What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-12-09 compared with 2021-12-10 · 105 added, 108 removed, 174 unchanged (55% of the section changed)

6 unchanged sentences

Coronavirus (COVID-19)

Due to the timing of the COVID-19 outbreak, the Company's primary-selling season during fiscal 2020 was interrupted resulting in a significant shift in sales volumes during the 2020 fiscal year toward the latter half of that fiscal year versus the 2019 fiscal year, where our heaviest sales volumes occurred during our second and third fiscal quarters.

As stay at home restrictions were lifted, the Company saw an increase in demand for many of its warm weather outdoor recreational products later during fiscal 2020 as consumers took advantage of being outdoors.

As a result, each of our Fishing, Camping and Watercraft Recreation segments experienced strong demand in the latter half of fiscal 2020.

This demand continued into and throughout our fiscal 2021, resulting in increased sales volumes across all Company segments in fiscal 2021.

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

These adverse supply chain 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.

Specifically, during the fourth quarter of fiscal 2021, 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.

As a result of these disruptions, starting during the latter portion of fiscal 2021, the Company took action to closely monitor its supply chain in order to meet the continued strong consumer demand and to attempt to continue to fulfill orders.

These actions included 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 resulted in the Company carrying significantly higher levels of inventory for a number of its materials, components and products at the end of fiscal 2021.

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

Nonetheless, these supply chain disruptions remain fluid and will likely impact the cost of goods sold for future sales of product or 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.

The Company's prior fiscal year ended October 2, 2020 comprised 53 weeks, whereas fiscal 2021 and 2019 each comprised 52 weeks.

The additional week in fiscal 2020 increased net sales by less than 2% over the prior year.

The Company’s fiscal 2021 revenues increased by 26% over the prior year, driven primarily by strong performance in the Fishing, Camping and Watercraft Recreation segments where the Company saw strong demand for its outdoor recreation products as a result of consumers recreating outdoors in light of COVID-19.

Operating profit in 2021 increased $40,213, or 57%, over 2020.

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

As a result, increased participation in Fishing, Camping and Watercraft Recreation also increased demand for our products across Company segments beginning in fiscal 2020 and continuing throughout 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 through 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 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 most impacted by the supply chain and logistics disruptions, there has been limited availability of those materials and components, as well as increased pricing and inflationary pressures on such components when they have become available, all of which impacted our margins during fiscal 2022.

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, shortages throughout fiscal 2022 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 prior year, despite continued demand for our Fishing 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 fiscal 2022.

Though the Company continues to believe the inventory that it has built and which exists on its balance sheet is useable and salable 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 supply chain disruptions, as well as inflationary pricing conditions for raw materials and components necessary to manufacture product, will continue into fiscal 2023, the Company remains focused on evaluating and pursuing additional options (beyond building inventory) to meet the demand for its products.

During fiscal 2023 the Company expects to closely monitor customer demand and proactively manage its higher than normal inventory levels.

Nonetheless, these supply chain and logistics disruptions and inflationary pricing conditions remain fluid and will likely adversely impact the cost of goods sold for future sales of product.

The Company's fiscal 2022 and 2021 each comprised 52 weeks, whereas the fiscal year ended October 2, 2020 comprised 53 weeks.

The Company’s fiscal 2022 revenues decreased by 1% from the prior year.

While consumer and customer demand for the Company's products remained strong throughout fiscal 2022 as evidenced by outstanding order volumes, sales volumes were negatively impacted by product availability caused by the supply chain disruptions described above, 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 $44,973 decrease in operating profit in fiscal 2022 over fiscal 2021.

Results of Operations

27 unchanged sentences

Fiscal 2022 vs.

Net sales in 2021 increased by 26% to $751,651 compared to $594,209 in 2020.

Foreign currency exchange had a favorable impact of less than 1%, on the current year’s sales versus the prior year.

Net sales for the Fishing business increased by $103,122, or 23% during 2021 from 2020.

The increase over the prior year was driven by continued new product success and increased participation in fishing, principally as a result of the effect of COVID-19 on consumer recreation and leisure choices, resulting in higher demand across all product lines in this segment.

Net sales in fiscal 2022 decreased by 1% to $743,355 compared to $751,651 in fiscal 2021.

Foreign currency exchange had an unfavorable impact of less than 1% on the current year’s sales versus the prior year.

Net sales for the Fishing business decreased by $26,418, or 5% during fiscal 2022 from fiscal 2021.

While customer and consumer demand was strong, the decrease over the prior year was driven by significant supply chain disruptions and the resulting unavailability of certain necessary components (especially as it related to electronic components) experienced in the current year, 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.

Camping net sales increased $7,434, or 12%, in 2022 from 2021.

Increased sales of consumer tents and Jetboil products as a result of increased participation in outdoor recreation activities were the primary driver of the increase year over year.

Increased sales of Eureka and Jetboil products as a result of continued participation in outdoor recreation activities were the primary driver of the increase year over year.

Net sales in the Watercraft Recreation business increased $1,337, or 2%.

Increased demand as a result of increased participation in watercraft recreation activities during the COVID-19 pandemic, combined with new product success, drove the overall increase over the prior year.

Continued new product success drove the overall increase over the prior year.

Diving net sales increased $9,427, or 14%, year over year.

Prior year sales were negatively impacted due to the effects of COVID-19 on demand globally due to restrictions in destination travel and tourism.

As travel restrictions started to lift throughout fiscal 2021, tourism has begun to recover, resulting in increased demand and sales in this segment over the prior year.

In addition, foreign currency translation favorably impacted sales by approximately 3.3% in 2021 versus the prior year period.

Prior year sales were negatively impacted due to the negative effects of COVID-19 on demand due to restrictions in destination travel and tourism.

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 these segment of approximately 4.5% in 2022 versus the prior year period.

Cost of Sales

Cost of sales was $472,023, or 63.5% of net sales, on a consolidated basis for fiscal 2022 compared to $417,526, or 55.5% of net sales, in the prior year.

Higher sales volumes between years were the primary driver of the increase in the cost of sales between periods.

Favorable product mix and pricing between fiscal years offset the impact of approximately $7,200 of additional tariffs on Chinese goods and components during fiscal 2021, as well as increased freight costs over the prior year.

Gross profit of $334,125 was 44.5% of net sales on a consolidated basis for the year ended October 1, 2021 compared to $264,993, or 44.6% of net sales in the prior year.

Gross profit in the Fishing business increased by $39,676 from the prior year due primarily to the 23% increase in net sales year over year.

Favorable product mix and improved absorption of overhead costs during fiscal 2021 partially offset approximately $5,900 of additional tariff costs on Chinese sourced goods and components and higher freight costs incurred during fiscal 2021 versus fiscal 2020.

Despite the decrease in sales over the prior fiscal year, the increase in cost of sales was primarily driven by significant increases in materials costs between years.

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 segments.

Gross profit of $271,332 was 36.5% of net sales on a consolidated basis for the year ended September 30, 2022 compared to $334,125, or 44.5% of net sales in the prior year.

Gross profit in the Fishing business decreased by $66,217 from the prior year due primarily to the 5% decrease in net sales year over year, as well as significant increases in materials costs, as discussed above.

Camping gross profit increased by $1,857 from 2021 due primarily to increased sales volumes, pricing actions and a favorable mix of products sold in the current year as compared to the prior year.

Gross profit in the Watercraft Recreation segment increased by $12,289 from 2020 due primarily to increased sales volumes in 2021 versus the prior year and the resulting improvement in absorption of overhead costs.

The $5,463 increase in gross profit in the Diving segment was due primarily to increased sales volumes, pricing actions and favorable product mix during fiscal 2021 as compared to the prior year.

Gross profit in the Watercraft Recreation segment decreased by $2,525 from 2021, despite increased sales in 2022 versus the prior year, primarily due to increased materials and freight costs.

The $4,169 increase in gross profit in the Diving segment was due primarily to increased sales volumes and pricing actions during fiscal 2022 as compared to the prior year.

Operating Expenses

Operating expenses increased from the prior year by $28,919.

The increase was driven primarily by higher sales volume related costs incurred in fiscal 2021 as compared to the prior fiscal year.

Additionally, increased headcount and compensation costs further increased expenses year over year.

Operating expenses for the Fishing segment increased by $13,069 from fiscal 2020 levels.

The increase was due primarily to higher sales volume related expenses, as well as increased people costs between years.

Camping operating expenses increased by $1,879 from the prior year due primarily to increased sales volume related expenses.

In the Watercraft Recreation segment, operating expenses increased $2,787 from their levels in fiscal 2020 due primarily to increased sales volume related expenses in 2021, partially offset by decreased spending rate on advertising and promotions.

Operating expenses for the Diving business increased by $1,357 year over year due primarily to increased sales volume related expenses, as well as increased people costs between periods.

The Company's 2021 general corporate expenses of $36,317 increased $9,827 from $26,490 in 2020.

The year over year increase reflects higher people costs including $2,900 of higher deferred compensation expenses and higher health insurance costs over the prior year as well as higher professional services expense.

Operating expenses decreased from the prior year by $17,820.

The decrease was primarily due to the impact of overall lower sales volume-driven expenses, as well as lower variable and deferred compensation expense incurred in fiscal 2022 as compared to the prior fiscal year.

Operating expenses for the Fishing segment decreased by $9,160 from fiscal 2021 levels.

The decrease was due primarily to lower sales volume related expenses between years.

Camping operating expenses increased by $2,467 from the prior year due primarily to increased sales volume related expenses and increased people costs.

In the Watercraft Recreation segment, operating expenses increased $475 from their levels in fiscal 2021 due primarily to increased sales volume related expenses in 2022.

Operating expenses for the Diving business increased by $993 year over year due primarily to increased sales volume related expenses between periods.

The Company's fiscal 2022 general corporate expenses of $23,722 decreased $12,595 from $36,317 in fiscal 2021.

The year over year decrease reflects lower people costs, including $11,200 of lower deferred compensation expenses, as well as lower incentive compensation and lower health insurance costs from the prior year.

Operating Results

The Company’s operating profit was $66,310 in fiscal 2022 compared to an operating profit of $111,283 in fiscal 2021.

Fishing operating profit increased by $26,606 to $122,490 from $95,884 in the prior year due primarily to higher sales volumes between years.

The operating profit for Camping was $14,025 compared to $4,406 in 2020 which increase was also primarily a result of higher sales volumes between periods.

The operating profit for the Watercraft Recreation business was $9,173 in fiscal 2021 compared to a loss of $329 in fiscal 2020 due to the factors noted above on changes in sales volumes and operating expenses.

Operating profit for the Diving business increased by $4,106 in fiscal 2021 from fiscal 2020, due to recovery from the impact of COVID-19 and demand for our Diving products and the other factors discussed above.

Fishing operating profit decreased by $57,057 to $65,433 from $122,490 in the prior year due primarily to higher costs of goods and also lower sales volumes between years, stemming from supply chain disruptions, which were particularly acute in electronics.

The operating profit for Camping was $13,415 compared to $14,025 in 2021 which decrease was primarily a result of the higher operating expenses between periods.

The operating profit for the Watercraft Recreation business was $6,173 in fiscal 2022 compared to $9,173 in fiscal 2021 due to the factors noted above on changes in sales volumes and operating

Operating profit for the Diving business increased by $3,175 in fiscal 2022 from fiscal 2021, due primarily to increased sales volumes and pricing actions.

Other Income and Expenses

Interest expense of $153 was relatively flat as compared to the prior year expense of $145.

Interest income of $366 decreased from prior year interest income of $1,413 due to the decrease in deposit interest rates year over year.

Net other income of $1,418 in fiscal 2021 increased slightly from net other income of $1,362 in fiscal 2020.

The current year net other income included currency losses of $215 and market gains and dividends of $5,329 on deferred compensation plan assets, partially offset by pension termination expense of $2,526.

In the prior year, net other income included $269 of currency losses and $2,454 of market gains and dividends on the deferred compensation plan assets.

The dividends and market gains and losses on deferred compensation plan assets recognized in the Consolidated Statement of Operations in “Other income, net” are offset as compensation expense in “Operating expenses.”

Interest income of $807 increased from prior year interest income of $366 due to the increase in deposit interest rates year over year.

Net other expense of $8,076 in fiscal 2022 decreased from net other income of $1,418 in fiscal 2021.

The current year net other expense included currency losses of $1,741 and market losses net of dividend income of $5,878 on deferred compensation plan assets.

In the prior year, net other income included $5,329 of market gains and dividends on the deferred compensation plan assets, partially offset by $215 of currency losses and pension termination expense of $2,526.

The dividends and market gains and losses on deferred compensation plan assets recognized in the Consolidated Statement of Operations in “Other expense (income), net” are offset as compensation expense in “Operating expenses.”

Pretax Income and Income Taxes

4 unchanged sentences

Net sales in 2021 increased by 26% to $751,651 compared to $594,209 in 2020.

The additional week in the fiscal year drove an increase in net sales of approximately 1.5% over fiscal 2019.

Foreign currency exchange had a $651 unfavorable impact, less than 1%, on 2020 fiscal year’s sales versus 2019.

Foreign currency exchange had a favorable impact of less than 1%, on the fiscal 2021 sales versus the prior year.

Net sales for the Fishing business increased by $103,122, or 23% during 2021 from 2020.

Increased demand late in fiscal 2020 was more than enough to overcome the impact of COVID-19 related restrictions and shutdowns earlier in 2020, resulting in the increase between years.

The increase over fiscal 2020 was driven by continued new product success and increased participation in fishing, principally as a result of the effect of COVID-19 on consumer recreation and leisure choices, resulting in higher demand across all product lines in this segment.

Camping net sales increased $21,329, or 51%, in 2021 from 2020.

Increased sales of consumer tents and Jetboil products as a result of increased participation in outdoor recreation activities were more than enough to overcome declines in military tent sales year over year.

Net sales in the Watercraft Recreation business increased $8,359, or 25% in 2020 from 2019.

Despite COVID-19 related shutdowns early in fiscal 2020, increased demand later in the year drove the overall increase over 2019.

See "Coronavirus (COVID-19)" above for more information regarding the impact the COVID-19 pandemic had on our fiscal 2020 sales.

Diving net sales decreased $15,433, or 20%, from 2020 to 2019.

The decrease was largely due to the effects of COVID-19 on demand globally due to restrictions during 2020 in destination travel and tourism.

In addition, foreign currency translation negatively impacted sales by approximately 1% in 2020 versus 2019.

Increased sales of consumer tents and Jetboil products as a result of increased participation in outdoor recreation activities were the primary driver of the increase year over year.

Net sales in the Watercraft Recreation business increased $24,746, or 59% from 2020 to 2021.

Increased demand as a result of increased participation in watercraft recreation activities during the COVID-19 pandemic, combined with new product success, drove the overall increase between years.

Diving net sales increased $8,574, or 14%, year over year.

Fiscal 2020 sales were negatively impacted due to the effects of COVID-19 on demand globally due to restrictions in destination travel and tourism.

As travel restrictions started to lift throughout fiscal 2021, tourism began to recover, resulting in increased demand and sales in this segment between years.

In addition, foreign currency translation favorably impacted sales by approximately 3.3% in 2021 versus 2020.

Cost of Sales

Cost of sales was $329,216, or 55.4% of net sales, on a consolidated basis for fiscal 2020 compared to $312,663, or 55.6% of net sales, in the prior year.

Cost of sales was $417,526, or 55.5% of net sales, on a consolidated basis for fiscal 2021 compared to $329,216, or 55.4% of net sales, in fiscal 2020.

Higher sales volumes between years were the primary driver of the increase in the cost of sales between periods.

Additionally, the impact of approximately $2,000 of additional tariffs during fiscal 2020, which increased our cost of sales, on Chinese goods and components over the prior year was offset by favorable product mix and pricing between fiscal years.

Gross profit of $334,125 was 44.5% of net sales on a consolidated basis for the year ended October 1, 2021 compared to $264,993, or 44.6% of net sales in fiscal 2020.

Gross profit in the Fishing business increased by $18,625 from 2019 to 2020 due primarily to the 9% increase in net sales year over year.

The recovery of overpayments of excise taxes during fiscal 2020 more than offset approximately $1,000 of new tariff costs on Chinese sourced goods and components incurred during fiscal 2020.

Camping gross profit in fiscal 2020 increased by $1,321 from 2019 due primarily to increased sales volumes and a favorable mix of products sold in fiscal 2020 as compared to fiscal 2019.

Gross profit in the Watercraft Recreation segment increased in fiscal 2020 by $3,840 from 2019 due primarily to increased sales volumes in 2020 versus 2019 and the resulting improvement in absorption of overhead costs.

The $8,467 decrease in gross profit in the Diving segment from 2019 to 2020 was due primarily to decreased sales volumes during fiscal 2020 as compared to fiscal 2019.

Gross profit in the Fishing business in fiscal 2021 increased by $39,676 from fiscal 2020 due primarily to the 23% increase in net sales year over year.

Camping gross profit increased by $11,497 from 2020 due primarily to increased sales volumes, pricing actions and a favorable mix of products sold in fiscal 2021 as compared to fiscal 2020.

Gross profit in the Watercraft Recreation segment increased by $12,289 from fiscal 2020 due primarily to increased sales volumes in fiscal 2021 versus the prior year and the resulting improvement in absorption of overhead costs.

The $5,463 increase in gross profit in the Diving segment was due primarily to increased sales volumes, pricing actions and favorable product mix during fiscal 2021 as compared to fiscal 2020.

Operating Expenses

Operating expenses increased during fiscal 2020 from 2019 by $7,941.

The increase was driven primarily by higher sales volume related costs incurred in fiscal 2020 as compared to the fiscal 2019.

Additionally, increased headcount and people costs further increased expenses year over year.

Operating expenses for the Fishing segment increased in fiscal 2020 by $6,832 from fiscal 2019 levels.

The increase was due primarily to higher sales volume related expenses between years and increased headcount related expenses incurred in fiscal 2020.

Camping operating expenses decreased in fiscal 2020 by $189 from 2019 due primarily to efforts to reduce spending in light of COVID-19 uncertainties during 2020, primarily as it related to travel, entertainment and advertising expenses.

In the Watercraft Recreation segment, fiscal 2020 operating expenses increased $1,347 from their levels in fiscal 2019 due primarily to increased sales volume related expenses in 2020.

Operating expenses for the Diving business decreased by $2,848 year over year due primarily to lower sales volume related expenses, as well as lower headcount related expenses between periods.

The Company's fiscal 2020 general corporate expenses of $26,490 increased $2,799 from $23,961 in 2019.

The year over year increase primarily reflects $1,800 of higher deferred compensation expenses, as well as higher health insurance costs offset in part by decreased investment in marketing support between years.

Operating expenses increased in fiscal 2021 from fiscal 2020 by $28,919.

The increase was driven primarily by higher sales volume related costs incurred in fiscal 2021 as compared to the prior fiscal year.

Additionally, increased headcount and compensation costs further increased expenses year over year.

Operating expenses for the Fishing segment increased by $13,069 from fiscal 2020 levels.

The increase was due primarily to higher sales volume related expenses, as well as increased people costs between years.

Camping operating expenses increased by $1,879 in fiscal 2021 from the prior year due primarily to increased sales volume related expenses.

In the Watercraft Recreation segment, operating expenses increased $2,787 in fiscal 2021 from their levels in fiscal 2020 due primarily to increased sales volume related expenses in 2021, partially offset by decreased spending rate on advertising and promotions.

Operating expenses for the Diving business increased by $1,357 year over year due primarily to increased sales volume related expenses, as well as increased people costs between periods.

The Company's 2021 general corporate expenses of $36,317 increased $9,827 from $26,490 in 2020.

Operating Results

The Company’s operating profit was $111,283 in fiscal 2021 compared to an operating profit of $71,070 in fiscal 2020.

Fishing operating profit increased by $11,792 to $95,884 in fiscal 2020 from $84,092 in fiscal 2019 due primarily to higher sales volumes between years.

The operating profit for Camping in fiscal 2020 was $4,406 compared to $2,896 in 2019 which increase was also primarily a result of higher sales volumes between periods.

The operating loss for the Watercraft Recreation business was $329 in fiscal 2020 compared to a loss of $2,822 in fiscal 2019 due to the factors noted above on changes in sales volumes and operating expenses.

Operating profit for the Diving business decreased by $5,619 in fiscal 2020 from fiscal 2019, due to the impact of COVID-19 and demand for our Diving products and the other factors discussed above.

Fishing operating profit increased by $26,606 to $122,490 from $95,884 in the prior year due primarily to higher sales volumes between years.

The operating profit for Camping was $14,025 compared to $4,406 in 2020 which increase was also primarily a result of higher sales volumes between periods.

Other Income and Expenses

Interest expense in fiscal 2020 of $143 declined slightly from 2019 expense of $172.

Interest income in fiscal 2020 of $1,413 decreased from 2019 interest income of $2,109 due to declining interest rates in 2020.

Net other income of $1,362 in fiscal 2020 increased from net other income of $796 in fiscal 2019.

Fiscal 2020 net other income included currency losses of $269 and market gains and dividends of $2,454 on deferred compensation plan assets.

In fiscal 2019, net other income included $645 of currency gains and $610 of market gains and dividends on the deferred compensation plan assets.

Interest expense in fiscal 2021 of $145 was relatively flat as compared to the prior year expense of $143.

Interest income of $366 decreased from fiscal 2020 year interest income of $1,413 due to the decrease in deposit interest rates year over year.

Net other income of $1,418 in fiscal 2021 increased slightly from net other income of $1,362 in fiscal 2020.

Fiscal 2021 net other income included currency losses of $215 and market gains and dividends of $5,329 on deferred compensation plan assets, partially offset by pension termination expense of $2,526.

In fiscal 2020, net other income included $269 of currency losses and $2,454 of market gains and dividends on the deferred compensation plan assets.

1 unchanged sentence

The Company realized pretax income of $112,922 in fiscal 2021 compared to $73,702 in fiscal 2020.

The Company recorded income tax expense of $18,469 in 2020, which equated to an effective tax rate of 25.1%, compared to $15,094 in 2019, which equated to an effective tax rate of 22.7%.

The Company recorded income tax expense of $29,541 in fiscal 2021, which equated to an effective tax rate of 26.2%, compared to $18,469 in fiscal 2020, which equated to an effective tax rate of 25.1%.

The Company recognized net income of $83,381, or $8.21 per diluted common share, in fiscal 2021 compared to $55,233, or $5.47 per diluted common share, in fiscal 2020 based on the factors discussed above.

Financial Condition, Liquidity and Capital Resources

The Company believes its existing balances of cash, cash equivalents and short-term investments will be sufficient to satisfy its working capital needs, capital asset purchase requirements, outstanding commitments and other liquidity requirements associated with its existing operations over the next twelve months.

The Company believes its existing balances of cash and cash equivalents will be sufficient to satisfy its working capital needs, capital asset purchase requirements, outstanding commitments and other liquidity requirements associated with its existing operations over the next twelve months.

The Company currently anticipates the cash used for future dividends will come from its current cash and cash generated from ongoing operating activities.

3 unchanged sentences

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

(thousands) October 1

(thousands) September 30

2022 October 1

2020 September 27

Cash provided by (used for):

2021 October 2

Cash (used for) provided by :

Operating activities $ (62,144) $ 58,318 $ 61,493

2 unchanged sentences

Effect of foreign currency rate changes on cash (4,590) 107 1,256

Increase in cash and cash equivalents $ 28,011 $ 40,055 $ 50,505

(Decrease) increase in cash and cash equivalents $ (110,645) $ 28,011 $ 40,055

Operating Activities

The following table sets forth the Company’s working capital position at the end of each of the years shown:

(thousands, except share data) October 1

(thousands, except share data) September 30

2022 October 1

3 unchanged sentences

Current ratio 4.2:1 3.6:1

Cash flows provided by operations totaled $58,318, $61,493 and $45,844 in fiscal 2021, 2020 and 2019, respectively.

Cash flows provided by operations decreased slightly from the prior year despite an increase in net income due primarily to increases in inventory levels and other working capital changes.

Cash flows used for operations in fiscal 2022 totaled $62,144, and cash provided by operations totaled $58,318 and $61,493 in fiscal 2021 and 2020, respectively.

The change in operating cash flow from the prior year is due primarily to a decrease in net income, as well as increases in inventory levels and other working capital changes.

Depreciation and amortization charges were $14,234, $13,401 and $14,926 in fiscal 2022, 2021 and 2020, respectively.

Investing Activities

Cash flows used for investing activities were $21,381 and $15,587 in fiscal 2021 and 2020, respectively, and cash flows provided by investing activities were $11,989 in 2019.

There were no sales or purchases of short-term investments in fiscal 2021 or 2020, while proceeds from the sale of short-term investments in 2019 provided cash of $35,838, offset by purchases of $7,124.

Cash flows used for investing activities were $31,678, $21,381, and $15,587 in fiscal 2022, 2021, and 2020, respectively.

There were no sales or purchases of short-term investments in fiscal 2022, 2021 or 2020.

Expenditures for property, plant and equipment were $31,690, $21,409 and $15,600 in fiscal 2022, 2021 and 2020, respectively.

The increase from the prior year is due primarily to additional capacity investments made in the current year.

In general, the Company’s ongoing capital expenditures are primarily related to tooling for new products, facilities investments and information systems improvements.

4 unchanged sentences

The Company has contractual obligations and commitments to make future payments under its 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 year ended October 1, 2021.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the year ended September 30, 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 at October 1, 2021 and October 2, 2020 were $181 and $181, respectively, and were

included in the Company’s total loan availability.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of October 1, 2021 or October 2, 2020.

The Company anticipates making contributions of approximately $96 to its defined benefit pension plans through September 30, 2022.

Letters of credit outstanding at September 30, 2022 and October 1, 2021 were $173 and $181, respectively, and were included in the Company’s total loan availability.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of September 30, 2022 or October 1, 2021.

The Company has no other off-balance sheet arrangements.

2 unchanged sentences

As disclosed in our prior filings with the Securities and Exchange Commission and elsewhere herein, in December 2019, a new strain of coronavirus ("COVID-19"), began to spread globally, leaving no region or part of the world unaffected by the pandemic it has created.

Governments and health authorities have been taking, and continue to take, measures to prevent the spread of this virus (including in certain cases requiring or recommending a vaccine or imposing testing requirements), but it is presently unknown to what extent they will be successful or the potential timing of these measures and their outcome and impact on the Company's business in the future.

To the extent that COVID-19 continues to persist, among other things, the ability of the Company’s suppliers to manufacture and deliver the products that it sells to the Company, the ability of the Company to manufacture and deliver its products to its customers, the Company's ability to display its products at trade shows and similar events, the Company's ability to conduct meetings with its customers and prospective customers, and, if a significant number of its employees at a particular facility or location were to contract coronavirus, the Company’s ability to conduct its day-to-day operations could be adversely impacted.

Governments and health authorities took measures to prevent the spread of this virus (including in certain cases requiring or recommending a vaccine or imposing testing requirements), all of which impacted the Company's business and operations.

To the extent that COVID-19 continues to persist or recur, among other things, the ability of the Company’s suppliers to manufacture and deliver the products that it sells to the Company, the ability of the Company to manufacture and deliver its products to its customers, the Company's ability to display its products at trade shows and similar events, the Company's ability to conduct meetings with its customers and prospective customers, and, if a significant number of its employees at a particular facility or location were to contract coronavirus, the Company’s ability to conduct its day-to-day operations could be adversely impacted.

The financial impact of the coronavirus pandemic on the Company will depend on future developments, including related to any supply chain disruptions, that the Company cannot reasonably predict or estimate at this time, but any of which could materially and adversely affect its results for an unknown but possibly extended period.

4 unchanged sentences

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

Approximately 12% of the Company’s revenues for the fiscal year ended October 1, 2021 were denominated in currencies other than the U.S.

Approximately 13% of the Company’s revenues for the fiscal year ended September 30, 2022 were denominated in currencies other than the U.S.

Approximately 4% were denominated in euros and approximately 6% were denominated in Canadian dollars, with the remaining 3% denominated in various other foreign currencies.

6 unchanged sentences

Impact of Inflation

The Company anticipates that changing costs of basic raw materials may impact future operating costs and, accordingly, the prices of its products.

The Company anticipates that changing costs of basic raw materials (including due to inflationary conditions in the economy) may impact future operating costs and, accordingly, the prices of its products.

The Company is involved in continuing programs to mitigate the impact of cost increases through changes in product design and identification of sourcing and manufacturing efficiencies.

1 unchanged sentence

The Company’s results of operations and financial condition are presented based on historical cost.

The Company does not believe that inflation has significantly affected its results of operations.

Critical Accounting Estimates

58 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis