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Item 1. Financial Statements

2022-02-04 compared with 2021-08-09 · 139 added, 224 removed, 441 unchanged (45% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

(thousands, except per share data) July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Three Months Ended

(thousands, except per share data) December 31, 2021 January 1, 2021

Net sales $ 153,524 $ 165,667

9 unchanged sentences

Interest expense 38 32

Other (income) expense, net ( 934 ) ( 2,493 ) ( 4,567 ) 205

Other income, net ( 774 ) ( 2,404 )

Profit before income taxes 14,589 26,011

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

(thousands) July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Three Months Ended

(thousands) December 31, 2021 January 1, 2021

Net income $ 10,856 $ 19,847

3 unchanged sentences

Change in pension plans, net of tax of $ 5 and $ 34 , respectively

123 180 325 303

Total other comprehensive income 865 1,717 1,997 933

Total other comprehensive (loss) income ( 407 ) 2,543

Total comprehensive income $ 10,449 $ 22,390

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CONDENSED CONSOLIDATED BALANCE SHEETS

(thousands, except share data) July 2, 2021 October 2, 2020 June 26, 2020

(thousands, except share data) December 31, 2021 October 1, 2021 January 1, 2021

Current assets:

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Nine Months Ended July 2, 2021

Three Months Ended December 31, 2021

(thousands except for shares) Shares Common Stock Capital in

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Change in pension plans, net of tax of $ 5

— — — — 101 —

Purchase of treasury stock at cost ( 4,577 ) — — — — ( 461 )

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

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 )

Net income — — — 28,774 — —

Dividends declared — — — ( 2,103 ) — —

Award of non-vested shares 9,633 1 ( 1 ) — — —

Stock-based compensation — — 1,052 — — —

Restricted stock forfeitures ( 621 ) — 75 — — ( 75 )

Currency translation adjustment — — — — 742 —

Change in pension plans, net of tax of $ 41

BALANCE AT JULY 2, 2021 10,127,200 $ 509 $ 81,309 $ 366,582 $ 6,714 $ ( 2,790 )

JOHNSON OUTDOORS INC.

Nine Months Ended June 26, 2020

BALANCE AT DECEMBER 31, 2021 10,157,045 $ 510 $ 83,869 $ 378,352 $ 6,979 $ ( 3,097 )

Three Months Ended January 1, 2021

(thousands except for shares) Shares Common Stock Capital in

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Income (Loss) Treasury

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

Net income — — — 6,430 — —

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

Award of non-vested shares 31,571 — — — — —

Stock-based compensation — — 667 — — —

Currency translation adjustment — — — — 700 —

Change in pension plans, net of tax of $ 21

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

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

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

Net income — — — 19,847 — —

4 unchanged sentences

Change in pension plans, net of tax of $ 34

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

Net income — — — 12,869 — —

Dividends declared — — — ( 1,697 ) — —

Issuance of stock under employee stock purchase plan 2,190 — 126 — — —

Stock-based compensation — — 1,417 — — —

Currency translation adjustment — — — — 1,537 —

Change in pension plans, net of tax of $ 60

— — — — 101 —

BALANCE AT JUNE 26, 2020 10,084,799 $ 504 $ 77,780 $ 282,980 $ 2,491 $ ( 2,221 )

Purchase of treasury stock at cost ( 5,661 ) — — — — ( 495 )

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

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(thousands) July 2, 2021 June 26, 2020

CASH PROVIDED BY OPERATING ACTIVITIES

Three Months Ended

(thousands) December 31, 2021 January 1, 2021

CASH USED FOR OPERATING ACTIVITIES

Net income $ 10,856 $ 19,847

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CASH USED FOR FINANCING ACTIVITIES

Common stock transactions — 126

Dividends paid ( 3,005 ) ( 2,094 )

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Effect of foreign currency rate changes on cash ( 492 ) 1,701

Increase in cash and cash equivalents 36,579 9,063

Decrease in cash and cash equivalents ( 72,975 ) ( 16,514 )

CASH AND CASH EQUIVALENTS

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Supplemental Disclosure:

Non-cash treasury stock activity $ 75 $ —

Non-cash dividends 7 5

Cash paid for taxes $ 2,853 $ 103

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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 July 2, 2021 and June 26, 2020, and their results of operations for the three and nine month periods then ended and cash flows for the nine month periods then ended.

and subsidiaries (collectively, the “Company”) as of December 31, 2021 and January 1, 2021, and their results of operations for the three month periods then ended and cash flows for the three 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 1, 2021 which was filed with the Securities and Exchange Commission on December 10, 2021.

Due to seasonal variations and other factors, some of which are described herein, including related to the ongoing coronavirus (COVID-19) outbreak and resulting pandemic, the results of operations for the three and nine months ended July 2, 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 ongoing coronavirus (COVID-19) pandemic and subsequent disruption to the Company's global supply chain, the results of operations for the three months ended December 31, 2021 are not necessarily indicative of the results to be expected for the Company’s full 2022 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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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 imposing travel restrictions, issuing quarantine, shelter-in-place and stay at home orders and guidelines and related actions, mandating mask wearing, limiting business capacity and generally restricting freedom of movement, in order to promote social distancing and other similar programs all in an effort to slow the spread of the illness.

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, 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 fiscal 2021.

Despite the availability of vaccines, and the overall reduction in restrictions on economic and social activities that were implemented at the start of the pandemic, COVID-19 continues to be a serious global health concern and has a significant impact on macroeconomic and societal developments, including on economic activity and supply chain continuity, in various key regions of the world and related to certain raw materials and components.

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.

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

These actions promoted social distancing, and subsequently resulted in adopting programs and taking actions to encourage and promote vaccination and implementing other similar programs all in an effort to slow the spread of the virus.

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

While 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, the Company saw increased participation in fishing, camping and watercraft recreation and the related demand for our products in these business segments throughout fiscal 2021, 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 fiscal 2022 across all segments.

Nonetheless, the full extent to which the COVID-19 pandemic will impact our business, results of operations and financial condition during the remainder of fiscal 2022 will depend on future developments, including any potential worsening of the pandemic, and the lingering impact of the pandemic in disrupting the global supply chain (including with respect to impacting the sourcing, timing, availability and cost of raw materials and components that are necessary to manufacturing our products), all of which are beyond our control and which remain highly uncertain and cannot be predicted.

2 ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts of $ 1,446 , $ 2,697 and $ 2,834 as of July 2, 2021, October 2, 2020 and June 26, 2020, respectively.

The increase in net accounts receivable to $ 94,750 as of July 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.

Accounts receivable are stated net of allowances for doubtful accounts of $ 2,662 , $ 2,494 and $ 2,823 as of December 31, 2021, October 1, 2021 and January 1, 2021, respectively.

The increase in net accounts receivable to $ 86,689 as of December 31, 2021 from $ 71,321 as of October 1, 2021 is attributable to the seasonal nature of the Company’s business.

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

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

Uncollectible accounts are

JOHNSON OUTDOORS INC.

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

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

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

JOHNSON OUTDOORS INC.

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 and nine month periods ended July 2, 2021 and June 26, 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.

For the three month periods ended December 31, 2021 and January 1, 2021, 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 and nine month periods ended July 2, 2021 and June 26, 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.

Shares of 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 40,743 and 41,390 for the three months ended July 2, 2021 and June 26, 2020, respectively, and 40,471 and 40,260 for the nine months ended July 2, 2021 and June 26, 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 20,277 and 36,495 for the three month periods ended July 2, 2021 and June 26, 2020, respectively, and 27,411 and 42,368 for the nine months ended July 2, 2021 and June 26, 2020, respectively.

For the three month periods ended December 31, 2021 and January 1, 2021, 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.

Shares of 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 37,916 and 40,647 for the three months ended December 31, 2021 and January 1, 2021, 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 26,232 and 30,786 for the three month periods ended December 31, 2021 and January 1, 2021, respectively.

Dividends per share

Dividends per share for the three and nine month periods ended July 2, 2021 and June 26, 2020 were as follows:

Dividends per share for the three month periods ended December 31, 2021 and January 1, 2021 were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended Nine months ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Three Months Ended

December 31, 2021 January 1, 2021

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 501,314 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at July 2, 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 474,393 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at December 31, 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 nine months ended July 2, 2021 related to the Company’s stock ownership plans is as follows:

A summary of non-vested stock activity for the three months ended December 31, 2021 related to the Company’s stock ownership plans is as follows:

Shares Weighted Average

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Restricted stock vested ( 5,751 ) 70.39

Forfeitures ( 621 ) 120.77

Non-vested stock at July 2, 2021 37,591 80.86

Non-vested stock at December 31, 2021 39,003 86.13

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 nine month periods ended July 2, 2021 and June 26, 2020, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 286 and $ 270 for the three month periods ended July 2, 2021 and June 26, 2020, respectively, and $ 862 and $ 762 for the nine months ended July 2, 2021 and June 26, 2020, respectively.

Unrecognized compensation cost related to non-vested stock as of July 2, 2021 was $ 1,764 , 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 nine month periods ended July 2, 2021 and June 26, 2020 was $ 1,950 and $ 1,329 , respectively.

Shares tendered back to the Company were 1,778 and 2,341 during the three month periods ended December 31, 2021 and January 1, 2021, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 295 and $ 279 for the three month periods ended December 31, 2021 and January 1, 2021, respectively.

Unrecognized compensation cost related to non-vested stock as of December 31, 2021 was $ 1,858 , which amount will be amortized to expense through November 2025 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the three month periods ended December 31, 2021 and January 1, 2021 was $ 573 and $ 658 , respectively.

Restricted Stock Units

JOHNSON OUTDOORS INC.

All restricted stock units (RSUs) awarded by the Company have been granted in the form of units payable in shares of Class A common stock upon vesting.

The units are valued at the fair market value of a share of Class A common stock on the date of grant and vest within one year from the date of grant for RSUs granted to directors and three years from the date of grant for RSUs granted to employees.

The units are valued at the fair market value of a share of Class A common

JOHNSON OUTDOORS INC.

stock on the date of grant and vest within one year from the date of grant for RSUs granted to directors and three years from the date of grant for RSUs granted to employees.

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 nine months ended July 2, 2021 follows:

A summary of RSU activity for the three months ended December 31, 2021 follows:

Number of RSUs Weighted Average

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RSUs vested ( 22,192 ) 71.42

RSUs at July 2, 2021 69,768 80.58

Stock compensation expense, net of forfeitures, related to RSUs was $ 735 and $ 1,678 for the three and nine months ended July 2, 2021, respectively.

For the three and nine months ended June 26, 2020, the Company recognized expense of $ 1,161 and $ 992 , respectively.

Unrecognized compensation cost related to non-vested RSUs as of July 2, 2021 was $ 3,111 , which amount will be amortized to expense through September 2023 or adjusted for changes in future estimated or actual forfeitures.

RSUs at December 31, 2021 67,334 82.42

Stock compensation expense, net of forfeitures, related to RSUs was $ 727 and $ 432 for the three months ended December 31, 2021 and January 1, 2021, respectively.

Unrecognized compensation cost related to non-vested RSUs as of December 31, 2021 was $ 4,322 , which amount will be amortized to expense through September 2024 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 nine month periods ended July 2, 2021 and June 26, 2020, respectively.

The fair value of restricted stock units recognized as a tax deduction during the nine month periods ended July 2, 2021 and June 26, 2020 was $ 3,353 and $ 1,426 , respectively.

Shares tendered back to the Company for this purpose were 2,799 and 3,320 during the three month periods ended December 31, 2021 and January 1, 2021, respectively.

The fair value of restricted stock units recognized as a tax deduction during the three month periods ended December 31, 2021 and January 1, 2021 was $ 2,759 and $ 2,148 , 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 July 2, 2021, the Company issued 0 shares of Class A common stock and recognized $ 31 of expense in connection with the Employees' Stock Purchase Plan.

During the nine month period ended July 2, 2021, the Company issued 0 shares of Class A common stock and recognized $ 31 of expense in connection with the Plan.

During the three month period ended June 26, 2020, the Company issued 2,190 shares of Class A common stock and recognized $ 14 of income in connection with the Plan.

During the nine month period ended June 26, 2020, the Company issued 2,190 shares of Class A common stock and recognized $ 44 of expense in connection with the Plan.

JOHNSON OUTDOORS INC.

During the three month period ended December 31, 2021, the Company issued 0 shares of Class A common stock and recognized $ 104 of expense in connection with the Employees' Stock Purchase Plan.

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 Plan.

5 PENSION PLANS

The Company has two non-contributory defined benefit pension plans covering certain of its U.S.

The Company has non-contributory defined benefit pension plans covering certain of its U.S.

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.

The Company made contributions of $ 42 and $ 44 to its pension plans for the three months ended July 2, 2021 and June 26, 2020, respectively, and contributions of $ 130 and $ 132 for the nine months ended July 2, 2021 and June 26, 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, 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 nine month periods ended July 2, 2021 and June 26, 2020 were as follows:

Three Months Ended Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

JOHNSON OUTDOORS INC.

During fiscal 2021, the Company terminated both the Johnson Outdoors Inc.

Mankato Operations Pension Plan and the Old Town Canoe Company Pension Plan (collectively, "the Terminated Plans"), both of which were frozen defined benefit pension plans at the time of termination.

In connection with the plan terminations, the Company settled all future obligations under the Terminated Plans through a combination of lump-sum payments to eligible participants who elected to receive them, and the transfer of any remaining benefit obligations under the Terminated Plans to a third-party insurance company under a group annuity contract.

The Company still maintains the Johnson Outdoors Inc.

Supplemental Executive Retirement Plan ("SERP"), and all future benefit payments to participants under this plan are made from the Company's general assets.

The Company made contributions of $ 25 and $ 43 to its plans for the three months ended December 31, 2021 and January 1, 2021, respectively.

The components of net periodic benefit cost related to Company sponsored defined benefit plans for the three month periods ended December 31, 2021 and January 1, 2021 were as follows:

Three Months Ended

December 31, 2021 January 1, 2021

Components of net periodic benefit cost:

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6 INCOME TAXES

For the three and nine months ended July 2, 2021 and June 26, 2020, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:

Three Months Ended Nine Months Ended

For the three months ended December 31, 2021 and January 1, 2021, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:

Three Months Ended

(thousands, except tax rate data)

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

December 31, 2021 January 1, 2021

Profit before income taxes $ 14,589 $ 26,011

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Effective income tax rate 25.6 % 23.7 %

The effective tax rate was higher for the three and nine months ended July 2, 2021 compared to the prior year periods due to the favorable impact from a decrease in reserves for unrecognized tax benefits reported in the prior year periods.

The effective tax rate was higher for the three months ended December 31, 2021 compared to the prior year period mainly due to the favorable impact from an intra-entity transfer of an asset other than inventory recorded in the prior year.

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 July 2, 2021 and June 26, 2020 were:

July 2, 2021 June 26, 2020

The significant tax jurisdictions that have a valuation allowance for the periods ended December 31, 2021 and January 1, 2021 were:

December 31, 2021 January 1, 2021

France France

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As a result, the Company may adjust the reserves for unrecognized tax benefits due to the impact of changes in its assumptions or as a result of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities and lapses of statutes of limitation.

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

The Company’s 2022 fiscal year tax expense is not anticipated to be materially impacted related to uncertain income tax positions.

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

The Company is projecting accrued interest of $ 300 related to uncertain income tax positions for the fiscal year ending October 1, 2021.

The Company is projecting accrued interest of $ 100 related to uncertain income tax positions for the fiscal year ending September 30, 2022.

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

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2021 October 1,

2020 June 26,

2021 January 1,

Raw materials $ 150,064 $ 110,974 $ 63,353

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$ 217,431 $ 166,615 $ 114,849

The changes in goodwill during the nine months ended July 2, 2021 and June 26, 2020 were as follows:

July 2, 2021 June 26, 2020

The changes in goodwill during the three months ended December 31, 2021 and January 1, 2021 were as follows:

December 31, 2021 January 1, 2021

Balance at beginning of period $ 11,221 $ 11,184

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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 nine months ended July 2, 2021 and June 26, 2020.

July 2, 2021 June 26, 2020

The following table summarizes the Company’s warranty activity for the three months ended December 31, 2021 and January 1, 2021.

December 31, 2021 January 1, 2021

Balance at beginning of period $ 14,073 $ 10,849

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11 INDEBTEDNESS

The Company had no debt outstanding at July 2, 2021, October 2, 2020, or June 26, 2020.

The Company had no debt outstanding at December 31, 2021, October 1, 2021, or January 1, 2021.

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 July 2, 2021 and June 26, 2020 were approximately 1.1 % and 1.2 %, respectively.

The interest rate on the Revolver at both December 31, 2021 and January 1, 2021 was approximately 1.1 %.

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 July 2, 2021 or June 26, 2020.

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 July 2, 2021 and June 26, 2020, respectively.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of December 31, 2021 or January 1, 2021.

JOHNSON OUTDOORS INC.

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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 12 % of the Company’s revenues for the nine month period ended July 2, 2021 were denominated in currencies other than the U.S.

Approximately 13 % of the Company’s revenues for the three month period ended December 31, 2021 were denominated in currencies other than the U.S.

Approximately 5 % 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 July 2, 2021 and June 26, 2020, the Company held no foreign currency forward contracts.

As of December 31, 2021 and January 1, 2021, 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 July 2, 2021, October 2, 2020 and June 26, 2020 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 December 31, 2021, October 1, 2021 and January 1, 2021 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 accompanying 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.

The offsetting deferred compensation liability

JOHNSON OUTDOORS INC.

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

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 July 2, 2021:

The following table summarizes the Company’s financial assets measured at fair value as of December 31, 2021:

Level 1 Level 2 Level 3 Total

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Rabbi trust assets $ 27,851 $ — $ — $ 27,851

The following table summarizes the Company’s financial assets measured at fair value as of June 26, 2020:

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

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 25,032 $ — $ — $ 25,032

The effect of changes in the fair value of financial instruments on the accompanying Condensed Consolidated Statements of Operations for the three and nine month periods ended July 2, 2021 and June 26, 2020 was:

Three Months Ended Nine months ended

Location of (income) loss recognized in Statement of Operations July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

Rabbi trust assets Other (income) expense, net $ ( 1,351 ) $ ( 2,732 ) $ ( 5,151 ) $ ( 398 )

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 nine month periods ended July 2, 2021 or June 26, 2020.

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 December 31, 2021 and January 1, 2021 was:

Three Months Ended

Location of income recognized in Statement of Operations December 31, 2021 January 1, 2021

Rabbi trust assets Other income, net $ 1,095 $ 2,596

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 December 31, 2021 or January 1, 2021.

14 NEW ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements

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 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).

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

JOHNSON OUTDOORS INC.

amortized cost.

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.

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The Company adopted the provisions of this ASU at the beginning of the first quarter of fiscal 2021, however the ASU did not have a significant impact on its financial statements, and therefore no adjustment to retained earnings was necessary.

Recently issued accounting pronouncements

In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans (Topic 715) , which modifies 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 adopted the provisions of this ASU in fiscal 2021, however, the ASU did not have a significant impact on its disclosures.

JOHNSON OUTDOORS INC.

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

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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.

The Company adopted the provisions of this ASU in the first quarter of fiscal 2022, however, the ASU did not have a significant impact on its financial statements or disclosures.

Recently issued accounting pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

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

At July 2, 2021, the right to returns asset was $ 1,105 and the accrued returns liability was $ 3,043 .

At June 26, 2020, the right to returns asset was $ 1,082 and the accrued returns liability was $ 3,207 .

At December 31, 2021, the right to returns asset was $ 780 and the accrued returns liability was $ 2,092 .

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

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.

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that is, when a customer takes control of the transferred goods.

In the event that a

JOHNSON OUTDOORS INC.

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.

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.

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See Note 16 for required disclosures of disaggregated revenue.

JOHNSON OUTDOORS INC.

16 SEGMENTS OF BUSINESS

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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 and nine month periods ended July 2, 2021, combined net sales to one customer of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 25,138 and $ 88,649 , respectively, of the Company's consolidated revenues.

During the three and nine month periods ended June 26, 2020, combined net sales to one customer of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 20,433 and $ 70,269 , respectively, of the Company's consolidated revenues.

During the three month period ended December 31, 2021, combined net sales to one customer of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 27,305 of the Company's consolidated revenues.

During the three month period ended January 1, 2021, combined net sales to two customers of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 53,573 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 Nine Months Ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020 October 2, 2020

Three Months Ended

December 31, 2021 January 1, 2021 October 1, 2021

Unaffiliated customers $ 108,181 $ 126,859

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$ 672,354 $ 577,181 $ 674,287

17 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

JOHNSON OUTDOORS INC.

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

Income (Loss)

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

Other comprehensive income before reclassifications 742 — 742

Amounts reclassified from accumulated other comprehensive income — 164 164

Tax effects — ( 41 ) ( 41 )

Balance at July 2, 2021 $ 8,995 $ ( 2,281 ) $ 6,714

The changes in AOCI by component, net of tax, for the three months ended June 26, 2020 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

Income (Loss)

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

Other comprehensive income before reclassifications 1,537 — 1,537

Amounts reclassified from accumulated other comprehensive income — 240 240

Tax effects — ( 60 ) ( 60 )

Balance at June 26, 2020 $ 5,420 $ ( 2,929 ) $ 2,491

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

17 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in Accumulated Other Comprehensive Income (“AOCI”) by component, net of tax, for the three months ended December 31, 2021 were as follows:

Adjustment Unamortized

8 unchanged sentences

Tax effects — ( 5 ) ( 5 )

Balance at July 2, 2021 $ 8,995 $ ( 2,281 ) $ 6,714

The changes in AOCI by component, net of tax, for the nine months ended June 26, 2020 were as follows:

Balance at December 31, 2021 $ 7,183 $ ( 204 ) $ 6,979

The changes in AOCI by component, net of tax, for the three months ended January 1, 2021 were as follows:

Adjustment Unamortized

4 unchanged sentences

Income (Loss)

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

Other comprehensive loss before reclassifications 630 — 630

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

Other comprehensive income before reclassifications 2,442 — 2,442

Amounts reclassified from accumulated other comprehensive income — 135 135

Tax effects — ( 34 ) ( 34 )

Balance at June 26, 2020 $ 5,420 $ ( 2,929 ) $ 2,491

The reclassifications out of AOCI for the three months ended July 2, 2021 and June 26, 2020 were as follows:

JOHNSON OUTDOORS INC.

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

The reclassifications out of AOCI for the three months ended December 31, 2021 and January 1, 2021 were as follows:

Three Months Ended

July 2, 2021 June 26, 2020 Statement of Operations

Unamortized loss on defined benefit pension plans:

Amortization of loss $ 164 $ 240 Other income and expense

Tax effects ( 41 ) ( 60 ) Income tax expense

Total reclassifications for the period $ 123 $ 180

The reclassifications out of AOCI for the nine months ended July 2, 2021 and June 26, 2020 were as follows:

Nine Months Ended

July 2, 2021 June 26, 2020 Statement of Operations

December 31, 2021 January 1, 2021 Statement of Operations

Unamortized loss on defined benefit pension plans:

2 unchanged sentences

Total reclassifications for the period $ 16 $ 101

Adoption of Topic 842

At the beginning of fiscal year 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 the new standard had a significant impact on the Company's condensed consolidated balance sheet in fiscal year 2020 due to the initial recognition of approximately $ 41 million of lease liabilities with corresponding ROU assets for operating leases.

The 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.

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

As of December 31, 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).

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.

To the extent the Company is reasonably certain to exercise these options, they have been considered in the calculation of the right-of-use ("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.

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 definition of a lease, and the determination of the discount rate, which is assumed to be the incremental borrowing rate.

The incremental borrowing

JOHNSON OUTDOORS INC.

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended July 2, 2021 and June 26, 2020 were as follows:

Three months ended Nine months ended

July 2, 2021 June 26, 2020 July 2, 2021 June 26, 2020

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 December 31, 2021 and January 1, 2021 were as follows:

Three months ended

December 31, 2021 January 1, 2021

Operating lease costs $ 2,107 $ 2,012

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Total lease cost $ 2,566 $ 2,449

Included in the amounts in the table above were rent expense to related parties of $ 262 and $ 778 for the three and nine months ended July 2, 2021, respectively, and $ 246 and $ 739 for the three and nine months ended June 26, 2020, respectively.

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

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

Included in the amounts in the table above were rent expense to related parties of $ 291 and $ 255 for the three months ended December 31, 2021 and January 1, 2021, respectively.

As of December 31, 2021, the Company did not have any finance leases or sublease agreements.

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

While the Company extended or renewed various existing leases during the quarter, there were no significant new leases entered into during the quarter ended December 31, 2021.

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

Nine months ended

July 2, 2021 June 26, 2020

Three months ended

December 31, 2021 January 1, 2021

Operating leases:

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Cash paid for amounts included in the measurement of lease liabilities $ 1,875 $ 1,857

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

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at December 31, 2021 were as follows:

JOHNSON OUTDOORS INC.

Year Related parties included

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2023 1,143 7,371

2024 1,178 6,696

2025 1,213 6,138

2026 1,250 4,526

Thereafter 209 29,780

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Total net lease liability $ 5,608 $ 48,463

JOHNSON OUTDOORS INC.

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 course of the lease as amended.

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

As of December 31, 2021, the Company did not have any other additional significant operating lease 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