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Item 1. Financial Statements

2021-05-07 compared with 2021-02-05 · 176 added, 118 removed, 465 unchanged (39% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

(thousands, except per share data) January 1, 2021 December 27, 2019

Three Months Ended Six Months Ended

(thousands, except per share data) April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Net sales $ 206,156 $ 163,084 $ 371,823 $ 291,138

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Interest expense 35 35 67 70

Other income, net ( 2,404 ) ( 1,168 )

Other (income) expense, net ( 1,229 ) 3,866 ( 3,633 ) 2,698

Profit before income taxes 37,310 28,377 63,321 36,966

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

(thousands) January 1, 2021 December 27, 2019

Three Months Ended Six Months Ended

(thousands) April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Net income $ 27,834 $ 20,387 $ 47,681 $ 26,817

Other comprehensive income:

Other comprehensive (loss) income:

Foreign currency translation ( 1,512 ) ( 1,607 ) 930 ( 907 )

1 unchanged sentence

Change in pension plans, net of tax of $ 33 , $ 20 , $ 67 , and $ 41 , respectively

Total other comprehensive income 2,543 761

101 62 202 123

Total other comprehensive (loss) income ( 1,411 ) ( 1,545 ) 1,132 ( 784 )

Total comprehensive income $ 26,423 $ 18,842 $ 48,813 $ 26,033

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CONDENSED CONSOLIDATED BALANCE SHEETS

(thousands, except share data) January 1, 2021 October 2, 2020 December 27, 2019

(thousands, except share data) April 2, 2021 October 2, 2020 March 27, 2020

Current assets:

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Three Months Ended January 1, 2021

Six Months Ended April 2, 2021

(thousands except for shares) Shares Common Stock Capital in

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BALANCE AT JANUARY 1, 2021 10,112,172 $ 504 $ 79,379 $ 314,184 $ 7,260 $ ( 2,715 )

Three Months Ended December 27, 2019

Net income — — — 27,834 — —

Dividends declared — — — ( 2,107 ) — —

Award of non-vested shares 6,016 4 ( 4 ) — — —

Stock-based compensation — — 808 — — —

Currency translation adjustment — — — — ( 1,512 ) —

Change in pension plans, net of tax of $ 33

— — — — 101 —

BALANCE AT APRIL 2, 2021 10,118,188 $ 508 $ 80,183 $ 339,911 $ 5,849 $ ( 2,715 )

Six Months Ended March 27, 2020

(thousands except for shares) Shares Common Stock Capital in

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BALANCE AT DECEMBER 27, 2019 10,070,213 $ 504 $ 76,523 $ 253,114 $ 2,319 $ ( 2,221 )

Net income — — — 20,387 — —

Dividends declared — — — ( 1,693 ) — —

Award of non-vested shares 12,396 — — — — —

Stock-based compensation — — ( 286 ) — — —

Currency translation adjustment — — — — ( 1,607 ) —

Change in pension plans, net of tax of $ 20

BALANCE AT MARCH 27, 2020 10,082,609 $ 504 $ 76,237 $ 271,808 $ 774 $ ( 2,221 )

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

(thousands) January 1, 2021 December 27, 2019

Six Months Ended

(thousands) April 2, 2021 March 27, 2020

CASH USED FOR OPERATING ACTIVITIES

5 unchanged sentences

Stock based compensation 1,519 381

Loss (gain) on disposal of productive assets 99 ( 10 )

Deferred income taxes ( 663 ) ( 117 )

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In the opinion of management, these statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Johnson Outdoors Inc.

and subsidiaries (collectively, the “Company”) as of January 1, 2021 and December 27, 2019, and their results of operations for the three month periods then ended and cash flows for the three month periods then ended.

and subsidiaries (collectively, the “Company”) as of April 2, 2021 and March 27, 2020, and their results of operations for the three and six month periods then ended and cash flows for the six month periods then ended.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 2, 2020 which was filed with the Securities and Exchange Commission on December 11, 2020.

Due to seasonal variations and other factors, some of which are described herein, including related to the coronavirus (COVID-19) outbreak and resulting pandemic, the results of operations for the three months ended January 1, 2021 are not necessarily indicative of the results to be expected for the Company’s full 2021 fiscal year.

Due to seasonal variations and other factors, some of which are described herein, including related to the coronavirus (COVID-19) outbreak and resulting pandemic, the results of operations for the three and six months ended April 2, 2021 are not necessarily indicative of the results to be expected for the Company’s full 2021 fiscal year.

See "Coronavirus (COVID-19)" below and “Seasonality” and "Coronavirus (COVID-19)" in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere herein for additional information.

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While some government mandates eased in the latter half of fiscal 2020, these mandates continued to emphasize social distancing measures to the general public.

As a result, we saw increased participation in fishing, camping and watercraft recreation and related demand for our products, largely driven by consumer desire to engage in socially distant and safe activities in the great outdoors in the latter part of fiscal 2020, which continued into the first quarter of fiscal 2021.

Nonetheless, the full extent to which the COVID-19 pandemic will impact our business, results of operations, and financial condition, including with respect to consumer buying patterns for the rest of our fiscal 2021, will depend on future developments, including any potential worsening or improvement 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, vaccine distribution and effectiveness, 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.

Further, the authorization of vaccines for COVID-19 by governments around the world, including the distribution of same, may further impact commercial activity and customer or consumer buying behavior, and the extent to which these developments will impact demand for, and participation in, outdoor recreation and related products is unknown.

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, including our supply chain, 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.

As a result, in the latter part of fiscal 2020 we saw increased participation in fishing, camping and watercraft recreation and the related demand for our products in these business segments, largely driven by consumer desire to engage in socially distant and safe activities in the great outdoors.

This trend in increased demand for our outdoor recreation products continued into the first half of fiscal 2021.

Nonetheless, the COVID-19 pandemic continues to impact macroeconomic and societal developments in various key regions of the world.

As a result, the Company cannot reasonably estimate the full impact of the COVID-19 pandemic on Company operations and profitability for the remainder of fiscal 2021 and beyond as the situation is dynamic and constantly changing.

The Company will 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.

2 ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts of $ 2,823 , $ 2,697 and $ 3,062 as of January 1, 2021, October 2, 2020 and December 27, 2019, respectively.

The increase in net accounts receivable to $ 97,386 as of

JOHNSON OUTDOORS INC.

January 1, 2021 from $ 67,292 as of October 2, 2020 is largely attributable to the impact of the COVID-19 pandemic on the buying patterns of the Company’s customers, which has shifted the seasonal nature of the Company’s business and has caused increases in sales volumes between periods.

Accounts receivable are stated net of allowances for doubtful accounts of $ 2,463 , $ 2,697 and $ 1,279 as of April 2, 2021, October 2, 2020 and March 27, 2020, respectively.

The increase in net accounts receivable to $ 130,139 as of April 2, 2021 from $ 67,292 as of October 2, 2020 is attributable to the seasonal nature of the Company’s business and the resulting increases in sales volumes between periods.

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

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The Company typically does not require collateral on its accounts receivable.

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3 EARNINGS PER SHARE (“EPS”)

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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 three month periods ended January 1, 2021 and December 27, 2019, basic income per share for the Class A and Class B shares has been presented using the two class method and reflects the allocation of undistributed income described above.

For the three and six month periods ended April 2, 2021 and March 27, 2020, basic income per share for the Class A and Class B shares has been presented using the two class method and reflects the allocation of undistributed income 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 (“stock units” or “units”) and non-vested restricted stock.

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In periods where the Company reports a net loss, the effect of anti-dilutive stock options and units is excluded and diluted loss per share is equal to basic loss per share for both classes of stock.

For the three month periods ended January 1, 2021 and December 27, 2019, diluted net income per share reflects the effect of dilutive 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 40,647 and 40,312 for the three months ended January 1, 2021 and December 27, 2019, respectively.

Stock units that could potentially dilute earnings per share in the future and which were not included in the fully diluted computation because they would have been anti-dilutive were 30,786 and 41,111 for the three month periods ended January 1, 2021 and December 27, 2019, respectively.

For the three and six month periods ended April 2, 2021 and March 27, 2020, diluted net income per share reflects the effect of dilutive 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 40,024 and 39,078 for the three months ended April 2, 2021 and March 27, 2020, respectively, and 40,336 and 39,695 for the six months ended April 2, 2021 and March 27, 2020, respectively.

Stock units that could potentially dilute earnings per share in the future and which were not included in the fully diluted computation because they would have been anti-dilutive were 24,894 and 43,198 for the three month periods ended April 2, 2021 and March 27, 2020, respectively, and 32,917 and 44,546 for the six months ended April 2, 2021 and March 27, 2020, respectively.

Dividends per share

Dividends per share for the three month periods ended January 1, 2021 and December 27, 2019 were as follows:

Dividends per share for the three and six month periods ended April 2, 2021 and March 27, 2020 were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended

January 1, 2021 December 27, 2019

Three Months Ended Six months ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Dividends declared per common share:

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Current plans also allow for issuance of shares of restricted stock, restricted stock units or stock appreciation rights in lieu of stock 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 507,510 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at January 1, 2021.

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 502,542 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at April 2, 2021.

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.

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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 Class A 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 Class A shares traded.

A summary of non-vested stock activity for the three months ended January 1, 2021 related to the Company’s stock ownership plans is as follows:

A summary of non-vested stock activity for the six months ended April 2, 2021 related to the Company’s stock ownership plans is as follows:

Shares Weighted Average

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Restricted stock vested ( 17,234 ) 53.79

Non-vested stock at January 1, 2021 41,664 71.15

Non-vested stock at April 2, 2021 36,984 80.16

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 2,341 and 4,054 during the three month periods ended January 1, 2021 and December 27, 2019, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 279 and $ 240 for the three month periods ended January 1, 2021 and December 27, 2019, respectively.

Unrecognized compensation cost related to non-vested stock as of January 1, 2021 was $ 1,672 , which amount will be amortized to expense through November 2024 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the three month periods ended January 1, 2021 and December 27, 2019 was $ 658 and $ 839 , respectively.

Shares tendered back to the Company were 2,341 and 4,054 during the six month periods ended April 2, 2021 and March 27, 2020, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 297 and $ 252 for the three month periods ended April 2, 2021 and March 27, 2020, respectively, and $ 576 and $ 492 for the six months ended April 2, 2021 and March 27, 2020, respectively.

Unrecognized compensation cost related to non-vested stock as of April 2, 2021 was $ 1,974 , which amount will be amortized to expense through November 2024 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the six month periods ended April 2, 2021 and March 27, 2020 was $ 1,258 and $ 1,329 , respectively.

Restricted Stock Units

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The fair value at the 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 Class A 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 Class A shares traded.

A summary of RSU activity for the three months ended January 1, 2021 follows:

A summary of RSU activity for the six months ended April 2, 2021 follows:

Number of RSUs Weighted Average

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RSUs vested ( 18,112 ) 43.49

RSUs at January 1, 2021 69,768 80.58

Stock compensation expense, net of forfeitures, related to RSUs was $ 432 and $ 420 for the three months ended January 1, 2021 and December 27, 2019, respectively.

Unrecognized compensation cost related to non-vested RSUs as of January 1, 2021 was $ 3,050 , which amount will be amortized to expense through September 2023 or adjusted for changes in future estimated or actual forfeitures.

RSUs at April 2, 2021 69,768 80.58

Stock compensation expense, net of forfeitures, related to RSUs was $ 511 and $ 943 for the three and six months ended April 2, 2021, respectively.

For the three and six months ended March 27, 2020, the Company recognized income of $ 589 and $ 169 , respectively, related to RSUs as a result of reversing compensation expense previously recognized in prior periods during the quarter ended March 27, 2020.

The Company reversed this compensation expense due to an expectation at the time that performance conditions would not be met for certain awards as a result of market conditions at that time.

Unrecognized compensation cost related to non-vested RSUs as of April 2, 2021 was $ 3,488 , which amount will be amortized to expense through September 2023 or adjusted for changes in future estimated or actual forfeitures.

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.

Shares tendered back to the Company for this purpose were 3,320 and 3,075 during the three month periods ended January 1, 2021 and December 27, 2019, respectively.

The fair value of restricted stock units recognized as a tax deduction during the three month periods ended January 1, 2021 and December 27, 2019 was $ 2,148 and $ 1,426 , respectively.

Shares tendered back to the Company for this purpose were 3,320 and 3,075 during the six month periods ended April 2, 2021 and March 27, 2020, respectively.

The fair value of restricted stock units recognized as a tax deduction during the six month periods ended April 2, 2021 and March 27, 2020 was $ 2,148 and $ 1,426 , respectively.

Compensation expense related to units earned by employees (as opposed to grants to outside directors) is based upon the attainment of certain Company financial goals related to cumulative net sales and cumulative operating profit over a three-year performance period.

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2009 Employees’ Stock Purchase Plan, which was most recently amended on March 2, 2017, and which 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 on the date of purchase, whichever is lower.

During the three month period ended January 1, 2021, the Company issued 0 shares of Class A common stock and recognized $ 0 of expense in connection with the Employees' Stock Purchase Plan.

During the three month period ended December 27, 2019, the Company issued 0 shares of Class A common stock and recognized $ 7 of expense in connection with the Plan.

During the three month period ended April 2, 2021, the Company issued 0 shares of Class A common stock and recognized $ 0 of expense in connection with the Employees' Stock Purchase Plan.

During the six month period ended April 2, 2021, the Company issued 0 shares of Class A common stock and recognized $ 0 of expense in connection with the Plan.

During the three month period ended March 27, 2020, the Company issued 0 shares of Class A common stock and recognized $ 51 of expense in connection with the Plan.

During the six month period ended March 27, 2020, the Company issued 0 shares of Class A common stock and recognized $ 58 of expense in connection with the Plan.

JOHNSON OUTDOORS INC.

5 PENSION PLANS

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

The Company made contributions of $ 43 and $ 44 to its pension plans for the three months ended January 1, 2021 and December 27, 2019, respectively.

JOHNSON OUTDOORS INC.

The Company made contributions of $ 44 and $ 44 to its pension plans for the three months ended April 2, 2021 and March 27, 2020, respectively, and contributions of $ 88 and $ 88 for the six months ended April 2, 2021 and March 27, 2020, respectively.

During the first quarter of fiscal 2021, Company management commenced actions to terminate both of the pension plans.

As part of the termination of these plans, all plan participants will have the option of taking a lump sum payment or receiving payout pursuant to an annuity contract.

When the termination and related payouts occur, they are estimated to unfavorably impact net income by approximately $ 4 to $ 5 million.

The components of net periodic benefit cost related to Company sponsored defined benefit plans for the three month periods ended January 1, 2021 and December 27, 2019 were as follows:

Three Months Ended

January 1, 2021 December 27, 2019

As part of the termination of these plans, plan participants that are not currently in pay status will have the option of taking a lump sum payment or receiving payout pursuant to an annuity contract.

When the termination and related payouts occur, which is subject to numerous conditions under the plan document and applicable law, they are estimated to unfavorably impact net income by approximately $ 4 to $ 5 million.

The components of net periodic benefit cost related to Company sponsored defined benefit plans for the three and six month periods ended April 2, 2021 and March 27, 2020 were as follows:

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Components of net periodic benefit cost:

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6 INCOME TAXES

For the three months ended January 1, 2021 and December 27, 2019, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:

Three Months Ended

For the three and six months ended April 2, 2021 and March 27, 2020, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:

Three Months Ended Six Months Ended

(thousands, except tax rate data)

January 1, 2021 December 27, 2019

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Profit before income taxes $ 37,310 $ 28,377 $ 63,321 $ 36,966

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Effective income tax rate 25.4 % 28.2 % 24.7 % 27.5 %

The decrease in the effective tax rate for the three months ended January 1, 2021 compared to the prior year period is primarily due to a current period income tax benefit of an intra-entity transfer of an asset other than inventory.

The effective tax rate was lower for the three months ended April 2, 2021 compared to the prior year period due to the favorable impact of excess tax benefits on deductible stock compensation.

The key factors impacting the effective tax rate for the six months ended April 2, 2021 were the net excess tax benefits related to share-based compensation and income tax benefit generated by the intra-entity transfer of an asset other than inventory.

The impact of the Company’s operations in jurisdictions where a valuation allowance is assessed is removed from the overall effective tax rate methodology and recorded directly based on year to date results for the year for which no tax expense or benefit can be recognized.

The significant tax jurisdictions that have a valuation allowance for the periods ended January 1, 2021 and December 27, 2019 were:

January 1, 2021 December 27, 2019

The significant tax jurisdictions that have a valuation allowance for the periods ended April 2, 2021 and March 27, 2020 were:

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April 2, 2021 March 27, 2020

France France

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The Company’s 2021 fiscal year tax expense is anticipated to be unchanged related to uncertain income tax positions.

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

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Inventories at the end of the respective periods consisted of the following:

2021 October 2, 2020 December 27,

2021 October 2,

2020 March 27,

Raw materials $ 74,780 $ 48,874 $ 47,848

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$ 124,538 $ 97,437 $ 107,680

The changes in goodwill during the three months ended January 1, 2021 and December 27, 2019 were as follows:

January 1, 2021 December 27, 2019

The changes in goodwill during the six months ended April 2, 2021 and March 27, 2020 were as follows:

April 2, 2021 March 27, 2020

Balance at beginning of period $ 11,184 $ 11,186

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Balance at end of period $ 11,231 $ 11,135

JOHNSON OUTDOORS INC.

The Company evaluates the carrying value of goodwill for a reporting unit on an annual basis or more frequently when events and circumstances warrant such an evaluation.

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The Company provides warranties on certain of its products as they are sold.

The following table summarizes the Company’s warranty activity for the three months ended January 1, 2021 and December 27, 2019.

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January 1, 2021 December 27, 2019

The following table summarizes the Company’s warranty activity for the six months ended April 2, 2021 and March 27, 2020.

April 2, 2021 March 27, 2020

Balance at beginning of period $ 10,849 $ 9,190

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11 INDEBTEDNESS

The Company had no debt outstanding at January 1, 2021, October 2, 2020, or December 27, 2019.

The Company had no debt outstanding at April 2, 2021, October 2, 2020, or March 27, 2020.

The Company and certain of its subsidiaries have entered into an unsecured credit facility with PNC Bank National Association and Associated Bank, N.A.

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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 at January 1, 2021 and December 27, 2019 were approximately 1.1 % and 2.8 %, respectively.

The interest rates on the Revolver at April 2, 2021 and March 27, 2020 were approximately 1.1 % and 1.9 %, respectively.

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 had no unsecured revolving credit facilities at its foreign subsidiaries as of January 1, 2021 or December 27, 2019.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers’ compensation insurance, which totaled approximately $ 181 and $ 181 as of January 1, 2021 and December 27, 2019, respectively.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of April 2, 2021 or March 27, 2020.

JOHNSON OUTDOORS INC.

12 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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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 10 % of the Company’s revenues for the three month

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period ended January 1, 2021 were denominated in currencies other than the U.S.

Approximately 11 % of the Company’s revenues for the six month period ended April 2, 2021 were denominated in currencies other than the U.S.

Approximately 3 % were denominated in euros, approximately 6 % were denominated in Canadian dollars and approximately 1 % were denominated in Hong Kong dollars, with the remaining revenues denominated in various other foreign currencies.

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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, including commitments for inventory purchases, denominated in foreign currencies.

As of January 1, 2021 and December 27, 2019, the Company held no foreign currency forward contracts.

As of April 2, 2021 and March 27, 2020, the Company held no foreign currency forward contracts.

13 FAIR VALUE MEASUREMENTS

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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 carrying amounts of cash, cash equivalents, short term investments, accounts receivable, and accounts payable approximated their fair values at January 1, 2021, October 2, 2020 and December 27, 2019 due to the short term maturities of these instruments.

The carrying amounts of cash, cash equivalents, short term investments, accounts receivable, and accounts payable approximated their fair values at April 2, 2021, October 2, 2020 and March 27, 2020 due to the short term maturities of these instruments.

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 their fair value.

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The rabbi trust assets are used to fund amounts the Company owes 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 Condensed Consolidated Balance Sheets, and the mark to market adjustments on the assets are recorded in “Other income, net” in the accompanying Condensed Consolidated Statements of Operations.

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

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the accompanying Condensed Consolidated Statements of Operations.

The offsetting deferred compensation liability is also reported at fair value as "Deferred compensation liability" in the Company's accompanying Condensed Consolidated Balance Sheets.

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

The following table summarizes the Company’s financial assets measured at fair value as of January 1, 2021:

The following table summarizes the Company’s financial assets measured at fair value as of April 2, 2021:

Level 1 Level 2 Level 3 Total

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

JOHNSON OUTDOORS INC.

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 December 27, 2019:

The following table summarizes the Company’s financial assets measured at fair value as of March 27, 2020:

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 16,548 $ — $ — $ 16,548

The effect of changes in the fair value of financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three month periods ended January 1, 2021 and December 27, 2019 was:

Three Months Ended

Location of income loss recognized in Statement of

Operations January 1, 2021 December 27, 2019

Rabbi trust assets Other income, net $ 2,596 $ 1,192

There were no assets or liabilities measured at fair value on a non-recurring basis in periods subsequent to their initial recognition for either of the three month periods ended January 1, 2021 or December 27, 2019.

The effect of changes in the fair value of financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three and six month periods ended April 2, 2021 and March 27, 2020 was:

Three Months Ended Six months ended

Location of (income) loss recognized in Statement of Operations April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Rabbi trust assets Other (income) expense, net $ ( 1,204 ) $ 3,525 $ ( 3,800 ) $ 2,334

There were no assets or liabilities measured at fair value on a non-recurring basis in periods subsequent to their initial recognition for either of the six month periods ended April 2, 2021 or March 27, 2020.

14 NEW ACCOUNTING PRONOUNCEMENTS

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The additional disclosures required by the ASU and its updates are included in Note 18 "Leases" of these Notes to the Condensed Consolidated Financial Statements.

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).

JOHNSON OUTDOORS INC.

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

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

JOHNSON OUTDOORS INC.

In December 2019, the FASB issued ASU No.

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

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes.

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

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

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), intended to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

The amendments in this guidance were effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022.

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

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied;

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The Company provides customers the right to return eligible products under certain circumstances.

At January 1, 2021, the right to returns asset was $ 1,367 and the accrued returns liability was $ 3,621 .

At December 27, 2019, the right to returns asset was $ 1,112 and the accrued returns liability was $ 3,394 .

At April 2, 2021, the right to returns asset was $ 1,487 and the accrued returns liability was $ 4,030 .

At March 27, 2020, the right to returns asset was $ 1,349 and the accrued returns liability was $ 4,273 .

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.

JOHNSON OUTDOORS INC.

The Company generally accounts for shipping and handling activities as a fulfillment activity, consistent with the timing of revenue recognition;

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Operations are conducted in the United States and various foreign countries, primarily in Europe, Canada and the Pacific Basin.

During the three month periods ended January 1, 2021 and December 27, 2019, combined net sales to two customers of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 53,573 and $ 32,321 , respectively, of the Company's consolidated revenues.

JOHNSON OUTDOORS INC.

During the three and six month periods ended April 2, 2021, combined net sales to two customers of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 45,735 and $ 99,308 , respectively, of the Company's consolidated revenues.

During the three and six month periods ended March 27, 2020, combined net sales to two customers of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 48,663 and $ 80,984 , respectively, of the Company's consolidated revenues.

Net sales and operating profit include both sales to customers, as reported in the Company’s accompanying Condensed Consolidated Statements of Operations, and interunit transfers, which are priced to recover cost plus an appropriate profit margin.

Total assets represent assets that are used in the Company’s operations in each business segment at the end of the periods presented.

JOHNSON OUTDOORS INC.

A summary of the Company’s operations by business segment is presented below:

Three Months Ended

January 1, 2021 December 27, 2019 October 2, 2020

Three Months Ended Six Months Ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020 October 2, 2020

Unaffiliated customers $ 159,770 $ 133,710 $ 286,629 $ 232,903

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$ — $ — $ 618,980 $ 504,304 $ 546,026

JOHNSON OUTDOORS INC.

17 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in Accumulated Other Comprehensive Income (“AOCI”) by component, net of tax, for the three months ended January 1, 2021 were as follows:

The changes in Accumulated Other Comprehensive Income (“AOCI”) by component, net of tax, for the three months ended April 2, 2021 were as follows:

JOHNSON OUTDOORS INC.

Adjustment Unamortized

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Income (Loss)

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

Balance at January 1, 2021 $ 9,765 $ ( 2,505 ) $ 7,260

Other comprehensive income before reclassifications ( 1,512 ) — ( 1,512 )

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Tax effects — ( 33 ) ( 33 )

Balance at January 1, 2021 $ 9,765 $ ( 2,505 ) $ 7,260

The changes in AOCI by component, net of tax, for the three months ended December 27, 2019 were as follows:

Balance at April 2, 2021 $ 8,253 $ ( 2,404 ) $ 5,849

The changes in AOCI by component, net of tax, for the three months ended March 27, 2020 were as follows:

Adjustment Unamortized

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Income (Loss)

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

Balance at December 27, 2019 $ 5,490 $ ( 3,171 ) $ 2,319

Other comprehensive income before reclassifications ( 1,607 ) — ( 1,607 )

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Tax effects — ( 20 ) ( 20 )

Balance at December 27, 2019 $ 5,490 $ ( 3,171 ) $ 2,319

The reclassifications out of AOCI for the three months ended January 1, 2021 and December 27, 2019 were as follows:

Balance at March 27, 2020 $ 3,883 $ ( 3,109 ) $ 774

The changes in AOCI by component, net of tax, for the six months ended April 2, 2021 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

Income (Loss)

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

Other comprehensive loss before reclassifications 930 — 930

Amounts reclassified from accumulated other comprehensive income — 269 269

Tax effects — ( 67 ) ( 67 )

Balance at April 2, 2021 $ 8,253 $ ( 2,404 ) $ 5,849

The changes in AOCI by component, net of tax, for the six months ended March 27, 2020 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

Income (Loss)

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

Other comprehensive loss before reclassifications ( 907 ) — ( 907 )

Amounts reclassified from accumulated other comprehensive income — 164 164

Tax effects — ( 41 ) ( 41 )

Balance at March 27, 2020 $ 3,883 $ ( 3,109 ) $ 774

The reclassifications out of AOCI for the three months ended April 2, 2021 and March 27, 2020 were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended

January 1, 2021 December 27, 2019 Statement of Operations

April 2, 2021 March 27, 2020 Statement of Operations

Unamortized loss on defined benefit pension plans:

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Total reclassifications for the period $ 101 $ 62

JOHNSON OUTDOORS INC.

The reclassifications out of AOCI for the six months ended April 2, 2021 and March 27, 2020 were as follows:

Six Months Ended

April 2, 2021 March 27, 2020 Statement of Operations

Unamortized loss on defined benefit pension plans:

Amortization of loss $ 269 $ 164 Other income and expense

Tax effects ( 67 ) ( 41 ) Income tax expense

Total reclassifications for the period $ 202 $ 123

Adoption of Topic 842

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

As of January 1, 2021, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 15 years.

As of April 2, 2021, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 18 years.

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

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

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three months ended January 1, 2021 and December 27, 2019 were as follows:

Three months ended Three months ended

January 1, 2021 December 27, 2019

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended April 2, 2021 and March 27, 2020 were as follows:

JOHNSON OUTDOORS INC.

Three months ended Six months ended

April 2, 2021 March 27, 2020 April 2, 2021 March 27, 2020

Operating lease costs $ 2,290 $ 1,787 $ 4,077 $ 3,563

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Total lease cost $ 2,668 $ 2,304 $ 4,972 $ 4,606

Included in the amounts in the table above, were rent expense to related parties of $ 255 and $ 246 for the three months ended January 1, 2021 and December 27, 2019, respectively.

As of January 1, 2021, the Company did not have any finance leases.

There were no significant new leases entered into during the quarter ended January 1, 2021.

Included in the amounts in the table above were rent expense to related parties of $ 261 and $ 516 for the three and six months ended April 2, 2021, respectively, and $ 247 and $ 493 for the three and six months ended March 27, 2020, respectively.

As of April 2, 2021, the Company did not have any finance leases.

There were no significant new leases entered into during the quarter ended April 2, 2021.

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

JOHNSON OUTDOORS INC.

Three months ended Three months ended

January 1, 2021 December 27, 2019

Six months ended

April 2, 2021 March 27, 2020

Operating leases:

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Cash paid for amounts included in the measurement of lease liabilities $ 3,757 $ 3,146

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at January 1, 2021 were as follows:

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at April 2, 2021 were as follows:

Year Related parties included

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Total net lease liability $ 767 $ 44,385

As of January 1, 2021, the Company did not have any additional significant operating leases commitments that have not yet commenced.

During the second quarter of fiscal 2021, the Company amended its agreement with the landlord on an existing leased facility.

Payments under the amended agreement are expected to begin in fiscal year 2022 and go through June 2039, and total estimated rental payments, not included in the amounts above, will be approximately $ 14 million over the

JOHNSON OUTDOORS INC.

course of the lease as amended.

As of April 2, 2021, the Company did not have any other additional significant operating leases commitments that have not yet commenced.

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-Q

Item 1. Financial Statements