What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-09 · 104 added, 103 removed, 110 unchanged (65% of the section changed)

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc.

and its subsidiaries (collectively, the “Company”) as of and for the three and six month periods ended April 1, 2022 and April 2, 2021.

and its subsidiaries (collectively, the “Company”) as of and for the three and nine month periods ended July 1, 2022 and July 2, 2021.

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

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• Liquidity and Financial Condition

JOHNSON OUTDOORS INC.

• Contractual Obligations and Off Balance Sheet Arrangements

• Critical Accounting Policies and Estimates

JOHNSON OUTDOORS INC.

This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and related notes that immediately precede this section, as well as 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.

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Coronavirus (COVID-19)

Due to the timing of the COVID-19 outbreak, the Company's traditional seasonal pacing, where our heaviest sales volumes typically occurred during our second and third fiscal quarters, shifted during fiscal 2020 and fiscal 2021.

JOHNSON OUTDOORS INC.

participation in fishing, camping, watercraft recreation and diving and related demand for our products, largely driven by consumer desire to engage in socially distant and safe activities outdoors as a reaction to the COVID-19 pandemic led to increased sales volumes across all Company segments during fiscal 2021.

This strong demand continued into the first two quarters of fiscal 2022.

In addition to this significant increase in demand for Company products during fiscal 2021 and fiscal 2022 to date, COVID-19 has also caused widely-documented supply chain and logistics disruptions across industries, including those in which we operate, which have been exacerbated by the higher demand for our outdoor recreation products and associated inventory replenishment actions of our customers.

These adverse supply chain and logistics constraints and disruptions have impacted the timing, sourcing, availability and cost of raw materials and components that are necessary to manufacture our outdoor recreation products.

Certain of the Company's component suppliers and logistical service providers experienced disruptions, resulting in supply shortages across all of our segments for certain materials and components that are necessary to produce our products.

Moreover, during the first two quarters of fiscal 2022, the Fishing segment was significantly impacted by these supply chain and logistical infrastructure disruptions, resulting in decreased sales volumes in that segment over the same periods in the prior year.

As a result of these disruptions, the Company has taken certain actions to attempt to meet the continued strong consumer demand for its products to continue to fulfill product orders.

These actions include building and procuring numerous categories of inventory (in some cases at significantly higher price points than what was historically paid) to mitigate against potential shortages during fiscal 2022 in certain of its materials and components that are necessary to manufacture Company products.

These buying actions have subsequently resulted in decreased margins and the Company carrying significantly higher levels of inventory for a number of its materials, components and products at the end of each of the first two fiscal quarters of 2022.

Because the Company expects that these same supply chain and logistics disruptions will continue throughout fiscal 2022, the Company remains focused on evaluating and pursuing additional options (beyond building inventory) to meet the continued strong consumer demand for its products.

Nonetheless, these supply chain and logistics disruptions remain fluid and will likely adversely impact the cost of goods sold for future sales of product for the remainder of fiscal 2022 and/or adversely impact the Company’s ability to fill all customer demand for its products, especially given the volatility and changing circumstances brought on by the COVID-19 pandemic and its impact on the global supply chain and logistics infrastructure.

Net sales of $189,623 for the second quarter of fiscal 2022 decreased $16,533, or 8%, from the same period in the prior year.

While consumer demand remains strong, sales volumes have been negatively impacted by product availability and supply chain disruptions, particularly in Fishing, the Company's largest segment.

This sales volume decrease and lower gross margins resulting from higher costs of sales were the primary drivers of the $20,607 decrease in operating profit over the prior year quarter.

The COVID-19 pandemic drove consumer desire to engage in socially distant and safe activities outdoors.

As a result, increased participation in fishing, camping, watercraft recreation also increased demand for our products across Company segments beginning in fiscal 2020, and continuing into the first three quarters of fiscal 2022.

As global travel restrictions also eased, we experienced increased participation and resulting increased product demand in the Diving segment beginning in fiscal 2021 and continuing into the first three quarters of fiscal 2022.

In addition to this increase in demand for Company products, COVID-19 and the resulting macroeconomic dynamics have also caused widely-documented supply chain and logistics disruptions across industries.

Specifically, the adverse supply chain and logistics constraints and disruptions have impacted the timing, sourcing, availability and cost of certain raw materials and components that are necessary to manufacture our outdoor recreation products, especially in our fishing segment due to the electronic components used in those products.

Because certain electronic components that are necessary for manufacturing our higher volume products in that segment have been the most impacted by the supply chain and logistics disruptions, there has been limited availability of those materials and components, as well as increased pricing on such components.

The Company has attempted to mitigate these disruptions by purchasing significantly higher levels of certain raw material and component inventory as they have been available, in many cases at higher price points than what was historically paid, to enable the Company to complete finished product orders as soon as the missing raw material and component inventory items become available.

Nonetheless, continuing shortages have impacted the fishing segment’s ability to complete products for shipping, which has ultimately resulted in decreased sales volumes in the fishing segment over the same periods in the prior year, despite continued strong demand for the products, as evidenced by outstanding orders.

Additionally, the Company’s buying actions have subsequently resulted in decreased margins and the Company carrying significantly higher levels of inventory for a number of its materials, components and products at the end of each of the first three fiscal quarters of 2022.

Though the Company continues to believe the inventory that it has built and which exists on its balance sheet is useable and saleable in the ordinary course of business, it continues to monitor the current reserve balances for obsolete and excess inventory.

However, any changes in consumer demand for the Company's outdoor recreation products, changes in economic conditions, or changes in customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances in the future.

Because the Company expects that these same supply chain and logistics disruptions will continue through the end of fiscal 2022, the Company remains focused on evaluating and pursuing additional options (beyond building inventory) to meet the continued strong demand for its products.

Nonetheless, these supply chain and logistics disruptions remain fluid and will likely adversely impact the cost of goods sold for future sales of product for the remainder of fiscal 2022 and/or adversely impact the Company’s ability to fill all demand for its products, especially given the volatility and changing circumstances brought on by the COVID-19 pandemic and its impact on the global supply chain and logistics infrastructure.

Net sales of $203,819 for the third quarter of fiscal 2022 decreased $9,749, or 5%, from the same period in the prior year.

While consumer and customer demand for the Company's products remains solid as evidenced by outstanding order volumes, sales volumes have been negatively impacted by product availability and supply chain disruptions, particularly in Fishing, the Company's largest segment, as described above.

This sales volume decrease and the lower gross margins resulting from higher costs of sales were the primary drivers of the $14,300 decrease in operating profit over the prior year quarter.

The Company’s business is seasonal in nature.

The second fiscal quarter traditionally falls within the Company’s primary selling season for its warm-weather outdoor recreation products.

The third fiscal quarter traditionally falls within the Company’s primary selling season for its warm-weather outdoor recreation products.

The table below sets forth a historical view of the Company’s seasonality during the last three fiscal years.

See “Coronavirus (COVID-19)” above for additional information of the impact of COVID-19 on changes to the Company’s seasonality for fiscal 2020 and 2021 which changes are expected to continue to evolve over the remainder of fiscal 2022.

Due to the timing of the COVID-19 outbreak, the Company's traditional seasonal sales pacing, where our heaviest sales volumes typically occurred during our second and third fiscal quarters, shifted during fiscal 2020.

See “Coronavirus (COVID-19)” above for additional information regarding the impact of COVID-19.

JOHNSON OUTDOORS INC.

2021 2020 2019

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Results of Operations

JOHNSON OUTDOORS INC.

The Company’s net sales and operating profit (loss) by business segment for the periods shown below were as follows:

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Fishing $ 136,565 $ 155,348 $ 374,244 $ 442,363

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See “Note 16 – Segments of Business” of the notes to the accompanying Condensed Consolidated Financial Statements for the definition of segment net sales and operating profit.

Consolidated net sales for the three months ended April 1, 2022 were $189,623, a decrease of $16,533, or 8%, compared to $206,156 for the three months ended April 2, 2021.

Foreign currency translation had virtually no impact on current year second quarter net sales compared to the prior year's second quarter net sales.

Net sales for the three months ended April 1, 2022 for the Fishing business were $129,323, a decrease of $30,693, or 19%, from $160,016 during the second fiscal quarter of the prior year.

While product demand remains strong, the decrease in Fishing was driven by significant supply chain disruptions and the resulting unavailability of components experienced in the current year quarter.

Net sales for the Camping business were $19,167 for the second quarter of the current fiscal year, an increase of $4,923, or 35%, from the prior year net sales during the same period of $14,244 due to increased sales of Jetboil and Eureka!

consumer camping products due to continued strong participation in outdoor recreation activities.

Net sales for the second quarter of fiscal 2022 for the Watercraft Recreation business were $23,009, an increase of $5,231, or 29%, compared to $17,778 in the prior year same period.

Continued strong demand for the segment's Sportsman line and successful pedal and motorized product offerings drove the increase over the prior year quarter.

Net sales for Diving, our most global business, for the second quarter of fiscal 2022 were $18,194, an increase of $3,986 or 28% versus $14,208 for the three months ended April 2, 2021.

In the prior year second quarter, demand was deflated due to the effects of COVID-19 which caused the closure of destination travel locations and resulted in lower tourism activities that tend to generate demand for our products in this segment.

As several regions around the world have re-opened, sales volumes have increased.

Foreign currency translation had an unfavorable impact on sales in this segment of approximately 2% versus the prior year quarter.

For the six months ended April 1, 2022, consolidated net sales of $343,147 decreased $28,676 or 8% compared to $371,823 for the six months ended April 2, 2021.

Foreign currency translation had virtually no impact on net sales of the current year to date period versus the prior year to date period.

Net sales for the six months ended April 1, 2022 for the Fishing business were $237,679, a decrease of $49,336, or 17% from $287,015 during the same period of the prior year.

The decrease over the prior year to date period was driven mainly by the

Consolidated net sales for the Third months ended July 1, 2022 were $203,819, a decrease of $9,749, or 5%, compared to $213,568 for the Third months ended July 2, 2021.

Foreign currency translation had an unfavorable impact of less than 1% on current year third quarter net sales compared to the prior year's third quarter net sales.

Net sales for the Third months ended July 1, 2022 for the Fishing business were $136,565, a decrease of $18,783, or 12%, from $155,348 during the third fiscal quarter of the prior year.

While customer and consumer demand remains solid, the decrease in Fishing sales was driven by significant supply chain disruptions and the resulting unavailability of certain necessary components (especially as it relates to electronic components) experienced in the current year quarter, which impacted the ability to complete product build and fill customer orders.

Specifically, due to the technical and electronic nature of the product categories, the fishing segment has been the most susceptible to the previously discussed supply chain issues, as discussed in “Coronavirus (COVID-19)” above.

Net sales for the Camping business were $23,479 for the third quarter of the current fiscal year, an increase of $5,722, or 32%, from the prior year net sales during the same period of $17,757 due to increased sales of Jetboil and Eureka!

consumer camping products.

These higher levels of sales over the prior year period were due to continued strong participation in outdoor recreation activities.

JOHNSON OUTDOORS INC.

previously discussed logistics and supply chain disruptions which adversely impacted our ability to satisfy demand for product orders.

Net sales for the Camping business were $33,301 for the six months ended April 1, 2022, an increase of $6,863, or 26%, from the prior year net sales during the same period of $26,438.

Net sales for the third quarter of fiscal 2022 for the Watercraft Recreation business were $21,872, an increase of $1,999, or 10%, compared to $19,873 in the prior year same period.

Continued strong demand for the segment's Sportsman line and successful pedal product offerings drove the increase over the prior year quarter.

Net sales for Diving, our most global business, for the third quarter of fiscal 2022 were $22,201, an increase of $1,521 or 7% versus $20,680 for the Third months ended July 2, 2021.

As several regions around the world have re-opened, sales volumes have increased along with the increase in tourism, partially offset by an unfavorable foreign currency translation impact on sales in this segment of approximately 5% versus the prior year quarter.

For the nine months ended July 1, 2022, consolidated net sales of $546,966 decreased $38,425 or 7% compared to $585,391 for the nine months ended July 2, 2021.

Foreign currency translation had an unfavorable impact of less than 1% on net sales of the current year to date period versus the prior year to date period.

Net sales for the nine months ended July 1, 2022 for the Fishing business were $374,244, a decrease of $68,119, or 15% from $442,363 during the same period of the prior year.

The decrease over the prior year to date period was driven mainly by the previously discussed logistics and supply chain disruptions which adversely impacted our ability to satisfy customer demand for product orders.

Net sales for the Camping business were $56,780 for the nine months ended July 1, 2022, an increase of $12,585, or 28%, from the prior year net sales during the same period of $44,195.

Increased sales of Jetboil and Eureka!

consumer camping products as a result of increased participation in outdoor recreation activities were the primary driver of the increase.

Net sales for the six months ended April 1, 2022 for the Watercraft Recreation business were $37,609, an increase of $7,388, or 24%, compared to $30,221 in the prior year same period.

Increased demand as a result of increased participation in watercraft recreation during the COVID-19 pandemic drove the overall increase over the prior year to date period.

Diving net sales were $34,685 for the six months ended April 1, 2022 versus $28,301 for the six months ended April 2, 2021, an increase of $6,384, or 23%.

The sales increase was largely due to increased demand for our products as the global tourism industry has started to recover.

The impact of increased sales volumes was offset in part by the unfavorable effect of foreign currency translation of 3% versus the prior year to date period.

Net sales for the nine months ended July 1, 2022 for the Watercraft Recreation business were $59,481, an increase of $9,387, or 19%, compared to $50,094 in the prior year same period.

Increased demand as a result of increased participation in watercraft recreation drove the overall increase over the prior year to date period.

Diving net sales were $56,886 for the nine months ended July 1, 2022 versus $48,981 for the nine months ended July 2, 2021, an increase of $7,905, or 16%.

The sales increase between periods was largely due to increased demand for our products as the global tourism industry has started to recover following the removal of many travel restrictions imposed in the prior year as a result of the COVID-19 pandemic.

The impact of increased sales volumes was offset in part by the unfavorable effect of foreign currency translation of approximately 4% versus the prior year to date period.

Cost of Sales

Cost of sales for the three months ended April 1, 2022 was $121,038 compared to $112,902 for the three months ended April 2, 2021.

The increase year over year was driven primarily by increases in costs, specifically increased materials costs and increased inbound freight costs, as the Company continues to manage disruptions in its supply chain to ensure the availability of necessary components, parts and other raw materials across our segments to try to meet sales demand for our products.

For the six months ended April 1, 2022, cost of sales was $213,931 compared to $203,539 in the same period of the prior year.

The increase year over year was primarily driven by increased costs in the current year versus the prior year as described above.

Despite the decrease in sales between quarters noted above, cost of sales for the Third months ended July 1, 2022 of $130,310 increased $14,253 compared to $116,057 for the Third months ended July 2, 2021.

The increase year over year was driven primarily by significant increases in materials costs.

The Company continues to manage disruptions in its supply chain to ensure the availability of necessary components, parts and other raw materials, in some cases at significantly higher price points than what was historically paid, to try to meet sales demand for our products across our segments.

For the nine months ended July 1, 2022, cost of sales was $344,241 compared to $319,596 in the same period of the prior year.

The increase year over year was primarily driven by increased material and inbound freight costs in the current year versus the prior year.

Gross Profit Margin

For the three months ended April 1, 2022, gross profit as a percentage of net sales was 36.2% compared to 45.2% in the three month period ended April 2, 2021.

While the Company has implemented price increases across product lines, they were not enough to offset the negative gross profit impact of cost increases noted above as well as reduced overhead absorption.

For the six months ended April 1, 2022, gross profit as a percentage of net sales was 37.7% compared to 45.3% in the prior six month period.

As noted above, the Company has implemented price increases across product lines, but they have not been significant enough to offset the negative gross profit impact of cost increases and reduced overhead absorption noted above.

For the Third months ended July 1, 2022, gross profit as a percentage of net sales was 36.1% compared to 45.7% in the Third month period ended July 2, 2021.

While the Company has implemented price increases across product lines, these actions were not enough to offset the negative gross profit impact of raw material and component cost increases noted above as well as reduced overhead absorption.

For the nine months ended July 1, 2022, gross profit as a percentage of net sales was 37.1% compared to 45.4% in the prior nine month period.

As noted above, the Company has implemented price increases across product lines, but they have not outweighed the negative gross profit impact of cost increases and reduced overhead absorption noted above.

Operating Expenses

Operating expenses were $53,156 for the three months ended April 1, 2022, compared to $57,218 for the three months ended April 2, 2021.

Operating expenses were $49,710 for the Third months ended July 1, 2022, compared to $59,412 for the Third months ended July 2, 2021.

The decrease of $9,702 was primarily due to the impact of lower sales volume-driven expenses, as well as lower variable and deferred compensation expense, between quarters.

Unfavorable market conditions on the Company's deferred compensation plan assets resulted in approximately $3,300 of lower deferred compensation expense in the current year quarter as compared to the prior year quarter, which was entirely offset by a loss in Other Expense (Income), net related to marking these deferred compensation plan assets to market.

Operating expenses were $100,027 for the six months ended April 2, 2021, compared to $108,691 for the six months ended April 2, 2021.

Unfavorable market conditions on the Company's deferred

JOHNSON OUTDOORS INC.

compensation plan assets resulted in approximately $5,300 of lower deferred compensation expense in the current year quarter as compared to the prior year quarter, which was entirely offset by a loss in Other Expense (Income), net related to marking these deferred compensation plan assets to market.

Operating expenses were $149,737 for the nine months ended April 2, 2021, compared to $168,103 for the nine months ended July 2, 2021.

The decrease of $18,366 was primarily due to the impact of lower sales volume-driven expenses, as well as lower variable and deferred compensation expense, between periods.

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Operating Profit

Operating profit on a consolidated basis for the three month period ended April 1, 2022 was $15,429, compared to an operating profit of $36,036 in the second quarter of the prior fiscal year.

Operating profit on a consolidated basis for the Third month period ended July 1, 2022 was $23,799, compared to an operating profit of $38,099 in the third quarter of the prior fiscal year.

Lower sales volumes and reduced gross margins as discussed above were the primary drivers of the decrease in operating profit between quarters.

Operating profit on a consolidated basis for the six months ended April 1, 2022 was $29,189, compared to an operating profit of $59,593 in the prior year to date period.

Operating profit on a consolidated basis for the nine months ended July 1, 2022 was $52,988, compared to an operating profit of $97,692 in the prior year to date period.

The decrease year over year was driven primarily by lower sales volumes and reduced gross margins as discussed above.

JOHNSON OUTDOORS INC.

Interest expense was $49 and $35 for the three months ended April 1, 2022 and April 2, 2021, respectively.

Interest expense was $87 for the six months ended April 1, 2022 compared to $67 for the six months ended April 2, 2021.

Interest income for the three month periods ended April 1, 2022 and April 2, 2021 was $102 and $80, respectively.

Interest income was $195 for the six months ended April 1, 2022 compared to $162 for the six months ended April 2, 2021.

Interest expense was $30 and $35 for the Third months ended July 1, 2022 and July 2, 2021, respectively.

Interest expense was $117 for the nine months ended July 1, 2022 compared to $102 for the nine months ended July 2, 2021.

Interest income for the Third month periods ended July 1, 2022 and July 2, 2021 was $144 and $76, respectively.

Interest income was $339 for the nine months ended July 1, 2022 compared to $238 for the nine months ended July 2, 2021.

Other Expense (Income), net

Other expense was $2,272 for the three months ended April 1, 2022 compared to other income of $1,229 in the prior year period.

Net investment losses on the assets related to the Company’s non-qualified deferred compensation plan were $2,046 in the three month period ended April 1, 2022 compared to net investment gains and earnings of $1,257 in the three month period ended April 2, 2021.

Other expense was $4,669 for the Third months ended July 1, 2022 compared to other income of $934 in the prior year period.

Net investment losses on the assets related to the Company’s non-qualified deferred compensation plan were $3,741 in the Third month period ended July 1, 2022 compared to net investment gains and earnings of $1,550 in the Third month period ended July 2, 2021.

The change year over year in the investment value of these assets was offset by the decrease in deferred compensation expense included in the Company's Operating expenses during the same periods.

For the three months ended April 1, 2022, foreign currency exchange losses were $146 compared to gains of $217 for the three months ended April 2, 2021.

For the six months ended April 1, 2022, other expense was $1,498 compared to other income of $3,633 in the six months ended April 2, 2021.

Net investment losses on the assets related to the Company’s non-qualified deferred compensation plan in the six months ended April 1, 2022 were $702, compared to net investment gains and earnings of $3,994 in the six months ended April 2, 2021.

Foreign currency exchange losses were $513 for the six months ended April 1, 2022, compared to gains of $121 for the six months ended April 2, 2021.

For the Third months ended July 1, 2022, foreign currency exchange losses were $807 compared to $220 for the Third months ended July 2, 2021.

For the nine months ended July 1, 2022, other expense was $6,167 compared to other income of $4,567 in the nine months ended July 2, 2021.

Net investment losses on the assets related to the Company’s non-qualified deferred compensation plan in the nine months ended July 1, 2022 were $4,443, compared to net investment gains and earnings of $5,554 in the nine months ended July 2, 2021.

Foreign currency exchange losses were $1,320 for the nine months ended July 1, 2022, compared to $99 for the nine months ended July 2, 2021.

Income Tax Expense

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

The effective tax rate for the three and six month periods ended April 1, 2022 were 25.1% and 25.3%, respectively, compared to 25.4% and 24.7% in the corresponding periods of the prior year.

A key factor impacting the effective tax rate for the six months ended April 2, 2021 was the favorable impact from an intra-entity transfer of assets other than inventory reported in the prior year period.

Net income for the three months ended April 1, 2022 was $9,900, or $0.97 per diluted common class A and B share, compared to net income of $27,834, or $2.74 per diluted common class A and B share, for the second quarter of the prior fiscal year.

Net income for the six months ended April 1, 2022 was $20,756, or $2.04 per diluted common class A and B share, compared to net income of $47,681, or $4.70 per diluted common class A and B share, for the six months ended April 2, 2021.

The effective tax rate for the three and nine month periods ended July 1, 2022 were 26.8% and 25.9%, respectively, compared to 26.4% and 25.3% in the corresponding periods of the prior year.

Net income for the three months ended July 1, 2022 was $14,082, or $1.38 per diluted common class A and B share, compared to net income of $28,774, or $2.83 per diluted common class A and B share, for the third quarter of the prior fiscal year.

Net income for the nine months ended July 1, 2022 was $34,838, or $3.42 per diluted common class A and B share, compared to net income of $76,455, or $7.53 per diluted common class A and B share, for the nine months ended July 2, 2021.

Liquidity and Financial Condition

Cash and cash equivalents totaled $113,186 as of April 1, 2022, compared to cash and cash equivalents of $186,921 as of April 2, 2021.

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Cash and cash equivalents totaled $117,567 as of July 1, 2022, compared to cash and cash equivalents of $249,016 as of July 2, 2021.

The decrease in cash year over year was due primarily to the Company's decision to build and procure numerous categories of inventory (in some cases at significantly higher prices than was historically paid) in an attempt to mitigate against potential shortages during this fiscal year.

The Company’s debt to total capitalization ratio was 0% as of April 1, 2022 and April 2, 2021.

The Company’s total debt balance was $0 as of each of April 1, 2022 and April 2, 2021.

The Company’s debt to total capitalization ratio was 0% as of July 1, 2022 and July 2, 2021.

The Company’s total debt balance was $0 as of each of July 1, 2022 and July 2, 2021.

See “Note 11 – Indebtedness” in the notes to the Company’s accompanying condensed consolidated financial statements for further discussion.

Accounts receivable, net of allowance for doubtful accounts, were $119,517 as of April 1, 2022, a decrease of $10,622 compared to $130,139 as of April 2, 2021.

The decrease is consistent with decreased sales volumes year over year.

Inventories were $235,220 as of April 1, 2022, an increase of $110,682, compared to $124,538 as of April 2, 2021.

As noted above, the increase in our inventory balances over the prior year period is due to increased raw material and other component purchases, at higher costs, in an effort to meet increased demand for products in the current year period.

Accounts payable were $56,720 at April 1, 2022 compared to $50,609 as of April 2, 2021, which increase corresponded with the increase in inventory balances between periods.

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Accounts receivable, net of allowance for doubtful accounts, were $103,244 as of July 1, 2022, an increase of $8,494 compared to $94,750 as of July 2, 2021.

The increase is consistent with increased sales volumes in three of the operating segments year over year.

Receivables balances in the Fishing segment remained consistent with the prior year.

Inventories were $250,956 as of July 1, 2022, an increase of $120,214, compared to $130,742 as of July 2, 2021.

As noted above, the increase in our inventory balances over the prior year period is primarily due to increased raw material and other component purchases, in many instances at higher costs, in an effort to meet increased demand for products in the current year period.

Accounts payable were $50,780 at July 1, 2022 compared to $54,991 as of July 2, 2021.

The Company’s cash flows from operating, investing and financing activities, as presented in the Company’s accompanying Condensed Consolidated Statements of Cash Flows, are summarized in the following table:

Six months ended

(thousands) April 1,

2022 April 2,

Cash used for:

Nine months ended

(thousands) July 1,

Cash (used for) provided by:

Operating activities $ (86,413) $ 57,611

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Effect of foreign currency rate changes on cash (2,104) 1,228

Decrease in cash and cash equivalents $ (127,262) $ (25,516)

(Decrease) increase in cash and cash equivalents $ (122,881) $ 36,579

Operating Activities

Cash used for operations totaled $104,648 for the six months ended April 1, 2022 compared to $11,955 during the corresponding period of the prior fiscal year.

The increase in cash used for operations over the prior year six month period was due primarily to the Company's decision to build and procure inventory in its attempt to mitigate against shortages in meeting product demand.

Lower net income in the current year to date period also contributed to increased use of cash between periods.

Depreciation and amortization charges were $6,914 for the six month period ended April 1, 2022 compared to $6,751 for the corresponding period of the prior year.

Cash used for operations totaled $86,413 for the nine months ended July 1, 2022 compared to cash provided by operations of $57,611 during the corresponding period of the prior fiscal year.

The increase in cash used for operations over the prior year nine month period was due primarily to the Company's decision to build and procure certain raw material and component inventory in its attempt to mitigate against shortages in meeting product demand.

Lower net income in the current year to date period also contributed to the change between periods.

Depreciation and amortization charges were $10,434 for the nine month period ended July 1, 2022 compared to $10,015 for the corresponding period of the prior year.

Investing Activities

Cash used for investing activities totaled $15,722 for the six months ended April 1, 2022 compared to $9,822 for the corresponding period of the prior fiscal year.

Cash usage for capital expenditures totaled $15,724 for the current year six month period and $9,828 for the prior year period.

The increase in capital expenditures in the current year period is primarily related to the expansion of the Fishing facility to accommodate additional production.

Cash used for investing activities totaled $25,150 for the nine months ended July 1, 2022 compared to $15,468 for the corresponding period of the prior fiscal year.

Cash usage for capital expenditures totaled $25,162 for the current year nine month period and $15,481 for the prior year period.

The increase in capital expenditures in the current year period is primarily related to the expansion of Fishing facilities to accommodate additional production.

Any additional capital expenditures in fiscal 2022 are expected to be funded by working capital.

Financing Activities

Cash used for financing activities totaled $6,528 for the six months ended April 1, 2022 compared to $4,690 for the six month period ended April 2, 2021 and represents the payment of dividends and purchase of treasury stock.

The Company had no debt during either quarter ended April 1, 2022 and April 2, 2021.

Cash used for financing activities totaled $9,214 for the nine months ended July 1, 2022 compared to $6,792 for the nine month period ended July 2, 2021 and represents the payment of dividends and purchase of treasury stock.

The Company had no debt during either quarter ended July 1, 2022 and July 2, 2021.

See Note 11 "Indebtedness" to the accompanying Condensed Consolidated Financial Statements for additional information on our credit facilities.

As of April 1, 2022 the Company held approximately $52,895 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.

As of July 1, 2022 the Company held approximately $52,208 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.

Contractual Obligations and Off Balance Sheet Arrangements

JOHNSON OUTDOORS INC.

The Company has contractual obligations and commitments to make future payments including under operating leases and open purchase orders.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended April 1, 2022.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended July 1, 2022.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers compensation insurance.

Letters of credit outstanding were approximately $181 and $181 as of April 1, 2022 and April 2, 2021, respectively.

Letters of credit outstanding were approximately $173 and $181 as of July 1, 2022 and July 2, 2021, respectively.

The Company anticipates making contributions of $22 to its defined benefit pension plan during the remainder of fiscal 2022.

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Critical Accounting Policies and Estimates

JOHNSON OUTDOORS INC.

under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 10, 2021.

There were no significant changes to the Company’s critical accounting policies and estimates during the six months ended April 1, 2022.

The Company’s critical accounting policies and estimates are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending October 1, 2021 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 10, 2021.

There were no significant changes to the Company’s critical accounting policies and estimates during the nine months ended July 1, 2022.

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 2. Management’s Discussion and Analysis