Unless otherwise stated, all monetary amounts in this Management's Discussion and Analysis of Financial Condition and Results of Operations, other than per share amounts, are stated in thousands.

Executive Overview

The Company designs, manufactures and markets high quality recreational products for the outdoor enthusiast. Through a combination of innovative products, strong marketing, a talented and passionate workforce and efficient distribution, the Company seeks to set itself apart from the competition. Its subsidiaries operate as a network that promotes innovation and leverages best practices and synergies, following the strategic vision set by executive management and approved by the Company's Board of Directors.

The Company's fiscal 2012 revenues improved by 1.2% while operating profit grew 21.2% from the prior year. Sales reflect the year over year unfavorable impact of currency translation of 1.3%. The increase in operating margin in the current year over the prior year was impacted in part by favorable legal and insurance settlements during the year as well as profits driven by the increased Marine Electronics sales volume and margin improvements in the Diving business. Net income of $10,134 decreased by $22,510 over fiscal 2011 due significantly to a $30,186 increase in tax expense which related primarily to the reversal of a valuation reserve for deferred tax assets in the prior year.

Results of Operations

Summary consolidated financial results from continuing operations for the fiscal years presented were as follows:

(thousands, except per share data)     2012          2011          2010
Net sales                            $ 412,292     $ 407,422     $ 382,432
Gross profit                           164,322       163,135       153,523
Operating expenses                     142,909       145,465       138,969
Operating profit                        21,413        17,670        14,554
Interest expense                         2,258         3,220         5,057
Other (income) expense, net               (771 )       2,200           305
Income tax expense (benefit)             9,792       (20,394 )       2,653
Net income                              10,134        32,644         6,539

The Company's internal and external sales and operating profit (loss) by business segment are as follows:

                             2012          2011          2010
Net sales:
Marine Electronics         $ 231,234     $ 222,115     $ 185,494
Outdoor Equipment             35,328        38,882        48,690
Watercraft                    58,201        57,732        64,001
Diving                        87,995        89,544        85,076
Other / Eliminations            (466 )        (851 )        (829 )
Total                      $ 412,292     $ 407,422     $ 382,432
Operating profit (loss):
Marine Electronics         $  25,230     $  21,074     $  13,938
Outdoor Equipment              2,831         2,996         5,881
Watercraft                      (408 )      (1,351 )       1,826
Diving                         6,408         3,610         3,030
Other / Corporate            (12,648 )      (8,659 )     (10,121 )
Total                      $  21,413     $  17,670     $  14,554

See Note 12 to the Consolidated Financial Statements included elsewhere in this report for the definition of segment net sales and operating profit.

Fiscal 2012 vs Fiscal 2011

Net Sales

Net sales in 2012 increased 1.2% to $412,292 compared to $407,422 in 2011. The increase was driven primarily by the success of the Marine Electronics business in the U.S. which more than offset the negative effect of foreign currency translation in Diving and sluggish to declining sales in Watercraft and Outdoor Equipment.

Net sales for the Marine Electronics business increased $9,119, or 4.1% during 2012. Innovative products such as Minn Kota's i-Pilot wireless GPS trolling system and increased OEM sales helped fuel the growth.

Outdoor Equipment net sales decreased $3,554, or 9.1%, in 2012 primarily due to a slowdown in the consumer camping market and further declines in U.S. military spending.

The Watercraft business experienced an increase in sales of approximately 1%, or $469, due primarily to high volumes of low margin product sold to outdoor retailers and the sale of inventory to a distributor related to the closure of the UK sales office.

Net sales for the Diving business declined $1,549, or 1.7%, year over year, due primarily to $3,825, or 4.3%, of unfavorable currency translation, which more than offset increased sales in the U.S. and Asian markets.

Cost of Sales

Cost of sales was $247,970, or 60.1% of net sales on a consolidated basis for the year ended September 28, 2012 compared to $244,287 or 60.0% of net sales in the prior year. Costs of raw materials and components increased only slightly over the prior year while increases in labor rates were largely offset by process improvement efforts in each of the businesses.

Gross Profit

Gross profit of $164,322 was 39.9% of net sales on a consolidated basis for the year ended September 28, 2012 compared to $163,135 or 40.0% of net sales in the prior year.

Gross profit in the Marine Electronics business increased $2,685 from the prior year due primarily to the 9.1% increase in sales volume, which was offset in part by inventory write-offs and other costs related to the closure of the European office.

Gross profit in the Outdoor Equipment business decreased $1,099 from 2011 due to decreases in sales, but increased as a percent of net sales from 36.7% in the prior year to 37.3% in 2012. The increase in gross profit as a percentage of net sales in 2012 was largely driven by the impact of the flood in the prior year results and a favorable mix in the military tent business in the current year.

Gross profit in the Watercraft segment was $1,800 lower than 2011 levels and decreased as a percent of sales from 32.5% in 2011 to 29.2% in 2012. The decrease in gross profit was due primarily to the mix of lower priced product as well as the closure of the U.K. sales office and the sale of its remaining inventory to a distributor at low margins.

Gross profit for the Diving segment increased by $1,363 and increased as a percentage of sales from 48.2% in 2011 to 50.6% in 2012. The increase in margin was driven primarily by price increases implemented in the current year to address the impact of cost increases in the prior year.

Operating Expenses

Operating expenses overall decreased from the prior year by $2,556. The decrease was driven by a $3,500 favorable settlement with an insurance carrier that was recognized as an expense reduction in the Company's second fiscal quarter and $2,600 of lower legal expenses, offset in part by an increase in bad debt expense, higher incentive compensation expense, and higher deferred compensation expense resulting from the increase in the market value of the non-qualified plan's assets.

Operating expenses for the Marine Electronics segment decreased by $1,470 from 2011 levels. The decrease was due mainly to lower legal and warranty costs offset in part by higher incentive compensation and severance costs related to the closure of the European office.

Outdoor Equipment operating expenses decreased by $934 from their levels in 2011 due primarily to the recovery of flood related losses in the current year versus flood related expenses incurred in the prior year. See further discussion of the impact of the flooding at Note 14 to the Consolidated Financial Statements included elsewhere in this report.

The Watercraft business saw a decline in operating expenses of $2,743 from the prior year due primarily to the favorable insurance settlement of $3,500 which was partially offset by costs related to the closure of the U.K. office and restructuring activities in the U.S. See further discussion of the impact of the insurance settlement at Note 13 to the Consolidated Financial Statements included elsewhere in this report.

Operating expenses for the Diving business decreased by $1,434 due primarily to the $1,636 favorable impact of currency translation which was offset in part by higher bad debt expense driven by the economic conditions in southern Europe.

Operating Results

The Company's operating profit was $21,413 in 2012 compared to an operating profit of $17,670 in fiscal 2011. Marine Electronics operating profit increased by $4,156 from the prior year. Outdoor Equipment operating profit declined year over year from $2,996 to $2,831. The Watercraft business incurred an operating loss in 2012 of $408, compared to a loss of $1,351 in the prior year. Diving operating profit increased $2,798 from the prior year.

Other Income and Expenses

Interest expense decreased from the prior year by $962, due largely to lower principal balances, decreases in interest rates and lower expense for amortization of interest rate swaps. Interest income was approximately $100 in both years.

Other income of $631 in fiscal 2012 compared to other expense of $2,290 in the prior year. The current year included currency losses of $213 which were more than offset by market gains of $1,320 on deferred compensation plan assets. In the prior year, this line item included $1,701 of currency losses and market losses of $253 on the deferred compensation plan assets. Market gains and losses on deferred compensation plan assets recognized in Other Income and Expense are offset in full in Operating Expenses.

Pretax Income and Income Taxes

The Company realized pretax income of $19,926 in fiscal 2012, compared to pretax income of $12,250 in fiscal 2011. The Company recorded income tax expense of $9,792 in 2012 compared to $20,394 of income tax benefit in 2011. The 2011 benefit reflected the net reduction of the Company's deferred tax asset valuation allowance which was a result of the Company's determination at the end of fiscal 2011 that it was more likely than not to realize the majority of its deferred tax assets. See further discussion of the deferred tax asset valuation allowance in Note 6 to the Consolidated Financial Statements found elsewhere in this report.

Net Income

The Company recognized net income of $10,134 in fiscal 2012, or $1.03 per diluted common share, compared to net income of $32,644 in fiscal 2011, or $3.36 per diluted common share, based on the factors discussed above.

Fiscal 2011 vs Fiscal 2010

Net Sales

Net sales in 2011 increased 6.5% to $407,422 compared to $382,432 in 2010. The increase was driven primarily by the success of new products in the Marine Electronics business. Those sales, in addition to favorable foreign currency translations which positively impacted sales by $6,367 in comparison to 2010, more than offset significant declines in sales in the Outdoor Equipment and Watercraft businesses.

Net sales for the Marine Electronics business increased $36,621, or 19.7%, during 2011. Both the Minn Kota and Humminbird brands grew by over 20% in all channels and each exceeded $100 million in sales. The increases were primarily the result of the introduction of successful new products including Talon shallow water anchors and Humminbird Down Imaging fishfinders.

Outdoor Equipment net sales decreased $9,808 in 2011, or 20.1%, primarily due to significant reductions in military spending and the temporary closure of the Binghamton, New York facility due to the flood that occurred in September 2011. See further discussion of the impact of the flooding at Note 14 to the Consolidated Financial Statements included elsewhere in this report.

The Watercraft business experienced a decline in sales of $6,269, or 9.8%, across all sales channels and all brands. Both a slow start to the paddling season due to unfavorable weather conditions and overall weak demand were the primary drivers leading to the decline year over year.

The Diving business saw an increase in sales of $4,468, or 5.3% year over year, due in large part to favorable currency translation of $3,656, or 4.3% year over year, as well as wider distribution of the new SUBGEAR brand and increased SCUBAPRO demand.

Cost of Sales

Cost of sales was 60.0% of net sales on a consolidated basis for the year ended September 30, 2011 compared to $228,909 or 59.9% of net sales in 2010. The cost of sales increase of $15,378 was primarily attributable to the increase in sales volume during 2011 as compared to 2010.

Gross Profit

Gross profit of $163,135 was 40.0% of net sales on a consolidated basis for the year ended September 30, 2011 compared to $153,523 million or 40.1% of net sales in the prior year. The gross profit increase of $9,612 was primarily attributable to the increase in sales volume during 2011 as compared to 2010.

Gross profit in the Marine Electronics business increased $16,209 from 2010 due to higher sales volume. Favorable product mix and increased efficiencies resulting from the higher sales volumes improved this segment's gross profit as a percent of net sales from 38.1% in 2010 to 39.1% in 2011.

Gross profit in the Outdoor Equipment business decreased $3,738 from 2010, and declined as a percent of net sales from 37.0% to 36.7% in 2011 primarily due to lower volumes and the related reduced absorption of fixed costs.

Gross profit in the Watercraft segment was 32.5% of net sales in 2011 and was $3,695 lower than 2010 levels, which were equal to 35.1% of net sales. The decrease in gross profit was due primarily to lower sales volumes and reduced absorption of fixed costs.

Gross profit for the Diving segment increased by $828 but decreased as a percentage of sales from 49.7% in 2010 to 48.2% in 2011 primarily due to increases in product and component costs.

Operating Expenses

Operating expenses increased in 2011 from 2010 by $6,497. The increase was mainly attributable to higher direct expenses related to higher sales volumes, increased R&D spending and higher legal costs.

Operating expenses for the Marine Electronics segment increased by $9,073 from 2010 levels. The increase was due mainly to increased direct expenses as the result of higher sales volumes and increased legal costs.

Outdoor Equipment operating expenses decreased by $854 from 2010 levels due primarily to lower marketing related costs which were driven by the declines in sales volume during 2011.

The Watercraft business saw a decline in operating expenses of $517 from 2010 due primarily to lower direct expenses driven by lower sales volume which were offset in part by increased freight costs.

Operating expenses for the Diving business increased by $249 due primarily to the $2,067 unfavorable impact of currency translation which was largely offset by the effects of cost reduction efforts undertaken in this segment.

Operating Results

The Company's operating profit was $17,670 in 2011 compared to an operating profit of $14,554 in fiscal 2010. Marine Electronics operating profit increased by $7,136 from the prior year. Outdoor Equipment operating profit declined to $2,996, half the level of 2010. The Watercraft business incurred an operating loss in 2011 of $1,351, compared to an operating profit of $1,826 in 2010, a decline of $3,177. Diving operating profit increased $580 from the prior year.

Other Income and Expenses

Interest expense decreased from the prior year by $1,837, due largely to lower amortization of interest rate swaps and interest rate decreases which resulted from renegotiating and amending the Company's debt agreements during 2011. Interest income was less than $100 in both years.

Other expense of $2,290 in fiscal 2011 compared to $367 in the prior year. The other expense in 2011 reflected currency losses of $1,701 and market losses of $382 on deferred compensation plan assets. In the 2010, this line item included $1,175 of currency losses offset in part by market gains of $730 on the deferred compensation plan assets.

Pretax Income and Income Taxes

The Company realized pretax income of $12,250 in fiscal 2011, compared to pretax income of $9,192 in fiscal 2010. The Company recorded an income tax benefit of $20,394 in 2011 compared to $2,653 of income tax expense in 2010. The 2011 income tax benefit reflected the net reduction of its deferred tax asset valuation allowance which was due primarily to the Company's determination at the end of fiscal 2011 that it was more likely than not to realize the majority of its deferred tax assets. See further discussion of the deferred tax asset valuation allowance in Note 6 to the Consolidated Financial Statements found elsewhere in this report.

Net Income

The Company recognized net income of $32,644 in fiscal 2011, or $3.36 per diluted common share, compared to net income of $6,539 in fiscal 2010, or $0.68 per diluted common share, based on the factors discussed above.

Financial Condition, Liquidity and Capital Resources

The Company's cash flows from operating, investing and financing activities, as reflected in the accompanying Consolidated Statements of Cash Flows, are summarized in the following table:

(thousands)                                         2012          2011          2010

Cash (used for) provided by:
Operating activities                              $  31,764     $  30,980     $ 19,751
Investing activities                                (10,789 )     (13,323 )     (9,271 )
Financing activities                                 (5,256 )      (8,648 )     (7,572 )
Effect of foreign currency rate changes on cash      (1,329 )       2,189        2,513
Increase in cash and cash equivalents             $  14,390     $  11,198     $  5,421

Operating Activities

The following table sets forth the Company's working capital position at the end
of each of the years shown:

(thousands, except share data)     2012          2011
Current assets                   $ 182,952     $ 176,445
Current liabilities                 58,967        65,000
Working capital                  $ 123,985       111,445
Current ratio                        3.1:1         2.7:1

Cash flows provided by operations totaled $31,764, $30,980 and $19,751 in fiscal 2012, 2011 and 2010, respectively. The most significant drivers in the increase in cash flows from operations over the past two years were increases in income and decreases in accounts receivable.

Depreciation and amortization charges were $11,882, $10,877 and $9,977 in fiscal 2012, 2011 and 2010, respectively.

Investing Activities

Cash flows used for investing activities were $10,789, $13,323 and $9,271 in fiscal 2012, 2011 and 2010, respectively. The purchase of Waypoint Technologies Inc. and Pro Map Technologies Inc., the maker of LakeMaster® brand high definition electronic lake charts used $3,969 of cash in fiscal 2011. Expenditures for property, plant and equipment were $12,032, $9,367 and $9,966 in fiscal 2012, 2011 and 2010, respectively. In general, the Company's ongoing capital expenditures are primarily related to tooling for new products and facilities and information systems improvements.

Financing Activities

The following table sets forth the Company's debt and capital structure at the
end of the past two fiscal years:

(thousands, except share data)         2012          2011
Current debt                         $     526     $   3,494
Long-term debt                           8,334        11,478
Total debt                               8,860        14,972
Shareholders' equity                   173,604       163,525
Total capitalization                 $ 182,464       178,497
Total debt to total capitalization         4.9 %         8.4 %

Cash flows used for financing activities totaled $5,256 in fiscal 2012 compared to $8,648 in 2011 and $7,572 in 2010. Payments on long-term debt were $6,112, $1,292, and $594 in fiscal 2012, 2011 and 2010, respectively.

The Company had current maturities of its long-term debt of $526 and $3,494 as of September 28, 2012 and September 30, 2011, respectively, and no outstanding borrowings on its revolving credit facilities as of the end of either fiscal year. The Company had outstanding borrowings on long-term debt (net of current maturities) of $8,334 and $11,478 as of September 28, 2012 and September 30, 2011, respectively.

The Company's term loans have a maturity date of September 29, 2029. Each term loan requires monthly payments of principal and interest. Interest on the aggregate outstanding amount of the term loans is based on the prime rate plus an applicable margin. The interest rate in effect on the term loans was 5.25% at September 28, 2012.

The term loans are guaranteed in part under the United States Department of Agriculture Rural Development program and are secured with a first priority lien on land, buildings, machinery and equipment of the Company's domestic subsidiaries and a second lien on working capital and certain patents and trademarks of the Company and its subsidiaries. Any proceeds from the sale of secured property are first applied against the related term loans and then against the Revolvers.

The aggregate term loan borrowings are subject to a pre-payment penalty. The penalty is currently 8% of the pre-payment amount, and the penalty will decrease by 1% annually on the anniversary date of the effective date of the loan agreement.

On November 16, 2010, the Company and certain of its subsidiaries entered into amendments to their Revolving Credit Agreements (or "Revolvers"). The amended terms of the Revolvers, maturing on November 16, 2014, provide for funding of up to $75,000, with an accordion feature that provides the Company with the option to increase the maximum seasonal financing availability by $25,000 subject to the approval of the lenders. Borrowing availability under the Revolvers is based on certain eligible working capital assets, primarily accounts receivable and inventory of the Company and its subsidiaries. The Revolvers contain a seasonal line reduction that reduces the maximum amount of borrowings to $50,000 during the period from mid-July to mid-November, consistent with the Company's reduced working capital needs throughout that period, and requires an annual seasonal pay down provision that reduces the borrowing capacity to $30,000 for 60 consecutive days. The amendments to the Revolvers reset the interest rate calculation each quarter, by instituting an applicable margin based on the Company's leverage ratio for the trailing twelve month period. The applicable margin ranges from 2.25% to 3.0%.

The interest rate on the Revolvers is based on LIBOR or the prime rate, at the Company's discretion, plus an applicable margin. The interest rate in effect on the Revolvers at September 28, 2012, based primarily on LIBOR, was approximately 2.50%.

The Revolvers are secured with a first priority lien on working capital assets and certain patents and trademarks of the Company and its subsidiaries and a second priority lien on land, buildings, machinery and equipment of the Company's domestic subsidiaries. As cash collections related to secured assets are applied against the balance outstanding under the Revolvers, the liability is classified as current. The Company's remaining borrowing availability under the Revolvers was approximately $28,100 at September 28, 2012.

Under the terms of the Revolvers, the Company is required to comply with certain financial and non-financial covenants. Among other restrictions, the Company is restricted in its ability to pay dividends, incur additional debt and make acquisitions or divestitures above certain amounts. The key financial covenants include a minimum fixed charge coverage ratio, limits on minimum net worth and EBITDA, a limit on capital expenditures, and, as noted above, a seasonal pay-down requirement.

See Note 2 to the Consolidated Financial Statements found elsewhere in this report regarding additional information on the Company's borrowing arrangements, including certain amendments entered into by the Company and certain of its subsidiaries in connection with the Company's Revolvers.

As of September 28, 2012, the Company held approximately $46,400 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.

Contractual Obligations and Off Balance Sheet Arrangements

The Company has contractual obligations and commitments to make future payments
under its existing credit facilities, including interest, operating leases and
open purchase orders. The following schedule details these significant
contractual obligations at September 28, 2012.

                                                Less than 1
                                    Total          year          2-3 years       4-5 years       After 5 years
Long-term debt                    $   8,860     $       526     $       873     $       755     $         6,706
Short-term debt                           -               -               -               -                   -
Operating lease obligations          20,809           6,127           8,777           4,774               1,131
Open purchase orders                 60,551          60,551               -               -                   -
Contractually obligated
interest payments                     4,370             436             821             747               2,366
Total contractual obligations     $  94,590     $    67,640     $    10,471     $     6,276     $        10,203

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers' compensation insurance. Letters of credit outstanding at September 28, 2012 were $1,401 compared to $2,103 on September 30, 2011 and were included in the Company's total loan availability. The Company had no unsecured revolving credit facilities at its foreign subsidiaries as of September 28, 2012. The Company had no unsecured lines of credit as of September 28, 2012.

The Company has no other off-balance sheet arrangements.

The Company anticipates making contributions to its defined benefit pension plans of $1,140 through September 27, 2013.

On November 14, 2012, subsequent to the end of the Company's most recent fiscal year the Company acquired all of the outstanding common and preferred stock of Jetboil, Inc. ("Jetboil"). Jetboil, founded and based in Manchester, New Hampshire, designs and manufactures the world's top brand of outdoor cooking systems. The approximately $16,000 acquisition was funded with existing cash and credit facilities. The Company believes that sales of Jetboil's innovative cooking products can be expanded through the Company's global marketing and distribution network and both companies will benefit from an increased presence in the outdoor Specialty trade channel. The Jetboil acquisition will be included in the Company's Outdoor Equipment segment. The Company anticipates that Jetboil will contribute approximately $10,000 of sales and $1,500 of operating profit to fiscal 2013 results.

The Company is currently in the process of determining the fair value of the . . .