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

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.

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.

The Company’s fiscal year ends on the Friday nearest September 30. The fiscal years ended September 29, 2023 (hereinafter 2023), September 30, 2022 (hereinafter 2022) and October 1, 2021 (hereinafter 2021) comprised 52 weeks.

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 cash equivalents. 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.

During the third quarter of fiscal 2023, the Company invested in marketable securities. The Company has classified all marketable securities as available-for-sale which requires the securities to be reported at estimated fair value, with unrealized gains and losses, net of tax, reported as a separate component of accumulated other comprehensive income in the Consolidated Statements of Shareholders' Equity.

At September 29, 2023, cost for marketable securities was determined using the specific identification method. A summary of the amortized costs and fair values of the Company’s marketable securities at the end of the period presented is shown in the following table. All of the Company’s marketable securities are classified as Level 2, as defined by FASB ASC 820, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable.


	Amortized Cost		Fair Value		Gross unrealized gains		Gross unrealized losses

Fixed rate US Government Bonds	$	29,749	$	29,686	$	—	$	63
Fixed rate Canadian Government Bonds	$	11,121	$	11,021	$	—	$	100
Total	$	40,870	$	40,707	$	—	$	163

There were no maturities or sales of available-for-sale securities during the years ended September 29, 2023, September 30, 2022 and October 1, 2021. No unrealized gains or losses were reclassified out of accumulated other comprehensive income during the same periods.

The contractual maturities of the marketable securities held at September 29, 2023 are as follows: $26,764 within one year, classified as Short-Term Investments on the Consolidated Balance Sheets, and $13,943 greater than one year, but less than five years, classified as Investments under non-current assets on the Consolidated Balance Sheets.

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.

The Company values inventory at the lower of cost (determined using the first-in first-out method) or net realizable value. 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.

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:

Upon retirement or disposition of any of the foregoing types of assets, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the statements of operations.


	2023		2022
Property improvements	$	380	$	586
Buildings and improvements	35,877		33,930
Furniture and fixtures, equipment and computer software	235,522		226,452
	271,779		260,968
Less accumulated depreciation	177,426		171,843
	$	94,353	$	89,125

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 results of the impairment tests performed in 2023, 2022, and 2021 indicated no impairment to the Company’s goodwill.

In conducting its analysis, the Company uses the income approach to compare the reporting unit’s carrying value to its indicated fair value. Fair value is determined primarily by using a discounted cash flow methodology that requires considerable management judgment and long-term assumptions and is considered a Level 3 (unobservable) fair value determination in the fair value hierarchy (see Note 4 below).

The Company’s impairment analysis is based on management’s estimates. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, that discount rates will not increase or that projected cash flows will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods, and accordingly, whether any impairment losses need to be recorded in future periods.


		Fishing		Camping		Watercraft		Diving		Total
Balance at October 1, 2021
	Goodwill	$	17,450	$	7,038	$	6,242	$	33,078	$	63,808
	Accumulated impairment losses	(6,229)		(7,038)		(6,242)		(33,078)		(52,587)
		11,221		—		—		—		11,221
	Currency translation	(61)		—		—		—		(61)


Balance at September 30, 2022
	Goodwill	17,389		7,038		6,242		33,078		63,747
	Accumulated impairment losses	(6,229)		(7,038)		(6,242)		(33,078)		(52,587)
		11,160		—		—		—		11,160
	Currency translation	12		—		—		—		12
Balance at September 29, 2023
	Goodwill	17,401		7,038		6,242		33,078		63,759
	Accumulated impairment losses	(6,229)		(7,038)		(6,242)		(33,078)		(52,587)
		$	11,172	$	—	$	—	$	—	$	11,172

Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. There were no impairment losses recognized in fiscal 2023, 2022 or 2021.

Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 4 to 15 years. Amortization of patents and other intangible assets with definite lives was $290, $261 and $421 for 2023, 2022 and 2021, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $324 for each of the next 3 fiscal years, $307 for fiscal 2027 and $102 for fiscal 2028.


	2023						2022
	Gross Intangible		Accumulated Amortization		Net		Gross Intangible		Accumulated Amortization		Net
Amortized other intangible assets:
Patents and trademarks	$	4,045	$	(4,041)	$	4	$	3,959	$	(3,956)	$	3
Other amortizable intangibles	12,769		(11,326)		1,443		12,137		(10,793)		1,344
Non-amortized trademarks	7,025		—		7,025		7,025		—		7,025
	$	23,839	$	(15,367)	$	8,472	$	23,121	$	(14,749)	$	8,372

The Company reviews long-lived assets for impairment whenever events or changes in business circumstances, such as unplanned negative cash flow, indicate that the carrying amount of these assets may not be fully recoverable. In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets. During the fourth quarters of fiscal 2023 and 2022, the Company determined it was not necessary to perform an impairment analysis, as there were no events or changes in business circumstances that indicated that the carrying amount of the assets may not be fully recoverable. Accordingly, there was no impairment.

The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated 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 29, 2023.


Balance at October 2, 2020	$	10,849
Expense accruals for warranties issued during the period	13,112
Less current period warranty claims paid	9,888
Balance at October 1, 2021	$	14,073
Expense accruals for warranties issued during the period	4,563
Less current period warranty claims paid	8,997
Balance at September 30, 2022	$	9,639
Expense accruals for warranties issued during the period	11,330
Less current period warranty claims paid	9,228
Balance at September 29, 2023	$	11,741


	2023						2022						2021
	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	$	3,581	$	—	$	3,581	$	791	$	—	$	791	$	7,606	$	—	$	7,606
Unrealized loss on available-for-sale securities	(163)		42		(121)		—		—		—		—		—		—
Unamortized loss on pension plans	(276)		139		(137)		(321)		150		(171)		(386)		166		(220)
Accumulated other comprehensive income	$	3,142	$	181	$	3,323	$	470	$	150	$	620	$	7,220	$	166	$	7,386


	2023		2022		2021		Statement of Operations Presentation
Unamortized loss on defined benefit pension plans
Amortization of loss	$	45	$	45	$	576	Cost of sales / Operating expense
Tax effects	(11)		(11)		(144)		Income tax expense


Total reclassifications for the period	$	34	$	34	$	432


	Foreign Currency Translation Adjustment		Unrealized gain (loss) on available-for-sale securities		Unamortized Loss on Defined Benefit Pension Plans		Accumulated Other Comprehensive Income (Loss)
Balance at September 30, 2022	$	791	$	—	$	(171)	$	620
Other comprehensive income before reclassifications	2,790		(163)		—		2,627
Amounts reclassified from accumulated other comprehensive income	—		—		45		45
Tax effects	—		42		(11)		31
Balance at September 29, 2023	$	3,581	$	(121)	$	(137)	$	3,323


	Foreign Currency Translation Adjustment		Unamortized Loss on Defined Benefit Pension Plans		Accumulated Other Comprehensive Income (Loss)
Balance at October 1, 2021	$	7,606	$	(220)	$	7,386
Other comprehensive income before reclassifications	(6,815)		20		(6,795)
Amounts reclassified from accumulated other comprehensive income	—		45		45
Tax effects	—		(16)		(16)
Balance at September 30, 2022	$	791	$	(171)	$	620

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 (whether vested or unvested) 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 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 29, 2023, September 30, 2022 and October 1, 2021, basic income per share for Class A and Class B shares has been presented using the two class method as 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 and non-vested restricted stock. Anti-dilutive stock options, restricted stock units 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, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.

For the years ended September 29, 2023, September 30, 2022 and October 1, 2021, diluted net income per share reflects the effect of dilutive stock options and restricted 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 63,506, 39,956 and 38,914 shares for the years ended September 29, 2023, September 30, 2022 and October 1, 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 totaled 49,531, 35,816 and 25,768 shares for the years ended September 29, 2023, September 30, 2022 and October 1, 2021, 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:


	2023		2022		2021
Net income	$	19,534	$	44,491	$	83,381
Less: Undistributed earnings reallocated to non-vested shareholders	(122)		(174)		(320)
Dilutive earnings	$	19,412	$	44,317	$	83,061
Weighted average common shares – Basic:
Class A	8,968		8,913		8,864
Class B	1,208		1,208		1,212
Dilutive stock options and restricted stock units	19		30		44
Weighted average common shares - Dilutive	10,195		10,151		10,120
Net income per common share – Basic:
Class A	$	1.93	$	4.42	$	8.34
Class B	$	1.75	$	4.02	$	7.57
Net income per common share – Diluted:
Class A	$	1.90	$	4.37	$	8.21
Class B	$	1.90	$	4.37	$	8.21

Stock-based compensation cost is recorded for all awards of non-vested stock and restricted stock units 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. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including non-vested stock, restricted stock units and employee stock purchase plans.

The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss. 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 basis 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 these Notes to Consolidated Financial Statements for further discussion.

The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Retirement costs are funded at least annually. See Note 7 of these Notes to Consolidated Financial Statements for additional discussion.

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 losses from transactions of $114, $1,741 and $215 in 2023, 2022, and 2021, respectively, which were included in Other income, net in the accompanying Consolidated Statements of Operations.

Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 14% of the Company’s revenues for the year ended September 29, 2023 were denominated in currencies other than the U.S. dollar. Approximately 6% were denominated in euros and approximately 6% were denominated in Canadian

dollars, with the remaining 2% denominated in various other foreign currencies. The Company may mitigate the impact on its operating results of 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. The Company did not use foreign currency forward contracts in 2023, 2022 or 2021. The Company does not enter into foreign exchange contracts for trading or speculative purposes.

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 2023, 2022 and 2021 totaled $35,503, $30,574 and $30,882, respectively. These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $780 and $470 at September 29, 2023 and September 30, 2022, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.

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 $15,519, $17,923 and $16,093 for 2023, 2022 and 2021, respectively.

The Company expenses research and development costs as incurred except for costs of software development for new electronic products and bathymetry data collection and processing, 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 $64,390, less accumulated amortization of $37,934, at September 29, 2023 and $58,857, less accumulated amortization of $33,872, at September 30, 2022. These costs are amortized over the expected life of the software of three to seven years. Amortization expense related to capitalized software in 2023, 2022 and 2021 was $4,062, $3,444 and $3,637, respectively, and is included in depreciation expense on plant, property and equipment.

The carrying amounts of cash, cash equivalents, short-term investments, accounts receivable, and accounts payable approximated fair value at September 29, 2023 and September 30, 2022 due to the short maturities of these instruments. During 2023, 2022 and 2021, the Company held investments in equity and debt securities that were carried at fair value related to its deferred compensation liability which was also carried at the same 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.

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.

Marketable securities, which are included in "Short-term Investments" and "Investments", based on maturity date, are classified as available-for-sale securities. These assets are comprised of marketable debt securities, with fair values determined using significant other observable inputs, which include quoted prices in markets that are not active, quoted prices of similar securities, recently executed transactions, broker quotations, and other inputs that are observable.

In assessing the recoverability of the Company’s goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments 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 charge is recognized based on the excess of the carrying amount over the fair value. 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.

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 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). This ASU will modify 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 No. 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 fiscal 2022, however, the ASU did not have a significant impact on its financial statements or disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). 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. 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 adopted Topic 848 in the fourth fiscal quarter of 2023, and does not expect this guidance to have a significant impact on its financial statements and disclosures.