UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 27, 1996
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
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
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, 1996, 6,901,885 shares of Class A and 1,228,053
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 $50,902,000 on
November 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Part and Item Number of Form 10-K
Document into which Incorporated
1. Johnson Worldwide Associates, Part I, Items 1 and 2, and Part
Inc. 1996 Annual Report II, Items 5, 6, 7 and 8
2. Johnson Worldwide Associates, Inc. Part III, Items 10, 11, 12 and 13
Notice of Annual Meeting of
Shareholders and Proxy Statement
for the Annual Meeting of
Shareholders on January 22, 1997
<PAGE>
PART I
ITEM 1. BUSINESS
Johnson Worldwide Associates, Inc. and its subsidiaries (the "Company")
are engaged in the manufacture and marketing of recreation 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 businesses and, in accordance
with this decision, the marking systems businesses are presented as a
discontinued operation in the Company's Consolidated Financial Statements.
Additional information regarding the marking systems businesses is set
forth at Note 3 to the Consolidated Financial Statements on page 26 in the
Company's 1996 Annual Report, which is incorporated herein by reference.
Financial information for the foreign and domestic operations of the
Company's recreation products businesses is set forth at Note 13 to the
Consolidated Financial Statements on page 30 in the Company's 1996 Annual
Report, which is incorporated herein by reference.
The Company's primary focus is on marketing and product innovation and
design to maintain its 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 Marine Products
The Company's fishing products include Minn Kota electric fishing motors
and accessories, Mitchell reels and rods, Johnson reels, Beetle Spin soft
body lures, Johnson spoons and Deckhand electric boat anchor systems. In
1995, the Company acquired the SpiderWire product line, giving it a
leading brand in the "superline" segment of the fishing line market. In
1995, 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 marine 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. The Company
controls a majority of the electric fishing motor market. Research and
development emphasize 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 and in-store displays. 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 in the United States, Canada, Europe and
the Pacific Basin through large retail store chains such as Wal Mart and
K-Mart, catalogs, such as Bass Pro Shops and Cabelas, sporting goods
specialty stores and 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 just above 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 spinning
and bait casting 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, Europe and the
Pacific Basin. 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 and through trade and consumer support at retail. The
Company's rods and reels are primarily produced by off-shore manufacturing
sources.
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.
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
is distributed primarily in the United States through large retail store
chains and original equipment manufacturers.
Camping Products
The Company's camping products include Eureka! and Camp Trails tents and
backpacks, Old Town canoes and kayaks, Carlisle paddles, Silva field
compasses, and Jack Wolfskin tents, backpacks and outdoor clothing.
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. Certain of these stores sell Jack Wolfskin products exclusively.
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 Products
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
underwater diving and snorkeling 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, Canada 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, Mexico and Italy. The Company procures a number of its rubber and
plastic products and components from offshore sources.
Sales by Category
The following table depicts net sales of continuing operations by major
product category:
Year Ended
Sept. 27, Sept. 29, Sept. 30,
1996 % 1995 % 1994 %
(thousands)
Fishing and
Marine $170,986 50% $176,665 51% $129,930 46%
Camping 96,387 28 96,095 28 87,529 31
Diving 77,000 22 74,430 21 66,884 23
------- --- ------- --- ------- ---
$344,373 100% $347,190 100% $284,343 100%
======= === ======= === ======= ===
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
1996 or 1994.
International Operations
See Note 13 to the Consolidated Financial Statements on page 30 of the
Company's 1996 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 21 of the
Company's 1996 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 27, 1996, the Company had approximately 1,333 employees
working in its businesses. The Company considers its employee relations
to be excellent.
Backlog
The Company's businesses do not receive significant orders in advance of
expected shipment dates.
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 for several months in 1995.
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. Inventory writedowns of $11
million in 1996 and $5.4 million in 1994 are included as components of the
fourth quarter operating losses. Nonrecurring charges totaling $6.8
million impacted operating results in the second, third and fourth
quarters of 1996.
Year Ended
Sept. 27, 1996 Sept. 29, 1995 Sept. 30, 1994
Net Operating Net Operating Net Operating
Quarter Ended Sales Profit(Loss) Sales Profit(Loss) Sales Profit(Loss)
December 16% (26)% 15% (8)% 16% (8)%
March 32 169 31 50 30 61
June 32 141 34 66 33 78
September 20 (184) 20 (8) 21 (31)
--- ---- --- --- --- ---
100% 100% 100% 100% 100% 100%
=== === === === === ===
Executive Officers of the Registrant
The following list sets forth certain information, as of November 15,
1996, regarding the executive officers of the Company.
Ronald C. Whitaker, age 49, became President and Chief Executive Officer
of the Company in October 1996. From December 1995 to October 1996,
Mr. Whitaker was President and Chief Executive Officer of EWI, Inc., a
supplier to the automotive industry. From 1992 to September 1995,
Mr. Whitaker was Chairman, President and Chief Executive Officer of Colt's
Manufacturing Company, Inc., a manufacturer of firearms, and, from 1988 to
1992, was President of Wheelabrator Corporation.
Philippe Blime, age 55, became a Vice President of the Company and
President of JWA Europe in 1993. From 1982 until 1993, Mr. Blime was
President and Directeur General of Mitchell Sports, S.A., a subsidiary of
the Company since 1990.
Helen P. Johnson-Leipold, age 39, became Executive Vice President - North
American Businesses of the Company in October 1995. From 1992 until
October 1995, Ms. Johnson-Leipold was Vice President - Consumer Marketing
Services - Worldwide of S.C. Johnson & Son, Inc. ("SCJ"), a manufacturer
of household maintenance and industrial products, and, from 1988 to 1992,
she was Director of Marketing Services of SCJ.
Michael E. Klockenga, age 46, became Vice President of Operations of JWA
North America in July 1994. From 1991 until July 1994, Mr. Klockenga was
a Plant Manager of Sundstrand Corporation ("Sundstrand"), a manufacturer
of aerospace and industrial subsystems and components, and, from 1988 to
1991, he was a Manager of Operations of Sundstrand.
Carl G. Schmidt, age 40, 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.
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
27 of the Company's 1996 Annual Report, which is incorporated herein by
reference, 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 Oslo, Norway
Barcelona, Spain Henggart, Switzerland Racine, Wisconsin
Basingstoke, Hampshire, Honolulu, Hawaii Rancho Dominguez,
England
Binghamton, New York Lorient, France California
Bruxelles, Belgium Mankato, Minnesota Salzburg-Glasenbach,
Burlington, Ontario, Canada Marignier, France Austria
Eastly, Hamphire, England Morfelden-Walldorf, Schoonhoven, Holland
Germany
Genoa, Italy Nykoping, Sweden Silverwater,
Australia
Tokyo (Kawasaki), Japan
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 27, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to this item is included on pages 27, 29, 30 and
32 and the inside back cover of the Company's 1996 Annual Report, which 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, 1996, 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 32 of the
Company's 1996 Annual Report, which 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 17 to 19 of the
Company's 1996 Annual Report, which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplemental data of
the Registrant and its subsidiaries, included on pages 20 through 32 of
the Company's 1996 Annual Report, are incorporated herein by reference:
Consolidated Balance Sheets - September 27, 1996 and
September 29, 1995
Consolidated Statements of Operations - Years ended September 27,
1996, September 29, 1995 and September 30, 1994
Consolidated Statements of Shareholders' Equity - Years ended
September 27, 1996, September 29, 1995 and September 30, 1994
Consolidated Statements of Cash Flows - Years ended September 27,
1996, September 29, 1995 and September 30, 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
Quarterly 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 certain information on
the Executive Officers which appears at the end of Part I of this report,
is included in the Company's January 22, 1997 Proxy Statement, which is
incorporated herein by reference, under the headings "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance."
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is included in the Company's
January 22, 1997 Proxy Statement, which is incorporated herein by
reference, under the heading "Executive Compensation," provided, however,
that the subsection entitled "Executive Compensation-Compensation
Committee Report on Executive Compensation" shall not be deemed to be
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 22, 1997 Proxy Statement, which is incorporated herein by
reference, under the heading "Stock Ownership of Management and Others."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to this item is included in the Company's
January 22, 1997 Proxy Statement, which is incorporated herein by
reference, under the heading "Certain Transactions."
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 1996 Annual Report:
Consolidated Balance Sheets - September 27, 1996 and September
29, 1995
Consolidated Statements of Operations - Years ended September
27, 1996, September 29, 1995 and September 30, 1994
Consolidated Statements of Shareholders' Equity - Years ended
September 27, 1996, September 29, 1995 and September 30, 1994
Consolidated Statements of Cash Flows - Years ended September
27, 1996, September 29, 1995 and September 30, 1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
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. Exhxibits
See Exhibit Index.
(b) Reports on Form 8-K:
None.
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Johnson Worldwide Associates, Inc.:
Under date of November 8, 1996, we reported on the consolidated balance
sheets of Johnson Worldwide Associates, Inc. and subsidiaries as of
September 27, 1996 and September 29, 1995, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of
the years in the three-year period ended September 27, 1996, as contained
in the 1996 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 1996. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule as listed in Item 14(a).
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, 1996
<PAGE>
<TABLE>
Johnson WORLDWIDE ASSOCIATES, Inc. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(thousands)
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs and at End
of Year Expenses Deductions(1) of Year
<S> <C> <C> <C> <C>
Year ended September 27, 1996:
Allowance for doubtful accounts $2,610 $ 1,662 $2,037 $ 2,235
Inventory reserves 5,118 12,202 3,655 13,665
Year ended September 29, 1995:
Allowance for doubtful accounts 2,317 1,567 1,274 2,610
Inventory reserves 7,554 1,561 3,997 5,118
Year ended September 30, 1994:
Allowance for doubtful accounts 1,606 1,421 710 2,317
Inventory reserves 1,751 6,318 515 7,554
(1) Includes the impact of foreign currency fluctuations on this balance sheet account.
</TABLE>
<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, 1996.
JOHNSON WORLDWIDE ASSOCIATES, INC.
(Registrant)
By /s/ Ronald C. Whitaker
Ronald C. Whitaker
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, 1996.
/s/ Samuel C. Johnson Chairman of the Board and Director
(Samuel C. Johnson)
/s/ Ronald C. Whitaker President and Chief Executive Officer
(Ronald C. Whitaker) 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) North American
Businesses and Director
/s/ Thomas F. Pyle, Jr. Director
(Thomas F. Pyle, Jr.)
/s/ Carl G. Schmidt Senior Vice President and Chief Financial
(Carl G. Schmidt) Officer, Secretary and Treasurer
(Principal Financial and Accounting Officer)
<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 Amendments to Bylaws of the Company, dated June 24,
1996. --
3.3 Bylaws of the Company as amended through June 24,
1996. --
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 Letter Amendment No. 1 dated September 30, 1993 to
Note Agreement dated May 1, 1991. (Filed as
Exhibit 4.5 to the Company's Form 10-K for the year
ended October 1, 1993 and incorporated herein by
reference). *
4.3 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.) *
4.4 Letter Amendment dated September 30, 1993 to Note
Agreement dated May 1, 1993. (Filed as Exhibit 4.8 to
the Company's Form 10-K for the year ended October 1,
1993 and incorporated herein by reference). *
4.5 Note Agreement dated October 1, 1995. (Filed as
Exhibit 4.1 to the Company's Form 10-Q for the quarter
ended December 29, 1995 and incorporated herein by
reference.) *
4.6 Credit Agreement dated November 29, 1995. (Filed as
Exhibit 4.2 to the Company's Form 10-Q for the quarter
ended December 29, 1995 and incorporated herein by
reference.) *
4.7 Amendment No. 1 dated July 1, 1996 to Credit Agreement
dated November 29, 1995. --
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.) *
10.13+ Separation agreement, dated July 18, 1996, between the
Company and John D. Crabb. --
11. Statement regarding computation of per share earnings.
(Incorporated by reference to Note 14 to the
Consolidated Financial Statements on page 30 of the
Company's 1996 Annual Report.) *
13. Portions of the Johnson Worldwide Associates, Inc.
1996 Annual Report that are incorporated herein by
reference. --
21. Subsidiaries of the Company as of September 27, 1996. --
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.
+ A management contract or compensatory plan or arrangement.
Exhibit 3.2
AMENDMENTS TO THE BY-LAWS
OF JOHNSON WORLDWIDE ASSOCIATES, INC.
(Amended as of June 24, 1996)
The following sections were amended in their entirety to provide
as follows:
ARTICLE THREE
Directors
* * *
3.02. Number of Directorship Positions; Chairman of the
Board.
(a) Number of Directors. Except as otherwise provided in
paragraph (c) of this Section 3.02, the number of directors of the
corporation shall be six (6), or such other specific number as from time
to time by resolution of the Board of Directors.
* * *
(d) Chairman of the Board. The Board of Directors may elect a
director as the Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the shareholders and of the Board
of Directors, may call meetings of the shareholders and the Board of
Directors,shall be the Chairman of the Executive Committee, shall advise
and counsel with the President, and shall perform such other duties as set
forth in these bylaws and as determined by the Board of Directors. Except
as provided in this paragraph (d), the Chairman shall be neither an
officer nor an employee of the corporation (by virtue of his election and
service as Chairman of the Board) and may use the title Chairman or
Chairman of the Board interchangeably. During the absence or disability
of the President, or while that office is vacant, the Chairman shall
exercise all of the powers and discharge all of the duties of the
President.
* * *
ARTICLE FIVE
Officers
* * *
5.07. The President. The President shall be the chief
executive officer of the corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all of the
business and affairs of the corporation. He shall, when present, in the
absence of the Chairman of the Board, if any, preside at all meetings of
the shareholders. In general he shall perform all duties incident to the
office of chief executive officer and such other duties as may be
prescribed by the Board of Directors from time to time. During the
absence or disability of the President, or while that office is vacant,
the Chairman of the Board shall exercise all of the powers and discharge
all of the duties of the President. The Board of Directors may authorize
the Chairman of the Board to appoint one or more officers or assistant
officers to perform the duties of the President during the absence or
disability of the President, or while that office is vacant.
* * *
Exhibit 3.3
BYLAWS
OF
JOHNSON WORLDWIDE ASSOCIATES, INC.
(A Wisconsin Corporation)
(As amended through June 24, 1996)
ARTICLE ONE
Offices
1.01. Principal and Business Office. The corporation may have
such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may from time to time
determine or as the business of the corporation may require from time to
time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be, identical
with the principal office in the State of Wisconsin, and the address of
the registered office may be changed from time to time by the Board of
Directors or by the registered agent. The business office of the
registered agent of the corporation shall be identical to such registered
office.
ARTICLE TWO
Meetings of the Shareholders
2.01. Annual Meetings. An annual meeting of the shareholders
shall be held at such time and date as may be fixed by or under the
authority of the Board of Directors and as designated in the notice
thereof, for the purpose of electing directors and for the transaction of
such other business as may come before the meeting.
2.02. Special Meetings.
(a) Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the
Chairman of the Board, if any, the President or the Board of Directors of
the corporation. The Chairman of the Board, if any, or the President
shall call a special meeting of the shareholders upon demand, in
accordance with this Section 2.02, of the holders of at least ten percent
(10%) of all of the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting.
(b) In order that the corporation may determine the
shareholders entitled to demand a special meeting, the Board of Directors
may fix a record date to determine the shareholders entitled to make such
a demand (the "Demand Record Date"). The Demand Record Date shall not
precede the date upon which the resolution fixing the Demand Record Date
is adopted by the Board of Directors and shall not be more than 10 days
after the date upon which the resolution fixing the Demand Record Date is
adopted by the Board of Directors. Any shareholder of record seeking to
have shareholders demand a special meeting shall, by sending written
notice to the Secretary of the corporation by hand or by certified or
registered mail, return receipt requested, request the Board of Directors
to fix a Demand Record Date. The Board of Directors shall promptly, but
in all events within 10 days after the date on which a valid request to
fix a Demand Record Date is received, adopt a resolution fixing the Demand
Record Date and shall make a public announcement of such Demand Record
Date. If no Demand Record Date has been fixed by the Board of Directors
within 10 days after the date on which such request is received by the
Secretary, the Demand Record Date shall be the 10th day after the first
date on which a valid written request to set a Demand Record Date is
received by the Secretary. To be valid, such written request shall set
forth the purpose or purposes for which the special meeting is to be held,
shall be signed by one or more shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of
signature of each such shareholder (or proxy or other representative) and
shall set forth all information about each such shareholder and about the
beneficial owner or owners, if any, on whose behalf the request is made
that would be required to be set forth in a shareholder's notice described
in paragraph (a) (ii) of Section 2.12 of these bylaws.
(c) In order for a shareholder or shareholders to demand a
special meeting, a written demand or demands for a special meeting by the
holders of record as of the Demand Record Date of shares representing at
least 10% of all the votes entitled to be cast on any issue proposed to be
considered at the special meeting must be delivered to the corporation.
To be valid, each written demand by a shareholder for a special meeting
shall set forth the specific purpose or purposes for which the special
meeting is to be held (which purpose or purposes shall be limited to the
purpose or purposes set forth in the written request to set a Demand
Record Date received by the corporation pursuant to paragraph (b) of this
Section 2.02), shall be signed by one or more persons who as of the Demand
Record Date are shareholders of record (or their duly authorized proxies
or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative), and shall set forth the
name and address, as they appear in the corporation's books, of each
shareholder signing such demand and the class and number of shares of the
corporation which are owned of record and beneficially by each such
shareholder, shall be sent to the Secretary by hand or by certified or
registered mail, return receipt requested, and shall be received by the
Secretary within 70 days after the Demand Record Date.
(d) The corporation shall not be required to call a special
meeting upon shareholder demand unless, in addition to the documents
required by paragraph (c) of this Section 2.02, the Secretary receives a
written agreement signed by each Soliciting Shareholder (as defined
below), pursuant to which each Soliciting Shareholder, jointly and
severally, agrees to pay the corporation's costs of holding the special
meeting, including the costs of preparing and mailing proxy materials for
the corporation's own solicitation, provided that if each of the
resolutions introduced by any Soliciting Shareholder at such meeting is
adopted, and each of the individuals nominated by or on behalf of any
Soliciting Shareholder for election as a director at such meeting is
elected, then the Soliciting Shareholders shall not be required to pay
such costs. For purposes of this paragraph (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person (as defined herein) shall
mean any Person controlling, controlled by or under common control
with such first Person.
(ii) "Participant" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term
in Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to
any Special Meeting demanded by a shareholder or shareholders, any of
the following Persons:
(A) if the number of shareholders signing the demand
or demands of meeting delivered to the corporation pursuant
to paragraph (c) of this Section 2.02 is 10 or fewer, each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand
or demands of meeting delivered to the corporation pursuant
to paragraph (c) of this Section 2.02 is more than 10, each
Person who either (I) was a Participant in any Solicitation
of such demand or demands or (II) at the time of the
delivery to the corporation of the documents described in
paragraph (c) of this Section 2.02 had engaged or intended
to engage in any Solicitation of Proxies for use at such
Special Meeting (other than a Solicitation of Proxies on
behalf of the corporation); or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine,
reasonably and in good faith, that such Affiliate should be
required to sign the written notice described in paragraph
(c) of this Section 2.02 and/or the written agreement
described in this paragraph (d) in order to prevent the
purposes of this Section 2.02 from being evaded.
(e) Except as provided in the following sentence, any special
meeting shall be held at such hour and day as may be designated by
whichever of the Chairman of the Board, if any, the President or the Board
of Directors shall have called such meeting. In the case of any special
meeting called by the Chairman of the Board, if any, or the President upon
the demand of shareholders (a "Demand Special Meeting"), such meeting
shall be held at such hour and day as may be designated by the Board of
Directors; provided, however, that the date of any Demand Special Meeting
shall be not more than 70 days after the record date for the meeting (as
established in Section 2.05 hereof); and provided further that in the
event that the directors then in office fail to designate an hour and date
for a Demand Special Meeting within 10 days after the date that valid
written demands for such meeting by the holders of record as of the Demand
Record Date of shares representing at least 10% of all the votes entitled
to be cast on each issue proposed to be considered at the special meeting
are delivered to the corporation (the "Delivery Date"), then such meeting
shall be held at 2:00 P.M. local time on the 100th day after the Delivery
Date or, if such 100th day is not a Business Day (as defined below), on
the first preceding Business Day. In fixing a meeting date for any
special meeting, the Chairman of the Board, if any, the President or the
Board of Directors may consider such factors as he or it deems relevant
within the good faith exercise of his or its business judgment, including,
without limitation, the nature of the action proposed to be taken, the
facts and circumstances surrounding any demand for such meeting, and any
plan of the Board of Directors to call an annual meeting or a special
meeting for the conduct of related business.
(f) The corporation may engage regionally or nationally
recognized independent inspectors of elections to act as an agent of the
corporation for the purpose of promptly performing a ministerial review of
the validity of any purported written demand or demands for a special
meeting received by the Secretary. For the purpose of permitting the
inspectors to perform such review, no purported demand shall be deemed to
have been delivered to the corporation until the earlier of (i) 5 Business
Days following receipt by the Secretary of such purported demand and (ii)
such date as the independent inspectors certify to the corporation that
the valid demands received by the Secretary represent at least 10% of all
the votes entitled to be cast on each issue proposed to be considered at
the special meeting. Nothing contained in this paragraph (f) shall in any
way be construed to suggest or imply that the Board of Directors or any
shareholder shall not be entitled to contest the validity of any demand,
whether during or after such 5 Business Day period, or to take any other
action (including, without limitation, the commencement, prosecution or
defense of any litigation with respect thereto).
(g) For purposes of these bylaws, "Business Day" shall mean any
day other than a Saturday, a Sunday or a day on which banking institutions
in the State of Wisconsin are authorized or obligated by law or executive
order to close.
2.03. Place of Meeting. The Board of Directors, the Chairman
of the Board, if any, or the President may designate any place, either
within or without the State of Wisconsin, as the place of meeting for any
annual or special meeting of the shareholders. If no designation is
made, the place of meeting shall be the principal business office of the
corporation in the State of Wisconsin. Any meeting may be adjourned to
reconvene at any place designated by the Board of Directors, the Chairman
of the Board, if any, or the President.
2.04. Notice. Written or printed notice of every annual or
special meeting of the shareholders, stating the place, date and time of
such meeting shall be delivered not less than ten nor more than sixty days
before the date of the meeting (unless a different period is required by
the Wisconsin Business Corporation Law or the Articles of Incorporation),
either personally or by mail, by or at the direction of the Board of
Directors, the Chairman of the Board, if any, the President or Secretary,
to each shareholder of record entitled to vote at such meeting and to
other shareholders as may be required by the Wisconsin Business
Corporation Law. In the event of any Demand Special Meeting, such notice
of meeting shall be sent not more than 30 days after the Delivery Date.
Notices which are mailed shall be deemed to be delivered when deposited in
the United States mail addressed to the shareholder at his or her address
as it appears on the stock record books of the corporation, with postage
thereon prepaid. Unless otherwise required by the Wisconsin Business
Corporation Law or the articles of incorporation of the corporation, a
notice of an annual meeting need not include a description of the purpose
for which the meeting is called. In the case of any special meeting, (a)
the notice of meeting shall describe any business that the Board of
Directors shall have theretofore determined to bring before the meeting
and (b) in the case of a Demand Special Meeting, the notice of meeting (i)
shall describe any business set forth in the statement of purpose of the
demands received by the corporation in accordance with Section 2.02 of
these bylaws and (ii) shall contain all of the information required in the
notice received by the corporation in accordance with Section 2.12(b) of
these bylaws. If an annual or special meeting of the shareholders is
adjourned to a different place, date or time, the corporation shall not be
required to give notice of the new place, date or time if the new place,
date or time is announced at the meeting before adjournment; provided,
however, that if a new record date for an adjourned meeting is or must be
fixed, the corporation shall give notice of the adjourned meeting to
persons who are shareholders as of the new record date.
2.05. Fixing of Record Date. The Board of Directors may fix in
advance a date not less than ten days and not more than seventy days prior
to the date of any annual or special meeting of the shareholders as the
record date for the purpose of determining shareholders entitled to notice
of and to vote at such meeting. In the case of any Demand Special
Meeting, (i) the meeting record date shall be not later than the 30th day
after the Delivery Date and (ii) if the Board of Directors fails to fix
the meeting record date within 30 days after the Delivery Date, then the
close of business on such 30th day shall be the meeting record date. If
no record date is fixed by the Board of Directors or by the Wisconsin
Business Corporation Law for the determination of the shareholders
entitled to notice of and to vote at a meeting of shareholders, the record
date shall be the close of business on the day before the first notice is
given to shareholders. The Board of Directors may also fix in advance a
date as the record date for the purpose of determining shareholders
entitled to demand a special meeting as contemplated by Section 2.02 of
these bylaws, shareholders to take any other action or shareholders for
any other purposes. Such record date shall not be more than seventy days
prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed
by the Board of Directors or by the Wisconsin Business Corporation Law for
the determination of shareholders entitled to demand a special meeting as
contemplated in Section 2.02 of these bylaws, the record date shall be the
date that the first shareholder signs the demand. The record date for
determining shareholders entitled to a distribution (other than a
distribution involving a purchase, redemption or other acquisition of the
corporation's shares) or a share dividend is the date on which the Board
of Directors authorized the distribution or share dividend, as the case
may be, unless the Board of Directors fixes a different record date.
Except as provided by the Wisconsin Business Corporation Law for a court-
ordered adjournment, a determination of shareholders entitled to notice of
and to vote at a meeting of the shareholders is effective for any
adjournment of such meeting unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
2.06. Shareholder Lists. After a record date for a special or
annual meeting of the shareholders has been fixed, the corporation shall
prepare a list of the names of all of the shareholders entitled to notice
of the meeting. The list shall be arranged by class or series of shares,
if any, and show the address of and number of shares held by each
shareholder. Such list shall be available for inspection by any
shareholder, beginning two business days after notice of the meeting is
given for which the list was prepared and continuing to the date of the
meeting, at the corporation's principal office or at a place identified in
the meeting notice in the city where the meeting will be held. A
shareholder or his agent may, on written demand, inspect and, subject to
the limitations imposed by the Wisconsin Business Corporation Law, copy
the list, during regular business hours and at his or her expense, during
the period that it is available for inspection pursuant to this Section
2.06. The corporation shall make the shareholders' list available at the
meeting and any shareholder or his or her agent or attorney may inspect
the list at any time during the meeting or any adjournment thereof.
Refusal or failure to prepare or make available the shareholders' list
shall not affect the validity of any action taken at a meeting of the
shareholders.
2.07. Quorum and Voting Requirements; Postponements;
Adjournments.
(a) Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. If at any time the corporation has only one
class of common stock outstanding, such class shall constitute a separate
voting group for purposes of this Section 2.07. Except as otherwise
provided in the Articles of Incorporation, any bylaw adopted under
authority granted in the Articles of Incorporation or by the Wisconsin
Business Corporation Law, a majority of the votes entitled to be cast on
the matter shall constitute a quorum of the voting group for action on
that matter. Once a share is represented for any purpose at a meeting,
other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes
of determining whether a quorum exists for the remainder of the meeting
and for any adjournment of that meeting unless a new record date is or
must be set for the adjourned meeting. If a quorum exists, except in the
case of the election of directors, action on a matter shall be approved if
the votes cast within the voting group favoring the action exceed the
votes cast within the voting group opposing the action, unless the
Articles of Incorporation, any bylaw adopted under authority granted in
the Articles of Incorporation or the Wisconsin Business Corporation Law
requires a greater number of affirmative votes. Unless otherwise provided
in the Articles of Incorporation, directors shall be elected by a
plurality of the votes cast within the voting group entitled to vote in
the election of such directors at a meeting at which a quorum is present.
For purposes of this Section 2.08, "plurality" means that the individuals
who receive the largest number of votes cast, within the voting group
entitled to vote in the election of such directors, are elected as
directors up to the maximum number of directors to be chosen at the
meeting by such voting group.
(b) The Board of Directors acting by resolution may postpone
and reschedule any previously scheduled annual meeting or special meeting;
provided, however, that a Demand Special Meeting shall not be postponed
beyond the 100th day following the Delivery Date. Any annual meeting or
special meeting may be adjourned from time to time, whether or not there
is a quorum, (i) at any time, upon a resolution of shareholders if the
votes cast in favor of such resolution by the holders of shares of each
voting group entitled to vote on any matter theretofore properly brought
before the meeting exceed the number of votes cast against such resolution
by the holders of shares of each such voting group or (ii) at any time
prior to the transaction of any business at such meeting, by the Chairman
of the Board or the President or pursuant to a resolution of the Board of
Directors. No notice of the time and place of adjourned meetings need be
given except as required by the Wisconsin Business Corporation Law. At
such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
meeting as originally notified, provided that no business shall be
transacted at such adjourned meeting on which any class of stock is
entitled to be voted which class shall not have been permitted to
participate in the vote to adjourn the meeting.
2.08. Proxies. At all meetings of the shareholders, a
shareholder entitled to vote may vote either in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by his or
her attorney-in-fact. An appointment of a proxy is effective when
received by the Secretary or other officer or agent of the corporation
authorized to tabulate votes. An appointment is valid for eleven months
from the date of its signing unless a different period is expressly
provided in the appointment form. Unless otherwise conspicuously stated
on the appointment form, a proxy may be revoked at any time before it is
voted, either by written notice delivered to the Secretary or other
officer or agent of the corporation authorized to tabulate votes or by
oral notice given by the shareholder to the presiding person during the
meeting. The Board of Directors shall have the power and authority to
make rules establishing presumptions as to the validity and sufficiency of
proxies.
2.09. Conduct of Meetings. The Chairman of the Board, if any,
and in his absence the President, shall call the meeting of the
shareholders to order, shall act as chairman of the meeting and shall
otherwise preside at the meeting. In the absence of the Chairman of the
Board, if any, and the President, a person designated by the Board of
Directors shall preside. The person presiding at any meeting of the
shareholders shall have the power to determine (i) whether and to what
extent proxies presented at the meeting shall be recognized as valid, (ii)
the procedure for tabulating votes at such meeting, (iii) procedures for
the conduct of such meeting, and (iv) any questions which may be raised at
such meeting. The person presiding at any meeting of the shareholders
shall have the right to delegate any of the powers contemplated by this
Section 2.09 to such other person or persons as the person presiding deems
desirable. The Secretary of the corporation shall act as secretary of all
meetings of shareholders, but, in the absence of the Secretary, the
presiding person may appoint any other person to act as secretary of the
meeting.
2.10. Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in
good faith, may accept the vote, consent, waiver or proxy appointment and
give it effect as the act of a shareholder. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the name of a
shareholder, the corporation, if acting in good faith, may accept the
vote, consent, waiver or proxy appointment and give it effect as the act
of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary status
acceptable to the corporation is presented with respect to the vote,
consent, waiver or proxy appointment.
(c) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation is presented with
respect to the vote, consent, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment.
(e) Two or more persons are the shareholders as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy appointment if
the Secretary or other officer or agent of the corporation who is
authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
2.11. Waiver of Notice by Shareholders. A shareholder may
waive any notice required by the Wisconsin Business Corporation Law, the
Articles of Incorporation or these bylaws before or after the date and
time stated in the notice. The waiver shall be in writing and signed by
the shareholder entitled to the notice, contain the same information that
would have been required in the notice under applicable provisions of the
Wisconsin Business Corporation Law (except that the time and place of the
meeting need not be stated) and be delivered to the corporation for
inclusion in the corporate records. A shareholder's attendance at a
meeting, in person or by proxy, waives objection to all of the following:
(a) lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting or promptly on arrival objects
to holding the meeting or transaction business at the meeting; and (b)
consideration of a particular matter at the meeting that is not within the
purpose described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
2.12. Notice of Shareholder Business and Nomination of
Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of
Directors of the corporation and the proposal of business to be
considered by the shareholders may be made at an annual meeting (A)
pursuant to the corporation's notice of meeting, (B) by or at the
direction of the Board of Directors or (C) by any shareholder of the
corporation who is a shareholder of record at the time of giving of
notice provided for in this by-law and who is entitled to vote at the
meeting and complies with the notice procedures set forth in this
Section 2.12.
(ii) For nominations or other business to be properly
brought before an annual meeting by a shareholder pursuant to clause
(C) of paragraph (a)(i) of this Section 2.12, the shareholder must
have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a shareholder's notice shall be received
by the Secretary of the corporation at the principal offices of the
corporation not earlier than the 90th day prior to the date of such
annual meeting and not later than the close of business on the later
of (x) the 60th day prior to such annual meeting and (y) the 10th day
following the day on which public announcement of the date of such
meeting is first made. Such shareholder's notice shall be signed by
the shareholder of record who intends to make the nomination or
introduce the other business (or his duly authorized proxy or other
representative), shall bear the date of signature of such shareholder
(or proxy or other representative) and shall set forth: (A) the name
and address, as they appear on this corporation's books, of such
shareholder and the beneficial owner or owners, if any, on whose
behalf the nomination or proposal is made; (B) the class and number
of shares of the corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that
such shareholder is a holder of record of shares of the corporation
entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to make the nomination or introduce the other
business specified in the notice; (D) in the case of any proposed
nomination for election or re-election as a director, (I) the name
and residence address of the person or persons to be nominated, (II)
a description of all arrangements or understandings between such
shareholder or beneficial owner or owners and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination is to be made by such shareholder, (III) such
other information regarding each nominee proposed by such shareholder
as would be required to be disclosed in solicitations of proxies for
elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the Exchange
Act, including any information that would be required to be included
in a proxy statement filed pursuant to Regulation 14A had the nominee
been nominated by the Board of Directors and (IV) the written consent
of each nominee to be named in a proxy statement and to serve as a
director of the corporation if so elected; and (E) in the case of any
other business that such shareholder proposes to bring before the
meeting, (I) a brief description of the business desired to be
brought before the meeting and, if such business includes a proposal
to amend these bylaws, the language of the proposed amendment, (II)
such shareholder's and beneficial owner's or owners' reasons for
conducting such business at the meeting and (III) any material
interest in such business of such shareholder and beneficial owner or
owners.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.12 to the contrary, in the event
that the number of directors to be elected to the Board of Directors
of the corporation is increased and there is no public announcement
naming all of the nominees for director or specifying the size of the
increased Board of Directors made by the corporation at least 60 days
prior to the annual meeting, a shareholder's notice required by this
Section 2.12 shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it
shall be received by the Secretary at the principal offices of the
corporation not later than the close of business on the 10th day
following the day on which such public announcement is first made by
the corporation.
(b) Special Meetings. Only such business shall be conducted at
a special meeting as shall have been described in the notice of meeting
sent to shareholders pursuant to Section 2.04 of these bylaws.
Nominations of persons for election to the Board of Directors may be made
at a special meeting at which directors are to be elected pursuant to such
notice of meeting (i) by or at the direction of the Board of Directors or
(ii) by any shareholder of the corporation who (A) is a shareholder of
record at the time of giving of such notice of meeting, (B) is entitled to
vote at the meeting and (C) complies with the notice procedures set forth
in this Section 2.12. Any shareholder desiring to nominate persons for
election to the Board of Directors at such a special meeting shall cause a
written notice to be received by the Secretary of the corporation at the
principal offices of the corporation not earlier than 90 days prior to
such special meeting and not later than the close of business on the later
of (x) the 60th day prior to such special meeting and (y) the 10th day
following the day on which public announcement is first made of the date
of such special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. Such written notice shall be
signed by the shareholder of record who intends to make the nomination (or
his duly authorized proxy or other representative), shall bear the date of
signature of such shareholder (or proxy or other representative) and shall
set forth: (A) the name and address, as they appear on the corporation's
books, of such shareholder and the beneficial owner or owners, if any, on
whose behalf the nomination is made; (B) the class and number of shares of
the corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such shareholder is
a holder of record of shares of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to make
the nomination specified in the notice; (D) the name and residence address
of the person or persons to be nominated; (E) a description of all
arrangements or understandings between such shareholder or beneficial
owner or owners and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination is to be made by
such shareholder; (F) such other information regarding each nominee
proposed by such shareholder as would be required to be disclosed in
solicitations of proxies for elections of directors, or would be otherwise
required to be disclosed, in each case pursuant to Regulation 14A under
the Exchange Act, including any information that would be required to be
included in a proxy statement filed pursuant to Regulation 14A had the
nominee been nominated by the Board of Directors; and (G) the written
consent of each nominee to be named in a proxy statement and to serve as a
director of the corporation if so elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.12 shall be eligible to serve
as directors. Only such business shall be conducted at an annual
meeting or special meeting as shall have been brought before such
meeting in accordance with the procedures set forth in this Section
2.12. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set
forth in this Section 2.12 and, if any proposed nomination or
business is not in compliance with this Section 2.12, to declare that
such defective proposal shall be disregarded.
(ii) For purposes of this Section 2.12, "public
announcement" shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the corporation with
the Securities and Exchange Commission pursuant to Section 13, 14 or
15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this
Section 2.12, a shareholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
2.12. Nothing in this Section 2.12 shall be deemed to limit the
corporation's obligation to include shareholder proposals in its
proxy statement if such inclusion is required by Rule 14a-8 under the
Exchange Act.
ARTICLE THREE
Directors
3.01. General Powers. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, the corporation's
Board of Directors. In addition to the powers and authorities expressly
conferred upon it by these bylaws, the Board of Directors may do all such
lawful acts and things as are not by the Wisconsin Business Corporation
Law, the Articles of Incorporation or these bylaws directed or required to
be exercised or done by the shareholders.
3.02. Number of Directorship Positions; Chairman of the Board.
(a) Number of Directors. Except as otherwise provided in
paragraph (c) of this Section 3.02, the number of directors of the
corporation shall be six (6), or such other specific number as from time
to time by resolution of the Board of Directors.
(b) Board of Directors' Power to Alter the Number of Directors.
The Board of Directors shall have the power (subject to any limitations
prescribed by the Articles of Incorporation) by a resolution adopted by
not less than a majority of all directors serving on the Board of
Directors at the time of such adoption to alter at any time and from time
to time the number of total directorship positions on the Board of
Directors. Upon the adoption of any resolution in the manner provided in
the preceding sentence, the total number of directorship positions on the
Board of Directors shall be equal to the number specified in such
resolution. If the Board of Directors shall determine to reduce the
number of directorship positions, then the term of each incumbent member
shall end upon the election of directors at the next annual meeting of
shareholders of the corporation and the persons elected to fill such
reduced number of directorship positions shall be deemed to be the
successors to all persons who shall have previously held such directorship
positions.
(c) Default. In the event that the corporation is in Default
(as defined in the Articles of Incorporation) in payment of dividends on
the 13% Senior Preferred Stock, $1.00 par value per share, of the
corporation (the "Senior Preferred Stock") or any stock on a parity with
the Senior Preferred Stock as to dividends and the holders of such stock
become entitled to elect two directors pursuant to Article Five, paragraph
A(2)(a)(iii) of the Articles of Incorporation, the number of total
directorship positions on the Board of Directors shall increase by two
effective as of the time that the holders of such stock elect two
directors pursuant to Article Five, paragraph A(2)(a)(iii) of the Articles
of Incorporation. When the Default is "cured" (as defined in the Articles
of Incorporation) or there is no longer any Senior Preferred Stock or any
stock on a parity with the Senior Preferred Stock outstanding, whichever
occurs earlier, the two directors elected pursuant to Article Five,
paragraph A(2)(a)(iii) of the Articles of Incorporation shall resign and
the total number of directorship positions shall be decreased by two
effective as of the date of the last such resignation.
(d) Chairman of the Board. The Board of Directors may elect a
director as the Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the shareholders and of the Board
of Directors, may call meetings of the shareholders and the Board of
Directors, shall be the Chairman of the Executive Committee, shall advise
and counsel with the President, and shall perform such other duties as set
forth in these bylaws and as determined by the Board of Directors. Except
as provided in this paragraph (d), the Chairman shall be neither an
officer nor an employee of the corporation (by virtue of his election and
service as Chairman of the Board) and may use the title Chairman or
Chairman of the Board interchangeably. During the absence or disability
of the President, or while that office is vacant, the Chairman shall
exercise all of the powers and discharge all of the duties of the
President.
3.03. Tenure and Qualifications. Each director shall hold
office until the next annual meeting of the shareholders and until his
successor shall have been elected and, if necessary, qualified, or until
his prior death, resignation or removal. A director may be removed by the
shareholders only at a meeting of the shareholders called for the purpose
of removing the director, and the meeting notice shall state that the
purpose, or one of the purposes, of the meeting is the removal of the
director. A director may be removed from office with or without cause
only by the voting group entitled to vote in the election of such
director. A director shall be removed if the number of votes cast to
remove the director exceeds the number of votes cast not to remove such
director. A director may resign at any time by delivering written notice
which complies with the Wisconsin Business Corporation Law to the Board of
Directors, to the Chairman of the Board, if any, or to the corporation. A
director's resignation is effective when the notice is delivered unless
the notice specifies a later effective date. Directors need not be
residents of the State of Wisconsin or shareholders of the corporation.
3.04. Regular Meetings. The Board of Directors shall provide,
by resolution, the date, time and place, either within or without the
State of Wisconsin, for the holding of regular meetings of the Board of
Directors without other notice than such resolution.
3.05. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board,
if any, the President or any three directors. The Chairman of the Board,
if any, or the President may fix the time, date and place, either within
or without the State of Wisconsin, for holding any special meeting of the
Board of Directors, and if no other place is fixed, the place of the
meeting shall be the principal business office of the corporation in the
State of Wisconsin.
3.06. Notice; Waiver. Notice of each special meeting of the
Board of Directors shall be given (a) by oral notice delivered or
communicated to the director by telephone or in person not less than
twenty-four hours prior to the meeting or (b) by written notice delivered
to the director in person, by telegram, teletype, facsimile or other form
of wire or wireless communication, or by mail or private carrier, to each
director at his business address or at such other address as the person
sending such notice shall reasonably believe appropriate, in each case not
less than forty-eight hours prior to the meeting. The notice need not
prescribe the purpose of the special meeting of the Board of Directors or
the business to be transacted at such meeting. If given by telegram, such
notice shall be deemed to be effective when the telegram is delivered to
the telegraph company. If given by teletype, facsimile or other wire or
wireless communication, such notice shall be deemed to be effective when
transmitted. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail so addressed, with postage thereon
prepaid. If given by private carrier, such notice shall be deemed to be
effective when delivered to the private carrier. Whenever any notice
whatever is required to be given to any director of the corporation under
the Articles of Incorporation or these bylaws or any provision of the
Wisconsin Business Corporation Law, a waiver thereof in writing, signed at
any time, whether before or after the date and time of meeting, by the
director entitled to such notice shall be deemed equivalent to the timely
giving of such notice. The corporation shall retain any such waiver as
part of the permanent corporate records. A director's attendance at or
participation in a meeting waives any required notice to him or her of the
meeting unless the director at the beginning of the meeting or promptly
upon his or her arrival objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent to
action taken at the meeting.
3.07. Quorum. Except as otherwise provided in the Articles of
Incorporation or these bylaws or by the Wisconsin Business Corporation
Law, directors holding a majority of the positions on the Board of
Directors established pursuant to Section 3.02 of these bylaws shall
constitute a quorum for transaction of business at any meeting of the
Board of Directors. A majority of the directors present (though less than
a quorum) may adjourn any meeting of the Board of Directors from time to
time without further notice.
3.08. Manner of Acting. The affirmative vote of a majority of
the directors present at a meeting of the Board of Directors at which a
quorum is present shall be the act of the Board of Directors unless the
Wisconsin Business Corporation Law, the Articles of Incorporation or these
bylaws require the vote of a greater number of directors.
3.09. Presumption of Assent. A director who is present and is
announced as present at a meeting of the Board of Directors or any
committee thereof created in accordance with Article IV of these bylaws,
when corporate action is taken on a particular matter, assents to the
action taken unless any of the following occurs: (a) the director objects
at the beginning of the meeting or promptly upon his or her arrival to
holding the meeting or transacting business at the meeting; (b) the
director dissents or abstains from an action taken and minutes of the
meeting are prepared that show the director's dissent or abstention from
the action taken; (c) the director delivers written notice that complies
with the Wisconsin Business Corporation Law of his or her dissent or
abstention from the action taken on the particular matter to the presiding
person of the meeting before its adjournment or to the corporation
immediately after adjournment of the meeting; or (d) the director dissents
or abstains from an action taken, minutes of the meeting are prepared that
fail to show the director's dissent or abstention from the action taken,
and the director delivers to the corporation a written notice of that
failure that complies with the Wisconsin Business Corporation Law promptly
after receiving the minutes. Such right of dissent or abstention shall
not apply to a director who votes in favor of the action taken on the
particular matter.
3.10. Action by Directors Without a Meeting. Any action
required or permitted by the Articles of Incorporation, these bylaws or
the Wisconsin Business Corporation Law to be taken at any meeting of the
Board of Directors or any committee thereof created pursuant to Article IV
of these bylaws may be taken without a meeting if the action is taken by
all members of the Board of Directors or such committee, as the case may
be. The action shall be evidenced by one or more written consents
describing the action taken, signed by each director or committee member,
as the case may be, and retained by the corporation. In the event one or
more positions on the Board of Directors or any committee thereof shall be
vacant at the time of the execution of any such consent, such consent
shall nevertheless be effective if it shall be signed by all persons
serving as members of the Board of Directors or of such committee, as the
case may be, at such time and if the persons signing the consent would be
able to take the action called for by the consent at a properly
constituted meeting of the Board of Directors or such committee, as the
case may be.
3.11. Compensation. The Board of Directors, irrespective of
any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the corporation as directors
or may delegate such authority to an appropriate committee of the Board of
Directors. The Board of Directors also shall have authority to provide
for or delegate authority to an appropriate committee of the Board of
Directors to provide for reasonable pensions, disability or death
benefits, and other benefits or payments, to directors, officers and
employees and to their estates, families, dependents or beneficiaries on
account of prior services rendered by such directors, officers and
employees to the corporation.
3.12. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
bylaws, members of the Board of Directors (and any committees thereof
created pursuant to Article IV hereof) may participate in regular or
special meetings by, or through the use of, any means of communication by
which (a) all participants may simultaneously hear each other, such as by
conference telephone, or (b) all communication is immediately transmitted
to each participant, and each participant can immediately send messages to
all other participants. If a meeting is conducted by such means, then at
the commencement of such meeting the presiding person shall inform the
participating directors that a meeting is taking place at which official
business may be transacted. Any participant in a meeting by such means
shall be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means on any
particular matter which the presiding person determines, in his or her
sole discretion, to be inappropriate under the circumstances for action at
a meeting held by such means. Such determination shall be made and
announced in advance of such meeting.
3.13. Conduct of Meetings. The Chairman of the Board, if any,
and in his or her absence, the President, and in their absence, any
director chosen by the directors present, shall call meetings of the Board
of Directors to order, shall act as chairman of the meeting and shall
otherwise preside at the meeting. The Secretary of the corporation shall
act as secretary of all meetings of the Board of Directors but in the
absence of the Secretary, the presiding person may appoint any other
person present to act as secretary of the meeting. Minutes of any regular
or special meeting of the Board of Directors shall be prepared and
distributed to each director.
ARTICLE FOUR
Committees of the Board of Directors
4.01. General.
(a) Establishment. The Board of Directors by resolution
adopted by the affirmative vote of a majority of all of the directors then
in office pursuant to Section 3.02 of these bylaws may establish one or
more committees, each committee to consist of two or more directors of
this corporation elected by the Board of Directors. The term "Board
Committee" as used in these bylaws means any committee comprised
exclusively of directors of the corporation which is identified as a
"Board Committee" either in these bylaws or in any resolutions adopted by
the Board of Directors.
(b) Membership. The Board of Directors by resolution adopted
by the affirmative vote of a majority of all directors then in office
shall have the power to: (i) establish the number of membership positions
on each Board Committee from time to time and change the number of
membership positions on such Committee from time to time; provided each
Board Committee shall consist of at least two members; (ii) appoint any
director to membership on any Board Committee who shall be willing to
serve on such Committee; (iii) remove any person from membership on any
Board Committee with or without cause; and (iv) appoint any director to
membership on any Board Committee as an alternate member. A person's
membership on any Board Committee shall automatically terminate when such
person ceases to be a director of the corporation.
(c) Powers. Except as otherwise provided in Section 4.01(d) of
these bylaws, each Board Committee shall have and may exercise all the
powers and authority of the Board of Directors, when the Board of
Directors is not in session, in the management of the business and affairs
of the corporation to the extent (but only to the extent) such powers
shall be expressly delegated to it by the Board of Directors or by these
bylaws. Unless otherwise provided by the Board of Directors in creating
the committee, a committee may employ counsel, accountants and other
consultants to assist it in the exercise of its authority.
(d) Reserved Powers. No Board Committee shall have the right
or power to do any of the following: (i) authorize distributions; (ii)
approve or propose to shareholders action that the Wisconsin Business
Corporation Law requires to be approved by shareholders; (iii) fill
vacancies on the Board of Directors, or, unless the Board of Directors
provides by resolution that vacancies on a committee shall be filled by
the affirmative vote of a majority of the remaining committee members, on
any Board Committee; (iv) amend the Articles of Incorporation; (v) adopt,
amend or repeal these bylaws; (vi) approve a plan of merger not requiring
shareholder approval; (vii) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the Board of
Directors; and (viii) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative
rights, preferences and limitations of a class or series of shares, except
that the Board of Directors may authorize a committee to do so within
limits prescribed by the Board of Directors.
(e) Vote Required. Except as provided by the Wisconsin
Business Corporation Law or in the Articles of Incorporation or these
bylaws, the members holding at least a majority of the membership
positions on any Board Committee shall constitute a quorum for purposes of
any meeting of such committee. The affirmative vote of the majority of
the members of a Board Committee present at any meeting of the Board
Committee at which a quorum is present shall be necessary and sufficient
to approve any action within the Board Committee's power, and any action
so approved by such a majority shall be deemed to have been taken by the
Board Committee and to be the act of such Board Committee.
(f) Governance. The Board of Directors may designate the
person who is to serve as chairman of and preside over any Board
Committee, and in the absence of any such designation by the Board of
Directors, the members of the Board Committee may either designate one
member of the Board Committee as its chairman to preside at any meeting or
elect to operate without a chairman, except as otherwise required by these
bylaws. Each Board Committee may appoint a secretary who need not be a
member of the Committee or a member of the Board of Directors. Each Board
Committee shall have the right to establish such rules and procedures
governing its meetings and operations as such committee shall deem
desirable provided such rules and procedures shall not be inconsistent
with the Articles of Incorporation, these bylaws, or any direction to such
committee issued by the Board of Directors.
(g) Alternate Committee Members. The Board of Directors may
designate one or more directors as alternate members of any Board
Committee, and any such director may replace any regular member of such
Board Committee who for any reason is absent from a meeting of such Board
Committee or is otherwise disqualified from serving on such Board
Committee.
4.02. Executive Committee. The corporation shall have an
Executive Committee. The Executive Committee shall be a Board Committee
and shall be subject to the provisions of Section 4.01 of these bylaws.
The Executive Committee shall assist the Board of Directors in developing
and evaluating general corporate policies and objectives. The Executive
Committee shall perform such specific assignments as shall be expressly
delegated to it from time to time by the Board of Directors and shall
(subject to the limitations specified in Section 4.01(d) of these bylaws
or imposed by the Wisconsin Business Corporation Law) have the power to
exercise, when the Board of Directors is not in session, the powers of the
Board of Directors except to the extent expressly limited or precluded
from exercising such powers in resolutions from time to time adopted by
the Board of Directors. Meetings of the Executive Committee may be called
at any time by any two members of the Committee. The time and place for
each meeting shall be established by the members calling the meeting. The
Chairman of the Board, when present, shall preside at all meetings of the
Executive Committee.
4.03. Audit Committee. The corporation shall have an Audit
Committee. The Audit Committee shall be a Board Committee and shall be
subject to the provisions of Section 4.01 of these bylaws. The Audit
Committee shall: (a) recommend to the Board of Directors annually a firm
of independent public accountants to act as auditors of the corporation;
(b) review with the auditors in advance the scope of their annual audit;
(c) review with the auditors and the management, from time to time, the
corporation's accounting principles, policies and practices and its
reporting policies and practices; (d) review with the auditors annually
the results of their audit; (e) review from time to time with the auditors
and the corporation's financial personnel the adequacy of the
corporation's accounting, financial and operating controls; (f) review
transactions between the corporation or any subsidiary of the corporation
and any shareholder who holds at least fifty percent of the total number
of shares outstanding of the corporation's Class A Common Stock or Class B
Common Stock (a "Controlling Shareholder") or any subsidiary of a
Controlling Shareholder in accordance with policies adopted by the Board
of Directors; and (g) perform such other duties as shall from time to time
be delegated to the Committee by the Board of Directors. The membership
of the Audit Committee shall always be such that a majority of the members
of the Audit Committee shall not be full-time employees of any Controlling
Shareholder, the corporation or any of their respective subsidiaries.
Within the limitations prescribed in the preceding sentence, the
membership on the Audit Committee shall be determined by the Board of
Directors as provided in Section 4.01 of these bylaws.
4.04. Compensation Committee. The corporation shall have a
Compensation Committee. The Compensation Committee shall be a Board
Committee and shall be subject to the provisions of Section 4.01 of these
bylaws. The Compensation Committee shall have the authority to establish
the compensation and benefits for directors, officers and, at the option
of the Compensation Committee, other managerial personnel of the
corporation and its subsidiaries, including, without limitation, fixing
the cash compensation of such persons, establishing and administering
compensation and benefit plans for such persons and determining awards
thereunder, and entering into (or amending existing) employment and
compensation agreements with any such persons. The Compensation Committee
may also recommend persons to be elected as officers of the corporation or
any of its subsidiaries to the Board of Directors. The Compensation
Committee shall perform such other duties as shall from time to time be
delegated to the Compensation Committee by the Board of Directors. The
authority of the Compensation Committee shall be subject to such
limitations and restrictions as may be imposed by the Board of Directors,
which may delegate the authority to establish or administer specific
employee compensation or benefit plans to one or more other Board
Committees or one or more persons designated by the Board of Directors.
The Compensation Committee shall consist solely of members of the Board of
Directors who are not officers of the corporation. The membership of the
Compensation Committee shall be determined by the Board of Directors as
provided in Section 4.01 of these bylaws.
ARTICLE FIVE
Officers
5.01. Number. The principal officers of the corporation shall
be appointed by the Board of Directors and shall consist of a President,
one or more Vice Presidents, a Secretary and a Treasurer. Such other
officers and assistant officers as may be deemed necessary or desirable
may be appointed by the Board of Directors. The President must be a
member of the Board of Directors, but no other officer need be a member of
the Board of Directors. Any two or more offices may be held by the same
person. In its discretion, the Board of Directors may choose not to fill
any office for any period as it may deem advisable, except the principal
offices of President, Vice President, Treasurer and Secretary. The Board
of Directors may authorize any officer to appoint one or more officers or
assistant officers.
5.02. Appointment and Term of Office. The officers of the
corporation to be appointed by the Board of Directors shall be appointed
annually by the Board of Directors at its first meeting following the
annual meeting of shareholders. If the appointment of officers shall not
occur at such meeting, such appointment shall occur as soon thereafter as
conveniently may be. Each officer shall hold office until the earlier of:
(a) the time at which a successor is duly appointed and, if necessary,
qualified, or (b) his or her death, resignation or removal as hereinafter
provided. The Board of Directors shall have the right to enter into
employment contracts providing for the employment of any officer for a
term longer than one year, but no such contract shall preclude the Board
of Directors from removing any person from any position with the
corporation whenever in the judgment of the Board of Directors the best
interests of the corporation would be served thereby.
5.03. Removal. The Board of Directors may remove any officer
and, unless restricted by the Board of Directors or these bylaws, an
officer may remove any officer appointed by that officer, at any time,
with or without cause and notwithstanding the contract rights, if any, of
the officer removed. The appointment of an officer does not of itself
create contract rights.
5.04. Resignation. An officer may resign at any time by
delivering notice to the corporation that complies with the Wisconsin
Business Corporation Law. The resignation shall be effective when the
notice is delivered, unless the notice specifies a later effective date
and the corporation accepts the later effective date.
5.05. Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be
filled by the Board of Directors for the unexpired portion of the term.
If a resignation of an officer is effective at a later date as
contemplated by Section 5.04 of these bylaws, the Board of Directors may
fill the pending vacancy before the effective date if the Board provides
that the successor may not take office until the effective date.
5.06. General Powers of Officers. For purposes of these
bylaws, the corporation's President and each Vice President shall be
deemed to be a "senior officer". Whenever any resolution adopted by the
corporation's shareholders, Board of Directors or Board Committee shall
authorize the "proper" or "appropriate" officers of the corporation to
execute any note, contract or other document or to take any other action
or shall generally authorize any action without specifying the officer or
officers authorized to take such action, any senior officer acting alone
and without countersignatures may take such action on behalf of the
corporation. Any officer of the corporation may on behalf of the
corporation sign contracts, reports to governmental agencies, or other
instruments which are in the regular course of business, except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these bylaws to some other officer or agent of the
corporation, or shall be required by the Wisconsin Business Corporation
Law or other applicable law to be otherwise signed or executed.
5.07. The President. The President shall be the chief
executive officer of the corporation and, subject to the control of the
Board of Directors, shall in general supervise and control all of the
business and affairs of the corporation. He shall, when present, in the
absence of the Chairman of the Board, if any, preside at all meetings of
the shareholders. In general he shall perform all duties incident to the
office of chief executive officer and such other duties as may be
prescribed by the Board of Directors from time to time. During the
absence or disability of the President, or while that office is vacant,
the Chairman of the Board shall exercise all of the powers and discharge
all of the duties of the President. The Board of Directors may authorize
the Chairman of the Board to appoint one or more officers or assistant
officers to perform the duties of the President during the absence or
disability of the President, or while that office is vacant.
5.08. Vice Presidents. Each Vice President shall perform such
duties and have such powers as the Board of Directors may from time to
time prescribe. The Board of Directors may designate any Vice President
as being senior in rank or degree of responsibility and may accord such a
Vice President an appropriate title designating his senior rank such as
"Executive Vice President" or "Senior Vice President" or "Group Vice
President". The Board of Directors may assign a certain Vice President
responsibility for a designated group, division or function of the
corporation's business and add an appropriate descriptive designation to
his title.
5.09. Secretary. The Secretary shall (subject to the control
of the Board of Directors): (a) keep the minutes of the shareholders' and
the Board of Directors' meetings in one or more books provided for that
purpose (including records of actions taken without a meeting); (b) see
that all notices are duly given in accordance with the provisions of these
bylaws or as required by the Wisconsin Business Corporation Law; (c) be
custodian of the corporate records and of the seal of the corporation and
see that the seal of the corporation is affixed to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) maintain a record of the shareholders of the corporation
in a form that permits preparation of a list of the names and address of
all shareholders by class or series of shares and showing the number and
class or series of shares held by each shareholder; (e) have general
charge of the stock transfer books of the corporation; (f) supply in such
circumstances as the Secretary deems appropriate to any governmental
agency or other person a copy of any resolution adopted by the
corporation's shareholders, Board of Directors or Board Committee, any
corporate record or document, or other information concerning the
corporation and its officers and certify on behalf of the corporation as
to the accuracy and completeness of the resolution, record, document or
information supplied; and (g) in general, perform all duties incident to
the office of Secretary and perform such other duties and have such other
powers as the Board of Directors or the President may from time to time
prescribe.
5.10. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) maintain appropriate accounting records; (c) receive and
give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such monies in the name of the
corporation in such banks, trust companies or other depositories as shall
be selected by or under authority of the Board of Directors; and (d) in
general, perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the
President. The Treasurer shall give a bond if required by the Board of
Directors for the faithful discharge of his duties in a sum and with one
or more sureties satisfactory to the Board of Directors.
5.11. Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors may from time to time authorize. The Assistant
Secretaries may sign with the President or a Vice-President certificates
for shares of the corporation, the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant
Treasurers shall respectively, if required by the Board of Directors, give
bonds for the faithful discharge of their duties in such sums and with
such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such
duties and have such authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
5.12. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly
appointed officer of the corporation to appoint, any person to act as
assistant to any officer, or as agent for the corporation in his or her
stead, or to perform the duties of such officer whenever for any reason it
is impracticable for such officer to act personally, and such assistant or
acting officer or other agent so appointed by the Board of Directors or an
authorized officer shall have the power to perform all the duties of the
office to which he or she is so appointed to be an assistant, or as to
which he or she is so appointed to act, except as such power may be
otherwise defined or restricted by the Board of Directors or the
appointing officer.
ARTICLE SIX
Contracts, Loans, Checks and Deposits
6.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to specific
instances. In the absence of other designation, all deeds, mortgages and
instruments of assignment or pledge made by the corporation shall be
executed in the name of the corporation by the President or one of the
Vice Presidents and by the Secretary, an Assistant Secretary, the
Treasurer or an Assistant Treasurer; the Secretary or an Assistant
Secretary, when necessary or required, shall affix the corporate seal
thereto; and when so executed no other party to such instrument or any
third party shall be required to make any inquiry into the authority of
the signing officer or officers.
6.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such
indebtedness shall be issued in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such authorization
may be general or confined to specific instances.
6.03. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued
in the name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner as shall
from time to time be determined by or under the authority of a resolution
of the Board of Directors.
6.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of
directors.
6.05. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by this corporation may be voted at any meeting of security
holders of such other corporation by the President of this corporation, if
he or she be present, or in his or her absence by any Vice President of
this corporation who may be present, and (b) whenever, in the judgment of
the President, or in his or her absence, of any Vice President, it is
desirable for this corporation to execute a proxy or written consent in
respect to any share or other securities issued by any other corporation
and owned by this corporation, such proxy or consent shall be executed in
the name of this corporation by the President or one of the Vice
Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal, if any, or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares
or other securities issued by such other corporation and owned by this
corporation the same as such shares or other securities might be voted by
this corporation.
6.06. No Nominee Procedures. The corporation has not
established, and nothing in these bylaws shall be deemed to establish, any
procedure by which a beneficial owner of the corporation's shares that are
registered in the name of a nominee is recognized by the corporation as
the shareholder under Section 180.0723 of the Wisconsin Business
Corporation Law.
6.07. Performance Bonds. The President and the Treasurer of
the corporation, and either one of them, shall have the continuing
authority to take all actions and to execute and deliver any and all
documents or instruments (including, without limitation, reimbursement
agreements and agreements of indemnity) in favor of such parties, in such
amounts and on such terms and conditions as may be necessary or useful for
the corporation or any of its direct or indirect subsidiaries to obtain
performance bonds, surety bonds, completion bonds, guarantees, indemnities
or similar assurances (collectively referred to as "Performance Bonds")
from third parties as such officer shall, in his sole discretion, deem
necessary or useful to facilitate and promote the business of the
corporation or any of its subsidiaries; provided, however, that the
contingent liability of the corporation with respect to Performance Bonds
for the corporation's subsidiaries shall not exceed $200,000 in any single
transaction or $1 million in the aggregate without the specific
authorization of the Board of Directors. Any action taken or document or
instrument executed and delivered by any such officer after December 31,
1993, that is within the scope of the authority granted in this Section
6.07 is hereby ratified, approved and confirmed. If any party shall
require resolutions of the Board of Directors with respect to the approval
of any actions of any officer of the corporation or documents or
instruments related to the Performance Bonds and within the scope of and
generally consistent with this Section 6.07, such resolutions shall be
deemed to have been duly approved and adopted by the Board of Directors,
and may be certified by the Secretary whenever approved by the President
or the Treasurer, in his sole discretion, and a copy thereof has been
inserted in the minute book of the corporation.
ARTICLE SEVEN
Corporate Stock
7.01. Certificates for Shares. Certificates representing
shares of any class of stock issued by the corporation shall be in such
form, consistent with the Wisconsin Business Corporation Law, as shall be
determined by the Board of Directors. Such certificates shall be signed
by the President or a Vice President and by the Secretary or an Assistant
Secretary and shall be sealed with the seal, or a facsimile of the seal,
of the corporation. If a certificate is countersigned by a transfer agent
or registrar, other than the corporation itself or its employees, any
other signature or countersignature on the certificate may be a facsimile.
In case any officer of the corporation, or any officer or employee of the
transfer agent or registrar who has signed or whose facsimile signature
has been placed upon such certificate ceases to be an officer of the
corporation, or an officer or employee of the transfer agent or registrar
before such certificate is issued, the certificate may be issued by the
corporation with the same effect as if the officer of the corporation, or
the officer or employee of the transfer agent or registrar had not ceased
to be such at the date of its issue. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares
and date of issue, shall be entered on the books of the corporation. All
certificates surrendered to the corporation for transfer shall be
canceled, and no new certificate shall be issued in replacement until the
former certificate for a like number of shares shall have been surrendered
and canceled, except as otherwise provided in Section 7.04 of these bylaws
with respect to lost, stolen or destroyed certificates.
7.02. Transfer Agent and Registrar. The Board of Directors may
from time to time with respect to each class of stock issuable by the
corporation appoint such transfer agents and registrars in such locations
as it shall determine, and may, in its discretion, appoint a single entity
to act in the capacity of both transfer agent and a registrar in any one
location.
7.03. Transfers of Shares. Transfers of shares shall be made
only on the books maintained by the corporation or a transfer agent
appointed as contemplated by Section 7.02 of these bylaws at the request
of the holder of record thereof or of his attorney, lawfully constituted
in writing, and on surrender for cancellation of the certificate for such
shares. Prior to due presentment of a certificate for shares for
registration of transfer, the corporation may (but shall not be required
to) treat the person in whose name corporate shares stand on the books of
the corporation as the only person having any interest in such shares and
as the only person having the right to receive dividends on and to vote
such shares, and the corporation shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part of the
other person, whether or not it shall have express or other notice
thereof. Where a certificate for shares is presented to the corporation
or a transfer agent with a request to register for transfer, the
corporation or the transfer agent, as the case may be, shall not be liable
to the owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation or the transfer agent had
no duty to inquire into adverse claims or has discharged any such duty.
The corporation or transfer agent may require reasonable assurance that
such endorsements are genuine and effective and compliance with such other
regulations as may be prescribed by or under the authority of the Board of
Directors.
7.04. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require
the person requesting such new certificate or certificates, or his or her
legal representative, to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
7.05. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of
any restriction imposed by the corporation upon the transfer of such
shares.
7.06. Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible
or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts for services to be
performed or other securities of the corporation. Before the corporation
issues shares, the Board of Directors shall determine that the
consideration received or to be received for the shares to be issued is
adequate. The determination of the Board of Directors is conclusive
insofar as the adequacy of consideration for the issuance of shares
relates to whether the shares are validly issued, fully paid and
nonassessable. The corporation may place in escrow shares issued in whole
or in part for a contract for future services or benefits, a promissory
note, or otherwise for property to be received in the future, or make
other arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until
the services are performed, the benefits or property are received or the
promissory note is paid. If the services are not performed, the benefits
or property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
7.07 Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the Wisconsin Business Corporation Law as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE EIGHT
General Provisions
8.01. Fiscal Year. The fiscal year of the corporation shall
begin and end on such dates as the Board of Directors shall determine by
resolution.
8.02. Seal. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the words
"Corporate Seal, Wisconsin." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE NINE
Amendments
9.01. By Directors. Except as otherwise provided by the
Wisconsin Business Corporation Law or the Articles of Incorporation, these
bylaws may be amended or repealed and new bylaws may be adopted by the
Board of Directors at any meeting at which a quorum is in attendance;
provided, however, that the shareholders in adopting, amending or
repealing a particular bylaw may provide therein that the Board of
Directors may not amend, repeal or readopt that bylaw.
9.02. By Shareholders. Except as otherwise provided in the
Articles of Incorporation, these bylaws may also be amended or repealed
and new bylaws may be adopted by the shareholders at any annual or special
meeting of the shareholders at which a quorum is in attendance.
9.03. Implied Amendments. Any action taken or authorized by
the shareholders or by the Board of Directors, which would be inconsistent
with the bylaws then in effect but is taken or authorized by affirmative
vote of not less than the number of votes or the number of directors
required to amend the bylaws so that the bylaws would be consistent with
such action, shall be given the same effect as though the bylaws had been
temporarily amended or suspended so far, but only so far, as is necessary
to permit the specific action so taken or authorized.
ARTICLE TEN
Indemnification
10.01. Certain Definitions. All capitalized terms used in this
Article X and not otherwise hereinafter defined in this Section 10.01
shall have the meaning set forth in Section 180.0850 of the Statute. The
following capitalized terms (including any plural forms thereof) used in
this Article X shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan,
trust or other enterprise that, directly or indirectly through
one or more intermediaries, controls or is controlled by, or is
under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the
Director or Officer to determine his or her right to
indemnification pursuant to Section 10.04.
(c) "Board" shall mean the entire then elected and serving
Board of Directors of the Corporation, including all members
thereof who are Parties to the subject Proceeding or any related
Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer
breached or failed to perform his or her duties to the
Corporation and his or her breach of or failure to perform those
duties is determined, in accordance with Section 10.04, to
constitute misconduct under Section 180.0851(2)(a) 1, 2, 3 or 4
of the Statute.
(e) "Corporation," as used herein and as defined in the
Statute and incorporated by reference into the definitions of
certain capitalized terms used herein, shall mean this
Corporation, including, without limitation, any successor
corporation or entity to the Corporation by way of merger,
consolidation or acquisition of all or substantially all of the
capital stock or assets of this Corporation.
(f) "Director or Officer" shall have the meaning set forth
in the Statute; provided, that, for purposes of this Article X,
it shall be conclusively presumed that any Director or Officer
serving as a director, officer, partner, trustee, member of any
governing or decision-making committee, employee or agent of an
Affiliate shall be so serving at the request of the Corporation.
(g) "Disinterested Quorum" shall mean a quorum of the
Board who are not Parties to the subject Proceeding or any
related Proceeding.
(h) "Party" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article X, the
term "Party" shall also include any Director, Officer or
employee who is or was a witness in a Proceeding at a time when
he or she has not otherwise been formally named a Party thereto.
(i) "Proceeding" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article X,
"Proceeding" shall include all Proceedings (i) brought under (in
whole or in part) the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, their respective
state counterparts, and/or any rule or regulation promulgated
under any of the foregoing; (ii) brought before an Authority or
otherwise to enforce rights hereunder; (iii) any appeal from a
Proceeding; and (iv) any Proceeding in which the Director or
Officer is a plaintiff or petitioner because he or she is a
Director or Officer; provided, however, that such Proceeding is
authorized by a majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through
180.0859, inclusive, of the Wisconsin Business Corporation Law,
Chapter 180 of the Wisconsin Statutes, including any amendments
thereto, but, in the case of any such amendment, only to the
extent such amendment permits or requires the Corporation to
provide broader indemnification rights than the Statute
permitted or required the Corporation to provide prior to such
amendment.
10.02. Mandatory Indemnification. To the fullest extent
permitted or required by the Statute, the Corporation shall indemnify a
Director or Officer against all Liabilities incurred by or on behalf of
such Director or Officer in connection with a Proceeding in which the
Director or Officer is a Party because he or she is a Director or Officer.
10.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under
Section 10.02 shall make a written request therefor to the Corporation.
Subject to Section 10.03(b), within sixty days of the Corporation's
receipt of such request, the Corporation shall pay or reimburse the
Director or Officer for the entire amount of Liabilities incurred by the
Director or Officer in connection with the subject Proceeding (net of any
Expenses previously advanced pursuant to Section 10.05).
(b) No indemnification shall be required to be paid by the
Corporation pursuant to Section 10.02 if, within such sixty-day period:
(i) a Disinterested Quorum, by a majority vote thereof, determines that
the Director or Officer requesting indemnification engaged in misconduct
constituting a Breach of Duty; or (ii) a Disinterested Quorum cannot be
obtained.
(c) In either case of nonpayment pursuant to Section 10.03(b),
the Board shall immediately authorize by resolution that an Authority, as
provided in Section 10.04, determine whether the Director's or Officer's
conduct constituted a Breach of Duty and, therefore, whether
indemnification should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to
determine the Director's or Officer's right to indemnification hereunder
within such sixty-day period and/or (ii) if indemnification of the
requested amount of Liabilities is paid by the Corporation, then it shall
be conclusively presumed for all purposes that a Disinterested Quorum has
determined that the Director or Officer did not engage in misconduct
constituting a Breach of Duty and, in the case of subsection (i) above
(but not subsection (ii)), indemnification by the Corporation of the
requested amount of Liabilities shall be paid to the Officer or Director
immediately.
10.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a
Director's or Officer's right to indemnification pursuant to Section
10.03, then the Director or Officer requesting indemnification shall have
the absolute discretionary authority to select one of the following as
such Authority:
(i) An independent legal counsel; provided, that such
counsel shall be mutually selected by such Director or Officer
and by a majority vote of a Disinterested Quorum or, if a
Disinterested Quorum cannot be obtained, then by a majority vote
of the Board;
(ii) A panel of three arbitrators selected from the panels
of arbitrators of the American Arbitration Association in
Milwaukee, Wisconsin; provided, that (A) one arbitrator shall be
selected by such Director or Officer, the second arbitrator
shall be selected by a majority vote of a Disinterested Quorum
or, if a Disinterested Quorum cannot be obtained, then by a
majority vote of the Board, and the third arbitrator shall be
selected by the two previously selected arbitrators; and (B) in
all other respects, such panel shall be governed by the American
Arbitration Association's then existing Commercial Arbitration
Rules; or
(iii) A court pursuant to and in accordance with Section
180.0854 of the Statute.
(b) In any such determination by the selected Authority there
shall exist a rebuttable presumption that the Director's or Officer's
conduct did not constitute a Breach of Duty and that indemnification
against the requested amount of Liabilities is required. The burden of
rebutting such a presumption by clear and convincing evidence shall be on
the Corporation or such other party asserting that such indemnification
should not be allowed.
(c) The Authority shall make its determination within sixty
days of being selected and shall submit a written opinion of its
conclusion simultaneously to both the Corporation and the Director or
Officer.
(d) If the Authority determines that indemnification is
required hereunder, the Corporation shall pay the entire requested amount
of Liabilities (net of any Expenses previously advanced pursuant to
Section 10.05), including interest thereon at a reasonable rate, as
determined by the Authority, within ten days of receipt of the Authority's
opinion; provided, that, if it is determined by the Authority that a
Director or Officer is entitled to indemnification as to some claims,
issues or matters, but not as to other claims, issues or matters, involved
in the subject Proceeding, the Corporation shall be required to pay (as
set forth above) only the amount of such requested Liabilities as the
Authority shall deem appropriate in light of all of the circumstances of
such Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any
prior determination that the Director or Officer engaged in a Breach of
Duty.
(f) All Expenses incurred in the determination process under
this Section 10.04 by either the Corporation or the Director or Officer,
including, without limitation, all Expenses of the selected Authority,
shall be paid by the Corporation.
10.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse, within ten days
after the receipt of the Director's or Officer's written request therefor,
the reasonable Expenses of the Director or Officer as such Expenses are
incurred, provided the following conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation
an executed written certificate affirming his or her good faith
belief that he or she has not engaged in misconduct which
constitutes a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation
an unsecured executed written agreement to repay any advances
made under this Section 10.05 if it is ultimately determined by
an Authority that he or she is not entitled to be indemnified by
the Corporation for such Expenses pursuant to Section 10.04.
(b) If the Director or Officer must repay any previously
advanced Expenses pursuant to this Section 10.05, such Director or Officer
shall not be required to pay interest on such amounts.
10.06. Indemnification and Allowance of Expenses of Certain
Others.
(a) The Corporation shall indemnify a director or officer of an
Affiliate (who is not otherwise serving as a Director or Officer) against
all Liabilities, and shall advance the reasonable Expenses, incurred by
such director or officer in a Proceeding to the same extent hereunder as
if such director or officer incurred such Liabilities because he or she
was a Director or Officer, if such director or officer is a Party thereto
because he or she is or was a director or officer of the Affiliate.
(b) The Corporation shall indemnify an employee who is not a
Director or Officer, to the extent that he or she has been successful on
the merits or otherwise in defense of a Proceeding, for all reasonable
Expenses incurred in the Proceeding if the employee was a Party because he
or she was an employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify (to the
extent not otherwise provided in Section 10.06(b)) against Liabilities
incurred by, and/or provide for the allowance of reasonable Expenses of,
an authorized employee or agent of the Corporation acting within the scope
of his or her duties as such and who is not otherwise a Director or
Officer.
10.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of a Director or Officer or any individual who is or
was an authorized employee or agent of the Corporation against any
Liability asserted against or incurred by such individual in his or her
capacity as such or arising from his or her status as such, regardless of
whether the Corporation is required or permitted to indemnify against any
such Liability under this Article X.
10.08. Notice to the Corporation. A Director, Officer or
employee shall promptly notify the Corporation in writing when he or she
has actual knowledge of a Proceeding which may result in a claim of
indemnification against Liabilities or allowance of Expenses hereunder,
but the failure to do so shall not relieve the Corporation of any
liability to the Director, Officer or employee hereunder unless the
Corporation shall have been irreparably prejudiced by such failure (as
determined, in the case of Directors and Officers only, by an Authority).
10.09. Severability. If any provision of this Article X shall
be deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article X contravene public
policy, this Article X shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such provisions which are invalid or inoperative or which contravene
public policy shall be deemed, without further action or deed by or on
behalf of the Corporation, to be modified, amended and/or limited, but
only to the extent necessary to render the same valid and enforceable.
10.10. Nonexclusivity of Article X. The rights of a Director,
Officer or employee (or any other person) granted under this Article X
shall not be deemed exclusive of any other rights to indemnification
against Liabilities or advancement of Expenses which the Director, Officer
or employee (or such other person) may be entitled to under any written
agreement, Board resolution, vote of shareholders of the Corporation or
otherwise, including, without limitation, under the Statute. Nothing
contained in this Article X shall be deemed to limit the Corporation's
obligations to indemnify a Director, Officer or employee under the
Statute.
10.11. Contractual Nature of Article X; Repeal or Limitation of
Rights. This Article X shall be deemed to be a contract between the
Corporation and each Director, Officer and employee of the Corporation and
any repeal or other limitation of this Article X or any repeal or
limitation of the Statute or any other applicable law shall not limit any
rights of indemnification against Liabilities or allowance of Expenses
then existing or arising out of events, acts or omissions occurring prior
to such repeal or limitation, including, without limitation, the right of
indemnification against Liabilities or allowance or Expenses for
Proceedings commenced after such repeal or limitation to enforce this
Article X with regard to acts, omissions or events arising prior to such
repeal or limitation.
AMENDMENT NO. 1
This Amendment No. 1 (the "Amendment") is entered into as of July 1,
1996 by and among Johnson Worldwide Associates, Inc. (the "Company"), the
undersigned Banks and The First National Bank of Chicago, as Agent.
W I T N E S S E T H :
WHEREAS, the Company, certain Banks named therein and the Agent are
parties to that certain Revolving Credit Agreement dated as of November
29, 1995 (the "Agreement");
WHEREAS, pursuant to Section 2.16 of the Agreement, the Company has
requested that the Agreement be amended so as to (i) increase the
Aggregate Commitment to $100,000,000, (ii) increase the Aggregate
Eurocurrency Commitment to $22,222,220, (iii) increase the Aggregate
Revolving Commitment to $77,777,780 (such increases in Aggregate
Commitment, Aggregate Eurocurrency Commitment and Aggregate Revolving
Commitment being herein collectively called the "Commitment Increase"),
and (iv) add The Northern Trust Company (the "New Bank") as a new Bank
thereunder; and
WHEREAS, subject to the terms and conditions hereof, the undersigned
Bank and the Agent have agreed to the Commitment Increase and the addition
of the New Bank;
NOW, THEREFORE, in consideration of the premises herein contained, and
for other good and valuable consideration, the receipt and sufficiency of
which are 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
Agreement.
2. Amendments to the Agreement.
2.1. On and after the Effective Date (as hereinafter defined), (i) the
New Bank shall for all purposes be a Bank party to the Agreement and shall
have all the rights and obligations of a Bank under the Agreement and the
Notes, with a Eurocurrency Commitment and Revolving Loan Commitment set
forth opposite its signature hereto, (ii) the Aggregate Commitment shall
be increased to $100,000,000, (iii) the Aggregate Eurocurrency Commitment
shall be increased to $22,222,220, (iv) the Aggregate Revolving Commitment
shall be increased to $77,777,780, and (v) the Eurocurrency Commitment and
Revolving Loan Commitment of each Bank (other than the New Bank) shall
remain unchanged from that in effect on June 30, 1996.
2.2. The definition of "Eurocurrency Commitment" set forth in
Article I of the Agreement is hereby amended by inserting, immediately
after the word "below" where it appears in the second line thereof, the
parenthetical "(or, in the case of The Northern Trust Company, set forth
opposite its signature to Amendment No. 1 dated as of July 1, 1996 to this
Agreement)".
2.3. The definition of "Revolving Loan Commitment" set forth in
Article I of the Agreement is hereby amended by inserting, immediately
after the word "below" where it appears in the second line thereof, the
parenthetical "(or, in the case of The Northern Trust Company, set forth
opposite its signature to Amendment No. 1 dated as of July 1, 1996 to this
Agreement)".
3. Effective Date. This Amendment shall become effective as of the
date first above written (the "Effective Date") upon receipt by the Agent
of the following:
(i) Counterparts of this Amendment duly executed by the
Company and the New Bank.
(ii) Notes payable to the order of the New Bank.
(iii) Such other documents, in each case in form and substance
satisfactory to the Agent, as the Agent may reasonably
request.
4. Notices. Pursuant to Section 10.08, the New Bank designates the
address set forth below its signature hereto as its address for purposes
of notices and other communications under the Agreement and the Notes.
5. Ratification. The Agreement (including, without limitation,
Article XI thereof), as amended hereby, shall remain in full force and
effect and is hereby ratified, approved and confirmed in all respects.
6. Reference to Agreement. From and after the Effective Date, each
reference in the Agreement to "this Agreement", "hereof", or "hereunder"
or words of like import, and all references to the Agreement in any and
all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the Agreement,
as amended by this Amendment.
7. Costs and Expenses. The Company agrees to pay all reasonable
costs, fees and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent, which attorneys may be employees of
the Agent) incurred by the Agent in connection with the preparation,
execution and enforcement of this Amendment.
8. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9. 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 New Bank and the Agent have
executed this Amendment as of the date first above written.
JOHNSON WORLDWIDE ASSOCIATES, INC.
By:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Agent
By:
Title:
Revolving Loan Eurocurrency
Commitment Commitment
$7,777,778 $2,222,222 THE NORTHERN TRUST COMPANY
By:
Title:
50 S. LaSalle Street, Floor B2
Chicago, IL 60603
Attention: Joseph Kunze
Vice President
Telephone: (312) 444-3175
Telecopier: (312) 444-7028
July 18, 1996
Mr. John D. Crabb
3333 Michigan Boulevard
Racine, Wisconsin 53402
Dear John:
This letter will serve as our formal agreement with respect to
your resignation from employment with Johnson Worldwide Associates, Inc.
("JWA"). In return for your compliance with all of the terms of this
letter JWA will provide the separation arrangements set forth in this
letter.
1. Resignation from Employment. Your employment with JWA,
including your duties as an Executive Officer, shall cease as of Monday,
June 24, 1996. You will resign effective as of that date, from all
positions with JWA, and each of its divisions and subsidiaries, including
positions as an officer and director, and as a member of any committee or
administrative body relating to JWA and its businesses. You will provide
JWA with such written resignations as JWA may request.
2. Compensation Following Termination Date. (a) Upon execution
of this letter JWA will pay to you separation payments in the amount of
Twenty-Eight Thousand Three Hundred Thirty-three and 34/100 Dollars
($28,333.34) net of applicable payroll and withholding taxes, on a monthly
basis for twelve (12) pay periods. The aggregate gross amount of such
payments shall be Three Hundred Forty Thousand Dollars ($340,000.00). JWA
will initiate separation payments within ten (10) days of your execution
of this agreement.
(b). JWA shall make outplacement services available, without
charge to you, through Right/Jannotta Bray for the twelve (12) consecutive
month period ending June 30, 1997.
3. Group Benefits. (a) Your group employee medical, life,
and disability coverage will terminate on your resignation date, and any
continuation or conversion rights under these programs are then available
for the periods prescribed under each program. You will pay the full
costs of any group benefits continued or converted. This letter agreement
does not affect your rights to vested benefits under JWA's 401(k)/deferred
profit sharing plan and any benefit entitlements arising out of your
employment by S. C. Johnson & Sons, Inc. In addition, you are eligible
for any deferred profit sharing (retirement contribution) that will be
paid to JWA employees for the fiscal year ending September 27, 1996.
(b) Your participation in the Flexible Perquisite Spending
Account program will terminate on your resignation date. You will be
reimbursed for qualified expenses incurred as of your resignation date.
JWA's reimbursement for the cost of your S. C. Johnson & Son, Inc. monthly
retiree health premium of One Hundred Seventy-eight Dollars ($178.00) will
continue for twelve (12) consecutive months following your resignation
date and will then terminate.
4. JWA Restricted Stock and Stock Options; Supplemental
Retirement Income. (a) You are now vested in Sixteen Thousand Six
Hundred Sixty-Six and 67/100 (16,666.67) shares of restricted stock
granted to you under the 1986 Restricted Stock Plan. JWA will immediately
arrange for the transfer agent to issue to you a certificate without the
restrictive legend for such shares. You shall also be deemed to be fully
vested in your remaining Three Thousand Three Hundred and 33/100
(3,333.33) shares of restricted stock, granted to you under the 1986
Restricted Stock Plan, on the tenth calendar day following your execution
of this agreement. JWA will, immediately following such date, arrange for
the transfer agent to issue to you a certificate for such shares without
the restrictive legend. You are responsible for compliance with all
securities laws, including those regarding insider trading, with regard to
any JWA stock transactions.
(b) You are seventy-five percent (75%) vested in Thirty-five
Thousand (35,000) shares of the stock option grant awarded to you under
the Amended and Restated 1986 Stock Option Plan on October 1, 1992; you
are seventy-five percent (75%) vested in Five Thousand (5,000) shares of
the stock option grant awarded to you under that plan on December 16,
1992; and you are fifty percent (50%) vested in Twenty-five Thousand
(25,000) shares of the stock option grant awarded to you under that plan
on December 10, 1993. You are thirty-three and one-third percent (33-
1/3%) vested in Twenty-five Thousand (25,000) shares of the stock option
grant awarded to you under the 1994 Long-Term Stock Incentive Plan. Your
vested stock options are exercisable in accordance with the terms of the
Plans and must be exercised no later than the close of business on July
24, 1996. Your nonvested stock options are forfeited and canceled as of
June 24, 1996.
(c) You shall remain entitled to receive any vested
supplemental retirement benefits payable to you or on your behalf under
that certain agreement between you and JWA dated December 16, 1992.
5. Noncompetition. (a) Except as provided by this paragraph
5, there will be no restrictions on your ability to enter into employment
with, be a sole proprietor or partner of, render services to, act as a
consultant to or hold an equity interest in, any entity or person. In
further consideration for the payments and benefits provided hereunder,
particularly the additional compensation described in paragraph 2, you
agree that during the period beginning on your resignation date and ending
January 31, 1998 (the "Restricted Period"), regardless of whether you have
forfeited rights under this agreement due to breach of its terms, you will
not, without the prior written consent of the Chairman of the Board of
JWA, be employed directly or indirectly by, be a sole proprietor or
partner of, or act as a consultant to Brunswick Corp., Coleman Co., Inc.,
or Outdoor Technologies Group, or any of their respective subsidiaries or
affiliates, in any capacity where confidential information concerning JWA
which was acquired by you during your employment with JWA would reasonably
be considered to be useful; neither will you, directly or indirectly make
sales solicitations to any person, corporation, partnership or other
business entity which is, at the present time and at the time of such
sales solicitation, a customer or prospective customer of JWA and/or its
subsidiaries or affiliates, if the effect of such action would be likely
to cause such customer to substantially reduce existing or future business
relationships with or purchases from JWA.
(b) You further agree to reasonably cooperate with JWA, its
financial and legal advisors and/or government officials, in any claims,
investigations, administrative proceedings including without limitation
environmental proceedings, lawsuits, and other legal, internal or business
matters, as reasonably requested by JWA during the Restricted Period and
for two (2) years thereafter. You will be paid one thousand dollars
($1,000) (in addition to any other amounts to which you may be entitled
hereunder) for each day on which such service is performed at the request
of JWA and, to the extent you incur travel or other expenses with respect
to such activities, JWA will reimburse you for such reasonable expenses
when submitted according to regular corporate procedures.
(c) You agree that JWA will suffer irreparable damage in the
event the provisions of this paragraph 5 are breached and your acceptance
of the provisions of this paragraph 5 was a material factor in your
decision to enter into this letter agreement. You further agree that JWA
shall be entitled as a matter of right to injunctive relief to prevent a
breach by you. Resort to such equitable relief, however, shall not
constitute a waiver of any other rights or remedies JWA may have. In
addition to such equitable relief, and not in limitation of any other
rights or remedies JWA may have, if you breach the provisions of this
paragraph 5 during the Restricted Period JWA shall have the remedies set
forth in paragraph 8 hereof.
6. Nonsolicitation: Confidentiality. (a) You agree that
during the Restricted Period, regardless of whether you have forfeited
rights under this agreement due to breach of its terms, you shall not,
except as provided herein, directly or indirectly solicit for employment
or advise or recommend to any other person that he or she solicit for
employment any person employed at that time by JWA, its subsidiaries or
affiliates. You further agree at all times, whether during the Restricted
Period and for two (2) years thereafter, not to exploit, use, sell,
publish, disclose, communicate or divulge to any person any trade secrets
or confidential information, knowledge or data regarding JWA, its
subsidiaries or affiliates or any of their respective directors, advisors,
officers, employees or agents for so long as such trade secrets or
confidential information, knowledge, or data have not become generally
known to the public or JWA's competitors without your fault or
participation. Good faith negotiations by you, on behalf of yourself or a
principal, for the purchase of goods and/or services from JWA, or any
affiliate of the Company, shall be deemed not to be a violation of the
prohibitions set forth in the preceding sentence. Nothing in this
agreement modifies or reduces your obligation to comply with applicable
laws relating to trade secrets, confidential information, or unfair
competition. You agree that JWA will suffer irreparable damage in the
event the provisions of this paragraph 6 are breached and that your
acceptance of the provisions of this paragraph 6 was a material factor in
your decision to enter into this letter of agreement. You further agree
that JWA shall be entitled as a matter of right to injunctive relief to
prevent a breach by you. Resort to such equitable relief, however, shall
not constitute a waiver of any other rights or remedies JWA may have. In
addition to such equitable relief, and not in limitation of any other
rights or remedies JWA may have, if you breach the provisions of this
paragraph 6 during the Restricted Period JWA shall have the remedies set
forth in paragraph 8 hereof. The provisions of this paragraph 6 shall not
apply to any truthful statement required to be made by you in any legal
proceeding or government or regulatory investigation, provided, however,
that prior to making such statement you will give JWA reasonable notice
and, to the extent you are legally entitled to do so, afford JWA the
ability to seek a confidentiality order.
(b) You represent and warrant that you have delivered to JWA
the original and all copies of all documents, records, including computer
disk records, and property of any nature whatsoever which are in your
possession or control and which are the property of JWA or which relate to
the business activities, facilities, or customers of JWA, its
subsidiaries, or its affiliates, including any records, documents or
property created by you. You further understand that all designs,
improvements, writings, and discoveries made by you during your employment
and pertaining to the business of JWA, its subsidiaries, or its affiliates
shall be the exclusive property of JWA.
7. Release and Covenants. (a) In consideration of the
payments and benefits provided hereunder, particularly the additional
compensation described in paragraph 2, you, on behalf of yourself, your
spouse, heirs, executors, administrators, agents, successors, assigns and
representatives of any kind (hereinafter collectively referred to as the
"Releasors") confirm that Releasors have released JWA, and each of its
subsidiaries, affiliates, their employees, successors, assigns, executors,
trustees, directors, advisors, agents and representatives, and all their
respective predecessors and successors (hereinafter collectively referred
to as the "Releasees"), from any and all actions, causes of actions,
charges, debts, liabilities, accounts, demands, damages and claims of any
kind whatsoever including, but not limited to, those arising under any
labor, employment discrimination (including, without limitation, the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the
Civil Rights Act of 1964, as amended, the Americans with Disabilities Act,
the Wisconsin Fair Employment Act, as amended), contract or tort laws,
equity or public policy, or negligence standard, whether certain or
speculative, which against any of the Releasees, any of the Releasors ever
had, now has, or hereafter shall have or can have. You further covenant
that you will not initiate any action, claim or proceeding against any of
the Releasees for any of the foregoing, nor will you participate, assist,
or cooperate in any such action, claim, or proceeding unless required to
do so by law.
(b) Notwithstanding the foregoing, this letter agreement does
not waive rights, if any, you or your successors and assigns may have
under or pursuant to, or release any member of Releasees from obligations,
if any, it may have to you or to your successors and assigns on claims
arising out of, related to or asserted under or pursuant to, this letter
agreement or any indemnity agreement or obligation contained in or adopted
or acquired pursuant to any provision of the charter or by-laws of JWA or
its subsidiaries or affiliates or in any applicable insurance policy
carried by JWA or its affiliates for any matter which arises or may arise
in the future in connection with your employment with JWA.
(c) You hereby acknowledge that you have at least twenty-one
(21) days to review this letter agreement from the date you first receive
it and you have been advised to review it with an attorney of your choice.
You further understand that the twenty-one (21) day review period ends
when you sign this agreement. You also have seven (7) days after your
signing of this agreement to revoke by so notifying JWA in writing. Any
revocation by you under this paragraph 7(c), however, is not effective
with regard to paragraph 1 hereof and your termination of employment with
JWA shall remain in effect as set forth therein. You further acknowledge
that you have carefully read this letter agreement, know and understand
the contents thereof and its binding legal effect. You sign the same of
your own free will and act, and it is your intention that you be legally
bound thereby.
(d) You agree to keep this letter agreement confidential and
not to reveal its contents to anyone other than your attorney, financial
consultant, and immediate family members. The provisions of this
paragraph 7(d) shall not apply to any truthful statement required to be
made by you in any legal proceeding or government or regulatory
investigation, provided, however, that prior to making such statement you
will give JWA reasonable notice and, to the extent you are legally
entitled to do so, afford JWA the ability to seek a confidentiality order.
8. Noncompliance. The additional payments and benefits
provided to you pursuant to paragraphs 2, 3(b), and 4(a) are conditioned
upon your compliance with all of the terms and conditions of this letter
agreement, particularly paragraphs 5, 6, and 7, above. Each of the
aforementioned provisions are material terms of this letter agreement, and
in the event of any violation of any such provision of this letter
agreement by you or anyone acting at your direction or in the event you or
anyone acting at your direction at any time shall substantially denigrate
any of the Releasees, including without limitation by way of news media or
the expression to news media of personal views, opinions or judgments, JWA
shall be entitled to treat your employment as being immediately terminated
for all purposes of this letter agreement and to withhold and terminate
all aforementioned payments provided or to be provided in paragraphs 2,
3(b), and 4(a) above, and you agree to repay to JWA all payments paid to
you pursuant to such paragraphs and/or JWA shall be entitled to recover
any of the amounts paid to you pursuant to such paragraphs without waiving
the right to pursue any other available legal or equitable remedies.
9. Tax Payments, Withholding and Reporting. You recognize
that the payments and benefits provided under this letter agreement
including without limitation those provided pursuant to paragraph 2 may
result in taxable income to you which JWA and its affiliates will report
to their appropriate taxing authorities. JWA and its affiliates shall
have the right to deduct from any payment made under this letter agreement
to you any federal, state, local or other income, employment or other
taxes it determines are required by law to be withheld with respect to
such payments or benefits provided hereunder or to require payment from
you which you agree to pay upon demand, for the purpose of satisfying any
such withholding requirement.
10. Severability. In the event any one or more of the
provisions of this letter agreement (or any part thereof) shall for any
reason be held to be invalid, illegal or unenforceable, the remaining
provisions of this letter agreement (or part thereof) shall be unimpaired,
and the invalid, illegal or unenforceable provision (or part thereof)
shall be replaced by a provision (or part thereof), which, being valid,
legal and enforceable, comes closest to the intention of the parties
underlying the invalid, illegal or unenforceable provisions. However, in
the event that any such provision of this letter agreement (or part
thereof) is adjudged by a court of competent jurisdiction to be invalid,
illegal or unenforceable, but that the other provisions (or part thereof)
are adjudged to be valid, legal and enforceable if such invalid, illegal
or unenforceable provision (or part thereof) were deleted or modified,
then this letter agreement shall apply with only such deletions or
modifications, or both, as the case may be, as are necessary to permit the
remaining separate provisions (or part thereof) to be valid, legal and
enforceable.
11. Indemnification. JWA shall indemnify you and your
successors and assigns against all Liabilities (as now defined in JWA's
bylaws) incurred by you or on your behalf in connection with any
Proceeding (as now defined in JWA's bylaws) in which you are a Party (as
now defined in JWA's bylaws) because you were a director or officer of
JWA, to the fullest extent permitted or required by the Wisconsin Business
Corporation Law, notwithstanding any amendment that may hereafter be made
to the charter or bylaws of JWA.
12. Other Provisions. All the terms of our agreement are
embodied in this letter agreement, which incorporates by reference JWA's
1986 Restricted Stock Plan and Amended and Restated 1986 Stock Option
Plan, the Johnson Worldwide Associates, Inc. 1994 Long-Term Stock
Incentive Plan, and the supplemental retirement benefits agreement
referred to in paragraph 4(c), and it fully supersedes any and all prior
agreements or understandings between you and any Releasee. This letter
agreement shall be governed by the substantive laws of the State of
Wisconsin without regard to its conflict of laws provisions. The parties
agree that any proceeding to resolve any dispute arising hereunder will be
brought only in the courts of the State of Wisconsin or in the courts of
the United States of America for the Eastern District of Wisconsin, and
that each party irrevocably submits to such jurisdiction, and hereby
waives any and all objections as to venue, inconvenient forum and the
like. It is the intention of the parties hereto, however, that to the
extent practicable, the parties will endeavor to settle any dispute
arising hereunder first through the process of non-binding mediation to be
conducted in Milwaukee, Wisconsin. This agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
If you find that the foregoing satisfactorily states our mutual
understanding, please sign and date the enclosed copy of this letter
agreement in the spaces indicated below and return it to me.
Sincerely yours,
JOHNSON WORLDWIDE ASSOCIATES, INC.
By
Raymond F. Farley
Its Chairman, Compensation Committee
of the Board of Directors
Agreed and Accepted this ________ day of _________________, 1996.
John D. Crabb
[Page 17]
Management's Discussion and Analysis
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
The following discussion includes comments and analysis relating to the
Company's results of operations and financial condition for the three
years ended September 27, 1996. 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] 1996 1995 1994
Net sales $344.4 $347.2 $284.3
Gross profit 119.7 138.2 110.5
Operating expenses(1) 121.2 114.4 91.5
Operating profit (loss) (1.5) 23.7 18.9
Interest expense 10.2 7.6 6.8
Income (loss) from
continuing operations (11.4) 10.1 8.1
Per common share (1.40) 1.25 1.01
(1) Includes nonrecurring charges of $6.8 million in 1996.
1996 vs 1995
Net Sales
Net sales were $344.4 million in 1996 compared to $347.2 million in 1995,
a decrease of 1%. The sales decrease as measured in U.S. dollars was
negatively impacted by the effect of weaker foreign currencies relative to
the U.S. dollar in comparison to 1995. Excluding the effects of foreign
currency movements, worldwide sales increased nominally over 1995.
Poor spring weather in North America contributed to a decline in sales of
4% in that region in 1996. Both the fishing and camping businesses were
impacted. The delay, until February 1996, in the introduction of a new
fishing line product due to production problems encountered by the
supplier, also negatively impacted revenue in 1996.
European sales as measured in U. S. dollars increased 6% in 1996, led by
strong growth in the camping and diving businesses. Excluding currency
effects, European sales increased 7% in 1996.
The Company's Asian business, which is concentrated in Japan and
Australia, recognized a decline in sales of 11% in 1996 due to the
significant decline in the Japanese yen relative to the U.S. dollar.
Excluding the impact of foreign currencies, sales in Asia increased 2% as
the Australian business generated significant sales growth.
Operating Profit
The Company recognized an operating loss of $1.5 million in 1996 compared
to operating profit of $23.7 million in 1995. Several factors accounted
for the operating loss. Gross profit margins declined from 39.8% in 1995
to 34.8% in 1996. Unusual charges related to reduction of inventories to
their net realizable value reduced the gross profit by $11 million, or
3.2%. Most significantly impacted was the North American fishing business,
which had the most significant buildup of inventory and recognized the
bulk of the losses. Changes in management and the end of the peak selling
season contributed to the timing of the loss, which was recognized in the
fourth quarter. The Company also continues to experience margin pressure
in all of its businesses due to increasing competition from other
businesses.
Operating expenses, excluding nonrecurring charges, totaled $114.4
million, or 33% of sales in both 1996 and 1995. While overall operating
expenses remained level, financial and administrative management expenses
increased $0.8 million. Amortization expense increased $0.5 million in
1996 due to a full year of amortization of intangible assets related to
acquisitions completed in 1995.
The Company recognized nonrecurring charges totaling $6.8 million in 1996.
These charges resulted from writedowns totaling $2.9 million of long-lived
assets related to adoption of FASB Statement 121, which the Company
adopted in 1996, and closure of a subsidiary, the expected loss of $2
million on the sale of one of the Company's businesses, and charges
totaling $1.9 million related to the relocation of one of its
manufacturing locations and the outsourcing of the distribution function
of another business.
Other Income and Expenses
Interest expense increased $2.6 million in 1996, reflecting higher debt
levels resulting from the full year impact of acquisitions consummated in
1995 and due to higher levels of working capital, primarily inventory. The
issuance of long-term senior notes in October 1995 increased the average
interest rate of the Company's indebtedness, as this debt was used to
repay short-term debt which generally carried lower interest rates.
[Page 18]
Income From Continuing Operations
The Company recognized a loss from continuing operations of $11.4 million
in 1996, or $1.40 per share, compared to earnings of $10.1 million, or
$1.25 per share in 1995. The Company recognized income tax expense of $0.2
million in 1996, despite a pretax loss, due to earnings in foreign
jurisdictions that are taxed at higher rates than in the U.S. The tax
benefit of operating losses generated in the U.S. did not fully offset the
taxes in these foreign jurisdictions. In addition, the Company recognized
income tax expense totaling $0.5 million on the expected disposition of a
business, despite a pretax loss of $2 million, due to differences between
the tax basis and financial statement carrying values of the related
assets. The disproportionate contribution of earnings from foreign
businesses is attributable to the inventory writedowns and nonrecurring
charges noted above, which are largely being recognized in the United
States.
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 sales of diving and marine
products.
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 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 was
concentrated primarily in marketing and selling expenses and, to a lesser
extent, research and development. Financial and administrative management
expenses, which had been stable for several years, increased in 1995 due
to increased information technology expenditures. Amortization of
intangible assets increased from $1.5 million to $2 million due to
acquisitions consummated in 1995. The increase in operating expenses was
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 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, reflected the disproportionate contribution to earnings in 1995 from
European and Asian operations, which generally have higher marginal tax
rates than the U.S.
Discontinued Operations
In 1993, the Company's Board of Directors approved a formal plan to divest
the Company's Marking Systems businesses. During 1994, the Company
completed the divestiture and recorded a gain on disposition of
approximately $4.1 million as net sales proceeds exceeded expectations.
[Page 19]
Financial Condition
The following discusses changes in the Company's liquidity and capital
resources.
Operations
The following table sets forth the Company's working capital position at
the end of each of the past three years:
[millions] 1996 1995 1994
Current assets $194.3 $185.4 $155.4
Current liabilities 88.4 63.9 54.0
Working capital $105.9 $121.5 $101.4
Current ratio 2.2 to 1 2.9 to 1 2.9 to 1
Cash flows used for operations totaled $6.5 million in 1996 and $6.3
million in 1995. Growth in inventories of $17.6 million in 1996 and $23.4
million in 1995 accounted for a significant amount of the net usage of
funds. Sales below expectations contributed to the growth in inventory in
1996. 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 contributed to the increase in
1995. Foreign currency fluctuations also contributed to the increase in
1995. Inventory turns decreased in 1996 and increased in 1995.
Accounts receivable decreased $2.4 million in 1996, providing a source of
funds, while increasing $6.6 million in 1995. Significant growth in third
and fourth quarter sales accounted for the increase in accounts receivable
in 1995.
Accounts payable and accrued liabilities decreased $1.1 million in 1996
and increased $7.3 million in 1995, impacting the net outflow of cash from
operations. Usage of liabilities established for restructuring in 1993
offset the increase in 1995.
Depreciation and amortization charges were $10.6 million in 1996, $8.3
million in 1995 and $7 million in 1994, mitigating the net outflow of
operating funds. The increase over 1994 reflects additional amortization
of intangible assets arising from the Company's 1995 acquisitions and
increased depreciation from capital spending in 1996, 1995 and 1994.
Investing Activities
Expenditures for property, plant and equipment were $10.7 million in 1996,
$15.5 million in 1995 and $14 million in 1994. The Company's recurring
investments are made primarily for tooling for new products and
enhancements. In 1996, 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 1997, capitalized expenditures are anticipated to total
approximately $10 million. These expenditures are expected to be funded by
working capital or existing bank lines of credit.
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 1996 or 1994.
Financing Activities
The following table sets forth the Company's debt and capital structure at
the end of the past three years:
[millions] 1996 1995 1994
Current debt $43.1 $18.6 $16.1
Long-term debt 61.5 68.9 31.2
Total debt 104.6 87.5 47.3
Shareholders' equity 126.4 141.3 128.2
Total capitalization $231.0 $228.8 $175.5
Total debt to total
capital ratio 45.3% 38.2% 27.0%
Cash flows from financing activities totaled $17.6 million in 1996 and
$39.5 million in 1995. In October 1995, the Company consummated private
placements of long-term debt totaling $45 million. In anticipation of this
financing, short-term debt to be repaid totaling $32 million at September
29, 1995 was classified as long-term. Payments on long-term debt required
to be made in 1997 total $7.5 million. Net proceeds totaling approximately
$17 million from the sale of one of the Company's businesses are expected
to be used to reduce indebtedness in 1997. At September 27, 1996, the
Company had available, unused credit facilities in excess of $112 million.
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 1997 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 20]
Consolidated Balance Sheets
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
September 27 September 29
[thousands, except share data] 1996 1995
Assets
Current assets:
Cash and temporary cash investments $12,697 $8,944
Accounts receivable, less allowance
for doubtful accounts of $2,235
and $2,610, respectively 55,847 61,456
Inventories 101,903 98,238
Deferred income taxes 13,561 7,423
Other current assets 10,336 9,319
------- -------
Total current assets 194,344 185,380
Property, plant and equipment 30,154 33,028
Intangible assets 54,422 58,691
Other assets 1,848 1,254
------- -------
Total assets $280,768 $278,353
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt and current
maturities of long-term debt $43,118 $18,563
Accounts payable 11,086 14,623
Accrued liabilities:
Salaries and wages 6,260 5,792
Income taxes 4,283 4,011
Other 23,659 20,866
------- -------
Total current liabilities 88,406 63,855
Long-term debt, less current maturities 61,501 68,948
Other liabilities 4,437 4,288
------- -------
Total liabilities 154,344 137,091
------- -------
Shareholders' equity:
Preferred stock: none issued - -
Common stock:
Class A shares issued: September
27, 1996, 6,901,801; September 29,
1995, 6,896,883 345 345
Class B shares issued (convertible
into Class A): September 27, 1996,
1,228,137; September 29, 1995,
1,228,613 61 61
Capital in excess of par value 44,084 43,968
Retained earnings 77,940 89,525
Contingent compensation (121) (264)
Cumulative translation adjustment 4,115 7,869
Treasury stock, at cost: September 29,
1995, 10,000 Class A shares - (242)
------- -------
Total shareholders' equity 126,424 141,262
------- -------
Total liabilities and shareholders'
equity $280,768 $278,353
======= =======
The accompanying notes are an integral part of the consolidated financial
statements.
[Page 21]
<TABLE>
Consolidated Statements of Operations
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
<CAPTION>
Year Ended
September 27 September 29 September 30
[thousands, except per share data] 1996 1995 1994
<S> <C> <C> <C>
Net sales $ 44,373 $ 47,190 $ 84,343
Cost of sales 24,649 09,035 73,869
Gross profit 19,724 38,155 10,474
Operating expenses:
Marketing and selling 8,348 8,743 59,629
Financial and administrative
management 6,139 5,304 23,482
Research and development 6,537 6,531 5,304
Amortization of acquisition costs 2,500 2,003 1,482
Nonrecurring charges 6,768 - -
Profit sharing 908 1,830 1,639
------- ------- -------
Total operating expenses 121,200 14,411 91,536
------- ------- -------
Operating profit (loss) (1,476) 23,744 18,938
Interest income (612) (774) (531)
Interest expense 10,181 7,613 6,845
Other (income) expenses, net 116 (87) 140
------- ------- -------
Income (loss) from continuing operations
before income taxes (11,161) 16,992 12,484
Income tax expense 194 6,903 4,338
------- ------- -------
Income (loss) from continuing operations (11,355) 10,089 8,146
Gain on disposal of discontinued operations,
including income tax benefit of $2,277 - - 4,052
------- ------- ------
Net income (loss) $ (11,355) $ 10,089 $ 12,198
------- ------- ------
Earnings (loss) Per Common Share
Continuing operations $ (1.40) $ 1.25 $ 1.01
Discontinued operations - - .50
------- ------- -------
Net income (loss) $ (1.40) $ 1.25 $ 1.51
------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[Page 22]
<TABLE>
Consolidated Statements of Shareholders' Equity
JOHNSON WORLDWIDE ASSOCIATES, INC. and subsidiaries
<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 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)
Net loss - - (11,355) - - -
Exercise of stock options - - (98) - - 295
Tax benefit of stock options exercised - 61 - - - -
Issuance of restricted stock - - - (67) - 67
Issuance of stock under employee
stock purchase plan - 55 (132) - - 291
Amortization of contingent
compensation - - - 210 - -
Other treasury stock transactions - - - - - (411)
Translation adjustment - - - - (3,754) -
---- ------ ------ ---- ----- -----
Balance at September 27, 1996 $406 $44,084 $77,940 $(121) $4,115 $ -
==== ====== ====== ==== ===== =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[Page 23]
<TABLE>
Consolidated Statements of Cash Flows
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
<CAPTION>
Year Ended
September 27 September 29 September 30
[thousands] 1996 1995 1994
<S> <C> <C> <C>
Cash Provided By (Used For) Operations
Net income (loss) $ (11,355) $ 10,089 $ 12,198
Noncash items:
Depreciation and amortization 10,561 8,314 6,987
Provision for doubtful accounts
receivable 1,662 1,567 1,421
Provision for inventory reserves 12,202 1,561 6,318
Deferred income taxes (6,842) 179 (694)
Writedown of property, plant and
equipment 1,846 - -
Writedown of intangible assets 1,070 - -
Loss on sale of business 2,000 - -
Gain on disposal of discontinued
operations - - (4,052)
Change in:
Accounts receivable 2,412 (6,637) (9,818)
Inventories (17,571) (23,386) (7,311)
Accounts payable and other accrued
liabilities (1,128) 7,256 3,576
Restructuring accrual - (1,077) (7,828)
Net assets of discontinued operations - - 4,036
Other, net (1,332) (4,147) 2,763
------- ------- -------
(6,475) (6,281) 7,596
------- ------- -------
Cash Provided By (Used For) Investing
Activities
Net assets of businesses acquired - (28,070) -
Proceeds from sale of discontinued
operations and other businesses - - 48,076
Additions to property, plant and
equipment (10,685) (15,501) (13,970)
Sales and retirements of property,
plant and equipment 3,583 3,403 1,676
------- ------- -------
(7,102) (40,168) 35,782
------- ------- -------
Cash Provided By (Used For)
Financing Activities
Issuance of senior notes 45,000 - -
Principal payments on senior notes
and notes payable (7,341) (6,662) (5,231)
Proceeds from revolving credit facilities - 13,172 -
Repayment of revolving credit facilities (13,412) - (7,237)
Net change in short-term debt (6,717) 32,928 (21,816)
Common stock transactions 61 73 1,570
------- ------- -------
17,591 39,511 (32,714)
Effect of foreign currency fluctuations
on cash (261) 294 509
------- ------- -------
Increase (decrease) in cash and temporary
cash investments 3,753 (6,644) 11,173
Cash and Temporary Cash Investments
Beginning of year 8,944 15,588 4,415
------- ------- -------
End of year $ 12,697 $ 8,944 $ 15,588
------- ------- -------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
[Page 24]
Notes to Consolidated Financial Statements
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
Johnson Worldwide Associates, Inc. is an integrated, global outdoor
recreation products company engaged in the design, manufacture and
marketing of brand name fishing and marine, camping and diving products.
1 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 differ significantly from those
estimates. For the Company, significant estimates include the allowance
for doubtful accounts receivable and reserves for inventory valuation.
The Company's fiscal year ends on the Friday nearest September 30. The
fiscal years ended September 27, 1996, September 29, 1995 and September
30, 1994 (hereinafter 1996, 1995 and 1994, 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] 1996 1995
Raw materials $ 30,102 $ 28,726
Work in process 6,167 5,888
Finished goods 79,299 68,742
--------- ---------
115,568 103,356
Less reserves 13,665 5,118
--------- ---------
$ 101,903 $ 98,238
========= =========
In 1996, the Company recorded charges totaling $11,000,000 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, which
range from 3 to 30 years.
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] 1996 1995
Property and improvements $ 987 $ 969
Buildings and improvements 15,685 15,642
Furniture, fixtures and equipment 61,009 59,275
--------- ---------
77,681 75,886
Less accumulated depreciation 47,527 42,858
--------- ---------
$ 30,154 $ 33,028
========= =========
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 annually 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 the deficiency of projected discounted future
operating cash flows relative to the value of the asset, using a discount
rate reflecting the Company's cost of capital, which is currently 12%.
Intangible assets at the end of the respective years consist of the
following:
[thousands] 1996 1995
Goodwill $ 66,260 $ 68,784
Patents, trademarks and other 4,357 4,604
-------- --------
70,617 73,388
Less accumulated amortization 16,195 14,697
-------- --------
$ 54,422 $ 58,691
======== ========
[Page 25]
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 27, 1996, net undistributed earnings of foreign subsidiaries
total approximately $39,973,000. 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 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 27, 1996, foreign currency forward contracts and options with
a notional value of approximately $4,716,000 are in place, hedging
existing and anticipated transactions. All of these contracts mature in
1997. 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 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 1996, 1995 and 1994 totals $26,657,000, $26,151,000
and $19,901,000, respectively. Capitalized costs at September 27, 1996 and
September 29, 1995 total $2,036,000 and $2,605,000, 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 1996, 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 currently in use.
2 Nonrecurring Charges
In 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. In addition, Statement 121 requires that long-lived
assets to be disposed of be reported at the lower of the carrying amount
or fair value (less estimated selling expenses). The Company adopted
Statement 121 in 1996 and determined that certain of its products would be
discontinued. As a result, assets totaling $1,846,000, consisting
primarily of tooling, were written off.
The Company also determined that the carrying value of goodwill of one of
its subsidiaries, which the Company subsequently closed, could not be
recovered through undiscounted future cash flows. Accordingly, the related
intangible assets, totaling $1,070,000, were written off.
[Page 26]
In 1996, the Company recorded involuntary severance and other exit costs
totaling $1,852,000 related to the relocation of one of its manufacturing
locations and the outsourcing of the distribution function of another
business. Substantially all of the $1,389,000 remaining accrued liability
at September 27, 1996 is to be disbursed by December 1996. Approximately
80 employees are impacted by these actions.
In 1996, the Board of Directors approved a plan to divest one of the
Company's businesses. The Company estimates the sale of this business will
result in a loss of approximately $2,000,000. Accordingly, this loss is
recognized in 1996 operating results. The Company expects the sale of this
business will be consummated in 1997. Net sales and operating profit of
this business were $36,391,000 and $3,043,000, respectively, in 1996. Net
assets of this business totaled $16,885,000 at September 27, 1996.
3 Discontinued Operations
In 1993, the Board of Directors approved a formal plan to divest the
Company's Marking Systems businesses, 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
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 businesses to the disposal dates were
$36,075,000 for 1994. Interest expense of $41,000 for 1994 that was
directly attributable to the Marking Systems businesses was allocated to
discontinued operations.
4 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 1997 through 2001 are dependent upon the
achievement of specified levels of sales and profitability of certain of
the acquired products. No additional payments were required in 1996. In
connection with the acquisition, the Company entered into an exclusive
supply agreement for certain of the products with the third-party
manufacturer of such 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 $2,231,000 was recorded as intangible
assets and will be amortized over 15 years. Additional payments in the
years 1997 through 2000 are dependent upon achievement of specified levels
of sales of the acquired product line. No additional payments were
required in 1996.
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.
5 Indebtedness
Short-term debt at the end of the respective years consists of the
following:
[thousands] 1996 1995
Commercial paper and bank loans $ 35,599 $ 42,978
Current maturities of long-term debt 7,519 7,413
-------- --------
43,118 50,391
Less short-term debt to be refinanced - 31,828
-------- --------
$ 43,118 $ 18,563
======== ========
Short-term arrangements provide for borrowings with interest rates set
periodically by reference to market rates. The weighted average interest
rate on short-term indebtedness was 5.8% and 7.0% at September 27, 1996
and September 29, 1995, respectively. The Company's primary facility is a
$100,000,000 revolving credit agreement expiring in 2001, which includes
$70,000,000 in support of commercial paper issuance. The Company has lines
of credit, both foreign and domestic, totaling $150,764,000, of which
$112,713,000 is available at September 27, 1996. The Company also has
available letters of credit for trade financing purposes.
Long-term debt at the end of the respective years consists of the
following:
[thousands] 1996 1995
Senior notes $ 67,000 $ 29,000
Short-term debt to be refinanced - 31,828
Revolving credit facility - 13,172
Notes payable 4.8% to 10.9%
maturing through December 2005 2,020 2,361
-------- --------
69,020 76,361
Less current maturities 7,519 7,413
-------- --------
$ 61,501 $ 68,948
======== ========
In 1996, 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%.
Total annual principal payments ranging from $5,500,000 to $7,500,000 are
due beginning in 2000 through 2006. Proceeds from issuance of the senior
notes were used to retire an interim revolving credit facility established
in 1995 to fund acquisitions and to reduce outstanding borrowings under
the Company's primary revolving credit facility. Outstanding
[Page 27]
short-term debt totaling $31,828,000 at September 29, 1995 was 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. The remaining annual
principal payment for the 1991 senior notes is $7,000,000 in 1997.
Principal amounts payable on long-term debt in each of the five years
ending September 2001 are as follows:
Year [thousands]
1997 $ 7,519
1998 7,868
1999 7,679
2000 5,880
2001 6,161
Interest paid was $8,853,211, $6,775,000 and $6,864,000 for 1996, 1995 and
1994, respectively.
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 debt as of September 27, 1996 and September 29, 1995 is
$69,151,000 and $76,804,000, 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. At September 27, 1996, the Johnson Family held approximately
2,169,000 shares or 31% of the Class A common stock, 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, fixed charge coverage and distribution
of earnings. The Company is in compliance with the restrictive covenants
of such agreements, as amended.
6 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 27, 1996 are as
follows:
Year [thousands]
1997 $ 4,098
1998 2,354
1999 1,628
2000 1,167
2001 862
Thereafter 2,093
Rental expense under all leases was approximately $5,309,000, $5,141,000
and $5,145,000 for 1996, 1995 and 1994, 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.
7 Income Taxes
Income tax expense (benefit) for the respective years attributable to
income (loss) from continuing operations consists of the following:
[thousands] 1996 1995 1994
Current:
Federal $ 518 $ 309 $ (2,045)
State 346 (100) 439
Foreign 6,239 6,489 5,382
Deferred (6,909) 205 562
------ ------- -------
$ 194 $ 6,903 $ 4,338
====== ======= =======
The significant components of deferred tax expense (benefit) attributable
to income (loss) from continuing operations are as follows:
[thousands] 1996 1995 1994
Deferred tax expense
(benefit) (exclusive
of effects of
other components
listed below) $(7,304) $ 325 $ 998
Adjustments to deferred
tax assets and
liabilities for
enacted changes in
tax laws or rates - 10 (18)
Increase (decrease) in
beginning of the
year balance of the
valuation allowance
for deferred tax assets 395 (130) (418)
------ ------- -------
$(6,909) $ 205 $ 562
------ ------- -------
[Page 28]
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] 1996 1995 1994
Deferred tax assets:
Inventories $ 6,126 $ 1,867 $ 2,836
Compensation 2,240 1,782 1,816
Restructuring - - 377
Foreign income taxes 595 988 1,489
Foreign tax credit
carryforwards 2,681 1,129 1,331
Net operating loss
carryforwards 2,996 407 360
Other 5,250 4,607 2,870
Total gross deferred
tax assets 19,888 10,780 11,079
Less valuation allowance 2,941 1,107 1,591
------- ------- -------
16,947 9,673 9,488
------- ------- -------
Deferred tax liabilities:
Foreign statutory
reserves 1,371 1,204 891
Acquisition accounting 836 638 561
------- ------- -------
Total deferred
tax liabilities 2,207 1,842 1,452
------- ------- -------
Net deferred tax asset $14,740 $ 7,831 $ 8,036
======= ======= =======
Following is the income (loss) from continuing operations before income
taxes for domestic and foreign operations:
[thousands] 1996 1995 1994
United States $ (25,276) $ 1,164 $ 350
Foreign 14,115 15,828 12,134
-------- ------- -------
$ (11,161) $ 16,992 $ 12,484
======== ======= =======
The significant differences between the statutory federal tax rates and
the effective income tax rates are as follows:
1996 1995 1994
Statutory U.S. federal
income tax rate (34.0)% 34.0% 34.0%
State income taxes,
net of federal income
tax benefit (3.4) (0.9) 1.9
Foreign rate differential 22.8 7.9 5.2
Basis difference on
divestiture of business 7.5 - -
Change in beginning
of year valuation
allowance for
foreign tax credits 3.9 - -
Foreign operating
losses (benefit) 1.2 0.9 (2.7)
Tax credits - (1.6) (0.7)
Other 3.7 0.3 (3.0)
---- ---- ----
1.7% 40.6% 34.7%
---- ---- ----
At September 27, 1996, the Company has $2,681,000 of foreign tax credit
carryforwards related to continuing operations available to be offset
against future U.S. tax liability. The credits begin expiring in 1999, if
not utilized.
During 1996, 1995 and 1994, foreign net operating loss carryforwards
related to continuing operations were utilized, resulting in a reduction
in income tax expense of $34,000, $130,000 and $428,000, respectively. At
September 27, 1996, the Company has a U.S. federal operating loss
carryforward of $6,925,000. In addition, certain of the Company's foreign
subsidiaries have net operating loss carryforwards totaling $790,000.
These amounts are available to offset future taxable income over the next
8 to 15 years and are anticipated to be utilized during this period.
Taxes paid related to continuing operations were $6,816,000, $7,318,000
and $5,896,000 for 1996, 1995 and 1994, respectively.
8 Employee Benefits
Net periodic pension cost for noncontributory pension plans related to
continuing operations includes the following components:
[thousands] 1996 1995 1994
Service cost $ 282 $ 254 $ 265
Interest on projected
benefit obligation 599 582 568
Return on plan assets (436) (457) (411)
Net amortization
and deferral (72) (19) 3
Effect of plan curtailment - - 177
------- ------- ------
$ 373 $ 360 $ 602
[Page 29]
The funded status of the plans related to continuing operations is as
follows at the end of the respective years:
[thousands] 1996 1995
Actuarial present value of
benefit obligations:
Vested benefits $ 7,031 $ 6,030
Non-vested benefits 187 174
Accumulated benefit
obligation 7,218 6,204
Effect of projected
compensation levels 1,779 1,681
Projected benefit obligation 8,997 7,885
Plan assets at fair value 6,235 5,697
Projected benefit
obligation In excess of
plan assets (2,762) (2,188)
Unrecognized net loss 1,756 1,209
Unrecognized prior service
cost 252 278
Unrecognized net asset (584) (661)
Pension liability recognized
in the consolidated balance
sheets $(1,338) $ (1,362)
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:
1996 1995 1994
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 under various performance and service based formulas.
9 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.
10 Common Stock
Common stock at the end of the respective years consists of the following:
1996 1995
Class A, $.05 par value:
Authorized 20,000,000 20,000,000
Outstanding 6,901,801 6,886,883
Class B, $.05 par value:
Authorized 3,000,000 3,000,000
Outstanding 1,228,137 1,228,613
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
1996, 1995 and 1994, respectively, 476, 1,986 and 284 shares of Class B
common stock were converted into Class A common stock.
11 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 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) 17.13 - 23.75
Outstanding at September 29, 1995 598,946 4.44 - 24.38
Granted 162,000 22.06 - 25.31
Exercised (12,567) 20.25 - 23.50
Cancelled (182,158) 17.13 - 23.25
Outstanding at September 27, 1996 566,221 $ 4.44 - 25.31
Exercisable at September 27, 1996 356,756 $ 4.44 - 24.38
[Page 30]
In October 1996, options to acquire 75,000 shares of Class A common stock
at an exercise price of $13.125 per share were granted. At September 27,
1996, September 29, 1995 and September 30, 1994, 289,833, 286,833, and
276,333 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 27, 1996, 457,500 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 1996, 1995
and 1994, 17,375, 6,701 and 9,432 shares, respectively, were issued under
this plan.
12 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 $440,000, $523,000 and $1,548,000
for 1996, 1995 and 1994, respectively, of which $106,000 and $125,000 are
outstanding at September 27, 1996 and September 29, 1995, respectively.
13 Geograph 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 presented
below:
[thousands] 1996 1995 1994
Net sales:
United States:
Unaffiliated customers $ 184,372 $ 192,426 $ 157,191
Inter-area transfers 6,718 5,749 4,966
Europe:
Unaffiliated customers 134,048 126,103 100,297
Inter-area transfers 3,107 3,365 3,622
Other 25,976 28,674 26,926
Eliminations (9,848) (9,127) (8,659)
------- ------- -------
$ 344,373 $ 347,190 $ 284,343
------- ------- -------
Operating profit (loss):
United States $ (17,347) $ 6,004 $ 3,807
Europe 13,013 14,409 11,643
Other 2,858 3,331 3,488
------- ------- -------
$ (1,476) $ 23,744 $ 18,938
------- ------- -------
Identifiable assets:
United States $ 150,959 $ 150,691
Europe 109,026 106,426
Other 20,783 21,236
------- -------
$ 280,768 $ 278,353
======= =======
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 1996 or 1994.
14 Earnings Per Share
Earnings (loss) 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 8,113,776, 8,080,684 and
8,067,629 in 1996, 1995 and 1994, respectively. Common stock equivalents
are not significant in any year presented.
15 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 31]
Auditors' and Management's Reports
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
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 27, 1996 and September
29, 1995 and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the
three-year period ended September 27, 1996. 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 as of September 27,
1996 and September 29, 1995, and the results of their operations and their
cash flows for each of the years in the three-year period ended September
27, 1996, in conformity with generally accepted accounting principles.
As discussed in note 2 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 121 Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of during the year ended September 27, 1996.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
November 8, 1996
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.
Ronald C. Whitaker
President and Chief Executive Officer
Carl G. Schmidt
Senior Vice President and Chief Financial Officer
[Page 32]
<TABLE>
Five Year Financial Summary
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
<CAPTION>
Year Ended
September 27 September 29 September 30 October 1 October 2
[thousands, except per share data] 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Income Statement Data(1)
Net sales $344,373 $347,190 $284,343 $280,292 $275,845
Gross profit 119,724 138,155 110,474 114,780 112,185
Operating expenses(2) 121,200 114,411 91,536 103,587 92,621
Operating profit (loss) (1,476) 23,744 18,938 11,193 19,564
Interest expense 10,181 7,613 6,845 8,309 10,180
Other (income) expense, net (496) (861) (391) 189 (491)
Income (loss) from continuing
operations before income taxes (11,161) 16,992 12,484 2,695 9,875
Income tax expense 194 6,903 4,338 2,055 4,509
Income (loss) from continuing
operations (11,355) 10,089 8,146 640 5,366
Income from discontinued operations - - - 1,169 2,304
Gain (loss) on disposal of
discontinued operations - - 4,052 (3,000) -
Net income (loss) $(11,355) $10,089 $12,198 $(1,191) $7,670
Earnings (loss) per common share:
Continuing operations $(1.40) $1.25 $1.01 $.08 $.67
Discontinued operations - - .50 (.23) .29
Net income (loss) $(1.40) $1.25 $1.51 $(.15) $.96
Weighted average common and
common equivalent shares
outstanding 8,114 8,081 8,068 7,974 7,953
Balance Sheet Data(1)
Total assets $280,768 $278,353 $219,681 $239,121 $236,281
Long-term debt, less current
maturities 61,501 68,948 31,190 44,543 43,327
Shareholders' equity 126,424 141,262 128,197 110,818 118,669
(1) All periods have been reclassified to reflect the discontinuation of
the Company's Marking Systems businesses.
(2) Includes nonrecurring charges of $6,768,000, $13,000,000 and
$4,500,000 in 1996, 1993 and 1992, respectively.
</TABLE>
<TABLE>
Quarterly Financial Summary
JOHNSON WORLDWIDE ASSOCIATES, INC. and Subsidiaries
<CAPTION>
First Second Third Fourth
[thousands, except per share data] 1996 1995 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $56,405 $53,462 $111,229 $105,797 $110,705 $117,844 $66,034 $70,087
Gross profit 21,321 20,184 44,332 42,480 42,423 48,745 11,648 26,746
Net income (loss) (2,793) (1,941) 4,090 6,453 4,202 8,239 (16,854) (2,662)
Earnings (loss) per
common share $ (.34) $ (.24) $ .50 $ .80 $ .52 $ 1.02 $ (2.08) $ (.33)
Stock prices:
High $ 24.25 $ 25.75 $ 23.00 $ 23.75 $ 19.50 $ 23.75 $ 15.25 $ 24.75
Low 21.75 18.25 17.50 19.00 13.50 20.50 13.75 22.50
</TABLE>
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 27, 1996. Inactive
subsidiaries are not presented.
Jurisdiction in
Name of Subsidiary (1)(2) which Incorporated
Johnson Worldwide Associates Australia Pty. Australia
Ltd.
Johnson Worldwide Associates Canada Inc. Canada
Mitchell Sports, S.A. France
Distribution Moderne De Marques (3) France
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 GmbH Germany
Jack Wolfskin Ausrustung fur Germany
Draussen GmbH
Johnson Outdoors V GmbH 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 Austria
GmbH
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, 1996, relating to the consolidated balance sheets of
Johnson Worldwide Associates, Inc. and subsidiaries as of September 27,
1996 and September 29, 1995, 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 27, 1996 which
reports appear or are incorporated by reference in the 1996 Annual Report
on Form 10-K of Johnson Worldwide Associates, Inc.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin
December 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF JOHNSON WORLDWIDE ASSOCIATES, INC. AS OF AND
FOR THE YEAR ENDED SEPTEMBER 27, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-27-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-27-1996
<CASH> 12,697
<SECURITIES> 0
<RECEIVABLES> 58,082
<ALLOWANCES> 2,235
<INVENTORY> 101,903
<CURRENT-ASSETS> 194,344
<PP&E> 77,681
<DEPRECIATION> 47,527
<TOTAL-ASSETS> 280,786
<CURRENT-LIABILITIES> 88,405
<BONDS> 61,501
0
0
<COMMON> 406
<OTHER-SE> 126,018
<TOTAL-LIABILITY-AND-EQUITY> 280,768
<SALES> 344,373
<TOTAL-REVENUES> 344,373
<CGS> 224,649
<TOTAL-COSTS> 224,649
<OTHER-EXPENSES> 119,042
<LOSS-PROVISION> 1,662
<INTEREST-EXPENSE> 10,181
<INCOME-PRETAX> (11,161)
<INCOME-TAX> 194
<INCOME-CONTINUING> (11,355)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,355)
<EPS-PRIMARY> (1.40)
<EPS-DILUTED> (1.40)
</TABLE>
