Company: JOUT
Filing Date: 2025-12-12
Form Type: 10-K
Source: 0001140361-25-045348
Chunk: 36

Company: JOHNSON OUTDOORS INC
Filing Date: 2025-12-12
Form: 10-K
Item: Item 7
Chunk 36
---
 inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

Deferred Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.  The Company recorded a reserve on US deferred tax assets in fiscal 2025.  See Note 6, Income Taxes, to the consolidated financial statements included elsewhere in this report for additional information.  

Goodwill and Other Intangible Assets Impairment

Goodwill and indefinite-lived intangible assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired.  Generally, annual impairment tests are performed by the Company in the fourth quarter of each fiscal year.  Goodwill is tested for impairment at the reporting unit level.

In assessing the recoverability of the Company’s goodwill, the Company estimates the fair value of the reporting unit to which the goodwill relates.  Fair value of the reporting unit is estimated using a discounted cash flow model.  If the fair value of a reporting unit exceeds its carrying value, no impairment exists. When the fair value of the reporting unit is less than it's carrying value, an impairment charge is recognized based on the excess of carrying amount over its fair value,  not to exceed the carrying value of the goodwill.  The Company recognized a goodwill impairment charge in the fourth quarter of fiscal 2024 of $11,173 in "Goodwill Impairment" in the accompanying Consolidated Statements of Operations in the Fishing segment, resulting in a full impairment of the Company's balance of goodwill.  The Company did not recognize any goodwill impairment charges in 2025 or 2023.  See Note 1, subheading "Goodwill," to the consolidated financial statements included elsewhere in this report for additional information.  

The discounted cash flow model used to estimate fair value of reporting units requires a number of key estimates and assumptions.  The Company