Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") includes comments and analysis relating to the results of operations and financial condition of Johnson Outdoors Inc. and its subsidiaries (the Company) as of and for the three and six months ended April 3, 2009 and March 28, 2008. All monetary amounts, other than share and per share amounts, are stated in millions.

Our MD&A is presented in the following sections:

? Forward Looking Statements ? Trademarks
? Overview
? Results of Operations ? Liquidity and Financial Condition ? Obligations and Off Balance Sheet Arrangements ? Market Risk Management ? Critical Accounting Policies and Estimates ? New Accounting Pronouncements

This discussion should be read in conjunction with the condensed 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, 2008 which was filed with the Securities and Exchange Commission on January 2, 2009.

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 the matters described under the caption "Risk Factors" in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended October 3, 2008 which was filed with the Securities and Exchange Commission on January 2, 2009 and the following: changes in consumer spending patterns; the Company's success in implementing its strategic plan, including its focus on innovation; actions of and disputes with companies that compete with the Company; the Company's success in managing inventory; the risk that the Company's lenders may be unwilling to provide a waiver or amendment if the Company is in violation of its financial covenants and the cost to the Company of obtaining any waiver or amendment that the lenders would be willing to provide; the risk of future writedowns of goodwill or other intangible assets; movements in foreign currencies or interest rates; the Company's success in restructuring certain of its operations; the success of suppliers and customers; the ability of the Company to deploy its capital successfully; adverse weather conditions; and other risks and uncertainties provided in the Company's filings with the Securities and Exchange Commission. 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 filing. The Company assumes no obligation, and disclaims any obligation, to update such forward-looking statements to reflect subsequent events or circumstances.

Trademarks

We have registered the following trademarks, which may be used in this report: Minn Kota®, Cannon®, Humminbird®, Bottom Line®, Fishin' Buddy®, Silva®, Eureka!®, Tech 4O™, Geonav®, Old Town®, Ocean Kayak™, Necky®, Escape®, Lendal®, Extrasport®, Carlisle®, Scubapro®, UWATEC® and Seemann™.

Overview

The Company is a leading global manufacturer and marketer of branded seasonal outdoor recreation products used primarily for fishing, diving, paddling and camping. The Company's portfolio of well-known consumer brands has attained leading market positions due to continuous innovation, marketing excellence, product performance and quality. The Company's management believes its brands enjoy a premium reputation among outdoor recreation enthusiasts and novices alike. Company values and culture support entrepreneurism in all areas, promoting and leveraging best practices and synergies within and across its subsidiaries to advance the Company's strategic vision set by executive management and approved by the Board of Directors. The Company is controlled by Helen P. Johnson-Leipold, Chairman and Chief Executive Officer, members of her family and related entities.

Highlights

Despite a 12.5% decrease in net sales for the quarter ended April 3, 2009 over the same period in the prior year, the Company recognized a 58.9% increase in operating profit due to a significant effort to cut costs. Second quarter sales reflect initial shipments to customers in anticipation of the primary selling season for the Company's outdoor recreational products. The decrease in net sales from the prior year resulted primarily from weak economic conditions and declines in consumer spending.

Key changes in the quarter included:

? Marine Electronics sales decreased 4.6% from the prior year quarter largely due to continued weakness in domestic and international boat markets.
? Outdoor Equipment sales were down 36.0% from the prior year quarter due primarily to strong customer sell-in during the first quarter and slower than normal commercial tent sales.
? Watercraft sales were 8.7% below the prior year quarter primarily as a result of unfavorable currency translation of 4.3%, scaling back of distribution to non-core channels and weak international markets. ? Diving sales were down 24.1% primarily due to slowing economies in key international markets and the impact of unfavorable currency translation, which comprised 8.3% of the revenue decline.

Gross profit margins were 37.5% for the quarter ended April 3, 2009, compared to 38.4% in the prior year quarter. The reduction in the gross profit margin was due primarily to lower production volumes, close out sales and an unfavorable product mix at Watercraft as well as currency impacts on purchased product, lower production volumes, and close out sales in Diving.

Operating expenses for the quarter ended April 3, 2009 were down $9.0 million from the prior year quarter driven primarily by headcount reductions, curtailed spending in administrative costs, a temporary 10% wage reduction in the U.S., and no incentive compensation expenses in the current year quarter versus an expense of $1.8 million in the prior year quarter.

Seasonality

The Company's business is seasonal in nature. The second quarter falls within the Company's primary selling season. The table below sets forth a historical view of the Company's seasonality during the last three fiscal years.

                             JOHNSON OUTDOORS INC.

                                                                             Year Ended
                                   October 3, 2008                         September 28, 2007                        September 29, 2006
                               Net             Operating               Net               Operating               Net               Operating
Quarter Ended                Sales         Profit (Loss)             Sales           Profit (Loss)             Sales           Profit (Loss)
December                        18 %                 (12 )%             17 %                   (11 )%             19 %                    (1 )%
March                           29 %                  10 %              28 %                    23 %              27 %                    38 %
June                            34 %                  38 %              35 %                    74 %              34 %                    62 %
September                       19 %                (136 )%             20 %                    14 %              20 %                     1 %
                               100 %                (100 )%            100 %                   100 %             100 %                   100 %

Results of Operations
The Company's net sales and operating profit (loss) by segment are summarized as
follows:

(millions)                         Three Months Ended             Six Months Ended
                              April 3        March 28       April 3       March 28
                                 2009            2008          2009           2008
Net sales:
  Marine Electronics       $     58.7      $     61.5     $    90.7     $     94.8
  Outdoor Equipment               8.5            13.2          19.7           21.2
  Watercraft                     21.7            23.7          32.7           37.2
  Diving                         17.8            23.5          33.4           45.0
  Other/eliminations             (0.1 )          (0.1 )        (0.1 )         (0.4 )
  Total                    $    106.6      $    121.8     $   176.4     $    197.8
Operating profit (loss):
  Marine Electronics       $      7.1      $      5.4     $     6.2     $      5.7
  Outdoor Equipment               0.4             0.8           1.3            0.4
  Watercraft                     (0.2 )          (0.2 )        (1.8 )         (2.3 )
  Diving                          0.3             0.6          (0.9 )          1.1
  Other/eliminations             (1.8 )          (3.0 )        (4.2 )         (5.8 )
  Total                    $      5.8      $      3.6     $     0.6     $     (0.9 )

See Note 21 of the notes to the condensed consolidated financial statements for the definition of segment net sales and operating profit.

Net sales on a consolidated basis for the three months ended April 3, 2009 were $106.6 million, a decrease of $15.2 million compared to $121.8 million for the three months ended March 28, 2008. Unfavorable currency translation had a negative $4.5 million impact on consolidated net sales.

Net sales for the three months ended April 3, 2009 for the Marine Electronics business were $58.7 million down $2.8 million or 4.6% from $61.5 million in the prior year quarter. This decrease was largely due to general economic conditions and weakness in the domestic and international boat markets, which reduced demand for trolling motors and downriggers, and unfavorable volume comparisons due to initial stocking of new products in the prior year. This weakness was partially offset by higher sales of Humminbird fishfinder / GPS combo units in the current quarterly period.

Net sales for the Watercraft business were $21.7 million, a decrease of $2.0 million or 8.7%, compared to $23.7 million in the prior year quarter, which was primarily due to scaling back of distribution to non-core channels and weak international markets. Unfavorable currency translation had a 4.3% negative impact on net sales in the current quarter.

Net sales for the Outdoor Equipment business were $8.5 million for the current quarter, a decrease of $4.7 million or 36.0% from the prior year quarter sales of $13.2 million due primarily to pacing of military tent sales and slower than normal commercial tent sales in the current quarter.

Net sales for the Diving business were $17.8 million this quarter versus $23.5 million in the prior year quarter, a decrease of $5.7 million or 24.1%. The decrease was due largely to slowing economies in key international markets and unfavorable currency translation which had a 8.3% negative impact on net sales in the current quarter.

Net sales on a consolidated basis for the six months ended April 3, 2009 were $176.4 million, a decrease of $21.4 million, or 10.8%, compared to $197.8 million for the six months ended March 28, 2008.

Net sales for the Marine Electronics business for the six months ended April 3, 2009 were $90.7 million, a decrease of 4.3% from prior year sales of $94.8 million. This decrease was primarily due to general economic conditions and weakness in the domesticand international boat markets. Unfavorable currency translation had a 2% negative impact on net sales in the current year period.

Net sales for the Watercraft business declined by 12% during the six months ended April 3, 2009 to $32.7 million from $37.2 million during the six months ended March 28, 2008. This decrease was primarily due to scaling back of distribution to non-core channels and weak international markets. Unfavorable currency translation had a 4.6% negative impact on net sales in the current year period.

Net sales for the Outdoor Equipment business were $19.7 million for the six months ended April 3, 2008 which represented a 7.1% decline from the same period last year due largely to slower than normal commercial tent sales and expected lower government sales.

Net sales for the Diving business declined by 25.8% to $33.4 million for the six months ended April 3, 2008 compared to $45.0 million in the same period last year primarily due to slowing economies in key international markets. Unfavorable currency translation had a 6.7% negative impact on revenues.

Gross Profit Margin

Gross profit as a percentage of net sales was 37.5% on a consolidated basis for the quarter ended April 3, 2009 compared to 38.4% in the prior year quarter. The decline in gross profit margin was primarily due to lower production volume, close out sales and unfavorable product mix at Watercraft and lower margins in Diving due to currency impacts on purchased product, lower production volumes, and close out sales. These declines in the gross profit margin were partially offset by higher gross profit margins in the Marine Electronics business and the Outdoor Equipment business.

Gross profit as a percentage of net sales was 36.9% on a consolidated basis for the six month period ended April 3, 2009 compared to 38.5% in the prior year period.

Operating Expenses

Operating expenses were $34.2 million for the quarter ended April 3, 2009, a decrease of $9.0 million over the prior year quarter amount of $43.2 million.
Primary factors driving the reduced level of operating expenses were headcount reductions, curtailed spending in administrative costs, a temporary 10% wage reduction in the U.S., no incentive compensation expenses in the current year quarter versus an expense of $1.8 million in the prior year quarter, and favorable foreign currency exchange translation of $1.6 million in the current year quarter. Operating expenses were $64.5 for the six months ended April 3, 2009, a decrease of $12.5 million over the prior year period amount of $77.0 million.

Operating Profit/Loss

Operating profit on a consolidated basis for the three months ended April 3, 2009 was $5.8 million compared to $3.6 million in the prior year quarter, an increase of 58.9%. The increase in the Company's operating profit in the current period over the prior year period was due to the factors impacting gross profit and operating expenses discussed above.

Operating profit on a consolidated basis for the six months ended April 3, 2009 was $0.6 million compared to an operating loss of $0.9 million in the prior year period due to the factors impacting gross profit and operating expenses discussed above.

Other Income and Expense

Interest expense totaled $3.1 million for the three months ended April 3, 2009, compared to $1.5 million in the corresponding period of the prior year, which was due to higher interest rates on the Company's outstanding debt, $0.5 of amortization of the fair value of the effective portion of the Company's interest rate swap and an expense of $0.7 million to mark the Company's interest rate swaps to market. Interest expense for the six months ended April 3, 2009 was $4.7 million, compared to $2.6 million in the corresponding period of the prior year. See "Note 13 - Derivative Instruments and Hedging Activities" to the Company's condensed consolidated financial statements for further discussion.

Interest income was less than $0.1 million and $0.1 million, respectively, for the three and six months ended April 3, 2009 compared to $0.2 million and $0.5 million, respectively, for the three and six months ended March 28, 2008.

Other expense included a net $0.5 million foreign currency exchange gain for the three month period ended April 3, 2009. Included in this amount are mark to market gains of $0.3 million on foreign currency denominated liabilities offset by losses of $0.3 million on foreign currency forward contracts. The foreign currency forward contracts were held as economic hedges in order to minimize currency risk of the related foreign currency denominated liabilities. Foreign currency exchange losses were $1.4 million for the three month period ended March 28, 2008. For the six months ended April 3, 2009, net foreign currency exchange losses were $0.6 million compared to losses of $1.7 million for the six months ended March 28, 2008. See "Note 13 - Derivative Instruments and Hedging Activities" to the Company's condensed consolidated financial statements for further discussion.

Income Tax Expense

The Company's provision for income taxes is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates. The Company's effective tax rate for the three and six month periods ended April 3, 2009 was 22.2% and 4.1%, compared to 26.4% and 34.9% in the corresponding periods of the prior year. Significant items contributing to changes in the effective rate versus the prior year quarter and six month period primarily relate to the impact of the Company recording a valuation allowance charge of $1,185 against the net deferred tax assets in the jurisdictions of the United States, Japan, Spain, and the United Kingdom in the current year period. Additionally, key changes in the valuation allowance during the six months ended April 3, 2009 resulted from the reversal of the valuation allowance for the Company's Germany operations which resulted in $1,800 benefit and establishing a valuation allowance for the Company's Japan operations which resulted in $1,200 of additional tax expense.

Discontinued Operations

On December 17, 2007, the Company committed to a plan to divest the Company's Escape business. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the operations of the Escape business were reported as discontinued operations in the consolidated financial statements for the fiscal years ended October 3, 2008, September 28, 2007, and September 29, 2006. The Company recorded after tax losses related to the discontinued Escape business of $0.3 million and $1.4 million during the three and six month periods ended March 28, 2008, respectively, and a slight gain, less than $0.1 million, in the six month period ended April 3, 2009.

Net Income/Loss

Net income for the three months ended April 3, 2009 was $2.5 million, or $0.27 per diluted common class A and B share, compared to net income of $0.5 million, or $0.05 per diluted common class A and B share, for the corresponding period of the prior year due to the factors discussed above.

Net loss for the six months ended April 3, 2009 was $4.4 million, or $0.49 per diluted common class A and B share, compared to a net loss of $4.2 million or $0.46 per diluted common class A and B share, for the corresponding period of the prior year due to the factors discussed above.

Liquidity and Financial Condition

Historically, as of the end of the Company's second fiscal quarter each year, the Company is heavily invested in operating assets to support its selling season, which is strongest in the second and third quarters of the Company's fiscal year. Accounts receivable net of allowance for doubtful accounts were $100.5 million as of April 3, 2009, a decrease of $19.7 million compared to $120.2 million as of March 28, 2008. The decrease year over year was due to lower sales and the effect of foreign currency translation of $5.3 million.

Inventories were $75.4 million as of April 3, 2009, a decrease of $39.7 million compared to $115.1 million as of March 28, 2008. The decrease year over year was due to the effect of foreign currency translation of $6.1 million and a concerted effort by the Company to reduce working capital levels through strict controls and improved processes.

Accounts payable were $34.4 million compared to $33.6 million as of March 28, 2008. The increase year over year was due to the effect of extended vendor payment cycles in fiscal 2009.

The Company's debt-to-total capitalization ratio has increased to 37% as of April 3, 2009 from 36% as of March 28, 2008. The Company's debt balance was $65.3 million as of April 3, 2009 compared to $115.0 million as of March 28, 2008. Shareholders' equity decreased $94.3 million year over year, due to the effect of net losses driven largely by asset impairments and deferred tax asset valuation allowances, the change in currency translation adjustments, pension adjustments and changes in the interest rate swap value.

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

(millions)                                      Six Months Ended
                                          April 3       March 28
                                             2009           2008
Cash provided by (used for):
Operating activities                    $   (24.9 )   $    (77.4 )
Investing activities                         (5.7 )        (10.9 )
Financing activities                          2.9           71.6
Effect of exchange rate changes              (0.2 )          5.1
Decrease in cash and cash equivalents   $   (27.9 )   $    (11.6 )

Operating Activities

Cash flows used for operations totaled $24.9 million for the six months ended April 3, 2009 compared with $77.4 million used for operations during the corresponding period of the prior fiscal year.

Accounts receivable increased $48.6 million for the six months ended April 3, 2009, down from a $57.3 million increase in the prior fiscal year period. Inventories decreased by $9.7 million for the six months ended April 3, 2009 compared to an increase of $18.6 million in the prior year period. The year to date change in inventory year over year was due to concerted efforts to enhance controls and processes to bring down working capital levels and the effect of reduced production activity in the current year period. Accounts payable and accrued liabilities increased $12.9 million for the six months ended April 3, 2009 versus an increase of $1.9 million for the corresponding period of the prior year period. The year to date change in accounts payable year over year reflects extended vendor payment cycles in the current year.

Including the amortization of deferred financing costs, depreciation and amortization charges were $5.2 million for the six month period ended April 3, 2009 compared to $4.9 million for the corresponding period of the prior year.

Investing Activities

Cash used for investing activities totaled $5.7 million for the six months ended April 3, 2009 and $10.9 million for the corresponding period of the prior year. Capital expenditures totaled $3.0 million for the six months ended April 3, 2009 compared to $5.3 million for the corresponding period of the prior year. The Company's recurring investments are made primarily for tooling for new products and enhancements on existing products. Any expenditures in fiscal 2009 are expected to be funded by working capital or existing credit facilities.

On February 6, 2009, the Company acquired 100% of the common stock of Navicontrol S.r.l. ("Navicontrol"), a marine autopilot manufacturing company for $0.9 million. The acquisition was funded with existing cash.

On November 16, 2007, the Company acquired 100% of the outstanding common stock of Geonav S.r.l. (Geonav), a marine electronics company located in Viareggio, Italy, for approximately $5.7 million (cash of $5.3 million and transaction costs of $0.4 million). The acquisition was funded with existing cash and borrowings under our credit facilities.

Cash used for investing activities included $1.8 million in payments under interest rate swap contracts. See "Note 13 - Derivative Instruments and Hedging Activities" in the Company's condensed consolidated financial statements for an explanation of these contracts.

Financing Activities

Cash flows provided by financing activities totaled $2.9 million for the six months ended April 3, 2009 compared to $71.6 million for the corresponding period of the prior year. The Company made principal payments on senior notes and other long-term debt of $0 million and $10.8 million during the six month periods ended April 3, 2009 and March 28, 2008, respectively.

The Company had no outstanding borrowings on revolving credit facilities as of April 3, 2009 versus $45.0 million as of March 28, 2008. Short term borrowings outstanding at April 3, 2009 consisted of notes payable at foreign subsidiaries.

On February 12, 2008, the Company entered into a term loan agreement with JPMorgan Chase Bank N.A., as lender and agent for the other lenders named therein (the "lending group"). This term loan agreement consisted of a $60.0 million term loan maturing on February 12, 2013, bearing interest at a three month LIBOR rate plus an applicable margin. The applicable margin was based on the Company's ratio of consolidated debt to earnings before interest, taxes, depreciation and amortization (EBITDA) and varied between 1.25% and 2.00%. At October 3, 2008, the margin in effect was 2.00% for LIBOR loans. Also on February 12, 2008, the Company entered into an amended and restated revolving credit agreement with the lending group. This amendment updated the Company's October 7, 2005 revolving credit facility to allow for the term loan and to amend the financial covenants in the revolving credit facility.

On October 13, 2008, the Company entered into an Omnibus Amendment of its term loan agreement and revolving credit facility effective as of October 3, 2008 with the lending group. On the same date, the Company also entered into a Security Agreement with the lending group. The Omnibus Amendment temporarily modified certain provisions of the Company's term loan agreement and revolving credit facility. The Security Agreement was granted in favor of the lending group and covers certain inventory and accounts receivable.

. . .