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Item 1. Financial Statements

2023-02-03 compared with 2022-08-05 · 145 added, 275 removed, 376 unchanged (53% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

(thousands, except per share data) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended

(thousands, except per share data) December 30, 2022 December 31, 2021

Net sales $ 178,337 $ 153,524

9 unchanged sentences

Interest expense 37 38

Other expense (income), net 4,669 ( 934 ) 6,167 ( 4,567 )

Other income, net ( 1,904 ) ( 774 )

Profit before income taxes 8,166 14,589

15 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

(thousands) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Three Months Ended

(thousands) December 30, 2022 December 31, 2021

Net income $ 5,879 $ 10,856

3 unchanged sentences

Change in pension plans, net of tax of $ 3 and $ 5 , respectively

( 7 ) 123 25 325

Total other comprehensive (loss) income ( 2,777 ) 865 ( 3,000 ) 1,997

Total other comprehensive income (loss) 2,945 ( 407 )

Total comprehensive income $ 8,824 $ 10,449

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(thousands, except share data) July 1, 2022 October 1, 2021 July 2, 2021

(thousands, except share data) December 30, 2022 September 30, 2022 December 31, 2021

Current assets:

47 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Nine Months Ended July 1, 2022

Three Months Ended December 30, 2022

(thousands except for shares) Shares Common Stock Capital in

4 unchanged sentences

Income (Loss) Treasury

BALANCE AT OCTOBER 1, 2021 10,127,200 $ 509 $ 82,899 $ 370,501 $ 7,386 $ ( 2,790 )

BALANCE AT SEPTEMBER 30, 2022 10,192,051 $ 512 $ 87,351 $ 402,821 $ 620 $ ( 3,290 )

Net income — — — 5,879 — —

1 unchanged sentence

Award of non-vested shares 56,799 2 ( 1,381 ) — — 1,379

B to A conversion — — ( 154 ) — — 154

Stock-based compensation — — 953 — — —

3 unchanged sentences

BALANCE AT DECEMBER 30, 2022 10,241,237 $ 514 $ 86,923 $ 405,574 $ 3,565 $ ( 2,355 )

Net income — — — 9,900 — —

Dividends declared — — — ( 3,023 ) — —

Award of non-vested shares 13,493 1 — — — —

Stock-based compensation — — 959 — — —

Currency translation adjustment — — — — 168 —

Change in pension plans, net of tax of $ 6

Non-vested stock forfeitures ( 2,040 ) — 150 — — ( 150 )

Purchase of treasury stock at cost ( 512 ) — — — — ( 48 )

BALANCE AT APRIL 1, 2022 10,167,986 $ 511 $ 84,978 $ 385,229 $ 7,163 $ ( 3,295 )

Net income — — — 14,082 — —

Dividends declared — — — ( 3,021 ) — —

Issuance of stock under employee stock purchase plan 5,112 — 332 — — —

B to A conversion — — ( 2 ) — — 2

Stock-based compensation — — 1,061 — — —

Currency translation adjustment — — — — ( 2,770 ) —

Change in pension plans, net of tax of $( 2 )

— — — — ( 7 ) —

Treasury stock adjustment — — — — — 3

BALANCE AT JULY 1, 2022 10,173,098 $ 511 $ 86,369 $ 396,290 $ 4,386 $ ( 3,290 )

JOHNSON OUTDOORS INC.

Nine Months Ended July 2, 2021

Three Months Ended December 31, 2021

(thousands except for shares) Shares Common Stock Capital in

8 unchanged sentences

Award of non-vested shares 34,422 1 ( 2 ) — — —

B to A conversion — — ( 154 ) — — 154

Stock-based compensation — — 1,126 — — —

1 unchanged sentence

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 )

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

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(thousands) July 1, 2022 July 2, 2021

CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES

Three Months Ended

(thousands) December 30, 2022 December 31, 2021

CASH USED FOR OPERATING ACTIVITIES

Net income $ 5,879 $ 10,856

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

Adjustments to reconcile net income to net cash used for operating activities:

Depreciation 3,697 3,429

9 unchanged sentences

Other current assets ( 1,055 ) ( 1,955 )

Other non-current assets 104 ( 149 )

Other long-term liabilities ( 196 ) ( 2,622 )

2 unchanged sentences

CASH USED FOR INVESTING ACTIVITIES

Proceeds from sale of productive assets 12 13

Capital expenditures ( 6,649 ) ( 6,244 )

1 unchanged sentence

CASH USED FOR FINANCING ACTIVITIES

Common stock transactions 332 —

Dividends paid ( 3,126 ) ( 3,005 )

2 unchanged sentences

Effect of foreign currency rate changes on cash 1,408 ( 492 )

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

Decrease in cash and cash equivalents ( 26,381 ) ( 72,975 )

CASH AND CASH EQUIVALENTS

3 unchanged sentences

Non-cash treasury stock activity $ 1,379 $ —

Non-cash dividends 12 7

Cash paid for taxes 737 2,853

6 unchanged sentences

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 1, 2022 and July 2, 2021, and their results of operations for the three and nine month periods then ended and cash flows for the nine 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 and the continued disruption to the global supply chain and logistics infrastructure, the results of operations for the three and nine months ended July 1, 2022 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.

and subsidiaries (collectively, the “Company”) as of December 30, 2022 and December 31, 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 September 30, 2022 which was filed with the Securities and Exchange Commission on December 9, 2022.

Due to seasonal variations and other factors, some of which are described herein, including related to the aftereffects of the COVID-19 pandemic and the ensuing related disruptions to the global supply chains and logistics infrastructure, and the current inflationary environment (especially as it relates to the cost of raw materials and purchased components), the results of operations for the three months ended December 30, 2022 are not necessarily indicative of the results to be expected for the Company’s full 2023 fiscal year.

The current economic and business environment, including as it relates to inflationary pressures, combined with the continued impact of the pandemic on the global supply chain (specifically with respect to the sourcing, timing, availability and cost of raw materials and components that are necessary to manufacture our products) is beyond our control and remains highly uncertain and cannot be predicted at this time.

See “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.

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

1 unchanged sentence

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

Coronavirus (COVID-19)

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

In response to the COVID-19 outbreak, the governments of many countries, states, cities and other geographic regions imposed varying degrees of restrictions on social and commercial activity, including travel restrictions, quarantine guidelines, and related actions.

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, because we sell products that are used in a safe and socially distant manner in the great outdoors, the COVID-19 pandemic has had an overall favorable effect on our sales levels and the demand for our products starting at the end of our fiscal 2020 and continuing into fiscal 2022.

Nonetheless, the continued evolution of the pandemic has resulted in disruptions to the global supply chain and the logistics infrastructure (including with respect to the sourcing, timing, availability and cost of raw materials and components that are necessary to manufacture our products).

The lingering impact of these disruptions is not fully known as they, along with certain inflationary pressures in the economy, have resulted in increased costs associated with building certain items of our inventory, and may result in future economic slowdowns and ultimately lower demand for discretionary goods like our outdoor recreational products.

Furthermore, the continued impact of the pandemic on the global supply chain (including with respect to impacting the sourcing, timing, availability and cost of raw materials and components that are necessary to manufacture our products) is beyond our control and remains highly uncertain and cannot be predicted at his time.

2 ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts of $ 1,208 , $ 2,494 and $ 1,446 as of July 1, 2022, October 1, 2021 and July 2, 2021, respectively.

The increase in net accounts receivable to $ 103,244 as of July 1, 2022 from $ 71,321 as of October 1, 2021 is attributable to the seasonal nature of the Company’s business.

Accounts receivable are stated net of allowances for doubtful accounts of $ 1,151 , $ 1,037 and $ 2,662 as of December 30, 2022, September 30, 2022 and December 31, 2021, respectively.

The increase in net accounts receivable to $ 120,553 as of December 30, 2022 from $ 91,919 as of September 30, 2022 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.

In circumstances where specific collection concerns about a receivable exist, a reserve is established to value the affected account receivable at an amount the Company believes will be collected.

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

JOHNSON OUTDOORS INC.

business segment.

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

6 unchanged sentences

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

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

JOHNSON OUTDOORS INC.

stock outstanding, respectively.

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

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 1, 2022 and July 2, 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.

For the three month periods ended December 30, 2022 and December 31, 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.

3 unchanged sentences

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 1, 2022 and July 2, 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 38,353 and 40,743 for the Third months ended July 1, 2022 and July 2, 2021, respectively, and 38,477 and 40,471 for the nine months ended July 1, 2022 and July 2, 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 37,152 and 20,277 for the Third month periods ended July 1, 2022 and July 2, 2021, respectively, and 35,413 and 27,411 for the nine month periods ended July 1, 2022 and July 2, 2021, respectively.

For the three month periods ended December 30, 2022 and December 31, 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 60,390 and 37,916 for the three months ended December 30, 2022 and December 31, 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 53,699 and 26,232 for the three months ended December 30, 2022 and December 31, 2021, respectively.

Dividends per share

Dividends per share for the three and nine month periods ended July 1, 2022 and July 2, 2021 were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended Nine months ended

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

Dividends per share for the three month periods ended December 30, 2022 and December 31, 2021 were as follows:

Three Months Ended

December 30, 2022 December 31, 2021

Dividends declared per common share:

4 unchanged sentences

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 466,598 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at July 1, 2022.

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 395,018 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at December 30, 2022.

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.

Non-vested Stock

JOHNSON OUTDOORS INC.

All shares of non-vested restricted stock awarded by the Company have been granted in the form of shares of Class A common stock at their fair market value on the date of grant and vest within one year from the date of grant for stock granted to directors and four years from the date of grant for stock granted to officers and employees.

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 1, 2022 related to the Company’s stock ownership plans is as follows:

A summary of non-vested stock activity for the three months ended December 30, 2022 related to the Company’s stock ownership plans is as follows:

Shares Weighted Average

Non-vested stock at October 1, 2021 37,591 $ 80.86

Non-vested stock at September 30, 2022 58,136 $ 73.37

Non-vested stock grants 16,143 56.55

Restricted stock vested ( 7,350 ) 71.43

Forfeitures ( 2,040 ) 73.52

Non-vested stock at July 1, 2022 39,183 80.76

Non-vested stock at December 30, 2022 66,929 69.52

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 1,778 and 2,341 during the nine month periods ended July 1, 2022 and July 2, 2021, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 335 and $ 286 for the three month periods ended July 1, 2022 and July 2, 2021, respectively, and $ 896 and $ 862 for the nine month periods ended July 1, 2022 and July 2, 2021, respectively.

Unrecognized compensation cost related to non-vested stock as of July 1, 2022 was $ 1,737 , which amount will be amortized to expense through February 2026 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the nine month periods ended July 1, 2022 and July 2, 2021 was $ 1,002 and $ 1,950 , respectively.

Shares tendered back to the Company were 2,289 and 1,778 during the three month periods ended December 30, 2022 and December 31, 2021, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $ 456 and $ 295 for the three month periods ended December 30, 2022 and December 31, 2021, respectively.

Unrecognized compensation cost related to non-vested stock as of December 30, 2022 was $ 2,938 , which amount will be amortized to expense through December 2026 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the three month periods ended December 30, 2022 and December 31, 2021 was $ 429 and $ 573 , 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 stock on the date of grant and vest within one year from the date of grant for RSUs granted to directors, subject to satisfaction of applicable performance criteria, 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 1, 2022 follows:

A summary of RSU activity for the three months ended December 30, 2022 follows:

Number of RSUs Weighted Average

RSUs at October 1, 2021 69,768 $ 73.60

RSUs at September 30, 2022 65,994 $ 82.58

RSUs granted 36,484 56.54

RSUs vested ( 26,742 ) 64.51

RSU's forfeited ( 1,340 ) 74.62

RSUs at July 1, 2022 65,994 82.58

Stock compensation expense, net of forfeitures, related to RSUs was $ 636 and $ 735 for the three month periods ended July 1, 2022 and July 2, 2021, respectively, and $ 1,961 and $ 1,678 for the nine month periods ended July 1, 2022 and July 2, 2021, respectively.

Unrecognized compensation cost related to non-vested RSUs as of July 1, 2022 was $ 2,746 , which amount will be amortized to expense through September 2024 or adjusted for changes in future estimated or actual forfeitures.

RSUs at December 30, 2022 75,736 76.42

Stock compensation expense, net of forfeitures, related to RSUs was $ 476 and $ 727 for the three month periods ended December 30, 2022 and December 31, 2021, respectively.

Unrecognized compensation cost related to non-vested RSUs as of December 30, 2022 was $ 3,175 , which amount will be amortized to expense through September 2025 or adjusted for changes in future estimated or actual forfeitures.

JOHNSON OUTDOORS INC.

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 3,311 and 3,320 during the nine month periods ended July 1, 2022 and July 2, 2021, respectively.

The fair value of restricted stock units recognized as a tax deduction during the nine month periods ended July 1, 2022 and July 2, 2021 was $ 3,240 and $ 3,353 , respectively.

Shares tendered back to the Company for this purpose were 5,055 and 2,799 during the three month periods ended December 30, 2022 and December 31, 2021, respectively.

The fair value of restricted stock units recognized as a tax deduction during the three month periods ended December 30, 2022 and December 31, 2021 was $ 2,247 and $ 2,759 , 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 Third month period ended July 1, 2022, the Company issued 5,112 shares of Class A common stock and recognized $ 90 of expense in connection with the Employees' Stock Purchase Plan.

During the nine month period ended July 1, 2022, the Company issued 5,112 shares of Class A common stock and recognized $ 289 of expense in connection with the Employees' Stock Purchase Plan.

During the Third 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 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 December 30, 2022, the Company issued 0 shares of Class A common stock and recognized $ 21 of expense in connection with the Employees' Stock Purchase Plan.

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 Plan.

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

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

As of December 30, 2022, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 16 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 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 applicable 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.

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three months ended December 30, 2022 and December 31, 2021 were as follows:

Three months ended

December 30, 2022 December 31, 2021

Operating lease costs $ 2,430 $ 2,107

Short-term lease costs 529 414

Variable lease costs 41 45

Total lease cost $ 3,000 $ 2,566

JOHNSON OUTDOORS INC.

5 PENSION PLANS

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.

During the fourth quarter of fiscal 2021, the Company terminated its Johnson Outdoors Inc.

Mankato Operations Pension Plan and 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 $ 42 to its pension plans for the three months ended July 1, 2022 and July 2, 2021, respectively, and contributions of $ 74 and $ 130 for the nine months ended July 1, 2022 and July 2, 2021, respectively.

The components of net periodic benefit cost related to Company sponsored defined benefit plans for the three and nine month periods ended July 1, 2022 and July 2, 2021 were as follows:

Three Months Ended Nine Months Ended

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

Components of net periodic benefit cost:

Service cost $ — $ — $ — $ —

Interest on projected benefit obligation ( 1 ) 163 13 629

Less estimated return on plan assets — 6 — 327

Amortization of unrecognized losses ( 9 ) 163 34 432

Net periodic benefit cost $ ( 10 ) $ 320 $ 47 $ 734

Included in the amounts in the table above were rent expense to related parties of $ 314 and $ 291 for the three months ended December 30, 2022 and December 31, 2021, respectively.

As of December 30, 2022, 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 30, 2022.

As of December 30, 2022, the Company did not have any significant operating lease commitments that have not yet commenced.

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

Three months ended

December 30, 2022 December 31, 2021

Operating leases:

Operating lease ROU assets $ 55,647 $ 47,443

Current operating lease liabilities 7,510 5,646

Non-current operating lease liabilities 49,519 42,817

Total operating lease liabilities $ 57,029 $ 48,463

Weighted average remaining lease term (in years) 12.21 12.15

Weighted average discount rate 3.15 % 3.09 %

Cash paid for amounts included in the measurement of lease liabilities $ 2,149 $ 1,875

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at December 30, 2022 were as follows:

Year Related parties included

in total Total

Remainder of 2023 $ 929 $ 6,822

2024 1,270 8,166

2025 1,308 7,545

2026 1,348 5,878

2027 226 4,710

Thereafter — 36,096

Total undiscounted lease payments 5,081 69,217

Imputed interest ( 155 ) ( 12,188 )

Total net lease liability $ 4,926 $ 57,029

6 INCOME TAXES

For the three and nine months ended July 1, 2022 and July 2, 2021, 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 30, 2022 and December 31, 2021, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended

(thousands, except tax rate data)

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

December 30, 2022 December 31, 2021

Profit before income taxes $ 8,166 $ 14,589

1 unchanged sentence

Effective income tax rate 28.0 % 25.6 %

The effective tax rates for the three and nine months ended July 1, 2022 and the prior year periods were relatively consistent with no primary factors materially impacting the rate.

The increase in the effective tax rate for the three months ended December 30, 2022 compared to the three months ended December 31, 2021 was primarily due to the unfavorable tax expense impact of stock-based compensation awards in the current year period, compared to a tax benefit for similar awards in the prior year period.

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 1, 2022 and July 2, 2021 were:

JOHNSON OUTDOORS INC.

July 1, 2022 July 2, 2021

France France

The significant tax jurisdictions that have a valuation allowance for the periods ended December 30, 2022 and December 31, 2021 were:

December 30, 2022 December 31, 2021

Indonesia Indonesia

4 unchanged sentences

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 $ 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.

As of the date of this report, the following tax years remain open to examination by the respective significant tax jurisdictions:

Jurisdiction Fiscal Years

United States 2018-2021

Canada 2018-2021

France 2018-2021

Germany 2019-2021

Italy 2019-2021

Switzerland 2011-2021

7 INVENTORIES

1 unchanged sentence

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

2022 October 1,

2022 September 30,

2022 December 31,

Raw materials $ 149,986 $ 166,443 $ 150,064

2 unchanged sentences

$ 251,525 $ 248,649 $ 217,431

The changes in goodwill during the nine months ended July 1, 2022 and July 2, 2021 were as follows:

July 1, 2022 July 2, 2021

The changes in goodwill during the three months ended December 30, 2022 and December 31, 2021 were as follows:

December 30, 2022 December 31, 2021

Balance at beginning of period $ 11,160 $ 11,221

6 unchanged sentences

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 1, 2022 and July 2, 2021.

July 1, 2022 July 2, 2021

The following table summarizes the Company’s warranty activity for the three months ended December 30, 2022 and December 31, 2021.

December 30, 2022 December 31, 2021

Balance at beginning of period $ 9,639 $ 14,073

7 unchanged sentences

11 INDEBTEDNESS

The Company had no debt outstanding at July 1, 2022, October 1, 2021, or July 2, 2021.

The Company had no debt outstanding at December 30, 2022, September 30, 2022, or December 31, 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.

6 unchanged sentences

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 both July 1, 2022 and July 2, 2021 were approximately 2.8 % and 1.1 %, respectively.

The interest rates on the Revolver at both December 30, 2022 and December 31, 2021 were approximately 5.4 % and 1.1 %, respectively.

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

1 unchanged sentence

JOHNSON OUTDOORS INC.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of July 1, 2022 or July 2, 2021.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers’ compensation insurance, which totaled approximately $ 173 and $ 181 as of July 1, 2022 and July 2, 2021, respectively.

The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of December 30, 2022 or December 31, 2021.

12 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

5 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 13 % of the Company’s revenues for the nine month period ended July 1, 2022 were denominated in currencies other than the U.S.

Approximately 12 % of the Company’s revenues for the three month period ended December 30, 2022 were denominated in currencies other than the U.S.

Approximately 5 % were denominated in euros, approximately 5 % were denominated in Canadian dollars and approximately 1 % were denominated in Hong Kong dollars, with the remaining revenues denominated in various other foreign currencies.

3 unchanged sentences

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 1, 2022 and July 2, 2021, the Company held no foreign currency forward contracts.

As of December 30, 2022 and December 31, 2021, the Company held no foreign currency forward contracts.

13 FAIR VALUE MEASUREMENTS

8 unchanged sentences

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 1, 2022, October 1, 2021 and July 2, 2021 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 30, 2022, September 30, 2022 and December 31, 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.

Valuation Techniques

Rabbi Trust Assets

JOHNSON OUTDOORS INC.

Rabbi Trust Assets

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

3 unchanged sentences

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 1, 2022:

The following table summarizes the Company’s financial assets measured at fair value as of December 30, 2022:

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 22,684 $ — $ — $ 22,684

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

The following table summarizes the Company’s financial assets measured at fair value as of September 30, 2022:

Level 1 Level 2 Level 3 Total

Rabbi trust assets $ 21,436 $ — $ — $ 21,436

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

Rabbi trust assets $ 29,835 $ — $ — $ 29,835

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 1, 2022 and July 2, 2021 was:

Three Months Ended Nine months ended

Location of expense (income) recognized in Statement of Operations July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Rabbi trust assets Other expense (income), net $ 3,851 $ ( 1,351 ) $ 4,900 $ ( 5,151 )

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 1, 2022 or July 2, 2021.

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 30, 2022 and December 31, 2021 was:

Three Months Ended

Location of income recognized in Statement of Operations December 30, 2022 December 31, 2021

Rabbi trust assets Other income, net $ 1,383 $ 1,095

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 30, 2022 or December 31, 2021.

14 NEW ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements

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

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

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

This guidance was effective for the Company in the first quarter of fiscal year 2021, and must be adopted by applying a cumulative effect adjustment to retained earnings.

The Company adopted the provisions of this ASU at the beginning of the first quarter of fiscal 2021, however the ASU did

JOHNSON OUTDOORS INC.

not have a significant impact on its financial statements, and therefore no adjustment to retained earnings was necessary.

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 adopted the provisions of this ASU in fiscal 2021, however, the ASU did not have a significant impact on its disclosures.

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

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

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

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

The Company 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.

Recently issued accounting pronouncements

1 unchanged sentence

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

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

Subsequently in December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848)—Deferral of the Sunset Date of Topic 848, which delayed the effective date to December 31, 2024.

The Company does not expect this guidance to have a significant impact on its financial statements and disclosures.

JOHNSON OUTDOORS INC.

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

14 unchanged sentences

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

At July 1, 2022, the right to returns asset was $ 765 and the accrued returns liability was $ 2,226 .

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

At December 30, 2022, the right to returns asset was $ 834 and the accrued returns liability was $ 2,317 .

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

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.

2 unchanged sentences

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

JOHNSON OUTDOORS INC.

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.

Shipping and handling fees billed to customers are included in "Net Sales," and shipping and handling costs are recognized within "Marketing and selling expenses" in the same period the related revenue is recognized.

The Company has a wide variety of seasonal, outdoor recreation products used primarily for fishing from a boat, diving, paddling, hiking and camping, that are sold to a variety of customers in multiple end markets.

4 unchanged sentences

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 1, 2022, combined net sales to one customer of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 20,607 and $ 69,528 , respectively, of the Company's consolidated revenues.

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 month period ended December 30, 2022, combined net sales to two customers of the Company's Fishing, Camping and Watercraft Recreation segments represented approximately $ 50,062 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.

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.

2 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

December 30, 2022 December 31, 2021 September 30, 2022

Unaffiliated customers $ 137,821 $ 108,181

25 unchanged sentences

17 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in Accumulated Other Comprehensive Income (“AOCI”) by component, net of tax, for the Third months ended July 1, 2022 were as follows:

The changes in Accumulated Other Comprehensive Income (“AOCI”) by component, net of tax, for the three months ended December 30, 2022 were as follows:

JOHNSON OUTDOORS INC.

5 unchanged sentences

Income (Loss)

Balance at April 1, 2022 $ 7,351 $ ( 188 ) $ 7,163

Other comprehensive loss before reclassifications ( 2,770 ) — ( 2,770 )

Amounts reclassified from accumulated other comprehensive income — ( 9 ) ( 9 )

Tax effects — 2 2

Balance at July 1, 2022 $ 4,581 $ ( 195 ) $ 4,386

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

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 nine months ended July 1, 2022 were as follows:

Adjustment Unamortized

Loss on Defined

Benefit Pension

Plans Accumulated

Comprehensive

Income (Loss)

Balance at October 1, 2021 $ 7,606 $ ( 220 ) $ 7,386

Balance at September 30, 2022 $ 791 $ ( 171 ) $ 620

Other comprehensive loss before reclassifications 2,937 — 2,937

1 unchanged sentence

Tax effects — ( 3 ) ( 3 )

Balance at July 1, 2022 $ 4,581 $ ( 195 ) $ 4,386

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

Balance at December 30, 2022 $ 3,728 $ ( 163 ) $ 3,565

The changes in 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 reclassifications out of AOCI for the Third and nine months ended July 1, 2022 and July 2, 2021 were as follows:

JOHNSON OUTDOORS INC.

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021 Statement of Operations

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

The reclassifications out of AOCI for the three months ended December 30, 2022 and December 31, 2021 were as follows:

Three Months Ended

December 30, 2022 December 31, 2021 Statement of Operations

Unamortized loss on defined benefit pension plans:

2 unchanged sentences

Total reclassifications for the period $ 8 $ 16

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

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

As of July 1, 2022, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 17 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 right-of-use ("ROU") assets and lease liabilities.

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

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

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended July 1, 2022 and July 2, 2021 were as follows:

Three months ended Nine months ended

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

Operating lease costs $ 2,212 $ 2,107 $ 6,430 $ 6,184

Short-term lease costs 542 403 1,501 1,206

Variable lease costs 43 46 131 138

Total lease cost $ 2,797 $ 2,556 $ 8,062 $ 7,528

Included in the amounts in the table above were rent expense to related parties of $ 314 and $ 895 for the three and nine months ended July 1, 2022, respectively, and $ 262 and $ 778 for the three and nine months ended July 2, 2021, respectively.

As of July 1, 2022, 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 July 1, 2022.

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

JOHNSON OUTDOORS INC.

Nine months ended

July 1, 2022 July 2, 2021

Operating leases:

Operating lease ROU assets $ 50,284 $ 43,741

Current operating lease liabilities 6,348 5,281

Non-current operating lease liabilities 45,111 39,382

Total operating lease liabilities $ 51,459 $ 44,663

Weighted average remaining lease term (in years) 12.10 13.24

Weighted average discount rate 3.11 % 3.15 %

Cash paid for amounts included in the measurement of lease liabilities $ 5,674 $ 5,680

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at July 1, 2022 were as follows:

Year Related parties included

in total Total

Remainder of 2022 $ 301 $ 2,145

2023 1,233 8,158

2024 1,270 7,255

2025 1,308 6,581

2026 1,348 4,942

Thereafter 226 33,955

Total undiscounted lease payments 5,686 63,036

Imputed interest ( 195 ) ( 11,577 )

Total net lease liability $ 5,491 $ 51,459

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

During the third quarter of fiscal 2022, the Company took occupancy of part of the space, and began making pro-rated payments under the amended agreement, which are included in the amounts above.

The Company expects to occupy the remaining space in the fourth quarter of fiscal 2022, and total estimated rental payments, not included in the amounts above, will be approximately $ 8 million over the course of the lease as amended, through June 2039.

As of July 1, 2022, 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