Johnson Outdoors Inc. Annual Report 2011

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FY2011 Annual Report · Johnson Outdoors Inc.

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Johnson Outdoors

Building
Value

Annual Report | 2011

Footprint

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$407.4 Million FY 2011 Revenue
Products sold in 81 countries

1,300 employees

17 facilities in 10 countries

Mission

To be the innovation leader and bring
excitement and growth to our markets.

Vision

To own the outdoor adventure
with innovation and passion!

2011 Sales by Division

Marine
Electronics
54%

Trolling Motors

Downriggers

Fishfinders

Navigation Devices

Regulators

Buoyancy Compensators

Dive Computers

Masks/Fins/Snorkels

Wetsuits

Diving
22%

Watercraft
14%

Canoes

Kayaks

Paddles

Accessories

Personal Flotation Devices

Consumer Tents

Commercial Tents

Military Tents

Compasses

Accessories

Outdoor
Gear
10%

Johnson Outdoors | Annual Report 2011 | 1

Snapshot

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new pro

In 2011, new products
generated more than 40%
of total sales.

More than a third of annual revenue has come from new, innovative

products for seven consecutive years.

Operating Results*

2009

2010

2011

Net sales

Gross profit

Operating profit

Net (loss) income

Diluted earnings per common share

$(1.06)

Diluted average common shares outstanding

9,165

Capitalization*

Total debt

Shareholders’ equity

Total debt to total capital

2009

$31,563

115,825

21.4%

2 | Johnson Outdoors | Annual Report 2011

*($ Thousands, except per share amount)

$356,523

$382,432

$407,422

132,782

153,523

272

(9,671)

14,554

6,539

$0.68

9,267

2010

$23,810

126,369

15.8%

163,135

17,670

32,644

$3.36

9,287

2011

$14,972

163,525

8.4%

Profitability
continues
to climb

Debt is at an
11-year low

Our brands command
the top positions
in their markets.

Minn Kota® | Motors

Humminbird® | Fishfinders

Old Town® | Canoes

Necky® | Kayaks

Ocean Kayak™ | Kayaks

Cannon® | Downriggers

SCUBAPRO® | Diving Gear

Eureka!® | Family Tents

Silva® | Field Compasses

Johnson Outdoors | Annual Report 2011 | 3

Contents

About Johnson Outdoors 1

Message from the Chairman 4

Growing Our Brands 8

Sustaining Performance 18

Letter from the CEO and CFO 20

Financial Summary 28

Enhancing Value 30

Leadership 34

Message from
the Chairman

4 | Johnson Outdoors | Annual Report 2011

Message from

the Chairman

2011

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Committed to building value

A 2011 survey by the acclaimed Boston Consulting Group found

that in today’s post-recession environment, investor objectives

have shifted from short-term return to longer-term value creation.

Investors said they assess prospects using three main value-based

criteria: strong management teams, solid competitive advantages and

good growth prospects.

Johnson Outdoors has always been committed to enhancing long-

term value for all stakeholders—employees, customers, consumers

and shareholders. Over the years, we have maximized and leveraged

our iconic brand equities to establish an unmatched breadth of

distribution that enables us to expand into new segments and

new markets with speed and agility. And our steadily improving

performance in the face of a start-stop recovery demonstrates the

depth of our team’s ability to deliver on our commitment in good

Helen P. Johnson-Leipold
Chairman of the Board

times and bad.

Looking back

Building value is the driving force behind our three-year strategic

plan. The aggressive transformation we launched in 2009 laid the

groundwork, creating a stronger, more competitive company that

delivered powerful results in 2010. We met or exceeded every

financial target, outperforming our markets and the competition.

Johnson Outdoors | Annual Report 2011 | 5

2011

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In the first half of fiscal 2011, our financial

previous fiscal year, due in part to a

segments and technologies to accelerate

results were the best in the last ten years.

$21.9 million reversal of our deferred tax

profitable growth in our Marine Electronics

In the second half of the year, economic

asset valuation allowance. Excluding the

and Diving businesses in the future; we

uncertainty slowed industry-wide recovery of

benefit of this non-cash item, adjusted net

are constantly evaluating acquisition

outdoor recreational products. However, our

income was $10.8 million, or $1.12 on an

opportunities; and we are staying focused

quick response to market fluctuation, coupled

adjusted earnings per diluted share basis—

on the balance sheet. Above all, Johnson

with the strength of our diverse portfolio,

a 66 percent improvement over the

Outdoors is building on the strengths you’ll

enabled us to achieve year-over-year growth

prior year.

read more about in this report:

in revenue, profit and earnings.

Looking ahead

Innovation keeps our brands strong and

Our strategic plan gives us the structure

growing. In 2011, new products generated

to make the right choices in the face of

• Market-leading brands

• Meaningful innovation

more than 40 percent of total company sales,

challenges, enabling us to continue to lead

• The right price/value balance

helping propel Minn Kota® and Humminbird®

our markets, deliver long-term, profitable

into elite $100,000,000 brands. In fact,

growth and enhance value for shareholders.

for seven years running, more than a third

The strength of recovery of outdoor

of total company revenue has come from

recreation markets will set the pace for

• Powerful distribution channels

• Top-quality customer service

market-winning new products.

growth in 2012, the final year of our three-

• A performance-based culture

Net income advanced to $32.7 million or

year plan.

$3.37 per diluted share versus net income of

However, our horizon looks beyond a single

$6.5 million or $0.68 per diluted share in the

year. So, we are investing in new categories,

These are the keys to sustainable growth

that create shareholder value. That long-term

focus underlies every aspect of our strategy.

6 | Johnson Outdoors | Annual Report 2011

Looking behind the scenes

So how do we create value? This report

Our transformation is nearly complete.

While more work lies ahead, we are clearly

takes you “behind the scenes,” presenting

stronger, more competitive and better

the foundations of our transformation.

positioned than ever to deliver sustained

It explains what we are doing to grow our

profitable growth and enhanced shareholder

brands, to sustain our performance and to

value, now and in the future.

build value for all stakeholders. You will find

details on our strategy and tactics and better

understand our plan and our priorities.

Our story is generating excitement

We are hard at work on our next multi-year

plan, determining the strategy that will help

us not only withstand challenges, but build

even greater value. I look forward to sharing

among investors, particularly those who

the details of that plan with you in the

embrace a company with a proven record

months ahead.

of sustained, profitable growth. While the

outdoor recreation industry overall was

negatively affected by the recession, outdoor

enthusiasts—the anglers, divers, paddlers

and campers who demand the latest and

greatest—have been drawn more and more

to Johnson Outdoors’ innovation-rich brands.

Helen Johnson-Leipold

Chairman & Chief Executive Officer

2011

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Johnson Outdoors | Annual Report 2011 | 7

Growing
Our Brands

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Powerful brands fuel success

Market-leading brands are the key to continued

Johnson Outdoors grows and strengthens our

growth for Johnson Outdoors. Maintaining the

brands through the strategies described in the

Number 1 or Number 2 positions in our markets

next few pages: innovation, focused marketing,

is a top priority.

targeted distribution and product excellence.

Why does brand matter? In the outdoor

recreation industry, people value and reward

innovation, quality and experience. And they

link those qualities to the name on the product.

Great brands let us compete on factors other

than price. Our powerful brands…

• Differentiate us from competitors, delivering

instant credibility.

• Attract and influence customers, speeding

the sales cycle.

• Reinforce relationships with business

partners as well as consumers, opening

markets and increasing sales.

In short, our brands are business assets that

add significantly to our bottom line.

Leveraging brand equity
The Minn Kota® Talon, a push-button deployable
shallow-water anchor, has energized a once-sleepy
market segment. It’s easier to mount than the
competition, deploys faster, holds stronger and
won’t damage vegetation or the bottom. With the
durability and performance customers expect
from the brand, the Talon is Minn Kota’s
top-selling new product for 2011.

Johnson Outdoors | Annual Report 2011 | 9

Innovation

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Delivering a must-have

Strong core brand innovation fuels Johnson

Meaningful innovation helps us hit the right

These enthusiasts are early adopters,

Outdoors’ competitiveness and organic sales

price/value balance, delighting consumers

trendsetters always searching for new ways

growth. For seven years straight, more than

while improving margins. It’s especially

to make their experience more enjoyable

a third of our revenue has come from new

critical in our Diving and Marine Electronics

regardless of the economic climate. In the

products—a clear indicator of innovation’s

segments, where avid enthusiasts eagerly

Marine Electronics market, for example, a

ability to drive marketplace demand even

seek the next “must-have” gear or equipment.

Southwick Associates survey found purchases

when the battle for consumer discretionary

dollars is fierce.

of fishing equipment remained steady in 2011

versus the previous year.

A technology exclusive
Our strategic acquisition of
LakeMaster®, the gold standard in
regional electronic charts and fishing
and boating maps, adds to our
portfolio of proprietary technologies.
We’re already expanding geographic
coverage, developing innovative
new chart features and integrating
this exclusive technology with our
other marine electronic offerings
to maximize LakeMaster’s growth
potential.

LakeMaster®
Digital Charting
Technology

10 | Johnson Outdoors | Annual Report 2011

Our innovation strategy in Marine Electronics

is to maximize technology to help the angler

catch more fish. That means staying on top of

constant electronic and digital advancements.

We’re looking for new technologies and new

ways to apply existing technology to reach

our goals.

The result is a strong, healthy innovation

pipeline. New products like the Minn Kota®

Talon, an award-winning shallow water anchor,

Humminbird®
1158c DI

and Humminbird® Down Imaging™ sonar

technology bring excitement and growth to

professional.

And users of

their categories. And the Minn Kota® i-Pilot®,

Cannon’s® new

introduced last year, has revolutionized

Digi-Troll electric

steering and positioning with its wireless

downriggers can preset intervals and depths

approach. Year I sales exceeded expectations,

for up to six bait lines with a backlit keypad—or

and Year II has been even bigger.

through their Humminbird fishfinder, via the

We also work to maximize the market

unique CannonLink® system.

potential for product innovation, making

Innovative products capture media attention

technology accessible to the broadest

and, year after year, win awards for Johnson

audience. Humminbird® Side Imaging® and

Outdoors. The true “must-have” of innovation,

new Down Imaging™ sonar technologies, for

however, is consumer appeal, proven by sales

example, are now available in fishfinders at

and share gains that confirm our brands just

every price point, for anglers from amateur to

keep growing and growing.

Innovation

Highlight

Marine
Electronics

Humminbird® 1158cDI
expands picture
and appeal
This year Humminbird pointed its
pioneering technology in a new
direction. The 1158c DI, an ICAST 2011
Best in Show winner, uses Down
Imaging™ technology to deliver

detailed views of what’s below the boat:

timber, brush, bridge pilings, rocks and other

structure where fish might linger. It emits high-frequency
sound waves in razor-thin slices, using sonar returns from the
waves to create an instant “snapshot.”

With Humminbird Side Imaging®, showing structure out to
240 feet on each side of the boat, and 2D Sonar, for targeting
fish, Down Imaging rounds out a full range of fishfinding
technologies for anglers—and keeps Johnson Outdoors clearly
in front of the competition.

Johnson Outdoors | Annual Report 2011 | 11

Focused Marketing

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Expanding market opportunity

The outdoor recreation industry is fragmented,

In Outdoor Gear, Eureka!® Is expanding

Targeted, innovative marketing also creates

with many brands serving many categories. That

its presence to include backpacks in 2012.

demand for our products. In Marine Electronics,

makes focused marketing a valuable key to brand

This focused collection is targeted at family

for instance, Humminbird® has a significant social

growth. Johnson Outdoors is adept at leveraging

campers, backpackers, hunters and anglers,

media presence among all those linked-in anglers.

brand equity to expand existing markets, enter

with features such as padded hip belts,

We’re front and center in their conversations about

new geographies or consumer segments and

safety whistles, built-in rain covers and a

catching great screen shots as well as big fish.

jump-start entire categories.

padded hydration sleeve that doubles as

In Diving, for example, we recognized that

the largest, fastest-growing market segment

is the mid-price segment—made up of new

and recreational divers who don’t yet need

the sophisticated technical capabilities of

SCUBAPRO®, the world’s Number 1 dive

equipment brand.

So we built on the power of the SCUBAPRO

name to introduce SUBGEAR®, a new brand

of mid-price, lifestyle-oriented dive gear.

SUBGEAR complements SCUBAPRO, offering

a commitment to quality and service on which

dealers and divers can rely. Over the past 18

months, we’ve significantly expanded global

distribution of SUBGEAR while at the same time

growing SCUBAPRO sales. The plan: Inspire

today’s SUBGEAR recreational diver to become

the SCUBAPRO diving enthusiast of tomorrow.

12 | Johnson Outdoors | Annual Report 2011

a laptop compartment. Customers and

consumers alike know they can expect the

comfort and performance common to all

Eureka! products.

Offering more to existing consumers and

connecting with more and more consumers in a

fragmented market—our marketing strategy brings

it all together to keep our brands growing.

Marketing

Highlight
Outdoor Gear

Building on big names
Named after peaks in the Adirondacks, the new Eureka!®
backpacks are designed for comfort and accessibility
on day trips, weekend travels and longer treks. And the
Eureka! brand name carries a heritage of quality.

Serving customers
with technology
Here are just a few ways Johnson Outdoors
uses technology to enhance value for our
retail partners.

Trading Partner Intelligence (TPI)
captures weekly point-of-sale data from key
partners. Metrics include units sold, sales
dollars, on-hand levels and more, sorted by
item, retailer and location.

TPI lets us give our top retailers detailed
product recommendations by brand and region,
so they can meet consumer demands without
costly overstock. The result: we grew sales
with these partners in 2011 while reducing
inventories.

BOATS is a secure e-commerce site for
Watercraft’s specialty dealer channel. Dealers
can browse products, check availability, and
order and pay online. In 2011, nearly 600 users
accessed BOATS.

Shopatron lets our Cannon® brand reach
consumers directly while still supporting our
trade partners. Consumers place an order
online, and, behind the scenes, retailers bid to
fulfill it, sharing in online marketing proceeds.

Sales through Shopatron rose 50 percent
from 2010 to 2011. It’s a win all around:
Consumers enjoy online convenience,
retailers get new business, we strengthen
partnerships—and Cannon sales and
brand awareness grow.

Discover GPS Watch

Marketing

Great features, great value
We’re building momentum in Outdoor
Gear with products like the Discover
GPS Watch from Tech4O®. This powerful
watch delivers speed, distance,

navigation and heart rate data, with
route mapping and PC link and
analysis software that interfaces
with Google Earth.

Sawtooth 45L Backpack

Johnson Outdoors | Annual Report 2011 | 13

Market fact:
Prior to the 2008 holiday season, active

Americans expected to spend 11% of their sports,

recreation and fitness gift dollars at independent

specialty stores. That number has increased each of

the past three years, reaching 18% this year, showing

that specialty stores have capitalized on their unique

advantages to add value to the shopping experience.

14 | Johnson Outdoors | Annual Report 2011

Targeted Distribution

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Succeeding with channel partners

One of Johnson Outdoors’ greatest assets

can maximize the growth opportunity for

and models. In 2012 we’ll build on that momentum

is the unmatched breadth of our portfolio,

both businesses.

and ensure continuity for dealers as we look for

ways to make the most of channel synergies. From

there we’ll work to be an easier, more profitable

partner for specialty vendors—creating growth for

their businesses and for ours.

which translates into unparalleled depth of

distribution. We build on strong partnerships

with distributors to penetrate our markets and

grow our brands in more than 80 countries.

Specialty channels are composed of small

business owners—the experts to whom

enthusiasts look for advice and premier

brands. These dealers need sales programs

This year we identified a major opportunity for

and terms that reflect their size; marketing

Watercraft and Outdoor Gear. Research shows

and product support to compete with larger

that paddle specialty and outdoor specialty

retailers; and simple, cost-effective business

channels together represent about half of the

processes to improve profitability. Our goal is

$1.5 billion market for our camping and paddling

to meet these unique needs and become the

products, and an even higher percentage of our

partner of choice for these local and regional

price/value target consumers. By combining

retailers, creating a distinct, sustainable

Watercraft and Outdoor Gear and focusing our

competitive advantage.

resources on the specialty class of trade, we

Our Watercraft and Outdoor Gear brands

were once exclusively sold through the

specialty channel and have established strong

momentum lately with specialty-only brands

An edge for paddlers—and dealers
The Necky® Vector 14™ sit-on-top
kayak, sold through authorized
Necky specialty dealers, is geared for
more advanced paddlers. With a hull
designed to deliver the performance of a high-end sea kayak,
the Vector 14 draws in consumers eager to push the speed and
distance envelope.

Necky® Vector 14™ Kayak, “Storm”

Johnson Outdoors | Annual Report 2011 | 15

Honors
and awards

Every year, Johnson Outdoors‘ products achieve new levels
of innovation, performance and quality, earning recognition
from industry trade groups, publications and the all-important
consumer. Here are winners from 2011.

Eureka!® Mansard 8 Tent
Camping Life 2011 Editors‘ Choice
The Eureka! Mansard tent brings luxurious
convenience to the base camp tent market. Its
proprietary hubs and box frame construction
create near-vertical walls, with well over six
feet of headroom. Two large doors, a removable
divider curtain that can create two internal
rooms, and large front and rear vestibules help
the Mansard comfortably house the entire family.

16 | Johnson Outdoors | Annual Report 2011

2011

Humminbird ® 1158c DI
Winner, ICAST 2011
Best in Show, Electronics
This huge 10.4” LED backlit color
display delivers incredibly detailed views of
the bottom and structure below the boat,
thanks to new Down Imaging™ technology
and DualBeam PLUS™ sonar. With GPS
chart plotting and options like Ethernet
networking and Satellite Weather, the
1158c DI makes for the best possible

fishing experience.

SCUBAPRO®
Everdry4 Drysuit
SCUBALAB 2011
Testers‘ Choice
The Everdry4 combines
a wetsuit’s soft, supple
comfort with the watertight
warmth of a dry suit. It
weighs half as much as
traditional dry suits, yet
offers better protection and
buoyancy stability at depth
than traditional wetsuits. All
in all, the Everdry4 provides
a comfortable dive from start
to finish.

Product Excellence

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Necky® Eliza™ Kayak
2011 Sea Kayaker Readers Choice
Award—Best Women’s Kayak

Available in a number of models,
including a new ruddered
composite version, the Necky

Eliza is ergonomically
designed around a woman’s
hip and leg physiology and
overall body proportions. Its low profile and
cockpit dimensions allow flexibility for rolling,
bracing, surfing and spirited paddling.

Necky® Vector 13™ Kayak
2011 National Geographic
Gear of the Year Selection
The Vector 13 is the rare sit-on-top that
paddles like a sit-inside touring craft, combining
stability and style—the best of both water
worlds. As National Geographic
Adventure wrote when
naming this kayak
as must-have gear,
“The Vector 13 will

make you rethink just
how cool the category can be.”

SCUBAPRO®
MK 11/C200 Regulator
Sport Diver Magazine 2011 Gear Guide

SCUBAPRO® MK 25/A700 Black Tech Regulator

Sport Diver Magazine 2011 Editor’s Pick

These regulators reflect SCUBAPRO’s continued commitment to great breathing

performance for recreational and technical divers. The MK 11/C200 combines a lightweight first
stage with a compact, uncomplicated second stage, for the value consumers demand. The MK 25/A700
combo delivers high performance with a stealthy new look: a Titanium Nitride PVD coating that boosts
surface hardness and durability.

Johnson Outdoors | Annual Report 2011 | 17

Sustaining
Performance

18 | Johnson Outdoors | Annual Report 2011

Transformation produces measurable results

For Johnson Outdoors, building value requires

The business results in the next few pages

maximizing marketplace performance and

show we’re addressing the elements that

strengthening operational results.

we can control. When we’re challenged by

In 2009, we launched an aggressive

transformation of our organization—a three-year

plan focused on achieving sustainable results:

elements beyond our control, such as bad

weather and economic downturns, our strategy

positions us to sustain performance and capture

opportunities for continued growth.

• Reduce our cost structure, lowering our

breakeven point.

• Enhance price/value, meeting tougher

marketplace criteria.

• Achieve targeted revenue gains, growing

profits faster than sales.

• Better manage the balance sheet,

improving net income while reducing

working capital and debt.

We delivered dramatic results in 2010, meeting

or exceeding every fiscal target.

When the economic recovery slowed midway

through 2011, we had the strength and flexibility

to adapt quickly. And we continue to surpass

competitors in return on equity.

Known for its innovative rotational-molding process for
forming polyethylene kayaks and canoes, Old Town®
also shapes paddlers’ expectations for comfort, ease
and affordability. That’s key in meeting the market’s
increasingly stringent price/value criteria.

Johnson Outdoors | Annual Report 2011 | 19

Letter from the
CEO and CFO

20 | Johnson Outdoors | Annual Report 2011

Letter from the CEO and CFO

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Strategy promotes success
in a challenging environment

After outstanding results in the first six

We’re seeing results from our commitment

Looking ahead, due to the need for added

months of 2011, industry recovery slowed

to a strong balance sheet. Average working

investment in innovation and the ongoing

in the face of economic, political and

capital was 30.8 percent of net sales

unpredictability surrounding external factors

weather-related challenges. Even so, our

versus 29.8 percent last year on a trailing

which could impact recovery of outdoor rec

strong brands and diverse portfolio enabled

twelve-month basis. Factors behind this

markets, 2012 will be a challenging year.

Johnson Outdoors to grow total company

modest increase include higher volume

That said, we end fiscal 2011 with a

revenue 7 percent year-over-year, with

and continued demand in MEG. In addition,

strong, healthy balance sheet, a threefold

innovative new products accounting for

the tsunami in Japan and flooding in the

improvement in net cash year-over-year and

40 percent of revenues.

northeast U.S. tied up inventory in Diving

confidence in our ability to withstand the

and Outdoor Gear respectively. At year-end,

economic tides.

Operating expense in 2011 was lower as

a percentage of sales, although $6 million

higher than in 2010 due to higher volume

and R&D spending, as well as higher legal

costs driven in part by efforts to enforce

total working capital dollars were below

prior year, so overall we feel good about

our ability to keep working capital in check

despite market volatility.

our patented Humminbird side imaging

Cash from operating activities increased

technology. Reported earnings were up

over 50 percent over the prior year, and

Helen Johnson-Leipold

Chairman & Chief Executive Officer

significantly over 2010 due in part to a

all units contributed to positive cash

reversal of our tax asset valuation allowance.

generation. Importantly, excluding the

Still, excluding this non-cash item, adjusted

non-cash tax asset reversal, adjusted

net earnings increased nearly 70 percent.

earnings per diluted share nearly doubled,

reemphasizing our commitment to

David W. Johnson

sustained profitable growth and enhanced

Vice President & Chief Financial Officer

shareholder value.

Johnson Outdoors | Annual Report 2011 | 21

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Business Recap: Marine Electronics

Net Sales: $222.1 Million

Largest business thrives
with innovation, teamwork

Continuing its 2010 success, the Marine

Electronics group, which accounts for nearly half

ago, fishing electronics has grown

Electronics group delivered a stellar 2011

of Johnson Outdoors‘ sales.

from niche products to a sophisticated

performance, creating huge demand with

unique new products and targeted marketing—

and keeping pace with that demand through

efficient manufacturing.

Net sales for the group jumped $36.6 million,

or 19.7 percent, in 2011, and operating profit

increased by $7.1 million—more than 50 percent

—with higher-margin products such as the

Two brands surpassed $100 million in sales:

Minn Kota® Talon™, Minn Kota® i-Pilot®,

Minn Kota®, the world’s #1 brand of electric

and Humminbird® Down Imaging™ and

fishing motors, and, for the first time,

Side Imaging® fishfinders.

market serving millions of enthusiasts.

And just as we’ve built Humminbird

into a sonar powerhouse since we acquired

it seven years ago, we expect to establish

Geonav and LakeMaster as leaders—creating

growth opportunities for all our Marine

Electronics brands.

Humminbird®, the world’s leading fishfinder

brand. Cannon® downriggers, Geonav® marine

navigation technology and

LakeMaster® digital charting

technology and products

complete the Marine

Marine Electronics will continue to be our

growth engine, fueled by deep market

penetration and broad distribution.

Since we acquired Minn Kota 40 years

Geonav® GIS 12
Multi-Function
Display with
BlueLogic™
User Interface

I had a pretty good tournament
season this year and couldn’t have
done it without my Humminbird ®or
my Terrova. I absolutely love i-Pilot®.
Thank you for making my days on
the water more productive, and
keep up the good work.

—Ron Levine, pro fishing champion

22 | Johnson Outdoors | Annual Report 2011

The electronics
enthusiasts love

Minn Kota’s® i-Pilot® wireless
trolling system uses GPS
technology to steer and position

a boat. Anglers can press a button
on the wireless remote to stay
on a fishing spot, retrace trolling
paths or take full control of speed
and steering. After a fantastic 2010
launch, i-Pilot sales in 2011 again
exceeded expectations.

i-Pilot® Wireless
GPS Trolling
System

i-Pilot®
Remote Control

Johnson Outdoors | Annual Report 2011 | 23

Compact
design, big
performance

This year SCUBAPRO®
introduced the C300 second
stage regulator, which
incorporates new Optimized
Flow Design technology for
uncompromised breathing
performance. Divers enjoy a compact,
midrange system with all the adjustment
options of a high-end regulator.

24 | Johnson Outdoors | Annual Report 2011

SCUBAPRO ®
C300 Regulator

Business Recap: Diving

Net Sales: $89.5 Million

Adding value for consumers
yields growth amid challenges

Despite the tsunami in

We are moving ahead carefully to ensure operations

Japan, political upheaval in the

remain stable through the year-long transition.

Meanwhile, superior innovation, quality, value and

service will keep SCUBAPRO and SUBGEAR on top

of the market.

SUBGEAR ® XP-10
3-Gauge Dive
Computer

Understanding the diving lifestyle
Most divers must travel to enjoy their sport—and they can go anywhere with the
SCUBAPRO® Go Travel BCD. Lightweight and extremely comfortable, it includes
original features such as an integrated weight system. The entire BC easily folds
for storage in its own travel sack.

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Middle East and economic turmoil in

Europe, Diving turned in modest topline

growth in 2011. Net sales increased $4.4

million, or 5.2 percent, and operating profit rose

by $0.8 million, or 19 percent, over 2010.

Our priorities in this global business are clear:

grow share and improve margins.

SUBGEAR®, our new mid-priced line of dive

equipment, delivered double-digit growth

in 2011, while our flagship SCUBAPRO®

brand grew share in the premium-price dive

segment. SUBGEAR’s price points appeal

to the largest, fastest-growing dive

gear segment, and its global rollout

exceeded expectations. In 2012 we’ll

expand distribution beyond our elite

SCUBAPRO dealer network.

Supply chain optimization is essential

in our efforts to improve margins.

This year we began implementing a

common ERP platform in Europe, an

important step in reducing costs.

SCUBAPRO ®
Go Travel BCD

Johnson Outdoors | Annual Report 2011 | 25

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Business Recap: Watercraft & Outdoor Gear

Net Sales: $96.6 Million (combined)

Resources combined to target
specialty channels, enthusiasts

Cold, rainy weather delayed the start of this

Watercraft, which dramatically improved

Yet we see steady growth for both businesses

year’s paddling and camping season, and

profitability in 2010, saw 2011 sales drop

with specialty retailers, which make up nearly

late summer rains cut it short, making 2011 a

9.8 percent, or $6.3 million, with an operating

half of the combined market for camping and

difficult year for Watercraft and Outdoor Gear.

loss of $1.4 million. Brands include Old Town®

paddling. It makes sense to focus consolidated

But with plans to combine resources and

canoes and kayaks, Ocean Kayak™, Necky®

Watercraft and Outdoor Gear marketing and

target long-term growth in the specialty trade,

kayaks, Carlisle® paddles, and Extrasport®

sales resources on these channels, leveraging

these businesses are entering 2012 with fresh

personal flotation devices.

synergies to become these retailers’ partner of

enthusiasm and strong momentum.

Outdoor Gear, comprising Eureka!® tents, Silva®

choice.

Family camping made even easier
In 2012 Eureka!© expands its Copper Canyon™ recreational tent
line with the Copper Canyon 4, a six-pole cabin-style, four-person
tent. With a center height of seven feet and near-vertical walls,
it’s spacious and inviting. Easy assembly, interior pocketing and
hanging gear loft organizers add convenience, while a
full mesh roof and side windows for increased ventilation
enhance comfort.

field compasses and Tech4O® performance

It’s a big opportunity, and we’re taking the

measurement instruments, was hit hard by

time to do it right. Our 2012 priority is to

reduced U.S. government spending on military

maintain momentum in the specialty channel

tents. Net sales dropped 20 percent, to $38.9

while developing programs for 2013. We’ll also

million, and operating profit was $3 million.

evaluate operational synergies to ensure we

continue to meet customer expectations for

innovation, price/value, quality and service.

26 | Johnson Outdoors | Annual Report 2011

Old Town® Saranac™ 160 XT Canoe

Carlisle Expedition Kayak Paddle

New canoe design promotes fun
Building off last year’s successful Saranac™ 146 launch,
Old Town® expanded the family in 2011 with the Saranac
160. Saranac canoes feature a modified design with
slightly lowered seats, paddling better than most other
recreational canoes. The Saranac 160 includes comforts
like contoured bow and stern seats, a center bench with
storage compartment, and molded-in rod and cup holders.
Available in base, XT and angler versions, the Saranac

continues Old Town’s tradition of innovation and

quality for affordable family fun.

Johnson Outdoors | Annual Report 2011 | 27

Strategy
2011

Focusing on the pursuit of value

How do you sustain performance in the face of

• A lean infrastructure. Johnson Outdoors maintains

earthquakes and floods, rioting and revolutions,

a strong, streamlined center providing direction

currency fluctuations and economic uncertainties?

and resources for each of our businesses.

For Johnson Outdoors, it comes down to two

words: strategy and discipline.

• Cross-business synergies. We look for ways

our businesses can complement each other,

We’re committed to our three-year strategy,

creating greater value in R&D, sales and marketing,

emphasizing balance sheet management. And

and distribution.

we’re disciplined in our follow-through, making the

most of our organizational strengths:

• A results-driven focus. Our organization is fully aligned

and committed to continuously improved performance.

Improving
Sales and Profitability

Reducing
Debt to Historic Low

Maintaining
Strong Cash Flow

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28 | Johnson Outdoors | Annual Report 2011

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Shareholder Value Performance (As Reported)

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Financial Summary

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Peer Group Includes:
Arctic Cat Inc. (ACAT)

Black Diamond (BDE)

Brunswick Corporation (BC)

Cybex International Inc. (CYBI)

Callaway Golf Co. (ELY)

Escalade Inc. (ESCA)

Jarden Corp (JAH)

Marine Products Corp. (MPX)

Nautilus, Inc. (NLS)

Quicksilver Inc. (ZQK)

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Discipline
2011

Discipline also means continually seeking

intensive, but in place, ERP zeroes in on waste

operational improvements and cost reductions.

and increases efficiency. Forecasting, inventory

In Marine Electronics and Diving, for example,

management and back-office effectiveness all

we source goods and materials strategically. In

improve—and profitability increases.

Outdoor Gear, we’re pursuing value-engineering to

decrease the cost of sales. And ERP for our Diving

business in Europe will complete the company’s

implementation, giving us essential visibility into

operations and inventory. The process is resource-

Sustaining performance can be a challenge in

any environment. With a focused strategy and a

commitment to discipline, Johnson Outdoors is

positioned to meet that challenge.

Johnson Outdoors | Annual Report 2011 | 29

Enhancing Value

30 | Johnson Outdoors | Annual Report 2011

Executing a strategy
to help all stakeholders win

The ultimate result of growing our brands

While share prices and market moves are

and sustaining performance is to create

unpredictable, our shareholders can rely

measurable value for all Johnson Outdoors‘

on our commitment to flawless execution

stakeholders, particularly our shareholders.

of our strategic plan in pursuit of enhanced

competitiveness and profitability.

As a publicly traded, closely held business,

ours is a compelling, unique story among

small- and micro-cap companies. Studies

show that owner-managed and -controlled

companies create more value over time

compared with those where management

is less invested in the business’ long-term

performance. Simply put, our objectives are

aligned with those of our shareholders—to

achieve long-term, profitable growth.

Entering the final third of our current three-

year plan, our transformation is nearly

complete and sustainability is in focus. We

continue to simplify our business model.

Strengthen our balance sheet. Gain share.

And outperform the market—thereby building

value in our brands and businesses that

translates into value for our shareholders.

We enhance value for all stakeholders through
strategies designed to grow share and optimize
profitability even in challenging times. For example,
Eureka!®, one of the ten best-known outdoor
recreation brands, is pursuing success in the specialty
channel with revamped product lines and programs.

Johnson Outdoors | Annual Report 2011 | 31

Strategic Plan

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Building on a solid core
Johnson Outdoors’ strategic plan starts with

Four Cs are key to success
We call the strategies we’re pursuing to enhance value “the four Cs.”

two overarching objectives:

• Grow share by leveraging our market

1. Cost control

2. Customer focus

leadership

• Grow profits faster than sales

To achieve those objectives, our current and

upcoming three-year plans build on:

• Meaningful innovation, growing our

customers’ business and our own.

• Superior service, meeting dealer and

consumer needs like no other company.

We’ve removed $18 million from our business

To be the partner of choice among retailers,

cost structure and cut the cost of debt.

especially specialty dealers, we offer value-

Streamlining also focuses on:

added customer service:

• Cost of sales

• Supply chain

• Design engineering

• Global systems/ERP

Targets:

• Operating expense at 34% of net sales

• Products with attractive price/value margins

• Accurate, on-time order delivery

• Superior business support to create a true

partnership

• Quality, striking the right price/value balance

• Borrowing costs 15% below 2010 levels

while outshining the competition.

Proven staying power
Outdoor recreation (fishing, paddling, camping and diving) presents distinct advantages for our
business and our shareholders. Positive demographics include high-spending, avid participants.
Price premiums reward innovation, retail experience and technical expertise. Fragmented
categories create opportunities for many brands.

The outdoor recreation industry has proven staying power. And with our
leading brands, superior innovation and performance-driven culture, Johnson
Outdoors is uniquely positioned to deliver long-term, profitable growth.

32 | Johnson Outdoors | Annual Report 2011

3. Competitiveness

Strategic acquisitions. We make smart

A culture of accountability

Our continued outperformance draws on

acquisitions that meet strict criteria: growing

To drive growth, Johnson Outdoors depends on the

Johnson Outdoors’ strengths:

market, leading brand, compatible culture, fair

four Cs, as well as a fifth C—culture.

Our company has the family feel and sensibilities

of a small business, with the sophisticated capabilities

of a large multinational enterprise.

Our people-focused values go hand-in-hand with our

performance-based culture, encouraging and rewarding

improving business results. Our culture is an asset

that no competitor can duplicate.

Innovation. We are the innovation leader in

our markets. For seven consecutive years,

more than 33% of our revenue has come

driven by acquisitions.

4. Cash

price. More than half our 2011 revenue was

from new products.

Market development. We uncover and

also create profitable market segments.

Our most recent success, SUBGEAR®

mid-price diving gear, delivered double-

digit growth in 2011. In 2012, we expect

our Geonav® brand to capture significant

opportunity in big boat navigation.

We’re balancing investment in growth with

cost controls, and managing inventories to

contain working capital while meeting market

demand.

Target:

• Working capital days at 2010 level

Measuring progress
In the first two years of our plan, we met or

Industry recovery is key to reaching these

exceeded our targets and achieved business-

targets. But whatever the economy, we

specific goals such as restructuring Watercraft

are committed to executing our strategic

and reducing Diving costs. Company-wide

plan…measuring success through enhanced

performance targets for 2012 include:

shareholder value.

• Net sales 5% CAGR

• Operating margin of 6%

Johnson Outdoors | Annual Report 2011 | 33

34 | Johnson Outdoors | Annual Report 2011
34 | Johnson Outdoors | Annual Report 2011

Front row , seated (L-R): Mr. Pyle, Ms. Johnson-Leipold, Mr. London
Back row, standing (L-R): Mr. McCollum, Mr. Fahey, Mr. Lang

Company Leadership

Board of Directors

Helen P. Johnson-Leipold
Chairman of the Board since 1994. Chairman
and CEO, Johnson Outdoors; Chairman
and Director, Johnson Financial Group, Inc.;
Director, S.C. Johnson & Son, Inc.; Chairman,
The Johnson Foundation.

W. Lee McCollum
Director since 2005. Vice Chairman and Director,
Johnson Financial Group, Inc.; Chairman of the
Board and Director, Le Groupe Fruits & Passion;
Director, Sigma Aldrich Corporation; Director,
Coastal South Bancshares, Inc.

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Thomas F. Pyle, Jr.
Vice Chairman of the Board and Director since
1997. Chairman, The Pyle Group; Director,
Sub-Zero Corporation; Non-Executive Chairman
of Uniek, Inc.; Trustee, Wisconsin Alumni
Research Foundation; Member, Kennedy Center
National Advisory Board.

John M. Fahey, Jr.
Director since 2001. Chairman and CEO,
National Geographic Society; Director, Exclusive
Resorts; Member of the Board, Smithsonian
National Museum of Natural History.

Edward F. Lang
Director since 2006. Senior Vice President and
Chief Financial Officer of the New Orleans
Hornets; past President of Business Operations
and Alternate Governor, Nashville Predators;
Director and past Chairman, Nashville’s
Adventure Science Center.

Terry E. London
Director since 1999. President and CEO,
London Broadcasting Company, Inc.; past
President, London Partners, LLC; past President
and CEO, Gaylord Entertainment Company;
Director, Pier 1 Imports.

Management Team
Front row (L-R): Dave Johnson, Bill Kelly, Alisa Swire, Kelly Grindle,
Helen Johnson-Leipold

Back row (L-R): Joe Stella, John Moon, Sara Vidian, Cynthia Georgeson

Johnson Outdoors | Annual Report 2011 | 35

Front row , seated (L-R): Mr. Pyle, Ms. Johnson-Leipold, Mr. London

Back row, standing (L-R): Mr. McCollum, Mr. Fahey, Mr. Lang