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

FORM 10-Q

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

For the quarterly period ended April 2, 2004

OR

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

For the transition period from _________ to _________

Commission file number 0-16255

JOHNSON OUTDOORS INC.
(Exact name of Registrant as specified in its charter)

Wisconsin 39-1536083
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

555 Main Street, Racine, Wisconsin 53403
(Address of principal executive offices)

(262) 631-6600
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [ X ]  No  [   ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes  [   ]  No  [ X ]

As of April 14, 2004, 7,553,084 shares of Class A and 1,222,297 shares of Class B common stock of the Registrant were outstanding.

JOHNSON OUTDOORS INC.

Index
 Page No.
PART I FINANCIAL INFORMATION

 		 Item 1. Financial Statements

 		 Consolidated Statements of Operations - Three months
and six months ended April 2, 2004 and March 28, 2003 1 

 		 Consolidated Balance Sheets - April 2, 2004, October
3, 2003 and March 28, 2003 2 

 		 Consolidated Statements of Cash Flows - Six months
ended April 2, 2004 and March 28, 2003 3 

 		 Notes to Consolidated Financial Statements 4 

 		 Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 

 		 Item 3. Quantitative and Qualitative Disclosures About Market Risk 16 

 		 Item 4. Controls and Procedures 16 

PART II		 OTHER INFORMATION

 		 Item 1. Legal Proceedings 16 

 		 Item 4. Submission of Matters to a Vote of Security Holders 16 

 		 Item 6. Exhibits and Reports on Form 8-K 17 

 		 Signatures 18 

 		 Exhibit Index 19 

PART I    FINANCIAL INFORMATION

Item 1.    Financial Statements

JOHNSON OUTDOORS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

(thousands, except per share data)
 Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net sales     $ 95,595   $ 83,265   $ 158,536   $ 138,160  
Cost of sales    53,316    47,072    89,287    78,284  
Gross profit    42,279    36,193    69,249    59,876  
Operating expenses:  
    Marketing and selling    21,133    19,034    37,439    33,485  
    Administrative management, finance and  
        information systems    9,461    8,372    16,465    15,806  
    Research and development    1,894    1,638    3,655    3,163  
    Amortization and write-down of intangibles    81    87    173    164  
    Profit sharing    1,024    938    1,486    968  
Total operating expenses    33,593    30,069    59,218    53,586  
Operating profit    8,686    6,124    10,031    6,290  
Interest income    (78 )  (225 )  (253 )  (578 )
Interest expense    1,058    1,339    2,437    2,710  
Other (income) expense, net    68    (2,115 )  (53 )  (2,471 )
Income before income taxes    7,638    7,125    7,900    6,629  
Income tax expense    2,842    2,828    2,944    2,612  
Net income   $ 4,796   $ 4,297   $ 4,956   $ 4,017  
Basic Earnings Per Common Share   $ 0.56   $ 0.51   $ 0.58   $ 0.48  
Diluted Earnings Per Common Share   $ 0.55   $ 0.50   $ 0.57   $ 0.47  

The accompanying notes are an integral part of the consolidated financial statements.











-1-

JOHNSON OUTDOORS INC.

CONSOLIDATED BALANCE SHEETS
(unaudited)

(thousands, except share data)
 April 2
2004
 October 3
2003
 March 28
2003
ASSETS                
Current assets:  
    Cash and temporary cash investments   $ 36,241   $ 88,910   $ 44,821  
    Accounts receivable, less allowance for doubtful  
        accounts of $4,187, $4,214 and $4,110,  
        respectively    80,646    43,104    71,520  
    Inventories, net    67,746    50,594    62,655  
    Deferred income taxes    6,900    6,392    4,985  
    Other current assets    7,075    6,135    6,245  
Total current assets    198,608    195,135    190,226  
Property, plant and equipment, net    30,806    31,023    29,795  
Deferred income taxes    18,733    18,637    19,520  
Intangible assets, net    30,241    29,573    28,930  
Other assets    3,022    3,289    2,822  
Total assets   $ 281,410   $ 277,657   $ 271,293  
LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities:  
    Short-term debt and current maturities of long-term  
        debt   $ 15,755   $ 9,587   $ 9,538  
    Accounts payable    18,348    15,627    20,715  
    Accrued liabilities:  
        Salaries and wages    9,378    8,899    7,119  
        Income taxes    1,491    499    5,009  
        Other    24,357    25,006    18,629  
Total current liabilities    69,329    59,618    61,010  
Long-term debt, less current maturities    51,365    67,886    68,488  
Other liabilities    6,629    5,959    5,599  
Total liabilities    127,323    133,463    135,097  
Shareholders' equity:  
    Preferred stock: none issued    --    --    --  
    Common stock:  
    Class A shares issued:  
        April 2, 2004, 7,553,084;  
        October 3, 2003, 7,382,979;  
        March 28, 2003, 7,194,649    378    369    360  
    Class B shares issued (convertible into Class A):  
        April 2, 2004, 1,222,297;  
        October 3, 2003, 1,222,647;  
        March 28, 2003, 1,222,647    61    61    61  
    Capital in excess of par value    52,026    50,093    48,277  
    Retained earnings    98,465    93,510    92,105  
    Contingent compensation    (45 )  (20 )  5  
    Accumulated other comprehensive income (loss)    3,202    181    (4,612 )
Total shareholders' equity    154,087    144,194    136,196  
Total liabilities and shareholders' equity   $ 281,410   $ 277,657   $ 271,293  

The accompanying notes are an integral part of the consolidated financial statements.

-2-

JOHNSON OUTDOORS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

(thousands)
 Six Months Ended
  
 April 2
2004
 March 28
2003
CASH USED FOR OPERATIONS            
Net income   $ 4,956   $ 4,017  
Adjustments to reconcile net income to net cash used for operating  
    activities:  
        Depreciation and amortization    3,905    3,981  
        Deferred income taxes    (558 )  139  
Change in assets and liabilities:  
    Accounts receivable, net    (36,617 )  (30,186 )
    Inventories, net    (16,167 )  (18,933 )
    Accounts payable and accrued liabilities    3,538    (5,413 )
    Other, net    (1,277 )  (5,159 )
     (42,220 )  (51,554 )
CASH USED FOR INVESTING ACTIVITIES  
Net additions to property, plant and equipment    (3,187 )  (3,351 )
     (3,187 )  (3,351 )
CASH USED FOR FINANCING ACTIVITIES  
Principal payments on senior notes and other long-term debt    (9,538 )  (8,038 )
Common stock transactions    1,501    620  
     (8,037 )  (7,418 )
Effect of foreign currency fluctuations on cash    775    6,314  
Decrease in cash and temporary cash investments    (52,669 )  (56,009 )
CASH AND TEMPORARY CASH INVESTMENTS  
Beginning of period    88,910    100,830  
End of period   $ 36,241   $ 44,821  

The accompanying notes are an integral part of the consolidated financial statements.








-3-

JOHNSON OUTDOORS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1 Basis of Presentation

  The consolidated financial statements included herein are unaudited. In the opinion of management, these statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Johnson Outdoors Inc. and its subsidiaries (the Company) as of April 2, 2004 and the results of operations for the three and six months ended April 2, 2004 and cash flows for the six months ended April 2, 2004. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2003.

  Because of seasonal and other factors, the results of operations for the three and six months ended April 2, 2004 are not necessarily indicative of the results to be expected for the full year.

  All monetary amounts, other than share and per share amounts, are stated in thousands.

  Certain amounts as previously reported have been reclassified to conform to the current period presentation.

2 Earnings per Share

  The following table sets forth the computation of basic and diluted earnings per common share:

Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net income for basic and diluted earnings per share     $ 4,796   $ 4,297   $ 4,956   $ 4,017  
Weighted average common shares outstanding    8,573,653    8,402,851    8,546,676    8,379,135  
Less nonvested restricted stock    3,211    6,895    4,020    7,813  
Basic average common shares    8,570,442    8,395,956    8,542,656    8,371,322  
Dilutive stock options and restricted stock    195,866    164,925    189,769    153,679  
Diluted average common shares    8,766,308    8,560,881    8,732,425    8,525,001  
Basic earnings per common share   $ 0.56   $ 0.51   $ 0.58   $ 0.48  
Diluted earnings per common share   $ 0.55   $ 0.50   $ 0.57   $ 0.47  

3 Stock-Based Compensation and Stock Ownership Plans

  The Company accounts for its stock-based compensation plans under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. The pro forma information below was determined using the fair value method based on provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, issued in December 2002.

-4-

JOHNSON OUTDOORS INC.

Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net income     $ 4,796   $ 4,297   $ 4,956   $ 4,017  
Total stock-based employee compensation expense  
     determined under fair value method for all  
     awards, net of tax    (58 )  (79 )  (78 )  (144 )
Pro forma net income   $ 4,738   $ 4,218   $ 4,878   $ 3,873  
Basic earnings per common share  
        As reported   $ 0.56   $ 0.51   $ 0.58   $ 0.48  
        Pro forma   $ 0.55   $ 0.50   $ 0.57   $ 0.46  
Diluted earnings per common share  
        As reported   $ 0.55   $ 0.50   $ 0.57   $ 0.47  
        Pro forma   $ 0.54   $ 0.50   $ 0.56   $ 0.46  

  The Company’s current stock ownership plans provide for the issuance of options to acquire shares of Class A common stock by key executives and non-employee directors. All stock options have been granted with an exercise price equal to or lower than the market price at the date of grant and become exercisable over periods of one to four years from the date of grant. Stock options generally have a term of 10 years. The current plans also allow for issuance of restricted stock or stock appreciation rights in lieu of options. Grants of restricted shares are not significant in any year presented.

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

Shares Weighted Average
Exercise Price
Outstanding at October 3, 2003      690,885   $ 8.80  
Granted    9,750    19.88  
Exercised    (144,368 )  8.16  
Cancelled    (30,334 )  19.82  
Outstanding at April 2, 2004    525,933   $ 8.55  

  Options to purchase 994,051 shares of Class A common stock with a weighted average exercise price of $9.12 per share were outstanding at March 28, 2003.

  The Company adopted a phantom stock plan during fiscal 2003. Under this plan, certain employees earn cash bonus awards based upon the performance of the Company’s Class A common stock.

-5-

JOHNSON OUTDOORS INC.

4 Pension Plans

  The components of net periodic benefit cost related to Company administered benefit plans for the three and six months ended April 2, 2004 and March 28, 2003 were as follows.

Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Components of net periodic benefit cost:                    
     Service cost   $ 144   $ 116   $ 287   $ 232  
     Interest on projected benefit obligation    222    220    443    439  
     Less estimated return on plan assets    191    170    382    338  
     Amortization of unrecognized:  
         Net loss    20    3    40    6  
         Prior service cost    6    6    13    13  
         Transition asset    (15 )  (18 )  (31 )  (35 )
 Net amount recognized   $ 186   $ 157   $ 370   $ 317  

5 New Accounting Pronouncements

  In December 2003, the FASB issued the revised SFAS No. 132, Employers’Disclosures about Pensions and Other Postretirement Benefits (SFAS 132). The revised SFAS 132 retains the disclosures required by the original issuance of SFAS 132 and requires additional annual disclosures describing the types of plan assets, investment strategy, measurement date, plan obligations and cash flows. The Company will include the revised SFAS 132 annual disclosures in its Annual Report on Form 10-K for the fiscal year ending October 1, 2004. The revised SFAS 132 also requires additional interim period disclosures, including the components of net periodic benefit cost and changes in planned contributions. As required, the Company has included the applicable interim period disclosures of the revised SFAS 132 in this Quarterly Report on Form 10-Q. (See Note 4 to these financial statements.)

6 Income Taxes

  The provision for income taxes includes deferred taxes and is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates.

7 Inventories

  Inventories at the end of the respective periods consist of the following:

 
 April 2
2004
 October 3
2003
 March 28
2003
Raw materials     $ 24,594   $ 19,009   $ 24,719  
Work in process    2,117    2,065    1,339  
Finished goods    44,244    33,362    39,452  
     70,955    54,436    65,510  
Less reserves    3,209    3,842    2,855  
    $ 67,746   $ 50,594   $ 62,655  

-6-

JOHNSON OUTDOORS INC.

8 Warranties

  The Company provides for warranties of certain products as they are sold in accordance with SFAS No. 5, Accounting for Contingencies. The following table summarizes the warranty activity for the six months ended April 2, 2004 and March 28, 2003.

2004 2003
Balance at beginning of fiscal period     $ 3,270   $ 1,846  
Expense accruals for warranties issued during the period    1,211    1,144  
Less current period warranty claims paid    1,283    1,043  
Balance at end of quarter   $ 3,198   $ 1,947  

9 Comprehensive Income

  Comprehensive income includes net income and changes in shareholders’ equity from non-owner sources. For the Company, the difference between net income and comprehensive income is due to cumulative foreign currency translation adjustments. Recent strengthening of the U.S. Dollar against the Euro has created the translation adjustment loss for the quarter ended April 2, 2004.

  Comprehensive income for the respective periods consists of the following:

Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net income     $ 4,796   $ 4,297   $ 4,956   $ 4,017  
Translation adjustment    (3,017 )  1,320    3,021    7,309  
Comprehensive income   $ 1,779   $ 5,617   $ 7,977   $ 11,326  

10 Segments of Business

  The Company conducts its worldwide operations through separate global business units, each of which represent major product lines. Operations are conducted in the United States and various foreign countries, primarily in Europe, Canada and the Pacific Basin. The Company’s Outdoor Equipment business recognized net sales to the United States Military that totaled approximately 14.3% and 12.5% of the Company’s total net sales during the three months ended April 2, 2004 and March 28, 2003, respectively, and 16.5% and 13.9% of the Company’s total net sales during the six months ended April 2, 2004 and March 28, 2003, respectively.

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

-7-

JOHNSON OUTDOORS INC.

  A summary of the Company’s operations by business unit is presented below:

Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net sales:                    
    Motors:  
        Unaffiliated customers   $ 31,662   $ 27,088   $ 49,596   $ 41,817  
        Interunit transfers    221    243    296    520  
    Outdoor equipment:  
        Unaffiliated customers    24,143    18,809    39,940    30,666  
        Interunit transfers    27    11    33    44  
    Watercraft:  
        Unaffiliated customers    19,620    19,599    31,845    31,333  
        Interunit transfers    73    350    288    525  
    Diving:  
        Unaffiliated customers    20,045    17,673    36,981    34,132  
        Interunit transfers    3    13    9    29  
    Other    125    96    174    212  
    Eliminations    (324 )  (617 )  (626 )  (1,118 )
    $ 95,595   $ 83,265   $ 158,536   $ 138,160  
Operating profit (loss):  
    Motors   $ 7,517   $ 4,296   $ 10,556   $ 5,873  
    Outdoor equipment    4,451    3,039    6,932    4,440  
    Watercraft    (2,062 )  (1,111 )  (5,573 )  (3,040 )
    Diving    3,065    3,157    4,750    5,183  
    Other    (4,285 )  (3,257 )  (6,634 )  (6,166 )
    $ 8,686   $ 6,124   $ 10,031   $ 6,290  
Total assets (end of period):  
    Motors           $ 48,056   $ 41,738  
    Outdoor equipment            32,534    28,855  
    Watercraft            71,971    74,379  
    Diving            100,601    87,409  
    Other            28,248    38,912  
        $281,410   $ 271,293  

11 Litigation

  The Company is subject to various legal actions and proceedings in the normal course of business, including those related to product liability and environmental matters. The Company is insured against loss for certain of these matters. Although litigation is subject to many uncertainties and the ultimate exposure with respect to these matters cannot be ascertained, management does not believe the final outcome of any pending litigation will have a material adverse effect on the financial condition, results of operations, liquidity or cash flows of the Company.

  On February 21, 2003, the Competition Department of the European Commission initiated formal proceedings in a case concerning certain provisions in the former distribution arrangements of the Company’s European SCUBAPRO UWATEC subsidiaries. On January 29, 2004, the Commission notified the Company of its decision to close the file without taking any further action.

  On December 22, 2003, the Company entered into a confidential settlement agreement with a former employee. Under the terms of the agreement the Company is entitled to receive up to $2.0 million. Any consideration received pursuant to the settlement agreement will be recorded in the quarter in which it occurs.

-8-

JOHNSON OUTDOORS INC.

12 Subsequent Events

  On May 5, 2004, the Company acquired all of the outstanding common stock of Techsonic Industries, Inc. and certain other assets from the parent company of Techsonic Industries, Inc., Teleflex Incorporated. The transaction was funded using existing cash on hand and short-term borrowings. The initial purchase price was approximately $28.0 million and is subject to a post-closing working capital adjustment. Techsonic Industries Inc. is a manufacturer and marketer of underwater sonar and GPS technology equipment. Techsonic Industries will be consolidated with the Company’s Motors segment. The Motors segment will be renamed the Marine Electronics Group and will be reported as such for the quarter ending July 2, 2004.

  On May 14, 2004, the Company received $1.7 million under the terms of a confidential settlement agreement with a former employee. This amount will be recorded in the Company’s third quarter. Additional consideration of up to $0.3 million may be received and will be recorded in the period in which it occurs.


Item 2    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc. and its subsidiaries (the Company) for the three and six months ended April 2, 2004 and March 28, 2003. This discussion should be read in conjunction with the consolidated financial statements and related notes that immediately precede this section, as well as the Company’s Annual Report on Form 10-K for the fiscal year ended October 3, 2003.

Forward Looking Statements

Certain matters discussed in this Form 10-Q are “forward-looking statements,” and the Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of those safe harbor provisions. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as the Company “expects,” “believes” or other words of similar meaning. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include changes in consumer spending patterns; the Company’s success in implementing its strategic plan, including its focus on innovation; actions of companies that compete with the Company; the Company’s success in managing inventory; movements in foreign currencies or interest rates; unanticipated issues related to the Company’s Military tent business; the success of suppliers and customers; the ability of the Company to deploy its capital successfully; unanticipated outcomes related to outstanding litigation matters; and adverse weather conditions. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Overview

The Company is a leading global outdoor recreation company that turns ideas into adventure with innovative, top-quality products. The Company designs, manufactures and markets a portfolio of consumer-preferred brands across four categories: Motors, Outdoor Equipment, Watercraft and Diving. Johnson Outdoors’ familiar brands include, among others: Minn Kota® motors; Eureka!® tents; Old Town® canoes and kayaks; Ocean Kayak™, Necky™ and Dimension® kayaks; and SCUBAPRO®, SnorkelPro and UWATEC® dive equipment. As of April 30, 2004, the Company had 24 locations around the world, and employed 1,400 people. The Company reported annual sales of $315.9 million in fiscal 2003.

-9-

JOHNSON OUTDOORS INC.

The Company’s primary focus is innovation — meeting consumer needs with breakthrough products that stand apart from the competition and advance the Company’s strong brand names. Its subsidiaries are organized in a network that is intended to promote entrepreneurialism and leverage best practices and synergies, following the strategic vision set by senior managers and approved by the Company’s Board of Directors.

The Company’s primary selling period takes place in its second and third fiscal quarters. The table below sets forth a historical view of the Company’s seasonality.

Year Ended
 October 3, 2003
 September 27, 2002
Quarter Ended Net
Sales		 Operating
Profit (Loss)		 Net
Sales		 Operating
Profit (Loss)
December      17 %  1 %  17 %  5 %
March    27    53    29    42  
June    34    77    34    66  
September    22    (31 )  20    (13 )
     100 %  100 %  100 %  100 %

Results of Operations

The Company’s sales and operating earnings by segment are summarized as follows:

(millions)
 Three Months Ended
 Six Months Ended
 April 2
2004
 March 28
2003
 April 2
2004
 March 28
2003
Net sales:                    
    Motors   $ 31.9   $ 27.3   $ 49.9   $ 42.3  
    Outdoor equipment    24.2    18.8    40.0    30.7  
    Watercraft    19.7    19.9    32.1    31.9  
    Diving    20.0    17.7    37.0    34.2  
    Other/eliminations    (0.2 )  (0.4 )  (0.5 )  (0.9 )
Total   $ 95.6   $ 83.3   $ 158.5   $ 138.2  
Operating profit:  
    Motors   $ 7.5   $ 4.3   $ 10.6   $ 5.9  
    Outdoor equipment    4.5    3.0    6.9    4.4  
    Watercraft    (2.1 )  (1.1 )  (5.6 )  (3.0 )
    Diving    3.1    3.2    4.8    5.2  
    Other/eliminations    (4.3 )  (3.3 )  (6.7 )  (6.2 )
Total   $ 8.7   $ 6.1   $ 10.0   $ 6.3  

See Note 10 in the notes to the consolidated financial statements for the definition of segment net sales and operating profits.

Net sales on a consolidated basis for the three months ended April 2, 2004 totaled $95.6 million, an increase of 14.8% or $12.3 million, compared to $83.3 million in the three months ended March 28, 2003. Foreign currency translations favorably impacted quarterly sales by $2.6 million. Three of the Company’s business units had sales growth over the prior year. The Motors business sales increased $4.6 million, or 16.7%, to $31.9 million as a result of sales of new products as well as continued distribution channel expansion. Sales for the Outdoor Equipment business increased $5.4 million, or 28.6%, to $24.2 million. Military sales in the current fiscal year accounted for this growth. The Company does not necessarily expect the same level of growth in Military sales in future years. The Watercraft business sales declined $0.2 million, or 1.3%, to $19.7 million. The Diving business sales increased $2.3 million, or 13.4%, to $20.0 million helped primarily by the strengthening of the Euro against the U.S. Dollar.

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JOHNSON OUTDOORS INC.

Net sales for the six months ended April 2, 2004 totaled $158.5 million, an increase of 14.7% or $20.3 million, compared to $138.2 million in the six months ended March 28, 2003. Foreign currency translations favorably impacted year-to-date sales by $5.2 million. All four of the Company’s business units had sales growth over the prior year. The Motors business sales increased $7.6 million, or 17.8%, to $49.9 million as a result of sales of new products as well as continued distribution channel expansion. Sales for the Outdoor Equipment business increased $9.3 million, or 30.2%, to $40.0 million mainly as a result of strength in Military sales. The Watercraft business sales increased $0.2 million, or 0.9%, to $32.1 million. The Diving business sales increased $2.8 million, or 8.3%, to $37.0 million, helped primarily by the strengthening of the Euro against the U.S. Dollar.

Relative to the U.S. dollar, the average values of most currencies of the countries in which the Company has operations were higher for the three months and six months ended April 2, 2004 as compared to the corresponding period of the prior year. The Diving business in particular was favorably impacted by foreign currency movements. The favorable impact of foreign currency movements on Companywide net sales was 3.1% and 3.5% for the three and six months ended April 2, 2004

Gross profit as a percentage of sales was 44.2% for the three months ended April 2, 2004 compared to 43.5% in the corresponding period in the prior year. Margins in the Motors and Diving businesses were improved over the prior year, while the Outdoor Equipment margins declined as expected on lower margin Military contracts and Watercraft business saw margins decline 2.3 percentage points due to continued operational efficiency issues, including unfavorable labor variances and unfavorable absorption variances.

The Motors business improved margins by 7.7 percentage points over the year ago quarter primarily from new products and product mix. The Diving business improved margins by 4.3 percentage points over the year ago quarter, primarily through manufacturing efficiencies and currency gains.

Gross profit as a percentage of sales was 43.7% for the six months ended April 2, 2004 compared to 43.3% in the corresponding period in the prior year. Margin improvements in the Motors and Diving businesses helped to offset declines in margins in the Outdoor Equipment and Watercraft businesses.

The Company recognized operating profit of $8.7 million for the three months ended April 2, 2004 compared to an operating profit of $6.1 million for the corresponding period of the prior year.

Operating profit improved when compared to the prior year. For the six months ended April 2, 2004 operating profit was $10.0 million compared to operating profit in the prior year period of $6.3 million. Higher sales in the Motors and Outdoor Equipment businesses and gross profit improvements in the Motors and Diving businesses drove the increase in operating profits. Watercraft operating profit was substantially below prior year, due to soft market conditions and operating inefficiencies.

Interest expense totaled $1.1 million for the three months ended April 2, 2004 compared to $1.3 million for the corresponding period of the prior year. In the current year, the Company benefited from scheduled reductions in overall debt. Interest expense totaled $2.4 million for the six months ended April 2, 2004 compared to $2.7 million for the corresponding period of the prior year.

Foreign currency gains (losses) realized from transactions were ($0.1) million for both the three and six months ended April 2, 2004 and $2.7 and $3.0 million in the corresponding periods of the prior year.

The Company’s effective tax rate for the six months ended April 2, 2004 was 37.3%, compared to 39.4% for the corresponding period of the prior year, primarily due to the geographic mix of earnings.

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JOHNSON OUTDOORS INC.

Net Income

Net income for the three months ended April 2, 2004 was $4.8 million, or $0.55 per diluted share, compared to $4.3 million, or $0.50 per diluted share, for the corresponding period of the prior year.

Net income for the six months ended April 2, 2004 was $5.0 million, or $0.57 per diluted share, compared to $4.0 million, or $0.47 per diluted share, for the corresponding period of the prior year.

Going Private Proposal

On February 20, 2004, the Company received a nonbinding proposal to acquire outstanding shares of Class A and Class B common stock of the Company for a cash price of $18.00 per share. The proposal is from Samuel C. Johnson (majority shareholder and director of the Company) and Helen P. Johnson-Leipold (Chairman and Chief Executive Officer and director of the Company) and pertains to all shares of the Company not already owned by them, any member of their family or entities controlled by them.

According to the proposal, the intent is to return full ownership in the Company to the Johnson family, and for all other holders of outstanding common stock to receive cash for their shares, through a negotiated merger transaction. The proposal also states that Mr. Johnson and Ms. Johnson–Leipold have no interest in selling their shares and will not support an alternative transaction. The proposal further states that no changes are anticipated in the Company’s current business as a result of the proposed transaction.

In response to the proposal, the Board of Directors of the Company has appointed a special committee of independent directors to evaluate the proposal on behalf of the Company. The members of the special committee are Thomas F. Pyle, Jr., Terry E. London and John M. Fahey, Jr. The special committee has retained its own independent financial and legal advisors. The special committee is currently evaluating the proposal.

Subsequent Events

On May 5, 2004, the Company acquired all of the outstanding common stock of Techsonic Industries, Inc. and certain other assets from the parent company of Techsonic Industries, Inc., Teleflex Incorporated. The transaction was funded using existing cash on hand and short-term borrowings. The initial purchase price was approximately $28.0 million and is subject to a post-closing working capital adjustment. Techsonic Industries Inc. is a manufacturer and marketer of underwater sonar and GPS technology equipment. Techsonic Industries will be consolidated with the Company’s Motors segment. The Motors segment will be renamed the Marine Electronics Group and will be reported as such for the quarter ending July 2, 2004.

The Company will file additional information pertaining to the acquisition of Techsonic Industries, Inc. as required on Form 8-K.

On May 14, 2004, the Company received $1.7 million under the terms of a confidential settlement agreement with a former employee. This amount will be recorded in the Company’s third quarter. Additional consideration of up to $0.3 million may be received and will be recorded in the period in which it occurs.






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JOHNSON OUTDOORS INC.

Financial Condition

The Company’s cash flow from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, is summarized in the following table:

(millions)
 Three Months Ended
  
 April 2
2004
 March 28
2003
Cash used for:            
    Operating activities   $ (42.2 ) $ (51.6 )
    Investing activities    (3.2 )  (3.4 )
    Financing activities    (8.0 )  (7.4 )
    Effect of exchange rate changes    0.8    6.3  
Decrease in cash and temporary cash investments   $ (52.7 ) $ (56.0 )

As of the end of the Company’s second fiscal quarter, it is heavily invested in operating assets to support the Company’s selling season, which is strongest in the second and third quarters of the Company’s fiscal year.

The Company’s debt to equity ratio has declined to 30% as of April 2, 2004 from 36% as of March 28, 2003, reflective of further strengthening the Company’s liquidity and strategic flexibility.

Operating Activities

Cash flows used for operations totaled $42.2 million for the six months ended April 2, 2004 compared with $51.6 million used for operations for the corresponding period of the prior year.

Accounts receivable increased $36.6 million for the six months ended April 2, 2004, compared to an increase of $30.2 million in the year ago period. Inventories increased by $16.2 million for the six months ended April 2, 2004 compared to an increase of $18.9 million in the prior year period. The inventory build in the current year is primarily related to a build-up of products for the Diving business and timing of Military tent orders in the Outdoor Equipment business. The Company believes it is producing products at levels adequate to meet expected customer demand.

Accounts payable and accrued liabilities increased $3.5 million for the six months ended April 2, 2004 versus a decrease of $5.4 million for the corresponding period of the prior year. This change is due to the timing of the settlement of short term accrued obligations.

Depreciation and amortization charges were $3.9 million for the six months ended April 2, 2004 and $4.0 million for the corresponding period of the prior year.

Investing Activities

Cash used for investing activities, consisting solely of expenditures for property, plant and equipment, totaled $3.2 million for the six months ended April 2, 2004 versus $3.4 million for the corresponding period of the prior year. The Company’s recurring investments are made primarily for tooling for new products and enhancements. In 2004, capitalized expenditures are anticipated to be in line with prior year levels. These expenditures are expected to be funded by working capital or existing credit facilities.

Financing Activities

Cash flows used for financing activities totaled $8.0 million for the six months ended April 2, 2004 and $7.4 million for the corresponding period of the prior year. The Company made principal payments on senior notes and other long-term debt of $9.5 million and $8.0 million in November 2003 and 2002, respectively.

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JOHNSON OUTDOORS INC.

In addition to cash generated by operating activities, the Company has access to existing financing sources, including its $70.0 million unsecured revolving credit facility. This facility expires in August 2004. The Company expects to pursue a renewal of this facility. At April 2, 2004, the Company had no outstanding borrowings on this credit agreement.

Obligations and Off Balance Sheet Arrangements

The Company has obligations and commitments to make future payments under debt and operating leases. The following schedule details these obligations at April 2, 2004.

(millions)
 Payment Due by Fiscal Years
Total Remaining
2004		 2005/2006 2007/2008 After 2008
Long-term debt (1)     $ 67.1   $ 0.1   $ 29.2   $ 27.8   $ 10.0  
Operating lease obligations    18.6    2.6    7.3    4.1    4.6  
Outstanding purchase orders    36.2    36.2    --    --    --  
Total contractual obligations   $ 122.2   $ 38.9   $ 36.5   $ 31.9   $ 14.6  

(1)     Excludes fair value adjustment of hedged debt.

The Company also utilizes letters of credit for trade financing purposes. Letters of credit outstanding at April 2, 2004 total $1.9 million.

The Company has no off-balance sheet arrangements.

Market Risk Management

The Company is exposed to market risk stemming from changes in foreign exchange rates, interest rates and, to a lesser extent, commodity prices. Changes in these factors could cause fluctuations in earnings and cash flows. The Company may reduce exposure to certain of these market risks by entering into hedging transactions authorized under Company policies that place controls on these activities. Hedging transactions involve the use of a variety of derivative financial instruments. Derivatives are used only where there is an underlying exposure, not for trading or speculative purposes.

Foreign Operations

The Company has significant foreign operations, for which the functional currencies are denominated primarily in Euros, Swiss francs, Japanese yen and Canadian dollars. As the values of the currencies of the foreign countries in which the Company has operations increase or decrease relative to the U.S. Dollar, the sales, expenses, profits, assets and liabilities of the Company’s foreign operations, as reported in the Company’s consolidated financial statements, increase or decrease, accordingly. The Company has in the past mitigated a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments, primarily for purchases of inventory and other assets denominated in foreign currencies; however, no such transactions were entered into during fiscal 2003 or the first two quarters of fiscal 2004.

Interest Rates

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

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JOHNSON OUTDOORS INC.

Commodities

Certain components used in the Company’s products are exposed to commodity price changes. The Company manages this risk through instruments such as purchase orders and non-cancelable supply contracts. Primary commodity price exposures are metals, plastics and packaging materials.

Sensitivity to Changes in Value

The estimates that follow are intended to measure the maximum potential fair value or earnings the Company could lose in one year from adverse changes in market interest rates under normal market conditions. The calculations are not intended to represent actual losses in fair value or earnings that the Company expects to incur. The estimates do not consider favorable changes in market rates. The table below presents the estimated maximum potential one year loss in fair value of debt and earnings before income taxes from a 100 basis point movement in interest rates on the senior notes outstanding at April 2, 2004:

(millions)
 Estimated Impact on
Fair Value Earnings Before
Income Taxes
Interest rate instruments     $ 1.3   $ 0.7  

The Company has outstanding $67.0 million in unsecured senior notes as of April 2, 2004. The senior notes have interest rates that range from 6.98% to 7.82% and principal payments through December 2008. The fair market value of the Company’s fixed rate debt was $75.2 million as of April 2, 2004.

The Company has entered into interest rate swap agreements on a portion of its senior notes. As of April 2, 2004, the notional amount of the swaps was $4.2 million. The swap agreements effectively reduced interest rates to a range of 4.55% to 3.90% on the notional amounts. The swap agreements expire in fiscal year 2005. The fair market value of the Company’s swap agreements was less than $0.1 million as of April 2, 2004.

On November 6, 2003, the Company terminated the swap instruments relating to the 1998 and 2001 debt instruments. The Company realized gains on the 1998 and 2001 instruments of $0.2 million and $0.7 million, respectively. The gains are being amortized as a reduction in interest expense over the remaining life of the underlying debt instruments.

Other Factors

The Company has not been significantly impacted by inflationary pressures over the last several years. The Company anticipates that changing costs of basic raw materials may impact future operating costs and, accordingly, the prices of its products. The Company is involved in continuing programs to mitigate the impact of cost increases through changes in product design and identification of sourcing and manufacturing efficiencies. Price increases and, in certain situations, price decreases are implemented for individual products, when appropriate.

Critical Accounting Policies and Estimates

The Company’s critical accounting policies are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending October 3, 2003 in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Critical Accounting Policies and Estimates.” There were no significant changes to the Company’s critical accounting policies during the three and six months ended April 2, 2004.

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JOHNSON OUTDOORS INC.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Information with respect to this item is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the heading “Market Risk Management.”

Item 4.    Controls and Procedures

(a) As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company (including consolidated subsidiaries) was made known to them by others within those entities, particularly during the period in which this Form 10-Q was being prepared.

(b) There were no changes in internal control over financial reporting that occurred during the quarter ended April 2, 2004 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1.    Legal Proceedings

On February 21, 2003, the Competition Department of the European Commission initiated formal proceedings in a case concerning certain provisions in the former distribution arrangements of the Company’s European SCUBAPRO UWATEC subsidiaries. On January 29, 2004, the Commission notified the Company of its decision to close the file without taking any further action.

Item 4.    Submission of Matters to a Vote of Security Holders

At the Company’s reconvened Annual Meeting held on March 9, 2004, the shareholders voted to elect the following individuals as directors for terms that expire at the next annual meeting:

Votes Cast
For (1)		 Votes
Withheld (1)		 Abstentions Broker
Non-Votes
Class A Directors:        
    Terry E. London 6,910,969  79,373  0  0 
    John M. Fahey, Jr 6,911,769  78,573  0  0 
Class B Directors:
    Samuel C. Johnson 1,202,745  0  0  0 
    Helen P. Johnson-Leipold 1,202,745  0  0  0 
    Thomas F. Pyle, Jr 1,202,745  0  0  0 
    Gregory E. Lawton 1,202,745  0  0  0 




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JOHNSON OUTDOORS INC.

At the Company’s reconvened Annual Meeting held on March 9, 2004, the shareholders voted to approve proposals related to the Company’s stock plans as set forth below:

Votes Cast
For (1)		 Votes Cast
Against (1)		 Abstentions Broker
Non-Votes
Proposal regarding the amendment to the 17,015,138  359,482  190,206  1,452,966 
    Johnson Outdoors Inc. 1987 Employees'
    Stock Purchase Plan to allow
    participation by certain highly
    compensated employees
Proposal to approve the Johnson Outdoors
    Inc. 2003 Non-Employee Director Stock
    Ownership Plan 17,255,995  126,056  182,775  1,452,966 

(1) Votes cast for or against and abstentions with respect to the proposals reflect that holders of Class B shares are entitled to 10 votes per share for matters other than the election of directors.

Item 6.    Exhibits and Reports on Form 8-K

(a)      The following exhibits are filed as part of this Form 10-Q:

  2.1 Stock Purchase Agreement by and between Johnson Outdoors Inc. and TFX Equities Incorporated.

  2.2 Intellectual Property Purchase Agreement by and among Johnson Outdoors, Inc., Technology Holding Company II and Teleflex Incorporated.

  10.1 Johnson Outdoors Inc. 1987 Employees' Stock Purchase Plan, as amended.

  10.2 Johnson Outdoors Inc. 2003 Non-Employee Director Stock Ownership Plan.

  31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  32 Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K:

  On January 12, 2004, the Company filed a Current Report on Form 8-K, dated January 12, 2004, furnishing under Item 12, the Company’s press release relating to a five-year Military tent contract.

  On January 29, 2004, the Company filed a Current Report on Form 8-K, dated January 29, 2004, furnishing under Item 12, the Company’s earnings press release for the reporting period ended January 2, 2004.

  On February 20, 2004, the Company filed a Current Report on Form 8-K, dated February 20, 2004, furnishing under Item 9, the Company’s press release relating to a nonbinding proposal to acquire outstanding shares of the Company received from Helen P. Johnson-Leipold and Samuel C. Johnson.



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JOHNSON OUTDOORS INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

JOHNSON OUTDOORS INC.

Signatures Dated: May 17, 2004

 		 /s/ Helen P. Johnson-Leipold
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer


 		 /s/ Paul A. Lehmann
Paul A. Lehmann
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)










-18-

Exhibit Index to Quarterly Report on Form 10-Q

Exhibit
Number    Description

2.1 Stock Purchase Agreement by and between Johnson Outdoors Inc. and TFX Equities Incorporated.

2.2 Intellectual Property Purchase Agreement by and among Johnson Outdoors, Inc., Technology Holding Company II and Teleflex Incorporated.

10.1 Johnson Outdoors Inc. 1987 Employees’ Stock Purchase Plan, as amended.

10.2 Johnson Outdoors Inc. 2003 Non-Employee Director Stock Ownership Plan.

31.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.