What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-05 · 93 added, 93 removed, 114 unchanged (62% of the section changed)

1 unchanged sentence

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

and its subsidiaries (collectively, the “Company”) as of and for the three and six month periods ended March 31, 2023 and April 1, 2022.

and its subsidiaries (collectively, the “Company”) as of and for the three and nine month periods ended June 30, 2023 and July 1, 2022.

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

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fluctuations in the prices of raw materials or the availability of raw materials or components used by the Company;

any disruptions in the Company's supply chain as a result of material fluctuations in the Company's order volumes and requirements for raw materials and other components, or the demand for those same raw materials and components by third parties, necessary to manufacture and produce the Company's products including related to

JOHNSON OUTDOORS INC.

materials and components by third parties, necessary to manufacture and produce the Company's products including related to shortages in procuring necessary raw materials and components to manufacture and produce such products;

shortages in procuring necessary raw materials and components to manufacture and produce such products;

the success of the Company’s suppliers and customers and the impact of any consolidation in the industries of the Company's suppliers and customers;

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As a result, increased participation in outdoor recreation also increased demand for our products across many of our Company segments.

During the first two quarters of fiscal 2023, however, demand in certain of our segments has substantially declined from the pandemic-driven market levels in prior periods.

During the post-pandemic period, and specifically the first three quarters of fiscal 2023, participation levels in some of our outdoor recreation segments has substantially declined from the pandemic-driven market levels.

Moreover, in addition to impacting demand for Company products, COVID-19 and the resulting macroeconomic dynamics also caused widely-documented supply chain and logistics disruptions across industries, as well as inflationary pressures (especially as it relates to raw material and purchased component prices).

These factors have impacted the timing, sourcing, availability and cost of raw materials and components that are necessary to manufacture our products, all of which adversely impacted our margins and inventory levels during fiscal 2022.

During the first half of fiscal 2023, the Company saw improvement in the availability of certain components necessary to complete finished products and converted a significant portion of its raw material inventory to finished goods available for shipping.

Net sales of $202,115 for the second quarter of fiscal 2023 increased $12,492, or 7%, from the same period in the prior year.

While sales increased overall, higher operating expenses drove a $4,039 decrease in operating profit over the prior year quarter.

During the first three quarters of fiscal 2023, the Company saw improvement in the availability of certain components necessary to complete finished products and converted a significant portion of its raw material inventory to finished goods available for shipping.

Despite this, reduced consumer participation has resulted in lower demand in some of our segments which has caused substantially lower sales, and higher inventory levels.

Net sales of $187,047 for the third quarter of fiscal 2023 decreased $16,772, or 8%, from the same period in the prior year.

Despite the decrease in sales between quarters, material and freight cost reductions helped drive a 5.4 point improvement in gross margin year over year resulting in a $4,078 gross profit increase between quarters.

Nonetheless, operating expenses increased by 21%, causing a $6,356 decrease in operating profit from the prior year quarter.

Profit before income taxes increased slightly, due to net investment gains and earnings on the Company's deferred compensation plan assets, which are recorded in Other income, and fully offset the deferred compensation expense that contributed to the increase in operating expenses.

During the second fiscal quarter of 2023, the Company sold the Military and Commercial Tents product lines of its Camping business segment to a third party in an asset sale for a purchase price of $14,990 which closed on March 17, 2023.

The net book value of the assets and liabilities sold was approximately $8,350, resulting in a gain on sale of approximately $6,640, which is recorded in Other (income) expense, net in the Company’s accompanying Condensed Consolidated Statements of Operations.

The purchase price and the net proceeds received by the Company related to this sale are subject to customary purchase price adjustment provisions and Company indemnity obligations set forth in the definitive purchase agreement.

The purchase price and the net proceeds received by the Company related to this sale were subject to customary purchase price adjustment provisions and Company indemnity obligations set forth in the definitive purchase agreement.

Accordingly, during the third fiscal quarter, a working capital true-up was recorded, which reduced the purchase price and the final net gain to approximately $6,560.

JOHNSON OUTDOORS INC.

The Company’s business is seasonal in nature.

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

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

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

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

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

JOHNSON OUTDOORS INC.

2022 2021 2020

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

Three Months Ended Six Months Ended

March 31, 2023 April 1, 2022 March 31, 2023 April 1, 2022

Three Months Ended Nine Months Ended

June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022

Fishing $ 137,460 $ 136,565 $ 430,842 $ 374,244

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

Consolidated net sales for the three months ended March 31, 2023 were $202,115, an increase of $12,492, or 7%, compared to $189,623 for the three months ended April 1, 2022.

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

Net sales for the three months ended March 31, 2023 for the Fishing business were $155,341, an increase of $26,018, or 20%, from $129,323 during the second fiscal quarter of the prior year.

The increase in sales over the prior year quarter is primarily attributable to increased supply and component availability versus the prior year quarter, resulting in the ability to fill more orders with distributors and retail partners, as well as higher sales levels due to product price increases (which represented approximately 30% of the increase in net sales between quarters).

Net sales for the Camping business were $13,725 for the second quarter of the current fiscal year, a decrease of $5,442, or 28%, from the prior year net sales during the same period of $19,167 due to decreased sales of Jetboil and Eureka!

consumer camping products, as demand declined from the increased levels seen during the pandemic.

Due to the timing of the transaction, the sale

Consolidated net sales for the three months ended June 30, 2023 were $187,047, a decrease of $16,772, or 8%, compared to $203,819 for the three months ended July 1, 2022.

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

Net sales for the three months ended June 30, 2023 for the Fishing business were $137,460, an increase of $895, or 1%, from $136,565 during the third fiscal quarter of the prior year.

The increase in sales over the prior year quarter is primarily attributable to product price increases.

JOHNSON OUTDOORS INC.

of the Military and Commercial Tents product lines had a negligible effect on the decrease in segment sales quarter over quarter.

Net sales for the second quarter of fiscal 2023 for the Watercraft Recreation business were $12,890, a decrease of $10,119, or 44%, compared to $23,009 in the prior year same period.

Reductions in demand from the elevated levels seen during the pandemic drove the decline from the prior year.

Net sales for Diving, our most global business, for the second quarter of fiscal 2023 were $20,308, an increase of $2,114 or 12% versus $18,194 for the three months ended April 1, 2022.

As destination travel has rebounded, sales volumes have increased along with the increase in tourism, partially offset by an unfavorable foreign currency translation impact on sales in this segment of approximately 2% versus the prior year quarter.

For the six months ended March 31, 2023, consolidated net sales of $380,452 increased $37,305 or 11% compared to $343,147 for the six months ended April 1, 2022.

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

Net sales for the six months ended March 31, 2023 for the Fishing business were $293,382, an increase of $55,703, or 23% from $237,679 during the same period of the prior year.

In addition to price increases (which accounted for approximately 30% of the year over year increase in net sales), the increase over the prior year to date period was driven mainly by improved supply and component availability over the prior year to date period, resulting in our ability to satisfy demand for product orders.

Net sales for the Camping business were $25,338 for the six months ended March 31, 2023, a decrease of $7,963, or 24%, from the prior year net sales during the same period of $33,301, due to decreased demand from the increased levels seen during the pandemic.

Due to the timing of the transaction, the sale of the Military and Commercial Tents product lines had a negligible effect on the decrease in segment sales year over year.

Net sales for the six months ended March 31, 2023 for the Watercraft Recreation business were $22,548, a decrease of $15,061, or 40%, compared to $37,609 in the prior year same period.

Reductions in demand from the elevated levels seen during the pandemic drove the decline from the prior year.

Diving net sales were $39,367 for the six months ended March 31, 2023 versus $34,685 for the six months ended April 1, 2022, an increase of $4,682, or 13%.

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

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

Net sales for the Camping business were $11,658 for the third quarter of the current fiscal year, a decrease of $11,821, or 50%, from the prior year net sales during the same period of $23,479 due to decreased sales of Jetboil and Eureka!

consumer camping products, as demand declined from the increased levels seen during the pandemic.

Additionally, approximately $4,900 of the decrease from the prior year quarter was related to the sale of the Military and Commercial Tents product lines described above.

Net sales for the third quarter of fiscal 2023 for the Watercraft Recreation business were $15,726, a decrease of $6,146, or 28%, compared to $21,872 in the prior year same period.

Reduced demand in the overall market from the elevated levels seen during the pandemic drove the decline from the prior year.

Net sales for Diving, our most global business, for the third quarter of fiscal 2023 were $22,227, which was relatively flat when compared to net sales of $22,201 for the three months ended July 1, 2022.

Foreign currency translation had a favorable impact of less than 1% on sales in this segment versus the prior year quarter.

For the nine months ended June 30, 2023, consolidated net sales of $567,499 increased $20,533 or 4% compared to $546,966 for the nine months ended July 1, 2022.

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

Net sales for the nine months ended June 30, 2023 for the Fishing business were $430,842, an increase of $56,598, or 15% from $374,244 during the same period of the prior year.

In addition to price increases (which accounted for approximately 6 points of the year over year increase in net sales), the increase over the prior year to date period was driven mainly by improved supply and component availability over the prior year, resulting in our ability to satisfy demand for product and fulfill orders.

Net sales for the Camping business were $36,996 for the nine months ended June 30, 2023, a decrease of $19,784, or 35%, from the prior year net sales during the same period of $56,780, due to decreased demand from the increased levels seen during the pandemic.

Approximately $4,900 of the decrease over the prior year to date period was related to the sale of the Military and Commercial Tents product lines described above.

Net sales for the nine months ended June 30, 2023 for the Watercraft Recreation business were $38,274, a decrease of $21,207, or 36%, compared to $59,481 in the prior year same period.

Reduced demand in the overall market from the elevated levels seen during the pandemic drove the decline from the prior year.

Diving net sales were $61,594 for the nine months ended June 30, 2023 versus $56,886 for the nine months ended July 1, 2022, an increase of $4,708, or 8%.

The sales increase was largely due to increased demand for our products as the global tourism industry continued to recover from the pandemic.

There was an unfavorable effect of foreign currency translation of 2% versus the prior year to date period.

Cost of Sales

Cost of sales for the three months ended March 31, 2023 of $126,780 increased $5,742 compared to $121,038 for the three months ended April 1, 2022.

The increase year over year was driven primarily by increased sales volumes.

For the six months ended March 31, 2023, cost of sales was $242,338 compared to $213,931 in the same period of the prior year.

The increase year over year was primarily driven by increased sales volumes.

Additionally, while the Company began to see some relief in freight and material costs late in the first fiscal quarter of 2023, the cost of components, parts and other raw materials in inventory, in some cases at significantly higher price points than what was historically paid, also contributed to the increase in cost of sales over the prior year to date period.

Cost of sales for the three months ended June 30, 2023 of $109,460 decreased $20,850 compared to $130,310 for the three months ended July 1, 2022.

The decrease year over year was driven primarily by decreased sales volumes, as well as decreased costs on freight and certain materials between quarters.

For the nine months ended June 30, 2023, cost of sales was $351,798 compared to $344,241 in the same period of the prior year.

The increase year over year was primarily driven by increased sales volumes, offset in part by reductions in freight costs from the elevated levels seen in the prior year.

Gross Profit Margin

For the three months ended March 31, 2023, gross profit as a percentage of net sales was 37.3% compared to 36.2% in the three month period ended April 1, 2022.

Factors impacting the change in gross profit percentage between quarters included increased sales volumes and the implementation of price increases across product lines.

For the six months ended March 31, 2023, gross profit as a percentage of net sales was 36.3% compared to 37.7% in the prior six month period.

Price increases and efficiencies from higher sales volumes were not significant enough to offset the negative gross profit impact of high inventory costs driven by the supply chain and logistics disruptions noted above, particularly in the first fiscal quarter of 2023.

For the three months ended June 30, 2023, gross profit as a percentage of net sales was 41.5% compared to 36.1% in the three month period ended July 1, 2022.

Factors impacting the change in gross profit percentage between quarters included the implementation of price increases across product lines, as well as decreased costs on freight and certain materials.

For the nine months ended June 30, 2023, gross profit as a percentage of net sales was 38.0% compared to 37.1% in the prior year nine month period.

Price increases and relief in freight costs were also the primary drivers of the margin improvement for the year to date period.

Operating Expenses

Operating expenses were $60,144 for the three months ended June 30, 2023, compared to $49,710 for the three months ended July 1, 2022.

The increase of $10,434 was primarily due to higher warranty expense, marketing spend and deferred compensation expense, offset in part by the impact of lower sales volumes between quarters.

More favorable market conditions

JOHNSON OUTDOORS INC.

Operating expenses were $63,945 for the three months ended March 31, 2023, compared to $53,156 for the three months ended April 1, 2022.

The increase of $10,789 was primarily due to the impact of higher sales volume-driven expenses, as well as higher warranty, compensation, professional services and deferred compensation expense between quarters.

More favorable market conditions on the Company's deferred compensation plan assets resulted in approximately $3,300 of higher deferred compensation expense recorded in the Company's Corporate segment in the current year quarter as compared to the prior year quarter.

on the Company's deferred compensation plan assets resulted in approximately $5,100 of higher deferred compensation expense recorded in the Company's Corporate segment in the current year quarter as compared to the prior year quarter.

This increase in expense was entirely offset by a gain in Other (income) expense, net related to marking these deferred compensation plan assets to market.

Operating expenses were $121,252 for the six months ended March 31, 2023, compared to $100,027 for the six months ended April 1, 2022.

The increase of $21,225 was primarily due to the impact of higher sales volume-driven expenses, as well as higher warranty, compensation, professional services and deferred compensation expense, between periods.

For the year to date period, deferred compensation expense recorded in the Corporate segment increased approximately $3,500 as compared to the prior year to date period, which was offset by a gain in Other (income) expense, net.

Operating expenses were $181,396 for the nine months ended June 30, 2023, compared to $149,737 for the nine months ended July 1, 2022.

The increase of $31,659 was primarily due to higher warranty expense, marketing spend, increased compensation costs, professional services and deferred compensation expense, between periods.

For the year to date period, deferred compensation expense recorded in the Corporate segment increased approximately $8,600 as compared to the prior year to date period, which was entirely offset by a gain in Other (income) expense, net.

Operating Profit

Operating profit on a consolidated basis for the three month period ended March 31, 2023 was $11,390, compared to an operating profit of $15,429 in the second quarter of the prior fiscal year.

Operating profit on a consolidated basis for the three month period ended June 30, 2023 was $17,443, compared to an operating profit of $23,799 in the third quarter of the prior fiscal year.

Higher operating expenses in the current year quarter, as discussed above, was the primary driver of the decrease in operating profit between quarters.

Operating profit on a consolidated basis for the six months ended March 31, 2023 was $16,862, compared to an operating profit of $29,189 in the prior year to date period.

The decrease year over year was driven primarily by higher material costs as well as the increase in operating expenses discussed above.

Interest expense was $38 and $49 for the three months ended March 31, 2023 and April 1, 2022, respectively.

Interest expense was $75 for the six months ended March 31, 2023 compared to $87 or the six months ended April 1, 2022.

Interest income was $735 and $102 for the three months ended March 31, 2023 and April 1, 2022, respectively.

Interest income was $1,562 for the six months ended March 31, 2023 compared to $195 for the six months ended April 1, 2022.

The increase in interest income over the prior year periods was driven by increased interest rates.

Operating profit on a consolidated basis for the nine months ended June 30, 2023 declined $18,683 to $34,305, compared to an operating profit of $52,988 in the prior year to date period despite a 4% increase in net sales primarily due to the increase in operating expenses between periods discussed above.

Interest expense was $39 and $30 for the three months ended June 30, 2023 and July 1, 2022, respectively.

Interest expense was $114 for the nine months ended June 30, 2023 compared to $117 or the nine months ended July 1, 2022.

Interest income was $1,244 and $144 for the three months ended June 30, 2023 and July 1, 2022, respectively.

Interest income was $2,806 for the nine months ended June 30, 2023 compared to $339 for the nine months ended July 1, 2022.

The increase in interest income over the prior year periods was driven by increased interest rates, as well as increased investment or cash balances during the third fiscal quarter of 2023.

Other Expense (Income), net

Other income was $7,861 for the three months ended March 31, 2023 compared to other expense of $2,272 in the prior year period.

The main driver of the increase over the prior year quarter is the gain on the sale of the Military and Commercial Tents product lines of approximately $6,640 recorded in the current year quarter.

Additionally, net investment gains and earnings on the assets related to the Company’s non-qualified deferred compensation plan were $1,289 in the three month period ended March 31, 2023 compared to losses of $2,046 in the three month period ended April 1, 2022.

For the three months ended March 31, 2023, foreign currency exchange losses were $46 compared to $146 for the three months ended April 1, 2022.

For the six months ended March 31, 2023, other income was $9,765 compared to other expense of $1,498 in the six months ended April 1, 2022.

The main driver of the increase over the prior year period is the gain on the sale of the Military and Commercial Tents product lines of approximately $6,640 recorded in the current year period.

Net investment gains and earnings on the assets related to the Company's non-qualified deferred compensation plan in the six months ended March 31, 2023 were $2,824, compared to losses of $702 in the six months ended April 1, 2022.

Foreign currency exchange gains were $230 for the six months ended March 31, 2023, compared to losses of $513 for the six months ended April 1, 2022.

Other income was $1,174 for the three months ended June 30, 2023 compared to other expense of $4,669 in the prior year period.

The main driver of the $5,843 increase over the prior year quarter is the net investment gains and earnings on the assets related to the Company’s non-qualified deferred compensation plan, which were $1,335 in the three month period ended June 30, 2023 compared to losses of $3,741 in the three month period ended July 1, 2022.

For the three months ended June 30, 2023, foreign currency exchange losses were $76 compared to $807 for the three months ended July 1, 2022.

For the nine months ended June 30, 2023, other income was $10,939 compared to other expense of $6,167 in the nine months ended July 1, 2022.

The main driver of the $17,106 increase over the prior year period include the following:

a gain on the sale of the Military and Commercial Tents product lines of approximately $6,560 recorded in the current year period;

net investment gains and earnings on the assets related to the Company's non-qualified deferred compensation plan of $4,159 in the nine months ended June 30, 2023 compared to losses of $4,443 in the nine months ended July 1, 2022;

and foreign currency exchange gains of $155 for the nine months ended June 30, 2023, compared to losses of $1,320 for the nine months ended July 1, 2022.

Income Tax Expense

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

The effective tax rate for the three and six month periods ended March 31, 2023 were 25.5% and 26.2%, respectively, compared to 25.1% and 25.3% in the corresponding periods of the prior year.

Net income for the three months ended March 31, 2023 was $14,861, or $1.45 per diluted common class A and B share, compared to net income of $9,900, or $0.97 per diluted common class A and B share, for the second quarter of the prior fiscal year.

The effective tax rate for the three and nine month periods ended June 30, 2023 were 25.3% and 25.9%, respectively, compared to 26.8% and 25.9% in the corresponding periods of the prior year.

Net income for the three months ended June 30, 2023 was $14,801, or $1.44 per diluted common class A and B share, compared to net income of $14,082, or $1.38 per diluted common class A and B share, for the third quarter of the prior fiscal year.

JOHNSON OUTDOORS INC.

Net income for the six months ended March 31, 2023 was $20,740, or $2.02 per diluted common class A and B share, compared to net income of $20,756, or $2.04 per diluted common class A and B share, for the six months ended April 1, 2022.

Net income for the nine months ended June 30, 2023 was $35,541, or $3.47 per diluted common class A and B share, compared to net income of $34,838, or $3.42 per diluted common class A and B share, for the nine months ended July 1, 2022.

Liquidity and Financial Condition

Cash and cash equivalents totaled $107,648 as of March 31, 2023, compared to cash and cash equivalents of $113,186 as of April 1, 2022.

The Company’s debt to total capitalization ratio was 0% as of March 31, 2023 and April 1, 2022.

The Company’s total debt balance was $0 as of each of March 31, 2023 and April 1, 2022.

Cash and cash equivalents and short term investments totaled $149,247 as of June 30, 2023, compared to $117,567 as of July 1, 2022.

The Company’s debt to total capitalization ratio was 0% as of June 30, 2023 and July 1, 2022.

The Company’s total debt balance was $0 as of each of June 30, 2023 and July 1, 2022.

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

Accounts receivable, net of allowance for doubtful accounts, were $144,600 as of March 31, 2023, an increase of $25,083 compared to $119,517 as of April 1, 2022.

The increase is consistent with increased sales volumes year over year.

Inventories were $236,671 as of March 31, 2023, an increase of $1,451, compared to $235,220 as of April 1, 2022.

Accounts payable were $51,855 at March 31, 2023 compared to $56,720 as of April 1, 2022.

Accounts receivable, net of allowance for doubtful accounts, were $94,644 as of June 30, 2023, a decrease of $8,600 compared to $103,244 as of July 1, 2022.

The decrease is consistent with the decreased third quarter sales volumes year over year.

Inventories were $235,069 as of June 30, 2023, a decrease of $15,887, compared to $250,956 as of July 1, 2022.

Accounts payable were $45,728 at June 30, 2023 compared to $50,780 as of July 1, 2022.

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

Six months ended

(thousands) March 31,

2023 April 1,

Nine months ended

(thousands) June 30,

Cash (used for) provided by:

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Operating Activities

Cash used for operations totaled $18,095 for the six months ended March 31, 2023 compared to $104,648 during the corresponding period of the prior fiscal year.

The decrease in cash used for operations over the prior year six month period was due primarily to higher inventory purchases in the prior year period, due to the Company's decision to build and procure certain raw material and component inventory in its attempt to mitigate against potential pandemic-related shortages in meeting product demand.

Depreciation and amortization charges were $7,829 for the six month period ended March 31, 2023 compared to $6,914 for the corresponding period of the prior year.

Cash provided by operations totaled $45,210 for the nine months ended June 30, 2023 compared to cash used for operations of $86,413 during the corresponding period of the prior fiscal year.

The increase in cash provided by operations over the prior year nine month period was due primarily to higher inventory purchases in the prior year period, often at higher price points than historically paid, due to the Company's decision to build and procure certain raw material and component inventory in its attempt to mitigate against potential pandemic-related shortages in meeting product demand.

Depreciation and amortization charges were $11,815 for the nine month period ended June 30, 2023 compared to $10,434 for the corresponding period of the prior year.

Investing Activities

Cash provided by investing activities totaled $992 for the six months ended March 31, 2023 compared to cash used by investing activities of $15,722 for the corresponding period of the prior fiscal year.

Capital expenditures were $13,998 in the six months ended March 31, 2023, compared to $15,724 in the prior year to date period.

The current year period includes proceeds of $14,990 related to the Big Tents sale previously discussed.

Cash used for investing activities totaled $45,133 for the nine months ended June 30, 2023 compared to $25,150 for the corresponding period of the prior fiscal year.

Capital expenditures were $19,427 in the nine months ended June 30, 2023, compared to $25,162 in the prior year to date period which included investments in expansion of Fishing facilities to accommodate additional production.

Current year cash usage reflects investment of $40,696 in investments as well as proceeds of $14,990 related to the Big Tents sale previously discussed.

Any additional capital expenditures in fiscal 2023 are expected to be funded by working capital.

Financing Activities

Cash used for financing activities totaled $6,710 for the six months ended March 31, 2023 compared to $6,528 for the six month period ended April 1, 2022 and represents the payment of dividends and purchase of treasury stock.

The Company had no debt during either quarter ended March 31, 2023 and April 1, 2022.

Cash used for financing activities totaled $9,591 for the nine months ended June 30, 2023 compared to $9,214 for the nine month period ended July 1, 2022 and represents the payment of dividends and purchase of treasury stock.

The Company had no debt during either nine month period ended June 30, 2023 and July 1, 2022.

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

As of March 31, 2023 the Company held approximately $43,971 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.

Contractual Obligations and Off Balance Sheet Arrangements

As of June 30, 2023 the Company held approximately $45,029 of cash, cash equivalents and short-term investments in bank accounts in foreign taxing jurisdictions.

JOHNSON OUTDOORS INC.

Contractual Obligations and Off Balance Sheet Arrangements

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

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended March 31, 2023.

There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended June 30, 2023.

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

Letters of credit outstanding were approximately $173 and $181 as of March 31, 2023 and April 1, 2022, respectively.

Letters of credit outstanding were approximately $78 and $173 as of June 30, 2023 and July 1, 2022, respectively.

The Company has no other off-balance sheet arrangements.

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The Company’s critical accounting policies and estimates are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2022 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 9, 2022.

There were no significant changes to the Company’s critical accounting policies and estimates during the six months ended March 31, 2023.

There were no significant changes to the Company’s critical accounting policies and estimates during the nine months ended June 30, 2023.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis