Chairman’s Insights

Johnson Outdoors is generating record sales and improved earnings through winning innovation, successful acquisitions and European expansion; leveraging our assets and capabilities to build sustained, profitable growth; and well on the way to achieving a half-billion dollars in sales within the next few years.

The growth strategy, developed in 2001, continues to drive positive results, with more than a third of this year’s growth coming from innovative new products, and another third from acquisitions. In 2007, we again outperformed our peers, achieving record revenues despite uncertainty over the economy. Net sales exceeded $432 million, a nine percent increase over last year. Excluding military sales in this and the prior year, core brand revenues increased twelve percent. Net earnings were up six percent, to $9.2 million, or $1.00 per diluted share as we continued to invest in the future.

We demonstrated our commitment to enhanced shareholder value and our confidence in the future by returning profits to shareholders through quarterly dividends. and we continued working to manage accelerating growth efficiently as we complete the transformation of each business.

• In Marine Electronics, strong new products and innovative marketing drove a 20 percent increase in net sales. Minn Kota® became our first $100 million brand.
• Net sales for Diving increased 13 percent through the addition of Seemann™ Sub, one of Germany’s largest dive equipment providers, a successful new dive computer launch, and favorable currency translation.
• Well-received paddlesport innovations and double-digit growth in key international markets led to a three percent increase in Watercraft sales, partially offsetting a one-time $4.4 million settlement payment.
• Outdoor Equipment saw double-digit growth in core consumer sales, partially offsetting the expected decline in military tent sales. Consumer and commercial tents generated positive momentum.

This year we took an in-depth look at the outdoor recreation universe, prioritizing opportunities to expand our footprint. We explored innovative new marketing programs, creating the industry’s first infomercial for Humminbird® Side Imaging™ technology. and we analyzed our supply chains, identifying opportunities to improve profitability. We continue to refine our strategic growth plan while executing on its cornerstones: winning innovation, targeted acquisitions and geographic expansion.

Winning innovation. For the fourth straight year, more than a third of revenues flowed from new products such as the breakthrough Eureka!® N!ergy™ wired tent and the market-transforming Minn Kota® Terrova™ bow-mount trolling motor. And the pipeline is full of cutting-edge ideas for all our businesses.

We are the undisputed innovation leader in our markets, combining a passion for the outdoors with unique consumer insights and advanced technology to develop products aimed squarely at key growth sectors. Meaningful innovation drives demand for our brands, enables us to compete on quality rather than price, and helps us attract top talent. It empowers us to grow regardless of economic trends.

Targeted acquisitions. Once again more than a third of new growth came from strategic acquisitions of leading brands and state-of-the-art technology to complement our businesses. Humminbird® and Cannon® have exceeded expectations in a very short time. Lendal® is meeting targets, and Seemann™ Sub contributed significantly to Diving’s improved performance. Our year-end acquisition of Geonav®, a premier European chartplotter brand, further advances our growth strategy.

Geographic expansion. Five years ago we decided to test our marine and paddlesport brands in Europe, anticipating a $10 million opportunity. Continual year-over-year double-digit growth shows the opportunity is much larger. With the right business model, we believe all our brands have the chance to become market leaders in every key country throughout the region. Geonav® and Seemann™ give us the insight and local resources to deliver smart growth in Europe.

We enter 2008 with our long-term strategic growth plan on target, delivering industry-leading results. Our healthy balance sheet gives us the financial flexibility to move forward with our plans. We will continue investing in strengthened operations and enhanced capability. We will get and stay even closer to our consumers and customers. We will create a business model to deliver sustained profitable growth in Europe. We will pursue strategic acquisitions where the fit is just right. and true to our Johnson values, we will strive to be a workplace of choice for our talented, dedicated and passionate company family.

I welcome our employees, our consumers and our investors to be where the excitement is. Be here, with Johnson Outdoors.