jout-20231229

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 29, 2023

☐ 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 incorporation or organization)						(I.R.S. Employer Identification No.)

555 Main Street, Racine, Wisconsin 53403

(Address of principal executive offices)

(262) 631-6600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, $.05 par value per share	JOUT	NASDAQ Global Select MarketSM

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act: Large accelerated filer ☐Accelerated filer ☒Non-accelerated filer ☐Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 26, 2024, 9,075,928 shares of Class A and 1,207,760 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

		Condensed Consolidated Statements of Operations - Three months ended December 29 , 2023 and Decembe r 30 , 2022	- 1

		Condensed Consolidated Statements of Comprehensive Income - Three months ended December 29, 2023 and December 30, 2022	- 2

		Condensed Consolidated Balance Sheets - D ecember 29 , 2023, September 29, 2023 , and December 30 , 2022	- 3

		Condensed Consolidated Statements of Shareholders' Equity - Three months ended December 29, 2023 and December 30, 2022	- 4

		Condensed Consolidated Statements of Cash Flows - Three months ended December 29, 2023 and December 30, 2022	- 5

		Notes to Condensed Consolidated Financial Statements	- 6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	- 19

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	- 24

	Item 4.	Controls and Procedures	- 24

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	- 25

	Item 1A.	Risk Factors	- 25

	Item 5.	Other Information	- 25

	Item 6.	Exhibits	- 25

		Signatures	- 25

		Exhibit Index	- 26


Index			JOHNSON OUTDOORS INC.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended
(thousands, except per share data)	December 29, 2023		December 30, 2022
Net sales	$	138,644	$	178,337
Cost of sales	85,790		115,558
Gross profit	52,854		62,779
Operating expenses:
Marketing and selling	30,342		33,498
Administrative management, finance and information systems	14,401		16,284

Research and development	8,065		7,525
Total operating expenses	52,808		57,307
Operating profit	46		5,472
Interest income	(1,198)		(827)
Interest expense	38		37
Other income, net	(4,693)		(1,904)
Profit before income taxes	5,899		8,166
Income tax expense	1,944		2,287
Net income	$	3,955	$	5,879

Weighted average common shares - Basic:
Class A	8,988		8,939
Class B	1,208		1,208
Participating securities	24		21
Weighted average common shares - Dilutive	10,220		10,168
Net income per common share - Basic:
Class A	$	0.39	$	0.58
Class B	$	0.35	$	0.53
Net income per common share - Diluted:
Class A	$	0.38	$	0.57
Class B	$	0.38	$	0.57

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

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Index			JOHNSON OUTDOORS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended
(thousands)	December 29, 2023		December 30, 2022
Net income	$	3,955	$	5,879
Other comprehensive income:
Foreign currency translation	3,059		2,937
Unrealized gain on available-for-sale securities, net of tax	102		—
Change in pension plans, net of tax	7		8
Total other comprehensive income	3,168		2,945
Total comprehensive income	$	7,123	$	8,824

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

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Index			JOHNSON OUTDOORS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


(thousands, except share data)	December 29, 2023		September 29, 2023		December 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	80,461	$	111,854	$	103,422
Short term investments	29,094		26,764		—
Accounts receivable, net	83,043		43,159		120,553
Inventories	267,321		261,474		251,525
Other current assets	16,305		15,405		11,024
Total current assets	476,224		458,656		486,524
Investments	4,668		13,943		—
Property, plant and equipment, net of accumulated depreciation of $180,947, $177,426 and $176,501, respectively	94,369		94,353		91,803
Right of use assets	51,852		50,746		55,647
Deferred income taxes	18,754		18,352		11,455
Goodwill	11,189		11,172		11,167
Other intangible assets, net	8,448		8,472		8,306
Other assets	27,179		25,912		24,194
Total assets	$	692,683	$	681,606	$	689,096
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	43,403	$	42,744	$	57,058
Current lease liability	7,284		7,009		7,510
Accrued liabilities:
Salaries, wages and benefits	18,348		16,741		18,022
Accrued warranty	10,986		11,741		9,698
Accrued discounts and returns	9,232		8,176		6,253
Accrued customer programs	3,934		3,774		3,943
Other	10,880		13,821		14,954
Total current liabilities	104,067		104,006		117,438
Non-current lease liability	46,239		45,335		49,519
Deferred income taxes	2,008		1,838		1,849
Retirement benefits	1,653		1,588		1,610
Deferred compensation liability	27,337		24,607		22,684
Other liabilities	7,509		4,495		1,775
Total liabilities	188,813		181,869		194,875
Shareholders’ equity:
Common stock:
Class A shares issued and outstanding: 9,076,240, 9,043,189 and 9,033,439, respectively	455		453		453
Class B shares issued and outstanding: 1,207,760, 1,207,760 and 1,207,798, respectively	61		61		61
Capital in excess of par value	88,830		88,234		86,923
Retained earnings	410,182		409,574		405,574
Accumulated other comprehensive income	6,491		3,323		3,565
Treasury stock at cost, shares of Class A common stock: 30,003, 25,342 and 31,265, respectively	(2,149)		(1,908)		(2,355)
Total shareholders’ equity	503,870		499,737		494,221
Total liabilities and shareholders’ equity	$	692,683	$	681,606	$	689,096

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

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Index			JOHNSON OUTDOORS INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited)


Three Months Ended December 29, 2023
(thousands except for shares)	Shares	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
BALANCE AT SEPTEMBER 29, 2023	10,250,949	$	514	$	88,234	$	409,574	$	3,323	$	(1,908)
Net income	—	—		—		3,955		—		—
Dividends declared	—	—		—		(3,347)		—		—


Award of non-vested shares	37,712	2		(2)		—		—

Stock-based compensation	—	—		598		—		—		—

Currency translation adjustment	—	—		—		—		3,059		—
Unrealized gain (loss) on available-for-sale securities, net of tax	—	—		—		—		102		—
Change in pension plans, net of tax of $3	—	—		—		—		7		—

Purchase of treasury stock at cost	(4,661)	—		—		—		—		(241)

BALANCE AT DECEMBER 29, 2023	10,284,000	$	516	$	88,830	$	410,182	$	6,491	$	(2,149)


Three Months Ended December 30, 2022
(thousands except for shares)	Shares	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock
BALANCE AT SEPTEMBER 30, 2022	10,192,051	$	512	$	87,351	$	402,821	$	620	$	(3,290)
Net income	—	—		—		5,879		—		—
Dividends declared	—	—		—		(3,126)		—		—

Award of non-vested shares	56,799	2		(1,381)		—		—		1,379

Stock-based compensation	—	—		953		—		—		—

Currency translation adjustment	—	—		—		—		2,937		—

Change in pension plans, net of tax of $3	—	—		—		—		8		—

Purchase of treasury stock at cost	(7,613)	—		—		—		—		(444)

BALANCE AT DECEMBER 30, 2022	10,241,237	$	514	$	86,923	$	405,574	$	3,565	$	(2,355)

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

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Index			JOHNSON OUTDOORS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


Cash paid for taxes	Three Months Ended
(thousands)	December 29, 2023		December 30, 2022
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net income	$	3,955	$	5,879
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation	4,945		3,697
Amortization of intangible assets	82		66
Amortization of deferred financing costs	9		9


Stock based compensation	598		953
(Gain) loss on disposal of productive assets	(1,917)		71

Deferred income taxes	(349)		9
Change in operating assets and liabilities:
Accounts receivable, net	(39,474)		(28,166)
Inventories, net	(4,093)		(1,214)
Accounts payable and accrued liabilities	(770)		2,308
Other current assets	(862)		(1,055)

Other long-term liabilities	4,474		(196)
Other, net	(285)		69
	(33,687)		(17,570)
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES


Proceeds from maturity of short-term investments	7,500		—
Proceeds from sale of productive assets	2,189		—
Capital expenditures	(5,004)		(6,649)
	4,685		(6,649)
CASH USED FOR FINANCING ACTIVITIES




Dividends paid	(3,347)		(3,126)
Purchases of treasury stock	(241)		(444)
	(3,588)		(3,570)
Effect of foreign currency rate changes on cash	1,197		1,408
Decrease in cash and cash equivalents	(31,393)		(26,381)
CASH AND CASH EQUIVALENTS
Beginning of period	111,854		129,803
End of period	$	80,461	$	103,422

Supplemental Disclosure:
Cash paid for taxes	$	1,093	$	737

Cash paid for interest	28		28
Non-cash treasury stock activity	—		1,379

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

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Index			JOHNSON OUTDOORS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1 BASIS OF PRESENTATION

The condensed consolidated financial statements included herein are unaudited. In the opinion of management, these statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Johnson Outdoors Inc. and subsidiaries (collectively, the “Company”) as of December 29, 2023 and December 30, 2022, and their results of operations for the three month periods then ended and cash flows for the three month periods then ended. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2023 which was filed with the Securities and Exchange Commission on December 8, 2023.

Certain reclassifications have been made to prior year financial statements to conform to the current year financial statement presentation. These reclassifications had no effect on net earnings.

Due to seasonal variations and other factors, some of which are described herein, the results of operations for the three months ended December 29, 2023 are not necessarily indicative of the results to be expected for the Company’s full 2024 fiscal year. The current economic and business environment, including the level of demand in the consumer markets for outdoor recreation products, seasonality effects, and end consumer purchasing actions, all stemming therefrom, is beyond our control and remains highly uncertain and cannot be predicted at this time.

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

2 ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts of $1,108, $907 and $1,151 as of December 29, 2023, September 29, 2023 and December 30, 2022, respectively. The determination of the allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns about a receivable exist, a reserve is established to value the affected account receivable at an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of accounts receivable outstanding for each business segment. 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.

3 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 which receive non-forfeitable dividends are classified as participating securities and 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.

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Index			JOHNSON OUTDOORS INC.

For the three month periods ended December 29, 2023 and December 30, 2022, basic income per share for the Class A and Class B shares has been presented using the two class method and reflects the allocation of undistributed income 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 (“stock units” or “units”) and non-vested restricted stock. Anti-dilutive stock options, 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 and units is excluded and diluted loss per share is equal to basic loss per share for both classes of stock.

For the three month periods ended December 29, 2023 and December 30, 2022, diluted net income per share reflects the effect of dilutive stock units and assumes the conversion of Class B common stock into Class A common stock.

Shares of 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 63,061 and 60,390 for the three months ended December 29, 2023 and December 30, 2022, respectively. Stock units that could potentially dilute earnings per share in the future and which were not included in the fully diluted computation because they would have been anti-dilutive were 65,228 and 53,699 for the three months ended December 29, 2023 and December 30, 2022, respectively.

Dividends per share

Dividends per share for the three month periods ended December 29, 2023 and December 30, 2022 were as follows:


	Three Months Ended
	December 29, 2023		December 30, 2022
Dividends declared per common share:
Class A	$	0.33	$	0.31
Class B	$	0.30	$	0.28

4 STOCK-BASED COMPENSATION AND STOCK OWNERSHIP PLANS

The Company’s current stock ownership plans allow for issuance of stock options to acquire shares of Class A common stock by key executives and non-employee directors. Current plans also allow for issuance of shares of restricted stock, restricted stock units or stock appreciation rights in lieu of stock options.

Under the Company’s 2023 Non-Employee Director Stock Ownership Plan and the 2020 Long-Term Incentive Plan (the only plans where shares currently remain available for future equity incentive awards) there were a total of 413,176 shares of the Company’s Class A common stock available for future grant to non-employee directors and key executives at December 29, 2023. Share awards previously made under the Company's 2012 Non-Employee Director Stock Ownership Plan and its 2010 Long-Term Stock Incentive Plan, which no longer allow for additional share grants, also remain outstanding.

Non-vested Stock

All shares of non-vested restricted stock awarded by the Company have been granted in the form of shares of Class A common stock at their fair market value on the date of grant and vest within one year from the date of grant for stock granted to directors and four years from the date of grant for stock granted to officers and employees. The fair value at date of grant is based on the number of shares granted and the average of the Company’s high and low Class A common stock price on the date of grant or, if the Company’s Class A shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock price on the last preceding date on which the Company’s Class A shares traded.

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Index			JOHNSON OUTDOORS INC.

A summary of non-vested stock activity for the three months ended December 29, 2023 related to the Company’s stock ownership plans is as follows:


	Shares	Weighted Average Grant Price
Non-vested stock at September 29, 2023	61,242	$	66.48
Non-vested stock grants	16,836	54.21
Restricted stock vested	(7,478)	63.88

Non-vested stock at December 29, 2023	70,600	63.83

Non-vested stock grantees may elect to reimburse the Company for withholding taxes due as a result of the vesting of shares by tendering a portion of the vested shares back to the Company. Shares tendered back to the Company were 2,330 and 2,289 during the three month periods ended December 29, 2023 and December 30, 2022, respectively.

Stock compensation expense, net of forfeitures, related to non-vested stock was $428 and $456 for the three month periods ended December 29, 2023 and December 30, 2022, respectively. Unrecognized compensation cost related to non-vested stock as of December 29, 2023 was $2,385, which amount will be amortized to expense through December 2027 or adjusted for changes in future estimated or actual forfeitures.

The fair value of restricted stock vested during the three month periods ended December 29, 2023 and December 30, 2022 was $409 and $429, respectively.

Restricted Stock Units

All restricted stock units (RSUs) awarded by the Company have been granted in the form of units payable in shares of Class A common stock upon vesting. The units are valued at the fair market value of a share of Class A common stock on the date of grant and vest within one year from the date of grant for RSUs granted to directors, subject to satisfaction of applicable performance criteria, and three years from the date of grant for RSUs granted to employees. The fair value at the date of grant is based on the number of units granted and the average of the Company’s high and low Class A common stock trading price on the date of grant or, if the Company’s Class A shares did not trade on the date of grant, the average of the Company’s high and low Class A common stock trading price on the last preceding date on which the Company’s Class A shares traded.

A summary of RSU activity for the three months ended December 29, 2023 follows:


	Number of RSUs	Weighted Average Grant Price
RSUs at September 29, 2023	68,244	$	76.38
RSUs granted	38,054	54.20
RSUs vested	(17,516)	88.49

RSUs at December 29, 2023	88,782	64.48

Stock compensation expense, net of forfeitures, related to RSUs was $139 and $476 for the three month periods ended December 29, 2023 and December 30, 2022, respectively. Unrecognized compensation cost related to non-vested RSUs as of December 29, 2023 was $2,054, which amount will be amortized to expense through September 2026 or adjusted for changes in future estimated or actual forfeitures.

RSU grantees may elect to reimburse the Company for withholding taxes due as a result of the vesting of units and issuance of unrestricted shares of Class A common stock by tendering a portion of such unrestricted shares back to the Company. Shares tendered back to the Company for this purpose were 2,331 and 5,055 during the three month periods ended December 29, 2023 and December 30, 2022, respectively.

The fair value of restricted stock units recognized as a tax deduction during the three month periods ended December 29, 2023 and December 30, 2022 was $1,015 and $2,247, respectively.

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Index			JOHNSON OUTDOORS INC.

Compensation expense related to units earned by employees (as opposed to grants to outside directors) is based upon the attainment of certain Company financial goals related to cumulative net sales and cumulative operating profit over a three-year performance period. Awards are only paid if at least 80% of the target levels are met and maximum payouts are made if 120% or more of target levels are achieved. The payouts for achievement at the threshold levels of performance are equal to 50% of the target award amount. The payouts for achievement at maximum levels of performance are equal to 150% of the target award amount. To the extent earned, awards are issued in shares of Company Class A common stock after the end of the three-year performance period.

Employees’ Stock Purchase Plan

The Company’s shareholders have adopted the Johnson Outdoors Inc. 2009 Employees’ Stock Purchase Plan, which was most recently amended on March 2, 2017, and which provides for the issuance of shares of Class A common stock at a purchase price of not less than 85% of the fair market value of such shares on the date of grant or on the date of purchase, whichever is lower.

During the three month period ended December 29, 2023, the Company issued 0 shares of Class A common stock and recognized $31 of expense in connection with the Employees' Stock Purchase Plan. During the three month period ended December 30, 2022, the Company issued 0 shares of Class A common stock and recognized $21 of expense in connection with the Plan.

5 LEASES

The Company leases certain facilities and machinery and equipment under long-term, non-cancelable operating leases. The Company determines if an arrangement is a lease at inception.

As of December 29, 2023, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 16 years. Some of the leases contain variable payment terms, such as payments based on fluctuations in the Consumer Price Index (CPI). Some leases also contain options to extend or terminate the lease. To the extent the Company is reasonably certain to exercise these options, they have been considered in the calculation of the right-of-use ("ROU") assets and lease liabilities. Under current lease agreements, there are no residual value guarantees or restrictive lease covenants. In calculating the ROU assets and lease liabilities, several assumptions and judgments were made by the Company, including whether a contract is or contains a lease under the applicable definition, and the determination of the discount rate, which is assumed to be the incremental borrowing rate. The incremental borrowing rate is derived from information available to the Company at the lease commencement date based on lease length and location.

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three months ended December 29, 2023 and December 30, 2022 were as follows:


	Three months ended
	December 29, 2023		December 30, 2022
Lease Cost
Operating lease costs	$	2,465	$	2,430
Short-term lease costs	627		529
Variable lease costs	43		41
Total lease cost	$	3,135	$	3,000

Included in the amounts in the table above was rent expense to related parties of $314 and $314 for the three months ended December 29, 2023 and December 30, 2022, respectively.

As of December 29, 2023, the Company did not have any finance leases or sublease agreements. Additionally, the Company does not have any leases in which it is the lessor. While the Company extended or renewed various existing leases during the quarter, there were no significant new leases entered into during the quarter ended December 29, 2023. As of December 29, 2023, the Company did not have any significant operating lease commitments that have not

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Index			JOHNSON OUTDOORS INC.

yet commenced. Supplemental balance sheet, cash flow, and other information related to operating leases was as follows:


	Three months ended
	December 29, 2023			December 30, 2022
Operating leases:

Operating lease ROU assets	$	51,852		$	55,647

Current operating lease liabilities	7,284			7,510
Non-current operating lease liabilities	46,239			49,519
Total operating lease liabilities	$	53,523		$	57,029

Weighted average remaining lease term (in years)	11.50			12.21

Weighted average discount rate	3.19		%	3.15		%

Cash paid for amounts included in the measurement of lease liabilities	$	2,268		$	2,149

ROU assets obtained in exchange for lease liabilities	$	2,061		$	1,941

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at December 29, 2023 were as follows:


Year	Related parties included in total		Total
Remainder of 2024	$	957	$	6,778
2025	1,308		8,518
2026	1,348		7,286
2027	226		5,789
2028	—		3,823
Thereafter	—		32,580
Total undiscounted lease payments	3,839		64,774
Less: Imputed interest	(87)		(11,251)
Total net lease liability	$	3,752	$	53,523

6 INCOME TAXES

For the three months ended December 29, 2023 and December 30, 2022, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:


	Three Months Ended
(thousands, except tax rate data)	December 29, 2023			December 30, 2022
Profit before income taxes	$	5,899		$	8,166
Income tax expense	1,944			2,287
Effective income tax rate	33.0		%	28.0		%

The increase in the effective tax rate for the three months ended December 29, 2023 compared to the three months ended December 30, 2022 was primarily related to a change in the geographic mix of profits or losses from a tax

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Index			JOHNSON OUTDOORS INC.

perspective for the current year period, as compared to the prior year period. The Company's effective tax rate is impacted by valuation allowances in certain tax jurisdictions and, as a result, changes in the geographic source of Company profits or losses between periods can have varying impacts on the Company's effective tax rate during a particular period.

The impact of the Company’s operations in jurisdictions where a valuation allowance is assessed is removed from the overall effective tax rate methodology and recorded directly based on year to date results for the year for which no tax expense or benefit can be recognized. The significant tax jurisdictions that have a valuation allowance for the periods ended December 29, 2023 and December 30, 2022 were:


December 29, 2023			December 30, 2022
Indonesia			Indonesia
Switzerland			Switzerland

The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits due to the impact of changes in its assumptions or as a result of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities and lapses of statutes of limitation. The Company’s 2024 fiscal year tax expense is anticipated to be unchanged related to uncertain income tax positions.

In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized benefits as a component of income tax expense.

7 INVENTORIES

The Company values inventory at the lower of cost (determined using the first-in first-out method) or net realizable value. Inventories at the end of the respective periods consisted of the following:

SEC Form 10-Q filed by Johnson Outdoors Inc.