Hello, everyone, and welcome to Johnson Outdoors Third 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, and good morning, everyone. And thank you for joining us for a discussion of Johnson Outdoors' results for the 2013 fiscal third 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 may differ materially from those statements due to a number of factors, many of which are beyond Johnson Outdoors' control. These risks and uncertainties include those listed in our media release today and our filings with the SEC. If you have additional questions following the call, please contact either Dave Johnson or me. It's now my pleasure to turn the call over to Helen Johnson-Leipold. Helen?

Good morning. I hope you've had an opportunity to review our third quarter earnings announcement. I'll start off with comments on the marketplace and our results, and then share perspectives on the future. Dave will cover some key financials. The third quarter is when the warm weather outdoor recreation season kicks into high gear. The breadth of our outdoor equipment portfolio provides us insight across a wide range of outdoor markets. While each is different, all have been impacted by an unseasonably cold and rainy spring, which delayed the start of the season and, to some extent, the long tail of the recession. None have returned to prerecession highs, which is why our emphasis on gaining share is so important. Our Johnson Outdoors 2015 3-year strategic plan was based on a continued, steady, moderate growth landscape across our markets. Consistent with that outlook, third quarter and year-to-date revenues were up 1% and 3.5%, respectively. Our plan's major focus is on growing profits faster than sales, and we're doing that, delivering 13% and 24% growth in operating profit year-over-year for the quarter and first 9 months, respectively. Net income rose dramatically, largely due to a lower effective tax rate and was up 52% and 71% year-over-year during the quarter and the year-to-date period, respectively. So solid results over all. Marine Electronics was the primary growth driver, bolstered by a strong lineup of new products which accounted for nearly half of sales during the quarter and the year thus far. This was a record third quarter for our fishing business and our outdoor gear business. Notably, consumer camping segment contributed to growth, primarily due to the addition of Jetboil, the leading camp stove brand, which we acquired last November. Declines in Watercraft sales were anticipated, as we continue to focus on higher…

Thank you, Helen. Good morning, everyone. Financial performance was solid for the quarter and year-to-date, particularly operating profit. As Helen pointed out, we're benefiting from significant efforts over the past few years, which have improved operational efficiency, enabling it to drop more to the bottom line. Going forward, we will realize additional benefit from 2 key initiatives this year. First, the scheduled closure of European Watercraft operations. When we established a footprint in Europe 10 years ago, the paddling market was really starting to take off. Despite healthy revenue growth early on, margins were pressured by consistently rising costs. Initially, we planned to move to a local distributor business model in the region. But with the state of the economy being what it is in Southern Europe, that just isn't viable. So we're closing the doors there at the end of September. Total Watercraft restructuring costs this year are expected to be about $1.6 million and we're projecting around $2 million of annual savings going forward. Second, a new satellite production facility in Mexicali, Mexico is supporting our motors business. The goal here is to protect and strengthen our competitive position in entry-level motors by enhancing features in our offering while controlling labor costs. We're moving carefully and methodically in getting this facility up and running and have been diligent in our efforts to ensure high-quality -- high-level quality processes and controls. Our Marine Electronics business has been growing steadily, and we're expecting that trend to continue. As a result, the Mexicali operation is an adjunct to, and not a replacement for, our global Minn Kota production hub in Mankato, Minnesota. So there's been no impact on jobs in Mankato. Pilot assembly testing is complete and we expect the facility to be in full production mode for the next fiscal…

[Operator Instructions] Our first question comes from James Fronda with Sidoti & Company. James Fronda - Sidoti & Company, LLC: Could you, I guess, talk about the commodity prices? I mean, do they still seem in check?

Yes, they seem to be in check so far. So we'll end the season in pretty good shape with that. James Fronda - Sidoti & Company, LLC: Okay. And I guess, could you give us a little more insight on, I guess, your Marine Electronics for the fourth quarter? Last year, revenues were slightly down, but the year before for that, they were significantly up. I mean, do you have any, I guess, insight?

On the fourth quarter? James Fronda - Sidoti & Company, LLC: Yes.

I don't know. I mean, it's hard to say because, again, the season started late. So if the weather holds, we could have a decent fourth quarter. But it's just -- it's hard to say right now. James Fronda - Sidoti & Company, LLC: Okay, all right. And any cash flow you get going forward, I guess, it'll be used to kind of on debt? Have you guys thought about a dividend at all?

Yes. We've been having a lot of discussion on what to do with our cash going forward. So all options are on the table, dividend, then we'll continue to look at other things.

Our next question comes from Brian Rafn with Morgan Dempsey.

Get back to that question, Dave, when you talked about commodities, would you say your supply chain commodity costs are flat? Would you say they're up slightly incrementally? Can you put a kind of a number on it?

Overall, there hasn't been a ton of movement. I mean, pockets here and there are up. But overall, I would say flat.

Okay. Is there anything from the standpoint x cost? Would there be anything in delays or longer lead times or anything for materials?

I don't understand the question, Brian? Can you clarify that?

Yes. Relative to if the supply chain cost for materials, if there really hasn't been much plus or minus in inflation in cost, are there any delays or lead-time changes in getting critical subassembly parts or materials?

It's always a challenge on the electronics side with long lead times. There hasn't been necessarily though a big change in that. So we continue to manage that pretty closely. But again, it's always a challenge.

Okay, okay. I missed your opening comments. I had to dial in 3 times, they didn't -- the operator couldn't find the call. So what -- the closure of the Watercraft plant, what was the -- I missed the dollar amount, severance cost or closure cost?

$1.6 million this year is what we expect in restructuring.

Okay, okay, okay. And as the -- as your business has built, what are you seeing relative to kind of the -- maybe not so much Marine Electronics, because it's a little bit more big-box, but kind of the scuba diving, camping, watercraft, some of the mom-and-pops, the specialty guys, what is their sentiment to build inventory? Is it strictly kind of just in time based on their demand, or are they building any channel inventory?

They have always been very concerned about building inventory. So they always keep it very tight, and that certainly isn't changing.

Okay, okay, okay. Anything from the standpoint of headcount changes? Where would be kind of your -- are you guys doing any hiring? Are you kind of maintaining? Give me a sense on your labor pool.

Overall, it's flat. As we'll go into next year, we'll do some investing and some hiring here and there where there's growth areas.

Okay, okay. And then what are you seeing salary, wages, kind of low-single digits? Anything out of the norm?

Nothing out of the norm right now. We're looking at low-single digits and pretty much the same that we've seen over the past couple of years.

Okay. Dave, the foreign tax valuations, the things that you've done to kind of get that back to more of a normal statutory rate, is that things that you can continue in the future? Or will you avail yourself of onetime tax provisions? Give me a sense of if that's ongoing.

Yes. This year, year-to-date, we're at a 22% rate. I don't think that will continue. I mean, I think, in the future, we'll get back up into a more normal rate. Now there are opportunities internationally that we'll take advantage of. But most of the stuff we've done on the U.S. side is pretty much behind us.

Okay, okay. And I missed your opening comments. What's kind of been the trend in the scuba diving area for this year?

Well, we have a significant piece of our business is outside of the U.S. and in Europe. And Europe is still being impacted from economic turmoil plus there's been bad weather, not just in Europe, but across the board. So it's been a challenge. I would say that we are certainly holding our own. It's hard to read on the shares, but our feeling is that we are at least maintaining our share or growing it.

Okay. Is there much -- Helen, relative to the scuba diving side, we ask it on the camping side with the military with, I think, Eureka! Is there much, I don't know, Navy SEAL or scuba diving for the military or for dive, like sheriff departments, rescue units, that type of thing. Is there much of that law enforcement for SCUBAPRO?

That's not a significant segment for us. We do sell in to that group as they need it, but it is not a specific area that we develop unique product for. So we are used by them, but not anywhere close to what we have done in our camping business.

[Operator Instructions] Our next question comes from Michael Schechter with Mentor.

Dave, what's your normalized tax rate?

Our U.S. federal tax rate is about 35% and we'll pay another 1 point or 2 on state, probably. So I usually think about 35% to 37% as a kind of a standard.

Okay. And just going back to the dividend concept, the balance sheet for the last 6 quarters on a 4-quarter average run rate has been positive cash, so there's no debt on the company. And the cash flows -- free cash flow after CapEx is running $2 a share. Have you thought about a dividend as well as -- I mean, conceivably putting a turn of debt on the company and paying out a special dividend just to bring this back to some financial discipline in capital allocation?

Yes. Mike, I mean, just to reiterate, I think we've had active discussions about what to do with our -- the good balance sheet that we do have. So I can't commit to anything right now, but just everything is on the table and we're looking at a lot of different options.

Okay. I mean, you know there are ways. I know you've got cash offshore. But you could pay a preferred if you didn't want to pay the tax on the cash. And certainly looks, given the way that cash flows are now, that you could easily support a $1 a share constant dividend and easily a $5 special dividend and have room to grow the company with acquisitions.

Yes, those are good ideas. And like I said, we'll continue to look at those kind of things.

Our next question comes from Brian Rafn with Morgan Dempsey.

Follow-up question on cash flow. What -- your capital funding rate, so if you look at property, plant and equipment due to depreciation and amortization, Dave, if you look out the next 3, 4 years, how would your kind of CapEx to D&A ratio run?

That's a good question, because this year we're investing. So CapEx will be a little bit higher than depreciation. I usually say, obviously, the long run is going to equal out. But probably for the next year or 2, as we continue to look at opportunities, that will translate into probably a higher CapEx number.

And where might -- where would you be kind of targeting that CapEx across your business the next couple of years?

Yes. I mean, Helen said in her remarks, we'll always look at technology. And we're very active in that, in trying to find the next technology level, so particularly in our fishing and electronics business. So that's where it could translate to.

Okay, okay. Any -- is the debt deleveraging or as debt paid down, would that be specifically -- that wouldn't be accelerated, that would be based on term structure of maturity?

Yes, we've got a term loan out there that with a fairly long maturity, and we probably won't do a lot with that. That's not a big number anyways, about $8 million in debt. So the rest is all revolver.

Okay. Let me ask the cash dividend question a different way, which is probably annoying on your side. But when you talk about that kind of being open for discussion, would that be something that you would say would be a policy that might be formalized within the next couple of quarters, within the next 2 years? We won't have anything for 5? What's kind of your horizon, maybe?

I can't really answer that, Brian. I mean, all I can tell you is that it's active. The discussion is very active.

Okay, okay, all right. And then on acquisitions, from a standpoint of your next 3-year plan, what -- how do you view the market for acquisitions on pricing the EBITDA multiple or an attractiveness for things that you could? Maybe a niche extension, a line extension, or something that you might look at for Johnson Outdoors?

I would say that it certainly varies by business and what we're looking at, especially if it's a company versus technology. But we are always looking externally and we evaluate opportunities as they come across our desk, plus we proactively look at areas that are strategic for us. We do not specifically incorporate numbers for an acquisition into our plan, but we're always looking and it will become incremental. It's -- there are companies for sale out there. There's also a lot of dollars on the sidelines waiting to invest. We evaluate every opportunity individually and we try to be very, very disciplined in our approach to it.

Helen, would you see the current environment is robust for acquisitions? Or would you see say it's, yes, there's some stuff out there but it's a little pricey. Can you put a kind of a flavor on it?

Well, there are certainly companies in the market out there. We're not specifically interested in looking at something that needs a 100% turnaround. It has to be strategically aligned. And if it is, we will pay the right price for it. So I think it is more opportunities than it has been in the last 12 to 24 months, but it's an ongoing assessment that we do.

I'm not showing any further questions at this time. I'd like to turn the conference back over to Helen for closing remarks.

Okay. Well, thanks, everyone, for joining us. And we look forward to speaking with you again at the end of the year. Thank you.

Ladies and gentlemen, this does concludes today's presentation. You may now disconnect and have a wonderful day.