Johnson Outdoors Inc. Annual Report 2000

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FY2000 Annual Report · Johnson Outdoors Inc.

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2000 Annual Report

Business Profile

Watercraft

Motors

Diving

Outdoor Equipment

24% 22% 24% 30%

Minn Kota
Electric boat motors, power
equipment and accessories

Airguide
Speedometers, marine and
automotive compasses and
weather instruments

Scubapro
Regulators, buoyancy
compensators, masks, fins,
wet and dry suits, gloves, dive
lights and other accessories

Aladin
Premium dive computers

Uwatec
Dive computers and other
electronic instruments

Soniform
Buoyancy compensators

SnorkelPro
Masks, fins and snorkels

Eureka!
Camping tents,
accessories and military
and commercial tents

CampTrails
Backpacks and accessories

Silva
Field compasses

Jack Wolfskin
Outdoor clothing, travel
gear, footwear, accessories,
camping tents, backpacks
and sleeping bags

Old Town
Canoes and kayaks

Necky
Kayaks

Leisure Life
Canoes, pedal boats, kayaks,
deck boats and tenders

Ocean Kayak
Sit-on-top kayaks

Escape
Sailboats

Carlisle
Paddles and oars

Extrasport and Swiftwater
Personal floatation devices

Dimension
Kayaks

Pacific Kayak
Kayaks

J O H N S O N O U T D O O R S I N C .

designs, manufactures and markets

outdoor recreation products in four

businesses: Watercraft, Motors,

Diving, and Outdoor Equipment.

More than 1,400 employees work

in thirty locations worldwide.

O U R V I S I O N

In the outdoor recreational

industry, our stakeholders will

recognize us as:

– the innovation leader

– bringing excitement and
growth to our markets

– a strong, talented team

with exceptional passion

This vision will translate into:

– strong brand equities and
leading market shares

– increased sales and profits

– preferred supplier relationships
and strong consumer loyalty

– steady shareholder returns

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Summary Financial Information1

Johnson Outdoors Inc.

(thousands, except per share data)

1998

1999

2000

% change

Operating Results

Net sales

Gross profit

Operating profit

Net income

Diluted earnings
per common share

Diluted average common
shares outstanding

Capitalization

Total debt

Shareholders’ equity

$270,017

106,801

18,356

5,379

$0.66

8,114

$305,094

120,670

19,513

5,861

$0.72

8,108

$347,288

135,212

24,719

8,375

$1.03

8,130

$124,001

124,386

$122,071

127,178

$105,319

100,832

14%

12%

27%

43%

Total debt to total capital

49.9%

49.0%

51.1%

375

350

325

300

275

250

225

200

175

150

125

100

6
9

7
9

8
9

9
9

0
0
0
2

Net Sales
in millions

6
9

7
9

8
9

9
9

0
0
0
2

Operating Profit
in millions

1.30

1.20

1.10

1.00

.90

.80

.70

.60

.50

.40

.30

.20

.10

-.10

-.20

6
9

7
9

8
9

9
9

0
0
0
2

EPS Diluted
in millions

+14% versus 1999

+27% versus 1999

+43% versus 1999

1Continuing operations

One

Table of Contents

1 Summary Financial Information

2 Letter to Shareholders

6 Watercraft

8 Motors

10 Diving

12 Outdoor Equipment

14 Outdoor Equipment – Europe

• Form 10-K

Inside Back Cover

Directors and Officers

Shareholders’ Information

E R

T O S H A R E H O L D E R S

We’re pleased to report double-digit increases in sales and operating profits as well as strong

gains in earnings per share for fiscal year 2000. Johnson Outdoors is on track with our five-year

growth plan, staying on top of recreation trends as we reach out to more consumers with

innovative, easy-to-use products.

Samuel C. Johnson
Chairman of the Executive Committee

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Among this year’s many
achievements, the sale of
our Fishing business stands
out. This step was crucial
in our ongoing efforts to
realize Johnson Outdoors’
long-term potential. It
demonstrated our commit-
ment to tight portfolio
management and our firm
focus on high-growth,
high-margin businesses.

In addition, Diving, Outdoor
Equipment Group and
Motors all turned in solid
performances. Watercraft
had strong sales, although
profitability was down due to
growing pains—integrating
recent acquisitions and
handling rapid growth at
Old Town. We’re in the
process of strengthening both
Old Town’s infrastructure and
our support for acquisitions.

Overall we’re pleased with
our solid position and are
working to continue our
success. Our new name,
Johnson Outdoors, captures
the spirit behind our mis-
sion and vision. Our
emphasis on innovation

and understanding consumer
needs continues to yield
some of the most exciting
products on the market.
Our organization grows
stronger each day, building
on the passion and commit-
ment of a talented team.

2 0 0 0 R E S U LT S
Earnings per diluted share
from continuing operations
increased 43%, to $1.03, in
fiscal 2000. Three of our four
business segments saw dou-
ble-digit sales growth, taking
total annual sales to $347
million—a 14% increase over
1999. Operating profits
from continuing operations
increased for the fourth
consecutive year, reaching
$24.7 million—a 27%
increase over 1999. Income
from continuing operations,
excluding strategic charges,
rose 29% to $1.20 per share.
Foreign exchange rates
affected these results; with-
out that impact, sales and
operating profit increased
17% and 33% respectively.

Diving completed an exciting
turnaround year, delivering

strong performance after
two years of profit shortfall
versus expectations. Despite
a flat market and the adverse
impact of a strong dollar,
sales increased 3% over
1999 while operating profit,
excluding strategic charges
in the prior year, rose 57%.
This success is a direct result
of our ongoing strategy—
emphasizing more profitable
lines, especially regulators
and dive computers; keeping
the focus on new product
development; bringing in
new talent in the U.S. and
Uwatec organizations; and
improving advertising and
communication programs.

Outdoor Equipment Group
increased sales 12%, to
$103 million, while profits
jumped more than 130%,
to $8.2 million. Strong Jack
Wolfskin and government
tent sales drove this growth,
along with a 25% efficiency
increase in our U.S. plants.
The mid-1999 refocus on
our core strength—con-
sumer, commercial and
military tents—continues
to pay off in improved

M A N A G E M E N T ’ S G R O W T H P L A N

Net Sales

$500M

12%

Operating Profit

0
0
0
2

4
0
0
2

margins and increased sales.
Meanwhile, Jack Wolfskin
outdoor apparel and equip-
ment continued strong—
introducing new products,
including a technical foot-
wear line, and extending the
franchise to 26 stores with
four new stores in Germany
and two in Canada.

Watercraft saw the effects
of being a brand leader in
outdoor recreation’s fastest-
growing category; sales
increased more than 26%,
but operating profit decreased
18%. We’re handling the
growing pains by bringing in
new managers to build team
depth; improving distribution
and operations at Old Town

Canoe; completing the
integration of recent acquisi-
tions; and developing a long-
term operational model and
implementation plan.

Motors continued its posi-
tive momentum with 19%
sales growth and, excluding
strategic charges, a 2.4 per-
centage point improvement
in operating margin. Minn
Kota furthered its lead over
the nearest competitor,
increasing U.S. share through
gains in the OEM market,
strong marine channel sales,
and continued innovation
with products like the
Vantage and the Genesis.
In the first half of 1999 we
increased our agility and

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

streamlined operations by
moving our Racine-based
Lake Electric motor manu-
facturing to our Minn
Kota facility in Mankato,
Minnesota. We booked a
$2 million strategic charge
but created operating effi-
ciencies that will save nearly
half a million dollars a year.

P E O P L E
This past year Johnson
Outdoors focused on
increasing our depth of
talent. We filled two impor-
tant positions—vice president
of operations and vice presi-
dent of human resources. In
Watercraft, we strengthened
operational expertise and
financial discipline; in
Diving, we added top mana-
gerial talent in both our
U.S. and Europe operations.

A QUICK LOOK BACK
Last year we introduced the
Johnson Outdoors success
model—encompassing four
drivers we consider essential
to long-term growth.

Portfolio management. We’re
analyzing our businesses and

Three

identifying our acquisitions
carefully, playing only
where we can win. Our
most significant initiative in
this area was the divestiture
of Fishing, followed by the
successful refocusing of our
North American Outdoor
Equipment Group. And,
after thorough evaluation
against our rigorous criteria,
we added Pacific Kayak to
our Watercraft business.
This process is ongoing,
and the bar is high.

Network model. Our goal is
a network of specialized
companies that maintain
their independent, creative
spirit while sharing best
practices and leveraging
synergies. In this model,
headquarters provides the
corporate vision and strategic
framework to give each

company direction. In 2000
we began rolling out our
new vision and strategy,
clarifying the roles of our
group vice presidents; hiring
new talent; initiating cross-
company projects; and devel-
oping a stronger sense of
team as we increased accoun-
tability among key managers.

Expanding markets. Since
early 1999 we’ve begun to
broaden our consumer base,
reaching out to more recre-
ational users with new
products like our Old Town
Kids Kayaks, Jack Wolfskin
“Rugged” line, and Eureka!
easy-up NightScape tent.
We’ve also expanded our mar-
kets by targeting enthusiasts
with innovations like Minn
Kota’s high-end Genesis
electronic trolling motor,
Scubapro’s Twin Jet Fin, and

the 650 Ultra Light regulator.
And we’re participating in
grassroots recreation events
and education programs,
stimulating new consumers
to try new categories.

Innovation. Innovation is our
lifeblood, infusing everything
we do…starting, above all,
with developing products
like those mentioned above.
We’ve put more resources
behind R&D, looking to
produce more breakthrough
products and get them to
market more efficiently. The
result has been a double-digit
increase in sales.

We also look for innovation
beyond new product
development—from the way
we structure our company
to the way we manage our
portfolio of businesses.

We’ve made great progress
in this area but will always
have more to do.

F O C U S F O R WA R D
Near-term, we’re focusing on
five strategic areas to keep us
on top of the marketplace
even as we increase our
capabilities to meet cus-
tomer and consumer needs.

1. Continue to improve

financial return.
Our growth from continuing
operations is a strong step
forward, and we’ll continue
to focus on working the bal-
ance sheet to improve cash
flow. It’s essential that we
increase Watercraft’s produc-
tivity, efficiency and returns
on recent acquisitions.
And we’ll keep on looking
for new ways to make the
best use of our assets,

yielding greater profitability
and returns.

2. Address Watercraft

operational issues.
We have the sales. We have
the brands. Now we’re
addressing distribution and
logistics issues to push more
growth to the bottom line.
As noted above, we’re
bringing in new managers,
improving Old Town dis-
tribution and operations,
increasing support for recent
acquisitions, and preparing
to implement a long-term
operational model.

3. Increase emphasis

on internal growth.
Growth through acquisitions
remains a significant strategy
for Johnson Outdoors. As
we work to build capacity
and operational strength,

A C C O M P L I S H M E N T S

Four

Delivery of budget,

Sale of Fishing,

achieving sales and

with bottom-line impact

N E W M O M E N T U M F O R D I V I N G

profit goals

exceeding expectations

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

however, we will concentrate
more on growth from our
existing businesses.

research acquisition candi-
dates, this internal growth
strategy will be our focus for
the next 12 to 24 months.

We have four significant

internal growth initiatives:

4. Strengthen our

•

Expanding key businesses

into Europe

•

Developing breakthrough

new products in our “drive”

businesses

•

Drawing on our strong

manufacturing capabilities to

extend product lines and

leverage brand equities into

new product segments

•

Entering a new business

category that uses our existing

design, manufacturing and

sourcing capabilities

While we will certainly
continue to identify and

business model.
“Project Network” is a
major initiative to define
our long-term operational
and organizational model
and determine how to take
Johnson Outdoors to the
next level. Capturing syner-
gies and leveraging strengths
is key. Although this project
will encompass all our
businesses, it is of special
importance in Watercraft,
where growing pains clearly
affected this year’s results.

This initiative will include
identifying the infrastructure
and talent necessary to
support our business model,

especially in the vital sales
and marketing area. Because
a strong operational and
organization foundation is
so important, we are using
an outside firm to help us
accelerate Project Network.
Our goal is to have the plan
completed and ready to
implement in late 2001.

5. Devote more

resources to new

product development.
At Johnson Outdoors, we
continue to hang our hat
on innovation. We will
allocate more resources to
new product development
in our core businesses,
sharing expertise and tech-
nologies across our busi-
nesses and drawing on
external expertise as needed.
Incentive programs will be
tied to successful new

product development and
commercialization.

Most important, we will
deepen our understanding
of consumer recreation
trends, developing products
that serve not only the
enthusiast but also the
growing numbers of casual
users—families and indi-
viduals who want products
that make it easier to have
fun in the great outdoors.
Our long-term goal is to
have 20% of our annual
sales growth come from
products introduced within
the past three years.

T H E S P I R I T

O F A D V E N T U R E
Our vision says Johnson
Outdoors wants to be recog-
nized as the outdoor recre-
ation industry’s innovation

leader, bringing excitement
and growth to our markets.
Our team made great strides
toward that goal this past
year—and we look forward
to continuing progress, not
just in the next year or two
but well into the future,
rewarding you with increased
shareholder value.

To our employees, partners,
customers and shareholders,
we offer thanks for your
support and an invitation to
celebrate the spirit of adven-
ture with Johnson Outdoors.

Helen P. Johnson-Leipold
Chairman and
Chief Executive Officer

New talent adding

strength at headquarters

OEG

Refocused OEG

and improving

Motor sales growth

Development of

and market share gains

J A C K W O L F S K I N

and in our businesses

operating efficiency

technical footwear line

Five

Watercraft

TA K I N G O N C H A L L E N G E

Put your paddle blade in the

water and stroke. The thrill of

powering your own craft, of being

right in the middle of nature,

makes watercraft the fastest

growing outdoor recreation cate-

gory…and Johnson Outdoors

brands are leading the way.

Six

B R A N D S

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Over the last year Watercraft saw exciting sales increases,

although growing pains led to disappointing operating profits. We’re positioning

Net Sales Growth

ourselves to drive forward off a challenging year—making the most of our

26% change

recent acquisitions, Extrasport and Pacific Kayak. Strengthening our organi-

zation. And preparing for long-term growth through geographic expansion

6
9
9
1

7
9
9
1

8
9
9
1

9
9
9
1

0
0
0
2

and unique new products under established brand names.

E X T R A S P O R T M O N A L I S A P F D

O L D T O W N D I S C O V E R Y C A N O E

N E C K Y S W I T C H
W H I T E W AT E R K AYA K

Technology counts. Our
patented molding process and
Superlink 3™ material give
Old Town’s Discovery excep-
tional strength, performance
and value. Advanced design
makes the new Necky Switch
perfect for whitewater rodeo
enthusiasts. And the short-
waisted Mona Lisa uses thermo-
molded construction—tech-
nology that women can wear.

Seven

Motors

L E A D I N G W I T H P O W E R

Whether you’re fishing for trophies

or memories, the right motor frees

you to have more fun on the

water. Johnson Outdoors brings

it all home with superior products

and the market’s leading brands.

Eight

B R A N D S

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Net Sales Growth

This year, Minn Kota furthered its lead over the nearest competitor,

increasing U.S. market share through gains in the OEM market and strong

marine channel sales. Continued innovation with products like the Vantage

19% change

and Genesis, along with superior quality, have solidified Minn Kota’s position

6
9
9
1

7
9
9
1

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9
9
1

9
9
9
1

0
0
0
2

as the industry leader.

M I N N K O TA G E N E S I S T R O L L I N G
M O T O R W I T H A U T O P I L O T

G E N E S I S T R O L L I N G M O T O R

M K 3 3 0 O N B O A R D C H A R G E R

Breakthroughs grow the

business. AutoPilot is like

having a personal navigator;

just point it, and it holds the

course. Genesis is reinventing

trolling motors, with power

stow & deploy, power steering

and power trim, while our

new onboard chargers use

advanced microprocessors to

assure the proper charge.

Nine

Diving

EXPLORING OPPORTUNITY

You feel like the first ever to

discover this secret world beneath

the water’s surface. With the

best and latest gear, Johnson

Outdoors is taking divers to

new places—and reaching new

frontiers as our innovative

products attract more consumers.

Ten

B R A N D S

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Net Sales Growth

turnaround sales year, delivering record profits. Diving’s North America business

Scubapro and Uwatec’s worldwide operations completed a

grew 22% despite a flat market. Innovations like the Twin Jet Fin and S600

2.6% change

regulator, along with the new generation of Uwatec computers, increased

SONIFORM

our brands’ share. Intensive global marketing and manufacturing initiatives

6
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solidified our leadership position.

U W AT E C D I V E C O M P U T E R

S C U B A P R O T W I N J E T F I N

S C U B A P R O S 6 0 0 R E G U L AT O R

Performance is vital. The

Twin Jet Fin, modeled on the

tail of a humpback whale,

delivers more power per kick—

while the superior reliability

of our S600 second stage reg-

ulator and Uwatec computers

gives divers more freedom to

immerse themselves in their

underwater adventure.

Eleven

O U T D O O R

Equipment

C O V E R I N G T H E T E R R A I N
C O V E R I N G T H E T E R R A I N

What is Mother Nature
What is Mother Nature

planning? How much room
planning? How much room

do we need? How does it all
do we need? How does it all

fit together? The questions that
fit together? The questions that

go into choosing your tent are
go into choosing your tent are

the same questions Johnson
the same questions Johnson

Outdoors is asking as we focus
Outdoors is asking as we focus

our strengths on the areas we
our strengths on the areas we

know best.
know best.

Twelve

B R A N D S

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Net Sales Growth

The Outdoor Equipment Group increased sales 12%, to $103 million,

while profits jumped more than 130%, to $8.2 million. North American operations

went from a loss in 1999 to 7% operating profit in 2000. Our decision to cut

underperforming lines like daypacks and concentrate on familiar terrain—military,

12% change

commercial and family tents—drove sales results. And an intense operations

focus produced a 25% efficiency increase at our Binghamton plant, an essential

6
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7
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1

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1

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0
0
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2

step as we seek to rebuild brand equity with superior products.

C A M P T R A I L S S P I R I T B A C K PA C K

E U R E K A ! C O M M E R C I A L T E N T S

E U R E K A ! N I G H T S C A P E

Quality is a must. Our

Eureka! commercial tents

combine an elegant profile

with structural integrity.

For recreational users, the

easy-up NightScape offers

durability as well as innova-

tion, and the Spirit backpack

fits rugged construction

into a streamlined design.

Thirteen

O U T D O O R E Q U I P M E N T

Europe

B U I L D I N G M O M E N T U M
B U I L D I N G M O M E N T U M

A stream, a hill, a mountain—
A stream, a hill, a mountain—

not barriers, but pathways
not barriers, but pathways

to adventure at every turn.
to adventure at every turn.

Johnson Outdoors continues
Johnson Outdoors continues

to reach new vistas with Jack
to reach new vistas with Jack

Wolfskin, combining real-life
Wolfskin, combining real-life

experiences with scientific
experiences with scientific

advances to create exciting
advances to create exciting

products…and exciting results.
products…and exciting results.

Fourteen

B R A N D S

J o h n s o n O u t d o o r s I n c . 2 0 0 0 A n n u a l R e p o r t

Jack Wolfskin’s outdoor footwear, apparel and equipment lines continue

as the #1 specialty retail brand in Germany, Europe’s largest market. We’re building

depth of talent as we roll out new franchises. Enhancing operating profit with

new products, like our technical footwear line. Driving sales through extensive

advertising and strong retail and e-commerce partnerships. And staying close to

consumers today to capture their insights for the best new products tomorrow.

T R A I L H E A D B A C K PA C K

S TA R T R A C K

S T O R M L O C K G U A N A C O

Innovation leads the way.
Our Star Track shoe is the
next generation in outdoor
footwear—light, comfortable
and tough. The Guanaco
jacket features highly breath-
able, windproof Stormlock
material. And the Trailhead
rucksack, designed for women,
offers easier access and the
comfort of our Victory Pro
suspension system.

Fifteen

t
f
a
r
c
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e
t
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W

s
r
o
t
o
M

g
n
i
v
i
D

t
n
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m
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i
u
q
E

r
o
o
d
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u
O

n
i
k
s
f
l
o
W
k
c
a
J

Ocean Kayak Manta

Carlisle RSXtreme

Extrasport Pro Joust

Escape Catamaran

Old Town Canoe

Leisure Life Pedal Boat

Minn Kota Genesis Trolling Motor

MK220 Onboard Charger

Engine Mount

MK18 Battery

AutoPilot Trolling Motor

Airguide Extreme Compass

Scubapro Ladyhawk BC

RMK20UL First Stage

SASY (Supplied Air Snorkeling Youth)

Fino Mask

Shotgun 2 Snorkel

Twin Jet Fin

Eureka! K2

Outside Inn

Silva Ranger Ultra

Mountainpass

Silva Wrist Sighting

Camptrails Eiger

BASOON

JORMA POINT

BLIND FAITH

TSUNAMI

SLICKROCK

MUDDY CREAK SANDAL

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M 10 - K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 29, 2000

[ ] 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.)

1326 Willow Road, Sturtevant, Wisconsin 53177
(Address of principal executive offices)

(262) 884-1500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:

Class A common stock, $.05 par value

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K, or any amendment
to this Form 10-K. [ ]

As of November 1, 2000, 6,924,630 shares of Class A and 1,222,729 shares of Class B common stock
of the Registrant were outstanding. The aggregate market value of voting stock of the Registrant held
by nonaffiliates of the Registrant was approximately $23,888,000 on November 1, 2000.

D O C U M E N T S I N C O R P O R AT E D B Y R E F E R E N C E

TA B L E O F C O N T E N T S

Page

Part and Item Number of Form 10-K
into which Incorporated

Part III, Items 10, 11, 12 and 13

Document

Johnson Outdoors Inc. Notice of
Annual Meeting of Shareholders
and Proxy Statement for the
Annual Meeting of Shareholders
to be held January 31, 2001.

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . .5

Market for Registrant’s Common Equity and Related Stockholder Matters . . . . .5

Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Management’s Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . .7

Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . .11

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . .11

Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . .12

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Security Ownership of Certain Beneficial Owners and Management . . . . . . . . .12

Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . .12

Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . .12

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

FORWARD LOOKING STATEMENTS
Certain matters discussed in this 2000 Form 10-K and in the accompanying 2000
Annual Report are “forward-looking statements,” intended to qualify for the safe
harbors from liability established by the Private Securities Litigation Reform Act of
1995. 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 changes in
consumer spending patterns, actions of companies that compete with the Company,
the Company’s success in managing inventory, movements in foreign currencies or
interest rates 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 2000 Form 10-K and in the accompanying 2000 Annual Report and the
Company undertakes no obligations to publicly update such forward-looking
statements to reflect subsequent events or circumstances.

PA R T I

ITEM 1. BUSINESS

Johnson Outdoors Inc. and its subsidiaries (the “Company”) design, manufacture
and market outdoor recreation products in four businesses: Diving, Watercraft,
Outdoor Equipment and Motors. The Company’s primary focus is innovation—
meeting consumer needs with breakthrough products that stand apart from the
competition and advance the Company’s strong brand names. Its subsidiaries are
organized in a network that promotes entrepreneurialism and leverages best prac-
tices and synergies, following the strategic vision set by headquarters. The Company
is controlled by Samuel C. Johnson, members of his family and related entities.

The Company was incorporated in Wisconsin in 1987 as successor to various businesses.

Diving
The Company is one of the world’s largest manufacturers and distributors of tech-
nical underwater diving products, which it sells under the Scubapro and SnorkelPro
names. The Company markets a full line of underwater diving and snorkeling
equipment, including regulators, stabilizing jackets, tanks, depth gauges, masks,
fins, snorkels, diving electronics and other accessories. The Company is also a lead-
ing manufacturer of dive computers and other electronics sold under the Aladin and
Uwatec brands. Scubapro, Aladin and Uwatec products are marketed to the high
quality, premium priced segment of the market via limited distribution to inde-
pendent specialty diving shops worldwide. These diving shops generally provide a
wide range of services to divers, including instruction and repair service.

The Company focuses on maintaining Scubapro, Aladin and Uwatec as the market
leaders in innovation and new products. The Company maintains research and
development functions both in the United States and Europe and holds several
patents on products and features. Consumer advertising focuses on building the
brand names and position as the industry’s high quality and innovation leader. The
Company advertises its equipment in diving magazines and through in-store displays.

The Company also manufactures and markets diving buoyancy compensators
primarily for the original equipment market, under the Soniform name.

The Company maintains manufacturing and assembly facilities in Switzerland,
Mexico, Italy and Indonesia and procures a majority of its rubber and plastic products
and components from third-party manufacturers.

The Company manufactures its Watercraft products in six locations in the United
States, two locations in Canada and in New Zealand. Ocean Kayak products are also
manufactured and sold under license in Europe.

Watercraft
The Company manufactures and markets canoes, kayaks, paddles, oars, recreational
sailboats, personal flotation devices and small thermoformed recreational boats
under the brand names Old Town, Carlisle Paddles, Ocean Kayak, Pacific Kayak,
Necky, Escape, Extrasport, Swiftwater, Leisure Life and Dimension.

The Company’s Old Town Canoe subsidiary produces high quality canoes and
kayaks for family recreation, touring and tripping. The Company uses a patented
rotational-molding process for manufacturing polyethylene kayaks and canoes to
compete in the high volume, low and mid-priced range of the market. These kayaks
and canoes feature stiffer and more durable hulls than higher priced boats. The
Company also manufactures canoes from fiberglass, Royalex (ABS) and wood.
Carlisle Paddles, a manufacturer of canoe and kayak paddles and rafting oars, man-
ufactures products that are sold by the Company’s other watercraft businesses and
also distributed directly through the same channels.

The Company is a leading manufacturer of sit-on-top kayaks under the Ocean
Kayak and Pacific Kayak brands. In addition, the Company manufactures and mar-
kets high quality Necky sea touring and whitewater kayaks; Escape recreational sail-
boats; Extrasport and Swiftwater personal flotation devices; small thermoformed
recreational boats, including canoes, pedal boats, deck boats and tenders, under the
Leisure Life brand; and the Dimension brand of kayaks.

In April 2000, the Company completed the acquisition of Pacific Kayak Ltd., a
manufacturer of sit-on-top and sea touring kayaks located in Auckland, New Zealand.

The Company’s kayaks, canoes and accessories are sold primarily to specialty stores
and marine dealers, sporting goods stores and catalog and mail order houses such as
L. L. Bean®, in the United States and Europe. Leisure Life products are sold through
marine dealers and large retail chains under several brand identities.

The North American market for kayaks is exhibiting strong growth, while the canoe
market is growing modestly. The Company believes, based on industry and other
data, that it is a leading manufacturer of canoes and kayaks in the United States in
both unit and dollar sales.

Outdoor Equipment
The Company’s Outdoor Equipment products include Jack Wolfskin high quality
outdoor clothing, innovative footwear, camping tents, backpacks, travel gear and
accessories; Eureka! military, commercial and consumer tents; Camp Trails backpacks;
and Silva field compasses.

Jack Wolfskin, based in Germany, distributes its products primarily through spe-
cialized outdoor stores, selected sporting goods dealers and a number of franchised
Jack Wolfskin stores. Jack Wolfskin has a strong position in Germany with addi-
tional distribution in the key European markets of Great Britain, Benelux, Switzerland
and Austria. The product is also sold in Canada and the United States and, under
license, in Japan.

Eureka! consumer tents and Camp Trails backpacks compete primarily in the
mid- to high-price range and are sold in the United States and Canada through
independent sales representatives, primarily to sporting goods stores, catalog and
mail order houses and camping and backpacking specialty stores. Marketing of the
Company’s tents and backpacks is focused on building the Eureka! and Camp
Trails brand names and establishing the Company as a leader in tent design and
innovation. The Company’s camping tents and backpacks are produced primarily
by third-party manufacturing sources.

Eureka! camping tents have outside self-supporting aluminum frames, allowing
quicker and easier set-up, a design approach the Company originated. Most Eureka!
tents are made from breathable nylon. Eureka! camping products are sold under
license in Japan and Korea. Eureka! commercial tents include party tents, sold pri-
marily to general rental stores, and other commercial tents sold directly to tent erec-
tors. Commercial tents are manufactured by the Company in the United States. The
Company was awarded several contracts for production of both camping and com-
mercial tents by the U.S. Armed Forces in 1997. The Company also serves as the
exclusive distributor of Losberger commercial framing structures in the United States.

Camp Trails backpacks consist primarily of internal and external frame backpacks for
hiking and mountaineering, but also include soft back bags, day packs and travel packs.

Silva field compasses, which are manufactured by third parties, are marketed exclu-
sively in North America, the area for which the Company owns Silva trademark rights.

Motors
The Company manufactures, under its Minn Kota name, battery powered motors
used on fishing boats and other boats for quiet trolling power or primary propul-
sion. The Company’s Minn Kota motors and related accessories are sold in the
United States, Canada, Europe and the Pacific Basin through large retail store chains
such as Wal Mart and K-Mart, catalogs such as Bass Pro Shops and Cabelas, sporting
goods specialty stores, marine dealers, and original equipment boat manufacturers
including Ranger® Boats, Outboard Marine Corporation (under the Evinrude® brand),
Triton Boats, Lund Boats, Smoker Craft, Alumacraft, and Skeeter. Consumer adver-
tising and promotion include advertising on regional television and in outdoor,
general interest and sports magazines. Packaging and point-of-purchase materials are
used to increase consumer appeal and sales.

The Company has the leading market share of the U.S. electric fishing motor market.
While the overall motors market has been stagnant in recent years, the Company
believes it has been able to increase revenues by emphasizing marketing, product
innovation and original equipment manufacturer sales.

The Company’s line of Airguide marine, weather and automotive instruments is dis-
tributed primarily in the United States through large retail store chains and original
equipment manufacturers. Airguide products are manufactured by the Company or
sourced from third-party manufacturers.

Fishing
In March 2000, the Company sold its Fishing business (consisting of the marketing
of rods, reels, lures, spoons and fishing line). As a result, the operations and related
assets and liabilities of the Fishing business have been reclassified as discontinued for
financial reporting purposes. A significant loss on the sale of the business was rec-
ognized, but the tangible net worth of the Company was not adversely impacted.
See Note 4 to the Consolidated Financial Statements for financial information.

Sales by Principal Business
See Note 13 to the Consolidated Financial Statements for financial information
comparing sales by major product category.

International Operations
See Note 13 to the Consolidated Financial Statements for financial information
comparing the Company’s domestic and international operations.

Research and Development
The Company commits significant resources to research and new product develop-
ment. The Company expenses research and development costs as incurred. The
amounts expended by the Company in connection with research and development
activities for each of the last three fiscal years are set forth in the Consolidated
Statements of Operations.

Competition
The markets for the Company’s products are very competitive. The Company
believes its products compete favorably on the basis of product innovation, product
performance and marketing support and, to a lesser extent, price.

Employees
At September 29, 2000, the Company had approximately 1,400 employees. The
Company considers its employee relations to be excellent. Temporary employees are
utilized to manage peaks in the seasonal manufacturing of products.

Executive Officers
The following list sets forth certain information, as of December 1, 2000, regarding
the executive officers of the Company.

Helen P. Johnson-Leipold, age 43, became Chairman and Chief Executive Officer
of the Company in March 1999. From September 1998 until March 1999, Ms.
Johnson-Leipold was Vice President, Worldwide Consumer Products-Marketing of
S. C. Johnson & Son, Inc. (SCJ). From October 1997 to September 1998, she was
Vice President, Personal and Home Care Products of SCJ. From October 1995 until
July 1997, Ms. Johnson-Leipold was Executive Vice President - North American
Businesses of the Company. From 1992 to September 1995, she was Vice President -
Consumer Marketing Services Worldwide of SCJ.

Patrick J. O’Brien, age 42, became President and Chief Operating Officer of the
Company in April 1999. From October 1997 until March 1999, Mr. O’Brien was
Vice President and General Manager, Home Storage of SCJ. From July 1997 until
October 1997, Mr. O’Brien was Vice President - Strategic Business of SCJ; from
April 1996 until June 1997, he was Vice President - North American Sales of SCJ;
from June 1995 until March 1996, he was Director - North American Sales of SCJ
and from January 1993 until May 1995, he was National Sales Manager of SCJ.

Mamdouh Ashour, age 62, has been a Group Vice President of the Company since
October 1997 and President - Worldwide Diving since August 1996. From 1994 to
August 1996, he served as President of Scubapro Europe.

There are no family relationships between the above executive officers.

The Company is currently conducting a search for a Chief Financial Officer. David A.
Callewaert is serving as Acting Chief Financial Officer until a replacement is hired.
Mr. Callewaert recently retired from S.C. Johnson Commercial Markets, Inc. where
he served as Chief Financial Officer.

Backlog
Unfilled orders for future delivery of products of continuing operations totaled
approximately $61.0 million at September 29, 2000 and $62.8 million at October 1,
1999. The Company’s businesses do not receive significant orders in advance of
expected shipment dates for the majority of products.

Patents, Trademarks and Proprietary Rights
The Company owns no single patent which is material to its business as a whole.
However, the Company holds several patents, principally for diving products, rota-
tional-molded canoes and electric motors and regularly files applications for patents.
The Company has numerous trademarks and trade names which it considers
important to its business, many of which are discussed on the preceding pages. The
Company vigorously defends its intellectual property rights.

Sources and Availability of Materials
The Company’s products use materials that are generally in adequate supply.

Seasonality
The Company’s business is seasonal. The following table shows total net sales and oper-
ating profit or loss related to continuing operations of the Company for each quarter,
as a percentage of the total year. Strategic charges totaling $2.4 million, $2.8 million
and $1.4 million impacted operating results in 2000, 1999 and 1998, respectively.

Year Ended

September 29, 2000

October 1, 1999

October 2, 1998

Net Operating
Profit

Sales

Operating
Profit
(Loss)

Net
Sales

Operating
Profit
(Loss)

Net
Sales

16%

(16)%

16%

(5)%

23
100%

4
100%

23
100%

3
100%

23
100%

—
100%

Quarter Ended

December

March

June

September

ITEM 2. PROPERTIES
The Company maintains both leased and owned manufacturing, warehousing,
distribution and office facilities throughout the world. The Company believes that its
facilities are well maintained and have capacity adequate to meet its current needs.

See Note 6 to the Consolidated Financial Statements for a discussion of lease obligations.

The Company’s principal manufacturing (identified with an asterisk) and other
locations are:

Albany, New Zealand (Watercraft)
Antibes, France (Diving)
Bad Säkingen, Germany (Diving)
Batam, Indonesia* (Diving)
Barcelona, Spain (Diving)
Basingstoke, Hampshire, England (Diving)
Binghamton, New York* (Outdoor Equipment)
Burlington, Ontario, Canada (Motors, Outdoor Equipment)
Chi Wan, Hong Kong (Diving)
Ferndale, Washington* (Watercraft)
Genoa, Italy* (Diving)
Grand Rapids, Michigan* (Watercraft)
Grayling, Michigan* (Watercraft)
Hallwil, Switzerland* (Diving)
Hamburg, Germany (Diving)
Henggart, Switzerland (Diving)
Honolulu, Hawaii (Diving)
Idstein, Germany (Outdoor Equipment)
Mankato, Minnesota* (Motors)
Mansonville, Quebec, Canada* (Watercraft)
Miami, Florida* (Watercraft)
Nyköping, Sweden (Diving)
Old Town, Maine* (Watercraft)
Portsmouth, Rhode Island* (Watercraft)
El Cajon, California (Diving)
Tijuana, Mexico* (Motors, Diving)
Tokyo (Kawasaki), Japan (Diving)

The Company’s corporate headquarters is located in Mount Pleasant, Wisconsin.
The Company’s mailing address is Sturtevant, Wisconsin.

ITEM 3. LEGAL PROCEEDINGS
See Note 16 to the Consolidated Financial Statements for a discussion of legal
proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the last quar-
ter of the year ended September 29, 2000.

PA R T I I

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND

RELATED STOCKHOLDER MATTERS

Certain information with respect to this item is included in Notes 5, 9, 10 and 11
to the Consolidated Financial Statements. The Company’s Class A common stock is
traded on The Nasdaq Stock Market® under the symbol: JOUT. There is no public
market for the Company’s Class B common stock. However, the Class B common
stock is convertible at all times at the option of the holder into shares of Class A com-
mon stock on a share for share basis. As of November 1, 2000, the Company had 690
holders of record of its Class A common stock and 58 holders of record of its Class B
common stock. The Company has never paid a dividend on its common stock.

A summary of the high and low prices for the Company’s Class A common stock
during each quarter of the years ended September 29, 2000 and October 1, 1999 is
as follows:

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2000

1999

2000

1999

2000

1999

2000

1999

Stock prices:

High

Low

Last

$9.19 $10.25

$8.50 $9.75

$9.69 $9.50

$7.94 $9.75

6.13

7.10

6.25

9.25

6.13

6.19

6.06

7.38

6.13

7.06

7.13

8.88

5.75

6.94

8.38

8.94

ITEM 6. SELECTED FINANCIAL DATA
A summary of the Company’s operating results and key balance sheet data for each of the years in the five-year period ended September 29, 2000 is presented below.
All periods have been restated to reflect the discontinuation of the Company’s Fishing business.

(thousands, except per share data)
Operating Results(1)
Net sales
Gross profit
Operating expenses(2)
Operating profit
Interest expense
Other income, net
Income from continuing operations before income taxes
Income tax expense
Income (loss) from continuing operations
Income (loss) from discontinued operations
Loss on disposal of discontinued operations
Net income (loss)
Basic earnings (loss) per common share:

Continuing operations
Discontinued operations

Net income (loss)
Diluted earnings (loss) per common share:

Continuing operations
Discontinued operations

Net income (loss)
Diluted average common shares outstanding
Balance Sheet Data
Current assets(3)
Total assets
Current liabilities(4)
Long-term debt, less current maturities
Total debt
Shareholders’ equity

September 29
2000

$347,288
135,212
110,493
24,719
9,799
(160)

15,080
6,705
8,375
(940)
(24,418)
$ (16,983)

1.03
(3.12)
(2.09)

1.03
(3.12)
(2.09)
8,130

$144,194
257,971
46,941
45,857
105,319
100,832

October 1
1999

$305,094
120,670
101,157
19,513
9,565

(71)

10,019
4,158
5,861
1,161
—
7,022

0.72
0.15
0.87

0.72
0.15
0.87
8,108

$185,733
299,025
45,072
72,744
122,071
127,178

October 2
1998

$270,017
106,801
88,445
18,356
9,631
(539)
9,264
3,885
5,379
(167)
—
5,212

0.66
(0.02)
0.64

0.66
(0.02)
0.64
8,114

$188,224
292,380
39,448
81,508
124,001
124,386

(1) The year ended October 3, 1997 includes 53 weeks. All other years include 52 weeks.
(2) Includes strategic charges of $2,369, $2,773, $1,388, $335 and $4,487 in 2000, 1999, 1998, 1997 and 1996, respectively.
(3) Includes net assets of discontinued operations of $56,114, $58,462, $66,507 and $84,851 in 1999, 1998, 1997 and 1996, respectively.
(4) Excludes short-term debt and current maturities of long-term debt.

October 3
1997

$239,322
91,118
77,237
13,881
8,413
(624)
6,092
2,721
3,371
(1,315)
—
2,056

0.42
(0.17)
0.25

0.42
(0.17)
0.25
8,115

$184,555
272,605
36,772
87,926
113,676
117,731

Year Ended
September 27
1996

$274,637
102,041
91,138
10,903
9,563
(498)
1,838
2,740
(902)
(10,453)
—

$ (11,355)

(0.11)
(1.29)
(1.40)

(0.11)
(1.29)
(1.40)
8,102

$221,798
272,119
41,773
60,194
99,485
126,424

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion includes comments and analysis relating to the Company’s
results of operations and financial condition for the three years ended September 29,
2000. Unless otherwise noted, the discussion refers to continuing operations. This
discussion should be read in conjunction with the Consolidated Financial
Statements and related notes thereto.

Results of Operations
Summary consolidated financial results from continuing operations are as follows:

(millions, except per share data)

Net sales
Gross profit
Operating expenses(1)
Operating profit
Interest expense
Income from continuing operations
Diluted earnings per common share
from continuing operations

2000

$347.3
135.2
110.5
24.7
9.8
8.4

1.03

1999

$305.1
120.7
101.2
19.5
9.6
5.9

0.72

1998

$270.0
106.8
88.4
18.4
9.6
5.4

0.66

(1)Includes strategic charges of $2.4 million, $2.8 million and $1.4 million in 2000, 1999 and 1998,

respectively.

2000 vs 1999

Net Sales
Net sales totaled $347.3 million in 2000 compared to $305.1 million in 1999, an
increase of 14%. Sales as measured in U.S. dollars were impacted by the effect of for-
eign currencies relative to the U.S. dollar in comparison to 1999. Excluding the
effects of foreign currency movements, sales increased 17% from 1999. The increase
was partially driven by the introduction of innovative new products in the
Watercraft and Motors businesses, as well as growth in sales of existing products in
Watercraft, Motors and Outdoor Equipment.

Operating Results
The Company recognized an operating profit of $24.7 million in 2000 compared
to an operating profit of $19.5 million in 1999. Gross profit margins decreased from
39.5% in 1999 to 38.9% in 2000, as significant improvements in the Diving and
Outdoor Equipment businesses, as well as improvement in the Motors business (due
to emphasis on higher margin products, increases in volume and improved produc-
tion efficiencies) were offset by a decline in Watercraft (due to production issues
related to a 26.4% growth in Watercraft revenues). The Company continues to
experience margin pressure in all of its businesses due to competition.

Operating expenses, excluding strategic charges, totaled $108.1 million, or 31.1%
of sales, in 2000 compared to $98.4 million, or 32.2% of sales, in 1999. The 10%
growth in operating expenses in 2000 was less than the growth rate of sales, which
contributed to the improved operating results. Nearly all items in operating expenses
declined as a percentage of sales from 1999.

The Company recognized strategic charges totaling $2.4 million in 2000 and $2.8
million in 1999. These charges resulted from severance, moving and other costs
related primarily to the closure and relocation of a manufacturing facility in the
Motors business and for severance, relocation and recruitment costs in the North
American Outdoor Equipment business. The Company anticipates no significant
additional strategic charges will be incurred in 2001 to complete announced actions.

Other Income and Expenses
Interest expense increased $0.2 million in 2000, reflecting higher working capital
levels primarily from accounts receivable and inventory, as well as higher interest rates.

Overall Results
The Company recognized income from continuing operations of $8.4 million in
2000, or $1.03 per diluted share, compared to $5.9 million, or $0.72 per diluted
share, in 1999. The Company recorded income tax expense of $6.7 million in 2000, an
effective rate of 44.5%. The increased rate from 41.5% in 1999 is due to an increase
in state income tax and change in expected recoverability of state net operating losses.

Discontinued Operations
In March 2000, the Company sold its Fishing business. As a result, operations and
related assets and liabilities of the Fishing group have been classified as discontinued
for all periods presented herein. The sale price totaled $47.3 million, including
$14.1 million of accounts receivable retained by the Company and $2.4 million of
debt assumed by the buyer. The Company recorded a loss of $24.4 million, net of
tax, related to the sale of the business, taking into account operating results from the
measurement date to the date of disposal. In addition, the Company recorded an
after tax loss from operations up to the measurement date of $0.9 million in 2000
and an after tax gain of $1.2 million in 1999.

1999 vs 1998

Net Sales
Net sales totaled $305.1 million in 1999 compared to $270.0 million in 1998, an
increase of 13%. Sales as measured in U.S. dollars were impacted by the effect of for-
eign currencies relative to the U.S. dollar in comparison to 1998. Excluding the
effects of foreign currency movements, sales increased 14.0% from 1998. The
increase was due to strong growth in sales of Watercraft, including sales of products
of businesses the Company acquired in 1999 and 1998, and growth in sales of
Motors and Outdoor Equipment products, which more than offset weaker Diving
equipment sales.

Operating Results
The Company recognized an operating profit of $19.5 million in 1999 compared
to an operating profit of $18.4 million in 1998. Gross profit margins remained flat
with 1998 at 39.6%, as a result of an improved mix of products sold in most busi-
nesses, increases in volume and the effect of businesses acquired in 1999, offset by a
decline in the higher margin Diving business.

Operating expenses, excluding strategic charges, totaled $98.4 million in 1999
compared to $87.1 million in 1998, a rate of 32.2% of sales in both years. The
allowance for doubtful accounts receivable was increased due to higher levels of sales
and receivables. These factors were partially offset by a decline from the prior year
in unusual legal expenses incurred to successfully defend certain of the Company’s
key Outdoor Equipment, Diving and Motors patents and trademarks.

The Company recognized strategic charges totaling $2.8 million in 1999 and $1.4
million in 1998. These charges resulted from severance and other costs related to
the integration of acquired businesses, primarily in the Diving business, and for
severance, relocation and recruitment costs in the North American Outdoor
Equipment business.

Other Income and Expenses
Interest expense remained flat in 1999 at $9.6 million, reflecting higher debt levels
resulting from the acquisition of three businesses, offset by lower levels of working
capital, primarily inventory.

Overall Results
The Company recognized income from continuing operations of $5.9 million in
1999, or $0.72 per diluted share, compared to $5.4 million, or $0.66 per diluted
share, in 1998. The Company recorded income tax expense of $4.2 million in 1999,
an effective rate of 41.5%, compared to 41.9% in 1998.

Discontinued Operations
The Company recorded a gain, net of tax, of $1.2 million in 1999 and a loss, net of
tax, of $(0.2) million in 1998 related to discontinued operations.

Financial Condition
The following discusses changes in the Company’s liquidity and capital resources.

Operations
The following table sets forth the Company’s working capital position related to
continuing operations at the end of each of the past three years:

(millions)

Current assets(1)
Current liabilities(2)
Working capital
Current ratio

2000

$144.2
46.9
$ 97.3
3.1:1

1999

$129.6
45.1
$ 84.5
2.9:1

1998

$129.8
39.4
$ 90.4
3.3:1

(1)Excludes net assets of discontinued operations.
(2)Excludes short-term debt and current maturities of long-term debt.

Cash flows provided by operations totaled $9.8 million in 2000, $24.8 million in
1999 and $9.1 million in 1998. The Company’s profitability and increases in
accounts payable and other accrued liabilities contributed to the positive cash flows
in 2000 and 1999. Growth in accounts receivable and inventories of $10.7 million
and $8.4 million, respectively, reduced the overall positive cash flows provided by
operations in 2000.

Depreciation and amortization charges were $12.5 million in 2000, $12.6 million
in 1999 and $10.8 million in 1998. Amortization of intangible assets arising from
the Company’s acquisitions and increased depreciation from capital spending
accounted for the increase from 1998 to 1999.

Investing Activities
Cash flows provided by (used for) investing activities were $20.0 million, $(26.1)
million and $(22.5) million in 2000, 1999 and 1998, respectively. Expenditures for
property, plant and equipment were $14.1 million in 2000, $13.0 million in 1999
and $11.6 million in 1998. The Company’s recurring investments are primarily
related to tooling for new products, facilities and information systems improve-
ments. In 2001, capital expenditures are anticipated to total approximately $10.5
million. These expenditures are expected to be funded by working capital or existing
credit facilities.

The Company completed the acquisitions of one business in 2000, three businesses
in 1999 and three businesses in 1998, which increased tangible and intangible assets
and debt by $0.9 million, $13.6 million and $12.8 million, respectively. The sale of
the Company’s Fishing business in March 2000 provided $33.1 million of cash,
which was used to reduce both short-term and long-term debt.

Financing Activities
The following table sets forth the Company’s debt and capital structure at the end
of the past three years:

(millions)

Current debt
Long-term debt
Total debt
Shareholders’ equity
Total capitalization
Total debt to total capitalization

2000

$ 59.5
45.8
105.3
100.8
$206.1

1999

$ 49.4
72.7
122.1
127.2
$249.3

1998

$ 42.5
81.5
124.0
124.4
$248.4

51.1%

49.0%

49.9%

Cash flows provided by (used for) financing activities totaled $(12.5) million in
2000, $(0.8) million in 1999 and $8.4 million in 1998. In 1998, the Company
consummated a private placement of long-term debt totaling $25 million. Payments
on long-term debt made in 2000 totaled $22 million, including a $15.1 million
payment in March 2000 from the proceeds of the sale of the Fishing business. At
September 29, 2000, the Company had available unused credit facilities in excess of
$63 million, which is believed to be adequate for its needs.

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. In the normal
course of business, exposure to certain of these market risks is managed 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 Swiss and French francs, German marks, Italian lire,
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, assets and liabilities of the Company’s foreign
operations, as reported in the Company’s Consolidated Financial Statements,
increase or decrease, accordingly. The Company mitigates a portion of the fluctua-
tions in certain foreign currencies through the purchase of foreign currency swaps,
forward contracts and options to hedge known commitments, primarily for pur-
chases of inventory and other assets denominated in foreign currencies.

Interest Rates
The Company’s debt structure and interest rate risk are managed through the use of
fixed and floating rate debt. The Company’s primary exposure is to United States
interest rates. The Company also periodically enters into interest rate swaps, caps or
collars to hedge its exposure and lower financing costs.

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 foreign
exchange rates or market interest rates under normal market conditions. The calcu-
lations 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. Further, since the hedging instrument (the derivative) inversely correlates with
the underlying exposure, any loss or gain in the fair value of derivatives would be
generally offset by an increase or decrease in the fair value of the underlying exposures.
The positions included in the calculations are foreign exchange forwards, currency
swaps and fixed rate debt. Certain instruments are included in both categories of risk
exposure calculated below. The calculations do not include the underlying foreign
exchange positions that are hedged by these market risk sensitive instruments. The
table below presents the estimated maximum potential one year loss in fair value and
earnings before income taxes from a 10% movement in foreign currencies and a 100
basis point movement in interest rate market risk sensitive instruments outstanding
at September 29, 2000:

(millions)

Foreign exchange rate instruments
Interest rate instruments

Estimated Impact on

Earnings Before
Income Taxes

$0.5
0.5

Fair Value

$2.1
1.4

Other Factors
The Company has not been significantly impacted by inflationary pressures over the
last several years. 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 increas-
es through changes in product design and identification of sourcing and manufac-
turing efficiencies. Price increases and, in certain situations, price decreases are
implemented for individual products, when appropriate.

In May 2000, the Financial Accounting Standards Board’s Emerging Issues Task
Force (EITF) reached a consensus on Issue No. 00-14, Accounting for Certain Sales
Incentives. This issue addresses the recognition, measurement, and income statement
classification for various types of sales incentives including discounts, coupons,
rebates and free products. The Company will adopt this consensus in the fourth
quarter of 2001. The impact of this consensus is still being evaluated and the
Company does not currently believe its adoption will have a material impact on the
consolidated financial statements.

Pending Accounting Changes
SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended
by SFAS 137, Accounting for Derivative Instruments and Hedging Activities – Deferral
of the Effective Date of FASB Statement No. 133 and SFAS 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, is effective for the
Company as of September 30, 2000. SFAS 133 requires that an entity recognize all
derivatives as either assets or liabilities measured at fair value. The accounting for
changes in the fair value of a derivative depends on the use of the derivative.
Adoption of these new accounting standards will result in a cumulative after-tax gain
in net income of approximately $1.8 million and an accumulated other compre-
hensive loss of approximately $3.0 million in the first quarter of fiscal 2001. The
adoption will also impact assets and liabilities recorded on the balance sheet.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition (SAB 101). An amendment in
June 2000 delayed the effective date for the Company until the fourth quarter of
2001, which is when the Company will adopt the bulletin. The impact of adopting
SAB 101 is still being evaluated and the Company does not currently believe its
adoption will have a material impact on the consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

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.”

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to this item is included on pages F-1 to F-18.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PA R T I I I

PA R T I V

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, except for certain information on executive
officers (which appears at the end of Part I of this report) is included in the
Company’s January 31, 2001 Proxy Statement, which is incorporated herein by
reference, under the headings “Election of Directors” and “Section 16(a) Beneficial
Ownership Reporting Compliance.”

ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is included in the Company’s January 31,
2001 Proxy Statement, which is incorporated herein by reference, under the headings
“Election of Directors - Compensation of Directors” and “Executive Compensation;”
provided, however, that the subsection entitled “Executive Compensation -
Compensation Committee Report on Executive Compensation” shall not be deemed
to be incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT

Information with respect to this item is included in the Company’s January 31,
2001 Proxy Statement, which is incorporated herein by reference, under the heading
“Stock Ownership of Management and Others.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is included in the Company’s January 31,
2001 Proxy Statement, which is incorporated herein by reference, under the heading
“Certain Transactions.”

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

AND REPORTS ON FORM 8-K

The following documents are filed as a part of this Form 10-K:

Financial Statements
Included in Item 8 of Part II of this Form 10-K are the following:

Independent Auditors’ Report

Consolidated Balance Sheets - September 29, 2000 and October 1, 1999

Consolidated Statements of Operations -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998

Consolidated Statements of Shareholders’ Equity -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998

Consolidated Statements of Cash Flows -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998

Notes to Consolidated Financial Statements

Financial Statement Schedules
All schedules are omitted because they are not applicable, are not required or
equivalent information has been included in the Consolidated Financial Statements
or notes thereto.

Exhibits
See Exhibit Index.

Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended September 29,
2000.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the Town of Mount Pleasant and State
of Wisconsin, on the 11th day of December 2000.

JOHNSON OUTDOORS INC.

(Registrant)

By /s/ Helen P. Johnson-Leipold

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has
been signed by the following persons in the capacities indicated on the 11th day of
December 2000.

/s/ Helen P. Johnson-Leipold

(Helen P. Johnson-Leipold)

Chairman and Chief Executive
Officer and Director
(Principal Executive Officer)

/s/ Thomas F. Pyle, Jr.

(Thomas F. Pyle, Jr.)

Vice Chairman of the Board
and Director

/s/ Samuel C. Johnson

(Samuel C. Johnson)

/s/ Gregory E. Lawton

(Gregory E. Lawton)

/s/ Glenn N. Rupp

(Glenn N. Rupp)

/s/ Terry E. London

(Terry E. London)

/s/ Scott M. Vos

(Scott M. Vos)

Director

Director of Financial Reporting
(Principal Accounting Officer)

EXHIBIT INDEX

Exhibit

Title

Page No.

Exhibit

Title

Page No.

3.1 Articles of Incorporation of the Company as amended through

February 17, 2000. (Filed as Exhibit 3.1(a) to the Company’s
Form 10-Q for the quarter ended March 31, 2000 and incorporated
herein by reference.)

3.2 Bylaws of the Company as amended through March 22, 2000.
(Filed as Exhibit 3.2(a) to the Company’s Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by reference.)

4.1 Note Agreement dated October 1, 1995. (Filed as Exhibit 4.1 to

the Company’s Form 10-Q for the quarter ended December 29, 1995
and incorporated herein by reference.)

4.2 First Amendment dated October 31, 1996 to Note Agreement dated
October 1, 1995. (Filed as Exhibit 4.3 to the Company’s Form 10-Q
for the quarter ended December 27, 1996 and incorporated herein
by reference.)

4.3

Second Amendment dated September 30, 1997 to Note Agreement
dated October 1, 1995. (Filed as Exhibit 4.8 to the Company’s
Form 10-K for the year ended October 3, 1997 and incorporated
herein by reference.)

4.4 Third Amendment dated October 3, 1997 to Note Agreement
dated October 1, 1995. (Filed as Exhibit 4.9 to the Company’s
Form 10-K for the year ended October 3, 1997 and incorporated
herein by reference.)

4.5 Fourth Amendment dated January 10, 2000 to Note Agreement

dated October 1, 1995. (Filed as Exhibit 4.9 to the Company’s
Form 10-Q for the quarter ended March 31, 2000 and incorporated
herein by reference.)

4.6 Note Agreement dated as of September 15, 1997. (Filed as

Exhibit 4.15 to the Company’s Form 10-K for the year ended
October 3, 1997 and incorporated herein by reference.)

4.7

4.8

4.9

First Amendment dated January 10, 2000 to Note Agreement
dated September 15, 1997. (Filed as Exhibit 4.10 to the Company’s
Form 10-Q for the quarter ended March 31, 2000 and incorporated
herein by reference.)

Amended and Restated Credit Agreement dated as of April 3, 1998.
(Filed as Exhibit 4.16 to the Company’s Form 10-Q for the quarter
ended April 3, 1998 and incorporated herein by reference.)

Amendment No. 1 dated September 11, 1998 to the Amended and
Restated Credit Agreement dated as of April 3, 1998. (Filed as
Exhibit 4.17 to the Company’s Form 10-Q for the quarter ended
January 1, 1999 and incorporated herein by reference.)

4.10 Amendment No. 2 dated September 30, 1999 to the Amended and
Restated Credit Agreement dated as of April 3, 1998. (Filed as
Exhibit 4.8 to the Company’s Form 10-Q for the quarter ended
March 31, 2000 and incorporated herein by reference.)

Johnson Outdoors Inc. Class B common stock Voting Trust
Agreement, dated December 30, 1993 (Filed as Exhibit 9 to the
Company’s Form 10-Q for the quarter ended December 31, 1993
and incorporated herein by reference.)

10.1 Stock Purchase Agreement, dated as of January 12, 2000, by and
between Johnson Outdoors Inc. and Berkley Inc. (Filed as
Exhibit 2.1 to the Company’s Form 8-K dated March 31, 2000
and incorporated herein by reference.)

10.2 Amendment to Stock Purchase Agreement, dated as of February 28,
2000, by and between Johnson Outdoors Inc. and Berkley Inc.
(Filed as Exhibit 2.2 to the Company’s Form 8-K dated March 31,
2000 and incorporated herein by reference.)

10.3 Johnson Outdoors Inc. Amended and Restated 1986 Stock Option

Plan. (Filed as Exhibit 10 to the Company’s Form 10-Q for the
quarter ended July 2, 1993 and incorporated herein by reference.)

Title

Page No.

Exhibit

Title

Page No.

Exhibit

10.4

10.5

10.6+

10.7+

10.8+

10.9+

Registration Rights Agreement regarding Johnson Outdoors Inc.
common stock issued to the Johnson family prior to the acquisition
of Johnson Diversified, Inc. (Filed as Exhibit 10.6 to the Company’s
Form S-1 Registration Statement No. 33-16998 and incorporated
herein by reference.)

Registration Rights Agreement regarding Johnson Outdoors Inc.
Class A common stock held by Mr. Samuel C. Johnson. (Filed as
Exhibit 28 to the Company’s Form 10-Q for the quarter ended
March 29, 1991 and incorporated herein by reference.)

Form of Restricted Stock Agreement. (Filed as Exhibit 10.8 to
the Company’s Form S-1 Registration Statement No. 33-23299
and incorporated herein by reference.)

Form of Supplemental Retirement Agreement of Johnson
Diversified, Inc. (Filed as Exhibit 10.9 to the Company’s
Form S-1 Registration Statement No. 33-16998 and
incorporated herein by reference.)

Johnson Outdoors Retirement and Savings Plan. (Filed as
Exhibit 10.9 to the Company’s Form 10-K for the year ended
September 29, 1989 and incorporated herein by reference.)

Form of Agreement of Indemnity and Exoneration with
Directors and Officers. (Filed as Exhibit 10.11 to the Company’s
Form S-1 Registration Statement No. 33-16998 and incorporated
herein by reference.)

10.10 Consulting and administrative agreements with S. C. Johnson &

Son, Inc. (Filed as Exhibit 10.12 to the Company’s Form S-1
Registration Statement No. 33-16998 and incorporated herein
by reference.)

10.11+ Johnson Outdoors Inc. 1994 Long-Term Stock Incentive Plan.

(Filed as Exhibit 4 to the Company’s Form S-8 Registration
Statement No. 333-88091 and incorporated herein by reference.)

10.12+ Johnson Outdoors Inc. 1994 Non-Employee Director Stock

Ownership Plan. (Filed as Exhibit 4 to the Company’s Form S-8
Registration Statement No. 333-88089 and incorporated herein
by reference.)

10.13+ Johnson Outdoors Economic Value Added Bonus Plan (Filed as
Exhibit 10.15 to the Company’s Form 10-K for the year ended
October 3, 1997 and incorporated herein by reference.)

10.14+ Johnson Outdoors Inc. 2000 Long-Term Stock Incentive Plan.

(Filed as Exhibit 10.16 to the Company’s Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by reference.)

10.15+ Severance Agreement and Release, dated June 9, 2000, between

the Company and Carl G. Schmidt.

11.

21.

23.

27.

99.

Statement regarding computation of per share earnings. (Note 15
to the Consolidated Financial Statements of the Company’s 2000
Form 10-K is incorporated herein by reference.)

Subsidiaries of the Company as of September 29, 2000.

Consent of KPMG LLP.

Financial Data Schedule (EDGAR version only)

Definitive Proxy Statement for the 2001 Annual Meeting of
Shareholders. Except to the extent specifically incorporated herein
by reference, the Proxy Statement for the 2001 Annual Meeting
of Shareholders shall not be deemed to be filed with the Securities
and Exchange Commission as part of this Form 10-K. The Proxy
Statement for the 2001 Annual Meeting of Shareholders will be filed
with the Securities and Exchange Commission under regulation 14A
within 120 days after the end of the Company’s fiscal year.

* Incorporated herein by reference.

+ A management contract or compensatory plan or arrangement.

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

Page

Report of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-3

Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-5

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .F-6

REPORT OF MANAGEMENT

The management of Johnson Outdoors Inc. is responsible for the preparation and
integrity of all financial statements and other information contained in this Form
10-K. We rely on a system of internal financial controls to meet the responsibility of
providing accurate financial statements. The system provides reasonable assurances
that assets are safeguarded, that transactions are executed in accordance with manage-
ment’s authorization and that the financial statements are prepared on a worldwide
basis in accordance with accounting principles generally accepted in the United
States of America.

The financial statements for each of the years covered in this Form 10-K have been
audited by independent auditors, who have provided an independent assessment as to
the fairness of the financial statements, after obtaining an understanding of the
Company’s systems and procedures and performing such other tests as deemed necessary.

The Audit Committee of the Board of Directors, which is composed solely of directors
who are not officers of the Company, meets with management and the independent
auditors to review the results of their work and to satisfy itself that their respective
responsibilities are being properly discharged. The independent auditors have full
and free access to the Audit Committee and have regular discussions with the
Committee regarding appropriate auditing and financial reporting matters.

Helen P. Johnson-Leipold
Chairman and Chief Executive Officer

Scott M. Vos
Director of Financial Reporting

INDEPENDENT AUDITORS’ REPORT

Shareholders and Board of Directors
Johnson Outdoors Inc.:

We have audited the consolidated balance sheets of Johnson Outdoors Inc. and
subsidiaries as of September 29, 2000 and October 1, 1999, and the related consol-
idated statements of operations, shareholders’ equity, and cash flows for each of the
years in the three-year period ended September 29, 2000. These Consolidated
Financial Statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these Consolidated Financial Statements
based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of Johnson Outdoors Inc. and
subsidiaries as of September 29, 2000 and October 1, 1999, and the results of their
operations and their cash flows for each of the years in the three-year period ended
September 29, 2000, in conformity with accounting principles generally accepted in
the United States of America.

KPMG LLP
Milwaukee, Wisconsin
November 6, 2000

F-1

CONSOLIDATED BALANCE SHEETS

(thousands, except share data)
Assets
Current assets:

Cash and temporary cash investments
Accounts receivable, less allowance for doubtful accounts of $3,895 and $3,236, respectively
Inventories
Deferred income taxes
Other current assets
Net assets of discontinued operations

Total current assets
Property, plant and equipment, net
Deferred income taxes
Intangible assets, net
Other assets
Total assets
Liabilities And Shareholders’ Equity
Current liabilities:

Short-term debt and current maturities of long-term debt
Accounts payable
Accrued liabilities:

Salaries and wages
Income taxes
Other
Total current liabilities
Long-term debt, less current maturities
Other liabilities
Total liabilities
Shareholders’ equity:

Preferred stock: none issued
Common stock:

Class A shares issued: September 29, 2000, 6,924,630; October 1, 1999, 6,910,577
Class B shares issued (convertible into Class A shares): September 29, 2000, 1,222,729; October 1, 1999, 1,222,861

Capital in excess of par value
Retained earnings
Contingent compensation
Accumulated other comprehensive income - cumulative translation adjustment
Treasury stock, Class A shares, at cost: October 1, 1999, 5,280

Total shareholders’ equity
Total liabilities and shareholders’ equity

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-2

September 29
2000

October 1
1999

$ 17,363
54,825
62,708
4,613
4,685
—
144,194
37,369
17,311
57,866
1,231
$ 257,971

$ 59,462
12,928

7,421
140
26,452
106,403
45,857
4,879
157,139

—

346
61
44,291
74,797

(77)
(18,586)
—
100,832
$ 257,971

9,974
49,302
59,981
4,718
5,644
56,114
185,733
35,323
11,277
65,599
1,093
$ 299,025

$ 49,327

16,034

6,912
(160)
22,286
94,399
72,744
4,704
171,847

—

345
61
44,205
91,832
(134)
(9,049)
(82)
127,178
$ 299,025

CONSOLIDATED STATEMENTS OF OPERATIONS

(thousands, except per share data)

Net sales
Cost of sales
Gross profit
Operating expenses:

Marketing and selling
Administrative management, finance and information systems
Research and development
Amortization of acquisition costs
Profit sharing
Strategic charges
Total operating expenses
Operating profit
Interest income
Interest expense
Other (income) expense, net
Income from continuing operations before income taxes
Income tax expense
Income from continuing operations
Income (loss) from discontinued operations, net of income tax expense (benefit)

of $(563), $771 and $52, respectively

Loss on disposal of discontinued operations, net of income tax benefit of $(1,840)
Net income (loss)
Basic earnings (loss) per common share:

Continuing operations
Discontinued operations

Net income (loss)
Diluted earnings (loss) per common share:

Continuing operations
Discontinued operations

Net income (loss)

The accompanying notes are an integral part of the Consolidated Financial Statements.

September 29
2000

$ 347,288
212,076
135,212

66,084
28,442
7,854
2,951
2,793
2,369
110,493
24,719
(421)
9,799
261
15,080
6,705
8,375

(940)
(24,418)
(16,983)

1.03
(3.12)
(2.09)

October 1
1999

$305,094
184,424
120,670

59,826
26,372
6,878
2,912
2,396
2,773
101,157
19,513
(294)
9,565
223
10,019
4,158
5,861

1,161
—
7,022

0.72
0.15
0.87

Year Ended

October 2
1998

$270,017
163,216
106,801

54,841
22,835
5,613
2,495
1,273
1,388
88,445
18,356
(329)
9,631
(210)
9,264
3,885
5,379

(167)
—
5,212

0.66
(0.02)
0.64

F-3

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(thousands)

Balance at October 3, 1997

Net income

Exercise of stock options

Tax benefit of stock options exercised

Issuance of restricted stock

Issuance of stock under employee stock purchase plan

Amortization of contingent compensation

Other treasury stock transactions

Translation adjustment

Balance at October 2, 1998

Net income

Issuance of restricted stock

Issuance of stock under employee stock purchase plan

Amortization of contingent compensation

Translation adjustment

Common
Stock

406

Capital in
Excess of
Par Value

44,186

—

406

44,205

—

Balance at October 1, 1999

406

44,205

Net loss

Issuance of restricted stock

Issuance of stock under employee stock purchase plan

Amortization of contingent compensation

Translation adjustment

Translation adjustment reclassified to net loss

on sale of Fishing business

—

Retained
Earnings

79,882

5,212

(4)

—

(22)

—

85,068

7,022

(137)

(121)

—

91,832

(16,983)

—

(52)

—

Contingent
Compensation

Cumulative
Translation
Adjustment

Treasury
Stock

Comprehensive
Income (Loss)

(85)

—

(32)

—

(27)

—

(182)

—

(134)

—

(19)

—

(6,356)

(302)

—

1,705

(4,651)

—

(4,398)

(9,049)

—

(10,346)

809

—

146

—

177

—

(668)

—

(615)

—

319

214

—

(82)

—

$ 5,212

—

1,705

$ 6,917

7,022

—

(4,398)

2,624

$(16,983)

—

(10,346)

—

BALANCE AT SEPTEMBER 29, 2000

$407

$44,291

$74,797

$(77)

$(18,586)

$ —

$(27,329)

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-4

CONSOLIDATED STATEMENTS OF CASH FLOWS

(thousands)

Cash Provided By Operations
Net income (loss)
Less income (loss) from discontinued operations
Income from continuing operations
Adjustments to reconcile income from continuing operations to net cash

provided by operating activities of continuing operations:

Depreciation and amortization
Provision for doubtful accounts receivable
Provision for inventory reserves
Deferred income taxes

Change in assets and liabilities, net of effect of businesses acquired or sold:

Accounts receivable
Inventories
Accounts payable and accrued liabilities
Other, net

Cash Provided By (Used For) Investing Activities
Proceeds from sale of business, net of cash
Payments for purchase of businesses, net of cash acquired
Net additions to property, plant and equipment
Sales of property, plant and equipment

Cash Provided By (Used For) Financing Activities
Issuance of senior notes
Principal payments on senior notes and other long-term debt
Net change in short-term debt
Common stock transactions

Effect of foreign currency fluctuations on cash
Net cash provided by (used for) discontinued operations
Increase (decrease) in cash and temporary cash investments
Cash And Temporary Cash Investments
Beginning of year
End of year

The accompanying notes are an integral part of the Consolidated Financial Statements.

September 29
2000

$(16,983)
(25,358)
8,375

12,523
1,812
853
(374)

(10,728)
(8,358)
3,910
1,738
9,751

33,126

(864)
(14,075)
1,838
20,025

—
(21,969)
9,351
97

(12,521)
(1,790)
(8,076)
7,389

October 1
1999

$ 7,022

1,161
5,861

12,597
2,162
801
(48)

(3,466)
1,012
5,975
(106)
24,788

—

(13,584)
(13,035)
501
(26,118)

—
(7,705)
6,764
94
(847)
(541)
2,361
(357)

Year Ended

October 2
1998

$ 5,212
(167)
5,379

10,814
819
269
(3,227)

(2,356)
(1,145)
(1,750)
308
9,111

—
(12,772)
(11,636)
1,894
(22,514)

25,000
(7,863)
(8,424)
(352)
8,361
216
8,223
3,397

9,974
$ 17,363

10,331
$ 9,974

6,934

$ 10,331

F-5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Johnson Outdoors Inc. is an integrated, global outdoor recreation products company
engaged in the design, manufacture and marketing of brand name outdoor equip-
ment, diving, watercraft and motors products.

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All monetary amounts, other than share and per share amounts, are stated in thousands
and are from continuing operations.

Principles of Consolidation
The Consolidated Financial Statements include the accounts of Johnson Outdoors
Inc. and all majority owned subsidiaries (the Company) and are stated in conform-
ity with accounting principles generally accepted in the United States of America.
Significant intercompany accounts and transactions have been eliminated in con-
solidation. The Consolidated Financial Statements have been restated to reflect the
results of the Fishing business as a discontinued operation. See Note 4.

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. For the Company, significant esti-
mates include the allowance for doubtful accounts receivable, reserves for inventory
valuation and the valuation allowance for deferred tax assets.

The Company’s fiscal year ends on the Friday nearest September 30. The fiscal years
ended September 29, 2000 (hereinafter 2000) and October 1, 1999 (hereinafter
1999) and October 2, 1998 (hereinafter 1998) each comprise 52 weeks.

Cash and Temporary Cash Investments
For purposes of the consolidated statements of cash flows, the Company considers all
short-term investments in interest-bearing bank accounts, securities and other instru-
ments with an original maturity of three months or less to be equivalent to cash.

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

F-6

Inventories
Inventories are stated at the lower of cost (determined using the first-in, first-out
method) or market.

Inventories attributable to continuing operations at the end of the respective years
consist of the following:

Raw materials
Work in process
Finished goods

Less reserves

2000

$ 23,122
2,238
40,297
65,657
2,949
$ 62,708

1999

$22,702
3,176
39,014
64,892
4,911
$59,981

Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation of plant and equipment is determined by straight-line and accelerated
methods over estimated useful lives, which range from 3 to 30 years.

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

Property, plant and equipment attributable to continuing operations at the end of
the respective years consist of the following:

Property and improvements
Buildings and improvements
Furniture, fixtures and equipment

Less accumulated depreciation

2000

$ 1,423
19,303
82,994
103,720
66,351
$ 37,369

1999

$ 1,275
16,301
74,667
92,243
56,920
$35,323

Intangible Assets
Intangible assets are stated at cost less accumulated amortization. Amortization is
computed using the straight-line method with periods ranging from 15 to 40 years
for goodwill and 3 to 16 years for patents, trademarks and other intangible assets.

Intangible assets attributable to continuing operations at the end of the respective
years consist of the following:

Goodwill
Patents, trademarks and other

Less accumulated amortization

2000

$ 69,546
4,122
73,668
15,802
$ 57,866

1999

$75,254
4,110
79,364
13,765
$65,599

Impairment of Long-Lived Assets
The Company annually assesses the recoverability of property, plant and equipment
and intangible assets, primarily by determining whether the depreciation and amor-
tization of the balance over its remaining life can be recovered through projected
undiscounted future operating cash flows of the related businesses. The amount of
impairment, if any, is measured primarily based on the deficiency of projected dis-
counted future operating cash flows relative to the value of the assets, using a discount
rate reflecting the Company’s cost of capital, which currently approximates 10%.

Income Taxes
The Company provides for income taxes currently payable, and deferred income
taxes resulting from temporary differences between financial statement and taxable
income, using the asset and liability method.

In assessing the realizability of deferred tax assets, the Company considers whether
it is more likely than not that some portion, or all of the deferred tax assets, will not
be realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the years in which those temporary dif-
ferences become deductible. The Company considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning strategies
in making this assessment.

Federal and state income taxes are provided on foreign subsidiary income distributed
to, or taxable in, the United States during the year. At September 29, 2000, net
undistributed earnings of foreign subsidiaries total approximately $55,500. A sub-
stantial portion of these unremitted earnings have been permanently invested
abroad and no provision for federal or state taxes is made on these amounts. With
respect to that portion of foreign earnings which may be returned to the United
States, provision is made for taxes if the amounts are significant.

The Company’s United States entities file a consolidated federal income tax return.

Employee Benefits
The Company and certain of its subsidiaries have various retirement and profit sharing
plans. United States pension obligations, which are generally based on compensa-
tion and years of service, are funded by payments to pension fund trustees. Foreign
plans are funded as expenses are incurred. The Company’s policy is generally to fund
the minimum amount required under the Employee Retirement Income Security
Act of 1974 for plans subject thereto. Profit sharing and other retirement costs are
funded at least annually.

Foreign Operations and Derivative Financial Instruments
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. Gains and losses resulting from the translation of
foreign currency financial statements are classified as accumulated other compre-
hensive income, a separate component of shareholders’ equity.

The Company operates internationally, which gives rise to exposure to market risk
from movements in foreign exchange rates. The Company uses foreign currency for-
ward contracts and options in its selective hedging of foreign exchange exposure.
Gains and losses on contracts that qualify as hedges are recognized as an adjustment
of the carrying amount of the item hedged. The Company primarily hedges assets,
inventory purchases and loans denominated in foreign currencies. The Company
does not enter into foreign exchange contracts for trading purposes. Gains and losses
on unhedged exposures are recorded in operating results.

F-7

At September 29, 2000, foreign currency forward contracts and options with a
notional value of approximately $5,100 are in place, hedging existing and antici-
pated transactions. Substantially all of these contracts mature in 2000. Failure of the
counterparties to perform their obligations under these contracts would expose the
Company to the risk of foreign currency rate movements for those contracts. The
Company does not believe the risk is significant. At September 29, 2000, the fair
value of these instruments is $(0.4).

Foreign currency swaps effectively denominate, in foreign currencies, existing U.S.
dollar denominated debt of the Company. This foreign currency debt serves as a hedge
of foreign assets. Accordingly, gains and losses on such swaps are recorded in share-
holders’ equity. At September 29, 2000, the fair value of these instruments is $3.0.

SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended
by SFAS 137, Accounting for Derivative Instruments and Hedging Activities – Deferral
of the Effective Date of FASB Statement No. 133 and SFAS 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities, is effective for the
Company as of September 30, 2000. SFAS 133 requires that an entity recognize all
derivatives as either assets or liabilities measured at fair value. The accounting for
changes in the fair value of a derivative depends on the use of the derivative.
Adoption of these new accounting standards will result in a cumulative after-tax gain
in net income of approximately $1.8 million and an accumulated other compre-
hensive loss of approximately $3.0 million in the first quarter of fiscal 2001. The
adoption will also impact assets and liabilities recorded on the balance sheet.

Revenue Recognition
Revenue from sales is recognized on the accrual basis, primarily upon the shipment
of products, net of estimated costs of returns and allowances.

Advertising
The Company expenses substantially all costs related to production of advertising
the first time the advertising takes place. Cooperative promotional arrangements are
accrued in relation to sales.

Advertising expense attributable to continuing operations in 2000, 1999 and 1998
totals $18,435, $16,258 and $13,647, respectively. Capitalized costs attributable to
continuing operations at September 29, 2000 and October 1, 1999 total $1,360
and $1,100, respectively, and primarily include catalogs and costs of advertising
which has not yet run for the first time.

Research and Development
Research and development costs are expensed as incurred.

Stock-Based Compensation
The Company accounts for stock options using the intrinsic value based method.
Accordingly, compensation cost is generally recognized only for stock options issued
with an exercise price lower than the market price on the date of grant. The fair
value of restricted shares awarded in excess of the amount paid for such shares is rec-
ognized as contingent compensation and is amortized over 1 to 3 years from the date
of award, the period after which all restrictions generally lapse.

Pending Accounting Changes
In addition to SFAS 133 as previously noted, in December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin No. 101, Revenue
Recognition (SAB 101). An amendment in June 2000 delayed the effective date for
the Company until the fourth quarter of 2001, which is when the Company will
adopt the bulletin. The impact of adopting SAB 101 is still being evaluated and the
Company does not currently believe its adoption will have a material impact on the
consolidated financial statements.

F-8

Reclassifications
Certain reclassifications have been made to prior years’ amounts to conform with
the current year presentation.

2 STRATEGIC CHARGES
In 2000, 1999 and 1998, the Company recorded strategic charges totaling $2,369,
$2,773 and $1,388, respectively. In 2000 strategic charges include severance, moving
and other exit costs related primarily to the closure and relocation of a manufactur-
ing facility in the Motors business. Severance costs included in the strategic charges
totaled $1,469 and approximately 95 employees were impacted by these actions.
Unexpended funds at year end related to these actions were approximately $750.

In 1999, a portion of the charges included severance, moving and recruiting costs
related to the relocation of certain sales and marketing functions of the Company’s
Outdoor Equipment business. The balance of the charges were related to the inte-
gration of acquired businesses. Severance costs included in these charges totaled
$1,101 and approximately 30 employees were impacted.

In 1998, strategic charges included severance and other exit related costs primarily
for the integration of acquired companies in the Diving business. Severance costs
totaled $781 and approximately 80 employees were impacted.

3 ACQUISITIONS
In April 2000, the Company completed the acquisition of the common stock of
Pacific Kayak Ltd., a manufacturer of sit-on-top and sea touring kayaks located in
Auckland, New Zealand. The initial purchase price, including direct expenses, for the
acquisition was approximately $962, of which approximately $584 was recorded as
intangible assets and is being amortized over 25 years. An additional payment in 2001
is dependent upon achievement of specified levels of sales of the acquired business.

In July 1999, the Company completed the acquisition of the common stock of
Extrasport, Inc., a privately held manufacturer and marketer of personal flotation
devices. The initial purchase price, including direct expenses, for the acquisition was
approximately $3,300, of which approximately $2,500 was recorded as intangible
assets and is being amortized over 25 years. In September 2000, an additional pay-
ment of approximately $150 was accrued. Additional payments in 2001 and 2002
are dependent upon achievement of specified levels of sales of the acquired business.

In April 1999, the Company completed the acquisition of substantially all of the
assets and the assumption of certain liabilities of Escape Sailboat Company LLC, a
privately held manufacturer and marketer of recreational sailboats. The initial pur-
chase price, including direct expenses, for the acquisition was approximately $4,800,
of which approximately $3,100 was recorded as intangible assets and is being amor-
tized over 25 years. An additional payment in 2001 is dependent upon achievement
of specified levels of sales of the acquired business.

In December 1998, the Company completed the acquisition of substantially all of
the assets and the assumption of certain liabilities of True North Paddle & Necky
Kayaks Ltd., a privately held manufacturer and marketer of Necky kayaks, and an
affiliated entity. The initial purchase price, including direct expenses, for the acqui-
sition was approximately $5,700, of which approximately $3,200 was recorded as
intangible assets and is being amortized over 25 years. Additional payments of
approximately $170 and $600 were earned in 2000 and 1999, respectively.
Additional payments in the years 2001 through 2003 are dependent upon the
achievement of specified levels of sales and profitability of the acquired business.

F-9

In February 1998, the Company completed the acquisition of the common stock of
Leisure Life Limited, a privately held manufacturer and marketer of recreational
watercraft. The purchase price, including direct expenses, for the acquisition was
approximately $10,300, of which approximately $7,300 was recorded as intangible
assets and is being amortized over 25 years.

In September 1997, subsequent to the end of the 1997 fiscal year, the Company
completed the acquisitions of certain assets of Soniform, Inc., a manufacturer of
diving buoyancy compensators, and the common stock of Plastiques L.P.A. Limitée,
a privately held Canadian manufacturer of kayaks. The purchase prices for the
acquisitions totaled approximately $3,400.

All acquisitions were accounted for using the purchase method and, accordingly, the
Consolidated Financial Statements include the results of operations since the respective
dates of acquisition. Additional payments, if required, will increase intangible assets.

4 SALE OF FISHING BUSINESS
In March 2000, the Company sold its Fishing business. As a result, operations and
related assets and liabilities of the Fishing group have been classified as discontinued
for all periods presented herein. The sale price totaled $47,279, including $14,056
of accounts receivable retained by the Company and $2,367 of debt assumed by the
buyer. The Company recorded a loss of $24,418, net of tax, related to the sale of the
business, taking into account operating results from the measurement date to the
date of disposal. In addition, the Company recorded an after tax loss from opera-
tions up to the measurement date of $940 in 2000, an after tax gain of $1,161 in
1999 and an after tax loss of $167 in 1998.

Net sales of the Fishing group were $32,667, $59,184 and $58,508 for 2000, 1999
and 1998, respectively. Interest expense of $90, $154 and $1,016 that is directly
attributable to the Fishing group is allocated to discontinued operations.

5 INDEBTEDNESS
Short-term debt at the end of the respective years consists of the following:

Commercial paper and bank loans
Current maturities of long-term debt

2000

$ 53,434
6,028
$ 59,462

1999

$43,380
5,947
$49,327

Short-term credit facilities provide for borrowings with interest rates set periodically
by reference to market rates. Commercial paper rates are set by competitive bidding.
The weighted average interest rate on short-term indebtedness was 7.6% and 6.2%
at September 29, 2000 and October 1, 1999, respectively. The Company’s primary
facility is a $100,000 revolving credit agreement expiring in 2001, which includes a
maximum amount of $80,000 in support of commercial paper issuance. The
Company has lines of credit, both foreign and domestic, totaling $122,000 of which
$63,000 is available at September 29, 2000. The Company also utilizes letters of
credit for trade financing purposes.

Long-term debt at the end of the respective years consists of the following:

1998 senior notes
1996 senior notes
Other long-term notes,

maturing through January 2004

Less current maturities

2000

$ 16,176
29,700

6,009
51,885
6,028
$ 45,857

1999

$24,981
45,000

8,710
78,691
5,947
$72,744

F-10

In 1998, the Company issued unsecured senior notes totaling $25,000 with an
interest rate of 7.15%. Simultaneous with the commitment of the 1998 senior
notes, the Company executed a foreign currency swap, denominating in Swiss francs
all principal and interest payments required under the 1998 senior notes. The fixed,
effective interest rate to be paid on the 1998 senior notes as a result of the currency
swap is 4.32%. A portion of the proceeds from the divestiture of the Fishing busi-
ness was used to make an unscheduled principal payment of $5,335 in March 2000.
The 1998 senior notes have annual principal payments of $1,721 to $6,023 begin-
ning October 2001 with a final payment due October 2007. Proceeds from issuance
of the 1998 senior notes were used to reduce outstanding indebtedness under the
Company’s primary revolving credit facility.

$5,676 of the initial purchase price for the common stock of Uwatec AG is due in
2002. Interest on the deferred amounts is payable annually at 6%. This obligation
is denominated in Swiss francs. A corresponding amount of the Company’s primary
revolving credit facility is reserved in support of this obligation through issuance of
a letter of credit.

In 1996, the Company issued unsecured senior notes totaling $30,000 with an
interest rate of 7.77% and $15,000 with an interest rate of 6.98%. A portion of the
proceeds from the divestiture of the Fishing business was used to make an unsched-
uled principal payment of $9,800 in March 2000. Total annual principal payments
ranging from $5,500 to $7,500 are due beginning in October 2000 through 2006.

Aggregate scheduled maturities of long-term debt in each of the five years ending
September 2005 are as follows:

Year

2001
2002
2003
2004
2005

$ 6,000
13,500
7,800
9,300
5,400

Interest paid was $10,471, $9,740 and $8,921 for 2000, 1999 and 1998, respectively.

Based on the borrowing rates currently available to the Company for debt with similar
terms and average maturities, the fair value of the Company’s long-term debt as of
September 29, 2000 and October 1, 1999 is approximately $53,000 and $79,700,
respectively. The carrying value of all other financial instruments approximates the
fair value.

Certain of the Company’s loan agreements require that Samuel C. Johnson, members
of his family and related entities (hereinafter the Johnson Family) continue to own
stock having votes sufficient to elect a 51% majority of the directors. At September
29, 2000, the Johnson Family held approximately 3,300,000 shares or 48% of the
Class A common stock, approximately 1,168,000 shares or 96% of the Class B
common stock and approximately 78% of the voting power of both classes of common
stock taken as a whole. The agreements also contain restrictive covenants regarding
the Company’s net worth, indebtedness, fixed charge coverage and distribution of
earnings. The Company is in compliance with the restrictive covenants of such
agreements, as amended from time to time.

6 LEASES AND OTHER COMMITMENTS
The Company leases certain operating facilities and machinery and equipment
under long-term, noncancelable operating leases. Future minimum rental commit-
ments under noncancelable operating leases attributable to continuing operations
having an initial term in excess of one year at September 29, 2000 are as follows:

Year

2001
2002
2003
2004
2005
Thereafter

$5,200
4,400
2,800
1,900
1,700
2,100

Rental expense attributable to continuing operations under all leases was approxi-
mately $6,727, $6,438 and $5,719 for 2000, 1999 and 1998, respectively.

The Company makes commitments in a broad variety of areas, including capital
expenditures, contracts for services, sponsorship of broadcast media and supply of
finished products and components, all of which are in the ordinary course of business.

F-11

7 INCOME TAXES
Income tax expense (benefit) attributable to continuing operations for the respective
years consists of the following:

The tax effects of temporary differences that give rise to significant portions of
deferred tax assets and deferred tax liabilities attributable to continuing operations
at the end of the respective years are presented below:

2000

1999

1998

2000

1999

Current:

Federal
State
Foreign

Deferred

17
490
6,572
(374)
$ 6,705

34
683
3,489
(48)
$4,158

56
514
6,542
(3,227)
$ 3,885

The significant components of deferred tax expense (benefit) attributable to continuing
operations are as follows:

2000

1999

1998

Deferred tax expense (benefit)

(exclusive of effects of other
components listed below)
Increase (decrease) in beginning

of the year balance of the
valuation allowance for
deferred tax assets

$ (822)

$ 89

$(2,967)

448
$ (374)

(137)
$ (48)

(260)
$(3,227)

Deferred tax assets:
Inventories
Compensation
Foreign income taxes
Foreign tax credit carryforwards
Net operating loss carryforwards

Other
Total gross deferred tax assets
Less valuation allowance

Deferred tax liabilities:

Foreign statutory reserves
Acquisition accounting
Total deferred tax liabilities
Net deferred tax asset

$ 1,966
3,502
—
3,791
16,808
5,869
31,936
7,783
24,153

1,952
277
2,229
$ 21,924

$ 2,557
2,934
78
4,051
12,217
3,614
25,451
7,183
18,268

1,973
300
2,273
$15,995

Deferred tax assets relating to net operating losses of discontinued operation of
$5,555 has been reflected as assets of continuing operations in 2000 as the benefit
will ultimately be realized by the continuing operations.

Following is the income (loss) from continuing operations before income taxes for
domestic and foreign operations:

United States
Foreign

2000

$ (1,436)
16,516
$ 15,080

1999

$ (1,269)
11,288
$10,019

1998

$ (4,953)
14,217
$ 9,264

F-12

The significant differences between the statutory federal tax rate and the effective
income tax rates for income from continuing operations are as follows:

Statutory U.S. federal
income tax rate
State income taxes, net of

federal income tax benefit

Foreign rate differential
Change in beginning of

year valuation allowance
Foreign operating losses (benefit)
Other

2000

1999

1998

34.0%

3.8
1.4

3.0
0.6
1.7
44.5%

0.7
5.1

—
1.9
(0.2)
41.5%

(2.2)
10.6

—
(1.4)
0.9
41.9%

At September 29, 2000, the Company has $3,791 of foreign tax credit carryfor-
wards available to be offset against future U.S. tax liability. The credits expire in
2000 through 2005 if not utilized. These carryforwards have been fully reserved for
in the valuation allowance.

At September 29, 2000, the Company has a U.S. federal operating loss carryforward
of $28,712 and various state net operating loss carryforwards. During 2000, 1999
and 1998, foreign net operating loss carryforwards were utilized, resulting in a
reduction in income tax expense of $152, $137 and $260, respectively. In addition,
certain of the Company’s foreign subsidiaries have net operating loss carryforwards
totaling $1,189. These amounts are available to offset future taxable income over the
next 14 to 20 years and are anticipated to be utilized during this period.

Taxes paid attributable to continuing operations were $9,935, $6,648 and $6,374
for 2000, 1999 and 1998, respectively.

8 EMPLOYEE BENEFITS
Net periodic pension cost for noncontributory pension plans includes the following
components.

Service cost
Interest on projected
benefit obligation
Less return on plan assets
Amortization of unrecognized:

Net loss
Prior service cost
Transition asset
Net amount recognized

2000
$315

763
592

4
26
(81)
$435

1999
$273

713
558

4
26
(81)
$377

1998
$301

697
520

15
26
(81)
$438

The following provides a reconciliation of the changes in the plans benefit obligation
and fair value of assets for 2000 and 1999 and a statement of the funded status at
the end of each year:

2000

1999

Benefit obligation:

Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid

Benefit obligation at end of year
Fair value of plan assets:

Fair value of plan assets at beginning of year
Actual return on plan assets
Company contributions
Benefits paid

Fair value of plan assets at end of year
Funded status:

Funded status of the plan
Unrecognized net loss
Unrecognized prior service cost
Unrecognized transition asset

Net liability recognized

$ 9,604
315
763
259
(609)
$10,332

$ 8,070
888
271
(609)
$ 8,620

$ (1,712)
80
148
(291)
$ (1,775)

$ 9,456
273
713
(257)
(581)
$ 9,604

$ 7,515
860
276
(581)
$ 8,070

$(1,534)
4
174
(372)
$(1,728)

F-13

The following summarizes the components of the net liability recognized in the
consolidated balance sheets at the end of the respective years:

10 COMMON STOCK
Common stock at the end of the respective years consists of the following:

Prepaid benefit cost
Accrued benefit liability
Net liability recognized

2000

$ —
(1,775)
$(1,775)

1999

55
(1,783)
$(1,728)

Plan assets are invested primarily in stock and bond mutual funds and insurance
contracts.

Actuarial assumptions used to determine the projected benefit obligation and the
net periodic pension cost are as follows:

Discount rate
Long-term rate of return
Average salary increase rate

2000

1999

1998

8%
8
5

A majority of the Company’s full-time employees are covered by profit sharing and
defined contribution programs. Participating entities determine profit sharing dis-
tributions under various performance and service based formulas.

9 PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of preferred stock in various
classes and series, of which there are none currently issued or outstanding.

Class A, $.05 par value:

Authorized
Outstanding

Class B, $.05 par value:

Authorized
Outstanding

2000

1999

20,000,000
6,924,630

20,000,000
6,905,297

3,000,000
1,222,729

3,000,000
1,222,861

Holders of Class A common stock are entitled to elect 25% of the members of the
Board of Directors and holders of Class B common stock are entitled to elect the
remaining directors. With respect to matters other than the election of directors or
any matters for which class voting is required by law, holders of Class A common
stock are entitled to one vote per share while holders of Class B common stock are
entitled to ten votes per share. If any dividends (other than dividends paid in shares
of the Company) are paid by the Company on its common stock, a dividend would
be paid on each share of Class A common stock equal to 110% of the amount paid
on each share of Class B common stock. Each share of Class B common stock is con-
vertible at any time into one share of Class A common stock. During 2000, 1999
and 1998, respectively, 132, 1,000 and 4,054 shares of Class B common stock were
converted into Class A common stock.

11 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 direc-
tors. 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 four years from the
date of grant. Stock options generally have a term of 10 years. Current plans also
allow for issuance of restricted stock or stock appreciation rights in lieu of options.
Grants of restricted shares are not significant in any year presented. No stock appre-
ciation rights have been granted.

F-14

A summary of stock option activity related to the Company’s plans is as follows:

Outstanding at October 3, 1997
Granted
Exercised
Cancelled
Outstanding at October 2, 1998
Granted
Cancelled
Outstanding at October 1, 1999
Granted
Cancelled
Outstanding at September 29, 2000

686,521
247,000
(10,243)
(321,217)
602,061
353,000
(176,224)
778,837
268,500
(95,107)
952,230

Weighted Average
Exercise Price

$18.32
17.01
13.96
19.11
17.43
8.53
14.67
14.02
7.58
15.23
$12.08

Other information regarding the Company’s stock option plans is as follows:

Options exercisable at end of year
Weighted average exercise

price of exercisable options
Weighted average fair value of

2000
441,544

$15.99

options granted during the year

3.20

1999
324,990

18.63

3.31

1998
257,055

$19.14

6.82

At September 29, 2000, the weighted average remaining contractual life of stock
options outstanding is approximately 7.6 years. Exercise prices of outstanding stock
options range from $6.25 to $25.31 at September 29, 2000.

Had compensation cost for the Company’s stock options been determined using the fair
value method, the Company’s pro forma operating results would have been as follows:

Income from continuing operations
Diluted earnings per common share
from continuing operations

2000

$7,744

1999

$5,221

$ 0.95

$ 0.64

1998

$4,776

$ 0.59

For purposes of calculating pro forma operating results, the fair value of each option
grant was estimated using the Black-Scholes option pricing model with an expected
volatility of 35%, a risk free rate equivalent to five year U.S. Treasury securities and
an expected life of five years. The pro forma operating results reflect only options
granted after 1995.

The Company’s employee stock purchase plan provides for the issuance of up to
150,000 shares of Class A common stock at a purchase price of not less than 85%
of the fair market value at the date of grant. During 2000, 1999 and 1998, 16,701,
13,722 and 11,325 shares, respectively, were issued under this plan.

12 RELATED PARTY TRANSACTIONS
Various transactions are conducted between the Company and organizations controlled
by the Johnson Family. These include consulting services, office rental, royalties and
certain administrative activities. Total net costs of these transactions are $542, $474
and $248 for 2000, 1999 and 1998, respectively.

13 SEGMENTS OF BUSINESS
The Company conducts its worldwide operations through separate global business
units, each of which represent major product lines. Operations are conducted in the
United States and various foreign countries, primarily in Europe, Canada and the
Pacific Basin.

Net sales and operating profit include both sales to customers, as reported in the
Company’s consolidated statements of operations, and interunit transfers, which are
priced to recover cost plus an appropriate profit margin. Identifiable assets represent
assets that are used in the Company’s operations in each business unit at the end of
the years presented.

F-15

A summary of the Company’s continuing operations by business segment is pre-
sented below:

A summary of the Company’s continuing operations by geographic area is pre-
sented below:

2000

1999

1998

2000

1999

1998

$156,252
8,427

91,973
6,642
21,792
1,737
(16,806)
$270,017

$190,743
6,622

90,445
6,510
23,906
5,495
(18,627)
$305,094

$129,874
92,933
20,104
56,114
$299,025

Net sales:

Outdoor equipment:

Net sales:

United States:

Unaffiliated customers
Interunit transfers

$103,454
67

$ 92,367
14

$ 77,566
28

Unaffiliated customers
Interarea transfers

$232,014
6,540

Europe:

Unaffiliated customers
Interarea transfers

Other
Interarea transfers
Eliminations

Identifiable assets:
United States
Europe
Other
Discontinued operations, net

88,213
7,800
27,061
7,863
(22,203)
$347,288

$148,186
91,684
18,101
—
$257,971

Watercraft:

Unaffiliated customers
Interunit transfers

Diving:

Unaffiliated customers
Interunit transfers

Motors:

Unaffiliated customers
Interunit transfers

Other
Eliminations

Operating profit (loss):

Outdoor equipment
Watercraft
Diving
Motors
Other

Identifiable assets:

Outdoor equipment
Watercraft
Diving
Motors
Discontinued operations, net
Other

84,025
397

82,246
5

76,424
1,363
1,139
(1,832)
$347,288

8,182
10,327
10,832
3,936
(8,558)
$ 24,719

$ 49,512
63,394
87,818
30,208
—
27,039
$257,971

66,461
260

80,200
9

64,260
1,783
1,806
(2,066)
$305,094

$ 3,546
12,598
4,749
3,497
(4,877)
$ 19,513

$ 47,760
54,458
89,706
25,483
56,114
25,504
$299,025

47,517
266

90,116
10

53,249
1,678
1,569
(1,982)
$270,017

$ 1,987
8,658
10,193
1,156
(3,638)
$ 18,356

F-16

14 VALUATION AND QUALIFYING ACCOUNTS
The following summarizes changes to valuation and qualifying accounts:

Additions
Balance at Charged to
Costs and
Beginning
Expenses
of Year

Reserves of
Businesses
Acquired
or Sold

Less
Deductions

Balance
at End
of Year

Year ended

September 29, 2000:
Allowance for

doubtful accounts

$3,236

$1,812

$ —

$1,153 $3,895

Reserves for

inventory valuation

4,911

853

—

2,815

2,949

Year ended October 1, 1999:

Allowance for

doubtful accounts

2,153

2,161

Reserves for

inventory valuation

5,196

801

Year ended October 2, 1998:

Allowance for

doubtful accounts

2,388

Reserves for

inventory valuation

6,009

734

270

—

120

1,092

3,236

1,086

4,911

1,004

2,153

1,203

5,196

Deductions include the net impact of foreign currency fluctuations on the respec-
tive accounts.

15 EARNINGS PER SHARE
Basic earnings per share excludes any dilutive effects of options, warrants and con-
vertible securities. Diluted earnings per share is similar to the previously reported
fully diluted earnings per share.

The following sets forth the computation of basic and diluted earnings per com-
mon share:

2000

1999

1998

Income from continuing

operations for basic and
diluted earnings per share
Weighted average shares outstanding
Less nonvested restricted stock
Basic average common shares
Dilutive stock options and restricted stock
Diluted average common shares
Basic earnings per common share

from continuing operations
Diluted earnings per common share
from continuing operations

$8,375
8,139,340
17,265
8,122,075
8,208
8,130,283

$1.03

$5,861
8,108,781
12,206
8,096,575
11,653
8,108,228

$5,379
8,100,415
5,509
8,094,906
18,924
8,113,830

$0.72

$0.66

$0.72

$0.66

16 LITIGATION
The Company is subject to various legal actions and proceedings in the normal
course of business, including those related to 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 will have a material
adverse effect on the financial condition, results of operations, liquidity or cash flows
of the Company.

F-17

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2000

1999

2000

1999

2000

1999

2000

1999

$ 56,201

$48,144

$ 96,703

$ 84,644

$ 114,003

$101,134

$ 80,381

$71,172

45,337

13,912

5,958

—

42,107

13,690

6,359

725

—

28,893

1,084

(444)

—

26,123

656

(680)

(740)

—

5,958

7,084

(444)

$ (1,420)

0.73

—

0.73

—

0.73

0.79

0.09

0.88

0.78

0.09

0.87

$ (0.05)

$ (0.09)

—

(0.09)

$ (0.05)

$ (0.18)

$ (0.05)

$ (0.09)

—

(0.09)

$ (0.05)

$ (0.18)

17 QUARTERLY FINANCIAL SUMMARY (unaudited)
The following summarizes quarterly operating results:

Net Sales

Gross profit

Operating profit loss

Income (loss) from continuing operations

Income (loss) from discontinued operations

21,912

139

(1,035)

(940)

Loss on disposal of discontinued operations

(23,109)

17,811

(3,121)

(3,038)

—

39,070

34,629

9,584

3,896

—

(1,309)

8,288

3,220

1,157

—

Net income (loss)

$ (25,084)

$ (3,019)

$ 2,587

$ 4,377

Basic earnings (loss) per common share:

Continuing operations

Discontinued operations

Net income (loss)

Diluted earnings (loss) per common share:

Continuing operations

Discontinued operations

Net income (loss)

(0.13)

(2.96)

(3.09)

(0.13)

(2.96)

(3.09)

$ (0.37)

—

$ (0.37)

—

$ (0.37)

0.48

(0.16)

0.32

0.48

(0.16)

0.32

0.40

0.14

0.54

0.40

0.14

0.54

F-18

B o a r d o f D i r e c t o r s

SAMUEL C. JOHNSON, 72

Director since 1970.

Retired Chairman of S.C. Johnson

& Son, Inc. Also Director of

Mobil Corporation, H. J. Heinz

Company and Deere & Company.

THOMAS F. PYLE, JR., 59

Vice Chairman of the Board.

Director since 1987.

Chairman, The Pyle Group.

Also Director of Kewaunee

Scientific Corporation and

Sub Zero Corporation.

GLENN N. RUPP, 56

Director since 1997.

Chairman and Chief Executive

Officer of Converse Inc.

HELEN P. JOHNSON-LEIPOLD, 43

Chairman and

Chief Executive Officer.

Director since 1994.

GREGORY E. LAWTON, 49

Director since 1997.

President and Chief Executive

Officer of Johnson Wax Professional.

Also Director of BICCGeneral and

Superior Metal Products, Inc.

TERRY E. LONDON, 51

Director since 1999.

Former President and

Chief Executive Officer and a

Director of Gaylord Entertainment.

Shareholders’ Information

CORPORATE HEADQUARTERS
Johnson Outdoors Inc.
1326 Willow Road
Sturtevant, Wisconsin 53177 USA
(262) 884-1500

INTERNET ADDRESSES (www.)
JohnsonOutdoors.com
escapesail.com (Escape sailboats)
extrasport.com (Extrasport)
llboats.com (Leisure Life)
necky.com (Necky)
oceankayak.com (Ocean Kayak)
minnkotamotors.com (Minn Kota motors)
scubapro.com (Scubapro)
uwatec.com (Uwatec)
eurekatent.com (Eureka! tents)
wolfskin.de (Jack Wolfskin)

COMMON STOCK
Johnson Outdoors Inc. Class A Common Stock
is traded on The Nasdaq Stock Market® under the
symbol: JOUT.

ANNUAL MEETING
The Annual Meeting of Shareholders will convene
at 10:00 a.m. (CST) on January 31, 2001, at the
Company’s Headquarters.

TRANSFER AGENT AND REGISTRAR
Firstar Bank Milwaukee, N.A.
Corporate Trust Department
P.O. Box 2077
Milwaukee, Wisconsin 53201
(414) 905-5000

SHAREHOLDER INQUIRIES
Communication concerning the transfer of
shares, lost certificates or changes of address
should be directed to the Transfer Agent.

Officers

HELEN P. JOHNSON-LEIPOLD, 43

Chairman and Chief Executive Officer

PATRICK J. O’BRIEN, 42

President and Chief Operating Officer

DAVID A. CALLEWAERT, 49

Acting Chief Financial Officer

MAMDOUH ASHOUR, 62

Group Vice President and

President – Worldwide Diving

J o h n s o n O u t d o o r s I n c .

1 3 2 6 W i l l o w R o a d

S t u r t e v a n t , W i s c o n s i n

5 3 1 7 7 U S A

( 2 6 2 ) 8 8 4 - 1 5 0 0