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Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Sep. 28, 2012

Summary Of Significant Accounting Policies [Abstract]

Johnson Outdoors Inc. (the “Company”) is an integrated, global outdoor recreation products company engaged in the design, manufacture and marketing of brand name outdoor equipment, diving, watercraft and marine electronics products.

Principles Of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Johnson Outdoors Inc. and all majority owned subsidiaries and are stated in conformity with U.S. generally accepted accounting principles. Intercompany accounts and transactions have been eliminated upon consolidation.

Use Of Estimates

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates.

Fiscal Year

The Company’s fiscal year ends on the Friday nearest September 30. The fiscal years ended September 28, 2012 (hereinafter 2012), September 30, 2011 (hereinafter 2011) and October 1, 2010 (hereinafter 2010) each comprised 52 weeks.

Cash And Cash Equivalents

Cash and Cash Equivalents

The Company considers all short-term investments in interest-bearing bank accounts, securities and other instruments with an original maturity of three months or less, to be equivalent to cash. Cash equivalents are stated at cost which approximates market value.

The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

Accounts Receivable

Accounts receivable are recorded at face value less an allowance for doubtful accounts. The allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns exist, a reserve is established to reduce the amount recorded to 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 outstanding accounts receivable for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable.

Inventories

The Company values inventory at the lower of cost (determined using the first-in first-out method) or market. Management’s judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. The Company also considers current forecast plans, as well as market and industry conditions in establishing reserve levels. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

Inventories at the end of the respective fiscal years consisted of the following:



	2012		2011
Raw materials	$	26,610	$	24,260
Work in process		1,324		1,780
Finished goods		39,124		42,422
	$	67,058	$	68,462

Property, Plant And Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:



Property improvements				5-20 years
Buildings and improvements				20-40 years
Furniture, fixtures and equipment				3-10 years

Upon retirement or disposition, cost and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Property, plant and equipment at the end of the respective years consist of the following:



	2012		2011
Property improvements	$	599	$	620
Buildings and improvements		19,336		22,040
Furniture, fixtures and equipment		114,967		109,727
		134,902		132,387
Less accumulated depreciation		98,235		97,229
	$	36,667	$	35,158

Goodwill

The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The operating segments of the Company also represent the reporting units for goodwill purposes.

The analysis of potential impairment of goodwill requires a two-step process. The first step is the estimation of fair value of the applicable reporting units. Estimated fair value is based on management judgments and assumptions and the Company cannot predict what future events may occur that could adversely affect the reported value of its goodwill. The fair values as determined by management are compared with the aggregate carrying values of the reporting units. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit carrying amount is greater than the fair value, then the second step must be completed to measure the amount of impairment, if any.

The second step calculates the implied fair value of the goodwill which is compared to its carrying value. If the implied fair value is less than the carrying value, an impairment loss is recognized equal to the difference.

The results of the impairment tests performed in 2012 and 2011 indicated no impairment to the Company’s goodwill. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, discount rates will not increase or the projected cash flows of the individual reporting units will not decline, all of which could impact the carrying value of remaining goodwill in future periods.

As of September 28, 2012 and September 30, 2011, the Company’s Outdoor Equipment and Watercraft segments had no carrying amount of goodwill. The changes in the carrying amount of those segments with goodwill and the composition of consolidated net goodwill for fiscal 2012 and 2011 are as follows:



	Segment						Consolidated
	Marine Electronics		Diving		Consolidated		Gross Goodwill		Accumulated Impairment		Total
Balance at October 1, 2010	$	9,674	$	4,055	$	13,729	$	53,644	$	39,915	$	13,729
LakeMaster® acquisition		732		-		732		732		-		732
Amount attributable to movements in foreign currency rates		(9)		199		190		190		-		190
Balance at September 30, 2011		10,397		4,254		14,651		54,566		39,915		14,651
Amount attributable to movements in foreign currency rates		(35)		(150)		(185)		(185)		-		(185)
Balance at September 28, 2012	$	10,362	$	4,104	$	14,466	$	54,381	$	39,915	$	14,466

Other Intangible Assets

Indefinite-lived intangible assets are also tested for impairment annually. During the fourth quarter of fiscal 2012, the Company completed its annual fair value-based impairment test on indefinite-lived intangibles. There was no impairment of intangibles recorded for the year ended September 28, 2012 or for the year ended September 30, 2011.

Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 3 to 16 years. Amortization of patents and other intangible assets with definite lives was $1,057, $729 and $681 for 2012, 2011 and 2010, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $180 in 2013 and approximately $130 for each of the following four years.

During 2011, the allocation of the purchase price related to the LakeMaster® acquisition was completed resulting in indefinite-lived intangible assets of $290.

Intangible assets at the end of the last two years consisted of the following:



	2012						2011
	Gross Intangible		Accumulated Amortization		Net		Gross Intangible		Accumulated Amortization		Total
Amortized other intangible assets:
Patents	$	3,614	$	(3,411)	$	203	$	3,687	$	(3,430)	$	257
Trademarks		1,881		(1,878)		3		1,976		(1,094)		882
Other amortizable intangibles		1,272		(759)		513		1,335		(611)		724
Non-amortized trademarks		3,590		-		3,590		3,540		-		3,540
	$	10,357	$	(6,048)	$	4,309	$	10,538	$	(5,135)	$	5,403

Impairment Of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable, and it performs an undiscounted cash flow analysis to determine if impairment exists. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value. During 2010, the Company recognized impairment on its Casarza-Ligure, Italy warehouse facility of $114 to write the asset down to its fair value of $656. During 2011, the Company recognized impairment of $334 on part of its facility in Ferndale, Washington in order to write the asset down to its estimated fair value of $1,300. In 2012, the Company recorded impairment on the Geonav trademark held by the Marine Electronics business, reducing its fair value to $0.

Warranties

The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. The following table summarizes the warranty activity for the three years in the period ended September 28, 2012.



Balance at October 2, 2009	$	4,196
Expense accruals for warranties issued during the period		3,671
Less current period warranty claims paid		3,278
Balance at October 1, 2010		4,589
Expense accruals for warranties issued during the period		4,551
Less current period warranty claims paid		3,985
Balance at September 30, 2011	$	5,155
Expense accruals for warranties issued during the period		3,740
Less current period warranty claims paid		4,144
Balance at September 28, 2012	$	4,751

Accumulated Other Comprehensive Income (Loss)

The components of “Accumulated other comprehensive income (loss)” on the accompanying balance sheets as of fiscal year end 2012, 2011 and 2010 are as follows:



	2012						2011						2010
	Pre-Tax Amount		Tax Effect		Net of Tax Effect		Pre-Tax Amount		Tax Effect		Net of Tax Effect		Pre-Tax Amount		Tax Effect		Net of Tax Effect
Foreign currency translation adjustment	$	23,901	$	-	$	23,901	$	25,811	$	-	$	25,811	$	23,305	$	-	$	23,305
Unamortized loss on pension plans		(10,207)		2,561		(7,646)		(7,636)		1,584		(6,052)		(5,315)		-		(5,315)
Unrealized loss on interest rate swaps		(138)		-		(138)		(927)		-		(927)		(1,917)		-		(1,917)
Accumulated other comprehensive income	$	13,556	$	2,561	$	16,117	$	17,248	$	1,584	$	18,832	$	16,073	$	-	$	16,073

Earnings Per Share ("EPS")

Earnings per Share (“EPS”)

Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method. Grants of restricted stock which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method.

Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above. 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 EPS

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. 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 years ended September 28, 2012, September 30, 2011 and October 1, 2010 basic income per share for Class A and Class B shares has been presented using the two class method as described above.

Diluted EPS

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 and non-vested restricted stock. Anti-dilutive stock options and non-vested stock are excluded from the calculation of diluted EPS. The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock. Therefore, diluted net income per share is the same for both Class A and Class B common shares. In periods where the Company reports a net loss, the effect of anti-dilutive stock options and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.

For the years ended September 28, 2012, September 30, 2011 and October 1, 2010, diluted net income per share reflects the effect of dilutive stock options and assumes the conversion of Class B common stock into Class A common stock.

Stock options 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 5,850, 15,066 and 16,063 for the years ended September 28, 2012, September 30, 2011 and October 1, 2010, respectively. 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 495,235, 472,761 and 325,172 for the years ended September 28, 2012, September 30, 2011 and October 1, 2010, respectively.

The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:




	2012		2011		2010
Net income	$	10,134	$	32,644	$	6,539
Less: Undistributed earnings reallocated to non-vested shareholders		(506)		(1,429)		(201)
Dilutive earnings	$	9,628	$	31,215	$	6,338
Weighted average common shares – Basic:
Class A		8,155		8,045		8,008
Class B		1,216		1,216		1,217
Dilutive stock options		8		26		42
Weighted average common shares - Dilutive		9,379		9,287		9,267
Net income per common share – Basic:
Class A	$	1.04	$	3.40	$	0.69
Class B	$	0.94	$	3.07	$	0.63
Net income per common share – Diluted:
Class A	$	1.03	$	3.36	$	0.68
Class B	$	1.03	$	3.36	$	0.68

Stock-Based Compensation

Stock-based compensation cost is recorded for all option grants and awards of non-vested stock based on their grant-date fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award. No stock options were granted in 2012, 2011 or 2010. See Note 10 of the Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options, non-vested stock, and employee stock purchase plans.

Cash flows from income tax benefits resulting from tax deductions in excess of the compensation expense recognized for stock-based awards have been classified as financing cash flows.

Income Taxes

The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement and taxable income. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax bases of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized. See Note 6 of the Notes to Consolidated Financial Statements for further discussion.

Employee Benefits

The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees. The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto. Other retirement costs are funded at least annually. See Note 7 of the Notes to Consolidated Financial Statements for additional discussion.

Foreign Operations And Related Derivative Financial Instruments

Foreign Operations and Related Derivative Financial Instruments

The functional currencies of the Company’s foreign operations are the local currencies. Accordingly, assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of the year. Results of operations are translated at monthly average exchange rates. Adjustments resulting from the translation of foreign currency financial statements are classified as Accumulated other comprehensive income (loss), a separate component of Shareholders’ equity.

Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity. Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency. The Company recognized currency gains from transactions of $92 in 2012 and currency losses of $2,061 and $610 in 2011 and 2010, respectively, all of which were included in the “Other (income) expense, net” line of the Company’s Consolidated Statements of Operations.

Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 23% of the Company’s revenues for the year ended September 28, 2012 were denominated in currencies other than the U.S. dollar. Approximately 12% were denominated in euros, with the remaining 11% denominated in various other foreign currencies. The Company may mitigate a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies. In 2012, 2011 and 2010 the Company used foreign currency forward contracts to reduce the economic risk of changes in foreign currency exchange rates on foreign currency borrowings. The Company does not enter into foreign exchange contracts for trading or speculative purposes.

Revenue Recognition

The Company recognizes revenue when all of the following criteria have been met:

·	Persuasive evidence of an arrangement exists. Contracts, internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.

·	All substantial risk of ownership transfers to the customer. Shipping documents and customer acceptance, when applicable, are used to verify delivery.

·	The fee is fixed or determinable. This is assessed based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.

·	Collectability is reasonably assured. We assess collectability based on the creditworthiness of the customer as determined by credit checks and analysis, as well as by the customer’s payment history.

Estimated costs of returns and allowances and discounts are accrued as a reduction to sales when revenue is recognized.

Advertising & Promotions

The Company expenses substantially all costs related to the production of advertising the first time the advertising takes place. Cooperative promotional arrangements are accrued as related revenue is earned.

Advertising and promotions expense in 2012, 2011 and 2010 totaled $21,745, $22,338 and $20,107, respectively. These charges are included in Marketing and selling expenses. Capitalized advertising costs, included in Other current assets, totaled $1,074 and $752 at September 28, 2012 and September 30, 2011, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.

Shipping And Handling Costs

Shipping and Handling Costs

Shipping and handling fees billed to customers are included in Net sales. Shipping and handling costs are included in Marketing and selling expenses and totaled $10,803, $10,591 and $ 9,697 for 2012, 2011 and 2010, respectively.

Research And Development

Research and Development

The Company expenses research and development costs as incurred except for costs of software development for new electronic products which are capitalized once technological feasibility is established and are included in Furniture, Fixtures and Equipment. The gross amount capitalized related to software development was $14,762, less accumulated amortization of $6,626, at September 28, 2012 and $8,380, less accumulated amortization of $4,399, at September 30, 2011. These costs are amortized over the expected life of the software of three years. Amortization expense related to capitalized software in 2012, 2011 and 2010 was $2,227, $1,373 and $489, respectively, and is included in Depreciation expense on Plant, Property and Equipment.

Fair Values

The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at September 28, 2012 and September 30, 2011 due to the short maturities of these instruments. During 2012, 2011 and 2010, the Company held foreign currency forward contracts and investments in equity and debt securities that were carried at fair value. 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 fair value.

Valuation Techniques

Over the Counter Derivative Contracts

The value of over the counter derivative contracts, such as interest rate swaps and foreign currency forward contracts, are derived using pricing models, which take into account the contract terms, as well as other inputs, including, where applicable, the notional values of the contracts, payment terms, maturity dates, credit risk, interest rate yield curves, and contractual and market currency exchange rates. The pricing model used for valuing interest rate swaps does not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets.

Rabbi Trust Assets

Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in other assets, and are classified as trading securities. These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.

Goodwill and Other Intangible Assets

In assessing the recoverability of the Company's goodwill and other intangible assets, the Company estimates the future discounted cash flows of the businesses to which the goodwill relates. When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any. In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.

See Note 2 of the Notes to Consolidated Financial Statements for disclosures regarding the fair value of long-term debt and Note 4 of the Notes to Consolidated Financial Statements for disclosures regarding fair value measurement.

Reclassifications

Certain prior year amounts have been reclassified to conform to the 2012 presentation. These reclassifications have no impact on previously reported net income or earnings per share.

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued updated authoritative guidance to amend fair value measurements and disclosures. The guidance became effective for the Company on a prospective basis during its 2012 fiscal second quarter. This guidance is intended to provide a consistent definition of fair value between International Financial Reporting Standards and U.S. GAAP and results in convergence of requirements for measurement of and disclosure about fair value. The new guidance also changes some fair value measurement principles and enhances disclosure requirements related to activities in Level 3 of the fair value hierarchy. The Company adopted this updated authoritative guidance effective as of December 31, 2011, the beginning of its second quarter of fiscal 2012. The Company’s adoption of this authoritative guidance did not have a significant impact on the Company’s Consolidated Financial Statements.

In July 2012, The FASB issued guidance to amend and simplify the rules related to testing indefinite-lived intangible assets. The revised guidance will allow an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Under these amendments, an entity would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on qualitative assessment, that it is not more likely than not that the indefinite-lived intangible asset is impaired. The amendments include a number of events and circumstances for an entity to consider in conducting the qualitative assessment. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this guidance will not have a material effect on the Company’s Consolidated Financial Statements.

In September 2011, the FASB issued guidance to amend and simplify the rules related to testing goodwill for impairment. The revised guidance allows an entity to make an initial qualitative evaluation, based on the entity’s events and circumstances, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform the currently required two-step impairment test. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this guidance will not have a material effect on the Company’s Consolidated Financial Statements.

In December 2011, the FASB issued updated authoritative guidance to amend the presentation of comprehensive income in financial statements. The guidance becomes effective on a retroactive basis for the Company’s first quarter of fiscal 2013. This new guidance allows companies the option to present other comprehensive income in either a single continuous statement or in two separate but consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. Under both alternatives, companies will be required to present each component of net income and comprehensive income. The adoption of this updated authoritative guidance will impact the presentation of the Company’s Consolidated Financial Statements, but it will have no effect on the Company’s financial condition, results of operations or cash flow.