johnsondec282007form10q.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[
X ] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
quarterly period ended December 28, 2007
OR
[ ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
transition period from _________ to _________
Commission
file number 0-16255
JOHNSON
OUTDOORS INC.
(Exact
name of Registrant as specified in its charter)
|
Wisconsin
(State
or other jurisdiction of
incorporation
or organization)
|
|
39-1536083
(I.R.S.
Employer Identification No.)
|
555
Main Street, Racine, Wisconsin 53403
(Address
of principal executive offices)
(262)
631-6600
(Registrant's
telephone number, including area code)
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes [ X ] No [ ]
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. Large accelerated filer [ ] Accelerated
filer [ X ] Non-accelerated filer [ ]
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [ X
]
As
of
January 12, 2008, 7,989,049 shares of Class A and 1,217,409 shares of Class
B
common stock of the Registrant were outstanding.
JOHNSON
OUTDOORS INC.
|
Index
|
|
Page
No.
|
|
PART
I
|
FINANCIAL
INFORMATION
|
|
|
| |
Item
1.
|
Financial
Statements
|
|
|
| |
|
|
|
1
|
| |
|
|
|
2
|
| |
|
|
|
3
|
| |
|
|
|
4
|
| |
Item
2.
|
|
|
13
|
| |
Item
3.
|
|
|
22
|
| |
Item
4.
|
|
|
23
|
|
PART
II
|
OTHER
INFORMATION
|
|
|
| |
Item
6.
|
|
|
23
|
| |
|
|
|
24
|
| |
|
|
|
25
|
PART
I FINANCIAL INFORMATION
Item
1. Financial Statements
JOHNSON
OUTDOORS INC.
(unaudited)
|
(thousands,
except per share data)
|
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Net
sales
|
|
$ |
75,967 |
|
|
$ |
71,427 |
|
|
Cost
of sales
|
|
|
46,678 |
|
|
|
42,907 |
|
|
Gross
profit
|
|
|
29,289 |
|
|
|
28,520 |
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Marketing
and selling
|
|
|
20,167 |
|
|
|
18,598 |
|
|
Administrative
management, finance and information systems
|
|
|
10,678 |
|
|
|
9,305 |
|
|
Research
and development
|
|
|
3,025 |
|
|
|
2,850 |
|
|
Total
operating expenses
|
|
|
33,870 |
|
|
|
30,753 |
|
|
Operating
loss
|
|
|
(4,581 |
) |
|
|
(2,233 |
) |
|
Interest
income
|
|
|
(288 |
) |
|
|
(171 |
) |
|
Interest
expense
|
|
|
1,080 |
|
|
|
1,023 |
|
|
Other
expenses, net
|
|
|
54 |
|
|
|
1 |
|
|
Loss
before income taxes
|
|
|
(5,427 |
) |
|
|
(3,086 |
) |
|
Income
tax benefit
|
|
|
(1,803 |
) |
|
|
(1,774 |
) |
|
Loss
from continuing operations
|
|
|
(3,624 |
) |
|
|
(1,312 |
) |
|
Loss
from discontinued operations, net of income tax benefit of $626 and
$151,
respectively
|
|
|
(1,066 |
) |
|
|
(257 |
) |
|
Net
loss
|
|
$ |
(4,690 |
) |
|
$ |
(1,569 |
) |
|
Loss
per common Class A and B shares, basic and diluted:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
(0.40 |
) |
|
$ |
(0.14 |
) |
|
Discontinued
operations
|
|
$ |
(0.12 |
) |
|
$ |
(0.03 |
) |
|
Net
loss per common Class A and B share, basic and diluted
|
|
$ |
(0.52 |
) |
|
$ |
(0.17 |
) |
|
Dividends
per share:
|
|
|
|
|
|
|
|
|
|
Class
A Common Stock
|
|
$ |
(0.055 |
) |
|
$ |
|
|
|
Class
B Common Stock
|
|
$ |
(0.050 |
) |
|
$ |
|
|
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
JOHNSON
OUTDOORS INC.
|
(thousands,
except share data)
|
|
December
28
2007
(unaudited)
|
|
|
September
28
2007
(audited)
|
|
|
December
29
2006
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
|
Cash
and temporary cash investments
|
|
$ |
37,181 |
|
|
$ |
39,232 |
|
|
$ |
48,548 |
|
|
Accounts
receivable, less allowance for doubtful accounts of $2,473, $2,267
and
$2,437, respectively
|
|
|
69,127 |
|
|
|
57,275 |
|
|
|
56,518 |
|
|
Inventories,
net
|
|
|
106,850 |
|
|
|
87,726 |
|
|
|
82,078 |
|
|
Income
taxes refundable
|
|
|
642 |
|
|
|
–– |
|
|
|
741 |
|
|
Deferred
income taxes
|
|
|
11,551 |
|
|
|
11,029 |
|
|
|
9,421 |
|
|
Other
current assets
|
|
|
9,875 |
|
|
|
8,253 |
|
|
|
10,726 |
|
|
Assets
held for sale
|
|
|
359 |
|
|
|
1,706 |
|
|
|
2,075 |
|
|
Total
current assets
|
|
|
235,585 |
|
|
|
205,221 |
|
|
|
210,107 |
|
|
Property,
plant and equipment, net
|
|
|
36,740 |
|
|
|
36,406 |
|
|
|
32,068 |
|
|
Deferred
income taxes
|
|
|
13,503 |
|
|
|
13,097 |
|
|
|
14,546 |
|
|
Goodwill
|
|
|
54,714 |
|
|
|
51,454 |
|
|
|
44,435 |
|
|
Intangible
assets, net
|
|
|
6,654 |
|
|
|
6,638 |
|
|
|
4,572 |
|
|
Other
assets
|
|
|
7,155 |
|
|
|
6,868 |
|
|
|
6,340 |
|
|
Total
assets
|
|
$ |
354,351 |
|
|
$ |
319,684 |
|
|
$ |
312,068 |
|
|
Liabilities
And Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
notes payable
|
|
$ |
72,000 |
|
|
$ |
22,000 |
|
|
$ |
48,000 |
|
|
Current
maturities of long-term debt
|
|
|
10,002 |
|
|
|
10,800 |
|
|
|
10,801 |
|
|
Accounts
payable
|
|
|
27,931 |
|
|
|
23,051 |
|
|
|
22,030 |
|
|
Accrued
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries,
wages and benefits
|
|
|
11,063 |
|
|
|
15,485 |
|
|
|
10,319 |
|
|
Accrued
discounts and returns
|
|
|
5,740 |
|
|
|
5,524 |
|
|
|
6,002 |
|
|
Accrued
interest payable
|
|
|
249 |
|
|
|
610 |
|
|
|
437 |
|
|
Income
taxes payable
|
|
|
–– |
|
|
|
2,192 |
|
|
|
– |
|
|
Other
|
|
|
15,509 |
|
|
|
16,619 |
|
|
|
14,044 |
|
|
Liabilities
held for sale
|
|
|
24 |
|
|
|
938 |
|
|
|
139 |
|
|
Total
current liabilities
|
|
|
142,518 |
|
|
|
97,219 |
|
|
|
111,772 |
|
|
Long-term
debt, less current maturities
|
|
|
3 |
|
|
|
10,006 |
|
|
|
10,005 |
|
|
Other
liabilities
|
|
|
14,888 |
|
|
|
12,294 |
|
|
|
8,296 |
|
|
Total
liabilities
|
|
|
157,409 |
|
|
|
119,519 |
|
|
|
130,073 |
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock: none issued
|
|
|
–– |
|
|
|
– |
|
|
|
–– |
|
|
Common
stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A shares issued:
December
28, 2007, 7,989,049;
September
28, 2007, 7,949,617;
December
29, 2006, 7,903,932
|
|
|
399 |
|
|
|
397 |
|
|
|
395 |
|
|
Class
B shares issued (convertible into Class A):
December
28, 2007, 1,217,409;
September
28, 2007, 1,217,409;
December
29, 2006, 1,217,977
|
|
|
61 |
|
|
|
61 |
|
|
|
61 |
|
|
Capital
in excess of par value
|
|
|
57,165 |
|
|
|
56,835 |
|
|
|
55,747 |
|
|
Retained
earnings
|
|
|
121,063 |
|
|
|
126,253 |
|
|
|
116,446 |
|
|
Accumulated
other comprehensive income
|
|
|
18,254 |
|
|
|
16,619 |
|
|
|
9,346 |
|
|
Total
shareholders' equity
|
|
|
196,942 |
|
|
|
200,165 |
|
|
|
181,995 |
|
|
Total
liabilities and shareholders' equity
|
|
$ |
354,351 |
|
|
$ |
319,684 |
|
|
$ |
312,068 |
|
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
JOHNSON
OUTDOORS INC.
(unaudited)
|
(thousands)
|
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Cash
Used For Operating Activities
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(4,690 |
) |
|
$ |
(1,569 |
) |
|
Adjustments
to reconcile net loss to net cash used for operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,382 |
|
|
|
2,133 |
|
|
Amortization
of intangible assets
|
|
|
68 |
|
|
|
25 |
|
|
Amortization
of deferred financing costs
|
|
|
28 |
|
|
|
44 |
|
|
Stock
based compensation
|
|
|
142 |
|
|
|
142 |
|
|
Deferred
income taxes
|
|
|
(361 |
) |
|
|
71 |
|
|
Change
in operating assets and liabilities, net of effect of businesses
acquired
or sold:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net
|
|
|
(7,736 |
) |
|
|
(3,362 |
) |
|
Inventories,
net
|
|
|
(13,349 |
) |
|
|
(18,578 |
) |
|
Accounts
payable and accrued liabilities
|
|
|
(9,679 |
) |
|
|
(6,056 |
) |
|
Other
current assets
|
|
|
(888 |
) |
|
|
(3,561 |
) |
|
Other,
net
|
|
|
1,078 |
|
|
|
(131 |
) |
| |
|
|
(33,005 |
) |
|
|
(30,842 |
) |
|
Cash
Used For Investing Activities
|
|
|
|
|
|
|
|
|
|
Payments
for purchase of business
|
|
|
(5,977 |
) |
|
|
(1,491 |
) |
|
Additions
to property, plant and equipment
|
|
|
(2,386 |
)
|
|
|
(2,657 |
) |
| |
|
|
(8,363 |
) |
|
|
(4,148 |
) |
|
Cash
Provided By Financing Activities
|
|
|
|
|
|
|
|
|
|
Net
borrowings from short-term notes payable
|
|
|
50,000 |
|
|
|
48,000 |
|
|
Principal
payments on senior notes and other long-term debt
|
|
|
(10,800 |
) |
|
|
(17,001 |
) |
|
Excess
tax benefits from stock based compensation
|
|
|
15 |
|
|
|
4 |
|
|
Dividends
paid
|
|
|
(499 |
) |
|
|
– |
|
|
Common
stock transactions
|
|
|
175 |
|
|
|
168 |
|
| |
|
|
38,891 |
|
|
|
31,171 |
|
|
Effect
of foreign currency fluctuations on cash
|
|
|
426 |
|
|
|
678 |
|
|
Decrease
in cash and temporary cash investments
|
|
|
(2,051 |
) |
|
|
(3,141 |
) |
|
Cash
And Temporary Cash Investments
|
|
|
|
|
|
|
|
|
|
Beginning
of period
|
|
|
39,232 |
|
|
|
51,689 |
|
|
End
of period
|
|
$ |
37,181 |
|
|
$ |
48,548 |
|
The
accompanying notes are an integral part of the condensed consolidated financial
statements.
JOHNSON
OUTDOORS INC.
(unaudited)
1
Basis of Presentation
The
condensed consolidated financial statements included herein are unaudited.
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 (the Company) as of December
28, 2007 and the results of operations and cash flows for the three months
ended
December 28, 2007. 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 28, 2007 which was filed with the Securities and Exchange Commission
on December 12, 2007.
Because
of seasonal and other factors, the results of operations for the three months
ended December 28, 2007 are not necessarily indicative of the results to be
expected for the Company's full 2008 fiscal year.
All
monetary amounts, other than share and per share amounts, are stated in
thousands.
Certain
amounts as previously reported have been reclassified to conform to the current
period presentation.
2
Discontinued Operations
On
December 17, 2007, the Company’s management committed to a plan to divest the
Company’s Escape business and is exploring strategic alternatives for its Escape brand products. In
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), the
results of operations of the Escape business have been
reported as discontinued operations in the condensed consolidated statements
of
operations for the three months ended December 28, 2007 and December 29, 2006,
and in the condensed consolidated balance sheets as of December 28, 2007,
September 28, 2007, and December 29, 2006. The Company recorded a loss related
to the discontinued Escape business of $1,066 and $257 (both net of income
tax)
during the quarters ended December 28, 2007 and December 29, 2006
respectively. Revenues of the Escape business were $77 and $302 for
the three month periods ending December 28, 2007 and December 29, 2006
respectively.
3
Accounts Receivable
Accounts
receivable are stated net of an allowance for doubtful accounts. The increase
in
net accounts receivable to $69,127 as of December 28, 2007 from $57,275 as of September 28,
2007
is attributable to the seasonal nature of the Company's business. The
calculation of the allowance for doubtful accounts is based on a combination
of
factors. In circumstances where specific collection concerns 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 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.
JOHNSON
OUTDOORS INC.
4
Income (Loss) per Share
Net
income or loss per share of Class A Common Stock and Class B Common Stock is
computed in accordance with Statement of Financial Accounting Standards (SFAS)
No. 128, Earnings per Share
(SFAS No. 128) using
the two-class method. Holders of Class A Common
Stock are entitled to cash dividends per share equal to 110% of all dividends
declared and paid on each share of Class B Common Stock. As such, and in
accordance with Emerging
Issues Task Force 03-06, Participating Securities and the Two-Class Method
under
FASB Statement No. 128 (EITF 03-06), the undistributed earnings for each
period are allocated based on the proportionate share of entitled cash
dividends.
Under
the
provisions of SFAS No. 128 and EITF 03-06, basic net income or loss per share
is
computed by dividing net income or loss by the weighted-average number of common
shares outstanding less any non-vested stock. For the quarters ended December
28, 2007 and December 29, 2006, because of the reported net loss, there is
no
dilutive effect and basic loss per share is equal to diluted loss per share.
In
periods where the Company reports income, diluted net earnings per share is
computed by dividing net income by the weighted-average number of common shares
outstanding, adjusted for the effect of dilutive stock options and non-vested
stock using the treasury method. Convertible Class B Common Stock is reflected
on an if-converted basis.
Basic
loss per share for the quarters ended December 28, 2007 and December 29, 2006
have been presented in accordance with EITF 03-06. Because of the reported
net
loss, there is no dilutive effect of including the shares of Class B Common
Stock in the computation of diluted net loss per share. In periods when the
Company reports income, the computation of diluted net loss per share of Class
A
Common Stock assumes the conversion of Class B Common Stock and, as such, the
undistributed earnings are equal to net earnings for that
computation.
The
following table illustrates the computation of Class A Common Stock and Class
B
Common Stock basic and diluted loss per share for loss from continuing and
discontinued operations and provides a reconciliation of the number of
weighted-average basic and diluted shares outstanding for the three months
ended
December 28, 2007 and December 29, 2006:
| |
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Loss
from continuing operations
|
|
$ |
(3,624 |
) |
|
$ |
(1,312 |
) |
|
Loss
from discontinued operations, net of income tax benefit of $626 and
$151,
respectively
|
|
|
(1,066 |
) |
|
|
(257 |
)
|
|
Net
loss
|
|
$ |
(4,690 |
) |
|
$ |
(1,569 |
) |
|
Weighted
average common Class A and B shares – Basic
|
|
|
9,071,265 |
|
|
|
9,005,615 |
|
|
Dilutive
stock options and restricted stock
|
|
|
– |
|
|
|
– |
|
|
Loss
per common Class A and B share, basic and diluted:
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
(0.40 |
) |
|
$ |
(0.14 |
) |
|
Discontinued
operations
|
|
$ |
(0.12 |
) |
|
$ |
(0.03 |
) |
|
Net
loss per common Class A and B share, basic and diluted
|
|
$ |
(0.52 |
) |
|
$ |
(0.17 |
)
|
5
Stock-Based Compensation and Stock Ownership Plans
The
Company’s current stock ownership plans provide for issuance of options to
acquire shares of Class A common stock by key executives and non-employee
directors. The plans also allow for issuance of shares of restricted stock
or
stock appreciation rights in lieu of options. Shares available for grant under
the Company’s stock ownership plans to key executives and non-employee directors
were 506,998 at December 28, 2007.
JOHNSON
OUTDOORS INC.
Stock
Options
All
stock
options have been granted at a price not less than fair market value at the
date
of grant and become exercisable over periods of one to three years from the
date
of grant. Stock options generally have a term of 10 years.
There
was
no compensation expense for stock options recognized by the Company for the
three months ended December 28, 2007 and December 29, 2006. The Company’s stock
options outstanding are all fully vested, with no further compensation expense
to be recognized. There were no grants of stock options during the three months
ended December 28, 2007.
A
summary
of stock option activity for the three months ended December 28, 2007 related
to
the Company’s stock ownership plans is as follows:
| |
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average Remaining Contractual Term (Years)
|
|
|
Aggregate
Intrinsic Value
|
|
|
Outstanding
at September 28, 2007
|
|
|
286,393 |
|
|
$ |
8.66 |
|
|
|
3.0 |
|
|
$ |
3,713 |
|
|
Granted
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(10,000 |
) |
|
|
17.50 |
|
|
|
|
|
|
|
44 |
|
|
Outstanding
and exercisable at December 28, 2007
|
|
|
276,393 |
|
|
$ |
8.34 |
|
|
|
2.9 |
|
|
$ |
3,830 |
|
Restricted
Stock
All
shares of restricted stock awarded by the Company have been granted at their
fair market value on the date of grant and vest either immediately or over
a
period of three to five years. The Company granted 29,432 and 35,132 shares
of
restricted stock with a total value of $658 and $648 during the three months
ended December 28, 2007 and December 29, 2006, respectively. Amortization
expense related to the restricted stock was $142 and $118 during the three
months ended December 28, 2007 and December 29, 2006, respectively. Unvested
restricted stock issued and outstanding as of December 28, 2007 totaled 134,534
shares, having a gross unamortized value of $1,437, which will be amortized
to
expense through November 2012.
A
summary
of unvested restricted stock activity for the three months ended December 28,
2007 related to the Company’s stock ownership plans is as follows:
| |
|
Shares
|
|
|
Weighted
Average
Grant
Price
|
|
|
Unvested
restricted stock at September 28, 2007
|
|
|
105,102 |
|
|
$ |
17.39 |
|
|
Restricted
stock grants
|
|
|
29,432 |
|
|
|
22.34 |
|
|
Unvested
restricted stock at December 28, 2007
|
|
|
134,534 |
|
|
$ |
18.47 |
|
Phantom
Stock
Plan
The
Company adopted a phantom stock plan during fiscal 2003. Under this plan,
certain employees were entitled to earn cash bonus awards based upon the
performance of the Company’s Class A common stock. The Company recognized no
expense under the phantom stock plan during the three months ended December
28,
2007 and $24 during the three months ended December 29, 2006. The Company made
payments of $319 to participants in this plan during the three months ended
December 29, 2006; no payments were made to participants in this plan during
the
three months ended December 28, 2007. There were no grants of phantom shares
by
the Company in fiscal 2007 or 2006 and the Company does not anticipate grants
of
phantom shares in the future.
JOHNSON
OUTDOORS INC.
Employee
Stock Purchase
Plan
The
Company’s employees’ stock purchase plan 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 at the end of the offering period,
whichever is lower. The grant period for the employees’ stock purchase plan
generally occurs during the Company’s second fiscal quarter. Accordingly, no
compensation expense was recognized during the three months ended December
28,
2007 or December 29, 2006 in connection with this plan. Shares available for
purchase by employees under this plan were 65,330 at December 28,
2007.
6
Pension Plans
The
components of net periodic benefit cost related to Company sponsored benefit
plans for the three months ended December 28, 2007 and December 29, 2006 were
as
follows:
| |
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Components
of net periodic benefit cost:
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
158 |
|
|
$ |
176 |
|
|
Interest
on projected benefit obligation
|
|
|
251 |
|
|
|
231 |
|
|
Less
estimated return on plan assets
|
|
|
(231 |
) |
|
|
(218 |
) |
|
Amortization
of unrecognized:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
23 |
|
|
|
67 |
|
|
Prior
service cost
|
|
|
– |
|
|
|
– |
|
|
Transition
asset
|
|
|
2 |
|
|
|
2 |
|
|
Net
amount recognized
|
|
$ |
203 |
|
|
$ |
258 |
|
7
Income Taxes
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 Company’s
effective tax rate for the three months ended December 28, 2007 was 33.2%
compared to 57.5% for the three months ended December 29, 2006. The prior year
period included the impact of a German tax refund in the amount of $543
resulting in a larger tax benefit, which was not repeated in the current year
quarter. Less significant items accounting for the reduction in the effective
rate versus the prior year quarter include changes in the mix of income from
generally higher tax jurisdictions in the prior year quarter to relatively
lower
tax jurisdictions in the current year quarter, and foreign tax rate reductions,
tax credits and incentives in the current year quarter.
The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes,” (FIN 48) effective in the quarter ending December
28, 2007 with no impact on its consolidated financial statements. The Company
recognizes interest and penalties related to unrecognized tax benefits in income
tax expense. The Company had $1,100 accrued for uncertain tax positions which
included $100 for interest as of September 28, 2007. The total amount of
unrecognized tax benefits that, if recognized, would affect the effective tax
rate is $1,100. The Company or one of its subsidiaries files income
tax returns in the U.S. federal jurisdiction, and with various states and
foreign jurisdictions. Primarily as a result of loss carry forwards, the Company
is still open to federal and state audits dating back to the 1993 taxable year.
The Company is not currently undergoing tax audits for any major foreign tax
jurisdiction. As of the adoption date, the tax years subject to
review in Switzerland, Italy, Germany, and France were the years after 1997,
2003, 2005, and 2006 respectively. The Company estimates that the
unrecognized tax benefits will not change significantly within the next
year.
JOHNSON
OUTDOORS INC.
8
Inventories
Inventories
at the end of the respective periods consist of the following:
| |
|
December
28
2007
|
|
|
September
28
2007
|
|
|
December
29
2006
|
|
|
Raw
materials
|
|
$ |
38,592 |
|
|
$ |
34,585 |
|
|
$ |
31,666 |
|
|
Work
in process
|
|
|
3,964 |
|
|
|
3,850 |
|
|
|
3,400 |
|
|
Finished
goods
|
|
|
68,543 |
|
|
|
53,315 |
|
|
|
50,510 |
|
| |
|
|
111,099 |
|
|
|
91,750 |
|
|
|
85,576 |
|
|
Less
inventory reserves
|
|
|
4,249 |
|
|
|
4,024 |
|
|
|
3,498 |
|
| |
|
$ |
106,850 |
|
|
$ |
87,726 |
|
|
$ |
82,078 |
|
9
New Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. SFAS No. 157 clarifies
the definition of exchange price as the price between market participants in
an
orderly transaction to sell an asset or transfer a liability in the market
in
which the reporting entity would transact for the asset or liability, which
is
the principal or most advantageous market for the asset or liability. The
Company will be required to adopt SFAS No. 157 beginning in fiscal 2009. The
Company is currently assessing the effect of SFAS No. 157 on the Company’s
consolidated financial statements.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. The fair value option permits
a company to choose to measure eligible items at fair value at specified
election dates. A company will report unrealized gains and losses on items
for
which the fair value option has been elected in earnings after adoption. SFAS
No. 159 will be effective for the Company beginning in fiscal 2009. The Company
is currently assessing the effect of SFAS No. 159 on the Company’s consolidated
financial statements.
In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations” (“SFAS No. 141(R)”), The objective of SFAS No. 141(R) is to
improve the information provided in financial reports about a business
combination and its effects. SFAS No. 141(R) requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date, measured at their fair values
as of that date. SFAS No. 141(R) also requires the acquirer to recognize
and measure the goodwill acquired in a business combination or a gain from
a
bargain purchase and how to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) will be applied on a prospective
basis for business combinations where the acquisition date is on or after the
beginning of the Company’s 2010 fiscal year.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in
Consolidated Financial Statements-an amendment of ARB No. 51”. The
objective of SFAS No. 160 is to improve the financial information provided
in consolidated financial statements. SFAS No. 160 amends ARB No. 51 to
establish accounting and reporting standards for the noncontrolling interest
in
a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 also
changes the way the consolidated income statement is presented, establishes
a
single method of accounting for changes in a parent’s ownership interest in a
subsidiary that do not result in deconsolidation, requires that a parent
recognize a gain or loss in net income when a subsidiary is deconsolidated,
and
expands disclosures in the consolidated financial statements in order to clearly
identify and distinguish between the interests of the parent’s owners and the
interest of the noncontrolling owners of a subsidiary. SFAS No. 160 is
effective for the Company’s 2010 fiscal year. The Company does not anticipate
that SFAS No. 160 will have any impact on its consolidated financial
statements.
JOHNSON
OUTDOORS INC.
10 Acquisitions
Geonav
S.r.l.
On
November 16, 2007, the Company acquired 100% of the common stock of Geonav
S.r.l. (Geonav), a marine electronics company for approximately $5,977 (cash
of
$2,471, transaction costs of $126, and assumed debt of $3,380), subject to
final
price adjustments. The acquisition was funded with existing cash and credit
facilities. Geonav is a major European brand of chart plotters based
in Viareggio, Italy. The Company’s management believes that the purchase of
Geonav will allow the Company to expand its product line and add to its marine
electronics distribution channels in Europe. Also sold under the Geonav brand
are marine autopilots, VHF radios and fish finders. Geonav will be included
in
the Company’s Marine Electronics segment.
The
acquisition was accounted for using the purchase method and, accordingly, the
Company's Consolidated Financial Statements include the results of operations
since the date of acquisition.
The
Company is not required to present pro forma financial information with respect
to the Seemann acquisition due to the materiality of the
transaction.
A
preliminary allocation of the purchase price is as follows:
| |
|
|
|
|
Total
current assets
|
|
$ |
8,481 |
|
|
Property,
plant and equipment
|
|
|
55 |
|
|
Other
intangibles
|
|
|
24 |
|
|
Goodwill
|
|
|
2,519 |
|
|
Total
assets acquired
|
|
|
11,079 |
|
|
Total
liabilities assumed
|
|
|
5,102 |
|
|
Net
purchase price
|
|
$ |
5,977 |
|
The
increases in goodwill assets during the three months ended December 28, 2007
and
December 29, 2006 are as follows:
|
|
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Balance
at beginning of quarter
|
|
$ |
51,454 |
|
|
$ |
42,947 |
|
|
Amount
attributable to Geonav acquisition
|
|
|
2,519 |
|
|
|
- |
|
|
Amount
attributable to Lendal acquisition
|
|
|
- |
|
|
|
844 |
|
|
Amount
attributable to movements in foreign currencies
|
|
|
741 |
|
|
|
644 |
|
|
Balance
at end of quarter
|
|
$ |
54,714 |
|
|
$ |
44,435 |
|
JOHNSON
OUTDOORS INC.
11 Warranties
The
Company provides for warranties of certain products as they are sold. The
following table summarizes the Company's warranty activity for the three months
ended December 28, 2007 and December 29, 2006.
|
|
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Balance
at beginning of quarter
|
|
$ |
4,290 |
|
|
$ |
3,844 |
|
|
Expense
accruals for warranties issued during the period
|
|
|
837 |
|
|
|
1,166 |
|
|
Less
current period warranty claims paid
|
|
|
975 |
|
|
|
722 |
|
|
Balance
at end of quarter
|
|
$ |
4,152 |
|
|
$ |
4,288 |
|
12 Forward
Starting Interest Rate Swap
On
October 29, 2007 the Company entered into a forward starting interest rate
swap
(the “Swap”) with a notional amount of $60,000, receiving a floating three month
LIBOR interest rate while paying at a fixed rate of 4.685% over an accruing
period beginning December 14, 2007 and ending December 14, 2012. Interest is
payable quarterly, starting on March 14, 2008. The Swap has been designated
as a
cash flow hedge and is expected to be an effective hedge against the impact
on interest payments of changes in the three-month LIBOR benchmark rate. The
effect of the interest rate swap is to lock the interest rate on $60,000 of
three-month floating rate LIBOR debt at 4.685%. The interest rate swap had
a
market value equal to a loss of $1,342, which was recorded as a reduction of
other comprehensive income in equity net of tax, in accordance with FAS 133
hedge accounting principles. The market value of the interest rate swap will
rise and fall as market expectations of future floating rate LIBOR interest
rates over the five year life of the swap change in relation to the fixed rate
of 4.685%.
13 Comprehensive
Income (Loss)
Comprehensive
income (loss) includes net income (loss) and changes in shareholders’ equity
from non-owner sources. For the Company, the difference between net income
(loss) and comprehensive income (loss) is due to cumulative foreign currency
translation adjustments and the effect of recording the fair value of an
interest rate swap designated as a cash flow hedge. Strengthening of worldwide
currencies against the U.S. dollar created the Company's translation adjustment
income for the three months ended December 28, 2007. The impact of
the cash flow hedge loss on comprehensive income was the result a decline in
five-year LIBOR rate futures during the three month period ended December 28,
2007.
Comprehensive
income (loss) for the respective periods consists of the following:
| |
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Net
loss
|
|
$ |
(4,690 |
) |
|
$ |
(1,569 |
) |
|
Translation
adjustments
|
|
|
2,446 |
|
|
|
2,393 |
|
|
Loss
on cash flow hedge, net of tax
|
|
|
(811 |
) |
|
|
– |
|
|
Comprehensive
income (loss)
|
|
$ |
(3,055 |
) |
|
$ |
824 |
|
JOHNSON
OUTDOORS INC.
14
Restructuring
In
May,
2007, the Company announced plans to relocate the operations of the Scubapro
facility in Bad Säckingen, Germany into the recently purchased Seemann
operations in Wendelstein, Germany. As a result of the relocation of the
positions at the Bad Säckingen facility in fiscal 2007, the Company recognized
an expense of $578, consisting of employee termination benefits and related
costs of $428 and non-employee exit costs of $150, largely consisting of moving
and contract termination costs. These charges were included in the
Administrative management, finance and information systems line in the Company’s
Condensed Consolidated Statements of Operations and in the Diving segment in
the
Management’s Discussion and Analysis of Financial Condition and Results of
Operations. This relocation resulted in the movement and ultimate impact to
21
positions. There were no charges or recoveries related to this restructuring
in
the current quarter or in the first quarter of fiscal 2007. Total restructuring
costs for the Bad Säckingen closure are anticipated to be approximately $628,
consisting of approximately $130 of contract exit costs, $428 of employee
termination costs, and $70 of other exit costs.
The
following represents a reconciliation of the changes in restructuring reserves
related to projects through December 28, 2007:
| |
|
Employee
Termination
Costs
|
|
|
Contract
Exit Costs
|
|
|
Total
|
|
|
Accrued
liabilities as of September 28, 2007
|
|
$ |
147 |
|
|
$ |
116 |
|
|
$ |
263 |
|
|
Activity
during quarter ended December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
charges (recoveries)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges
to earnings
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Settlement
payments and other
|
|
|
(147 |
) |
|
|
(27 |
) |
|
|
(174 |
) |
|
Accrued
liabilities as of December 28, 2007
|
|
$ |
– |
|
|
$ |
89 |
|
|
$ |
89 |
|
15 Segments
of Business
The
Company conducts its worldwide operations through separate global business
units, each of which represents the Company's major product lines. Operations
are conducted in the United States and various foreign countries, primarily
in
Europe, Canada and the Pacific Basin. The Company’s Outdoor Equipment business
recognized net sales to the United States military which totaled approximately
12.0% of the total Company’s net sales during the three months ended December
29, 2006. The Company had no single customer that represented more than 10%
of
its total net sales during the three months ended December 28,
2007.
Net
sales
and operating profit include both sales to customers, as reported in the
Company's condensed consolidated statements of operations, and interunit
transfers, which are priced to recover cost plus an appropriate profit margin.
Total assets are those assets used in the Company's operations in each business
unit at the end of the periods presented.
JOHNSON
OUTDOORS INC.
A
summary
of the Company’s operations by business unit is presented below:
| |
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Net
sales:
|
|
|
|
|
|
|
|
Marine
electronics:
|
|
|
|
|
|
|
|
Unaffiliated
customers
|
|
$ |
33,255 |
|
|
$ |
29,456 |
|
|
Interunit
transfers
|
|
|
8 |
|
|
|
10 |
|
|
Outdoor
equipment:
|
|
|
|
|
|
|
|
|
|
Unaffiliated
customers
|
|
|
7,975 |
|
|
|
13,683 |
|
|
Interunit
transfers
|
|
|
10 |
|
|
|
7 |
|
|
Watercraft:
|
|
|
|
|
|
|
|
|
|
Unaffiliated
customers
|
|
|
13,439 |
|
|
|
11,455 |
|
|
Interunit
transfers
|
|
|
15 |
|
|
|
12 |
|
|
Diving:
|
|
|
|
|
|
|
|
|
|
Unaffiliated
customers
|
|
|
21,240 |
|
|
|
16,777 |
|
|
Interunit
transfers
|
|
|
290 |
|
|
|
142 |
|
|
Other/Corporate
|
|
|
58 |
|
|
|
56 |
|
|
Eliminations
|
|
|
(323 |
) |
|
|
(171 |
) |
| |
|
$ |
75,967 |
|
|
$ |
71,427 |
|
|
Operating
profit (loss):
|
|
|
|
|
|
|
|
|
|
Marine
electronics
|
|
$ |
263 |
|
|
$ |
204 |
|
|
Outdoor
equipment
|
|
|
(382 |
) |
|
|
1,643 |
|
|
Watercraft
|
|
|
(2,113 |
) |
|
|
(1,984 |
) |
|
Diving
|
|
|
560 |
|
|
|
631 |
|
|
Other/Corporate
|
|
|
(2,909 |
) |
|
|
(2,727 |
) |
| |
|
$ |
(4,581 |
) |
|
$ |
(2,233 |
) |
|
Total
assets (end of period):
|
|
|
|
|
|
|
|
|
|
Marine
electronics
|
|
$ |
120,885 |
|
|
$ |
90,176 |
|
|
Outdoor
equipment
|
|
|
28,247 |
|
|
|
30,531 |
|
|
Watercraft
|
|
|
63,029 |
|
|
|
59,727 |
|
|
Diving
|
|
|
120,248 |
|
|
|
103,124 |
|
|
Other/Corporate
|
|
|
21,583 |
|
|
|
26,435 |
|
|
Assets
held for sale
|
|
|
359 |
|
|
|
2,075 |
|
| |
|
$ |
354,351 |
|
|
$ |
312,068 |
|
16
Litigation
The
Company is subject to various legal actions and proceedings in the normal course
of business, including those related to product liability and environmental
matters. The Company is insured against loss for certain of these matters.
Although litigation is subject to many uncertainties and the ultimate exposure
with respect to these matters cannot be ascertained, management does not believe
the final outcome of any pending litigation will have a material adverse effect
on the financial condition, results of operations, liquidity or cash flows
of
the Company.
On
July
10, 2007, after considering the costs, risks and business distractions
associated with continued litigation, the Company reached a settlement agreement
with Confluence Holdings Corp. that ended a long-standing intellectual property
dispute between the two companies. The Company has made a claim with its
insurance carriers to recover the $4,400 settlement, plus defense costs
(approximately $800). This matter is presently the subject of litigation in
the
Eastern District of Wisconsin. The Company is unable to estimate at this time
the amount of insurance recovery, if any.
JOHNSON
OUTDOORS INC.
The
following discussion includes comments and analysis relating to the results
of
operations and financial condition of Johnson Outdoors Inc. and its subsidiaries
(the Company) as of and for the three months ended December 28, 2007 and
December 29, 2006. This discussion should be read in conjunction with the
condensed consolidated financial statements and related notes that immediately
precede this section, as well as the Company’s Annual Report on Form 10-K for
the fiscal year ended September 28, 2007 which was filed with the Securities
and
Exchange Commission on December 12, 2007.
Forward
Looking Statements
Certain
matters discussed in this Form 10-Q are “forward-looking statements,” and the
Company intends these forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and is including this statement for
purposes of those safe harbor provisions. These forward-looking statements
can
generally be identified as such because the context of the statement includes
phrases such as the Company “expects,” “believes” or other words of similar
meaning. Similarly, statements that describe the Company’s future plans,
objectives or goals are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties which could cause
actual results or outcomes to differ materially from those currently
anticipated. Factors that could affect actual results or outcomes include the
matters described under the caption "Risk Factors" in Item 1A of the
Company’s Annual Report on Form 10-K for the fiscal year ended September 28,
2007 which was filed with the Securities and Exchange Commission on December
12,
2007 and the following: changes in consumer spending patterns; the Company’s
success in implementing its strategic plan, including its focus on innovation;
actions of companies that compete with the Company; the Company’s success in
managing inventory; movements in foreign currencies or interest rates;
unanticipated issues related to the Company’s military tent business; the
success of suppliers and customers; the ability of the Company to deploy its
capital successfully; unanticipated outcomes related to outsourcing certain
manufacturing processes; unanticipated outcomes related to outstanding
litigation matters; successful integration of acquisitions; and adverse weather
conditions. Shareholders, potential investors and other readers are urged to
consider these factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements. The
forward-looking statements included herein are only made as of the date of
this
filing. The Company assumes no obligation, and disclaims any obligation, to
update such forward-looking statements to reflect subsequent events or
circumstances.
Trademarks
We
have
registered the following trademarks, which are used in this Form
10-Q: Minn Kota®, Cannon®, Humminbird®, Bottom Line®, Fishin' Buddy®,
Silva®, Eureka!®, Geonav®, Old Town®, Ocean Kayak™, Necky®, Escape®,
Lendal®, Extrasport®, Carlisle®, Scubapro®, UWATEC® and Seemann™.
JOHNSON
OUTDOORS INC.
Overview
Johnson
Outdoors designs, manufactures and markets top-quality outdoor recreational
products. Through a combination of innovative products and marketing, a talented
and passionate workforce, and efficient distribution, the Company seeks to
set
itself apart from the competition. Its subsidiaries comprise a network that
promotes entrepreneurialism and leverages best practices and synergies,
following the strategic vision set by executive management and approved by
the
Company’s Board of Directors.
Quarterly
sales are typically lowest during the first fiscal quarter of the fiscal year
as
the Company ramps up production in preparation for the primary selling season
for its outdoor recreational products. The 6.4% increase in net sales for the
three months ended December 28, 2007 over the same period in the prior year
resulted primarily from strong growth in the Company’s Humminbird brand and
export sales at Marine Electronics and favorable reception to new product
introductions at Diving and Watercraft, offsetting an expected decrease in
military sales at Outdoor Equipment.
Key
changes included:
|
|
§
|
Marine
Electronics revenues increased 12.9% over the prior year quarter,
driven
by increased sales of Humminbird fishfinder / GPS combo units and
export
sales.
|
|
|
§
|
Watercraft
revenues were up 17.3% versus prior year on the strength of new
paddlesport products, which drove growth in sales to large retail
customers and specialty retail accounts.
|
|
|
§
|
Diving
revenues increased 27.2% due to strong sales of new products, the
Seemann
acquisition, and favorable foreign currency translation. New product
sales, including the Galileo dive computer, comprised 45% of total
revenues for Diving for the current quarter.
|
|
|
§
|
Outdoor
Equipment revenues were down 41.6% as the expected slowing of military
sales continued, declining 57.6% versus the prior year quarter. Consumer
products were down 23.4%, largely due to a special promotional program
in
the prior year quarter which was not repeated in the current year
quarter.
|
Gross
margins were 38.6% for the current year quarter, down 1.3 percentage points
from
the same period in the prior year. This decrease in gross profit margins was
largely due to channel and product mix at Marine Electronics, product and
geographic mix in Diving, and closeout sales at Watercraft.
Operating
expenses were up $3.1 million from the prior year quarter, driven primarily
by
recently acquired Geonav and Seemann businesses which were not part of the
prior
year quarter results, and by the effect of foreign currency
translation.
Total
Company operating loss from continuing operations for the current year period
was $4.6 million compared to an operating loss from continuing operations of
$2.2 million in the prior year quarter, due largely to the decrease in
government sales at Outdoor Equipment, higher selling-related costs at Marine
Electronics, and severance, foreign currency and consulting at
Diving.
The
Company reported a net loss from continuing operations of $3.6 million or
($0.40) per diluted Class A and Class B common share, during the seasonally
slow
first quarter. This compares to a net loss from continuing operations of $1.3
million, or ($0.14) per diluted Class A and Class B common share, in the same
quarter last year.
On
December 17, 2007, management committed to divest the Company’s Escape business
and is exploring strategic alternatives for its Escape business. This decision
resulted in the reporting of the Escape business as a discontinued operation
in
the current period and the reclassification of the results of this business
as
discontinued operations for comparable reporting periods. The net loss from
discontinued operations was $1.1 million and $0.3 million (both after income
tax) for the three months ended December 28, 2007 and December 29, 2006,
respectively.
Total
net
loss for the Company for the first quarter of the current year was $4.7 million
compared to $1.6 million in the first quarter of last year.
JOHNSON
OUTDOORS INC.
The
Company’s debt to total capitalization stood at 29% at the end of the quarter
versus 27% at December 29, 2006. Debt, net of cash, was $44.8 million at the
end
of the current year quarter compared to $20.3 million at the end of the prior
year quarter. The Company paid $10.8 million on its outstanding
senior notes, but incurred short-term borrowings to meet working capital needs.
In addition, the Company’s borrowings increased to fund the acquisitions of
Seemann and Geonav and to support higher working capital balances.
Due
to
the seasonality of the Company’s businesses, first quarter results are not
expected to be indicative of the Company's primary selling period, which takes
place in its second and third fiscal quarters. The table below sets forth a
historical view of the Company’s seasonality.
| |
Year
Ended
|
|
|
| |
|
September
28, 2007
|
|
|
September
29, 2006
|
|
|
September
30, 2005
|
|
|
Quarter
Ended
|
|
Net
Sales
|
|
|
Operating
Profit
(Loss)
|
|
|
Net
Sales
|
|
|
Operating
Profit
(Loss)
|
|
|
Net
Sales
|
|
|
Operating
Profit
(Loss)
|
|
|
December
|
|
|
17 |
% |
|
|
(15 |
)% |
|
|
19 |
% |
|
|
(4 |
)% |
|
|
20 |
% |
|
|
– |
% |
|
March
|
|
|
28 |
|
|
|
23 |
|
|
|
27 |
|
|
|
40 |
|
|
|
28 |
|
|
|
54 |
|
|
June
|
|
|
35 |
|
|
|
82 |
|
|
|
34 |
|
|
|
67 |
|
|
|
32 |
|
|
|
76 |
|
|
September
|
|
|
20 |
|
|
|
10 |
|
|
|
20 |
|
|
|
(3 |
)
|
|
|
20 |
|
|
|
(30 |
) |
| |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Results
of Operations
The
Company’s net sales and operating profit (loss) by segment are summarized as
follows:
|
(millions)
|
|
Three
Months
Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Net
sales:
|
|
|
|
|
|
|
|
Marine
electronics
|
|
$ |
33.3 |
|
|
$ |
29.5 |
|
|
Outdoor
equipment
|
|
|
8.0 |
|
|
|
13.7 |
|
|
Watercraft
|
|
|
13.5 |
|
|
|
11.5 |
|
|
Diving
|
|
|
21.5 |
|
|
|
16.9 |
|
|
Other/eliminations
|
|
|
(0.3 |
) |
|
|
(0.2 |
) |
|
Total
|
|
$ |
76.0 |
|
|
$ |
71.4 |
|
|
Operating
profit (loss):
|
|
|
|
|
|
|
|
|
|
Marine
electronics
|
|
$ |
0.3 |
|
|
$ |
0.2 |
|
|
Outdoor
equipment
|
|
|
(0.4 |
) |
|
|
1.6 |
|
|
Watercraft
|
|
|
(2.1 |
) |
|
|
(2.0 |
) |
|
Diving
|
|
|
0.6 |
|
|
|
0.6 |
|
|
Other/eliminations
|
|
|
(3.0 |
) |
|
|
(2.6 |
) |
|
Total
|
|
$ |
(4.6 |
) |
|
$ |
(2.2 |
) |
See
Note
15 of the notes to the condensed consolidated financial statements for the
definition of segment net sales and operating profits.
JOHNSON
OUTDOORS INC.
The
Company’s net sales on a consolidated basis for the three months ended December
28, 2007 totaled $76.0 million, an increase of 6.4% or $4.6 million, compared
to
$71.4 million during the three months ended December 29, 2006. The Marine
Electronics business posted net sales of $33.3 up $3.8 million or 12.9% from
$29.5 million in the prior year quarter. This increase was due to robust sales
of Humminbird brand products, which were up 65.8% on high demand for Humminbird
fishfinder / GPS combo units, and strong export sales. Minn Kota sales were
down
15.2% due to extended pre-season sales programs to distributors,
which shifted some pre-season shipments into the second quarter of fiscal 2008.
In addition, the fiscal first quarter of 2007 included the initial shipment
of
newly introduced products to customers, which was not repeated in the fiscal
first quarter of 2008
Net
sales
for the Watercraft business were $13.5 million, an increase of $2.0 million
or
17.4% compared to $11.5 million in the prior year quarter. Increases in sales
of
Old Town, Pacific, and Ocean boat brands, Carlisle paddles and Extrasport
accessories in the current period were driven primarily by the strength of
new
paddlesport products, which drove growth in sales to large retail and specialty
retail accounts. These increases were offset somewhat by lower European sales
compared to the prior year period due to decreases in pre-season promotions
with
larger retail accounts versus the prior year period.
Net
sales
for the Outdoor Equipment business were $8.0 million for the quarter, a decrease
of $5.7 million or 41.6% from the prior year quarter sales of $13.7 million.
The
causes of this change were a $5.1 million decrease in military sales from the
prior year quarter and a reduction in net sales of approximately $1.4 million
from a specialty market sales program implemented in the prior year quarter
that
was not repeated in the current year quarter, partially offset by increases
in
consumer tent sales.
Net
sales
for the Diving business were $21.5 million this quarter, versus $16.9 million
in
the prior year quarter, an increase of $4.6 million or 27.2%. The increase
was
due to new product launches, sales growth in Europe, favorable foreign currency
exchange translation, and sales from the recently acquired Seemann business.
The
Seemann business, acquired on April 2, 2007, added $1.9 million in sales to
the
first quarter of fiscal 2008. Sales in Europe for the first quarter of fiscal
2008 were up 36.2% versus the same period in the prior year. Foreign currency
exchange translation increased reported revenues by $1.1 million over the prior
year first quarter. The new Galileo dive computer and other product
introductions comprised 45% of Diving revenues in the first quarter of fiscal
2008.
Gross
profit as a percentage of sales was 38.6% for the three months ended December
28, 2007 compared to 39.9% in the corresponding period in the prior year. Minn
Kota brand experienced lower sales to specialty retail chains and higher export
sales, both contributing to lower gross profit margins in the current quarter
versus the same period in the prior year. Diving margins were down 5.3
percentage points over the prior year quarter due to currency impacts on
purchased product, geographic mix, and increased pre-season discounts. Increased
accessory closeout sales drove a 1.8 percentage point decline in gross profit
percentage at Watercraft for the current quarter versus prior year.
Operating
expenses were $33.9 million, an increase of $3.1 million or 10.1% compared
to
$30.8 million in the prior year quarter. Increases were seen globally
for the Company on foreign currency unfavorability of $0.9
million. The Diving business increased due to $0.6 million in
severance costs, consulting and other legal costs of $0.3 million and
incremental expenses of the acquired Seemann Sub brand of $0.3
million. The Marine Electronic business increased $0.5 million due to
incremental expenses of the acquired Geonav business and higher selling related
costs. The Watercraft business increased its spending related to
promotion of its accessory brands during the pre-season selling
period.
Total
Company operating loss from continuing operations for the current year period
was $4.6 million compared to an operating loss from continuing operations of
$2.2 million in the prior year quarter. Marine Electronics reported an operating
profit of $0.3 million compared to $0.2 million in the corresponding prior
year
period due to higher selling-related costs. Diving reported an operating profit
of $0.6 million, flat with the corresponding prior year period as decreased
gross profit margins, severance, foreign currency impacts, and consulting costs
offset profits from higher sales. Watercraft operating losses for the three
months ended December 28, 2007 and December 29, 2006 were $2.1 million and
$2.0
million respectively. The decline in operating profit was the result of the
lower gross profit margins discussed previously and increases in selling related
expenses. The Outdoor Equipment business declines in operating profit were
the
result of a $5.1 million reduction in military tent sales over the prior year
quarter which had a negative impact on operating leverage for the three month
period ended December 28, 2007.
JOHNSON
OUTDOORS INC.
Interest
expense was $1.1 million for the three months ended December 28, 2007, compared
to $1.0 million for the three months ended December 29, 2006. Payments of $10.8
million were made on the Company's outstanding senior notes during the three
months ended December 28, 2007.
Interest
income was $0.3 million for the three months ended December 28, 2007, compared
to $0.2 million for the corresponding period of the prior year.
The
Company’s effective tax rate on a continuing operations basis for the three
months ended December 28, 2007 was 33.2% compared to 57.5% for the corresponding
period of the prior year. The largest impact is the prior year included a German
tax refund in the amount of $0.5 million which resulted in a larger tax benefit
in the quarter ended December 29, 2006. Smaller items which impacted the tax
rate include changes in the mix of income from generally higher tax
jurisdictions to relatively lower tax jurisdictions, including foreign tax
rate
reductions and tax credits and incentives.
In
July
2006, the Financial Accounting Standards Board (FASB) issued Interpretation
48
(“FIN 48”), Accounting for Uncertainty in Income Taxes - an Interpretation of
FASB Statement No 109. This Interpretation provides a consistent recognition
threshold and measurement attribute, as well as criteria for recognizing,
derecognizing and measuring uncertain tax positions for financial statement
purposes. This Interpretation also requires expanded disclosure with respect
to
the uncertainty in income tax positions. The Company adopted the provisions
of
FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (FIN
48) effective in the first quarter of the fiscal year ending in September
2008 with no impact on its consolidated financial statements. The Company
recognizes interest and penalties related to unrecognized tax benefits in income
tax expense. The Company had $1.1 million accrued for uncertain tax positions
which included $0.1 for interest as of September 28, 2007. The total amount
of
unrecognized tax benefits that, if recognized, would affect the effective tax
rate is $1.1 million. The Company or one of its subsidiaries files
income tax returns in the U.S. federal jurisdiction, and with various states
and
foreign jurisdictions. Primarily as a result of loss carry forwards, the Company
is still open to federal and state audits dating back to the 1993 taxable year.
The Company is not currently undergoing tax audits for any major foreign tax
jurisdiction . As of the adoption date, the tax years subject to
review in Switzerland, Italy, Germany, and France were the years after 1997,
2003, 2005, and 2006 respectively. The Company estimates that the unrecognized
tax benefits will not change significantly within the next year.
On
December 17, 2007, management committed to a plan to divest its Escape business
and publicly announced on January 18, 2008 that it is exploring strategic
alternatives for its Escape brand of products. This decision resulted in the
classification of the Escape business as a discontinued operation in the current
period and the reclassification of the results of this business as a
discontinued operation for comparable reporting periods. The net loss from
discontinued operations was $1.1 million and $0.3 million (both after income
tax) for the three months ended December 28, 2007 and December 29, 2006,
respectively.
Net
Loss
Net
loss
for the three months ended December 28, 2007 was $4.7 million, or $0.52 per
diluted Common Class A and B share, compared to a net loss of $1.6 million,
or
$0.17 per diluted Common Class A and B share, for the corresponding period
of
the prior year due to the factors discussed above.
JOHNSON
OUTDOORS INC.
Financial
Condition
The
Company’s cash flow from operating, investing and financing activities, as
reflected in the condensed consolidated statements of cash flows, is summarized
in the following table:
|
(millions)
|
|
Three
Months Ended
|
|
| |
|
December
28
2007
|
|
|
December
29
2006
|
|
|
Cash
provided by (used for):
|
|
|
|
|
|
|
|
Operating
activities
|
|
$ |
(33.0 |
) |
|
$ |
(30.8 |
) |
|
Investing
activities
|
|
|
(8.4 |
) |
|
|
(4.1 |
) |
|
Financing
activities
|
|
|
38.9 |
|
|
|
31.2 |
|
|
Effect
of exchange rate changes
|
|
|
0.4 |
|
|
|
0.6 |
|
|
Decrease
in cash and temporary cash investments
|
|
$ |
(2.1 |
) |
|
$ |
(3.1 |
) |
In
its
first fiscal quarter, the Company typically invests in operating assets in
anticipation of the Company’s strongest selling season, which is in the second
and third quarters of the Company’s fiscal year.
The
Company's debt-to-total capitalization ratio has increased to 29% as of December
28, 2007 from 27% as of December 29, 2006. The Company paid $10.8 million on
its
outstanding senior notes, but incurred short-term borrowings to meet working
capital needs. In addition, the Company’s borrowings increased to fund the
acquisitions of Seemann and Geonav and to support higher working capital
balances.
Operating
Activities
Cash
flows used for operations totaled $33.0 million for the three months ended
December 28, 2007 compared with $30.8 million used for operations for the
corresponding period of the prior year.
Accounts
receivable increased $7.7 million for the three months ended December 28, 2007,
compared to an increase of $3.4 million in the corresponding period of the
prior
year. Inventories increased by $13.3 million for the three months ended December
28, 2007 down from the increase of $18.6 million in the prior year comparable
period. The inventory build in the current year is primarily related to a
build-up of products for the Company’s selling season which is the strongest
during the second and third quarters of the Company's fiscal year. The Company
believes it is producing products at levels adequate to meet expected customer
demand.
Accounts
payable and accrued liabilities decreased $9.7 million for the three months
ended December 28, 2007 versus a decrease of $6.1 million for the corresponding
period of the prior year. The decreases during the quarters ended December
28,
2007 and December 29, 2006 were the result of settlement of various
accruals.
Total
depreciation and amortization charges were $2.5 million for the three months
ended December 28, 2007 and $2.2 million for the corresponding period of the
prior year.
Investing
Activities
Cash
used
for investing activities totaled $8.4 million for the three months ended
December 28, 2007 and $4.1 million for the corresponding period of the prior
year. Capital expenditures totaled $2.4 million for the three months ended
December 28, 2007 and $2.7 million for the corresponding period of the prior
year. The Company’s recurring investments are made primarily for tooling for new
products and enhancements on existing products. In fiscal 2008, the Company's
capital expenditures are anticipated to be roughly equal to prior year levels
as
the Company completed construction of a floodwall in fiscal 2007 but will invest
in tooling, leasehold improvements as well as new ERP systems in its Canadian
and domestic Outdoor Equipment businesses in fiscal 2008. These expenditures
are
expected to be funded by working capital or existing credit
facilities.
JOHNSON
OUTDOORS INC.
On
November 16, 2007, the Company acquired 100% of the common stock of Geonav
S.r.l. (Geonav), a marine electronics company located in Europe for
approximately $6.0 million (cash of $2.5 million, transaction costs of $0.1
million, and assumed debt of $3.4 million), subject to final price adjustments.
On October 3, 2006, the Company acquired all of the outstanding common stock
of
Lendal Products Ltd. (Lendal) from Lendal's founders for $1.4 million, plus
$0.1
million in transaction costs.
Financing
Activities
Cash
flows provided by financing activities totaled $38.9 million for the three
months ended December 28, 2007 and $31.2 million for the corresponding period
of
the prior year. The Company made principal payments on senior notes and other
long-term debt of $10.8 million and $17.0 million during the first quarters
of
fiscal years 2008 and 2007, respectively.
The
Company had borrowings outstanding on revolving credit facilities of $72.0
million ($24.0 million at an interest rate of 5.7%, $18.0 million at an interest
rate of 5.75% and $30.0 million at an interest rate of 6.0%) as of December
28,
2007. The Company incurred short-term borrowings during the quarter ended
December 28, 2007 to meet working capital needs.
Our
credit agreements contain restrictive covenants regarding such conditions as
the
Company’s net worth, indebtedness, fixed charge coverage and distribution of
earnings. The most restrictive of these covenants are maintaining a fixed charge
coverage ratio of 2.0 or greater, and maintaining a ratio of average total
debt
to average EBITDA of 3.5 or less. As of the date of this report, the Company
was
in compliance with the restrictive covenants of such agreements, as amended
from
time to time.
JOHNSON
OUTDOORS INC.
Obligations
and Off Balance Sheet Arrangements
The
Company has obligations and commitments to make future payments under debt
agreements and operating leases. The following schedule details these
obligations at December 28, 2007.
| |
|
Payment
Due by Period
|
|
|
(millions)
|
|
Total
|
|
|
Remainder 2008
|
|
|
|
2009/10 |
|
|
|
2011/12 |
|
|
2013
&
After
|
|
|
Long-term
debt
|
|
$ |
10.0 |
|
|
$ |
10.0 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
Short-term
debt
|
|
|
72.0 |
|
|
|
72.0 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Operating
lease obligations
|
|
|
26.3 |
|
|
|
4.4 |
|
|
|
8.0 |
|
|
|
5.6 |
|
|
|
8.3 |
|
|
Open
purchase orders
|
|
|
74.3 |
|
|
|
74.3 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Contractually
obligated interest payments
|
|
|
1.0 |
|
|
|
0.6 |
|
|
|
0.4 |
|
|
|
– |
|
|
|
– |
|
|
Total
contractual obligations
|
|
$ |
183.6 |
|
|
$ |
161.3 |
|
|
$ |
8.4 |
|
|
$ |
5.6 |
|
|
$ |
8.3 |
|
Interest
obligations on short-term debt are included in the category "contractually
obligated interest payments" noted above only to the extent accrued as of
December 28, 2007. Future interest costs on the revolving credit facility cannot
be estimated due to the variability of the amount of borrowings and the interest
rates on that facility.
The
Company also utilizes letters of credit for trade financing purposes. Letters
of
credit outstanding at December 28, 2007 totaled $2.5 million.
The
Company has no off-balance sheet arrangements.
Market
Risk Management
The
Company is exposed to market risk stemming from changes in foreign exchange
rates, interest rates and, to a lesser extent, commodity prices. Changes in
these factors could cause fluctuations in earnings and cash flows. The Company
may reduce exposure to certain of these market risks by entering into hedging
transactions authorized under Company policies that place controls on these
activities. Hedging transactions involve the use of a variety of derivative
financial instruments. Derivatives are used only where there is an underlying
exposure, not for trading or speculative purposes.
Foreign
Operations
The
Company has significant foreign operations, for which the functional currencies
are denominated primarily in Euros, Swiss francs, Japanese yen and Canadian
dollars. As the values of the currencies of the foreign countries in which
the
Company has operations increase or decrease relative to the U.S. 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 30%
of the
Company’s revenues for the three months ended December 28, 2007 were
denominated in currencies other than the U.S. dollar. Approximately
16% were denominated in euros, with the remaining 14% denominated in various
other foreign currencies.
In
the
past the Company has mitigated a portion of the fluctuations in certain foreign
currencies through the purchase of foreign currency swaps, forward contracts
and
options to hedge known commitments, primarily for purchases of inventory and
other assets denominated in foreign currencies; however, no such transactions
were entered into during fiscal 2007 or the first quarter of fiscal
2008.
JOHNSON
OUTDOORS INC.
Interest
Rates
The
Company uses interest rate swaps, caps or collars in order to maintain a mix
of
floating rate and fixed rate debt such that permanent working capital needs
are
largely funded with fixed rate debt and seasonal working capital needs are
funded with floating rate debt. The Company’s primary exposure is to U.S.
interest rates. As disclosed in Note 12 of the notes to the condensed
consolidated financial statements, on October 29, 2007 the Company entered
into
a forward starting interest rate swap (the “Swap”) with a notional amount of
$60.0 million. The Swap has been designated as a cash flow
hedge. The market value of the Swap (a $1.3 million loss) was
recorded as a reduction of other comprehensive income in equity net of tax,
in
accordance with FAS 133 hedge accounting principles.
Commodities
Certain
components used in the Company’s products are exposed to commodity price
changes. The Company manages this risk through instruments such as purchase
orders and non-cancelable supply contracts. Primary commodity price exposures
are metals and packaging materials.
Sensitivity
to Changes in Value
The
estimates that follow are intended to measure the maximum potential fair value
or earnings the Company could lose in one year from adverse changes in market
interest rates. The calculations are not intended to represent actual losses
in
fair value or earnings that the Company expects to incur. The estimates do
not
consider favorable changes in market rates. The table below presents the
estimated maximum potential loss in fair value and annual earnings before income
taxes from a 100 basis point movement in interest rates on the senior notes
outstanding at December 28, 2007:
|
(millions)
|
|
Estimated
Impact on
|
|
| |
|
Fair
Value
|
|
|
Earnings
Before Income Taxes
|
|
|
Interest
rate instruments
|
|
$ |
0.1 |
|
|
$ |
0.1 |
|
The
Company had outstanding $10.0 million in an unsecured senior note as of December
28, 2007. The senior note bears interest at 7.82% and is to be repaid December
2008. The fair market value of the Company’s fixed rate senior notes was $10.3
million as of December 28, 2007.
Other
Factors
The
Company experienced inflationary pressures during fiscal 2007 and fiscal 2008
to
date on energy, metals and resins. The Company anticipates that changing costs
of basic raw materials may impact future operating costs and, accordingly,
the
prices of its products. The Company is involved in continuing programs to
mitigate the impact of cost increases through changes in product design and
identification of sourcing and manufacturing efficiencies. Price increases
and,
in certain situations, price decreases are implemented for individual products,
when appropriate.
Critical
Accounting Policies and Estimates
The
Company’s critical accounting policies are identified in the Company’s Annual
Report on Form 10-K for the fiscal year ending September 28, 2007 in Management’s Discussion and Analysis
of Financial Condition and Results of Operations under the heading
“Critical Accounting Policies and Estimates.” There were no significant changes
to the Company’s critical accounting policies during the three months ended
December 28, 2007.
JOHNSON
OUTDOORS INC.
New
Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements. SFAS No. 157 clarifies
the definition of exchange price as the price between market participants in
an
orderly transaction to sell an asset or transfer a liability in the market
in
which the reporting entity would transact for the asset or liability, which
is
the principal or most advantageous market for the asset or liability. The
Company will be required to adopt SFAS No. 157 beginning in fiscal 2009. The
Company is currently assessing the effect of SFAS No. 157 on the Company’s
consolidated financial statements.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115. This standard permits an entity to choose to measure many financial
instruments and certain other items at fair value. The fair value option permits
a company to choose to measure eligible items at fair value at specified
election dates. A company will report unrealized gains and losses on items
for
which the fair value option has been elected in earnings after adoption. SFAS
No. 159 will be effective for the Company beginning in fiscal 2009. The Company
is currently assessing the effect of SFAS No. 159 on the Company’s consolidated
financial statements.
In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business
Combinations” (“SFAS No. 141(R)”), The objective of SFAS No. 141(R) is to
improve the information provided in financial reports about a business
combination and its effects. SFAS No. 141(R) requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date, measured at their fair values
as of that date. SFAS No. 141(R) also requires the acquirer to recognize
and measure the goodwill acquired in a business combination or a gain from
a
bargain purchase and how to evaluate the nature and financial effects of the
business combination. SFAS No. 141(R) will be applied on a prospective
basis for business combinations where the acquisition date is on or after the
beginning of the Company’s 2010 fiscal year.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements-an amendment of ARB No. 51”. The objective
of SFAS No. 160 is to improve the financial information provided in
consolidated financial statements. SFAS No. 160 amends ARB No. 51 to
establish accounting and reporting standards for the noncontrolling interest
in
a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 also
changes the way the consolidated income statement is presented, establishes
a
single method of accounting for changes in a parent’s ownership interest in a
subsidiary that do not result in deconsolidation, requires that a parent
recognize a gain or loss in net income when a subsidiary is deconsolidated,
and
expands disclosures in the consolidated financial statements in order to clearly
identify and distinguish between the interests of the parent’s owners and the
interest of the noncontrolling owners of a subsidiary. SFAS No. 160 is
effective for the Company’s 2010 fiscal year. The Company does not anticipate
that SFAS No. 160 will have any impact on its consolidated financial
statements.
Information
with respect to this item is included in Management’s Discussion and Analysis of
Financial Condition and Results of Operations under the heading “Market Risk
Management.”
JOHNSON
OUTDOORS INC.
The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company’s reports filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
recorded, processed, summarized and reported within the specified time periods.
As of the end of the period covered by this report, the Company carried out
an
evaluation, under the supervision and with the participation of the Company’s
management, including the Chief Executive Officer and Chief Financial Officer,
of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that, as of the end of such period, the Company's disclosure controls
and procedures were effective in recording, processing, summarizing and
reporting, on a timely basis, information required to be disclosed by the
Company in reports that the Company files with or submits to the Securities
and
Exchange Commission. It should be noted that in designing and evaluating the
disclosure controls and procedures, management recognized that any controls
and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost benefit
relationship of possible controls and procedures. The Company has designed
its
disclosure controls and procedures to reach a level of reasonable assurance
of
achieving the desired control objectives and, based on the evaluation described
above, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures were effective
at reaching that level of reasonable assurance.
There
were no changes in the Company’s internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that
occurred during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II OTHER INFORMATION
See
Exhibit Index to this Form 10-Q report.
JOHNSON
OUTDOORS INC.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| |
JOHNSON
OUTDOORS INC.
|
|
Signatures
Dated: February 6, 2008
|
|
| |
/s/
Helen P.
Johnson-Leipold
|
| |
Helen
P. Johnson-Leipold
Chairman
and Chief Executive Officer
|
| |
/s/
David W.
Johnson
|
| |
David
W. Johnson
Vice
President and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
Exhibit
Number
|
Description
|
|
31.1
|
|
|
31.2
|
|
|
32
(1)
|
|
________________________
(1)
This
certification is not “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act
of
1934, as amended.
25