# Johnson Outdoors Inc: Form 10-Q for the period ended Jun 30, 2023

- Company: [Johnson Outdoors Inc](/companies/jout.md) (CIK 788329)
- Form: 10-Q
- Filed: 2023-08-03
- Accepted by EDGAR: Aug 3, 2023, 12:27 ET
- Period: 2023-06-30
- Accession: 0001140361-23-037830
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/788329/000114036123037830/jout-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/788329/000114036123037830/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $187.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-10-01 to 2023-06-30 | $567.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $109.5m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2022-10-01 to 2023-06-30 | $351.8m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-04-01 to 2023-06-30 | $77.6m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-10-01 to 2023-06-30 | $215.7m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-04-01 to 2023-06-30 | $8.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2022-10-01 to 2023-06-30 | $23.9m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $17.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-10-01 to 2023-06-30 | $34.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $39.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-10-01 to 2023-06-30 | $114.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $5.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-10-01 to 2023-06-30 | $12.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $14.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-10-01 to 2023-06-30 | $35.5m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 10,210,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-10-01 to 2023-06-30 | 10,187,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-10-01 to 2023-06-30 | $45.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-10-01 to 2023-06-30 | $19.4m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2022-10-01 to 2023-06-30 | $9.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2022-10-01 to 2023-06-30 | $941.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-06-30 | $122.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $485.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $705.5m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $106.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $185.0m | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $0 | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-06-30 | $520.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,242 characters.

This 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 and nine month periods ended June 30, 2023 and July 1, 2022. 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 30, 2022 which was filed with the Securities and Exchange Commission on December 9, 2022.

### 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,” use of words such as “confident,” “could,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of such words 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 9, 2022 and the following: changes in economic conditions, consumer confidence levels and discretionary spending patterns in key markets; uncertainties stemming from political instability (and its impact on the economies in jurisdictions where the Company has operations); uncertainties stemming from changes in U.S. trade policies, tariffs, and the reaction of other countries to such changes; the global outbreaks of disease, such as the COVID-19 pandemic which has affected, and may continue to affect, market and economic conditions, along with wide-ranging impacts on employees, customers and various aspects of our operations; the Company’s success in implementing its strategic plan, including its targeted sales growth platforms, innovation focus and its increasing digital presence; 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 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; the impact of actions of the Company's competitors with respect to product development or enhancement or the introduction of new products into the Company's markets; movements in foreign currencies, interest rates or commodity costs; fluctuations in the prices of raw materials or the availability of raw materials or components used by the Company; any disruptions in the Company's supply chain as a result of material fluctuations in the Company's order volumes and requirements for raw materials and other components, or the demand for those same raw materials and components by third parties, necessary to manufacture and produce the Company's products including related to shortages in procuring necessary raw materials and components to manufacture and produce such products; the success of the Company’s suppliers and customers and the impact of any consolidation in the industries 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 and other factors impacting climate change legislation. 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, among others, which may be used in this report: Minn Kota®, Cannon®, Humminbird®, Eureka!®, Jetboil®, Old Town®, Ocean Kayak®, Carlisle®, and SCUBAPRO®.

### 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 Company’s 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.

#### Coronavirus (COVID-19)

The COVID-19 pandemic drove consumer desire to engage in socially distant and safe activities outdoors. As a result, increased participation in outdoor recreation also increased demand for our products across many of our Company segments. During the post-pandemic period, and specifically the first three quarters of fiscal 2023, participation levels in some of our outdoor recreation segments has substantially declined from the pandemic-driven market levels.

Moreover, in addition to impacting demand for Company products, COVID-19 and the resulting macroeconomic dynamics also caused widely-documented supply chain and logistics disruptions across industries, as well as inflationary pressures (especially as it relates to raw material and purchased component prices). These factors have impacted the timing, sourcing, availability and cost of raw materials and components that are necessary to manufacture our products, all of which adversely impacted our margins and inventory levels during fiscal 2022. During the first three quarters of fiscal 2023, the Company saw improvement in the availability of certain components necessary to complete finished products and converted a significant portion of its raw material inventory to finished goods available for shipping. Despite this, reduced consumer participation has resulted in lower demand in some of our segments which has caused substantially lower sales, and higher inventory levels.

#### Highlights

Net sales of $187,047 for the third quarter of fiscal 2023 decreased $16,772, or 8%, from the same period in the prior year. Despite the decrease in sales between quarters, material and freight cost reductions helped drive a 5.4 point improvement in gross margin year over year resulting in a $4,078 gross profit increase between quarters. Nonetheless, operating expenses increased by 21%, causing a $6,356 decrease in operating profit from the prior year quarter. Profit before income taxes increased slightly, due to net investment gains and earnings on the Company's deferred compensation plan assets, which are recorded in Other income, and fully offset the deferred compensation expense that contributed to the increase in operating expenses.

During the second fiscal quarter of 2023, the Company sold the Military and Commercial Tents product lines of its Camping business segment to a third party in an asset sale for a purchase price of $14,990 which closed on March 17, 2023. The net book value of the assets and liabilities sold was approximately $8,350, resulting in a gain on sale of approximately $6,640, which is recorded in Other (income) expense, net in the Company’s accompanying Condensed Consolidated Statements of Operations. The purchase price and the net proceeds received by the Company related to this sale were subject to customary purchase price adjustment provisions and Company indemnity obligations set forth in the definitive purchase agreement. Accordingly, during the third fiscal quarter, a working capital true-up was recorded, which reduced the purchase price and the final net gain to approximately $6,560.

#### Seasonality

The Company’s business is seasonal in nature. The third fiscal quarter traditionally falls within the Company’s primary selling season for its warm-weather outdoor recreation products. The table below sets forth a historical view of the Company’s seasonality during the last three fiscal years. Due to the timing of the COVID-19 outbreak, the Company's traditional seasonal sales pacing, where our heaviest sales volumes typically occurred during our second and third fiscal quarters, shifted during fiscal 2020.

| Quarter Ended | Fiscal Year 2022 Net Sales | Operating Profit | 2021 Net Sales | Operating Profit | 2020 Net Sales | Operating Profit |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| December | 21% | 21% | 22% | 22% | 22% | 10% |
| March | 26% | 23% | 27% | 32% | 27% | 45% |
| June | 27% | 36% | 29% | 34% | 23% | 17% |
| September | 26% | 20% | 22% | 12% | 28% | 28% |
|  | 100% | 100% | 100% | 100% | 100% | 100% |

### Results of Operations

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

| Net sales: | Three Months Ended June 30, 2023 | July 1, 2022 | Nine Months Ended June 30, 2023 | July 1, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Fishing | $137,460 | $136,565 | $430,842 | $374,244 |
| Camping | 11,658 | 23,479 | 36,996 | 56,780 |
| Watercraft Recreation | 15,726 | 21,872 | 38,274 | 59,481 |
| Diving | 22,227 | 22,201 | 61,594 | 56,886 |
| Other / Corporate / Eliminations | (24) | (298) | (207) | (425) |
| Total | $187,047 | $203,819 | $567,499 | $546,966 |
| Operating profit (loss): |  |  |  |  |
| Fishing | $18,665 | $16,553 | $51,358 | $44,166 |
| Camping | 2,039 | 4,998 | 4,863 | 12,867 |
| Watercraft Recreation | 1,483 | 2,893 | 1,637 | 7,588 |
| Diving | 2,733 | 2,412 | 4,190 | 4,074 |
| Other / Corporate / Eliminations | (7,477) | (3,057) | (27,743) | (15,707) |
| Total | $17,443 | $23,799 | $34,305 | $52,988 |

See “Note 16 – 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 June 30, 2023 were $187,047, a decrease of $16,772, or 8%, compared to $203,819 for the three months ended July 1, 2022. Foreign currency translation had an unfavorable impact of less than 1% on current year third quarter net sales compared to the prior year's third quarter net sales.

Net sales for the three months ended June 30, 2023 for the Fishing business were $137,460, an increase of $895, or 1%, from $136,565 during the third fiscal quarter of the prior year. The increase in sales over the prior year quarter is primarily attributable to product price increases.

Net sales for the Camping business were $11,658 for the third quarter of the current fiscal year, a decrease of $11,821, or 50%, from the prior year net sales during the same period of $23,479 due to decreased sales of Jetboil and Eureka! consumer camping products, as demand declined from the increased levels seen during the pandemic. Additionally, approximately $4,900 of the decrease from the prior year quarter was related to the sale of the Military and Commercial Tents product lines described above.

Net sales for the third quarter of fiscal 2023 for the Watercraft Recreation business were $15,726, a decrease of $6,146, or 28%, compared to $21,872 in the prior year same period. Reduced demand in the overall market from the elevated levels seen during the pandemic drove the decline from the prior year.

Net sales for Diving, our most global business, for the third quarter of fiscal 2023 were $22,227, which was relatively flat when compared to net sales of $22,201 for the three months ended July 1, 2022. Foreign currency translation had a favorable impact of less than 1% on sales in this segment versus the prior year quarter.

For the nine months ended June 30, 2023, consolidated net sales of $567,499 increased $20,533 or 4% compared to $546,966 for the nine months ended July 1, 2022. Foreign currency translation had an unfavorable impact of less than 1% on net sales of the current year to date period versus the prior year to date period.

Net sales for the nine months ended June 30, 2023 for the Fishing business were $430,842, an increase of $56,598, or 15% from $374,244 during the same period of the prior year. In addition to price increases (which accounted for approximately 6 points of the year over year increase in net sales), the increase over the prior year to date period was driven mainly by improved supply and component availability over the prior year, resulting in our ability to satisfy demand for product and fulfill orders.

Net sales for the Camping business were $36,996 for the nine months ended June 30, 2023, a decrease of $19,784, or 35%, from the prior year net sales during the same period of $56,780, due to decreased demand from the increased levels seen during the pandemic. Approximately $4,900 of the decrease over the prior year to date period was related to the sale of the Military and Commercial Tents product lines described above.

Net sales for the nine months ended June 30, 2023 for the Watercraft Recreation business were $38,274, a decrease of $21,207, or 36%, compared to $59,481 in the prior year same period. Reduced demand in the overall market from the elevated levels seen during the pandemic drove the decline from the prior year.

Diving net sales were $61,594 for the nine months ended June 30, 2023 versus $56,886 for the nine months ended July 1, 2022, an increase of $4,708, or 8%. The sales increase was largely due to increased demand for our products as the global tourism industry continued to recover from the pandemic. There was an unfavorable effect of foreign currency translation of 2% versus the prior year to date period.

#### Cost of Sales

Cost of sales for the three months ended June 30, 2023 of $109,460 decreased $20,850 compared to $130,310 for the three months ended July 1, 2022. The decrease year over year was driven primarily by decreased sales volumes, as well as decreased costs on freight and certain materials between quarters.

For the nine months ended June 30, 2023, cost of sales was $351,798 compared to $344,241 in the same period of the prior year. The increase year over year was primarily driven by increased sales volumes, offset in part by reductions in freight costs from the elevated levels seen in the prior year.

#### Gross Profit Margin

For the three months ended June 30, 2023, gross profit as a percentage of net sales was 41.5% compared to 36.1% in the three month period ended July 1, 2022. Factors impacting the change in gross profit percentage between quarters included the implementation of price increases across product lines, as well as decreased costs on freight and certain materials.

For the nine months ended June 30, 2023, gross profit as a percentage of net sales was 38.0% compared to 37.1% in the prior year nine month period. Price increases and relief in freight costs were also the primary drivers of the margin improvement for the year to date period.

#### Operating Expenses

Operating expenses were $60,144 for the three months ended June 30, 2023, compared to $49,710 for the three months ended July 1, 2022. The increase of $10,434 was primarily due to higher warranty expense, marketing spend and deferred compensation expense, offset in part by the impact of lower sales volumes between quarters. More favorable market conditions on the Company's deferred compensation plan assets resulted in approximately $5,100 of higher deferred compensation expense recorded in the Company's Corporate segment in the current year quarter as compared to the prior year quarter. This increase in expense was entirely offset by a gain in Other (income) expense, net related to marking these deferred compensation plan assets to market.

Operating expenses were $181,396 for the nine months ended June 30, 2023, compared to $149,737 for the nine months ended July 1, 2022. The increase of $31,659 was primarily due to higher warranty expense, marketing spend, increased compensation costs, professional services and deferred compensation expense, between periods. For the year to date period, deferred compensation expense recorded in the Corporate segment increased approximately $8,600 as compared to the prior year to date period, which was entirely offset by a gain in Other (income) expense, net.

#### Operating Profit

Operating profit on a consolidated basis for the three month period ended June 30, 2023 was $17,443, compared to an operating profit of $23,799 in the third quarter of the prior fiscal year. Higher operating expenses in the current year quarter, as discussed above, was the primary driver of the decrease in operating profit between quarters.

Operating profit on a consolidated basis for the nine months ended June 30, 2023 declined $18,683 to $34,305, compared to an operating profit of $52,988 in the prior year to date period despite a 4% increase in net sales primarily due to the increase in operating expenses between periods discussed above.

#### Interest

Interest expense was $39 and $30 for the three months ended June 30, 2023 and July 1, 2022, respectively. Interest expense was $114 for the nine months ended June 30, 2023 compared to $117 or the nine months ended July 1, 2022.

Interest income was $1,244 and $144 for the three months ended June 30, 2023 and July 1, 2022, respectively. Interest income was $2,806 for the nine months ended June 30, 2023 compared to $339 for the nine months ended July 1, 2022. The increase in interest income over the prior year periods was driven by increased interest rates, as well as increased investment or cash balances during the third fiscal quarter of 2023.

#### Other Expense (Income), net

Other income was $1,174 for the three months ended June 30, 2023 compared to other expense of $4,669 in the prior year period. The main driver of the $5,843 increase over the prior year quarter is the net investment gains and earnings on the assets related to the Company’s non-qualified deferred compensation plan, which were $1,335 in the three month period ended June 30, 2023 compared to losses of $3,741 in the three month period ended July 1, 2022. For the three months ended June 30, 2023, foreign currency exchange losses were $76 compared to $807 for the three months ended July 1, 2022.

For the nine months ended June 30, 2023, other income was $10,939 compared to other expense of $6,167 in the nine months ended July 1, 2022. The main driver of the $17,106 increase over the prior year period include the following: a gain on the sale of the Military and Commercial Tents product lines of approximately $6,560 recorded in the current year period; net investment gains and earnings on the assets related to the Company's non-qualified deferred compensation plan of $4,159 in the nine months ended June 30, 2023 compared to losses of $4,443 in the nine months ended July 1, 2022; and foreign currency exchange gains of $155 for the nine months ended June 30, 2023, compared to losses of $1,320 for the nine months ended July 1, 2022.

#### 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 effective tax rate for the three and nine month periods ended June 30, 2023 were 25.3% and 25.9%, respectively, compared to 26.8% and 25.9% in the corresponding periods of the prior year.

#### Net Income

Net income for the three months ended June 30, 2023 was $14,801, or $1.44 per diluted common class A and B share, compared to net income of $14,082, or $1.38 per diluted common class A and B share, for the third quarter of the prior fiscal year.

Net income for the nine months ended June 30, 2023 was $35,541, or $3.47 per diluted common class A and B share, compared to net income of $34,838, or $3.42 per diluted common class A and B share, for the nine months ended July 1, 2022.

### Liquidity and Financial Condition

Cash and cash equivalents and short term investments totaled $149,247 as of June 30, 2023, compared to $117,567 as of July 1, 2022. The Company’s debt to total capitalization ratio was 0% as of June 30, 2023 and July 1, 2022. The Company’s total debt balance was $0 as of each of June 30, 2023 and July 1, 2022. See “Note 11 – 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 $94,644 as of June 30, 2023, a decrease of $8,600 compared to $103,244 as of July 1, 2022. The decrease is consistent with the decreased third quarter sales volumes year over year. Inventories were $235,069 as of June 30, 2023, a decrease of $15,887, compared to $250,956 as of July 1, 2022. Accounts payable were $45,728 at June 30, 2023 compared to $50,780 as of July 1, 2022.

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

| (thousands) Cash (used for) provided by: | Nine months ended June 30, 2023 | July 1, 2022 |
| --- | ---: | ---: |
| Operating activities | $45,210 | $(86,413) |
| Investing activities | (45,133) | (25,150) |
| Financing activities | (9,591) | (9,214) |
| Effect of foreign currency rate changes on cash | 2,307 | (2,104) |
| Decrease in cash and cash equivalents | $(7,207) | $(122,881) |

#### Operating Activities

Cash provided by operations totaled $45,210 for the nine months ended June 30, 2023 compared to cash used for operations of $86,413 during the corresponding period of the prior fiscal year. The increase in cash provided by operations over the prior year nine month period was due primarily to higher inventory purchases in the prior year period, often at higher price points than historically paid, due to the Company's decision to build and procure certain raw material and component inventory in its attempt to mitigate against potential pandemic-related shortages in meeting product demand. Depreciation and amortization charges were $11,815 for the nine month period ended June 30, 2023 compared to $10,434 for the corresponding period of the prior year.

#### Investing Activities

Cash used for investing activities totaled $45,133 for the nine months ended June 30, 2023 compared to $25,150 for the corresponding period of the prior fiscal year. Capital expenditures were $19,427 in the nine months ended June 30, 2023, compared to $25,162 in the prior year to date period which included investments in expansion of Fishing facilities to accommodate additional production. Current year cash usage reflects investment of $40,696 in investments as well as proceeds of $14,990 related to the Big Tents sale previously discussed. Any additional capital expenditures in fiscal 2023 are expected to be funded by working capital.

#### Financing Activities

Cash used for financing activities totaled $9,591 for the nine months ended June 30, 2023 compared to $9,214 for the nine month period ended July 1, 2022 and represents the payment of dividends and purchase of treasury stock. The Company had no debt during either nine month period ended June 30, 2023 and July 1, 2022. See Note 11 "Indebtedness" to the accompanying Condensed Consolidated Financial Statements for additional information on our credit facilities.

As of June 30, 2023 the Company held approximately $45,029 of cash, cash equivalents and short-term investments 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 including under operating leases and open purchase orders. There have been no changes outside of the ordinary course of business in the specified contractual obligations during the quarter ended June 30, 2023.

The Company utilizes letters of credit primarily as security for the payment of future claims under its workers compensation insurance. Letters of credit outstanding were approximately $78 and $173 as of June 30, 2023 and July 1, 2022, respectively.

The Company has no other off-balance sheet arrangements.

### Critical Accounting Policies and Estimates

The Company’s critical accounting policies and estimates are identified in the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2022 in *Management’s Discussion and Analysis of Financial Condition and Results of Operations* under the heading “Critical Accounting Estimates”, which was filed with the Securities and Exchange Commission on December 9, 2022. There were no significant changes to the Company’s critical accounting policies and estimates during the nine months ended June 30, 2023.

## Market risk

As filed, 577 characters.

The Company is exposed to market risk in foreign currency exchange rates, interest rates, commodity prices and inflation. For a discussion of exposure to market risk, refer to the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2022, in *Management’s Discussion and Analysis of Financial Condition and Results of Operations* under the heading “Market Risk Management”, which was filed with the Securities and Exchange Commission on December 9, 2022. There have been no significant changes to our market risk in the nine months ended June 30, 2023.

## Controls and procedures

As filed, 2,254 characters.

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective at reaching a level of reasonable assurance. It should be noted that in designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. The Company has designed its disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 156 characters.

There have been no material changes to the risk factors disclosed in our Form 10-K as filed with the Securities and Exchange Commission on December 9, 2022.

Filed Aug 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001140361-23-037830. Last ingested by Listed: Oct 27, 2026, 17:32 ET. No prices; not investment advice.