| Summary Of Significant Accounting Policies (Policy) | 12 Months Ended |
| Oct. 02, 2015 |
| Summary Of Significant Accounting Policies [Abstract] | |
| Business | Business
Johnson Outdoors Inc. (the “Company”) is an integrated, global outdoor recreation products company engaged in the design, manufacture and marketing of brand name outdoor equipment, diving, watercraft and marine electronics products. |
| Principles Of Consolidation | Principles of Consolidation
The consolidated financial statements include the accounts of Johnson Outdoors Inc. and all majority owned subsidiaries and are stated in conformity with U.S. generally accepted accounting principles. Intercompany accounts and transactions have been eliminated upon consolidation. |
| Use Of Estimates | Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates. |
| Fiscal Year | Fiscal Year
The Company’s fiscal year ends on the Friday nearest September 30. The fiscal year ended October 2, 2015 (hereinafter 2015) comprised 52 weeks. The fiscal year ended October 3, 2014 (hereinafter 2014) comprised 53 weeks. The fiscal year ended September 27, 2013 (hereinafter 2013) comprised 52 weeks. |
| Cash And Cash Equivalents | Cash and Cash Equivalents
The Company considers all short-term investments in interest-bearing bank accounts, and all securities and other instruments with an original maturity of three months or less, to be equivalent to cash. Cash equivalents are stated at cost which approximates market value.
The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice. |
| Accounts Receivable | Accounts Receivable
Accounts receivable are recorded at face value less an allowance for doubtful accounts. The allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns exist, a reserve is established to reduce the amount recorded to an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts receivable for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable. |
| Inventories | Inventories
The Company values inventory at the lower of cost (determined using the first-in first-out method) or market. Management’s judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. The Company also considers current forecast plans, as well as market and industry conditions in establishing reserve levels. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.
Inventories at the end of the respective fiscal years consisted of the following:
October 2
October 3
2015
2014
Raw materials
$
$
Work in process
Finished goods
$
$ |
| Property, Plant And Equipment | Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:
Property improvements
5 - 20 years
Buildings and improvements
20 - 40 years
Furniture, fixtures and equipment
3 - 10 years
Upon retirement or disposition, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the results of operations.
Property, plant and equipment at the end of the respective years consisted of the following:
2015
2014
Property improvements
$
$
Buildings and improvements
Furniture, fixtures and equipment
Less accumulated depreciation
$
$ |
| Goodwill | 2015
2014
Property improvements
$
$
Buildings and improvements
Furniture, fixtures and equipment
Less accumulated depreciation
$
$
Goodwill
The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis.
The analysis of potential impairment of goodwill requires a two-step process. The first step is the estimation of the fair value of the applicable reporting unit. Estimated fair value is based on management judgments and assumptions and the Company cannot predict what future events may occur that could adversely affect the reported value of its goodwill. The fair values as determined by management are compared with the aggregate carrying values of the reporting units. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit carrying amount is greater than the fair value, then the second step must be completed to measure the amount of impairment, if any.
The second step calculates the implied fair value of the goodwill which is compared to its carrying value. If the implied fair value is less than the carrying value, an impairment loss is recognized equal to the difference.
See Note 1 7 for a discussion of the impairment charges recognized as a result of the impairment tests performed in 2014. The results of the impairment tests performed in 2015 and 2013 indicated no impairment to the Company’s goodwill. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, discount rates will not increase or the projected cash flows of the individual reporting units will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods , and accordingly, whether any impairment losses need to be recorded in future periods .
The changes in the carrying amount of those segments with goodwill and the composition of consolidated net goodwill for fiscal 2015 and 2014 were as follows:
Segment
Consolidated
Marine Electronics
Diving
Outdoor Equipment
Consolidated
Gross Goodwill
Accumulated Impairment
Total
Balance at September 27, 2013
$
$
$
$
$
$
$
Impairment
-
-
-
Amount attributable to movements in foreign currency rates
-
-
-
Balance at October 3, 2014
$
$
$
-
$
$
$
$
Amount attributable to movements in foreign currency rates
-
-
-
Balance at October 2, 2015
$
$
$
-
$
$
$
$ |
| Other Intangible Assets | Other Intangible Assets
Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. There were no impairment losses recognized in fiscal 2015.
During fiscal 2013, the acquisition of Jetboil resulted in indefinite-lived intangible assets of $5,400 consisting of the Jetboil tradename. During the third quarter of fiscal 2014, forecasted cash flows related to Jetboil declined from the assumptions used in the initial valuation. This change led the Company to perform an interim impairment test on the acquired indefinite lived intangible assets by comparing their carrying value to their fair value. The fair value was determined using a relief from royalty method under the income approach which uses projected revenue allocable to the tradename and a royalty rate at which it is assumed a market participant would be willing to incur as its cost in order to manufacture a branded product. As a result of this analysis, the Company recognized an impairment charge of $2,000 in “Goodwill and other intangible assets impairment” in the accompanying Consolidated Statements of Operations in the Outdoor Equipment segment reducing the fair value of the tradename to $3,400 . There was no additional impairment of indefinite-lived intangible assets recorded for fiscal 2014.
Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 4 to 15 years. Amortization of patents and other intangible assets with definite lives was $856 , $ 765 and $ 650 for 2015, 2014 and 2013, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $ 836 , $502 , $45 8 , $458 and $395 for fiscal years 2016, 2017, 2018, 2019 and 2020, respectively .
Intangible assets at the end of the last two years consisted of the following:
2015
2014
Gross Intangible
Accumulated Amortization
Net
Gross Intangible
Accumulated Amortization
Net
Amortized other intangible assets:
Patents and trademarks
$
$
$
$
$
$
Other amortizable intangibles
Non-amortized trademarks
-
-
$
$
$
$
$
$ |
| Impairment Of Long-Lived Assets | Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in business circumstances such as unplanned negative cash flow indicate that the carrying amount of these assets may not be fully recoverable. In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets. |
| Warranties | Warranties
The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. The following table summarizes the warranty activity for the three years in the period ended October 2, 2015 .
Balance at September 28, 2012
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at September 27, 2013
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at October 3, 2014
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at October 2, 2015
$ |
| Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)
The components of “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets as of the end of fiscal year 2015 , 2014 and 2013 were as follows:
2015
2014
2013
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Foreign currency translation adjustment
$
$
-
$
$
$
-
$
$
$
-
$
Unamortized loss on pension plans
Accumulated other comprehensive income
$
$
$
$
$
$
$
$
$
The reclassifications out of AOCI for the year ended October 2, 2015 were as follows:
Statement of Operations
Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss
$
Cost of sales / Operating expense
Tax effects
Income tax expense
Foreign currency translation adjustments:
Write off of currency translation amounts
Other income and expense
Total reclassifications for the period
$
The reclassifications out of AOCI for the year ended October 3, 2014 were as follows:
Statement of Operations
Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss
$
Cost of sales / Operating expense
Tax effects
Income tax expense
Foreign currency translation adjustments:
Write off of currency translation amounts
Other income and expense
Total reclassifications for the period
$
The changes in AOCI by component, net of tax, for the year ended October 2, 2015 were as follows:
Foreign Currency Translation Adjustment
Unamortized Loss on Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss)
Balance at October 3, 2014
$
$
$
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Tax effects
-
Balance at October 2, 2015
$
$
$
The changes in AOCI by component, net of tax, for the year ended October 3, 2014 were as follows:
Foreign Currency Translation Adjustment
Unamortized Loss on Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss)
Balance at September 27, 2013
$
$
$
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Tax effects
-
Balance at October 3, 2014
$
$
$ |
| Earnings Per Share ("EPS") | Earnings per Share (“EPS”)
Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method. Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method.
Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above. As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.
Basic EPS
Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding, respectively. In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive. In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities.
For the years ended October 2, 2015, October 3, 2014 and September 27, 2013, basic income per share for Class A and Class B shares has been presented using the two class method as described above.
Diluted EPS
Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units and non-vested restricted stock. Anti-dilutive stock options, restricted stock units and non-vested stock are excluded from the calculation of diluted EPS. The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock. Therefore, diluted net income per share is the same for both Class A and Class B common shares. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.
For the years ended October 2, 2015, October 3, 2014 and September 27, 2013, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into Class A common stock.
There were no stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive for the years ended October 2, 2015, October 3, 2014 and September 27, 2013. Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 214,027 , 319,632 and 386,409 shares for the years ended October 2, 2015, October 3, 2014 and September 27, 2013, respectively.
The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:
2015
2014
2013
Net income
$
$
$
Less: Undistributed earnings reallocated to non-vested shareholders
Dilutive earnings
$
$
$
Weighted average common shares – Basic:
Class A
Class B
Dilutive stock options and restricted stock units
-
Weighted average common shares - Dilutive
Net income per common share – Basic:
Class A
$
$
$
Class B
$
$
$
Net income per common share – Diluted:
Class A
$
$
$
Class B
$
$
$ |
| Stock-Based Compensation | Stock-Based Compensation
Stock-based compensation cost is recorded for all option grants and awards of non-vested stock and restricted stock units based on their grant-date fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award. No stock options were granted in 2015, 2014 or 2013. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options, non-vested stock, and employee stock purchase plans. |
| Income Taxes | Income Taxes
The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized. See Note 6 of these Notes to Consolidated Financial Statements for further discussion. |
| Employee Benefits | Employee Benefits
The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees. The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto. Other retirement costs are funded at least annually. See Note 7 of these Notes to Consolidated Financial Statements for additional discussion. |
| Foreign Operations And Related Derivative Financial Instruments | Foreign Operations and Related Derivative Financial Instruments
The functional currencies of the Company’s foreign operations are the local currencies. Accordingly, assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of the year. Results of operations are translated at monthly average exchange rates. Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of Shareholders’ equity.
Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity. Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency. The Company recognized currency losses from transactions of $1,196 and $916 in 2015 and 2013, respectively, and currency gains from transactions of $427 in 2014, all of which were included in the “Other expense (income), net” line of the Company’s Consolidated Statements of Operations.
Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 18 % of the Company’s revenues for the year ended October 2, 2015 were denominated in currencies other than the U.S. dollar. Approximately 8 % were denominated in euros and approximately 6% were denominated in Canadian dollars, with the remaining 4 % denominated in various other foreign currencies. The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies. In 2015 the Company did not use foreign currency forward contracts. The Company does not enter into foreign exchange contracts for trading or speculative purposes. |
| Revenue Recognition | Revenue Recognition
The Company recognizes revenue when all of the following criteria have been met:
·
Persuasive evidence of an arrangement exists. Contracts, internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.
·
All substantial risk of ownership transfers to the customer. Shipping documents and customer acceptance, when applicable, are used to verify delivery.
·
The fee is fixed or determinable. This is assessed based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.
·
Collectability is reasonably assured. Collectability is assessed based on the creditworthiness of the customer as determined by credit checks and analysis, as well as by the customer’s payment history.
Estimated costs of returns and allowances and discounts are accrued as a reduction to sales when revenue is recognized. |
| Advertising & Promotions | Advertising & Promotions
The Company expenses substantially all costs related to the production of advertising the first time the advertising takes place. Cooperative promotional arrangements are accrued as related revenue is earned.
Advertising and promotions expense in 2015 , 2014 and 2013 totaled $24,460 , $ 22,135 and $ 22,902 , respectively. These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $ 1,049 and $ 1,156 at October 2, 2015 and October 3, 2014, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time. |
| Shipping And Handling Costs | Shipping and Handling Costs
Shipping and handling fees billed to customers are included in “Net sales.” Shipping and handling costs are included in “Marketing and selling expenses” and totaled $10,838 , $10,675 and $10,436 for 2015 , 2014 and 2013 , respectively. |
| Research And Development | Research and Development
The Company expenses research and development costs as incurred except for costs of software development for new electronic products which are capitalized once technological feasibility is established and are included in Furniture, Fixtures and Equipment. The gross amount capitalized related to software development was $ 26,487 , less accumulated amortization of $11,858 , at October 2, 2015 and $23,350 , less accumulated amortization of $ 9,324 , at October 3, 2014. These costs are amortized over the expected life of the software of three to seven years. Amortization expense related to capitalized software in 2015 , 2014 and 2013 was $2,535 , $ 2,045 and $ 1,268 , respectively, and is included in depreciation expense on plant, property and equipment. |
| Fair Values | Fair Values
The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at October 2, 2015 and October 3, 2014 due to the short maturities of these instruments. During 2015, 2014 and 2013, the Company held investments in equity and debt securities that were carried at fair value. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value. |
| Valuation Techniques | Valuation Techniques
Rabbi Trust Assets
Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in “Other assets,” and are classified as trading securities. These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.
Goodwill and Other Intangible Assets
In assessing the recoverability of the Company's goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments to which the goodwill relates. When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any. In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.
See Note 2 of these Notes to Consolidated Financial Statements for disclosures regarding the fair value of long-term debt and Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding fair value measurements. |
| New Accounting Pronouncements | 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Johnson Outdoors Inc. (the “Company”) is an integrated, global outdoor recreation products company engaged in the design, manufacture and marketing of brand name outdoor equipment, diving, watercraft and marine electronics products.
Principles of Consolidation
The consolidated financial statements include the accounts of Johnson Outdoors Inc. and all majority owned subsidiaries and are stated in conformity with U.S. generally accepted accounting principles. Intercompany accounts and transactions have been eliminated upon consolidation.
Use of Estimates
The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates.
Fiscal Year
The Company’s fiscal year ends on the Friday nearest September 30. The fiscal year ended October 2, 2015 (hereinafter 2015) comprised 52 weeks. The fiscal year ended October 3, 2014 (hereinafter 2014) comprised 53 weeks. The fiscal year ended September 27, 2013 (hereinafter 2013) comprised 52 weeks.
Cash and Cash Equivalents
The Company considers all short-term investments in interest-bearing bank accounts, and all securities and other instruments with an original maturity of three months or less, to be equivalent to cash. Cash equivalents are stated at cost which approximates market value.
The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.
Accounts Receivable
Accounts receivable are recorded at face value less an allowance for doubtful accounts. The allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns exist, a reserve is established to reduce the amount recorded to an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts receivable for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable.
Inventories
The Company values inventory at the lower of cost (determined using the first-in first-out method) or market. Management’s judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. The Company also considers current forecast plans, as well as market and industry conditions in establishing reserve levels. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.
Inventories at the end of the respective fiscal years consisted of the following:
October 2
October 3
2015
2014
Raw materials
$
$
Work in process
Finished goods
$
$
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:
Property improvements
5 - 20 years
Buildings and improvements
20 - 40 years
Furniture, fixtures and equipment
3 - 10 years
Upon retirement or disposition, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the results of operations.
Property, plant and equipment at the end of the respective years consisted of the following:
2015
2014
Property improvements
$
$
Buildings and improvements
Furniture, fixtures and equipment
Less accumulated depreciation
$
$
Goodwill
The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis.
The analysis of potential impairment of goodwill requires a two-step process. The first step is the estimation of the fair value of the applicable reporting unit. Estimated fair value is based on management judgments and assumptions and the Company cannot predict what future events may occur that could adversely affect the reported value of its goodwill. The fair values as determined by management are compared with the aggregate carrying values of the reporting units. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit carrying amount is greater than the fair value, then the second step must be completed to measure the amount of impairment, if any.
The second step calculates the implied fair value of the goodwill which is compared to its carrying value. If the implied fair value is less than the carrying value, an impairment loss is recognized equal to the difference.
See Note 1 7 for a discussion of the impairment charges recognized as a result of the impairment tests performed in 2014. The results of the impairment tests performed in 2015 and 2013 indicated no impairment to the Company’s goodwill. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, discount rates will not increase or the projected cash flows of the individual reporting units will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods , and accordingly, whether any impairment losses need to be recorded in future periods .
The changes in the carrying amount of those segments with goodwill and the composition of consolidated net goodwill for fiscal 2015 and 2014 were as follows:
Segment
Consolidated
Marine Electronics
Diving
Outdoor Equipment
Consolidated
Gross Goodwill
Accumulated Impairment
Total
Balance at September 27, 2013
$
$
$
$
$
$
$
Impairment
-
-
-
Amount attributable to movements in foreign currency rates
-
-
-
Balance at October 3, 2014
$
$
$
-
$
$
$
$
Amount attributable to movements in foreign currency rates
-
-
-
Balance at October 2, 2015
$
$
$
-
$
$
$
$
Other Intangible Assets
Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. There were no impairment losses recognized in fiscal 2015.
During fiscal 2013, the acquisition of Jetboil resulted in indefinite-lived intangible assets of $5,400 consisting of the Jetboil tradename. During the third quarter of fiscal 2014, forecasted cash flows related to Jetboil declined from the assumptions used in the initial valuation. This change led the Company to perform an interim impairment test on the acquired indefinite lived intangible assets by comparing their carrying value to their fair value. The fair value was determined using a relief from royalty method under the income approach which uses projected revenue allocable to the tradename and a royalty rate at which it is assumed a market participant would be willing to incur as its cost in order to manufacture a branded product. As a result of this analysis, the Company recognized an impairment charge of $2,000 in “Goodwill and other intangible assets impairment” in the accompanying Consolidated Statements of Operations in the Outdoor Equipment segment reducing the fair value of the tradename to $3,400 . There was no additional impairment of indefinite-lived intangible assets recorded for fiscal 2014.
Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 4 to 15 years. Amortization of patents and other intangible assets with definite lives was $856 , $ 765 and $ 650 for 2015, 2014 and 2013, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $ 836 , $502 , $45 8 , $458 and $395 for fiscal years 2016, 2017, 2018, 2019 and 2020, respectively .
Intangible assets at the end of the last two years consisted of the following:
2015
2014
Gross Intangible
Accumulated Amortization
Net
Gross Intangible
Accumulated Amortization
Net
Amortized other intangible assets:
Patents and trademarks
$
$
$
$
$
$
Other amortizable intangibles
Non-amortized trademarks
-
-
$
$
$
$
$
$
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in business circumstances such as unplanned negative cash flow indicate that the carrying amount of these assets may not be fully recoverable. In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets.
Warranties
The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. The following table summarizes the warranty activity for the three years in the period ended October 2, 2015 .
Balance at September 28, 2012
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at September 27, 2013
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at October 3, 2014
$
Expense accruals for warranties issued during the period
Less current period warranty claims paid
Balance at October 2, 2015
$
Accumulated Other Comprehensive Income (Loss)
The components of “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets as of the end of fiscal year 2015 , 2014 and 2013 were as follows:
2015
2014
2013
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Pre-Tax Amount
Tax Effect
Net of Tax Effect
Foreign currency translation adjustment
$
$
-
$
$
$
-
$
$
$
-
$
Unamortized loss on pension plans
Accumulated other comprehensive income
$
$
$
$
$
$
$
$
$
The reclassifications out of AOCI for the year ended October 2, 2015 were as follows:
Statement of Operations
Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss
$
Cost of sales / Operating expense
Tax effects
Income tax expense
Foreign currency translation adjustments:
Write off of currency translation amounts
Other income and expense
Total reclassifications for the period
$
The reclassifications out of AOCI for the year ended October 3, 2014 were as follows:
Statement of Operations
Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss
$
Cost of sales / Operating expense
Tax effects
Income tax expense
Foreign currency translation adjustments:
Write off of currency translation amounts
Other income and expense
Total reclassifications for the period
$
The changes in AOCI by component, net of tax, for the year ended October 2, 2015 were as follows:
Foreign Currency Translation Adjustment
Unamortized Loss on Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss)
Balance at October 3, 2014
$
$
$
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Tax effects
-
Balance at October 2, 2015
$
$
$
The changes in AOCI by component, net of tax, for the year ended October 3, 2014 were as follows:
Foreign Currency Translation Adjustment
Unamortized Loss on Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss)
Balance at September 27, 2013
$
$
$
Other comprehensive income before reclassifications
Amounts reclassified from accumulated other comprehensive income
Tax effects
-
Balance at October 3, 2014
$
$
$
Earnings per Share (“EPS”)
Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method. Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method.
Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above. As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.
Basic EPS
Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding, respectively. In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive. In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities.
For the years ended October 2, 2015, October 3, 2014 and September 27, 2013, basic income per share for Class A and Class B shares has been presented using the two class method as described above.
Diluted EPS
Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units and non-vested restricted stock. Anti-dilutive stock options, restricted stock units and non-vested stock are excluded from the calculation of diluted EPS. The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock. Therefore, diluted net income per share is the same for both Class A and Class B common shares. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.
For the years ended October 2, 2015, October 3, 2014 and September 27, 2013, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into Class A common stock.
There were no stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive for the years ended October 2, 2015, October 3, 2014 and September 27, 2013. Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 214,027 , 319,632 and 386,409 shares for the years ended October 2, 2015, October 3, 2014 and September 27, 2013, respectively.
The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:
2015
2014
2013
Net income
$
$
$
Less: Undistributed earnings reallocated to non-vested shareholders
Dilutive earnings
$
$
$
Weighted average common shares – Basic:
Class A
Class B
Dilutive stock options and restricted stock units
-
Weighted average common shares - Dilutive
Net income per common share – Basic:
Class A
$
$
$
Class B
$
$
$
Net income per common share – Diluted:
Class A
$
$
$
Class B
$
$
$
Stock-Based Compensation
Stock-based compensation cost is recorded for all option grants and awards of non-vested stock and restricted stock units based on their grant-date fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award. No stock options were granted in 2015, 2014 or 2013. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options, non-vested stock, and employee stock purchase plans.
Income Taxes
The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized. See Note 6 of these Notes to Consolidated Financial Statements for further discussion.
Employee Benefits
The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees. The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto. Other retirement costs are funded at least annually. See Note 7 of these Notes to Consolidated Financial Statements for additional discussion.
Foreign Operations and Related Derivative Financial Instruments
The functional currencies of the Company’s foreign operations are the local currencies. Accordingly, assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of the year. Results of operations are translated at monthly average exchange rates. Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of Shareholders’ equity.
Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity. Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency. The Company recognized currency losses from transactions of $1,196 and $916 in 2015 and 2013, respectively, and currency gains from transactions of $427 in 2014, all of which were included in the “Other expense (income), net” line of the Company’s Consolidated Statements of Operations.
Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 18 % of the Company’s revenues for the year ended October 2, 2015 were denominated in currencies other than the U.S. dollar. Approximately 8 % were denominated in euros and approximately 6% were denominated in Canadian dollars, with the remaining 4 % denominated in various other foreign currencies. The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies. In 2015 the Company did not use foreign currency forward contracts. The Company does not enter into foreign exchange contracts for trading or speculative purposes.
Revenue Recognition
The Company recognizes revenue when all of the following criteria have been met:
·
Persuasive evidence of an arrangement exists. Contracts, internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.
·
All substantial risk of ownership transfers to the customer. Shipping documents and customer acceptance, when applicable, are used to verify delivery.
·
The fee is fixed or determinable. This is assessed based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.
·
Collectability is reasonably assured. Collectability is assessed based on the creditworthiness of the customer as determined by credit checks and analysis, as well as by the customer’s payment history.
Estimated costs of returns and allowances and discounts are accrued as a reduction to sales when revenue is recognized.
Advertising & Promotions
The Company expenses substantially all costs related to the production of advertising the first time the advertising takes place. Cooperative promotional arrangements are accrued as related revenue is earned.
Advertising and promotions expense in 2015 , 2014 and 2013 totaled $24,460 , $ 22,135 and $ 22,902 , respectively. These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $ 1,049 and $ 1,156 at October 2, 2015 and October 3, 2014, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.
Shipping and Handling Costs
Shipping and handling fees billed to customers are included in “Net sales.” Shipping and handling costs are included in “Marketing and selling expenses” and totaled $10,838 , $10,675 and $10,436 for 2015 , 2014 and 2013 , respectively.
Research and Development
The Company expenses research and development costs as incurred except for costs of software development for new electronic products which are capitalized once technological feasibility is established and are included in Furniture, Fixtures and Equipment. The gross amount capitalized related to software development was $ 26,487 , less accumulated amortization of $11,858 , at October 2, 2015 and $23,350 , less accumulated amortization of $ 9,324 , at October 3, 2014. These costs are amortized over the expected life of the software of three to seven years. Amortization expense related to capitalized software in 2015 , 2014 and 2013 was $2,535 , $ 2,045 and $ 1,268 , respectively, and is included in depreciation expense on plant, property and equipment.
Fair Values
The carrying amounts of cash, cash equivalents, accounts receivable, and accounts payable approximated fair value at October 2, 2015 and October 3, 2014 due to the short maturities of these instruments. During 2015, 2014 and 2013, the Company held investments in equity and debt securities that were carried at fair value. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.
Valuation Techniques
Rabbi Trust Assets
Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in “Other assets,” and are classified as trading securities. These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.
Goodwill and Other Intangible Assets
In assessing the recoverability of the Company's goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments to which the goodwill relates. When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any. In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.
See Note 2 of these Notes to Consolidated Financial Statements for disclosures regarding the fair value of long-term debt and Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding fair value measurements.
New Accounting Pronouncements
In May 2014, the FASB issued a new standard on revenue recognition from contracts with customers. This standard supersedes nearly all existing revenue recognition guidance and involves a five-step approach to recognizing revenue based on individual performance obligations in a contract. The new standard will also require additional qualitative and quantitative disclosures about the Company’s contracts with customers, any significant judgments made in applying the revenue guidance, and the Company’s assets recognized from the costs to obtain or fulfill a contract. This guidance becomes effective for the Company at the beginning of its 201 9 fiscal year. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated financial statements and its related disclosures.
In April 2015, the FASB issued ASU No. 2015-03, Interest - "Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The guidance requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the presentation for debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. In August 2015, the FASB issued ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcements at the June 2015 EITF Meeting. ASU 2015-15 amends Subtopic 835-30 to include that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of debt issuance costs over the term of the line-of-credit arrangement, whether or not there are any outstanding borrowings on the line-of-credit arrangement. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and must be applied on a retrospective basis with early adoption permitted. The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-12, "Plan Accounting—Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962) Health and Welfare Benefit Plans (Topic 965)". There are three parts to the ASU that aim to simplify the accounting and presentation of plan accounting. Part I of this ASU requires fully benefit-responsive investment contracts to be measured at contract value instead of the current fair value measurement. Part II of this ASU requires investments (both participant-directed and nonparticipant-directed investments) of employee benefit plans be grouped only by general type, eliminating the need to disaggregate the investments in multiple ways. Part III of this ASU provides a similar measurement date practical expedient for employee benefit plans as available in ASU No. 2015-04, which allows employers to measure defined benefit plan assets on a month-end date that is nearest to the year’s fiscal year-end when the fiscal period does not coincide with a month-end. Parts I and II of the new guidance should be applied on a retrospective basis. Part III of the new guidance should be applied on a prospective basis. This ASU is effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory," which amends ASC 330, Inventory. This ASU simplifies the subsequent measurement of inventory by using only the lower of cost and net realizable value. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and must be applied on a retrospective basis with early adoption permitted. The adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): "Simplifying the Accounting for Measurement-Period Adjustments," which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Under this ASU, acquirers must recognize measurement-period adjustments in the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This guidance is effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company does not anticipate the adoption of this standard will have a material impact on its Consolidated Financial Statements. |
