

The following table summarizes the warranty activity for the three years in the period ended September 27, 2019.

Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues.

The following table summarizes the warranty activity for the three years in the period ended October 2, 2020.

Balance at September 29, 2017 $ 6,393

7 unchanged sentences

Less current period warranty claims paid 10,055

Balance at September 27, 2019

Balance at October 2, 2020 $ 10,849

Accumulated Other Comprehensive Income

The components of Accumulated other comprehensive income ("AOCI") on the accompanying Consolidated Balance Sheets as of the end of fiscal year 2020, 2019 and 2018 were as follows:

2020 2019 2018

Amount Tax Effect Net of Tax

Effect Pre-Tax

Amount Tax Effect Net of Tax

Effect Pre-Tax

Amount Tax Effect Net of Tax

Foreign currency translation adjustment $ 7,323 $ — $ 7,323 $ 4,790 $ — $ 4,790 $ 7,796 $ — $ 7,796

1 unchanged sentence

Accumulated other comprehensive income $ 4,194 $ 523 $ 4,717 $ 826 $ 732 $ 1,558 $ 2,467 $ 1,020 $ 3,487

The reclassifications out of AOCI for the year ended September 27, 2019 were as follows:

The reclassifications out of AOCI for the year ended October 2, 2020 were as follows:

Statement of Operations

Unamortized loss on defined benefit pension plans

Amortization of loss

Cost of sales / Operating expense

Income tax expense

Foreign currency translation adjustments

Write off of currency translation amounts

Other income and expense

Amortization of loss $ 537 Cost of sales / Operating expense

Tax effects ( 134 ) Income tax expense

Total reclassifications for the period $ 403

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Unamortized loss on defined benefit pension plans:

Amortization of loss

Cost of sales / Operating expense

Income tax expense

Amortization of loss $ 328 Cost of sales / Operating expense

Tax effects ( 82 ) Income tax expense

Foreign currency translation adjustments:

Write off of currency translation amounts

Other income and expense

Write off of currency translation amounts ( 761 ) Other income and expense

Total reclassifications for the period $ ( 515 )

2 unchanged sentences

Unamortized loss on defined benefit pension plans:

Amortization of loss

Cost of sales / Operating expense

Income tax expense

Amortization of loss $ 553 Cost of sales / Operating expense

Tax effects ( 133 ) Income tax expense

Foreign currency translation adjustments

Write off of currency translation amounts

Other income and expense

Write off of currency translation amounts ( 2,378 ) Other income and expense

Total reclassifications for the period $ ( 1,958 )

The changes in AOCI by component, net of tax, for the year ended September 27, 2019 were as follows:

The changes in AOCI by component, net of tax, for the year ended October 2, 2020 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

1 unchanged sentence

Balance at September 27, 2019 $ 4,790 $ ( 3,232 ) $ 1,558

Other comprehensive (loss) income before reclassifications

Other comprehensive income before reclassifications 2,533 298 2,831

Amounts reclassified from accumulated other comprehensive income — 537 537

Balance at September 27, 2019

Tax effects — ( 209 ) ( 209 )

Balance at October 2, 2020 $ 7,323 $ ( 2,606 ) $ 4,717

The changes in AOCI by component, net of tax, for the year ended September 27, 2019 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive income ( 761 ) 328 ( 433 )

Tax effects — ( 288 ) ( 288 )

Balance at September 27, 2019 $ 4,790 $ ( 3,232 ) $ 1,558

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Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method.

Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as

part of the basic weighted average share calculation under the two-class method.

Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method.

Holders of Class A common stock are entitled to cash dividends equal to 110 % of all dividends declared and paid on each share of Class B common stock.

The Company grants shares of unvested restricted stock in the form of Class A shares, which

carry the same distribution rights as the Class A common stock described above.

As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that

each such class is entitled to receive.

Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding,

respectively.

In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that

each such class is entitled to receive.

net losses are allocated equally on a per share basis among all participating securities.

For the years ended September 27, 2019, September 28, 2018 and September 29, 2017, basic income per share for Class A and Class B shares has been presented using the two class method as described above.

The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above.

As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.

In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities.

For the years ended October 2, 2020, September 27, 2019 and September 28, 2018, basic income per share for Class A and Class B shares has been presented using the two class method as described above.

Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units and non-vested restricted stock.

Anti-dilutive stock options, restricted stock units and non-vested stock are excluded from the calculation of diluted EPS.

The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into

Class A common stock.

The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock.

Therefore, diluted net income per share is the same for both Class A and Class B common shares.

In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and

non-vested stock is excluded and diluted loss per share is equal to basic loss per share.

For the years ended September 27, 2019, September 28, 2018 and September 29, 2017, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into

Class A common stock.

There were no stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive for the years ended September 27, 2019, September 28,

2018 and September 29, 2017.

shares for the years ended September 27, 2019, September 28, 2018 and September 29, 2017, respectively.

In periods where the

Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.

For the years ended October 2, 2020, September 27, 2019 and September 28, 2018, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into Class A common stock.

Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 40,094 , 43,963 and 46,776 shares for the years ended October 2, 2020, September 27, 2019 and September 28, 2018, respectively.

The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:

2020 2019 2018

Net income $ 55,233 $ 51,413 $ 40,669

Undistributed earnings reallocated to non-vested shareholders ( 220 ) ( 226 ) ( 224 )

1 unchanged sentence

Weighted average common shares – Basic:

Class A 8,822 8,782 8,730

Class B 1,212 1,212 1,212

Dilutive stock options and restricted stock units 30 27 54

1 unchanged sentence

Net income per common share – Basic:

Class A $ 5.54 $ 5.18 $ 4.12

Class B $ 5.04 $ 4.71 $ 3.74

Net income per common share – Diluted:

Class A $ 5.47 $ 5.11 $ 4.05

Class B $ 5.47 $ 5.11 $ 4.05

Stock-Based Compensation

Stock-based compensation cost is recorded for all option grants and awards of non-vested stock and restricted stock units based on their grant-date fair value.

Stock-based compensation expense is recognized on a straight-line basis over the

vesting period of each award.

No stock options were granted in 2019, 2018 or 2017.

See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options,

non-vested stock, and employee stock purchase plans.

Stock-based compensation cost is recorded for all awards of non-vested stock and restricted stock units based on their grant-date fair value.

Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award.

See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including non-vested stock, restricted stock units and employee stock purchase plans.

The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss.

Accrued interest and penalties related to unrecognized tax

benefits are recognized as a component of income tax expense.

Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities,

using enacted tax rates in effect in the years in which the differences are expected to reverse.

Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense.

Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse.

Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized.

A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized.

See Note 6 of these Notes to Consolidated Financial Statements for further discussion.

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The Company does not have any significant foreign retirement plans.

Pension obligations, which are generally based on compensation and years of

service, are funded by payments to pension fund trustees.

The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto although the Company may choose to

fund more than the minimum amount at its discretion.

Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees.

The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto although the Company may choose to fund

more than the minimum amount at its discretion.

Other retirement costs are funded at least annually.

4 unchanged sentences

dollars at the rate of exchange existing at the end of the year.

of operations are translated at monthly average exchange rates.

Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of

Shareholders’ equity.

Results of operations are translated at monthly average exchange rates.

Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of Shareholders’ equity.

Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity.

Additionally, currency gains and losses are

recognized through the settlement of transactions denominated in other than the local currency.

The Company recognized currency gains from transactions of $645, $1,985, and $903 in 2019, 2018, and 2017, respectively, which were included in Other

income, net in the accompanying Consolidated Statements of Operations.

Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency.

The Company recognized currency losses from transactions of $ 269 , and currency gains of $ 645 and $ 1,985 in 2020, 2019, and 2018, respectively, which were included in Other income, net in the accompanying Consolidated Statements of Operations.

Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates.

Approximately 14% of the Company’s revenues for the year ended September 27, 2019 were denominated in currencies

other than the U.S.

Approximately 12 % of the Company’s revenues for the year ended October 2, 2020 were denominated in currencies other than the U.S.

Approximately 5 % were denominated in euros and approximately 5 % were denominated in Canadian dollars, with the remaining 2 % denominated in various other foreign currencies.

The Company may mitigate the impact on its

operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign

The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies.

The Company did not use foreign currency forward contracts in 2020, 2019 or 2018.

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On September 29, 2018, the Company adopted Accounting Standards Update 2014-09 and all subsequent updates that modified accounting standards Topic 606, Revenue from contracts with customers.

See Note 12 of these Notes to Consolidated Financial

Statements for further discussion.

Prior to adoption of Topic 606, during 2018 and 2017, the Company followed Topic 605, Revenue Recognition.

See Note 12 of these Notes to Consolidated Financial Statements for further discussion.

Prior to adoption of Topic 606, during 2018, the Company followed Topic 605, Revenue Recognition.

Under Topic 605, the Company recognized revenue when all of the following criteria had been met:

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Advertising and promotions expense in 2020, 2019 and 2018 totaled $ 26,727 , $ 28,397 and $ 26,319 , respectively.

These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets,

totaled $466 and $606 at September 27, 2019 and September 28, 2018, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.

These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $ 611 and $ 466 at October 2, 2020 and September 27, 2019, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.

Shipping and Handling Costs

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Research and Development

The Company expenses research and development costs as incurred except for costs of software development for new electronic products and bathymetry data collection and processing, which are capitalized once technological feasibility is

established and are included in Furniture, Fixtures and Equipment.

The gross amount capitalized related to software development was $43,304, less accumulated amortization of $25,750, at September 27, 2019 and $38,062, less accumulated amortization

of $21,788, at September 28, 2018.

The gross amount capitalized related to software development was $ 48,711 , less accumulated amortization of $ 29,579 , at October 2, 2020 and $ 43,304 , less accumulated amortization of $ 25,750 , at September 27, 2019.

These costs are amortized over the expected life of the software of three to seven years .

Amortization expense related to capitalized software in 2019, 2018 and 2017 was $3,962, $3,747 and $3,444, respectively,

and is included in depreciation expense on plant, property and equipment.

The carrying amounts of cash, cash equivalents, short-term investments, accounts receivable, and accounts payable approximated fair value at September 27, 2019 and September 28, 2018 due to the short maturities of these instruments.

2018 and 2017, the Company held investments in equity and debt securities that were carried at fair value related to its deferred compensation liability which was also carried at the same fair value.

When indicators of impairment are present, the

Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

Amortization expense related to capitalized software in 2020, 2019 and 2018 was $ 3,829 , $ 3,962 and $ 3,747 , respectively, and is included in depreciation expense on plant, property and equipment.

The carrying amounts of cash, cash equivalents, short-term investments, accounts receivable, and accounts payable approximated fair value at October 2, 2020 and September 27, 2019 due to the short maturities of these instruments.

During 2020, 2019 and 2018, the Company held investments in equity and debt securities that were carried at fair value related to its deferred compensation liability which was also carried at the same fair value.

When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

Valuation Techniques

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Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in “Other assets,” and are classified as trading securities.

assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.

These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.

Goodwill and Other Intangible Assets

In assessing the recoverability of the Company’s goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments to which the goodwill relates.

When estimated future discounted cash flows

are less than the carrying value of the net assets and related goodwill, an impairment charge is recognized based on the excess of the carrying amount over the fair value.

In determining estimated future cash flows, the Company makes assumptions

regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.

When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment charge is recognized based on the excess of the carrying amount over the fair value.

In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.

See Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding fair value measurements.

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Recently adopted accounting pronouncements

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement - Reporting Comprehensive Income - Reclassification of Certain Tax

Effects from Accumulated Other Comprehensive Income (Topic 220) , which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842) .

In July 2018, the FASB also issued ASU 2018-10 Codification Improvements to Topic 842, Leases and ASU 2018-11 Leases (Topic 842) Targeted Improvements.

In February 2019, the FASB also issued ASU 2019-01 Leases (Topic 842):

Codification Improvements .

This ASU and the updates to this ASU require organizations to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements.

This guidance was effective for the Company in the first quarter of fiscal year 2020, and may be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements with certain practical expedients available.

The Company adopted the provisions of these ASU's using the modified retrospective approach at the beginning of the first quarter of fiscal 2020, coinciding with the standard's effective date.

The additional disclosures required by the ASU and its updates are included in Note 5 "Leases" of these Notes to the Condensed Consolidated Financial Statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220) , which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017.

2018-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The ASU allows for early adoption in any interim period after issuance of the update.

The Company early

adopted the ASU in the second quarter of fiscal 2019, and elected not to make this optional reclassification.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes existing revenue recognition requirements and provides a new comprehensive revenue

recognition model.

The underlying principle of the new standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for those

goods or services.

The Company early adopted the ASU in the second quarter of fiscal 2019, and elected not to make this optional reclassification.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes existing revenue recognition requirements and provides a new comprehensive revenue recognition model.

The underlying principle of

the new standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for those goods or services.

The Company adopted the provisions of this ASU in the first quarter of fiscal 2019 for all contracts on a modified retrospective basis, with no cumulative-effect adjustment to retained earnings upon adoption.

The comparative

information has not been restated and continues to be reported under the accounting standards that were in effect for those periods.

The additional disclosures required by the ASU are included in Note 12 “Revenues” of these Notes to the

Consolidated Financial Statements.

The comparative information has not been restated and continues to be reported under the accounting standards that were in effect for those periods.

The additional disclosures required by the ASU are included in Note 12 "Revenues" of these Notes to the Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory .

The ASU includes provisions intended to simplify the measurement of inventory and to more clearly articulate the

requirements for the measurement and disclosure of inventory.

The ASU includes provisions intended to simplify the measurement of inventory and to more clearly articulate the requirements for the measurement and disclosure of inventory.

Under such provisions, an entity should measure inventory within the scope of this amendment at the lower of cost or net realizable value.

Net realizable value is the estimated selling

prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

The Company adopted this standard at the beginning of the first quarter of fiscal 2018.

The adoption of this ASU did not have a

significant impact on the Company’s consolidated financial statements.

The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost .

The ASU includes, among other provisions, one that will

require presentation of the service cost component of net benefit cost in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period.

The other components of net benefit cost are

required to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations.

This amendment is effective for annual periods beginning after December 15, 2017 and the interim

periods within those annual periods.

The ASU includes, among other provisions, one that will require presentation of the service cost component of net benefit cost in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period.

The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations.

This amendment is effective for annual periods beginning after December 15, 2017 and the interim periods within those annual periods.

The Company elected to adopt this accounting standard at the beginning of the first quarter of fiscal 2018.

The adoption of this standard resulted in a reduction of an annual operating expense of $848 and an

increase in other expense of $848.

The adoption of this standard resulted in a reduction of an annual operating expense of $ 848 and an increase in other expense of $ 848 .

The adoption of this standard did not have an effect on the Company's consolidated balance sheets or consolidated statements of cash flows.

Recently issued accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) .

In July 2018, the FASB also issued ASU 2018-10 Codification Improvements to Topic 842, Leases and

ASU 2018-11 Leases (Topic 842) Targeted Improvements.

In February 2019, the FASB also issued ASU 2019-01 Leases (Topic 842):

Codification Improvements .

amendments in these updates will increase the transparency and comparability among organizations by recognizing right-of-use (“ROU”) assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

guidance is effective for the Company in the first quarter of fiscal year 2020, and requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in

the financial statements with certain practical expedients available.

As part of the July 2018 ASU, an additional transition method became available by which companies may elect not to recast the comparative periods presented in the financial

statements in the period of adoption.

The Company will adopt Topic 842 in the first quarter of fiscal 2020 using the optional adoption method and thereby not adjust comparative financial statements.

Consequently, reporting for the comparative

periods presented in the year of adoption will continue to be in accordance with Topic 840, including the disclosure requirements of Topic 840.

The Company currently plans to apply the package of practical expedients to leases that commenced

before the effective date, whereby the Company will elect to not reassess the following:

(i) whether any expired or existing contracts contain leases;

(ii) the lease classification for any expired or existing leases;

and (iii) initial direct costs

for any existing leases.

The Company has enhanced system functionality to enable the preparation and reporting of financial information and is currently evaluating related processes and internal controls.

The Company expects the most significant

impact upon the adoption of this standard to be the recognition of ROU assets and lease liabilities on the consolidated balance sheets, with an estimated increase in total assets and total liabilities in the range of $40 to $45 million.

Company does not expect the adoption of this standard to have a significant impact on the consolidated statements of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326).

Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates.

The amendments in this guidance are effective for fiscal years beginning after December 15, 2019, with early adoption permitted for certain amendments.

Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings.

The Company does not expect adoption of the new guidance to have a significant impact on its financial statements.

In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans (Topic 715).

This ASU will modify the disclosure requirements for employers that sponsor

defined pension or postretirement plans.

This ASU will modify the disclosure requirements for employers that sponsor defined pension or postretirement plans.

The amendments in this guidance are effective for fiscal years ending after December 15, 2020, with early adoption permitted.

The Company is currently evaluating the potential impact of this guidance on

its disclosures.

The Company had no outstanding debt at September 27, 2019 or September 28, 2018.

On October 24, 2016 the Company repaid its outstanding term loans with Ridgestone Bank totaling $7,068.

The early repayment of these loans resulted in of a 3% pre-payment penalty.

The Company’s term loans had a maturity date of September 29,

The interest rate in effect on the term loans was 5.5% at the date of repayment.

The Company is currently evaluating the potential impact of this guidance on its disclosures.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes.

ASU 2019-12 is intended to simplify accounting for income taxes.

It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted.

The Company does not expect adoption of the new guidance to have a significant impact on its financial statements.

2 INDEBTEDNESS

The Company had no outstanding debt at October 2, 2020 or September 27, 2019.

On November 15, 2017, the Company and certain of its subsidiaries entered into a new unsecured revolving credit facility with PNC Bank, National Association and Associated Bank, N.A.

("the Lending Group").

This credit facility replaced the

Company’s previous revolving credit agreement dated September 16, 2013 and consists of an Amended and Restated Revolving Credit Agreement dated November 15, 2017 among the Company, certain of the Company’s subsidiaries, PNC Bank, National

Association, as lender and as administrative agent, and the other lender named therein (the “New Revolving Credit Agreement” or “New Revolver”).

The New Revolver has an expiration date of November 15, 2022, and provides for borrowing of up to an

aggregate principal amount not to exceed $75,000 with a $50,000 accordion feature that gives the Company the option to increase the maximum financing availability subject to the conditions of the New Revolving Credit Agreement and subject to the

approval of the lenders.

The interest rate on the New Revolver is based on LIBOR plus an applicable margin, which margin resets each quarter.

The applicable margin ranges from 1.00% to 1.75% and is dependent on the Company’s leverage ratio for the trailing twelve month

The interest rates on the Revolver were approximately 3.0% at September 27, 2019 and 3.3% at September 28, 2018.

The New Revolving Credit Agreement restricts the Company’s ability to incur additional debt, includes maximum leverage ratio and minimum interest coverage ratio covenants and is unsecured.

This credit facility consists of a $ 75 million Revolving Credit Facility among the Company, certain of the Company's subsidiaries, PNC Bank National Association, as lender and as administrative agent, and the other lender named therein (the "Credit Agreement" or "Revolver").

The Revolver has an expiration date of November 15, 2022, and provides for borrowing of up to an aggregate principal amount not to exceed $ 75,000 with a $ 50,000 accordion feature that gives the Company the option to increase the maximum financing

availability (i.e., an aggregate borrowing amount of $ 125,000 ) subject to the conditions of the Credit Agreement and subject to the approval of the lenders.

The interest rate on the Revolver is based on LIBOR plus an applicable margin, which margin resets each quarter.

The applicable margin ranges from 1.00 % to 1.75 % and is dependent on the Company's leverage ratio for the trailing twelve month period.

The interest rates on the Revolver were approximately 1.1 % at October 2, 2020 and 3.0 % at September 27, 2019.

The Credit Agreement restricts the Company's ability to incur additional debt, includes maximum leverage ratio and minimum interest coverage ratio covenants and is unsecured.

Other Borrowings

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers’ compensation insurance which totaled $181 and $279 at September 27, 2019 and September 28, 2018, respectively.

The Company had no

other unsecured lines of credit as of September 27, 2019 or September 28, 2018.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers’ compensation insurance which totaled $ 181 and $ 181 at October 2, 2020 and September 27, 2019, respectively.

The Company had no other unsecured lines of credit as of October 2, 2020 or September 27, 2019.

The weighted average borrowing rate for short-term debt was approximately 1.1 %, 3.0 % and 3.3 % for 2020, 2019 and 2018, respectively.

Under the Company’s New Revolving Credit Agreement, a change in control of the Company would constitute an event of default.

A change in control would be deemed to have occurred if, among other events described in the terms of the New Revolving

Agreement, a person or group other than the Company’s Chief Executive Officer, Helen P.

Johnson-Leipold, members of her family and related entities (hereinafter the Johnson Family) became or obtained rights as a beneficial owner (as interpreted

under the Securities Exchange Act of 1934) of a certain minimum percentage of the outstanding capital stock of the Company.

Under the Company’s Credit Agreement, a change in control of the Company would constitute an event of default.

A change in control would be deemed to have occurred if, among other events described in the terms of the Credit Agreement, a person or group other than the Company’s Chief Executive Officer, Helen P.

Johnson-Leipold, members of her family and related entities (hereinafter the Johnson Family) became or obtained rights as a beneficial owner (as interpreted under the Securities Exchange Act of 1934) of a certain minimum percentage of the outstanding capital stock of the Company.

3 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following disclosures describe the Company’s objectives in using derivative instruments, the business purpose or context for using derivative instruments, and how the Company believes the use of derivative instruments helps achieve the

stated objectives.

In addition, the following disclosures describe the effects of the Company’s use of derivative instruments and hedging activities on its financial statements.

See Note 4 of these Notes to Consolidated Financial Statements for

disclosures regarding the fair value and effects of changes in the fair value of derivative instruments.

See Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding the fair value and effects of changes in the fair value of derivative instruments.

Foreign Exchange Risk

The Company has significant foreign operations, for which the functional currencies are denominated primarily in euros, Swiss francs, Hong Kong dollars 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, losses, assets and liabilities of the Company’s foreign operations, as reported in the Company’s consolidated financial statements, increase or

decrease, accordingly.

Approximately 14% of the Company’s revenues for the fiscal year ended September 27, 2019 were denominated in currencies other than the U.S.

Approximately 6% were denominated in euros and approximately 5% were

denominated in Canadian dollars, with the remaining 3% denominated in various other foreign currencies.

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, losses, assets and liabilities of the Company’s foreign operations, as reported in the Company’s consolidated financial statements, increase or decrease, accordingly.

Approximately 12 % of the Company’s revenues for the fiscal year ended October 2, 2020 were denominated in currencies other than the U.S.

Approximately 5 % were denominated in euros and approximately 5 % were denominated in Canadian dollars, with the remaining 2 % denominated in various other foreign currencies.

Changes in foreign currency exchange rates can cause unexpected financial losses or cash flow needs.

The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the use of foreign currency forward contracts.

Foreign currency forward contracts enable the Company to lock in

the foreign currency exchange rate for a fixed amount of currency to be paid or received on a specified date in the future.

The Company may use such foreign currency forward contracts to mitigate the risk associated with changes in foreign currency

exchange rates on financial instruments and known commitments denominated in foreign currencies.

As of September 27, 2019 and September 28, 2018, the Company held no foreign currency forward contracts.

Foreign currency forward contracts enable the Company to lock in the foreign currency exchange rate for a fixed amount of currency to be paid or received on a specified date in the future.

The Company may use such foreign currency forward contracts to mitigate the risk associated with changes in foreign currency exchange rates on financial instruments and known commitments denominated in foreign currencies.

As of October 2, 2020 and September 27, 2019, the Company held no foreign currency forward contracts.

Interest Rate Risk

The Company operates in a seasonal business and experiences significant fluctuations in operating cash flow as working capital needs increase in advance of the Company’s primary selling and cash generation season, and decline as accounts

receivable are collected and cash is accumulated.

As of September 27, 2019 and September 28, 2018, the Company held no interest rate swap contracts.

As of October 2, 2020 and September 27, 2019, the Company held no interest rate swap contracts.

4 FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market

participants on the measurement date.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

A fair value hierarchy has been established based on three levels of

inputs, of which the first two are considered observable and the last unobservable.

A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable.

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

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• Level 2 - Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly.

These are typically obtained from readily-available pricing sources for comparable

These are typically obtained from readily-available pricing sources for comparable instruments.

• Level 3 - Unobservable inputs, where there is little or no market activity for the asset or liability.

These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or

liability, based on the best information available in the circumstances.

The following table summarizes the Company’s financial assets measured at fair value as of September 27, 2019:

These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

The following table summarizes the Company’s financial assets measured at fair value as of October 2, 2020:

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 21,550 $ — $ — $ 21,550

The following table summarizes the Company’s financial assets measured at fair value as of September 27, 2019:

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 19,092 $ — $ — $ 19,092

Rabbi trust assets are classified as trading securities and are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.

The rabbi trust assets are owed by the Company

to certain officers and other employees under the Company’s non-qualified deferred compensation plan.

These assets are included in “Other assets” in the Company’s Consolidated Balance Sheets, and the mark-to-market adjustments on the assets are

recorded in “Other income, net” in the accompanying Consolidated Statements of Operations.

The offsetting deferred compensation liability is also reported at fair value and is included in “Deferred compensation liability” in the Company’s

Consolidated Balance Sheets.

The rabbi trust assets are owed by the Company to certain officers and other employees under the Company’s non-qualified deferred compensation plan.

These assets are included in "Other assets" in the Company's Consolidated Balance Sheets, and the mark-to-market adjustments on the assets are recorded in “Other income, net” in the accompanying Consolidated Statements of Operations.

The offsetting deferred compensation liability is also reported at fair value and is included in “Deferred compensation liability” in the Company’s Consolidated Balance Sheets.

Changes in the liability are recorded in "Administrative management, finance and information systems" expense in the accompanying Consolidated Statements of Operations.

The effect of changes in the fair value of financial instruments on the Consolidated Statements of Operations for the years ended September 27, 2019, September 28, 2018 and September 29, 2017 was:

Location of income

recognized in Statement of

Rabbi trust assets

Other income, net

The effect of changes in the fair value of financial instruments on the Consolidated Statements of Operations for the years ended October 2, 2020, September 27, 2019 and September 28, 2018 was:

Location of income recognized in Statement of

Operations 2020 2019 2018

Rabbi trust assets Other income, net $ 2,140 $ 572 $ 1,395

Certain assets and liabilities are measured at fair value on a non-recurring basis in periods subsequent to their initial recognition.

No assets or liabilities were measured at fair value on a non-recurring basis in 2020, 2019, or 2018.

LEASES AND OTHER COMMITMENTS

Adoption of Topic 842

At the beginning of fiscal 2020, the Company adopted ASU 2016-02 and all subsequent ASUs that modified accounting standards Topic 842 using a modified retrospective adoption method, in which right-of-use ("ROU") assets and lease liabilities are recognized in the condensed consolidated balance sheets.

Under the effective date transition method, financial results reported in periods prior to fiscal year 2020 are unchanged.

The Company also elected the package of practical expedients

permitted under the standard, which does not require reassessment of prior conclusions related to contracts containing a lease, lease classification and initial direct lease costs.

As an ongoing accounting policy election, the Company will exclude short-term leases (terms of 12 months or less) from the balance sheet presentation and will account for non-lease and lease components in a contract as a single lease component for most asset classes.

All leases in which the Company is the lessee are classified as operating leases, and the Company does not have any finance leases or sublease agreements.

Additionally, the Company does not have any leases in which it is the lessor.

The adoption of this new standard had a significant impact on the Company's condensed consolidated balance sheet due to the recognition of approximately $ 41 million of lease liabilities with corresponding ROU assets for operating leases.

The adoption of this new standard did not have a significant impact on the condensed consolidated statements of operations or cash flows, and did not impact our debt covenant compliance under our current credit agreements.

The Company determines if an arrangement is a lease at inception.

The Company leases certain facilities and machinery and equipment under long-term, non-cancelable operating leases.

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at

September 27, 2019 were as follows:

Related parties included

Rental expense under all leases was approximately $9,352, $8,316 and $7,969 for 2019, 2018 and 2017, respectively.

Rent expense to related parties was $998, $992 and $949 for 2019, 2018 and 2017, respectively.

As of October 2, 2020, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 15 years.

Some of the leases contain variable payment terms, such as payments based on fluctuations in the Consumer Price Index (CPI).

Some leases also contain options to extend or terminate the lease.

To the extent the Company is reasonably certain to exercise these options, they have been considered in the calculation of the ROU assets and lease liabilities.

Under current lease agreements, there are no residual value guarantees or restrictive lease covenants.

In calculating the ROU assets and lease liabilities, several assumptions and judgments were made by the Company, including whether a contract is or contains a lease under the new definition, and the determination of the discount rate, which is assumed to be the incremental borrowing rate.

The incremental borrowing rate is derived from information available to the Company at the lease commencement date based on lease length and location.

As of October 2, 2020, the components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations were as follows:

October 2, 2020

Operating lease costs $ 7,483

Short-term lease costs 1,828

Variable leases costs 173

Total lease cost $ 9,484

Included in the amounts in the table above was rent expense to related parties of $ 1,028 for the year ended October 2, 2020.

As of October 2, 2020, the Company did not have any finance leases.

There were no significant new leases entered into during the year ended October 2, 2020.

Supplemental balance sheet, cash flow, and other information related to operating leases was as follows:

October 2, 2020

Operating leases:

Operating lease ROU assets $ 40,666

Current operating leases liabilities 6,587

Non-current operating lease liabilities 34,931

Total operating lease liabilities $ 41,518

Weighted average remaining lease term (in years) 10.05

Weighted average discount rate 2.85 %

Cash paid for amounts included in the measurement of lease liabilities $ 6,716

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at October 2, 2020 were as follows:

Year Related parties included

in total Total

2021 $ 1,152 $ 8,025

2022 193 5,025

Thereafter — 22,222

Total undiscounted lease payments 1,345 47,996

Imputed interest ( 15 ) ( 6,478 )

Total net lease liability $ 1,330 $ 41,518

As of October 2, 2020, the Company did not have any additional significant operating lease commitments that have not yet commenced.

Disclosures related to periods prior to adoption of Topic 842 (Fiscal 2019 and 2018)

Rental expense under all leases was $ 9,352 and $ 8,316 for the years ended September 27, 2019 and September 28, 2018, respectively.

Rent expense to related parties was $ 998 and $ 992 for the years ended September 27, 2019 and September 28, 2018, respectively.

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at September 27, 2019 were as follows:

Year Related parties included

in total Total

2020 $ 1,039 $ 7,865

2021 1,070 6,155

2022 179 3,794

Thereafter — 23,180

6 INCOME TAXES

and foreign income before income taxes for the respective years consisted of the following:

2020 2019 2018

United States $ 72,602 $ 59,261 $ 57,888

Foreign 1,100 7,246 10,218

$ 73,702 $ 66,507 $ 68,106

Income tax expense for the respective years consisted of the following:

2020 2019 2018

Federal $ 13,735 $ 11,074 $ 12,390

State 3,348 2,752 4,482

Foreign 1,109 1,422 1,678

Deferred 277 ( 154 ) 8,887

$ 18,469 $ 15,094 $ 27,437

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at the end of the respective years are presented below:

Deferred tax assets:

Inventories $ 1,346 $ 1,478

Compensation 7,726 6,890

Tax credit carryforwards 3,235 3,554

Net operating loss carryforwards 4,427 4,073

Other 7,154 7,103

Total gross deferred tax assets 23,888 23,098

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Net deferred tax assets $ 9,261 $ 9,811

The net deferred tax assets recorded in the accompanying Consolidated Balance Sheets as of the years ended September 27, 2019 and September 28, 2018 were as follows:

The net deferred tax assets recorded in the accompanying Consolidated Balance Sheets as of the years ended October 2, 2020 and September 27, 2019 were as follows:

Non-current assets $ 10,679 $ 11,449

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The significant differences between the statutory federal tax rate and the effective income tax rates for the Company for the respective years shown below were as follows:

2020 2019 2018

Statutory U.S.

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Taxes related to foreign income, net of credits — % 0.5 % 0.1 %

Compensation 0.7 % ( 0.7 ) % 1.5 %

Tax rate or law change — % ( 0.2 ) % 12.3 %

* Rate benefit is primarily from excess foreign tax credits generated by a dividend repatriation in the first quarter of fiscal 2018.

Other — % ( 0.8 ) % ( 2.2 ) %

25.1 % 22.7 % 40.3 %

* The federal statutory rate is a blended rate which reflects 35% through December 31, 2017 and the lower rate of 21.0% beginning on January 1, 2018 due to tax reform.

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The Company elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year.

The Company’s net operating loss carryforwards and their expirations as of September 27, 2019 were as follows:

The Company’s net operating loss carryforwards and their expirations as of October 2, 2020 were as follows:

State Foreign Total

Year of expiration

2021-2025 $ 1,854 $ 4,423 $ 6,277

2026-2030 2,618 3,972 6,590

2031-2035 7,884 — 7,884

2036-2040 760 — 760

Indefinite — 6,136 6,136

Total $ 13,116 $ 14,531 $ 27,647

The Company has tax credit carryforwards as follows:

State Federal Total

Year of expiration

2021-2025 $ 1,699 $ — $ 1,699

2026-2030 1,058 — 1,058

2031-2035 478 — 478

Total $ 3,235 $ — $ 3,235

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

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Gross increases - tax positions in prior period 82 63

Gross decreases - tax positions in prior period

Gross increases - tax positions in current period 909 855

Settlements — ( 463 )

Lapse of statute of limitations

( 1,550 ) ( 1,353 )

Ending balance $ 7,372 $ 7,931

The total accrued interest and penalties with respect to income taxes was approximately $1,942 and $1,863 for the years ended September 27, 2019 and September 28, 2018, respectively.

The Company’s liability for unrecognized tax benefits as of

September 27, 2019 was $7,931, and if recognized, $5,469 would have an effective tax rate impact.

The total accrued interest and penalties with respect to income taxes was approximately $ 1,947 and $ 1,942 for the years ended October 2, 2020 and September 27, 2019, respectively.

The Company’s liability for unrecognized tax benefits as of October 2, 2020 was $ 7,372 , and if recognized, $ 5,371 of such amount would have an effective tax rate impact.

In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Interest and penalties of $79, $537 and $246 were recorded as a component

of income tax expense in the accompanying Consolidated Statements of Operations during fiscal years 2019, 2018 and 2017, respectively.

Interest and penalties of $ 5 , $ 79 and $ 537 were recorded as a component of income tax expense in the accompanying Consolidated Statements of Operations during fiscal years 2020, 2019 and 2018, respectively.

The Company’s policy is to remit earnings from foreign subsidiaries only to the extent the remittance does not result in an incremental U.S.

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The Company does not currently provide for the additional U.S.

and foreign income taxes

which would become payable upon remission of undistributed earnings of foreign subsidiaries.

If all undistributed earnings were remitted, an additional income tax provision of approximately $1.3 million would have been necessary as of September 27,

and foreign income taxes which would become payable upon remission of undistributed earnings of foreign subsidiaries.

If all undistributed earnings were remitted, an additional income tax provision of approximately $ 1.4 million would have been necessary as of October 2, 2020.

The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions.

During the year ended September 27, 2019, the Company concluded income tax examinations in Italy and

The amount of unrecognized tax benefits recognized within the next twelve months may decrease due to expiration of the statute of limitations for certain years in various jurisdictions.

However, it is possible that a jurisdiction may

open an audit prior to the statute expiring that may result in adjustments to the Company’s tax filings.

However, it is possible that a jurisdiction may open an audit prior to the statute expiring that may result in adjustments to the Company’s tax filings.

At this time, an estimate of the range of the reasonably possible change cannot be made.

The following tax years remain subject to examination by the Company's respective major tax jurisdictions:

Jurisdiction Fiscal Years

United States 2017-2020

Canada 2016-2020

France 2017-2020

Germany 2018-2020

Italy 2018-2020

Switzerland 2010-2020

7 EMPLOYEE BENEFITS

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Retirement benefits are generally provided based on the employees’ years of service and average earnings.

Normal retirement age is 65, with

provisions for earlier retirement.

Normal retirement age is 65, with provisions for earlier retirement.

The Company elected to freeze its U.S.

defined benefit pension plans as of September 30, 2009 and, as a result, there are no benefit accruals related to service performed after that date.

The Company has elected the practical expedient pursuant to ASU 2015-04, Compensation-retirement benefits (Topic 715) and has selected the measurement date of September 30, the calendar month end closest to the Company's fiscal year end.

The financial position of the Company’s non-contributory defined benefit plans as of fiscal year end 2020 and 2019 was as follows:

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Projected benefit obligation, beginning of year $ 30,248 $ 26,831

Service cost — —

Interest cost 931 1,103

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Net periodic benefit cost for the non-contributory defined benefit pension plans for the respective years included the following pre-tax amounts:

2020 2019 2018

Interest cost $ 931 $ 1,103 $ 1,058

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The Company expects to recognize $ 85 of unrecognized loss amortization as a component of net periodic benefit cost in 2020.

This amount is included in accumulated other comprehensive income as of September 27, 2019.

benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $1,230 and $0, respectively.

At September 28, 2018, the aggregate accumulated benefit obligation and aggregate fair value

of plan assets for plans with plan assets in excess of benefit obligations was $25,504 and $25,971, respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in

excess of plan assets was$1,327 and $0, respectively.

The Company anticipates making contributions to the defined benefit pension plans of $172 through October 2, 2020.

Estimated benefit payments from the Company’s defined benefit plans to participants for each of the next five years and the five

years thereafter are as follows:

This amount is included in accumulated other comprehensive income as of October 2, 2020.

At October 2, 2020, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $ 31,446 and $ 32,923 , respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $ 1,185 and $ 0 , respectively.

At September 27, 2019, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $ 29,018 and $ 30,356 , respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $ 1,230 and $ 0 , respectively.

The Company anticipates making contributions to the defined benefit pension plans of $ 171 through fiscal year 2021.

Estimated benefit payments from the Company’s defined benefit plans to participants for each of the next five years and the five years thereafter are as follows:

Five years thereafter 7,566

Actuarial assumptions used to determine the projected benefit obligation and net periodic pension cost as of the following fiscal years were as follows:

Projected Benefit Obligation

Net Periodic Pension Cost

Projected Benefit Obligation Net Periodic Pension Cost

2020 2019 2018 2020 2019 2018

Discount rate 2.60 % 3.13 % 4.22 % 3.13 % 4.22 % 3.79 %

Long-term rate of return

Average salary increase rate

Long-term rate of return N/A N/A N/A 2.50 % 3.45 % 3.45 %

Average salary increase rate N/A N/A N/A N/A N/A N/A

The change in discount rates in 2020, 2019 and 2018 resulted in an actuarial loss during the year of approximately $ 2,358 , and actuarial gains of $ 4,320 , and $ 1,633 , respectively.

The remainder of the actuarial gains or losses for each of the

three years was related to adjustments to mortality tables and other modifications to actuarial assumptions.

To determine the discount rate assumption used in the Company’s pension valuation, the Company identified a benefit payout stream based on the demographics of the pension plans and constructed a hypothetical bond portfolio using high-quality

corporate bonds with cash flows that matched that benefit payout stream.

The remainder of the actuarial gains or losses for each of the three years was related to adjustments to mortality tables and other modifications to actuarial assumptions.

A yield curve was calculated based on this hypothetical portfolio which was used for the discount rate determination.

The Company determines the long-term rate of return assumption for plan assets by using the historical asset returns for various investment asset classes and adjusting them to reflect future expectations.

The expected asset class returns are

weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

The expected asset class returns are weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

The Company uses measurement dates of October 1 to determine pension expenses for each year and the last day of the fiscal year to determine the fair value of the pension assets.

The Company’s pension plans’ weighted average asset allocations at September 27, 2019 and September 28, 2018, by asset category were as follows:

The Company’s pension plans’ weighted average asset allocations at October 2, 2020 and September 27, 2019, by asset category were as follows:

Equity securities 5 % 4 %

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The Company elected to make additional contributions to its defined benefit plans in fiscal 2018, continuing its strategy to de-risk the plans.

As a result of the improved funded status, the Company changed its investment strategy for the

plans, allocating the majority of its assets, 95%, into fixed income securities designed to minimize the pension plans’ exposure to changes in interest rates.

As a result of the improved funded status, the Company changed its investment strategy for the plans, allocating the majority of its assets, 95%, into fixed income securities designed to minimize the pension plans' exposure to changes in interest rates.

The remaining 5% of assets are allocated to global equities.

The following table summarizes the Company’s pension plan assets measured at fair value as of September 27, 2019:

The following table summarizes the Company’s pension plan assets measured at fair value as of October 2, 2020:

Level 1 Level 2 Level 3 Total

Fixed income $ 5,657 $ 24,734 $ — $ 30,391

Mutual funds 1,468 — — 1,468

Money market funds — 1,056 — 1,056

Group annuity contract — — 8 8

Total $ 7,125 $ 25,790 $ 8 $ 32,923

The following table summarizes the Company’s pension plan assets measured at fair value as of September 27, 2019:

Level 1 Level 2 Level 3 Total

Fixed income $ 4,066 $ 24,553 $ — $ 28,619

Mutual funds 1,304 — — 1,304

Money market funds — 402 — 402

Group annuity contract — — 31 31

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended September 27, 2019 and September 28, 2018:

Total $ 5,370 $ 24,955 $ 31 $ 30,356

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended October 2, 2020 and September 27, 2019:

Level 3 assets, beginning of year $ 31 $ 52

Unrealized gain (loss) ( 1 ) 2

Sales ( 22 ) ( 23 )

Level 3 assets, end of year $ 8 $ 31

The fair values of the treasury fixed income and mutual fund assets were derived from quoted market prices as substantially all of these instruments have active markets.

The fair values of agency and corporate bond fixed income and money market

assets are derived from other observable market inputs or independent pricing services.

The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with

comparable durations.

The fair values of agency and corporate bond fixed income and money market assets are derived from other observable market inputs or independent pricing services.

The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with comparable durations.

The annuity contract consists of high quality bonds.

The Company also has a non-qualified deferred compensation plan that provides certain officers and employees the ability to defer a portion of their compensation until a later date.

The deferred amounts and earnings thereon are payable to

participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company.

The deferred compensation liability, which is reported at fair value equal to the related rabbi trust

assets, and is classified as “Deferred compensation liability” on our accompanying Consolidated Balance Sheets, was approximately $19,092 and $17,477 as of September 27, 2019 and September 28, 2018, respectively.

See “Note 4 Fair Value” for

additional information.

The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company.

The deferred compensation liability, which is reported at fair value equal to the related rabbi trust assets, and is classified as “Deferred compensation liability” on our accompanying Consolidated Balance Sheets, was approximately $ 21,585 and $ 19,092 as of October 2, 2020 and September 27, 2019, respectively.

See “Note 4 Fair Value” for additional information.

A majority of the Company’s full-time employees are covered by defined contribution programs.

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8 PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of preferred stock in various classes and series, of which there are none currently issued and none outstanding.

The Company is authorized to issue 1,000,000 shares of preferred stock in various classes and series, of which there are no ne currently issued and no ne outstanding.

9 COMMON STOCK

The number of authorized and outstanding shares of each class of the Company’s common stock at the end of the respective years was as follows:

Class A, $ 0.05 par value:

Authorized 20,000,000 20,000,000

Outstanding 8,873,235 8,834,169

Class B, $ 0.05 par value:

Authorized 3,000,000 3,000,000

Outstanding 1,211,564 1,211,602

Holders of Class A common stock are entitled to elect 25 %, or the next highest whole number, of the members of the Company’s Board of Directors and holders of Class B common stock are entitled to elect the remaining directors.

With respect to

matters other than the election of directors or any matters for which class voting is required by law, holders of Class A common stock are entitled to one vote per share while holders of Class B common stock are entitled to ten votes per share.

any dividends (other than dividends paid in shares of the Company’s stock) are paid by the Company on its common stock, a dividend would be paid on each share of Class A common stock equal to 110% of the amount paid on each share of Class B common

With respect to matters other than the election of directors or any matters for which class voting is required by law, holders of Class A common stock are entitled to one vote per share while holders of Class B common stock are entitled to ten votes per share.

If any dividends (other than dividends paid in shares of the Company’s stock) are paid by the Company on its common stock, a dividend would be paid on each share of Class A common stock equal to 110 % of the amount paid on each share of Class B common stock.

Each share of Class B common stock is convertible at any time into one share of Class A common stock.

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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.

Current plans also allow for issuance of shares of restricted stock, restricted

stock units or stock appreciation rights in lieu of options.

Under the Company’s 2010 Long-Term Stock Incentive Plan and the 2012 Non-Employee Director Stock Ownership Plan there were 536,657 shares of the Company’s Class A common stock available for grant to key executives and non-employee directors at

September 27, 2019.

Shares issued pursuant to the exercise of stock options or grants of restricted stock are typically issued first out of reserves to the extent that reserved shares are available.

Current plans also allow for issuance of shares of restricted stock, restricted stock units or stock appreciation rights in lieu of options.

Under the Company’s 2012 Non-Employee Director Stock Ownership Plan and the 2020 Long-Term Incentive Plan (the only plans where shares currently remain available for future equity incentive awards) there were a total of 536,657 shares of the Company’s Class A common stock available for grant to key executives and non-employee directors at October 2, 2020.

Share awards previously made under the Company's 2010 Long-Term Stock Incentive Plan, which no longer allows for additional share grants, also remain outstanding.

The Company recognized additional tax benefits from the vesting of restricted stock and restricted stock units of $ 238 , $ 646 and $ 369 for 2020, 2019 and 2018, respectively.

In 2019 and 2018, these amounts were recorded as a component of income

In 2020 and 2019, these amounts were recorded as a component of income tax expense.

In 2018, the amount was recorded as an increase in additional paid-in capital on the consolidated balance sheets and as cash from financing activities on the consolidated statements of cash flows.

The Company recognizes forfeitures

of equity awards as incurred.

The Company recognizes forfeitures of equity awards as incurred.

Non-Vested Stock

All shares of non-vested stock awarded by the Company have been granted at their fair market value on the date of grant and vest within five years after the grant date.

The fair value at date of grant is based on the number of shares granted

and the average of the Company’s high and low Class A common stock price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock price on the last preceding

date on which the Company’s shares traded.

A summary of non-vested stock activity for the two year period ended September 27, 2019 related to the Company’s stock ownership plans is as follows:

The fair value at date of grant is based on the number of shares granted and the average of the Company’s high and low Class A common stock price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock price on the last preceding date on which the Company’s shares traded.

A summary of non-vested stock activity for the two year period ended October 2, 2020 related to the Company’s stock ownership plans is as follows:

Shares Weighted Average

Non-vested stock at September 28, 2018 46,776 $ 36.37

Non-vested stock grants 16,366 69.36

Non-vested stock forfeited ( 4,290 ) 38.14

Restricted stock vested ( 17,244 ) 30.05

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Non-vested stock grants 19,105 63.33

Non-vested stock forfeited

Restricted stock vested ( 20,221 ) 41.93

Non-vested stock September 27, 2019

Non-vested stock October 2, 2020 40,492 62.15

Non-vested stock grantees may elect to reimburse the Company for withholding taxes due as a result of the vesting of shares by tendering a portion of the vested shares back to the Company.

Shares tendered back to the Company were 3,381 and 9,377

during 2019 and 2018, respectively.

Shares tendered back to the Company were 4,054 and 3,381 during 2020 and 2019, respectively.

The fair value of restricted stock vested during 2020, 2019 and 2018 was approximately $ 1,288 , $ 1,237 and $ 3,948 , respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 1,032 , $ 667 and $ 501 during 2020, 2019 and 2018, respectively.

The tax benefit recognized during 2019, 2018 and 2017 related to stock based compensation was $163,

$122 and $358, respectively.

Unrecognized compensation cost related to non-vested stock as of September 27, 2019 was $998, which amount will be amortized to expense through November 2022 or adjusted for changes in future estimated or actual

The tax benefit recognized during 2020, 2019 and 2018 related to stock based compensation was $ 252 , $ 163 and $ 122 , respectively.

Unrecognized compensation cost related to non-vested stock as of October 2, 2020 was $ 1,176 , which amount will be amortized to expense through November 2022 or adjusted for changes in future estimated or actual forfeitures.

Restricted Stock Units

All restricted stock units awarded by the Company during fiscal 2020 and in prior years have been granted at their fair market value on the date of grant.

The fair value at date of grant is based on the number of units granted and the average

of the Company’s high and low Class A common stock trading price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock trading price on the last preceding

date on which the Company’s shares traded.

The fair value at date of grant is based on the number of units granted and the average of the Company’s high and low Class A common stock trading price on the date of grant or, if the Company’s shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock trading price on the last preceding date on which the Company’s shares traded.

The vesting period for RSUs is generally one year from the date of grant for RSUs granted to directors and three years from the date of the grant for RSUs granted to employees.

A summary of RSU activity follows:

RSUs at September 29, 2017

Number of RSUs Weighted Average

RSUs at September 28, 2018 79,579 $ 44.06

RSUs granted 22,192 71.42

RSUs forfeited ( 3,052 ) 58.99

RSUs vested ( 40,011 ) 31.59

RSUs at September 27, 2019 58,708 62.13

RSUs granted 27,517 64.51

RSUs vested ( 18,404 ) 42.80

RSUs at October 2, 2020 67,821 68.34

RSU grantees may elect to reimburse the Company for withholding taxes due as a result of the vesting of units and issuance of unrestricted shares of Class A common stock by tendering a portion of such unrestricted shares back to the Company.

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The fair value of restricted stock recognized as a tax deduction during 2020, 2019 and 2018 was approximately $ 1,600 , $ 2,945 and $ 80 , respectively.

Stock compensation expense, net of forfeitures, related to restricted stock units was $1,652, $1,743 and $1,011 for the years ended September 27, 2019, September 28, 2018 and September 29, 2017, respectively.

The tax benefit recognized during

2019, 2018 and 2017 related to restricted stock unit based compensation was $405, $424 and $384, respectively.

Unrecognized compensation cost related to non-vested restricted stock units as of September 27, 2019 was $1,631, which amount will be

amortized to expense through September 2021 or adjusted for changes in future estimated or actual forfeitures.

Stock compensation expense, net of forfeitures, related to restricted stock units was $ 1,611 , $ 1,652 and $ 1,743 for the years ended October 2, 2020, September 27, 2019 and September 28, 2018, respectively.

The tax benefit recognized during 2020, 2019 and 2018 related to restricted stock unit based compensation was $ 166 , $ 405 and $ 424 , respectively.

Unrecognized compensation cost related to non-vested restricted stock units as of October 2, 2020 was $ 1,671 , which amount will be amortized to expense through September 2021 or adjusted for changes in future estimated or actual forfeitures.

Compensation expense related to units earned by certain employees is based upon the attainment of certain financial goals related to cumulative net sales and cumulative operating profit over a three-year performance period.

Awards are only paid

if at least 80% of the target levels are met and maximum payouts are made if 120% of more of target levels are achieved.

Awards are only paid if at least 80 % of the target levels are met and maximum payouts are made if 120 % of more of target levels are achieved.

The payouts for achievement at the minimum threshold levels of performance are equal to 50 % of the target award amount.

payouts for achievement at maximum levels of performance are equal to 150% of the target award amount.

The payouts for achievement at maximum levels of performance are equal to 150 % of the target award amount.

To the extent earned, awards are issued in shares of Company common stock after the end of the three year performance period.

Employee Stock Purchase Plan

The 2009 Employees’ Stock Purchase Plan (the “Purchase Plan”) provides for the issuance of shares of Class A common stock at a purchase price of not less than 85% of the fair market value of such shares on the date of grant or at the end of the

offering period, whichever is lower.

The 2009 Employees’ Stock Purchase Plan (the “Purchase Plan”) provides for the issuance of shares of Class A common stock at a purchase price of not less than 85 % of the fair market value of such shares on the date of grant or at the end of the offering period, whichever is lower.

The Company issued 2,190 , 1,594 and 3,365 shares of Class A common stock under the Purchase Plan during the years 2020, 2019 and 2018, respectively, and recognized expense of $ 43 , $ 27 and $ 53 in 2020, 2019 and 2018, respectively.

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These transactions include product purchases, aviation services, office rental, and facility fees.

Total costs of these

transactions were $1,261, $1,231 and $1,144 for 2019, 2018 and 2017, respectively.

Amounts due to/from related parties were immaterial at September 27, 2019 and September 28, 2018.

Total costs of these transactions were $ 1,099 , $ 1,261 and $ 1,231 for 2020, 2019 and 2018, respectively.

Amounts due to/from related parties were immaterial at October 2, 2020 and September 27, 2019.

Adoption of Topic 606

On September 29, 2018, the Company adopted ASU 2014-09 and all subsequent ASUs that modified accounting standards Topic 606 using the modified retrospective adoption method.

Upon adoption, the Company recorded a right to returns asset of $763

and a corresponding increase in the accrued return liability, resulting in an accrued returns liability of $2,725.

Other than as discussed above, the adoption of this new revenue standard did not have an impact on the Company's consolidated

financial statements, and the timing and amount of its revenue recognition remained substantially unchanged under this new guidance.

Upon adoption, the Company recorded a right to returns asset of $ 763 and a corresponding increase in the accrued return liability, resulting in an accrued returns liability of $ 2,725 .

Other than as discussed above, the adoption of this new revenue standard did not have an impact on the Company's consolidated financial statements, and the timing and amount of its revenue recognition remained substantially unchanged under this new guidance.

Revenue recognition

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generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title.

measured as the amount of consideration we expect to receive in exchange for transferring goods.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods.

The amount of consideration received can vary, primarily because of customer incentive or rebate arrangements.

The Company estimates variable

consideration based on the expected value of total consideration to which customers are likely to be entitled based on historical experience and projected market expectations.

Included in the estimate is an assessment as to whether any variable

consideration is constrained.

The Company estimates variable consideration based on the expected value of total consideration to which customers are likely to be entitled based on historical experience and projected market expectations.

Included in the estimate is an assessment as to whether any variable consideration is constrained.

Revenue estimates are adjusted at the earlier of a change in the expected value of consideration or when the consideration becomes fixed.

For all contracts with customers, the Company has not adjusted the promised

amount of consideration for the effects of a significant financing component as the period between the transfer of the promised goods and the customer's payment is expected to be one year or less.

Sales are made on normal and customary

short-term credit terms, generally ranging from 30 to 90 days, or upon delivery of point of sale transactions.

For all contracts with customers, the Company has not adjusted the promised amount of consideration for the effects of a significant financing component as the period between the transfer of the promised goods and the customer's payment is expected to be one year or less.

Sales are made on normal and customary short-term credit terms, generally ranging from 30 to 90 days, or upon delivery of point of sale transactions.

Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

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Due to the nature of these contracts, no significant judgment exists in relation to the identification of the customer contract, satisfaction of the performance obligation, or transaction price.

The Company expenses incremental costs of obtaining a

contract due to the short-term nature of the contracts.

The Company expenses incremental costs of obtaining a contract due to the short-term nature of the contracts.

Estimated costs of returns, allowances and discounts, based on historic experience, are accrued as a reduction to sales when revenue is recognized.

The Company provides customers the right to return eligible products under certain

circumstances.

The Company provides customers the right to return eligible products under certain circumstances.

At October 2, 2020, the right to returns asset was $ 1,091 and the accrued returns liability was $ 2,990 .

At September 27, 2019, the right to returns asset was $ 2,013 and the accrued returns liability was $ 4,847 .

The Company also offers assurance-type warranties relating to its products sold to end customers that continue to be

accounted for under ASC 460 Guarantees .

The Company also offers assurance-type warranties relating to its products sold to end customers that continue to be accounted for under ASC 460 Guarantees.

The Company generally accounts for shipping and handling activities as a fulfillment activity, consistent with the timing of revenue recognition;

that is, when a customer takes control of the transferred goods.

In the event that a customer

were to take control of a product upon or after shipment, the Company has made an accounting policy election to treat such shipping and handling activities as a fulfillment cost.

Shipping and handling fees billed to customers are included in

"Net Sales," and shipping and handling costs are recognized within "Marketing and selling expenses" in the same period the related revenue is recognized.

In the event that a customer were to take control of a product upon or after shipment, the Company has made an accounting policy election to treat such shipping and handling activities as a fulfillment cost.

Shipping and handling fees billed to customers are included in "Net Sales," and shipping and handling costs are recognized within "Marketing and selling expenses" in the same period the related revenue is recognized.

The Company has a wide variety of seasonal, outdoor recreation products used primarily for fishing from a boat, diving, paddling, hiking and camping, that are sold to a variety of customers in multiple end markets.

While there are multiple

products sold, the nature of products are similar in terms of the nature of the revenue recognition policies.

While there are multiple products sold, the nature of products are similar in terms of the nature of the revenue recognition policies.

See Note 13 of these Notes to Consolidated Financial Statements for required disclosures of disaggregated revenue.

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and various foreign countries, primarily in Europe, Canada and the Pacific Basin.

During the years ended September 27, 2019 and September 28, 2018, combined net sales to one customer of the Company’s Fishing, Camping and Watercraft Recreation segments represented approximately $93,056 and $90,554, respectively, of the Company’s

consolidated revenues.

As of September 29, 2017, two customers of the Company’s Fishing, Camping and Watercraft Recreation segments combined into a single entity.

The combined net sales to these two customers represented approximately $80,795 of

the Company’s consolidated revenues during fiscal 2017.

During the years ended October 2, 2020, September 27, 2019, and September 28, 2018, combined net sales to one customer of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 93,478 , $ 93,056 , and $ 90,554 respectively, of the Company's consolidated revenues.

Net sales and operating profit include both sales to customers, as reported in the Company’s accompanying Consolidated Statements of Operations, and inter-unit transfers, which are priced to recover costs plus an appropriate profit margin.

assets represent assets that are used in the Company’s operations in each business segment at the end of the years presented.

Total assets represent assets that are used in the Company’s operations in each business segment at the end of the years presented.

A summary of the Company’s operations by business segment is presented below:

2020 2019 2018

Unaffiliated customers $ 449,186 $ 411,566 $ 390,679

8 unchanged sentences

Other / Corporate 830 830 830

Eliminations ( 821 ) ( 715 ) ( 654 )

Total $ 594,209 $ 562,419 $ 544,268

Operating profit (loss):

Fishing $ 95,884 $ 84,092 $ 83,696

Camping 4,406 2,896 1,867

Watercraft Recreation ( 329 ) ( 2,822 ) ( 1,555 )

Diving ( 2,576 ) 3,043 2,766

Other / Corporate ( 26,315 ) ( 23,435 ) ( 23,753 )

$ 71,070 $ 63,774 $ 63,021

Depreciation and amortization expense:

Fishing $ 8,654 $ 8,730 $ 8,174

Camping 639 705 816

Watercraft Recreation 899 1,051 977

Diving 1,761 1,005 1,166

Other / Corporate 2,973 2,473 1,972

$ 14,926 $ 13,964 $ 13,105

Capital expenditures:

Fishing $ 12,847 $ 13,712 $ 9,709

Camping 206 210 253

Watercraft Recreation 685 727 859

Diving 947 955 1,109

Other / Corporate 915 1,182 7,222

$ 15,600 $ 16,786 $ 19,152

Goodwill, net:

Fishing $ 11,184 $ 11,186

Watercraft Recreation — —

$ 11,184 $ 11,186

Total assets (end of period):

Fishing $ 206,244 $ 153,926

Camping 37,514 31,525

Watercraft Recreation 21,038 14,436

Diving 67,393 57,682

Other / Corporate 213,837 178,875

$ 546,026 $ 436,444

A summary of the Company’s operations by geographic area is presented below:

2020 2019 2018

United States:

7 unchanged sentences

Interunit transfers 10 29 231

Eliminations ( 26,109 ) ( 30,812 ) ( 31,580 )

$ 594,209 $ 562,419 $ 544,268

Total assets:

United States $ 456,188 $ 356,419

Europe 45,429 41,333

Canada and other 44,409 38,692

$ 546,026 $ 436,444

Long-term assets (1) :

United States $ 134,932 $ 96,769

Europe 7,889 3,294

Canada and other 3,988 2,404

Long term assets consist of net property, plant and equipment, net intangible assets, goodwill and other assets excluding deferred income taxes.

$ 146,809 $ 102,467

(1) Long term assets consist of net property, plant and equipment, right of use assets, net intangible assets, goodwill and other assets excluding deferred income taxes.

14 CONTINGENCIES

The Company is subject to various legal actions and proceedings in the normal course of business, including those related to commercial disputes, product liability, intellectual property and environmental matters.

The Company is insured against

loss for certain of these matters.

a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

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.

15 VALUATION AND QUALIFYING ACCOUNTS

The following summarizes changes to valuation and qualifying accounts for 2020, 2019 and 2018:

Beginning of Year

Less Deductions

Balance at End of

Year Ended September 27, 2019

Beginning of Year Additions Charged

Expenses Less Deductions Balance at End of

Year Ended October 2, 2020

Allowance for doubtful accounts $ 2,550 $ 2,095 $ 1,948 $ 2,697

14 unchanged sentences

The following summarizes quarterly operating results for the years presented below:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

First Quarter Second Quarter Third Quarter Fourth Quarter

(thousands, except per share data) 2020 2019 2020 2019 2020 2019 2020 2019

Net sales $ 128,054 $ 104,440 $ 163,084 $ 177,707 $ 138,390 $ 176,253 $ 164,681 $ 104,019

Gross profit 53,612 44,319 75,132 79,129 62,562 79,725 73,687 46,583

Operating profit (loss) 6,801 5,978 31,794 27,844 12,929 28,029 19,546 1,923

3 unchanged sentences

Net income (loss) per common share - Basic:

Class A $ 0.65 $ 0.36 $ 2.05 $ 2.21 $ 1.29 $ 2.22 $ 1.56 $ 0.49

Class B $ 0.59 $ 0.32 $ 1.86 $ 2.01 $ 1.17 $ 2.02 $ 1.42 $ 0.45

Net income (loss) per common share - Diluted:

Class A $ 0.64 $ 0.35 $ 2.02 $ 2.18 $ 1.27 $ 2.19 $ 1.53 $ 0.49

Class B $ 0.64 $ 0.35 $ 2.02 $ 2.18 $ 1.27 $ 2.19 $ 1.53 $ 0.49

Due to changes in stock prices during the year and the timing of issuance of shares, the cumulative total of quarterly net income (loss) per share amounts may not equal the net income (loss) per share for the entire year.

17 SUBSEQUENT EVENTS

In September 2020, the Company's Board of Directors approved termination of, and authorized Company management to commence taking actions to terminate, the Company's defined benefit pension plans.

In November 2020, Company management commenced actions to terminate the plans.

When the termination and related payouts occur, they are estimated to unfavorably impact net income by approximately $ 4 to $ 5 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures