THIS FORM 10-K/A SUPERSEDES IN ITS ENTIRETY THE FORM 10-K FILED ON
DECEMBER 19, 1995.
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1 TO
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-16255
JOHNSON WORLDWIDE ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1536083
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
1326 Willow Road, Sturtevant, Wisconsin 53177
(Address of principal executive offices)
(414) 884-1500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Class A Common Stock, $.05 par value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
[ X ] Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K, or any amendment to this Form 10-K.
As of November 15, 1995, 6,896,959 shares of Class A and 1,228,537
shares of Class B common stock of the Registrant were outstanding. The
aggregate market value of voting stock of the Registrant held by
non-affiliates of the Registrant was approximately $101,859,000 on
November 15, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Document Part and Item Number of
Form 10-K into which
Incorporated
1. Johnson Worldwide Associates, Inc. Part I, Items 1 and 2,
1995 Annual Report and Part II,
Items 5, 6, 7 and 8
2. Johnson Worldwide Associates, Inc. Part III, Items 10, 11,
Notice of Annual Meeting of 12 and 13
Shareholders and Proxy Statement
for the Annual Meeting of
Shareholders on January 24, 1996
<PAGE>
THIS FORM 10-K/A SUPERSEDES IN ITS ENTIRETY THE FORM 10-K FOR THE FISCAL
YEAR ENDED SEPTEMBER 29, 1995 FILED, IN ERROR, BY THE COMPANY'S AGENT ON
DECEMBER 19, 1995. THAT FILING WAS INCOMPLETE AND SHOULD BE DISREGARDED.
THIS FORM 10-K/A INCLUDES ALL REQUIRED INFORMATION.
PART I
ITEM 1. BUSINESS
Johnson Worldwide Associates, Inc. and its subsidiaries (the "Company")
are engaged in the manufacture and marketing of recreational products.
Until the third quarter of fiscal 1994, the Company also manufactured and
marketed marking systems products. In July 1993, the Company announced
its intention to sell its marking systems business and, in accordance with
this decision, the marking systems business is presented as a discontinued
operation in the Company's Consolidated Financial Statements. Additional
information regarding the marking systems business is set forth at Note 3
to the Consolidated Financial Statements on page 22 in the Company's 1995
Annual Report, which is incorporated herein by reference. Financial
information for the foreign and domestic operations of the Company's
recreational business is set forth at Note 13 to the Consolidated
Financial Statements on page 26 in the Company's 1995 Annual Report which
is incorporated herein by reference.
The Company's primary focus is on marketing and product innovation and
design to achieve strong brand names and consumer recognition. Research
and development activities for each of the Company's principal businesses
emphasize new products and innovations to differentiate the Company's
products from those of its competitors.
The Company is controlled by Samuel C. Johnson, members of his family and
related entities.
Fishing and Camping Products
The Company's fishing and camping products include Minn Kota electric
fishing motors and accessories, Mitchell reels and rods, Johnson reels,
Beetle Spin soft body lures, Johnson spoons, Deckhand electric boat anchor
systems, Eureka! and Camp Trails tents and backpacks, Old Town canoes and
kayaks, Carlisle paddles, Silva compasses, and Jack Wolfskin camping
tents, backpacks and outdoor clothing. In 1995, the Company acquired the
SpiderWire product line, giving it an entry into the "superline" segment
of the fishing line market. The Company also acquired the Neptune product
line of electric motors and power accessories, which expands its range of
such products.
The overall fishing and camping markets in which the Company competes have
grown moderately in recent years. The Company believes it has been able
to maintain its share of most markets primarily as a result of the
Company's emphasis on marketing and product innovation. Research and
development emphasizes new products and innovations to provide
demonstrable product differentiation and expanded product lines. Consumer
advertising and promotion include advertising on regional television and
in outdoor, general interest and sports magazines, in-store displays and
sponsorship of fishing tournaments. Packaging and point-of-purchase
materials are used to increase consumer appeal and sales.
Electric Fishing Motors
The Company manufactures, under its Minn Kota and Neptune names, battery
powered motors used on fishing boats and other boats for quiet trolling
power or primary propulsion. The Company's Minn Kota and Neptune motors
and related accessories are sold primarily in the United States through
large retail store chains such as Wal Mart and K-Mart, through catalogs,
such as Bass Pro Shops, and through marine dealers.
Fishing Line
The Company purchases, through a third-party manufacturer, its SpiderWire
and SpiderWire Fusion products, which have performance characteristics
superior to those of monofilament fishing line. SpiderWire competes in
the "superline" segment of the fishing line category, while the recently
introduced SpiderWire Fusion is positioned at the high end of the
monofilament market. These products are sold through large retail store
chains, catalogs and specialty stores.
Rods and Reels
The Company markets Johnson fishing reels, which are primarily closed-face
reels, as well as Mitchell reels, which are primarily open-faced reels.
Reels are sold individually and in rod and reel combinations, primarily
through large retail store chains, catalogs and specialty fishing shops in
the United States, Canada and Europe. The Company's closed-face reels
compete in a segment of the U.S. fishing reel market which is dominated by
larger manufacturers. Marketing support for the Company's reels is
focused on building brand names, emphasizing product features and
innovations and on developing specific segments of the reel market through
advertising in national outdoor magazines, through trade and consumer
support at retail and through sponsorship of fishing tournaments.
Lure Products
The Company's artificial lure products consist of Beetle Spin soft body
lures, and Johnson spoons. These products are sold primarily through
large retail store chains.
Tents and Backpacks
The Company's Eureka! and Camp Trails tents and backpacks compete
primarily in the mid- to high-price range of their respective markets and
are sold in the United States through independent sales representatives
primarily to sporting goods stores, catalog and mail order houses and
camping and backpacking specialty stores. Marketing of the Company's
tents and backpacks is focused on building the Eureka! and Camp Trails
brand names and establishing the Company as a leader in product design and
innovation. The Company's tents and backpacks are produced by off-shore
manufacturing sources.
The Company markets both Eureka! camping and commercial tents. The
Company's camping tents have outside self-supporting aluminum frames
allowing quicker and easier set-up, a design approach first introduced by
the Company. Most of the Eureka! tents are made from breathable nylon.
The Company's commercial tents include party tents and tents for fairs.
Party tents are sold primarily to general rental stores while other
commercial tents are sold directly to tent erectors. Commercial tents are
manufactured by the Company in the United States.
Camp Trails backpacks consist primarily of internal and external frame
backpacks for hiking and mountaineering. The Company's line of Camp
Trails backpacks also includes soft back bags, day packs and travel packs.
Jack Wolfskin, a German marketer of camping tents, backpacks and outdoor
clothing, distributes its products primarily through camping and
backpacking specialty stores in Germany with additional distribution in
other European countries and the United States and, under license, in
Japan.
Canoes and Kayaks
The Company's watercraft are sold under the Old Town name and consist of
whitewater, tripping, touring and general recreational purpose canoes for
the high quality and mid-price segments of the canoe market and
recreational and higher performance kayaks. The Company has developed a
proprietary roto-molding process for manufacturing polyethylene canoes to
compete in the higher volume mid-priced range of the market. These canoes
maintain many of the design and durability characteristics of higher
priced canoes. The Company also manufactures canoes from fiberglass,
Royalex (ABS) and wood. The Company's canoes are sold primarily to
sporting goods stores, catalog and mail order houses such as L. L. Bean,
canoe specialty stores and marine dealers in the United States and Europe.
The United States market for canoes is relatively constant, but the
Company believes, based on industry data, that it is the leading
manufacturer of canoes in the United States in unit and dollar sales.
Carlisle Paddles, a manufacturer of composite canoe paddles, supplies
certain paddles that are sold with the Company's canoes as well as
supplying paddles which are distributed through the same channels as the
Company's watercraft.
Diving and Marine Products
Diving
The Company believes that it is one of the world's largest manufacturers
and distributors of underwater diving products which it sells under the
Scubapro and SnorkelPro names. The Company markets a full line of
snorkeling and underwater diving equipment including regulators,
stabilizing jackets, tanks, depth gauges, masks, fins, snorkels, diving
electronics and other accessories. Scubapro products are marketed to the
high quality, premium priced segment of the market. The Company maintains
a marketing policy of limited distribution and sells primarily through
independent specialty diving shops worldwide. These diving shops
generally provide a wide range of services to divers, including
instruction and repair service. Scubapro products are marketed primarily
in Europe, the United States and the Pacific Basin.
The Company focuses on maintaining Scubapro as the market leader in
innovations and new products. The Company maintains a research and
development staff both in the United States and Italy and has obtained
several patents on Scubapro products and features. Consumer advertising
focuses on building the Scubapro brand name and position as the high
quality and innovative leader in the industry. The Company advertises its
Scubapro equipment in diving magazines and through in-store displays.
The Company maintains manufacturing and assembly facilities in the United
States and Italy. The Company procures a number of its rubber and plastic
products and components from offshore sources.
Marine Products
The Company is a leading supplier in Europe of marine products and
accessories primarily for sailing, which are sold under the Plastimo name.
Plastimo products and accessories include safety products (such as
buoyancy vests and inflatable life rafts), mooring products (such as
anchors, fenders and ladders), navigational equipment (such as cockpit
instruments, automatic pilots and compasses) and jib reefing systems.
Plastimo products are sold to a lesser extent in the United States and
other markets worldwide.
The Company's line of Airguide marine, weather and automotive instruments
are distributed primarily in the United States through large retail store
chains and original equipment manufacturers.
Sales by Category
The following table depicts net sales of continuing operations by major
product category:
Year Ended
September 29, September 30, October 1,
1995 1994 1993
(thousands)
Fishing $127,597 $ 94,363 $ 84,773
Camping 98,963 87,529 86,118
Diving 77,667 66,884 66,225
Marine 42,963 35,567 43,176
-------- -------- --------
$347,190 $284,343 $280,292
======== ======== ========
Sales to Wal Mart Stores, Inc. and its affiliated entities totaled
$34,902,000 in 1995. No customer accounted for 10% or more of sales in
1994 or 1993.
International Operations
See Note 13 to the Consolidated Financial Statements on page 26 of the
Company's 1995 Annual Report which is incorporated herein by reference,
for financial information comparing the Company's domestic and
international operations.
Research and Development
The Company commits significant resources to research and new product
development. The Company expenses research and development costs as
incurred. The amounts expended by the Company in connection with research
and development activities for each of the last three fiscal years are set
forth in the Consolidated Statements of Operations on page 17 of the
Company's 1995 Annual Report which is incorporated herein by reference.
Competition
The markets for most of the Company's products are quite competitive. The
Company believes its products compete favorably on the basis of product
innovation, product performance and strong marketing support, and to a
lesser extent, price.
Employees
At September 29, 1995, the Company had approximately 1,342 employees
working in its businesses. The Company considers its employee relations
to be excellent.
Patents, Trademarks and Proprietary Rights
The Company owns no single patent which is material to its business as a
whole. However, the Company holds several patents, principally for diving
products and roto-molded canoes and has filed several applications for
patents. The Company also has numerous trademarks and trade names which
the Company considers important to its business.
Sources and Availability of Materials
The Company's products use materials that are generally in adequate
supply. In 1995, however, the Company experienced shortages in the supply
of magnets, which are key components used in its electric motors. The
shortage of magnets hindered the Company's ability to meet customer demand
for its electric motor products. The magnet supply situation has been
resolved.
Seasonality
The Company's business is seasonal. The following table shows total net
sales and operating profit of the Company's continuing operations for each
quarter, as a percentage of the total year. An inventory writedown of
$5.4 million is included as a component of the fourth quarter operating
loss in 1994. A restructuring charge of $13.0 million is included as a
component of the fourth quarter operating loss in 1993.
Year Ended
September 29, 1995 September 30, 1994 October 1, 1993
Operating Operating Operating
Quarter Net Profit Net Profit Net Profit
Ended Sales (Loss) Sales (Loss) Sales (Loss)
December 15% (8)% 16% (8)% 17% (11)%
March 31 50 30 61 30 99
June 34 66 33 78 33 110
September 20 (8) 21 (31) 20 (98)
---- ----- ----- ----- ----- ------
100% 100 % 100% 100% 100% 100 %
=== ==== === ==== ==== ====
Executive Officers of the Registrant
Pursuant to General Instruction of G(3) of Form 10-K, the following list
is included as an unnumbered Item in Part I of this report in lieu of
being included in the Company's Proxy Statement for the January 24, 1996
Annual Meeting of Shareholders.
Mr. Crabb, age 52, became President and Chief Executive Officer in January
1994. He served as President and Chief Operating Officer of the Company
from 1992 to January 1994. Mr. Crabb served as Executive Vice
President-Regional Director, Consumer Products, Europe of S.C. Johnson and
Son, Inc. ("SCJ") from 1990 to 1992 and from 1984 to 1990 was Vice
President-Regional Director of Asia/Pacific of SCJ. Mr. Crabb joined SCJ
in 1970.
Mr. Blime, age 54, became a Vice President of the Company and President of
JWA Europe in 1993. From 1982 to 1993, Mr. Blime was President and
Directeur General of Mitchell Sports, S.A., a subsidiary of the Company
since 1990.
Mr. Inslee, age 57, became Vice President-Human Resources of the Company
in 1991. From 1988 to 1991, Mr. Inslee was Director of Human Resources of
the Company. He was Director of Personnel at SCJ from 1981 to 1988. Mr.
Inslee joined SCJ in 1960.
Mr. Schmidt, age 39, became Senior Vice President of the Company in May
1995 and has been Chief Financial Officer, Secretary and Treasurer of the
Company since July 1994. From July 1994 until May 1995, Mr. Schmidt was a
Vice President of the Company. From 1988 to July 1994, he was a partner
in the firm of KPMG Peat Marwick LLP.
Ms. Johnson-Leipold, age 38, became Executive Vice President - North
American Businesses of the Company in October 1995. From 1992 until
October 1995, she was Vice President - Consumer Marketing Services -
Worldwide of SCJ and from 1988 to 1992 she was Director of Marketing
Services of SCJ.
There are no family relationships between the above executive officers.
ITEM 2. PROPERTIES
The Company maintains both leased and owned manufacturing, warehousing,
distribution and office facilities throughout the world.
The Company's manufacturing processes are primarily assembly operations
and the Company prefers to lease rather than own facilities to maintain
operational flexibility and control the investment of financial resources
in property. See Note 6 to the Consolidated Financial Statements on Page
23 of the Company's 1995 Annual Report for a discussion of lease
obligations.
The Company believes that its facilities are well maintained and have a
capacity adequate to meet the Company's current needs.
The Company's principal manufacturing locations and distribution centers
are:
Antibes, France Grayling, Michigan Old Town, Maine
Bad Sakingen, Germany Henan, Sweden Old Woking, Surrey,
England
Barcelona, Spain Henggart, Switzerland Oslo, Norway
Binghamton, New York Honolulu, Hawaii Racine, Wisconsin
Bruxelles, Belgium Lorient, France Rancho Dominguez,
California
Burlington, Ontario, Mankato, Minnesota Salzburg-Glasenbach,
Canada Austria
Carlisle, Cumbria, Marignier, France Schoonhoven, Holland
England
Chicago, Illinois Mitcham, Surrey, Silverwater, Australia
England
Eastleigh, Hampshire, Morfelden-Walldorf, Tokyo (Kawasaki), Japan
England Germany
Genoa, Italy Nykoping, Sweden
The Company's Marking Systems' principal locations were:
Boras, Sweden Cookeville, Tennessee Utica, New York
Brookfield, Houston, Texas
Connecticut
The Company's corporate headquarters is located in Mount Pleasant,
Wisconsin. The Company's mailing address is Sturtevant, Wisconsin.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various legal actions and proceedings in the
normal course of business, including those related to environmental
matters. Although litigation is subject to many uncertainties and the
ultimate exposure with respect to these matters cannot be ascertained,
management does not believe the final outcome will have a significant
effect on the Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
last quarter of the year ended September 29, 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to this item is included on pages 23, 25, 26 and
28 and the inside back cover of the Company's 1995 Annual Report and is
incorporated herein by reference.
There is no public market for the Registrant's Class B Common Stock.
However, the Class B Common Stock is convertible at all times at the
option of the holder into shares of Class A Common Stock on a share for
share basis. As of November 15, 1995, the Company had 791 Holders of
Record of its Class A Common Stock and 71 Holders of Record of its Class B
Common Stock.
The Company has never paid a dividend on its Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to this item is included on page 28 of the
Company's 1995 Annual Report and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information with respect to this item is included on pages 13 to 15 of the
Company's 1995 Annual Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplemental data of
the Registrant and subsidiaries, included on pages 16 through 28 of the
Company s 1995 Annual Report, are incorporated herein by reference:
Consolidated Balance Sheets - September 29, 1995 and September 30,
1994
Consolidated Statements of Operations - Years ended September 29,
1995, September 30, 1994 and October 1, 1993
Consolidated Statements of Shareholders' Equity - Years ended
September 29, 1995, September 30, 1994 and October 1, 1993
Consolidated Statements of Cash Flows - Years ended September 29,
1995, September 30, 1994 and October 1, 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
Five Year Financial Summary
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, except for information on the
Executive Officers which appears at the end of Part I of this report, is
included in the Company's January 24, 1996 Proxy Statement under the
headings "Election of Directors" and "Other Matters" and is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is included in the Company's January
24, 1996 Proxy Statement under the heading "Executive Compensation" and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information with respect to this item is included in the Company's January
24, 1996 Proxy Statement under the heading "Stock Ownership of Management
and Others" and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is included in the Company's January
24, 1996 Proxy Statement under the heading "Certain Transactions" and is
incorporated herein by reference.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
A. The following documents are filed as a part of this Form 10-K:
1. Financial Statements:
Included in Item 8 of Part II of this Form 10-K are the
following Consolidated Financial Statements, related notes
thereto, and independent auditors' report which are
incorporated herein by reference from the 1995 Annual Report:
Consolidated Balance Sheets - September 29, 1995 and
September 30, 1994
Consolidated Statements of Operations - Years ended
September 29, 1995, September 30, 1994 and
October 1, 1993
Consolidated Statements of Shareholders' Equity - Years
ended September 29, 1995, September 30, 1994 and
October 1, 1993
Consolidated Statements of Cash Flows - Years ended
September 29, 1995, September 30, 1994 and
October 1, 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
Five Year Financial Summary
2. Financial Statement Schedules and Independent Auditors'
Report:
Included in Part IV of this Form 10-K is the following
financial statement schedule and independent auditors' report:
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not
applicable, are not required or equivalent information has
been included in the Consolidated Financial Statements or
notes thereto.
3. Exhibits
See Exhibit Index.
B. Reports on Form 8-K:
On May 26, 1995, the Company filed a Current Report on Form 8-K
dated May 11, 1995 to reflect (under Item 2 of Form 8-K) the
Company's acquisition of the assets of the SpiderWire product line
of Safari Land Ltd., Inc. On July 25, 1995, the Company filed an
amendment on Form 8-K/A to the Company's Current Report on Form 8-
K dated May 11, 1995. The report, as amended, included (under
Item 7 of Form 8-K) the following financial statements: Statement
of Assets Acquired as of March 31, 1995, Statements of Revenues
and Direct Operating Expenses for the year ended September 30,
1994 and the six months ended March 31, 1995, Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 1995 and Pro Forma
Condensed Consolidated Statements of Operations for the year ended
September 30, 1994 and for the six months ended March 31, 1995.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Johnson Worldwide Associates, Inc.:
Under date of November 8, 1995, we reported on the consolidated balance
sheets of Johnson Worldwide Associates, Inc. and subsidiaries as of
September 29, 1995 and September 30, 1994, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of
the years in the three-year period ended September 29, 1995, as contained
in the 1995 Annual Report. These consolidated financial statements and
our report thereon are incorporated by reference in the Annual Report on
Form 10-K for the fiscal year 1995. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule as listed in Item 14A.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
November 8, 1995
<PAGE>
JOHNSON WORLDWIDE ASSOCIATES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(thousands)
Additions
Balance at Charged to Balance
Beginning Costs and Deductions at End
of Year Expenses (1) of Year
Year ended September 29,
1995:
Allowance for doubtful
accounts $2,317 $1,567 $1,274 $2,610
Year ended September 30,
1994:
Allowance for doubtful
accounts 1,606 1,421 710 2,317
Year ended October 1,
1993:
Allowance for doubtful
accounts 1,867 994 1,255 1,606
(1) Includes the impact of foreign currency fluctuations on this balance
sheet account.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Town of Mount Pleasant and State of Wisconsin, on the 12th day of
December, 1995.
JOHNSON WORLDWIDE ASSOCIATES, INC.
(Registrant)
By /s/ John D. Crabb
John D. Crabb
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the
report has been signed by the following persons in the capacities
indicated on the 12th day of December, 1995.
/s/ Samuel C. Johnson Chairman of the Board
(Samuel C. Johnson) and Director
/s/ John D. Crabb President and Chief Executive
(John D. Crabb) Officer and Director
(Principal Executive Officer)
/s/ Donald W. Brinckman Director
(Donald W. Brinckman)
/s/ Raymond F. Farley Director
(Raymond F. Farley)
/s/ Helen P. Johnson-Leipold Executive Vice President -
(Helen P. Johnson-Leipold) Businesses and Director
/s/ Thomas F. Pyle, Jr. Director
(Thomas F. Pyle, Jr.)
/s/ Carl G. Schmidt Senior Vice President and
(Carl G. Schmidt) Officer, Secretary and
(Principal Financial and
<PAGE>
JOHNSON WORLDWIDE ASSOCIATES, INC.
EXHIBIT INDEX
Exhibits Title Page No.
3.1 Articles of Incorporation of the *
Company. (Filed as Exhibit 3.1 to
the Company's Form S-1 Registration
Statement No. 33-16998, and
incorporated herein by reference.)
3.2 Bylaws of the Company as Amended *
through January 27, 1994 (Filed as
Exhibit 3.2 to the Company's Form
10-K for the year ended September
30, 1994 and incorporated herein by
reference.)
4.1 Note Agreement dated May 1, 1991. *
(Filed as Exhibit 4 to the
Company's Form 10-Q for the quarter
ended June 28, 1991 and
incorporated herein by reference).
4.2 Revolving and Term Loan Agreement *
dated October 2, 1991. (Filed as
Exhibit 4.4 to the Company's Form
10-K for the year ended September
27, 1991 and incorporated herein by
reference.)
4.3 Revolving Loan Agreement dated *
April 2, 1993. (Filed as Exhibit 4
to the Company's Form 10-Q for the
quarter ended April 2, 1993 and
incorporated herein by reference.)
4.4 Note Agreement dated May 1, 1993. *
(Filed as Exhibit 4 to the
Company's Form 10-Q for the quarter
ended July 2, 1993 and incorporated
herein by reference.)
4.5 Letter Amendment No. 1 dated *
September 30, 1993 to Note
Agreement dated May 1, 1991
4.6 Letter Amendment No. 1 dated *
September 27, 1993 to Revolving and
Term Loan Agreement dated October
2, 1991
4.7 Letter Amendment No. 1 dated *
September 27, 1993 to Revolving
Loan Agreement dated April 2, 1993
4.8 Letter Amendment dated September *
30, 1993 to Note Agreement dated
May 1, 1993
4.9 Letter Amendment No. 2 dated *
September 30, 1994 to Revolving and
Term Loan Agreement dated October
2, 1991 (Filed as Exhibit 4.9 to
the Company's Form 10-K for the
year ended September 30, 1994 and
incorporated herein by reference.)
4.10 Letter Amendment No. 2 dated August *
29, 1994 to Revolving Loan
Agreement dated April 2, 1993
(Filed as Exhibit 4.10 to the
Company's Form 10-K for the year
ended September 30, 1994 and
incorporated herein by reference.)
4.11 Letter Amendment No. 3 dated August -
14, 1995 to Revolving and Term Loan
Agreement dated October 2, 1991.
4.12 Letter Amendment No. 3 dated August -
14, 1995 to Revolving Loan
Agreement dated April 2, 1993.
9. Johnson Worldwide Associates, Inc. *
Class B Common Stock Voting Trust
Agreement, dated December 30, 1993
(Filed as Exhibit 9 to the
Company's Form 10-Q for the quarter
ended December 31, 1993 and
incorporated herein by reference.)
10.1 Asset Purchase Agreement between *
Johnson Worldwide Associates, Inc.
and Safari Land Ltd., Inc. dated as
of March 31, 1995 (Filed as Exhibit
2 to the Company's Form 10-Q for
the quarter ended March 31, 1995
and incorporated herein by
reference.)
10.2 Discretionary Bonus Option Plan. *
(Filed as Exhibit 10-2 to the
Company's Form S-1 Registration
Statement No. 33-16998, and
incorporated herein by reference.)
10.3 Johnson Worldwide Associates, Inc. *
Amended and Restated 1986 Stock
Option Plan. (Filed as Exhibit 10
to the Company's Form 10-Q for the
quarter ended July 2, 1993 and
incorporated herein by reference.)
10.4 Registration Rights Agreement *
regarding Johnson Worldwide
Associates, Inc. Common Stock
issued to the Johnson family prior
to the acquisition of Johnson
Diversified, Inc. (Filed as
Exhibit 10.6 to the Company's Form
S-1 Registration Statement No.
33-16998, and incorporated herein
by reference.)
10.5 Registration Rights Agreement *
regarding Johnson Worldwide
Associate, Inc. Class A Common
Stock held by Mr. Samuel C.
Johnson. (Filed as Exhibit 28 to
the Company's Form 10-Q for the
quarter ended March 29, 1991 and
incorporated herein by reference.)
10.6 Form of Restricted Stock Agreement. *
(Filed as Exhibit 10.8 to the
Company's Form S-1 Registration
Statement No. 33-23299, and
incorporated herein by reference.)
10.7 Form of Supplemental Retirement *
Agreement of Johnson Diversified,
Inc. (Filed as Exhibit 10.9 to the
Company's Form S-1 Registration
Statement No. 33-16998, and
incorporated herein by reference.)
10.8 Johnson Worldwide Associates *
Retirement and Savings Plan. (Filed
as Exhibit 10.9 to the Company's
Form 10-K for the year ended
September 29, 1989 and incorporated
herein by reference.)
10.9 Form of Agreement of Indemnity and *
Exoneration with Directors and
Officers. (Filed as Exhibit 10.11
to the Company's Form S-1
Registration Statement No.
33-16998, and incorporated herein
by reference.)
10.10 Consulting and administrative *
agreements with S. C. Johnson &
Son, Inc. (Filed as Exhibit 10.12
to the Company's Form S-1
Registration Statement No.
33-16998, and incorporated herein
by reference.)
10.11 Johnson Worldwide Associates, Inc. *
Stock Option Plan for Non-Employee
Directors. (Filed as Exhibit 4.2
to the Company's Form S-8
Registration Statement No. 33-19805
and incorporated herein by
reference.)
10.12 Johnson Worldwide Associates, Inc. *
1994 Long-Term Stock Incentive Plan
(Filed as Exhibit 4 to the
Company's S-8 Registration
Statement No. 33-52073 and
incorporated herein by reference.)
11. Statement regarding computation of *
per share earnings. (Incorporated
by reference to Note 14 to the
Consolidated Financial Statements
on page 26 of the Company's 1995
Annual Report.)
13. Portions of the Johnson Worldwide -
Associates, Inc. 1995 Annual Report
that are incorporated herein by
reference.
21. Subsidiaries of the Company as of -
September 29, 1995.
23. Consent of KPMG Peat Marwick LLP. -
27. Financial Data Schedule -
99. Definitive Proxy Statement for the *
1996 Annual Meeting of Shareholders
(Previously filed via the EDGAR
system and incorporated herein by
reference). Except to the extent
incorporated herein by reference,
the Proxy Statement for the 1996
Annual Meeting of Shareholders
shall not be deemed to be filed
with the Securities and Exchange
Commission as part of this Annual
Report on Form 10-K.
* Incorporated herein by reference.
EXHIBIT 4.11
This Amendment No. 3 is entered into as of August 14, 1995
between Johnson Worldwide Associates, Inc. (the "Company"), Firstar Bank
Milwaukee, N.A. and Societe Generale (each individually, a "Bank" and
collectively, "the Banks") and The First National Bank of Chicago as a
Bank and as agent for the Banks (the "Agent").
W I T N E S S E T H :
WHEREAS, the Company, the Banks and the Agent are parties to
that certain Revolving Loan Agreement dated as of October 2, 1991 (the
"Credit Agreement"); and
WHEREAS, the Company, the Banks and the Agent desire to amend
the Credit Agreement to extend the termination date;
NOW, THEREFORE, in consideration of the premises herein
contained, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms
in the Credit Agreement.
2. Amendment of the Credit Agreement. The definition of
"Revolving Commitment Expiration Date" in Section 1.01 of the Credit
Agreement is amended by deleting the date contained therein and
substituting therefor the date "October 31, 1995".
3. Effective Date. This Amendment shall become effective as
of the date first above written upon execution of this Amendment by the
Company, the Banks and the Agent.
4. Ratification. The Credit Agreement, as amended hereby, is
hereby ratified, approved and confirmed in all respects.
5. Reference to Credit Agreement. From and after the
effective date hereof, each reference in the Credit Agreement to "this
Agreement", "hereof", or "hereunder" or words of like import, and all
references to the Credit Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and nature
shall be deemed to mean the Credit Agreement, as amended by this
Amendment.
6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Company, the Banks and the Agent have
executed this Amendment as of the date first above written.
JOHNSON WORLDWIDE ASSOCIATES,
INC.
By: _________________________________
Title: _______________________
1326 Willow Road
Sturtevant, Wisconsin 53177
THE FIRST NATIONAL BANK OF
CHICAGO,
Individually and as Agent
By: _________________________________
Title: ________________________
One First National Plaza
Chicago, Illinois 60670
FIRSTAR BANK MILWAUKEE, N.A.
By: _________________________________
Title: ________________________
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
SOCIETE GENERALE
By: _________________________________
Title: _______________________
181 West Madison Street
Suite 3400
Chicago, Illinois 60602
EXHIBIT 4.12
This Amendment No. 3 is entered into as of August 14, 1995
between Johnson Worldwide Associates, Inc. (the "Company"), Firstar Bank
Milwaukee, N.A., M&I Marshall & Ilsley Bank and NBD Bank (each
individually, a "Bank" and collectively, "the Banks") and The First
National Bank of Chicago as a Bank and as agent for the Banks (the
"Agent").
W I T N E S S E T H :
WHEREAS, the Company, the Banks and the Agent are parties to
that certain Revolving Loan Agreement dated as of April 2, 1993 (the
"Credit Agreement"); and
WHEREAS, the Company, the Banks and the Agent desire to amend
the Credit Agreement to extend the termination date;
NOW, THEREFORE, in consideration of the premises herein
contained, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms
in the Credit Agreement.
2. Amendment of the Credit Agreement. The definition of
"Maturity Date" in Section 1.01 of the Credit Agreement is amended by
deleting the date contained therein and substituting therefor the date
"October 31, 1995".
3. Effective Date. This Amendment shall become effective as
of the date first above written upon execution of this Amendment by the
Company, the Banks and the Agent.
4. Ratification. The Credit Agreement, as amended hereby, is
hereby ratified, approved and confirmed in all respects.
5. Reference to Credit Agreement. From and after the
effective date hereof, each reference in the Credit Agreement to "this
Agreement", "hereof", or "hereunder" or words of like import, and all
references to the Credit Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind and nature
shall be deemed to mean the Credit Agreement, as amended by this
Amendment.
6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Company, the Banks and the Agent have
executed this Amendment as of the date first above written.
JOHNSON WORLDWIDE ASSOCIATES,
INC.
By: _________________________________
Title: __________________
1326 Willow Road
Sturtevant, Wisconsin 53177
THE FIRST NATIONAL BANK OF
CHICAGO,
Individually and as Agent
By: _________________________________
Title: ______________________
One First National Plaza
Chicago, Illinois 60670
FIRSTAR BANK MILWAUKEE, N.A.
By: _________________________________
Title: _______________________
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
M&I MARSHALL & ILSLEY BANK
By: _________________________________
Title: ______________________
770 North Water Street
Milwaukee, Wisconsin 53202
NBD BANK
By: _________________________________
Title: ______________________
611 Woodward Avenue
Detroit, Michigan 48226
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion includes comments and analysis relating to the
Company's results of operations and financial condition for the three
years ended September 29, 1995. This discussion should be read in
conjunction with the consolidated financial statements and related notes
that immediately follow this section. Comparisons reflect results from
continuing operations.
Foreign Operations
The Company has significant foreign operations, for which the functional
currencies are denominated primarily in French francs, German marks,
Italian lire, Japanese yen and Canadian dollars. As the values of the
currencies of the foreign countries in which the Company has operations
increase or decrease relative to the U.S. dollar, the sales, expenses,
profits, assets and liabilities of the Company's foreign operations, as
reported in the Company's consolidated financial statements, increase or
decrease, accordingly. The Company mitigates a portion of the fluctuations
in certain foreign currencies through the purchase of forward contracts
and options to hedge known commitments, primarily for purchases of
inventory and loans denominated in foreign currencies.
Results of Operations
Summary consolidated financial results are as follows:
[millions, except per share data] 1995 1994 1993
Net sales $347.2 $284.3 $280.3
Gross profit 138.2 110.5 114.8
Operating expenses (1) 114.4 91.5 103.6
Operating profit 23.7 18.9 11.2
Interest expense 7.6 6.8 8.3
Income from
continuing operations 10.1 8.1 .6
Per common share 1.25 1.01 .08
(1) Includes pre-tax restructuring charges of $13 million in 1993.
1995 vs 1994
Net Sales
Net sales were $347.2 million in 1995 compared to $284.3 million in 1994,
an increase of 22%. The sales increase as measured in U.S. dollars was
positively impacted by the effect of stronger foreign currencies relative
to the U.S. dollar in comparison to 1994. Strong new product programs
contributed to the increase in sales in all businesses, as did sales from
acquired product lines in the fishing business. Excluding the effects of
foreign currency movements, worldwide sales increased 17% over 1994.
In North America, an overall increase in sales of 22% was led by fishing
products, primarily on the strength of increased sales of Mitchell and
Johnson rod and reel products and sales of SpiderWire, a product line
acquired in April 1995. While sales of Minn Kota electric motors were
improved over 1994, sales growth was inhibited by an extended work
stoppage at a key component supplier, which limited product availability.
Sales of camping products in North America increased moderately overall,
led by Old Town watercraft products, as did diving and marine product
sales.
European sales as measured in U.S. dollars increased 26% from 1994, but
increased less in local currencies. Measured in U.S. dollars, all product
categories recorded gains in sales of at least 20%.
The Company's Asian business, which is concentrated primarily in Japan and
Australia, recorded modest sales growth, reflecting problems in the
Japanese economy and the effects of the Kobe earthquake.
Operating Profit
The Company's operating profit of $23.7 million in 1995 was $4.8 million,
or 25% more than 1994. Gross profit margins increased from 38.9% to 39.8%
of sales, reflecting declines in margins in the North American and
European fishing businesses which were offset by increases in gross profit
margins in the camping, diving and marine businesses in all major
geographic areas. Margins in the fishing business were negatively impacted
by changes in product mix, the work stoppage noted above, increased
incoming freight costs and early season selling programs. Gross margins in
1994 were negatively impacted by inventory adjustments totaling $5.4
million.
Operating expenses totaled $114.4 million or 33% of sales in 1995 compared
to $91.5 million or 32% of sales in 1994. The increase in expenses is
concentrated primarily in marketing and selling expenses and, to a lesser
extent, research and development. Financial and administrative management
expenses have been stable for several years but increased in 1995 due to
increased information technology expenditures. Amortization of intangible
assets increased from $1.5 million to $2.0 million due to acquisitions
consummated in 1995. The increase in operating expenses is also magnified
by foreign currency movements relative to the U.S. dollar.
Other Income and Expenses
Interest expense increased in 1995 reflecting higher debt levels resulting
from the April 1995 acquisition of the SpiderWire product line and the
July 1995 acquisition of the Neptune Technologies product line, as well as
increased working capital needs from internal growth. Other income, net of
other expenses, increased from the prior year, primarily due to higher
interest income and lower foreign exchange losses.
Income From Continuing Operations
Income from continuing operations of $10.1 million or $1.25 per share in
1995 was $2.0 million or 24% more than the $1.01 per share earned in 1994.
The Company's effective tax rate of 40.6% in 1995, compared to 34.7% in
1994, reflects the disproportionate contribution to earnings in 1995 from
European and Asian operations, which generally have higher marginal tax
rates than the U.S.
1994 vs 1993
Net Sales
Net sales were $284.3 million in 1994 compared to $280.3 million in 1993,
an increase of 1%. The sales increase as measured in U.S. dollars was
positively impacted by the effect of stronger foreign currencies relative
to the U.S. dollar in comparison to 1993.
In North America, fishing products led the sales increase, primarily on
the strength of Minn Kota electric trolling motors. The line of motors
introduced in 1993 increased Minn Kota's market share. Sales of camping
products in North America decreased slightly overall as Old Town
watercraft products recorded gains, while other camping products
decreased. Diving sales increased in the U.S. market while marine product
sales decreased, primarily due to elimination of certain non-strategic
products in 1994.
European sales as measured in U.S. dollars increased 6% from 1993, but
increased less in local currencies. Fishing and camping products were
contributors, increasing 12%, led by Jack Wolfskin's brand expansion.
Diving products had a slight increase in sales and improved operating
performance. Sales of marine products were flat, affected by the weak
economy in France, which is their primary market, and a reduction in the
number of products offered, but operating results improved.
The Company's Japanese business recorded strong sales growth, reflecting a
strong market for the Company's diving products, increased penetration of
fishing and camping products, and benefiting from the strong value of the
yen.
Operating Profit
The Company's operating profit was $18.9 million in 1994 compared to $11.2
million in 1993. The 1993 results reflect the establishment of a $13
million pre-tax restructuring reserve. Results in 1994 were significantly
impacted by European fishing and marine operations where operating profit
more than doubled over the prior year. Programs to reduce expenses and the
number of products offered for sale significantly enhanced profitability.
Margins and operating profit were reduced in 1994 by fourth quarter
inventory adjustments totaling $5.4 million, primarily in North American
marine operations. Many of the products involved in the writedown were not
part of the Company's core recreation products business. Efforts to sell
these products in the Company's peak selling season, which ends in July,
were not successful, necessitating the writedown. The inventory
adjustments account, in large measure, for the disproportionate
contribution of earnings from outside North America to total operating
results. Gross profit margins outside North America held steady in 1994
compared to 1993.
Other Income and Expenses
Interest expense decreased in 1994 reflecting lower debt levels beginning
in May 1994 offset by rising interest rates in the U.S. Other expenses,
net of other income, decreased from the prior year, primarily due to
higher interest income from increasing interest rates and higher invested
balances and lower foreign exchange losses.
Income From Continuing Operations
Income from continuing operations of $8.1 million or $1.01 per share in
1994 was $7.5 million or $ .93 per share more than 1993. Restructuring
charges reduced 1993 earnings per share by $1.10. Excluding the
restructuring charge, earnings per share from continuing operations were
$1.18 in 1993. The effective tax rate returned to a more historical level
in 1994 due to increasing levels of pre-tax income. The 1993 tax rate was
impacted by restructuring charges.
Discontinued Operations
In July 1993, the Company's Board of Directors approved a formal plan to
divest the Company's Marking Systems group. As a result, all operations of
the Marking Systems group were classified as discontinued operations for
all years presented. At that time, the Company recorded a loss on disposal
of discontinued operations of $3.0 million. During 1994, the Company
completed the sales of the businesses comprising the Marking Systems group
and recorded a gain on disposition of approximately $4.1 million as net
sales proceeds exceeded expectations.
Restructuring
As a result of the desire of management and the Board of Directors to
strategically reposition the Company as an integrated global recreation
products company, restructuring reserves totaling $13 million and $4.5
million were recorded in 1993 and 1992, respectively. The key components
of these charges were losses on the disposal of non-strategic recreation
product lines totaling $6.4 million, creation of a centralized management
structure totaling $2.3 million, severance costs of $3.6 million and
facilities closing costs of $1.1 million. The majority of the
restructuring charges were for future cash outlays, however, provisions
were included for inventory and equipment writedowns and a $2.1 million
write-off of goodwill associated with non-strategic recreation product
lines. As of September 30, 1994, approximately $1.1 million of unexpended
reserves remained as a liability of the Company.
Remaining reserves from restructuring charges recorded in 1993 and 1992
were consumed in 1995. While certain expenses related to the original
restructuring plan remain to be incurred, these charges will not be
significant. However, certain estimates of the cost of components of the
charges varied from the amounts originally determined. In particular, the
extent of restructuring of European operations (and the related cost) was
less than originally anticipated. This was offset by approximately $5
million of costs from the disposition of the Elliot commercial life raft
operation, which was consummated in 1994. Restructuring charges totalled
approximately $15 million for North American operations, of which Elliot
was a part, with the remainder attributable primarily to European
businesses.
Financial Condition
The Company completed the acquisitions of two product lines in 1995, which
increased tangible and intangible assets and long-term debt by $28
million. No acquisitions were completed in 1994 or 1993 as the Company
focused on repositioning its existing businesses.
WORKING CAPITAL
The following table sets forth the Company's working capital position at
the end of each of the past three years:
[millions] 1995 1994 1993
Current assets $185.4 $155.4 $182.6
Current liabilities 63.9 54.0 78.4
Working capital $121.5 $101.4 $104.2
Current ratio 2.9 to 1 2.9 to 1 2.3 to 1
Current assets included $46.5 million of Marking Systems group assets, net
of liabilities, at October 1, 1993. The Company divested these assets in
1994.
Total inventories increased by $27.8 million from 1994, due to accelerated
delivery schedules for certain new products, inventories of acquired
product lines, and level loading of production at certain of the Company's
manufacturing operations. Foreign currency fluctuations also contributed
to the increase. Inventory turns in 1995 increased modestly from the prior
year.
The increase of $6.5 million in accounts receivable was due to sales
growth in the most recent quarter and was magnified by the same foreign
currency effect as inventories. Receivable days outstanding at September
29, 1995 improved nominally from the prior year.
Current liabilities increased by $9.8 million as current debt increased
primarily from the growth in inventory noted above. Accruals for
restructuring have been decreasing since establishment of the reserves in
1992 and 1993 as funding of the related obligations has occurred.
CAPITALIZATION
The following table sets forth the Company's debt and capital structure at
the end of the past three years:
[millions] 1995 1994 1993
Current debt $18.6 $16.1 $37.1
Long-term debt 68.9 31.2 44.5
Total debt 87.5 47.3
81.6
Shareholders' equity 141.3 128.2 110.8
Total capitalization $228.8 $175.5 $192.4
Debt to total capital ratio 38.2% 27.0% 42.4%
In October 1995, the Company consummated private placements of long-term
debt totaling $45 million. In anticipation of this financing, short-term
debt totaling $32 million at September 29, 1995 has been classified as
long-term. Bank lines of credit expiring in 1996 are expected to be
replaced with similar facilities. The Company's debt to total capital
ratio indicates its underlying financial strength.
CAPITAL EXPENDITURES, DEPRECIATION AND AMORTIZATION
Expenditures for property, plant and equipment were $15.6 million in 1995,
$14 million in 1994 and $8.4 million in 1993. The Company's recurring
investments are made primarily for tooling for new products and
enhancements. In 1995 and 1994, capital spending was increased due to
investments in data processing improvements. In 1994, the Company also
constructed and occupied an office and research facility to replace rented
space. In 1996, capitalized expenditures will total approximately $14
million. These expenditures are expected to be funded by working capital
or existing bank lines of credit.
Depreciation and amortization charges were $8.3 million in 1995, $7.0
million in 1994, and $7.2 million in 1993. The increase over 1994 reflects
additional amortization of intangible assets arising from the Company's
1995 acquisitions and increased depreciation from capital spending in 1995
and 1994.
Other Factors
The Company has not been significantly impacted by inflationary pressures
over the last several years. However, from time to time the Company faces
changes in the prices of commodities. Price increases and, in certain
situations, price decreases are implemented for individual products, when
appropriate. The Company anticipates that rising costs of basic raw
materials may impact 1996 operating costs and, accordingly, the prices of
its products. The Company is involved in continuing programs to mitigate
the impact of cost increases through changes in product design and
identification of sourcing and manufacturing efficiencies.
<PAGE>
CONSOLIDATED BALANCE SHEETS
September 29 September 30
[thousands, except share data] 1995 1994
Assets
Current assets:
Cash and temporary cash investments $8,944 $15,588
Accounts receivable, less allowance
for doubtful accounts of $2,610
and $2,317, respectively 61,456 54,942
Inventories 98,238 70,389
Deferred income taxes 7,423 7,482
Other current assets 9,319 6,967
-------- --------
Total current assets 185,380 155,368
Property, plant and equipment 33,028 26,579
Intangible assets 58,691 35,009
Other assets 1,254 2,725
-------- --------
Total assets $278,353 $219,681
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable and current maturities
of long-term obligations $18,563 $16,097
Accounts payable 14,623 13,467
Accrued liabilities:
Salaries and wages 5,792 5,207
Income taxes 4,011 5,145
Other 20,866 14,118
-------- --------
Total current liabilities 63,855 54,034
Long-term obligations, less
current maturities 68,948 31,190
Other liabilities 4,288 6,260
-------- --------
Total liabilities 137,091 91,484
======== ========
Shareholders' equity:
Preferred stock issued: none - -
Common stock:
Class A shares issued:
September 29, 1995, 6,896,883;
September 30, 1994, 6,859,558 345 343
Class B shares issued
(convertible into Class A):
September 29, 1995, 1,228,613;
September 30, 1994, 1,230,599 61 62
Capital in excess of par value 43,968 43,330
Retained earnings 89,525 79,538
Contingent compensation (264) (242)
Cumulative translation adjustment 7,869 5,166
Treasury stock, at cost: September 29,
1995, 10,000 Class A shares (242) -
-------- -------
Total shareholders' equity 141,262 128,197
-------- -------
Total liabilities and
shareholders' equity $278,353 $219,681
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended
[thousands, except September 29 September 30 October 1
per share data] 1995 1994 1993
Net sales $347,190 $284,343 $280,292
Cost of sales 209,035 173,869 165,512
------- ------- -------
Gross profit 138,155 110,474 114,780
======= ======= =======
Operating expenses:
Marketing and selling 78,743 59,629 57,242
Financial and administrative
management 25,304 23,482 25,146
Research and development 6,531 5,304 4,924
Profit sharing 1,830 1,639 1,694
Amortization of acquisition
costs 2,003 1,482 1,581
Restructuring - - 13,000
------- ------- -------
Total operating expenses 114,411 91,536 103,587
======= ======= =======
Operating profit 23,744 18,938 11,193
Interest income (774) (531) (459)
Interest expense 7,613 6,845 8,309
Other (income) expenses, net (87) 140 648
Income from continuing
operations before income taxes 16,992 12,484 2,695
Income tax expense 6,903 4,338 2,055
Income from continuing operations 10,089 8,146 640
Discontinued operations:
Income from discontinued
operations, net of
income tax expense of
$1,293 in 1993 - - 1,169
Gain (loss) on disposal of
discontinued operations,
net of income tax expense
(benefit) of $(2,277) and
$3,000 in 1994 and 1993,
respectively - 4,052 (3,000)
------- ------- -------
Net income (loss) $10,089 $12,198 $(1,191)
Earnings (loss) Per Common Share
Continuing operations $1.25 $1.01 $.08
Discontinued operations - .50 (.23)
-------- -------- -------
Net income (loss) $1.25 $1.51 $(.15)
======== ======== =======
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
Consolidated Statements of Shareholders' Equity
<CAPTION>
Capital in Cumulative
Common Excess of Retained Contingent Translation Treasury
[thousands] Stock Par Value Earnings Compensation Adjustment Stock
<S> <C> <C> <C> <C> <C> <C>
Balance at October 2, 1992 $396 $40,984 $68,531 $(221) $8,979 $ -
Net loss - - (1,191) - - -
Exercise of stock options 2 355 - - - -
Tax benefit of stock
options exercised - 145 - - - -
Issuance of restricted stock 1 212 - (212) - -
Amortization of contingent
compensation - - - 83 - -
Translation adjustment - - - - (7,246) -
Balance at October 1, 1993 399 41,696 67,340 (350) 1,733 -
Net income - - 12,198 - - -
Exercise of stock options 5 1,226 - - - -
Tax benefit of stock
options exercised - 150 - - - -
Issuance of restricted stock - 70 - (70) - -
Issuance of stock under
employee stock purchase
plan 1 188 - - - -
Amortization of contingent
compensation - - - 178 - -
Translation adjustment - - - - 3,433 -
Balance at September 30, 1994 405 43,330 79,538 (242) 5,166 -
Net income - - 10,089 - - -
Exercise of stock options 1 384 (95) - - 910
Tax benefit of stock
options exercised - 118 - - - -
Issuance of restricted
stock - - (7) (222) - 229
Issuance of stock under
employee stock purchase
plan - 136 - - - -
Amortization of contingent
compensation - - - 200 - -
Other treasury stock
transactions - - - - - (1,381)
Translation adjustment - - - - 2,703 -
Balance at September 29, 1995 $406 $43,968 $89,525 $(264) $7,869 $(242)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
September 29 September 30 October 1
[thousands] 1995 1994 1993
Cash Provided By (Used For)
Operations
Net income (loss) $10,089 $12,198 $(1,191)
Noncash items:
Depreciation and amortization 8,314 6,987 7,167
Deferred income taxes 179 (694) (2,255)
Writedown of intangible assets - - 2,060
Loss (income) from
discontinued operations - (4,052) 1,831
Change in:
Accounts receivable, net (5,070) (8,397) (6,624)
Inventories (21,825) (993) (2,639)
Accounts payable and other
accrued liabilities 7,256 3,576 3,604
Restructuring accrual (1,077) (7,828) 4,405
Net assets of discontinued
operations - 4,036 (6,611)
Other, net (4,147) 2,705 (3,566)
------- ------- -------
(6,281) 7,538 (3,819)
------- ------- -------
Cash Provided By (Used For)
Investing Activities
Net assets of businesses acquired (28,070) - -
Proceeds from sales of
discontinued operations
and other businesses - 48,076 -
Net additions to property,
plant and equipment (12,098) (12,294) (5,334)
Other, net - 58 (26)
------- ------- -------
(40,168) 35,840 (5,360)
------- ------- -------
Cash Provided By (Used For)
Financing Activities
Proceeds from revolving credit
facilities 31,672 - -
Issuance of senior notes - - 15,000
Principal payments on senior notes (6,000) (5,000) (5,000)
Net change in notes payable and
other long-term obligations 13,766 (29,284) 25
Common stock transactions 73 1,570 503
------- -------- -------
39,511 (32,714) 10,528
------- -------- -------
Effect of foreign currency
fluctuations on cash 294 509 (479)
Increase (decrease) in cash
and temporary cash investments (6,644) 11,173 870
Cash and Temporary Cash Investments
Beginning of year 15,588 4,415 3,545
End of year $8,944 $15,588 $4,415
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Johnson Worldwide Associates, Inc. is an integrated, global recreation
products company engaged primarily in the marketing and distribution of
its proprietary brands of fishing, camping, diving and marine products.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Johnson
Worldwide Associates, Inc. and all majority owned subsidiaries (the
Company). Significant intercompany accounts and transactions have been
eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that impact the reported amounts of assets, liabilities and
operating results and the disclosure of commitments and contingent
liabilities. Actual results could significantly differ from those
estimates. For the Company, significant estimates include the allowance
for doubtful accounts receivable and reserves for inventory obsolescence.
The Company's fiscal year ends on the Friday nearest September 30. The
fiscal years ended September 29, 1995, September 30, 1994 and October 1,
1993 (hereinafter 1995, 1994 and 1993, respectively) each comprise 52
weeks.
Cash and Temporary Cash Investments
For purposes of the consolidated statements of cash flows, the Company
considers all short-term investments in interest-bearing bank accounts,
securities and other instruments with an original maturity of three months
or less, to be equivalent to cash.
Inventories
Inventories are stated at the lower of cost (determined using the
first-in, first-out method) or market.
Inventories at the end of the respective years consist of the following:
[thousands] 1995 1994
Raw materials $28,726 $19,058
Work in process 5,888 4,625
Finished goods 68,742 54,260
------- --------
103,356 77,943
Less reserves 5,118 7,554
------- -------
$98,238 $70,389
======= =======
In 1994, the Company recorded charges totaling $5,400,000 to reduce the
carrying value of certain elements of inventory to their net realizable
value.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation of plant and equipment is determined by
straight-line and accelerated methods over estimated useful lives.
Upon retirement or disposition, cost and the related accumulated
depreciation are removed from the accounts and any resulting gain or loss
is recognized in operating results.
Property, plant and equipment at the end of the respective years consist
of the following:
[thousands] 1995 1994
Property and improvements $969 $953
Buildings and improvements 15,642 15,048
Furniture, fixtures and
equipment 59,275 49,140
------- -------
75,886 65,141
Less accumulated depreciation 42,858 38,562
------- -------
$33,028 $26,579
======= =======
Intangible Assets
Intangible assets are stated at cost less accumulated amortization.
Amortization is computed using the straight-line method with periods
ranging from 15 to 40 years for goodwill and 3 to 16 years for patents,
trademarks and other intangible assets.
The Company assesses the recoverability of intangible assets primarily by
determining whether the amortization of the balance over its remaining
life can be recovered through undiscounted future operating cash flows of
the acquired operation. The amount of impairment, if any, is measured
primarily based on projected discounted future operating cash flows using
a discount rate reflecting the Company's cost of funds.
Intangible assets at the end of the respective years consist of the
following:
[thousands] 1995 1994
Goodwill $68,784 $42,878
Patents, trademarks and other 4,604 4,643
------ ------
73,388 47,521
Less accumulated amortization 14,697 12,512
------ ------
$58,691 $35,009
====== ======
Income Taxes
The Company provides for income taxes currently payable, and deferred
income taxes resulting from temporary differences between financial
statement and taxable income using the asset and liability method.
Federal and state income taxes are provided on foreign subsidiary income
distributed to or taxable in the United States during the year. At
September 29, 1995, net undistributed earnings of foreign subsidiaries
total approximately $37,406,000. A substantial portion of these unremitted
earnings have been permanently invested abroad and no provision for
federal or state taxes is made on these amounts. With respect to that
portion of foreign earnings which may be returned to the United States,
provision is made for taxes if the amounts are significant.
The Company's United States entities file a consolidated federal income
tax return.
Employee Benefits
The Company and certain of its subsidiaries have various retirement and
profit sharing plans. U.S. pension obligations, which are generally based
on compensation and years of service, are funded by payments to pension
fund trustees. Other foreign pensions are funded as expenses are incurred.
The Company's policy is generally to fund the minimum amount required
under the Employee Retirement Income Security Act of 1974 for plans
subject thereto. Profit sharing costs are funded at least annually.
Foreign Operations
The Company operates internationally, which gives rise to exposure to
market risk from movements in foreign exchange rates. The Company uses
foreign currency forward contracts and foreign currency options in its
selective hedging of foreign exchange exposure. Gains and losses on
contracts that qualify as hedges are recognized as an adjustment of the
carrying amount of the item being hedged. The Company primarily hedges
inventory purchases and loans denominated in foreign currencies. The
Company does not enter into foreign exchange contracts for trading
purposes.
At September 29, 1995, foreign currency forward contracts and options with
a notional value of approximately $12,000,000 are in place, hedging
existing and anticipated transactions. Substantially all of these
contracts mature in 1996. Failure of the counterparties to perform their
obligations under these contracts would expose the Company to the risk of
foreign currency rate movements for those contracts. The Company does not
believe the risk is significant.
Assets and liabilities of foreign operations are translated into United
States dollars at the rate of exchange existing at the end of the year.
Results of operations are translated at monthly average exchange rates.
Gains and losses resulting from the translation of foreign currency
financial statements are deferred and classified as a separate component
of shareholders' equity.
Revenue Recognition
Revenue from sales is recognized on the accrual basis, primarily upon the
shipment of products, net of estimated costs of returns and allowances.
Advertising
The Company expenses substantially all costs of production of advertising
the first time the advertising takes place. Cooperative promotional
arrangements are accrued in relation to sales.
Advertising expense in 1995, 1994 and 1993 totals $26,151,000, $19,901,000
and $20,188,000, respectively. Capitalized costs at September 29, 1995 and
September 30, 1994 total $2,605,000 and $1,860,000, respectively, and
primarily include catalogs and costs of advertising which has not yet run
for the first time.
Research and Development
Research and development costs are expensed as incurred.
Reclassification
Certain reclassifications have been made to prior years' amounts to
conform with the current year presentation.
Pending Accounting Changes
In March 1995, the FASB issued Statement 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, which requires impairment losses to be recorded on long-lived assets
used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less
than the carrying amount. The Company will adopt Statement 121 in 1997
and, based on current circumstances, does not believe the effect of
adoption will be material.
In October 1995, the FASB issued Statement 123, Accounting for Stock-Based
Compensation, which requires accounting for employee stock compensation
plans using either the fair value method or the intrinsic value based
method. The Company will adopt Statement 123 in 1997 and, based on current
circumstances, anticipates retaining the intrinsic value based method of
accounting for stock options, which is in use in 1995.
RESTRUCTURING
In 1993, the Company accrued pre-tax restructuring charges of $13,000,000.
These restructuring charges are presented as a separate component of
operating profit and established reserves for costs to be incurred related
to facility closures, employee severance, recruiting and moving employees,
and allowances for exit from certain extraneous recreational product
categories.
Assets of recreational product categories held for sale, consisting
primarily of accounts receivable and inventory less the associated
liabilities, were disposed of in 1994. Unamortized goodwill, which was
associated with certain of these product categories in the amount of
$2,100,000, was written off against the restructuring reserve in 1993.
DISCONTINUED OPERATIONS
In July 1993, the Board of Directors approved a formal plan to divest the
Company's Marking Systems group, which manufactured and marketed hand
stamps, ink rolls, ink cartridges and liquid ink jets. As a result of the
adoption of the plan of divestiture, the Marking Systems operations have
been classified as discontinued for all years presented. The Company
estimated in 1993 that the Marking Systems group would be sold for its net
book value after consideration of earnings to the date of disposal. Tax
expense of $3,000,000 was provided in recognition of estimated tax
liabilities associated with the divestiture. This provision resulted in
recognition of a loss on disposal. The Company completed the divestiture
in two separate transactions in 1994 resulting in a gain of $4,052,000 as
net sales proceeds exceeded expectations. Net sales of the Marking Systems
group to the disposal dates were $36,075,000 and $58,996,000 for 1994 and
1993, respectively. Interest expense of $41,000 and $79,000 for 1994 and
1993, respectively, that was directly attributable to the Marking Systems
group was allocated to discontinued operations.
ACQUISITIONS
In April 1995, the Company acquired substantially all the assets of a line
of fishing tackle products. The initial purchase price, including direct
expenses, of the acquisition was $25,470,000, of which $22,042,000 was
recorded as intangible assets and will be amortized over 25 years.
Additional payments in the years 1996 through 2001 are dependent upon the
achievement of specified levels of sales and profitability of certain of
the acquired products. In connection with the acquisition, the Company
entered into an exclusive supply agreement with the third-party
manufacturer of the products.
In June 1995, the Company acquired substantially all the assets of a line
of electric motors and marine accessories. The purchase price of the
acquisition was $2,600,000, of which $2,000,000 was recorded as intangible
assets and will be amortized over 15 years. Additional payments in the
years 1996 through 2000 are dependent upon achievement of specified levels
of sales of the acquired product line.
The acquisitions were accounted for using the purchase method and,
accordingly, the consolidated financial statements include the results of
operations since the respective dates of acquisition. Additional payments,
if required, will increase intangible assets in future years.
The following pro forma operating results are unaudited and reflect
purchase accounting adjustments assuming the acquisitions were consummated
at the beginning of each year presented:
[thousands, except per share data] 1995 1994
Net sales $359,049 $292,812
Income from continuing operations 8,755 5,237
Earnings per common share 1.08 0.65
NOTES PAYABLE AND LONG-TERM OBLIGATIONS
Short-term obligations at the end of the respective years consist of the
following:
[thousands] 1995 1994
Bank loans $42,978 $9,264
Current maturities of
long-term obligations 7,413 6,833
------- -------
50,391 16,097
Less short-term obligations
to be refinanced 31,828 -
------- -------
$18,563 $16,097
======= =======
These arrangements provide for short-term borrowings with interest rates
set periodically by reference to market rates. The weighted average
interest rate on short-term indebtedness was 7.0% and 7.9% at September
29, 1995 and September 30, 1994, respectively. The Company has lines of
credit, both foreign and domestic, totaling $103,775,000, including
$35,000,000 in support of commercial paper issuance, of which $57,958,000
is available at September 29, 1995. The Company also has available letters
of credit for trade financing purposes.
Long-term obligations at the end of the respective years consist of the
following:
[thousands] 1995 1994
Senior notes $29,000 $35,000
Short-term obligations to
be refinanced 31,828 -
Revolving credit facility 13,172 -
Notes payable 4.8% to 10.9%
maturing through December 2005 2,361 3,023
-------- --------
76,361 38,023
Less current maturities 7,413 6,833
-------- --------
$68,948 $31,190
======== ========
In October 1995, the Company issued unsecured senior notes of $30,000,000
with an interest rate of 7.77% and $15,000,000 with an interest rate of
6.98%. The funding commitment for the $30,000,000 issue of senior notes
was received in April 1995. Total annual principal payments ranging from
$5,500,000 to $7,500,000 are due beginning in 2000 to 2006. Proceeds from
issuance of the senior notes have been used to retire an interim revolving
credit facility established in April 1995 to fund acquisitions and to
reduce outstanding borrowings under the Company's primary revolving credit
facility. Outstanding short-term obligations totaling $31,828,000 at
September 29, 1995 have been classified as long-term in anticipation of
refinancing with the proceeds of the senior notes.
In 1993 and 1991, respectively, the Company issued unsecured senior notes
of $15,000,000 with an interest rate of 6.58% and $25,000,000 with an
interest rate of 9.16%. Equal annual principal payments of $7,500,000 for
the 1993 senior notes are due in 1998 and 1999. Remaining annual principal
payments for the 1991 senior notes are $7,000,000 in both 1996 and 1997.
The Company has a $25,000,000 revolving credit facility, which allows for
borrowings in certain foreign currencies. Interest on borrowings is set
periodically by reference to market rates such as the London Interbank
Offered Rate. This facility, the Company's $35,000,000 commercial paper
backup line and a $20,000,000 interim facility expire in 1996 and are
expected to be replaced by a combined $90,000,000 multi-currency
agreement.
Based on the borrowing rates currently available to the Company for debt
with similar terms and average maturities, the fair value of the Company's
long-term obligations as of September 29, 1995 and September 30, 1994 is
$76,804,000 and $37,165,000, respectively. The carrying value of all other
financial instruments approximates the fair value.
Certain of the Company's loan agreements require that Samuel C. Johnson,
members of his family and related entities (Johnson Family) continue to
own stock having votes sufficient to elect a 51% majority of the
directors. As of September 29, 1995, the Johnson Family held approximately
2,134,000 shares or 31% of the Class A common stock and approximately
1,160,000 shares or 94% of the Class B common stock and approximately 72%
of the voting power of both classes of common stock taken as a whole. The
agreements also contain restrictive covenants regarding the Company's
tangible net worth, indebtedness and distribution of earnings.
Principal amounts payable on long-term obligations in each of the five
years ending September 2000 are as follows:
Year [thousands]
1996 $7,413
1997 7,406
1998 7,853
1999 7,688
2000 5,898
Interest paid was $6,775,000, $6,864,000 and $8,325,000 for 1995, 1994 and
1993, respectively.
Leases and Other Commitments
The Company leases certain operating facilities and machinery and
equipment under long-term, noncancelable operating leases. Future minimum
rental commitments under noncancelable operating leases having an initial
or remaining term in excess of one year at September 29, 1995 are as
follows:
Year [thousands]
1996 $4,027
1997 2,968
1998 1,645
1999 1,161
2000 938
Thereafter 3,485
Rental expense under all leases related to continuing operations was
approximately $5,141,000, $5,145,000 and $5,432,000 for 1995, 1994 and
1993, respectively.
The Company makes commitments in a broad variety of areas, including
capital expenditures, contracts for services, sponsorship of broadcast
media and supply of finished products and components, all of which are in
the ordinary course of business.
INCOME TAXES
The Company adopted the asset and liability method in October 1992. The
cumulative effect of this change in accounting for income taxes is
$95,000.
Income tax expense (benefit) for the respective years attributable to
income from continuing operations consists of the following:
[thousands] 1995 1994 1993
Current:
Federal $309 $(2,045) $582
State (100) 439 539
Foreign 6,489 5,382 3,545
Deferred 205 562 (2,611)
----- ----- -----
$6,903 $4,338 $2,055
===== ===== =====
The significant components of deferred tax expense (benefit) attributable
to income from continuing operations are as follows:
[thousands] 1995 1994 1993
Deferred tax expense (benefit)
(exclusive of effects of
other components listed below) $679 $998 $(3,037)
Adjustments to deferred tax
assets and liabilities
for enacted changes in
tax laws or rates 10 (18) 307
Increase (decrease) in beginning
of the year balance of the
valuation allowance for
deferred tax assets (484) (418) 119
---- ----- ------
$205 $562 $(2,611)
==== ===== ======
In assessing the realizability of deferred tax assets, the Company
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the years in which those temporary differences become
deductible. The Company considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies
in making this assessment.
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and deferred tax liabilities at the end of
the respective years are presented below:
[thousands] 1995 1994 1993
Deferred tax assets:
Inventories $1,867 $2,836 $862
Compensation 1,782 1,816 1,603
Restructuring - 377 4,247
Foreign income taxes 988 1,489 706
Foreign tax credit
carryforwards 1,129 1,331 1,321
Net operating loss
carryforwards 407 360 788
Other 4,607 2,870 2,556
------- ------- -------
Total gross deferred
tax assets 10,780 11,079 12,083
Less valuation allowance 1,107 1,591 2,009
------- ------- -------
9,673 9,488 10,074
Deferred tax liabilities:
Foreign statutory reserves 1,204 891 879
Acquisition accounting 638 561 597
Total deferred tax liabilities 1,842 1,452 1,476
------- ------- -------
Net deferred tax asset $7,831 $8,036 $8,598
======= ======= =======
Following is the income (loss) from continuing operations before income
taxes for domestic and foreign operations:
[thousands] 1995 1994 1993
United States $1,164 $350 $(10,280)
Foreign 15,828 12,134 12,975
$16,992 $12,484 $2,695
The significant differences between the statutory federal tax rates and
the effective income tax rates are as follows:
1995 1994 1993
Statutory U.S. federal
income tax rate 34.0% 34.0% 34.0%
State income taxes, net of
federal income tax benefit (0.9) 1.9 12.7
Foreign rate differential 7.9 5.2 24.3
Foreign operating losses (benefit) 0.9 (2.7) 13.2
Tax credits (1.6) (0.7) (5.2)
Other 0.3 (3.0) (2.7)
40.6% 34.7% 76.3%
At September 29, 1995, the Company has $1,129,000 of foreign tax credit
carryforwards related to continuing operations available to be offset
against future U.S. tax liability. The credits begin expiring in 1997, if
not utilized.
During 1995, 1994 and 1993, foreign net operating loss carryforwards
related to continuing operations were utilized, resulting in a reduction
in income tax expense of $130,000, $428,000 and $264,000, respectively. At
September 29, 1995, certain of the Company's foreign subsidiaries have net
operating losses totaling $1,237,000 which are available to offset future
taxable income over the next 8 to 10 years. They are anticipated to be
utilized against profits over the next several years.
Taxes paid related to continuing operations were $7,318,000, $5,896,000
and $6,069,000 for 1995, 1994 and 1993, respectively.
EMPLOYEE BENEFITS
Net periodic pension cost for noncontributory pension plans related to
continuing operations includes the following components:
[thousands] 1995 1994 1993
Service cost $254 $265 $218
Interest on projected
benefit obligation 582 568 515
Return on plan assets (457) (411) (240)
Net amortization and deferral (19) 3 (125)
Effect of plan curtailment - 177 -
$360 $602 $368
The funded status of the plans related to continuing operations is as
follows at the end of each year:
[thousands] 1995 1994
Actuarial present value of
benefit obligations:
Vested benefits $6,030 $5,727
Non-vested benefits 174 326
Accumulated benefit obligation 6,204 6,053
Effect of projected compensation
levels 1,681 1,770
Projected benefit obligation 7,885 7,823
Plan assets at fair value 5,697 5,601
Projected benefit obligation
in excess of plan assets (2,188) (2,222)
Unrecognized net loss 1,209 1,136
Unrecognized prior service cost 278 303
Unrecognized net asset (661) (737)
Pension liability recognized in
the consolidated balance sheets $(1,362) $(1,520)
Plan assets are invested primarily in stock and bond mutual funds and
insurance contracts.
Actuarial assumptions used to determine the projected benefit obligation
and the expected net periodic pension cost are as follows:
1995 1994 1993
Discount rate 8% 8% 8%
Rate of increase in
compensation levels 5 5 5
Expected long-term rate
of return on plan assets 8 8 8
A majority of the Company's full-time employees are covered by profit
sharing programs. Participating entities determine a profit sharing
distribution as a percentage of pre-tax profit adjusted to yield a defined
return on tangible net worth. Individual employees share in the
distribution based on a combination of salary and years of service.
PREFERRED STOCK
The Company is authorized to issue 1,000,000 shares of preferred stock in
various classes and series, of which there are none currently issued or
outstanding.
COMMON STOCK
Common stock at the end of the respective years consists of the following:
1995 1994
Class A, $.05 par value:
Authorized 20,000,000 20,000,000
Outstanding 6,886,883 6,859,558
Class B, $.05 par value:
Authorized 3,000,000 3,000,000
Outstanding 1,228,613 1,230,599
Holders of Class A common stock are entitled to elect 25% of the members
of the Board of Directors and holders of Class B common stock are entitled
to elect the remaining directors. With respect to matters other than the
election of directors or any matters for which class voting is required by
law, holders of Class A common stock are entitled to one vote per share
while holders of Class B common stock are entitled to ten votes per share.
If any dividends (other than dividends paid in shares of the Company) are
paid by the Company on its common stock, a dividend would be paid on each
share of Class A common stock equal to 110% of the amount paid on each
share of Class B common stock. Each share of Class B common stock is
convertible at any time into one share of Class A common stock. During
1995, 1994 and 1993, respectively, 1,986, 284 and 1,587 shares of Class B
common stock were converted into Class A common stock.
STOCK OWNERSHIP PLANS
The Company's current stock ownership plans provide for issuance of
options to acquire shares of Class A common stock by key executives and
non-employee directors. Current plans also allow for issuance of
restricted stock or stock appreciation rights in lieu of options. All
options have been granted at a price not less than fair market value at
the date of grant and become exercisable over periods of one to four years
from the date of grant, unless accelerated. Stock options generally have a
term of 10 years. A summary of stock option activity related to the
Company's plans is as follows:
Shares Exercise Price
Outstanding at October 2, 1992 477,246 $3.50 - 23.25
Granted 193,555 16.38 - 21.25
Exercised (63,721) 3.50 - 19.88
Cancelled (12,250) 17.13 - 23.25
Outstanding at October 1, 1993 594,830 3.50 - 23.25
Granted 122,000 23.00 - 24.38
Exercised (88,663) 3.50 - 23.25
Cancelled (40,558) 17.13 - 22.00
Outstanding at September 30, 1994 587,609 3.50 - 24.38
Granted 119,000 18.63 - 21.75
Exercised (70,138) 3.50 - 23.75
Cancelled (37,525) 17.12 - 23.75
Outstanding at September 29, 1995 598,946 $4.44 - 24.38
Exercisable at September 29, 1995 338,511 $4.44 - 24.38
At September 29, 1995, September 30, 1994 and October 1, 1993, 286,833,
276,333 and 273,500 shares, respectively, of restricted Class A common
stock were issued under the Company's stock ownership plans. The fair
value of the shares awarded in excess of the amount paid for such shares
is recognized as contingent compensation and is being amortized over three
years from the dates of award, unless accelerated, the period after which
all restrictions will have lapsed. At September 29, 1995, 467,117 shares
are available for future issuance under all Company stock ownership plans.
The Company's employee stock purchase plan provides for the issuance of up
to 150,000 shares of Class A common stock at a purchase price of not less
than 85% of the fair market value at the date of grant. During 1995 and
1994, 6,701 and 9,432 shares, respectively, were issued under this plan.
No shares were issued under this plan in 1993.
RELATED PARTY TRANSACTIONS
The Company and S.C. Johnson & Son, Inc. are controlled by the Johnson
Family. Various transactions are conducted between the Company and
organizations controlled by the Johnson Family. These include consulting
services, office rental, certain administrative activities and, in 1994,
the purchase of land for the Company's headquarters facility.
Total costs of these transactions are $523,000, $1,548,000 and $871,000
for 1995, 1994 and 1993, respectively, of which $125,000 and $210,000 are
outstanding at September 29, 1995 and September 30, 1994, respectively.
GEOGRAPHIC SEGMENTS OF BUSINESS
The Company conducts its worldwide operations through separate geographic
area organizations which represent major markets or combinations of
markets. The operations are conducted in the United States and various
foreign countries, primarily in Europe, Canada and the Pacific Basin.
Net sales and operating profit by geographic area include both sales to
customers, as reported in the Company's consolidated statements of
operations, and inter-area transfers, which are priced to recover cost
plus an appropriate profit margin.
Identifiable assets represent assets that are used in the Company's
operations in each geographic area at the end of the years presented.
A summary of the Company's operations by geographic area is as follows:
[thousands] 1995 1994 1993
Net sales:
United States:
Unaffiliated customers $192,426 $157,191 $159,842
Inter-area transfers 5,749 4,966 3,213
Europe:
Unaffiliated customers 126,103 100,297 94,777
Inter-area transfers 3,365 3,622 2,654
Other 28,674 26,926 26,360
Eliminations (9,127) (8,659) (6,554)
-------- -------- --------
$347,190 $284,343 $280,292
======== ======== ========
Operating profit (loss):
United States $6,004 $3,807 $(295)
Europe 14,409 11,643 7,933
Other 3,331 3,488 3,555
------- ------- -------
$23,744 $18,938 $11,193
======= ======= =======
Identifiable assets:
United States $150,691 $109,306
Europe 106,426 90,852
Other 21,236 19,523
------- -------
$278,353 $219,681
======= =======
Export sales in each geographic area total less than 10% of sales to
unaffiliated customers. Sales to a single customer and its affiliated
entities totaled $34,902,000 in 1995. No customer accounted for 10% or
more of sales in 1994 or 1993.
EARNINGS PER SHARE
Earnings per share of common stock are computed on the basis of a weighted
average number of common and common equivalent shares outstanding. Primary
and fully diluted earnings per share are the same. The per share effect of
discontinued operations is calculated by dividing the applicable income or
loss from discontinued operations by the weighted average common and
common equivalent shares outstanding.
The weighted average common and common equivalent shares used in the
computation of earnings per common share are 8,080,684, 8,067,629 and
7,974,418 in 1995, 1994 and 1993, respectively. Common stock equivalents
are not significant in any year presented.
LITIGATION
The Company is subject to various legal actions and proceedings in the
normal course of business, including those related to environmental
matters. Although litigation is subject to many uncertainties and the
ultimate exposure with respect to these matters cannot be ascertained,
management does not believe the final outcome will have a significant
effect on the consolidated financial statements.
<PAGE>
AUDITORS' AND MANAGEMENT'S REPORTS
Independent Auditors' Report
Shareholders and Board of Directors
Johnson Worldwide Associates, Inc.:
We have audited the consolidated balance sheets of Johnson Worldwide
Associates, Inc. and subsidiaries as of September 29, 1995 and September
30, 1994 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the three
year period ended September 29, 1995. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Johnson Worldwide Associates, Inc. and subsidiaries at September 29, 1995
and September 30, 1994, and the results of their operations and their cash
flows for each of the years in the three year period ended September 29,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
November 8, 1995
<PAGE>
Report of Management
The management of Johnson Worldwide Associates, Inc. is responsible for
the preparation and integrity of all financial statements and other
information contained in this Annual Report. We rely on a system of
internal financial controls to meet the responsibility of providing
accurate financial statements. The system provides reasonable assurances
that assets are safeguarded, that transactions are executed in accordance
with management's authorization and that the financial statements are
prepared on a worldwide basis in accordance with generally accepted
accounting principles.
The financial statements for each of the years covered in this Annual
Report have been audited by independent auditors, who have provided an
independent assessment as to the fairness of the financial statements,
after obtaining an understanding of the Company's systems and procedures
and performing such other tests as deemed necessary.
The Audit Committee of the Board of Directors, which is composed solely of
directors who are not officers of the Company, meets with management and
the independent auditors to review the results of their work and to
satisfy itself that their respective responsibilities are being properly
discharged. The independent auditors have full and free access to the
Audit Committee and have regular discussions with the Committee regarding
appropriate auditing and financial reporting matters.
/s/ John D. Crabb
John D. Crabb
President and Chief Executive Officer
/s/ Carl G. Schmidt
Carl G. Schmidt
Senior Vice President and Chief Financial Officer
<PAGE>
<TABLE>
Five Year Financial Summary
<CAPTION>
Year Ended
[thousands, except per September 29 September 30 October 1 October 2 September 27
share data] 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income Statement Data(1)
Net sales $347,190 $284,343 $280,292 $275,845 $258,154
Gross profit 138,155 110,474 114,780 112,185 105,317
Operating expenses 114,411 91,536 90,587 88,121 81,656
Restructuring - - 13,000 4,500 -
Operating profit 23,744 18,938 11,193 19,564 23,661
Interest expense 7,613 6,845 8,309 10,180 9,343
Other (income) expense, net (861) (391) 189 (491) 1,295
Income from continuing
operations before income
taxes 16,992 12,484 2,695 9,875 13,023
Income tax expense 6,903 4,338 2,055 4,509 5,581
Income from continuing
operations 10,089 8,146 640 5,366 7,442
Income from discontinued
operations - - 1,169 2,304 3,703
Gain (loss) on disposal of
discontinued operations - 4,052 (3,000) - -
Net income (loss) $10,089 $12,198 $(1,191) $7,670 $11,145
Earnings (loss) per
common share:
Continuing operations $1.25 $1.01 $.08 $.67 $.94
Discontinued operations - .50 (.23) .29 .46
Net income (loss) $1.25 $1.51 $(.15) $.96 $1.40
Weighted average common and
common equivalent shares
outstanding 8,081 8,068 7,974 7,953 7,939
Balance Sheet Data(1)
Total assets $278,353 $219,681 $239,121 $236,281 $217,641
Long-term obligations,
less current maturities 68,948 31,190 44,543 43,327 41,170
Shareholders' equity 141,262 128,197 110,818 118,669 105,302
<FN>
(1)All periods have been reclassified to reflect the discontinuation of the Company's Marking Systems group.
</TABLE>
<TABLE>
Quarterly Financial Summary
<CAPTION>
[thousands, except First Second Third Fourth
per share data] 1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $53,462 $44,009 $105,797 $84,305 $117,844 $95,083 $70,087 $60,946
Gross profit 20,184 17,881 42,480 35,874 48,745 40,130 26,746 16,589
Income (loss) from:
Continuing operations (1,941) (2,024) 6,453 6,129 8,239 7,939 (2,662) (3,898)
Discontinued operations - - - - - 4,052 - -
Net income (loss) $(1,941) $(2,024) $6,453 $6,129 $8,239 $11,991 $(2,662) $(3,898)
Earnings (loss) per
common share:
Continuing operations $(.24) $(.25) $.80 $.76 $1.02 $.98 $(.33) $(.48)
Discontinued operations - - - - - 50 - -
Net income (loss) $(.24) $(.25) $.80 $.76 $1.02 $1.48 $(.33) $(.48)
Stock prices:
High $25.75 $27.00 $23.75 $26.50 $23.75 $25.25 $24.75 $26.50
Low 18.25 21.00 19.00 23.25 20.50 21.00 22.50 23.25
</TABLE>
<PAGE>
BOARD OF DIRECTORS
Samuel C. Johnson, 67
Chairman of the Board.
Director since 1970.
Chairman of S.C. Johnson & Son, Inc. Also Director of Mobil Corporation,
H. J. Heinz Company and Deere & Company.
John D. Crabb, 52
President and Chief Executive Officer.
Director since 1992.
Raymond F. Farley, 71
Director since 1970.
Retired President and Chief Executive Officer of S.C. Johnson & Son, Inc.
Also Director of Hartmarx Corporation, Kemper Corporation and Snap-on
Incorporated.
Thomas F. Pyle, Jr., 54
Director since 1987.
Chairman, President and Chief Executive Officer of RAYOVAC Corporation.
Also Director of Kewaunee Scientific Corporation and Riverside Paper
Corporation.
Donald W. Brinckman, 64
Director since 1988.
Chairman and Founder of Safety-Kleen Corporation. Also Director of
Pay-Chex, Inc. and Snap-on Incorporated.
Helen P. Johnson-Leipold, 38
Executive Vice President -
North American Businesses
Director since 1994.
EXECUTIVE OFFICERS
John D. Crabb, 52
President and Chief Executive Officer.
3 years of service with JWA.
Philippe Blime, 54
Vice President, President of JWA Europe. 5 years of service with JWA.
Robert L. Inslee, 57
Vice President-Human Resources.
10 years of service with JWA.
Helen P. Johnson-Leipold, 38
Executive Vice President -
North American Businesses
Joined JWA: October 1995.
Carl G. Schmidt, 39
Senior Vice President and Chief Financial Officer, Secretary and
Treasurer. 1 year of service with JWA.
SHAREHOLDERS' INFORMATION
Corporate Headquarters
Johnson Worldwide Associates, Inc.
1326 Willow Road
Sturtevant, Wisconsin 53177 USA
[414] 884-1500
Internet Address
http://www.jwa.com
Common Stock
NASDAQ Symbol: JWAIA
Class A Common Stock is traded on the NASDAQ Over the Counter National
Market System.
Annual Meeting
The Annual Meeting of Shareholders
will convene at 1:15 p.m. [CST] on January 24, 1996, in the Grand
Ballroom, Racine Marriott, 7111 Washington Avenue, Racine, Wisconsin.
Form 10-K
You may receive a copy of the Johnson Worldwide Associates, Inc. Form 10-K
filed with the Securities and Exchange Commission by writing to the
Secretary at Corporate Headquarters.
Transfer Agent and Registrar
Firstar Trust Company
Corporate Trust Department
P.O. Box 2077
Milwaukee, Wisconsin 53201
Shareholder Inquiries
Communication concerning the transfer
of shares, lost certificates or changes
of address should be directed to the Transfer Agent.
EXHIBIT 21
JOHNSON WORLDWIDE ASSOCIATES, INC. AND SUBSIDIARIES
The following lists the principal direct and indirect subsidiaries of
Johnson Worldwide Associates, Inc. as of September 29, 1995. Inactive
subsidiaries are not presented.
Jurisdiction in
Name of Subsidiary (1)(2) which Incorporated
Airguide Instrument Company Illinois
America Outdoors, Inc. ("Crappiethon U.S.A.") Alabama
Jack Wolfskin Adventure Equipment Ltd. United Kingdom
Johnson Worldwide Associates Australia Pty. Ltd. Australia
Johnson Worldwide Associates Canada Inc. Canada
Mitchell Sports, S.A. France
Mitchell France, S.A. France
Distribution Moderne De Marques (3) France
Mitchell Holland BV Netherlands
Old Town Canoe Company Delaware
Plastimo Manufacturing (UK) Ltd. (4) United Kingdom
Plastimo, S.A. France
Plastimo Espana S.A. Spain
Plastimo Holland BV Holland
Plastimo Nordic AB Sweden
Scubapro Sweden AB Sweden
Under Sea Industries, Inc. Delaware
Johnson Beteiligungsgesellschaft mbH mbH Germany
Jack Wolfskin Ausrustung fur Draussen GmbH Germany
Johnson Outdoors V mbH Germany
Scubapro Taucherauser GmbH Germany
Scubapro Asia, Ltd. Japan
Scubapro Espana, S.A.(3) Spain
Scubapro Eu AG Switzerland
Scubapro Europe Benelux, S.A.(4) Belgium
Scubapro Europe S.R.L. Italy
Scubapro Italy S.R.L. Italy
Scubapro Norge AS Norway
Scubapro Taucherausrustungen Gesellschaft GmbH Austria
Scubapro (UK) Ltd.(4) United Kingdom
(1) Unless otherwise indicated in brackets, each company does business
only under its legal name.
(2) Unless otherwise indicated by footnote, each company is a
wholly-owned subsidiary of Johnson Worldwide Associates, Inc.
(through direct or indirect ownership).
(3) Percentage of stock owned is 98%.
(4) Percentage of stock owned is 99%.
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
Shareholders and Board of Directors
Johnson Worldwide Associates, Inc.:
We consent to incorporation by reference in the Registration Statements
(No. 33-19804, 33-19805, 33-35309, 33-50680, 33-52073, 33-54899 and 33-
61285) on Form S-8 of Johnson Worldwide Associates, Inc. of our reports
dated November 8, 1995, relating to the consolidated balance sheets of
Johnson Worldwide Associates, Inc. and subsidiaries as of September 29,
1995 and September 30, 1994, and the related consolidated statements of
operations, shareholders' equity, and cash flows and related schedule for
each of the years in the three-year period ended September 29, 1995, which
reports appear or are incorporated by reference in the 1995 Annual Report
on Form 10-K of Johnson Worldwide Associates, Inc.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
December 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-29-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-29-1995
<CASH> 8,944
<SECURITIES> 0
<RECEIVABLES> 64,066
<ALLOWANCES> 2,610
<INVENTORY> 98,238
<CURRENT-ASSETS> 185,380
<PP&E> 75,886
<DEPRECIATION> 42,858
<TOTAL-ASSETS> 278,353
<CURRENT-LIABILITIES> 63,855
<BONDS> 68,948
0
0
<COMMON> 406
<OTHER-SE> 140,856
<TOTAL-LIABILITY-AND-EQUITY> 278,353
<SALES> 347,190
<TOTAL-REVENUES> 347,190
<CGS> 209,035
<TOTAL-COSTS> 209,035
<OTHER-EXPENSES> 111,983
<LOSS-PROVISION> 1,567
<INTEREST-EXPENSE> 7,613
<INCOME-PRETAX> 16,992
<INCOME-TAX> 6,903
<INCOME-CONTINUING> 10,089
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,089
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
