Hello, everyone, and welcome to the Johnson Outdoors' Second Quarter 2013 Earnings Conference Call. Today's call will be led by Helen Johnson-Leipold, Johnson Outdoors' Chairman and Chief Executive Officer; also on the call is David Johnson, Vice President and Chief Financial Officer. [Operator Instructions] This call is being recorded. Your participation implies consent to our recording this call. If you do not agree with these terms, simply drop off the line. I would now like to turn the call over to Cynthia Georgeson from Johnson Outdoors. Please go ahead, Ms. Georgeson.

Thank you, operator. Good morning and welcome to our discussion of Johnson Outdoors' results for the 2013 fiscal second quarter. If you need a copy of our news release issued this morning, it's available on the Johnson Outdoors website at www.johnsonoutdoors.com, under Investor Relations. Before I turn the call over to Helen, I need to remind you that this conference call may contain forward-looking statements. These statements are made on the basis of our views and assumptions at this time and are not guarantees of future performance. Actual events or results may differ materially from those statements due to a number of potential factors, many of which are beyond Johnson Outdoors' control. These risks and uncertainties include those listed in our media release from today and our filings with the Securities and Exchange Commission. If you have additional questions following the call, please contact either David Johnson or me. It's now my pleasure to turn the call over to Helen Johnson-Leipold, Chairman and CEO.

Good morning. I hope you've had an opportunity to review our second quarter earnings announcement, I'll begin with comments on our results in the marketplace and give you our perspective for the remainder of the year. Dave will cover some key financials then we'll take your questions. Financial performance is solid for the quarter and on a year-to-date basis. Starting off with the quarter, sales of $132 million or 3% ahead of last year due largely to growth in North America primarily from Marine Electronics. Operating profit for the quarter compared unfavorably to prior year due to a favorable $3.5 million settlement with an insurance carrier in last year's quarter. Excluding the settlement, operating profit would have been $2.2 million above the prior year. Net income during the quarter was $8.9 million or $0.90 per diluted share. The improvement over prior year was due to a positive shift in the effective tax rate. On a year-to-date basis, sales are up 5% to $219.4 million and operating profit of $14.2 million was 38% ahead of the prior first 6 month period. Next, net income during the first 6 months was $9.2 million or $0.93 per diluted share. While we started off strong this year, it's too early to predict full year performance. Unseasonably cold and wet weather has delayed the retail season in some parts of the U.S. and consumer demand is always the critical determining factor. Economic conditions throughout Southern Europe are challenging and we don't know what to expect in that region, but we feel good about where we are and our ability to adjust to unpredictable variables. As you can see from the results, Marine Electronics continues to be our primary growth engine, sales are up 11% in the first 6 months. Year-to-date operating profit is also up…

Thank you, Helen. Helen gave you a good picture of where we are and our plans going forward. Let me give you some perspective around the quarterly and year-to-date financials. First, operating expense, which was up in dollars on a year-to-date basis. Higher volume generally translates into higher expenses, but the primary driver behind the unfavorable year-over-year comparison was the favorable $3.5 million insurance settlement in last year's second quarter, which Helen mentioned earlier. That, along with increased investment in R&D, and the Jetboil acquisition, accounted for the year-over-year comparison in dollars. Now, despite these increases, operating expense is actually down for the first 6 months as a percentage of sales. A quick update on Jetboil, integration is on-track and the brand is adding to the top line. For all the reasons Helen stated earlier, it's too soon to project full year performance, but we remain bullish on the brand and the category. Now, we had a nice lift in gross margin for the quarter to 41%, a full 1.7 points gain over last year's quarter. Year-to-date gross margin is also up 1 point to 40.1%. Product mix in Marine Electronics was a big factor, since the majority of the unit sales are from higher margin new products. Gross profit also benefited from the transition last year from a dual brand to a single brand go-to-market strategy in the bigger water segment in Marine Electronics. Product mix in Watercraft is also better due to the continuing deemphasis on low margin SKUs. Inventory levels are higher year-over-year due to the delayed start of the retail selling season. Orders and sell-through at retail are what we would expect at the start of the season and our operations have the flexibility to ramp up or down quickly, depending on marketplace demand. Of course, we're keeping a close eye on things and we'll be ready to react to any changes in market dynamics, if and when that's necessary. As explained to you in the past 3 quarters, why our effective tax rate was unusually high. As I mentioned last quarter, we expected the rate to go down over the course of the year, as we drive more profits during the season in jurisdictions with deferred tax asset valuation allowances, and that's what's happened. In addition, we're benefiting from the retroactive recognition of the R&D credit enactment. We're also considering a number of other options to benefit our tax position on an ongoing basis. Lastly, the balance sheet continues to be strong with every business contributing to operating cash flow. Debt, net of cash, is below prior year despite the acquisition of Jetboil in the first quarter of this year. Our cash position is solid, providing us the opportunity to invest in targeted strategic growth opportunities when they arise, as we continue to evaluate a range of capital deployment opportunities. Now, I'll turn the call back over to the operator for questions. Operator?

[Operator Instructions] Our first question comes from the line of James Fronda from Sidoti & Company. James Fronda - Sidoti & Company, LLC: I guess, could you talk a little bit about any type of demographic issues you might be seeing? I mean, I know in the past, it's always been an older generation that you're after, but have you seen anything in terms of a younger generation buying the products?

Well, I would say, in general, that the kinds of products we have, target mid- to slightly older, and I would say that there hasn't been a noticeable shift, specifically due to the demographics. Certainly, we are trying to bring new and younger participants in and we see that -- we can read that in fishing because of fishing licenses. But it's been, I would say, a pretty steady rate that hasn't shown much volatility. James Fronda - Sidoti & Company, LLC: Okay. And I guess, with the warmer temperatures, do you think that'll, I guess, significantly benefit the second quarter of this year compared to last year, if the temperatures do warm up?

Our third quarter, you mean, our fiscal third quarter? James Fronda - Sidoti & Company, LLC: Oh, yes. Sorry.

That's okay. James Fronda - Sidoti & Company, LLC: Okay, David, on the cost side, I mean, you always mentioned a little bit of -- you were weary of inflation. Is that still the case or has that died down a bit?

Yes. We haven't really seen a whole lot of cost pressure for the season. So I never want to say it's died down because we always have to look forward to see what's happening in the commodity market, but so far, so good.

Our next question comes from the line of Brian Rafn from Morgan Dempsey.

Give me a sense, you talked, Helen, about SCUBAPRO at about 20%, what do you think on an incremental basis within your Value Plus 2015, what's kind of an incremental capture? A couple of percent a year or one less than 1%, maybe over 3-year period, what kind of goal might you have for SCUBAPRO?

Just so you know, in general, it's very hard to get shared data from the industry. And so a lot of it -- so it's not necessarily -- you can't get down to that kind of detail. I think, the SCUBAPRO plus our SUBGEAR brand, we think has opportunity to gain share and the reason we brought up the 20% is just to show how fragmented the market is, that there is room for growth. If you look at SCUBAPRO in the premium segment, which is where SCUBAPRO plays, we have a larger share of that market, but still room to grow. So I wouldn't put any specific emphasis on the quantitative aspect because we are estimating shares, but we have new products coming into the computer side of things that should be a significant plus to the business. Plus our SUBGEAR brand, we are in the U.S. I think have a stronger positioning for that brand. So we'll definitely see some momentum.

If you look at your premium, the SCUBAPRO, on the premium area, what is your estimated market share then, in just the premium line?

Well, I would say above 40%.

Yes, okay. Okay, that's good. Now, as you look at kind of the attempt to drive market share there, as you add in and when you talk about computer-related, are you talking about like depth gauges and things or from the computer side for diving?

Well, it's all -- it's computer, in general. The computers you use to dive, which manages your dive pattern, so it's across-the-board. But that area is where we have found there's some gaps in terms of innovation. And so that has been a key emphasis of ours. So that will be a SCUBAPRO computer launch and some are geared towards maybe simpler, user-friendly, and some have also more of the intricate details for the more avid diver. So we've got a good offering there.

Okay. As you look at the combined brands, Helen, is your sense that you can kind of drive incremental sales and market share better through SUBGEAR, or you think you'll be balanced across SCUBAPRO and SUBGEAR, what's your sense as a total dive package?

Well, I would say we have certainly opportunity in SCUBAPRO, specifically with the launch of our computer line. And I would say, SUBGEAR also has an opportunity as well and it is in the mid-priced segment, which is a fairly large segment of the product portfolio. So I think it's balanced across both.

Okay. Okay, that sounds good. Let me ask you, we're the largest institution or shareholder in the State of Wisconsin of Sturm, Ruger firearms and have been for about 25 years. So we get the hook and bullet, or hook and ammo issue. Is given your sporting goods, your athletic outdoor, is there any -- given that you have kind of a camping side, is there any incremental from Johnson Outdoor thoughts about maybe going into the hunting business? Be it non-firearm but hunting, in general? There's a very broad category there in apparel and things.

Well, I would say, in the near-term, our strategic plan -- we've identified significant opportunity within the segments in which we currently compete. We are always looking at opportunities out there. Certainly, hunt is a big one. There's a big chunk of apparel in hunt, which is not necessarily a core capability for us. So I would say, for now, we're staying in our current markets and see a lot of growth there, but always looking outside for opportunities.

Sure, sure. Do you have an idea of what's in -- in across the 4 categories, what's approximately your SKU count of products? Even a range, is it hundreds? And I guess I'm looking for a kind of a delta change?

I would say --

Are you adding? subtracting? We're rationalizing and getting down to the most profitable, the 80:20 rule, because when you're talking about new innovation, I guess, I'm looking more from a strategy standpoint, is -- does innovation bring in new products that then add to the top of the SKU pyramid and then you're like the leading, the maybe older more mature products that have falling off sales? I guess, I'm kind of looking for anything quantitative but then more of a qualitative, too?

Well, let me just say from a strategic standpoint, there is a heavy emphasis on SKU management. And we try very hard that it's -- when you introduce new products, that it's not incremental, that we do have the discipline of discontinuing those SKUs that are of lower volume. So we work hard at it, but needless to say, we do have -- there are some fairly SKU-heavy categories that we are in.

Okay, okay. Are you guys, maybe a question for Dave, are you guys seeing any incremental pressures on commodities? Are you seeing plateauing on costs? Are you seeing declines? Give me a sense on your kind of the cost of sales mix from the standpoint of pricing?

Yes, as I said earlier, I think, so far, so good, on the commodity side of things. Although we keep our ear to the ground on that, especially on the seasonal business, we have to make sure we understand what's happening there. At least for the foreseeable future, I think the pressure is okay in terms of the cost structure.

Okay. Kind of back to the weather on the fishing side. Is it been your experience that weather interdictions create a little bit of pent-up demand and then you see more of a pulsed recovery once the weather turns out? Or was it more incremental that, that's just kind of lost sales and when it picks up, it kind of picks up at a steady state?

I would say that, it's a very hard thing to predict and especially on top of a significant purchase, big -- significant purchase in the hunting area, which is our same consumer. But when the weather picks up, our fishing guys get out there, and that hopefully, the consumer demand follows, and that we can extend the season so we can get in the same amount of sales that we predicted. But some years that happens and some years it doesn't. So hopefully there's a lot of pent-up demand.

Yes, okay. Okay. Well, what is your sense -- and you had talked a little bit about, Helen, relative to the elasticity of the consumer and weather, and then some of the retailers who are, we've owned Cabela's in the past, shifting mix toward guns and ammo. Is this where you guys are going to be more of a just-in-time, short cycle delivery of fishing products? Or you think that over the course of some of these boutique retailers or the category super stores that they will inevitably come back to seasonal patterns in fishing inventory?

Well, we've had a pretty strong season of selling. So our fishing products have sold in well. So it's not that we will get stuck without product on the shelf. I think the key is are consumers going to buy? And is it going to -- how many turns are we going to get? And that, we can be prepared for. So we're ready to go and if they've got product on the shelf, so I don't think that timing is necessarily an issue. It's just, hopefully -- there's a repeat and restocking that goes on.

Yes. That would be -- you kind of jumped to my next question. When you look just at that kind of fishing side that you do such a fabulous job and -- is there -- and I'm kind of going back to our experience in the gun industry, is there -- the inventory delivery that you guys have, is that a kind of a bulk majority of inventory placed early in the season? And kind of what is the reorder pattern? Or is it very kind of balanced and symmetrical across the order season? There were plenty -- they are many replenishment cycles type thing. I'm just trying to understand how you get inventory into the retailer and how it, over the season, plays out?

Well, I think the customer's gotten much more sophisticated and certainly manages their inventory, as do we, much better. And also our manufacturing processes have gotten more efficient, so we're better with lead times. So we also use data a lot. So we help the customers understand how much they should carry. We don't load them up. We would rather be replenishing them than having them stuck with a lot of inventory. So I would say that, certainly, there's sell in, but we manage it, so that there is restocking and replenishment throughout the season depending on the demand.

Okay. You gone through any EDI -- like the electronic data interchange stuff or you're electronically managing that? Or is it all kind of purchase order in that?

No, what -- we have a kind of a unique system that we get point-of-purchase data from our big customers. And so, we can help manage inventory for them and with them, and we -- there is some automatic, but I would say, mostly, it's -- we have the information and we make recommendations.

Okay, okay. And I'll just ask one more and get back in line. Dave, you got a CapEx number for the balance of the year? And any CapEx going forward? Or CapEx D&A, however, you want to kind of...

Yes. I think CapEx will grow a little bit versus last year, so we're probably looking at the low teens in terms of CapEx.

[Operator Instructions] This does conclude the question-and-answer session of today's program. I'd like to turn the program back for any further remarks.

Okay, well, thank you, all, for joining us. And, again, if you have further questions, you can give Dave or Cynthia a call. Thank you very much.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.