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 (collectively, the "Company") as of and for the three month periods ended December 28, 2012 and December 30, 2011. All monetary amounts, other than share and per share amounts, are stated in thousands.

Our MD&A is presented in the following sections:

? Forward Looking Statements ? Trademarks
? Overview
? Results of Operations
? Liquidity and Financial Condition ? Contractual Obligations and Off Balance Sheet Arrangements ? Critical Accounting Policies and Estimates

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 September 28, 2012 which was filed with the Securities and Exchange Commission on December 11, 2012.

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 they include phrases such as the Company "expects," "believes," "anticipates," "intends" 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 Form 10-K which was filed with the Securities and Exchange Commission on December 11, 2012 and the following: changes in economic conditions, consumer confidence levels and discretionary spending patterns in key markets; the Company's success in implementing its strategic plan, including its targeted sales growth platforms and focus on innovation; litigation costs related to actions of and disputes with third parties, including competitors; the Company's continued success in its working capital management and cost-structure reductions; the Company's ongoing success in meeting financial covenants in its credit arrangements with its lenders; the Company's success in integrating strategic acquisitions; the risk of future writedowns of goodwill or other long-lived assets; the ability of the Company's customers to meet payment obligations; movements in foreign currencies, interest rates or commodity costs; fluctuations in the prices of raw materials or the availability of raw materials used by the Company; the success of the Company's suppliers and customers; the ability of the Company to deploy its capital successfully; unanticipated outcomes related to outsourcing certain manufacturing processes; unanticipated outcomes related to 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 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®, LakeMaster®, Silva®, Eureka!®, Tech4Oä, Jetboil®, Geonav®, Old Town®, Ocean Kayakä, Necky®, Extrasport®, Carlisle®, Scubapro®, UWATEC®, and SUBGEAR®.

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 values and culture support innovation 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, the Company's Chairman and Chief Executive Officer, members of her family and related entities.

Highlights

During the first quarter of fiscal 2013, the Company acquired Jetboil, Inc. ("Jetboil"), the manufacturer of the world's top brand of portable outdoor cooking systems for approximately $15,500. The transaction was completed on November 14, 2012 and first quarter results are included in the Outdoor Equipment segment. The Company believes the acquisition will expand distribution and fuel growth in all of its Outdoor Equipment brands. See further discussion of the acquisition at "Note 10 - Acquisition" to the Company's Condensed Consolidated Financial Statements included elsewhere herein.

Seasonality

The Company's business is seasonal in nature. The second and third fiscal
quarters fall within the Company's primary selling season for its outdoor
recreation products. The table below sets forth a historical view of the
Company's seasonality during the last two fiscal years.


                                       Year Ended
                    September 28, 2012             September 30, 2011
                      Net        Operating           Net        Operating
Quarter Ended       Sales           Profit         Sales           Profit
December               19 %            -17 %          19 %             -8 %
March                  31 %             65 %          32 %             65 %
June                   31 %             66 %          30 %             67 %
September              19 %            -14 %          19 %            -24 %
                      100 %            100 %         100 %            100 %

                             JOHNSON OUTDOORS INC.

Results of Operations

The Company's net sales and operating profit (loss) by segment for the periods
shown below were as follows:

                                 Three Months Ended
                            December 28       December 30
                               2012              2011
Net sales:
Marine Electronics         $      53,651     $      47,771
Outdoor Equipment                  8,440             6,290
Watercraft                         6,814             7,485
Diving                            18,483            18,758
Other / Eliminations                (114 )            (128 )
                           $      87,274     $      80,176
Operating profit (loss):
Marine Electronics         $       4,746     $       2,073
Outdoor Equipment                    224              (252 )
Watercraft                        (1,682 )          (2,458 )
Diving                               702               (98 )
Other / Corporate                 (2,464 )          (2,984 )
                           $       1,526     $      (3,719 )

See "Note 17 - Segments of Business" of the notes to the accompanying Condensed Consolidated Financial Statements for the definition of segment net sales and operating profit.

Net Sales

Consolidated net sales for the three months ended December 28, 2012 were $87,274, an increase of $7,098, or 9%, compared to $80,176 for the three months ended December 30, 2011. Increased sales in the Marine Electronics business and the acquisition of Jetboil were primary drivers of the increase.

Net sales for the three months ended December 28, 2012 for the Marine Electronics business were $53,651, up $5,880, or 12%, from $47,771 in the first three months of the prior year. Higher demand in the distributor sales channel and the timing of pre-season shipments were the primary drivers of the increase.

Net sales for the Outdoor Equipment business were $8,440 for the current year to date period, an increase of $2,150, or 34%, from the prior year net sales of $6,290. The increase was driven primarily by the acquisition of the Jetboil business in November 2012.

Net sales for the first three months of fiscal 2013 for the Watercraft business were $6,814, a decrease of $671, or 9%, compared to $7,485 in the prior year period. The decrease was driven primarily by non-recurring close-out sales in the prior year quarter.

Diving net sales were $18,483 for the three months ended December 28, 2012 versus $18,758 for the three months ended December 30, 2011, a decrease of $275, or 1%. The unfavorable effect of currency translation of $435 drove the decrease versus the same period of the prior year.

Cost of Sales

For the three months ended December 28, 2012, cost of sales increased $4,385, or 8%, to $53,460 versus $49,075 in the same prior year period. The increase in the year to date period was primarily driven by the 9% increase in net sales in the current year period. The cost of materials remained fairly stable versus the prior year. The cost per unit sold in the Marine Electronics business increased in the current period as a result of lower production volume in the fourth quarter of fiscal year 2012.

Gross Profit Margin

Gross profit as a percentage of net sales declined slightly for the three month period ended December 28, 2012 from 38.8% in the prior year to date period to 38.7% during the first quarter of fiscal 2013. Improved margins in the Diving business due to pricing actions were more than offset by declines in Marine Electronics margins.

Operating Expenses

Operating expenses were $32,288 for the three months ended December 28, 2012 compared to $34,820 in the prior year three month period. The decrease was driven in large part by the closure of certain European sales offices in fiscal year 2012 and a reduction in legal expenses.

Operating Profit

Operating profit on a consolidated basis for the three months ended December 28, 2012 was $1,526 compared to an operating loss of $3,719 in the prior year period, an increase of $5,245 over the prior year-to-date period.

Interest

For the three months ended December 28, 2012, interest expense totaled $439 compared to $596 for the three months ended December 30, 2011. The decrease was due to lower interest rate swap amortization expense in the current period as well as lower average interest rates on our borrowings during the first quarter of fiscal 2013 due to repayments of higher interest rate term loans during fiscal 2012.

Interest income for both three month periods ended December 28, 2012 and December 30, 2011 was less than $100.

Other Expense/Income

Other expense for the three months ended December 28, 2012 was $498 versus income of $1,192 for the three months ended December 30, 2011. For the three months ended December 28, 2012, foreign currency exchange losses were $567 compared to gains of $696 for the three months ended December 30, 2011. The Company's foreign currency forward contracts resulted in gains of $122 for the three months ended December 28, 2012 versus losses of $236 for the three months ended December 30, 2011. Net investment gains on the assets related to the Company's non-qualified deferred compensation plan were $42 in the three month period ended December 28, 2012 compared to $489 in the three month period ended December 30, 2011.

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 months ended December 28, 2012 was 59.5%, compared to 5.1% in the corresponding period of the prior year.

The increase in the Company's effective tax rate for the three months ended December 28, 2012 versus the prior year period was primarily due to increased losses in foreign jurisdictions that carry valuation allowances resulting in no recognition in these jurisdictions of a tax benefit related to those losses.

Net Income

Net income for the three months ended December 28, 2012 was $247 or $0.02 per diluted common class A and B share, compared to a loss of $2,944, or $0.30 per diluted common class A and B share, for the corresponding period of the prior year. The improvement in our net income over the prior year was driven by the factors noted above.

Liquidity and Financial Condition

Cash, net of debt, was $8,506 as of December 28, 2012 compared to debt, net of cash, of $4,920 as of December 30, 2011. The increase in net cash was driven in large part by strong operating cash flow over the twelve month period ending December 28, 2012. The Company's debt to total capitalization ratio was 18% as of both December 28, 2012 and December 30, 2011, respectively. The Company's total debt balance was $39,464 as of December 28, 2012 compared to $34,016 as of December 30, 2011. See "Note 13 - Indebtedness" in the notes to the Company's accompanying Condensed Consolidated Financial Statements for further discussion.

Accounts receivable, net of allowance for doubtful accounts, were $62,848 as of December 28, 2012, a decrease of $2,713 compared to $65,561 as of December 30, 2011. The year over year change was primarily related to improved collections of aged receivables.

Inventories, net of inventory reserves, were $77,519 as of December 28, 2012, a decrease of $1,496 compared to $79,015 as of December 30, 2011. The decrease was driven primarily by a sale of inventory to a distributor due to the closure of a sales office in the Watercraft business in Europe.

Accounts payable were $32,519 at December 28, 2012, an increase of $2,774 compared to $29,745 as of December 30, 2011. The increase was driven primarily by increased sales volume in the Marine Electronics business.

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

                                                        Three Months Ended
                                                   December 28       December 30
(thousands)                                           2012              2011

Cash (used for) provided by:
Operating activities                              $     (22,734 )   $     (32,028 )
Investing activities                                    (18,561 )            (766 )
Financing activities                                     29,803            19,198
Effect of foreign currency rate changes on cash             558            (1,822 )
Decrease in cash and cash equivalents             $     (10,934 )   $     (15,418 )

Operating Activities

Cash used for operations totaled $22,734 for the three months ended December 28, 2012 compared with cash used for operations of $32,028 during the corresponding period of the prior fiscal year. The improvement in cash used by operating activities was driven by the increase in net income as well as a greater reduction of inventory and increase in accounts payable compared with the first three months of the prior year.

Amortization of deferred financing costs, depreciation and other amortization charges were $2,402 for the three month period ended December 28, 2012 compared to $2,655 for the corresponding period of the prior year.

Investing Activities

Cash used for investing activities totaled $18,561 for the three months ended December 28, 2012 and $766 for the corresponding period of the prior year. The Company used cash of $15,534 for the purchase of Jetboil in the quarter ended December 28, 2012. There were no such acquisitions in the prior year. Cash usage in the current and prior year quarterly periods related to capital expenditures was $3,027 and $1,974, respectively. The Company's recurring investments are made primarily for software development and tooling for new products and enhancements on existing products. Any additional expenditures in fiscal 2013 are expected to be funded by working capital or existing credit facilities. The Company received proceeds of $1,208 in the three month period ending December 30, 2011 related to the sale of a property in Ferndale, Washington.

Financing Activities

Cash flows provided by financing activities totaled $29,803 for the three months ended December 28, 2012 compared to $19,198 for the three month period ended December 30, 2011. The Company made principal payments on senior notes and other long-term debt of $130 during the three month period ended December 28, 2012 For the three month period ended December 30, 2011, the Company made principal payments on senior notes and other long-term debt of $3,069 which included the repayment of approximately $2,932 of term loans resulting from the sale of a property in Ferndale, Washington, which was pledged as collateral under the related term loan.

The Company had outstanding borrowings of $30,733 on revolving credit facilities and current maturities of its long-term debt of $535 as of December 28, 2012. As of December 30, 2011, the Company had $22,113 outstanding on revolving credit facilities and current maturities of long-term debt of $646. The Company had outstanding borrowings on long-term debt (net of current maturities) of $8,196 and $11,257 as of December 28, 2012 and December 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 terms loans is based on the prime rate plus an applicable margin. The interest rate in effect on the term loans was 5.25% at December 28, 2012.

The aggregate term loan borrowings are subject to a pre-payment penalty. The penalty is currently 7% 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 in November 2014, provide for funding of up to $75,000, with the option for an additional $25,000 in maximum seasonal financing availability 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 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 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 December 28, 2012, based primarily on LIBOR plus 2.25%, was approximately 2.50%.

The Company's remaining borrowing availability under the Revolvers was approximately $16,900 at December 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.

As of December 28, 2012 the Company held approximately $44,100 of cash and cash equivalents in bank accounts in foreign taxing jurisdictions.