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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 29, 2000
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 OUTDOORS INC.
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1536083
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1326 Willow Road, Sturtevant, Wisconsin 53177
(Address of principal executive offices)
(262) 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 1, 2000, 6,924,630 shares of Class A and 1,222,729 shares of
Class B common stock of the Registrant were outstanding. The aggregate market
value of voting stock of the Registrant held by nonaffiliates of the Registrant
was approximately $23,888,000 on November 1, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Part and Item Number of Form 10-K
Document into which Incorporated
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Johnson Outdoors Inc. Notice of Part III, Items 10, 11, 12 and 13
Annual Meeting of Shareholders
and Proxy Statement for the
Annual Meeting of Shareholders
to be held January 31, 2001.
TABLE OF CONTENTES Page
Business......................................................................1
Properties....................................................................5
Legal Proceedings.............................................................5
Submission of Matters to a Vote of Security Holders...........................5
Market for Registrant's Common Equity and Related Stockholder Matters.........5
Selected Financial Data.......................................................6
Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................7
Quantitative and Qualitative Disclosures about Market Risk....................11
Financial Statements and Supplementary Data...................................11
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...........................................11
Directors and Executive Officers of the Registrant............................12
Executive Compensation........................................................12
Security Ownership of Certain Beneficial Owners and Management................12
Certain Relationships and Related Transactions................................12
Exhibits, Financial Statement Schedules and Reports on Form 8-K...............12
Signatures....................................................................13
Exhibit Index.................................................................14
Consolidated Financial Statements............................................F-1
Forward Looking Statements
Certain matters discussed in this 2000 Form 10-K and in the accompanying 2000
Annual Report are "forward-looking statements," intended to qualify for the safe
harbors from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements can generally be identified as
such because the context of the statement includes phrases such as the Company
"expects," "believes" or other words of similar meaning. Similarly, statements
that describe the Company's future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties which could cause actual results or outcomes to
differ materially from those currently anticipated. Factors that could affect
actual results or outcomes include changes in consumer spending patterns,
actions of companies that compete with the Company, the Company's success in
managing inventory, movements in foreign currencies or interest rates and
adverse weather conditions. Shareholders, potential investors and other readers
are urged to consider these factors in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included herein are only made as of
the date of this 2000 Form 10-K and in the accompanying 2000 Annual Report and
the Company undertakes no obligations to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
PART I
ITEM 1. BUSINESS
Johnson Outdoors Inc. and its subsidiaries (the "Company") design, manufacture
and market outdoor recreation products in four businesses: Diving, Watercraft,
Outdoor Equipment and Motors. The Company's primary focus is innovation--meeting
consumer needs with breakthrough products that stand apart from the competition
and advance the Company's strong brand names. Its subsidiaries are organized in
a network that promotes entrepreneurialism and leverages best practices and
synergies, following the strategic vision set by headquarters. The Company is
controlled by Samuel C. Johnson, members of his family and related entities.
The Company was incorporated in Wisconsin in 1987 as successor to various
businesses.
Diving
The Company is one of the world's largest manufacturers and distributors of
technical 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. The
Company is also a leading manufacturer of dive computers and other electronics
sold under the Aladin and Uwatec brands. Scubapro, Aladin and Uwatec products
are marketed to the high quality, premium priced segment of the market via
limited distribution to independent specialty diving shops worldwide. These
diving shops generally provide a wide range of services to divers, including
instruction and repair service.
The Company focuses on maintaining Scubapro, Aladin and Uwatec as the market
leaders in innovation and new products. The Company maintains research and
development functions both in the United States and Europe and holds several
patents on products and features. Consumer advertising focuses on building the
brand names and position as the industry's high quality and innovation leader.
The Company advertises its equipment in diving magazines and through in-store
displays.
The Company also manufactures and markets diving buoyancy compensators primarily
for the original equipment market, under the Soniform name.
1
The Company maintains manufacturing and assembly facilities in Switzerland,
Mexico, Italy and Indonesia and procures a majority of its rubber and plastic
products and components from third-party manufacturers.
Watercraft
The Company manufactures and markets canoes, kayaks, paddles, oars, recreational
sailboats, personal flotation devices and small thermoformed recreational boats
under the brand names Old Town, Carlisle Paddles, Ocean Kayak, Pacific Kayak,
Necky, Escape, Extrasport, Swiftwater, Leisure Life and Dimension.
The Company's Old Town Canoe subsidiary produces high quality canoes and kayaks
for family recreation, touring and tripping. The Company uses a patented
rotational-molding process for manufacturing polyethylene kayaks and canoes to
compete in the high volume, low and mid-priced range of the market. These kayaks
and canoes feature stiffer and more durable hulls than higher priced boats. The
Company also manufactures canoes from fiberglass, Royalex (ABS) and wood.
Carlisle Paddles, a manufacturer of canoe and kayak paddles and rafting oars,
manufactures products that are sold by the Company's other watercraft businesses
and also distributed directly through the same channels.
The Company is a leading manufacturer of sit-on-top kayaks under the Ocean Kayak
and Pacific Kayak brands. In addition, the Company manufactures and markets high
quality Necky sea touring and whitewater kayaks; Escape recreational sailboats;
Extrasport and Swiftwater personal flotation devices; small thermoformed
recreational boats, including canoes, pedal boats, deck boats and tenders, under
the Leisure Life brand; and the Dimension brand of kayaks.
In April 2000, the Company completed the acquisition of Pacific Kayak Ltd., a
manufacturer of sit-on-top and sea touring kayaks located in Auckland, New
Zealand.
The Company's kayaks, canoes and accessories are sold primarily to specialty
stores and marine dealers, sporting goods stores and catalog and mail order
houses such as L. L. Bean(R), in the United States and Europe. Leisure Life
products are sold through marine dealers and large retail chains under several
brand identities.
The Company manufactures its Watercraft products in six locations in the United
States, two locations in Canada and in New Zealand. Ocean Kayak products are
also manufactured and sold under license in Europe.
The North American market for kayaks is exhibiting strong growth, while the
canoe market is growing modestly. The Company believes, based on industry and
other data, that it is a leading manufacturer of canoes and kayaks in the United
States in both unit and dollar sales.
Outdoor Equipment
The Company's Outdoor Equipment products include Jack Wolfskin high quality
outdoor clothing, innovative footwear, camping tents, backpacks, travel gear and
accessories; Eureka! military, commercial and consumer tents; Camp Trails
backpacks; and Silva field compasses.
Jack Wolfskin, based in Germany, distributes its products primarily through
specialized outdoor stores, selected sporting goods dealers and a number of
franchised Jack Wolfskin stores. Jack Wolfskin has a strong position in Germany
with additional distribution in the key European markets of Great Britain,
Benelux, Switzerland and Austria. The product is also sold in Canada and the
United States and, under license, in Japan.
Eureka! consumer tents and Camp Trails backpacks compete primarily in the mid-
to high-price range and are sold in the United States and Canada 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 tent design and
innovation. The Company's camping tents and backpacks are produced primarily by
third-party manufacturing sources.
2
Eureka! camping tents have outside self-supporting aluminum frames, allowing
quicker and easier set-up, a design approach the Company originated. Most
Eureka! tents are made from breathable nylon. Eureka! camping products are sold
under license in Japan and Korea. Eureka! commercial tents include party tents,
sold primarily to general rental stores, and other commercial tents sold
directly to tent erectors. Commercial tents are manufactured by the Company in
the United States. The Company was awarded several contracts for production of
both camping and commercial tents by the U.S. Armed Forces in 1997. The Company
also serves as the exclusive distributor of Losberger commercial framing
structures in the United States.
Camp Trails backpacks consist primarily of internal and external frame backpacks
for hiking and mountaineering, but also include soft back bags, day packs and
travel packs.
Silva field compasses, which are manufactured by third parties, are marketed
exclusively in North America, the area for which the Company owns Silva
trademark rights.
Motors
The Company manufactures, under its Minn Kota name, battery powered motors used
on fishing boats and other boats for quiet trolling power or primary propulsion.
The Company's Minn Kota 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, marine dealers, and original equipment boat
manufacturers including Ranger(R) Boats, Outboard Marine Corporation (under the
Evinrude(R) brand), Triton Boats, Lund Boats, Smoker Craft, Alumacraft, and
Skeeter. Consumer advertising and promotion include advertising on regional
television and in outdoor, general interest and sports magazines. Packaging and
point-of-purchase materials are used to increase consumer appeal and sales.
The Company has the leading market share of the U.S. electric fishing motor
market. While the overall motors market has been stagnant in recent years, the
Company believes it has been able to increase revenues by emphasizing marketing,
product innovation and original equipment manufacturer sales.
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. Airguide products are manufactured by the
Company or sourced from third-party manufacturers.
Fishing
In March 2000, the Company sold its Fishing business (consisting of the
marketing of rods, reels, lures, spoons and fishing line). As a result, the
operations and related assets and liabilities of the Fishing business have been
reclassified as discontinued for financial reporting purposes. A significant
loss on the sale of the business was recognized, but the tangible net worth of
the Company was not adversely impacted. See Note 4 to the Consolidated Financial
Statements for financial information.
Sales by Principal Business
See Note 13 to the Consolidated Financial Statements for financial information
comparing sales by major product category.
International Operations
See Note 13 to the Consolidated Financial Statements 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.
Competition
The markets for the Company's products are very competitive. The Company
believes its products compete favorably on the basis of product innovation,
product performance and marketing support and, to a lesser extent, price.
Employees
At September 29, 2000, the Company had approximately 1,400 employees. The
Company considers its employee relations to be excellent. Temporary employees
are utilized to manage peaks in the seasonal manufacturing of products.
3
Backlog
Unfilled orders for future delivery of products of continuing operations totaled
approximately $61.0 million at September 29, 2000 and $62.8 million at October
1, 1999. The Company's businesses do not receive significant orders in advance
of expected shipment dates for the majority of products.
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,
rotational-molded canoes and electric motors and regularly files applications
for patents. The Company has numerous trademarks and trade names which it
considers important to its business, many of which are discussed on the
preceding pages. The Company vigorously defends its intellectual property
rights.
Sources and Availability of Materials
The Company's products use materials that are generally in adequate supply.
Seasonality
The Company's business is seasonal. The following table shows total net sales
and operating profit or loss related to continuing operations of the Company for
each quarter, as a percentage of the total year. Strategic charges totaling $2.4
million, $2.8 million and $1.4 million impacted operating results in 2000, 1999
and 1998, respectively.
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Year Ended
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September 29, 2000 October 1, 1999 October 2, 1998
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Operating Operating
Net Operating Net Profit Net Profit
Quarter Ended Sales Profit Sales (Loss) Sales (Loss)
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December 16% 1% 16% (16)% 16% (5)%
March 28 39 28 43 29 50
June 33 56 33 70 32 55
September 23 4 23 3 23 --
100% 100% 100% 100% 100% 100%
Executive Officers
The following list sets forth certain information, as of December 1, 2000,
regarding the executive officers of the Company.
Helen P. Johnson-Leipold, age 43, became Chairman and Chief Executive Officer of
the Company in March 1999. From September 1998 until March 1999, Ms.
Johnson-Leipold was Vice President, Worldwide Consumer Products-Marketing of S.
C. Johnson & Son, Inc. (SCJ). From October 1997 to September 1998, she was Vice
President, Personal and Home Care Products of SCJ. From October 1995 until July
1997, Ms. Johnson-Leipold was Executive Vice President - North American
Businesses of the Company. From 1992 to September 1995, she was Vice President -
Consumer Marketing Services Worldwide of SCJ.
Patrick J. O'Brien, age 42, became President and Chief Operating Officer of the
Company in April 1999. From October 1997 until March 1999, Mr. O'Brien was Vice
President and General Manager, Home Storage of SCJ. From July 1997 until October
1997, Mr. O'Brien was Vice President - Strategic Business of SCJ; from April
1996 until June 1997, he was Vice President - North American Sales of SCJ; from
June 1995 until March 1996, he was Director - North American Sales of SCJ and
from January 1993 until May 1995, he was National Sales Manager of SCJ.
Mamdouh Ashour, age 62, has been a Group Vice President of the Company since
October 1997 and President - Worldwide Diving since August 1996. From 1994 to
August 1996, he served as President of Scubapro Europe.
There are no family relationships between the above executive officers.
The Company is currently conducting a search for a Chief Financial Officer.
David A. Callewaert is serving as Acting Chief Financial Officer until a
replacement is hired. Mr. Callewaert recently retired from S.C. Johnson
Commercial Markets, Inc. where he served as Chief Financial Officer.
4
ITEM 2. PROPERTIES
The Company maintains both leased and owned manufacturing, warehousing,
distribution and office facilities throughout the world. The Company believes
that its facilities are well maintained and have capacity adequate to meet its
current needs.
See Note 6 to the Consolidated Financial Statements for a discussion of lease
obligations.
The Company's principal manufacturing (identified with an asterisk) and other
locations are:
Albany, New Zealand (Watercraft)
Antibes, France (Diving)
Bad Sakingen, Germany (Diving)
Batam, Indonesia* (Diving)
Barcelona, Spain (Diving)
Basingstoke, Hampshire, England (Diving)
Binghamton, New York* (Outdoor Equipment)
Burlington, Ontario, Canada (Motors, Outdoor Equipment)
Chi Wan, Hong Kong (Diving)
Ferndale, Washington* (Watercraft)
Genoa, Italy* (Diving)
Grand Rapids, Michigan* (Watercraft)
Grayling, Michigan* (Watercraft)
Hallwil, Switzerland* (Diving)
Hamburg, Germany (Diving)
Henggart, Switzerland (Diving)
Honolulu, Hawaii (Diving)
Idstein, Germany (Outdoor Equipment)
Mankato, Minnesota* (Motors)
Mansonville, Quebec, Canada* (Watercraft)
Miami, Florida* (Watercraft)
Nykoping, Sweden (Diving)
Old Town, Maine* (Watercraft)
Portsmouth, Rhode Island* (Watercraft)
El Cajon, California (Diving)
Tijuana, Mexico* (Motors, Diving)
Tokyo (Kawasaki), Japan (Diving)
The Company's corporate headquarters is located in Mount Pleasant, Wisconsin.
The Company's mailing address is Sturtevant, Wisconsin.
ITEM 3. LEGAL PROCEEDINGS
See Note 16 to the Consolidated Financial Statements for a discussion of legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the last
quarter of the year ended September 29, 2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Certain information with respect to this item is included in Notes 5, 9, 10 and
11 to the Consolidated Financial Statements. The Company's Class A common stock
is traded on The Nasdaq Stock Market(R) under the symbol: JOUT. There is no
public market for the Company'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 1, 2000, the
Company had 690 holders of record of its Class A common stock and 58 holders of
record of its Class B common stock. The Company has never paid a dividend on its
common stock.
A summary of the high and low prices for the Company's Class A common stock
during each quarter of the years ended September 29, 2000 and October 1, 1999 is
as follows:
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First Quarter Second Quarter Third Quarter Fourth Quarter
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2000 1999 2000 1999 2000 1999 2000 1999
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Stock prices:
High $9.19 $10.25 $8.50 $9.75 $9.69 $9.50 $7.94 $9.75
Low 6.13 6.25 6.13 6.06 6.13 7.13 5.75 8.38
Last 7.10 9.25 6.19 7.38 7.06 8.88 6.94 8.94
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5
ITEM 6. SELECTED FINANCIAL DATA
A summary of the Company's operating results and key balance sheet data for each
of the years in the five-year period ended September 29, 2000 is presented
below. All periods have been restated to reflect the discontinuation of the
Company's Fishing business.
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Year Ended
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September 29 October 1 October 2 October 3 September 27
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(thousands, except per share data) 2000 1999 1998 1997 1996
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Operating Results(1)
Net sales $347,288 $305,094 $270,017 $239,322 $274,637
Gross profit 135,212 120,670 106,801 91,118 102,041
Operating expenses(2) 110,493 101,157 88,445 77,237 91,138
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Operating profit 24,719 19,513 18,356 13,881 10,903
Interest expense 9,799 9,565 9,631 8,413 9,563
Other income, net (160) (71) (539) (624) (498)
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Income from continuing operations before income taxes 15,080 10,019 9,264 6,092 1,838
Income tax expense 6,705 4,158 3,885 2,721 2,740
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Income (loss) from continuing operations 8,375 5,861 5,379 3,371 (902)
Income (loss) from discontinued operations (940) 1,161 (167) (1,315) (10,453)
Loss on disposal of discontinued operations (24,418) -- -- -- --
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Net income (loss) $(16,983) $ 7,022 $ 5,212 $ 2,056 $(11,355)
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Basic earnings (loss) per common share:
Continuing operations $ 1.03 $ 0.72 $ 0.66 $ 0.42 $ (0.11)
Discontinued operations (3.12) 0.15 (0.02) (0.17) (1.29)
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Net income (loss) $ (2.09) $ 0.87 $ 0.64 $ 0.25 $ (1.40)
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Diluted earnings (loss) per common share:
Continuing operations $ 1.03 $ 0.72 $ 0.66 $ 0.42 $ (0.11)
Discontinued operations (3.12) 0.15 (0.02) (0.17) (1.29)
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Net income (loss) $ (2.09) $ 0.87 $ 0.64 $ 0.25 $ (1.40)
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Diluted average common shares outstanding 8,130 8,108 8,114 8,115 8,102
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Balance Sheet Data
Current assets(3) $144,194 $ 185,733 $188,224 $184,555 $221,798
Total assets 257,971 299,025 292,380 272,605 272,119
Current liabilities(4) 46,941 45,072 39,448 36,772 41,773
Long-term debt, less current maturities 45,857 72,744 81,508 87,926 60,194
Total debt 105,319 122,071 124,001 113,676 99,485
Shareholders' equity 100,832 127,178 124,386 117,731 126,424
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(1) The year ended October 3, 1997 includes 53 weeks. All other years include 52 weeks.
(2) Includes strategic charges of $2,369, $2,773, $1,388, $335 and $4,487 in 2000, 1999, 1998, 1997 and 1996, respectively.
(3) Includes net assets of discontinued operations of $56,114, $58,462, $66,507 and $84,851 in 1999, 1998, 1997 and 1996,
respectively.
(4) Excludes short-term debt and current maturities of long-term debt.
6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion includes comments and analysis relating to the
Company's results of operations and financial condition for the three years
ended September 29, 2000. Unless otherwise noted, the discussion refers to
continuing operations. This discussion should be read in conjunction with the
Consolidated Financial Statements and related notes thereto.
Results of Operations
Summary consolidated financial results from continuing operations are as
follows:
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(millions, except per share data) 2000 1999 1998
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Net sales $347.3 $305.1 $270.0
Gross profit 135.2 120.7 106.8
Operating expenses(1) 110.5 101.2 88.4
Operating profit 24.7 19.5 18.4
Interest expense 9.8 9.6 9.6
Income from continuing operations 8.4 5.9 5.4
Diluted earnings per common share
from continuing operations 1.03 0.72 0.66
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(1) Includes strategic charges of $2.4 million, $2.8 million and $1.4 million in
2000, 1999 and 1998, respectively.
2000 vs 1999
Net Sales
Net sales totaled $347.3 million in 2000 compared to $305.1 million in 1999, an
increase of 14%. Sales as measured in U.S. dollars were impacted by the effect
of foreign currencies relative to the U.S. dollar in comparison to 1999.
Excluding the effects of foreign currency movements, sales increased 17% from
1999. The increase was partially driven by the introduction of innovative new
products in the Watercraft and Motors businesses, as well as growth in sales of
existing products in Watercraft, Motors and Outdoor Equipment.
Operating Results
The Company recognized an operating profit of $24.7 million in 2000 compared to
an operating profit of $19.5 million in 1999. Gross profit margins decreased
from 39.5% in 1999 to 38.9% in 2000, as significant improvements in the Diving
and Outdoor Equipment businesses, as well as improvement in the Motors business
(due to emphasis on higher margin products, increases in volume and improved
production efficiencies) were offset by a decline in Watercraft (due to
production issues related to a 26.4% growth in Watercraft revenues). The Company
continues to experience margin pressure in all of its businesses due to
competition.
Operating expenses, excluding strategic charges, totaled $108.1 million, or
31.1% of sales, in 2000 compared to $98.4 million, or 32.2% of sales, in 1999.
The 10% growth in operating expenses in 2000 was less than the growth rate of
sales, which contributed to the improved operating results. Nearly all items in
operating expenses declined as a percentage of sales from 1999.
The Company recognized strategic charges totaling $2.4 million in 2000 and $2.8
million in 1999. These charges resulted from severance, moving and other costs
related primarily to the closure and relocation of a manufacturing facility in
the Motors business and for severance, relocation and recruitment costs in the
North American Outdoor Equipment business. The Company anticipates no
significant additional strategic charges will be incurred in 2001 to complete
announced actions.
Other Income and Expenses
Interest expense increased $0.2 million in 2000, reflecting higher working
capital levels primarily from accounts receivable and inventory, as well as
higher interest rates.
Overall Results
The Company recognized income from continuing operations of $8.4 million in
2000, or $1.03 per diluted share, compared to $5.9 million, or $0.72 per diluted
share, in 1999. The Company recorded income tax expense of $6.7 million in 2000,
an effective rate of 44.5%. The increased rate from 41.5% in 1999 is due to an
increase in state income tax and change in expected recoverability of state net
operating losses.
7
Discontinued Operations
In March 2000, the Company sold its Fishing business. As a result, operations
and related assets and liabilities of the Fishing group have been classified as
discontinued for all periods presented herein. The sale price totaled $47.3
million, including $14.1 million of accounts receivable retained by the Company
and $2.4 million of debt assumed by the buyer. The Company recorded a loss of
$24.4 million, net of tax, related to the sale of the business, taking into
account operating results from the measurement date to the date of disposal. In
addition, the Company recorded an after tax loss from operations up to the
measurement date of $0.9 million in 2000 and an after tax gain of $1.2 million
in 1999.
1999 vs 1998
Net Sales
Net sales totaled $305.1 million in 1999 compared to $270.0 million in 1998, an
increase of 13%. Sales as measured in U.S. dollars were impacted by the effect
of foreign currencies relative to the U.S. dollar in comparison to 1998.
Excluding the effects of foreign currency movements, sales increased 14.0% from
1998. The increase was due to strong growth in sales of Watercraft, including
sales of products of businesses the Company acquired in 1999 and 1998, and
growth in sales of Motors and Outdoor Equipment products, which more than offset
weaker Diving equipment sales.
Operating Results
The Company recognized an operating profit of $19.5 million in 1999 compared to
an operating profit of $18.4 million in 1998. Gross profit margins remained flat
with 1998 at 39.6%, as a result of an improved mix of products sold in most
businesses, increases in volume and the effect of businesses acquired in 1999,
offset by a decline in the higher margin Diving business.
Operating expenses, excluding strategic charges, totaled $98.4 million in 1999
compared to $87.1 million in 1998, a rate of 32.2% of sales in both years. The
allowance for doubtful accounts receivable was increased due to higher levels of
sales and receivables. These factors were partially offset by a decline from the
prior year in unusual legal expenses incurred to successfully defend certain of
the Company's key Outdoor Equipment, Diving and Motors patents and trademarks.
The Company recognized strategic charges totaling $2.8 million in 1999 and $1.4
million in 1998. These charges resulted from severance and other costs related
to the integration of acquired businesses, primarily in the Diving business, and
for severance, relocation and recruitment costs in the North American Outdoor
Equipment business.
Other Income and Expenses
Interest expense remained flat in 1999 at $9.6 million, reflecting higher debt
levels resulting from the acquisition of three businesses, offset by lower
levels of working capital, primarily inventory.
Overall Results
The Company recognized income from continuing operations of $5.9 million in
1999, or $0.72 per diluted share, compared to $5.4 million, or $0.66 per diluted
share, in 1998. The Company recorded income tax expense of $4.2 million in 1999,
an effective rate of 41.5%, compared to 41.9% in 1998.
Discontinued Operations
The Company recorded a gain, net of tax, of $1.2 million in 1999 and a loss, net
of tax, of $(0.2) million in 1998 related to discontinued operations.
8
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 related to
continuing operations at the end of each of the past three years:
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(millions) 2000 1999 1998
- --------------------------------------------------------------------------------
Current assets(1) $144.2 $129.6 $129.8
Current liabilities(2) 46.9 45.1 39.4
- --------------------------------------------------------------------------------
Working capital $ 97.3 $ 84.5 $ 90.4
- --------------------------------------------------------------------------------
Current ratio 3.1:1 2.9:1 3.3:1
- --------------------------------------------------------------------------------
(1)Excludes net assets of discontinued operations.
(2)Excludes short-term debt and current maturities of long-term debt.
Cash flows provided by operations totaled $9.8 million in 2000, $24.8 million in
1999 and $9.1 million in 1998. The Company's profitability and increases in
accounts payable and other accrued liabilities contributed to the positive cash
flows in 2000 and 1999. Growth in accounts receivable and inventories of $10.7
million and $8.4 million, respectively, reduced the overall positive cash flows
provided by operations in 2000.
Depreciation and amortization charges were $12.5 million in 2000, $12.6 million
in 1999 and $10.8 million in 1998. Amortization of intangible assets arising
from the Company's acquisitions and increased depreciation from capital spending
accounted for the increase from 1998 to 1999.
Investing Activities
Cash flows provided by (used for) investing activities were $20.0 million,
$(26.1) million and $(22.5) million in 2000, 1999 and 1998, respectively.
Expenditures for property, plant and equipment were $14.1 million in 2000, $13.0
million in 1999 and $11.6 million in 1998. The Company's recurring investments
are primarily related to tooling for new products, facilities and information
systems improvements. In 2001, capital expenditures are anticipated to total
approximately $10.5 million. These expenditures are expected to be funded by
working capital or existing credit facilities.
The Company completed the acquisitions of one business in 2000, three businesses
in 1999 and three businesses in 1998, which increased tangible and intangible
assets and debt by $0.9 million, $13.6 million and $12.8 million, respectively.
The sale of the Company's Fishing business in March 2000 provided $33.1 million
of cash, which was used to reduce both short-term and long-term debt.
Financing Activities
The following table sets forth the Company's debt and capital structure at the
end of the past three years:
- --------------------------------------------------------------------------------
(millions) 2000 1999 1998
- --------------------------------------------------------------------------------
Current debt $ 59.5 $ 49.4 $ 42.5
Long-term debt 45.8 72.7 81.5
- --------------------------------------------------------------------------------
Total debt 105.3 122.1 124.0
Shareholders' equity 100.8 127.2 124.4
- --------------------------------------------------------------------------------
Total capitalization $206.1 $249.3 $248.4
- --------------------------------------------------------------------------------
Total debt to total capitalization 51.1% 49.0% 49.9%
- --------------------------------------------------------------------------------
Cash flows provided by (used for) financing activities totaled $(12.5) million
in 2000, $(0.8) million in 1999 and $8.4 million in 1998. In 1998, the Company
consummated a private placement of long-term debt totaling $25 million. Payments
on long-term debt made in 2000 totaled $22 million, including a $15.1 million
payment in March 2000 from the proceeds of the sale of the Fishing business. At
September 29, 2000, the Company had available unused credit facilities in excess
of $63 million, which is believed to be adequate for its needs.
9
Market Risk Management
The Company is exposed to market risk stemming from changes in foreign exchange
rates, interest rates and, to a lesser extent, commodity prices. Changes in
these factors could cause fluctuations in earnings and cash flows. In the normal
course of business, exposure to certain of these market risks is managed by
entering into hedging transactions authorized under Company policies that place
controls on these activities. Hedging transactions involve the use of a variety
of derivative financial instruments. Derivatives are used only where there is an
underlying exposure: not for trading or speculative purposes.
Foreign Operations
The Company has significant foreign operations, for which the functional
currencies are denominated primarily in Swiss and 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 foreign currency swaps, forward contracts and options to
hedge known commitments, primarily for purchases of inventory and other assets
denominated in foreign currencies.
Interest Rates
The Company's debt structure and interest rate risk are managed through the use
of fixed and floating rate debt. The Company's primary exposure is to United
States interest rates. The Company also periodically enters into interest rate
swaps, caps or collars to hedge its exposure and lower financing costs.
Commodities
Certain components used in the Company's products are exposed to commodity price
changes. The Company manages this risk through instruments such as purchase
orders and non-cancelable supply contracts. Primary commodity price exposures
are metals and packaging materials.
Sensitivity to Changes in Value
The estimates that follow are intended to measure the maximum potential fair
value or earnings the Company could lose in one year from adverse changes in
foreign exchange rates or market interest rates under normal market conditions.
The calculations are not intended to represent actual losses in fair value or
earnings that the Company expects to incur. The estimates do not consider
favorable changes in market rates. Further, since the hedging instrument (the
derivative) inversely correlates with the underlying exposure, any loss or gain
in the fair value of derivatives would be generally offset by an increase or
decrease in the fair value of the underlying exposures. The positions included
in the calculations are foreign exchange forwards, currency swaps and fixed rate
debt. Certain instruments are included in both categories of risk exposure
calculated below. The calculations do not include the underlying foreign
exchange positions that are hedged by these market risk sensitive instruments.
The table below presents the estimated maximum potential one year loss in fair
value and earnings before income taxes from a 10% movement in foreign currencies
and a 100 basis point movement in interest rate market risk sensitive
instruments outstanding at September 29, 2000:
- --------------------------------------------------------------------------------
Estimated Impact on
- --------------------------------------------------------------------------------
Earnings Before
(millions) Fair Value Income Taxes
- --------------------------------------------------------------------------------
Foreign exchange rate instruments $2.1 $0.5
Interest rate instruments 1.4 0.5
- --------------------------------------------------------------------------------
10
Other Factors
The Company has not been significantly impacted by inflationary pressures over
the last several years. The Company anticipates that changing costs of basic raw
materials may impact future 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. Price increases and, in certain
situations, price decreases are implemented for individual products, when
appropriate.
Pending Accounting Changes
SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, is effective for the Company as of September 30, 2000. SFAS 133
requires that an entity recognize all derivatives as either assets or
liabilities measured at fair value. The accounting for changes in the fair value
of a derivative depends on the use of the derivative. Adoption of these new
accounting standards will result in a cumulative after-tax gain in net income of
approximately $1.8 million and an accumulated other comprehensive loss of
approximately $3.0 million in the first quarter of fiscal 2001. The adoption
will also impact assets and liabilities recorded on the balance sheet.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, Revenue Recognition (SAB 101). An amendment in June 2000
delayed the effective date for the Company until the fourth quarter of 2001,
which is when the Company will adopt the bulletin. The impact of adopting SAB
101 is still being evaluated and the Company does not currently believe its
adoption will have a material impact on the consolidated financial statements.
In May 2000, the Financial Accounting Standards Board's Emerging Issues Task
Force (EITF) reached a consensus on Issue No. 00-14, Accounting for Certain
Sales Incentives. This issue addresses the recognition, measurement, and income
statement classification for various types of sales incentives including
discounts, coupons, rebates and free products. The Company will adopt this
consensus in the fourth quarter of 2001. The impact of this consensus is still
being evaluated and the Company does not currently believe its adoption will
have a material impact on the consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Information with respect to this item is included in Management's Discussion and
Analysis of Financial Condition and Results of Operations under the heading
"Market Risk Management."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to this item is included on pages F-1 to F-18.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
11
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to this item, except for certain information on
executive officers (which appears at the end of Part I of this report) is
included in the Company's January 31, 2001 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 31,
2001 Proxy Statement, which is incorporated herein by reference, under the
headings "Election of Directors - Compensation of Directors" and "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 31,
2001 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 31,
2001 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
The following documents are filed as a part of this Form 10-K:
Financial Statements
Included in Item 8 of Part II of this Form 10-K are the following:
Independent Auditors' Report
Consolidated Balance Sheets - September 29, 2000 and October 1, 1999
Consolidated Statements of Operations -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998
Consolidated Statements of Shareholders' Equity -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998
Consolidated Statements of Cash Flows -
Years ended September 29, 2000, October 1, 1999 and October 2, 1998
Notes to Consolidated Financial Statements
Financial Statement Schedules
All 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.
Exhibits
See Exhibit Index.
Exhibits
See Exhibit Index.
Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended September 29,
2000.
12
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 11th day of December 2000.
JOHNSON outdoors INC.
(Registrant)
By /s/ Helen P. Johnson-Leipold
------------------------------
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities indicated on the 11th
day of December 2000.
/s/ Helen P. Johnson-Leipold Chairman and Chief Executive
------------------------------ Officer and Director
(Helen P. Johnson-Leipold) (Principal Executive Officer)
/s/ Thomas F. Pyle, Jr. Vice Chairman of the Board
------------------------------ and Director
(Thomas F. Pyle, Jr.)
/s/ Samuel C. Johnson Director
------------------------------
(Samuel C. Johnson)
/s/ Gregory E. Lawton Director
------------------------------
(Gregory E. Lawton)
/s/ Glenn N. Rupp Director
------------------------------
(Glenn N. Rupp)
/s/ Terry E. London Director
------------------------------
(Terry E. London)
/s/ Scott M. Vos Director of Financial Reporting
------------------------------ (Principal Accounting Officer)
(Scott M. Vos)
13
EXHIBIT INDEX
Exhibit Title Page No.
3.1 Articles of Incorporation of the Company as amended through *
February 17, 2000. (Filed as Exhibit 3.1(a) to the Company's
Form 10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference.)
3.2 Bylaws of the Company as amended through March 22, 2000. *
(Filed as Exhibit 3.2(a) to the Company's Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by
reference.)
4.1 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.)
4.2 First Amendment dated October 31, 1996 to Note Agreement *
dated October 1, 1995. (Filed as Exhibit 4.3 to the Company's
Form 10-Q for the quarter ended December 27, 1996 and
incorporated herein by reference.)
4.3 Second Amendment dated September 30, 1997 to Note Agreement *
dated October 1, 1995. (Filed as Exhibit 4.8 to the Company's
Form 10-K for the year ended October 3, 1997 and incorporated
herein by reference.)
4.4 Third Amendment dated October 3, 1997 to Note Agreement dated *
October 1, 1995. (Filed as Exhibit 4.9 to the Company's Form
10-K for the year ended October 3, 1997 and incorporated
herein by reference.)
4.5 Fourth Amendment dated January 10, 2000 to Note Agreement *
dated October 1, 1995. (Filed as Exhibit 4.9 to the Company's
Form 10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference.)
4.6 Note Agreement dated as of September 15, 1997. (Filed as *
Exhibit 4.15 to the Company's Form 10-K for the year ended
October 3, 1997 and incorporated herein by reference.)
4.7 First Amendment dated January 10, 2000 to Note Agreement *
dated September 15, 1997. (Filed as Exhibit 4.10 to the
Company's Form 10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference.)
4.8 Amended and Restated Credit Agreement dated as of April 3, *
1998. (Filed as Exhibit 4.16 to the Company's Form 10-Q for
the quarter ended April 3, 1998 and incorporated herein by
reference.)
4.9 Amendment No. 1 dated September 11, 1998 to the Amended and *
Restated Credit Agreement dated as of April 3, 1998. (Filed
as Exhibit 4.17 to the Company's Form 10-Q for the quarter
ended January 1, 1999 and incorporated herein by reference.)
4.10 Amendment No. 2 dated September 30, 1999 to the Amended and *
Restated Credit Agreement dated as of April 3, 1998. (Filed
as Exhibit 4.8 to the Company's Form 10-Q for the quarter
ended March 31, 2000 and incorporated herein by reference.)
9 Johnson Outdoors 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 Stock Purchase Agreement, dated as of January 12, 2000, by *
and between Johnson Outdoors Inc. and Berkley Inc. (Filed as
Exhibit 2.1 to the Company's Form 8-K dated March 31, 2000
and incorporated herein by reference.)
10.2 Amendment to Stock Purchase Agreement, dated as of February *
28, 2000, by and between Johnson Outdoors Inc. and Berkley
Inc. (Filed as Exhibit 2.2 to the Company's Form 8-K dated
March 31, 2000 and incorporated herein by reference.)
10.3 Johnson Outdoors 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.)
14
Exhibit Title Page No.
10.4 Registration Rights Agreement regarding Johnson Outdoors 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 Outdoors 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 Outdoors 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 Outdoors Inc. 1994 Long-Term Stock Incentive Plan. *
(Filed as Exhibit 4 to the Company's Form S-8 Registration
Statement No. 333-88091 and incorporated herein by
reference.)
10.12+ Johnson Outdoors Inc. 1994 Non-Employee Director Stock *
Ownership Plan. (Filed as Exhibit 4 to the Company's Form S-8
Registration Statement No. 333-88089 and incorporated herein
by reference.)
10.13+ Johnson Outdoors Economic Value Added Bonus Plan (Filed as *
Exhibit 10.15 to the Company's Form 10-K for the year ended
October 3, 1997 and incorporated herein by reference.)
10.14+ Johnson Outdoors Inc. 2000 Long-Term Stock Incentive Plan. *
(Filed as Exhibit 10.16 to the Company's Form 10-Q for the
quarter ended March 31, 2000 and incorporated herein by
reference.)
10.15+ Severance Agreement and Release, dated June 9, 2000, between *
the Company and Carl G. Schmidt.
11. Statement regarding computation of per share earnings. (Note *
15 to the Consolidated Financial Statements of the Company's
2000 Form 10-K is incorporated herein by reference.)
21. Subsidiaries of the Company as of September 29, 2000.
23. Consent of KPMG LLP.
27. Financial Data Schedule (EDGAR version only)
99. Definitive Proxy Statement for the 2001 Annual Meeting of *
Shareholders. Except to the extent specifically incorporated
herein by reference, the Proxy Statement for the 2001 Annual
Meeting of Shareholders shall not be deemed to be filed with
the Securities and Exchange Commission as part of this Form
10-K. The Proxy Statement for the 2001 Annual Meeting of
Shareholders will be filed with the Securities and Exchange
Commission under regulation 14A within 120 days after the end
of the Company's fiscal year.
* Incorporated herein by reference.
+ A management contract or compensatory plan or arrangement.
15
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents Page
Report of Management.............................................F-1
Independent Auditors' Report.....................................F-1
Consolidated Balance Sheets......................................F-2
Consolidated Statements of Operations............................F-3
Consolidated Statements of Shareholders' Equity..................F-4
Consolidated Statements of Cash Flows............................F-5
Notes to Consolidated Financial Statements.......................F-6
REPORT OF MANAGEMENT
The management of Johnson Outdoors Inc. is responsible for the preparation and
integrity of all financial statements and other information contained in this
Form 10-K. 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 accounting
principles generally accepted in the United States of America.
The financial statements for each of the years covered in this Form 10-K have
been audited by independent auditors, who have provided an independent
assessment as to the fairness of the financial statements, after obtaining an
understanding of the Company's systems and procedures and performing such other
tests as deemed necessary.
The Audit Committee of the Board of Directors, which is composed solely of
directors who are not officers of the Company, meets with management and the
independent auditors to review the results of their work and to satisfy itself
that their respective responsibilities are being properly discharged. The
independent auditors have full and free access to the Audit Committee and have
regular discussions with the Committee regarding appropriate auditing and
financial reporting matters.
/s/ Helen P. Johnson-Leipold
Helen P. Johnson-Leipold
Chairman and Chief Executive Officer
/s/ Scott M. Vos
Scott M. Vos
Director of Financial Reporting
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Johnson Outdoors Inc.:
We have audited the consolidated balance sheets of Johnson Outdoors Inc. and
subsidiaries as of September 29, 2000 and October 1, 1999, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended September 29, 2000. 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 auditing standards generally accepted
in the United States of America. 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 Outdoors
Inc. and subsidiaries as of September 29, 2000 and October 1, 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 29, 2000, in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
KPMG LLP
Milwaukee, Wisconsin
November 6, 2000
F-1
CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------------------------------------------------------------
September 29 October 1
(thousands, except share data) 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash and temporary cash investments $ 17,363 $ 9,974
Accounts receivable, less allowance for doubtful accounts of $3,895 and
$3,236, respectively 54,825 49,302
Inventories 62,708 59,981
Deferred income taxes 4,613 4,718
Other current assets 4,685 5,644
Net assets of discontinued operations -- 56,114
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 144,194 185,733
Property, plant and equipment, net 37,369 35,323
Deferred income taxes 17,311 11,277
Intangible assets, net 57,866 65,599
Other assets 1,231 1,093
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 257,971 $ 299,025
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities And Shareholders' Equity
Current liabilities:
Short-term debt and current maturities of long-term debt $ 59,462 $ 49,327
Accounts payable 12,928 16,034
Accrued liabilities:
Salaries and wages 7,421 6,912
Income taxes 140 (160)
Other 26,452 22,286
- -----------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 106,403 94,399
Long-term debt, less current maturities 45,857 72,744
Other liabilities 4,879 4,704
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 157,139 171,847
- -----------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock: none issued -- --
Common stock:
Class A shares issued: September 29, 2000, 6,924,630;
October 1, 1999, 6,910,577 346 345
Class B shares issued (convertible into Class A shares):
September 29, 2000, 1,222,729; October 1, 1999, 1,222,861 61 61
Capital in excess of par value 44,291 44,205
Retained earnings 74,797 91,832
Contingent compensation (77) (134)
Accumulated other comprehensive income - cumulative translation adjustment (18,586) (9,049)
Treasury stock, Class A shares, at cost: October 1, 1999, 5,280 -- (82)
- -----------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 100,832 127,178
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 257,971 $ 299,025
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the Consolidated Financial Statements.
F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended
- -----------------------------------------------------------------------------------------------------------------------------------
September 29 October 1 October 2
- -----------------------------------------------------------------------------------------------------------------------------------
(thousands, except per share data) 2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales $ 347,288 $ 305,094 $ 270,017
Cost of sales 212,076 184,424 163,216
- -----------------------------------------------------------------------------------------------------------------------------------
Gross profit 135,212 120,670 106,801
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Marketing and selling 66,084 59,826 54,841
Administrative management, finance and information systems 28,442 26,372 22,835
Research and development 7,854 6,878 5,613
Amortization of acquisition costs 2,951 2,912 2,495
Profit sharing 2,793 2,396 1,273
Strategic charges 2,369 2,773 1,388
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 110,493 101,157 88,445
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 24,719 19,513 18,356
Interest income (421) (294) (329)
Interest expense 9,799 9,565 9,631
Other (income) expense, net 261 223 (210)
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 15,080 10,019 9,264
Income tax expense 6,705 4,158 3,885
- -----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 8,375 5,861 5,379
Income (loss) from discontinued operations, net of income tax expense (benefit)
of $(563), $771 and $52, respectively (940) 1,161 (167)
Loss on disposal of discontinued operations, net of income tax benefit of $(1,840) (24,418) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) (16,983) 7,022 5,212
- -----------------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per common share:
Continuing operations $ 1.03 $ 0.72 $ 0.66
Discontinued operations (3.12) 0.15 (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2.09) $ 0.87 $ 0.64
- -----------------------------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per common share:
Continuing operations $ 1.03 $ 0.72 $ 0.66
Discontinued operations (3.12) 0.15 (0.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (2.09) $ 0.87 $ 0.64
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the Consolidated Financial Statements.
F-3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
Capital in Cumulative
Common Excess of Retained Contingent Translation Treasury Comprehensive
(thousands) Stock Par Value Earnings Compensation Adjustment Stock Income (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at October 3, 1997 406 44,186 79,882 (85) (6,356) (302)
Net income -- -- 5,212 -- -- -- $ 5,212
Exercise of stock options -- -- (4) -- -- 146 --
Tax benefit of stock options exercised -- 6 -- -- -- -- --
Issuance of restricted stock -- 13 -- (32) -- 32 --
Issuance of stock under employee stock purchase plan -- -- (22) -- -- 177 --
Amortization of contingent compensation -- -- -- 90 -- -- --
Other treasury stock transactions -- -- -- -- -- (668) --
Translation adjustment -- -- -- -- 1,705 -- 1,705
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at October 2, 1998 406 44,205 85,068 (27) (4,651) (615) $ 6,917
Net income -- -- 7,022 -- -- -- $ 7,022
Issuance of restricted stock -- -- (137) (182) -- 319 --
Issuance of stock under employee stock purchase plan -- -- (121) -- -- 214 --
Amortization of contingent compensation -- -- -- 75 -- -- --
Translation adjustment -- -- -- -- (4,398) -- (4,398)
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at October 1, 1999 406 44,205 91,832 (134) (9,049) (82) $ 2,624
Net loss -- -- (16,983) -- -- -- $(16,983)
Issuance of restricted stock -- 19 -- (19) -- -- --
Issuance of stock under employee stock purchase plan 1 67 (52) -- -- 82 --
Amortization of contingent compensation -- -- -- 76 -- -- --
Translation adjustment -- -- -- -- (10,346) -- (10,346)
Translation adjustment reclassified to net loss
on sale of Fishing business -- -- -- -- 809 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at September 29, 2000 $407 $44,291 $74,797 $(77) $(18,586) $ -- $(27,329)
- ----------------------------------------------------------------------------- ------------------------------------------------------
The accompanying notes are an integral part of the Consolidated Financial Statements.
F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended
- -----------------------------------------------------------------------------------------------------------------------------------
September 29 October 1 October 2
(thousands) 2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided By Operations
Net income (loss) $ (16,983) $ 7,022 $ 5,212
Less income (loss) from discontinued operations (25,358) 1,161 (167)
Income from continuing operations 8,375 5,861 5,379
Adjustments to reconcile income from continuing operations to net cash
provided by operating activities of continuing operations:
Depreciation and amortization 12,523 12,597 10,814
Provision for doubtful accounts receivable 1,812 2,162 819
Provision for inventory reserves 853 801 269
Deferred income taxes (374) (48) (3,227)
Change in assets and liabilities, net of effect of businesses acquired or sold:
Accounts receivable (10,728) (3,466) (2,356)
Inventories (8,358) 1,012 (1,145)
Accounts payable and accrued liabilities 3,910 5,975 (1,750)
Other, net 1,738 (106) 308
- -----------------------------------------------------------------------------------------------------------------------------------
9,751 24,788 9,111
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided By (Used For) Investing Activities
Proceeds from sale of business, net of cash 33,126 -- --
Payments for purchase of businesses, net of cash acquired (864) (13,584) (12,772)
Net additions to property, plant and equipment (14,075) (13,035) (11,636)
Sales of property, plant and equipment 1,838 501 1,894
- -----------------------------------------------------------------------------------------------------------------------------------
20,025 (26,118) (22,514)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Provided By (Used For) Financing Activities
Issuance of senior notes -- -- 25,000
Principal payments on senior notes and other long-term debt (21,969) (7,705) (7,863)
Net change in short-term debt 9,351 6,764 (8,424)
Common stock transactions 97 94 (352)
- -----------------------------------------------------------------------------------------------------------------------------------
(12,521) (847) 8,361
- -----------------------------------------------------------------------------------------------------------------------------------
Effect of foreign currency fluctuations on cash (1,790) (541) 216
Net cash provided by (used for) discontinued operations (8,076) 2,361 8,223
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and temporary cash investments 7,389 (357) 3,397
Cash And Temporary Cash Investments
Beginning of year 9,974 10,331 6,934
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $ 17,363 $ 9,974 $ 10,331
- -----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the Consolidated Financial Statements.
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Johnson Outdoors Inc. is an integrated, global outdoor recreation
products company engaged in the design, manufacture and marketing of
brand name outdoor equipment, diving, watercraft and motors products.
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All monetary amounts, other than share and per share amounts, are stated in
thousands and are from continuing operations.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Johnson Outdoors
Inc. and all majority owned subsidiaries (the Company) and are stated in
conformity with accounting principles generally accepted in the United States of
America. Significant intercompany accounts and transactions have been eliminated
in consolidation. The Consolidated Financial Statements have been restated to
reflect the results of the Fishing business as a discontinued operation. See
Note 4.
The preparation of financial statements 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,
reserves for inventory valuation and the valuation allowance for deferred tax
assets.
The Company's fiscal year ends on the Friday nearest September 30. The fiscal
years ended September 29, 2000 (hereinafter 2000) and October 1, 1999
(hereinafter 1999) and October 2, 1998 (hereinafter 1998) 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.
The Company maintains cash in bank accounts in excess of insured limits. The
Company has not experienced any losses as a result of this practice and does not
believe that significant credit risk exists.
Inventories
Inventories are stated at the lower of cost (determined using the first-in,
first-out method) or market.
Inventories attributable to continuing operations at the end of the respective
years consist of the following:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Raw materials $ 23,122 $ 22,702
Work in process 2,238 3,176
Finished goods 40,297 39,014
- -------------------------------------------------------------------------------
65,657 64,892
Less reserves 2,949 4,911
- -------------------------------------------------------------------------------
$ 62,708 $ 59,981
- -------------------------------------------------------------------------------
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 attributable to continuing operations at the end
of the respective years consist of the following:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Property and improvements $ 1,423 $ 1,275
Buildings and improvements 19,303 16,301
Furniture, fixtures and equipment 82,994 74,667
- -------------------------------------------------------------------------------
103,720 92,243
- -------------------------------------------------------------------------------
Less accumulated depreciation 66,351 56,920
- -------------------------------------------------------------------------------
$ 37,369 $ 35,323
- -------------------------------------------------------------------------------
F-6
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.
Intangible assets attributable to continuing operations at the end of the
respective years consist of the following:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Goodwill $ 69,546 $ 75,254
Patents, trademarks and other 4,122 4,110
- -------------------------------------------------------------------------------
73,668 79,364
Less accumulated amortization 15,802 13,765
- -------------------------------------------------------------------------------
$ 57,866 $ 65,599
- -------------------------------------------------------------------------------
Impairment of Long-Lived Assets
The Company annually assesses the recoverability of property, plant and
equipment and intangible assets, primarily by determining whether the
depreciation and amortization of the balance over its remaining life can be
recovered through projected undiscounted future operating cash flows of the
related businesses. 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 assets, using a discount rate reflecting the
Company's cost of capital, which currently approximates 10%.
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.
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.
Federal and state income taxes are provided on foreign subsidiary income
distributed to, or taxable in, the United States during the year. At September
29, 2000, net undistributed earnings of foreign subsidiaries total approximately
$55,500. 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. United States pension obligations, which are generally based on
compensation and years of service, are funded by payments to pension fund
trustees. Foreign plans 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
and other retirement costs are funded at least annually.
Foreign Operations and Derivative Financial Instruments
Assets and liabilities of foreign operations are translated into U.S. 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
accumulated other comprehensive income, a separate component of shareholders'
equity.
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 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 assets, inventory purchases and loans denominated in foreign currencies.
The Company does not enter into foreign exchange contracts for trading purposes.
Gains and losses on unhedged exposures are recorded in operating results.
F-7
At September 29, 2000, foreign currency forward contracts and options with a
notional value of approximately $5,100 are in place, hedging existing and
anticipated transactions. Substantially all of these contracts mature in 2000.
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. At
September 29, 2000, the fair value of these instruments is $(0.4).
Foreign currency swaps effectively denominate, in foreign currencies, existing
U.S. dollar denominated debt of the Company. This foreign currency debt serves
as a hedge of foreign assets. Accordingly, gains and losses on such swaps are
recorded in shareholders' equity. At September 29, 2000, the fair value of these
instruments is $3.0.
SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 and SFAS
138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities, is effective for the Company as of September 30, 2000. SFAS 133
requires that an entity recognize all derivatives as either assets or
liabilities measured at fair value. The accounting for changes in the fair value
of a derivative depends on the use of the derivative. Adoption of these new
accounting standards will result in a cumulative after-tax gain in net income of
approximately $1.8 million and an accumulated other comprehensive loss of
approximately $3.0 million in the first quarter of fiscal 2001. The adoption
will also impact assets and liabilities recorded on the balance sheet.
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 related to production of
advertising the first time the advertising takes place. Cooperative promotional
arrangements are accrued in relation to sales.
Advertising expense attributable to continuing operations in 2000, 1999 and 1998
totals $18,435, $16,258 and $13,647, respectively. Capitalized costs
attributable to continuing operations at September 29, 2000 and October 1, 1999
total $1,360 and $1,100, 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.
Stock-Based Compensation
The Company accounts for stock options using the intrinsic value based method.
Accordingly, compensation cost is generally recognized only for stock options
issued with an exercise price lower than the market price on the date of grant.
The fair value of restricted shares awarded in excess of the amount paid for
such shares is recognized as contingent compensation and is amortized over 1 to
3 years from the date of award, the period after which all restrictions
generally lapse.
Pending Accounting Changes
In addition to SFAS 133 as previously noted, in December 1999, the Securities
and Exchange Commission issued Staff Accounting Bulletin No. 101, Revenue
Recognition (SAB 101). An amendment in June 2000 delayed the effective date for
the Company until the fourth quarter of 2001, which is when the Company will
adopt the bulletin. The impact of adopting SAB 101 is still being evaluated and
the Company does not currently believe its adoption will have a material impact
on the consolidated financial statements.
F-8
In May 2000, the Financial Accounting Standards Board's Emerging Issues Task
Force (EITF) reached a consensus on Issue No. 00-14, Accounting for Certain
Sales Incentives. This issue addresses the recognition, measurement, and income
statement classification for various types of sales incentives including
discounts, coupons, rebates and free products. The Company will adopt this
consensus in the fourth quarter of 2001. The impact of this consensus is still
being evaluated and the Company does not currently believe its adoption will
have a material impact on the consolidated financial statements.
Reclassifications
Certain reclassifications have been made to prior years' amounts to conform with
the current year presentation.
2 STRATEGIC CHARGES
In 2000, 1999 and 1998, the Company recorded strategic charges totaling $2,369,
$2,773 and $1,388, respectively. In 2000 strategic charges include severance,
moving and other exit costs related primarily to the closure and relocation of a
manufacturing facility in the Motors business. Severance costs included in the
strategic charges totaled $1,469 and approximately 95 employees were impacted by
these actions. Unexpended funds at year end related to these actions were
approximately $750.
In 1999, a portion of the charges included severance, moving and recruiting
costs related to the relocation of certain sales and marketing functions of the
Company's Outdoor Equipment business. The balance of the charges were related to
the integration of acquired businesses. Severance costs included in these
charges totaled $1,101 and approximately 30 employees were impacted.
In 1998, strategic charges included severance and other exit related costs
primarily for the integration of acquired companies in the Diving business.
Severance costs totaled $781 and approximately 80 employees were impacted.
3 ACQUISITIONS
In April 2000, the Company completed the acquisition of the common stock of
Pacific Kayak Ltd., a manufacturer of sit-on-top and sea touring kayaks located
in Auckland, New Zealand. The initial purchase price, including direct expenses,
for the acquisition was approximately $962, of which approximately $584 was
recorded as intangible assets and is being amortized over 25 years. An
additional payment in 2001 is dependent upon achievement of specified levels of
sales of the acquired business.
In July 1999, the Company completed the acquisition of the common stock of
Extrasport, Inc., a privately held manufacturer and marketer of personal
flotation devices. The initial purchase price, including direct expenses, for
the acquisition was approximately $3,300, of which approximately $2,500 was
recorded as intangible assets and is being amortized over 25 years. In September
2000, an additional payment of approximately $150 was accrued. Additional
payments in 2001 and 2002 are dependent upon achievement of specified levels of
sales of the acquired business.
In April 1999, the Company completed the acquisition of substantially all of the
assets and the assumption of certain liabilities of Escape Sailboat Company LLC,
a privately held manufacturer and marketer of recreational sailboats. The
initial purchase price, including direct expenses, for the acquisition was
approximately $4,800, of which approximately $3,100 was recorded as intangible
assets and is being amortized over 25 years. An additional payment in 2001 is
dependent upon achievement of specified levels of sales of the acquired
business.
In December 1998, the Company completed the acquisition of substantially all of
the assets and the assumption of certain liabilities of True North Paddle &
Necky Kayaks Ltd., a privately held manufacturer and marketer of Necky kayaks,
and an affiliated entity. The initial purchase price, including direct expenses,
for the acquisition was approximately $5,700, of which approximately $3,200 was
recorded as intangible assets and is being amortized over 25 years. Additional
payments of approximately $170 and $600 were earned in 2000 and 1999,
respectively. Additional payments in the years 2001 through 2003 are dependent
upon the achievement of specified levels of sales and profitability of the
acquired business.
F-9
In February 1998, the Company completed the acquisition of the common stock of
Leisure Life Limited, a privately held manufacturer and marketer of recreational
watercraft. The purchase price, including direct expenses, for the acquisition
was approximately $10,300, of which approximately $7,300 was recorded as
intangible assets and is being amortized over 25 years.
In September 1997, subsequent to the end of the 1997 fiscal year, the Company
completed the acquisitions of certain assets of Soniform, Inc., a manufacturer
of diving buoyancy compensators, and the common stock of Plastiques L.P.A.
Limitee, a privately held Canadian manufacturer of kayaks. The purchase prices
for the acquisitions totaled approximately $3,400.
All 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.
4 SALE OF FISHING BUSINESS
In March 2000, the Company sold its Fishing business. As a result, operations
and related assets and liabilities of the Fishing group have been classified as
discontinued for all periods presented herein. The sale price totaled $47,279,
including $14,056 of accounts receivable retained by the Company and $2,367 of
debt assumed by the buyer. The Company recorded a loss of $24,418, net of tax,
related to the sale of the business, taking into account operating results from
the measurement date to the date of disposal. In addition, the Company recorded
an after tax loss from operations up to the measurement date of $940 in 2000, an
after tax gain of $1,161 in 1999 and an after tax loss of $167 in 1998.
Net sales of the Fishing group were $32,667, $59,184 and $58,508 for 2000, 1999
and 1998, respectively. Interest expense of $90, $154 and $1,016 that is
directly attributable to the Fishing group is allocated to discontinued
operations.
5 INDEBTEDNESS
Short-term debt at the end of the respective years consists of the following:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Commercial paper and bank loans $ 53,434 $ 43,380
Current maturities of long-term debt 6,028 5,947
- -------------------------------------------------------------------------------
$ 59,462 $ 49,327
- -------------------------------------------------------------------------------
Short-term credit facilities provide for borrowings with interest rates set
periodically by reference to market rates. Commercial paper rates are set by
competitive bidding. The weighted average interest rate on short-term
indebtedness was 7.6% and 6.2% at September 29, 2000 and October 1, 1999,
respectively. The Company's primary facility is a $100,000 revolving credit
agreement expiring in 2001, which includes a maximum amount of $80,000 in
support of commercial paper issuance. The Company has lines of credit, both
foreign and domestic, totaling $122,000 of which $63,000 is available at
September 29, 2000. The Company also utilizes letters of credit for trade
financing purposes.
Long-term debt at the end of the respective years consists of the following:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
1998 senior notes $ 16,176 $ 24,981
1996 senior notes 29,700 45,000
Other long-term notes,
maturing through January 2004 6,009 8,710
- -------------------------------------------------------------------------------
51,885 78,691
Less current maturities 6,028 5,947
- -------------------------------------------------------------------------------
$ 45,857 $ 72,744
- -------------------------------------------------------------------------------
F-10
In 1998, the Company issued unsecured senior notes totaling $25,000 with an
interest rate of 7.15%. Simultaneous with the commitment of the 1998 senior
notes, the Company executed a foreign currency swap, denominating in Swiss
francs all principal and interest payments required under the 1998 senior notes.
The fixed, effective interest rate to be paid on the 1998 senior notes as a
result of the currency swap is 4.32%. A portion of the proceeds from the
divestiture of the Fishing business was used to make an unscheduled principal
payment of $5,335 in March 2000. The 1998 senior notes have annual principal
payments of $1,721 to $6,023 beginning October 2001 with a final payment due
October 2007. Proceeds from issuance of the 1998 senior notes were used to
reduce outstanding indebtedness under the Company's primary revolving credit
facility.
$5,676 of the initial purchase price for the common stock of Uwatec AG is due in
2002. Interest on the deferred amounts is payable annually at 6%. This
obligation is denominated in Swiss francs. A corresponding amount of the
Company's primary revolving credit facility is reserved in support of this
obligation through issuance of a letter of credit.
In 1996, the Company issued unsecured senior notes totaling $30,000 with an
interest rate of 7.77% and $15,000 with an interest rate of 6.98%. A portion of
the proceeds from the divestiture of the Fishing business was used to make an
unscheduled principal payment of $9,800 in March 2000. Total annual principal
payments ranging from $5,500 to $7,500 are due beginning in October 2000 through
2006.
Aggregate scheduled maturities of long-term debt in each of the five years
ending September 2005 are as follows:
- -------------------------------------------------------------------------------
Year
- -------------------------------------------------------------------------------
2001 $ 6,000
2002 13,500
2003 7,800
2004 9,300
2005 5,400
Interest paid was $10,471, $9,740 and $8,921 for 2000, 1999 and 1998,
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 29, 2000 and October 1, 1999 is approximately $53,000 and
$79,700, 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 (hereinafter the Johnson Family) continue to
own stock having votes sufficient to elect a 51% majority of the directors. At
September 29, 2000, the Johnson Family held approximately 3,300,000 shares or
48% of the Class A common stock, approximately 1,168,000 shares or 96% of the
Class B common stock and approximately 78% of the voting power of both classes
of common stock taken as a whole. The agreements also contain restrictive
covenants regarding the Company's net worth, indebtedness, fixed charge coverage
and distribution of earnings. The Company is in compliance with the restrictive
covenants of such agreements, as amended from time to time.
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 attributable to continuing
operations having an initial term in excess of one year at September 29, 2000
are as follows:
- -------------------------------------------------------------------------------
Year
- -------------------------------------------------------------------------------
2001 $5,200
2002 4,400
2003 2,800
2004 1,900
2005 1,700
Thereafter 2,100
- -------------------------------------------------------------------------------
Rental expense attributable to continuing operations under all leases was
approximately $6,727, $6,438 and $5,719 for 2000, 1999 and 1998, 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.
F-11
7 INCOME TAXES
Income tax expense (benefit) attributable to continuing operations for the
respective years consists of the following:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Current:
Federal $ 17 $ 34 $ 56
State 490 683 514
Foreign 6,572 3,489 6,542
Deferred (374) (48) (3,227)
- -------------------------------------------------------------------------------
$ 6,705 $ 4,158 $ 3,885
- -------------------------------------------------------------------------------
The significant components of deferred tax expense (benefit) attributable to
continuing operations are as follows:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Deferred tax expense (benefit)
(exclusive of effects of other
components listed below) $ (822) $ 89 $ (2,967)
Increase (decrease) in beginning
of the year balance of the
valuation allowance for
deferred tax assets 448 (137) (260)
- -------------------------------------------------------------------------------
$ (374) $ (48) $ (3,227)
- -------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities attributable to continuing
operations at the end of the respective years are presented below:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Deferred tax assets:
Inventories $ 1,966 $ 2,557
Compensation 3,502 2,934
Foreign income taxes -- 78
Foreign tax credit carryforwards 3,791 4,051
Net operating loss carryforwards 16,808 12,217
Other 5,869 3,614
- -------------------------------------------------------------------------------
Total gross deferred tax assets 31,936 25,451
Less valuation allowance 7,783 7,183
- -------------------------------------------------------------------------------
24,153 18,268
- -------------------------------------------------------------------------------
Deferred tax liabilities:
Foreign statutory reserves 1,952 1,973
Acquisition accounting 277 300
- -------------------------------------------------------------------------------
Total deferred tax liabilities 2,229 2,273
- -------------------------------------------------------------------------------
Net deferred tax asset $ 21,924 $15,995
- -------------------------------------------------------------------------------
Deferred tax assets relating to net operating losses of discontinued operation
of $5,555 has been reflected as assets of continuing operations in 2000 as the
benefit will ultimately be realized by the continuing operations.
Following is the income (loss) from continuing operations before income taxes
for domestic and foreign operations:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
United States $ (1,436) $ (1,269) $ (4,953)
Foreign 16,516 11,288 14,217
- -------------------------------------------------------------------------------
$ 15,080 $ 10,019 $ 9,264
- -------------------------------------------------------------------------------
F-12
The significant differences between the statutory federal tax rate and the
effective income tax rates for income from continuing operations are as follows:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Statutory U.S. federal
income tax rate 34.0% 34.0% 34.0%
State income taxes, net of
federal income tax benefit 3.8 0.7 (2.2)
Foreign rate differential 1.4 5.1 10.6
Change in beginning of
year valuation allowance 3.0 -- --
Foreign operating losses (benefit) 0.6 1.9 (1.4)
Other 1.7 (0.2) 0.9
- -------------------------------------------------------------------------------
44.5% 41.5% 41.9%
- -------------------------------------------------------------------------------
At September 29, 2000, the Company has $3,791 of foreign tax credit
carryforwards available to be offset against future U.S. tax liability. The
credits expire in 2000 through 2005 if not utilized. These carryforwards have
been fully reserved for in the valuation allowance.
At September 29, 2000, the Company has a U.S. federal operating loss
carryforward of $28,712 and various state net operating loss carryforwards.
During 2000, 1999 and 1998, foreign net operating loss carryforwards were
utilized, resulting in a reduction in income tax expense of $152, $137 and $260,
respectively. In addition, certain of the Company's foreign subsidiaries have
net operating loss carryforwards totaling $1,189. These amounts are available to
offset future taxable income over the next 14 to 20 years and are anticipated to
be utilized during this period.
Taxes paid attributable to continuing operations were $9,935, $6,648 and $6,374
for 2000, 1999 and 1998, respectively.
8 EMPLOYEE BENEFITS
Net periodic pension cost for noncontributory pension plans includes the
following components.
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Service cost $ 315 $ 273 $ 301
Interest on projected
benefit obligation 763 713 697
Less return on plan assets 592 558 520
Amortization of unrecognized:
Net loss 4 4 15
Prior service cost 26 26 26
Transition asset (81) (81) (81)
- -------------------------------------------------------------------------------
Net amount recognized $ 435 $ 377 $ 438
- -------------------------------------------------------------------------------
The following provides a reconciliation of the changes in the plans benefit
obligation and fair value of assets for 2000 and 1999 and a statement of the
funded status at the end of each year:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Benefit obligation:
Benefit obligation at beginning of year $ 9,604 $ 9,456
Service cost 315 273
Interest cost 763 713
Actuarial (gain) loss 259 (257)
Benefits paid (609) (581)
- -------------------------------------------------------------------------------
Benefit obligation at end of year $ 10,332 $ 9,604
- -------------------------------------------------------------------------------
Fair value of plan assets:
Fair value of plan assets at beginning of year $ 8,070 $ 7,515
Actual return on plan assets 888 860
Company contributions 271 276
Benefits paid (609) (581)
- -------------------------------------------------------------------------------
Fair value of plan assets at end of year $ 8,620 $ 8,070
- -------------------------------------------------------------------------------
Funded status:
Funded status of the plan $ (1,712) $(1,534)
Unrecognized net loss 80 4
Unrecognized prior service cost 148 174
Unrecognized transition asset (291) (372)
- -------------------------------------------------------------------------------
Net liability recognized $ (1,775) $(1,728)
- -------------------------------------------------------------------------------
F-13
The following summarizes the components of the net liability recognized in the
consolidated balance sheets at the end of the respective years:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Prepaid benefit cost $ -- $ 55
Accrued benefit liability (1,775) (1,783)
- -------------------------------------------------------------------------------
Net liability recognized $ (1,775) $ (1,728)
- -------------------------------------------------------------------------------
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
net periodic pension cost are as follows:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Discount rate 8% 8% 8%
Long-term rate of return 8 8 8
Average salary increase rate 5 5 5
- -------------------------------------------------------------------------------
A majority of the Company's full-time employees are covered by profit sharing
and defined contribution programs. Participating entities determine profit
sharing distributions 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:
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Class A, $.05 par value:
Authorized 20,000,000 20,000,000
Outstanding 6,924,630 6,905,297
Class B, $.05 par value:
Authorized 3,000,000 3,000,000
Outstanding 1,222,729 1,222,861
- -------------------------------------------------------------------------------
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 2000, 1999 and 1998, respectively, 132, 1,000 and 4,054 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. All stock 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. Stock options generally have a term of 10
years. Current plans also allow for issuance of restricted stock or stock
appreciation rights in lieu of options. Grants of restricted shares are not
significant in any year presented. No stock appreciation rights have been
granted.
F-14
A summary of stock option activity related to the Company's plans is as follows:
- -------------------------------------------------------------------------------
Weighted Average
Shares Exercise Price
- -------------------------------------------------------------------------------
Outstanding at October 3, 1997 686,521 $18.32
Granted 247,000 17.01
Exercised (10,243) 13.96
Cancelled (321,217) 19.11
- -------------------------------------------------------------------------------
Outstanding at October 2, 1998 602,061 17.43
Granted 353,000 8.53
Cancelled (176,224) 14.67
- -------------------------------------------------------------------------------
Outstanding at October 1, 1999 778,837 14.02
Granted 268,500 7.58
Cancelled (95,107) 15.23
- -------------------------------------------------------------------------------
Outstanding at September 29, 2000 952,230 $12.08
- -------------------------------------------------------------------------------
Other information regarding the Company's stock option plans is as follows:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Options exercisable at end of year 441,544 324,990 257,055
Weighted average exercise
price of exercisable options $15.99 18.63 $19.14
- -------------------------------------------------------------------------------
Weighted average fair value of
options granted during the year 3.20 3.31 6.82
- -------------------------------------------------------------------------------
At September 29, 2000, the weighted average remaining contractual life of stock
options outstanding is approximately 7.6 years. Exercise prices of outstanding
stock options range from $6.25 to $25.31 at September 29, 2000.
Had compensation cost for the Company's stock options been determined using the
fair value method, the Company's pro forma operating results would have been as
follows:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Income from continuing operations $ 7,744 $ 5,221 $ 4,776
Diluted earnings per common share
from continuing operations $ 0.95 $ 0.64 $ 0.59
- -------------------------------------------------------------------------------
For purposes of calculating pro forma operating results, the fair value of each
option grant was estimated using the Black-Scholes option pricing model with an
expected volatility of 35%, a risk free rate equivalent to five year U.S.
Treasury securities and an expected life of five years. The pro forma operating
results reflect only options granted after 1995.
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 2000, 1999 and 1998,
16,701, 13,722 and 11,325 shares, respectively, were issued under this plan.
12 RELATED PARTY TRANSACTIONS
Various transactions are conducted between the Company and organizations
controlled by the Johnson Family. These include consulting services, office
rental, royalties and certain administrative activities. Total net costs of
these transactions are $542, $474 and $248 for 2000, 1999 and 1998,
respectively.
13 SEGMENTS OF BUSINESS
The Company conducts its worldwide operations through separate global business
units, each of which represent major product lines. Operations are conducted in
the United States and various foreign countries, primarily in Europe, Canada and
the Pacific Basin.
Net sales and operating profit include both sales to customers, as reported in
the Company's consolidated statements of operations, and interunit 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
business unit at the end of the years presented.
F-15
A summary of the Company's continuing operations by business segment is
presented below:
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2000 1999 1998
- -------------------------------------------------------------------------------
Net sales:
Outdoor equipment:
Unaffiliated customers $ 103,454 $ 92,367 $ 77,566
Interunit transfers 67 14 28
Watercraft:
Unaffiliated customers 84,025 66,461 47,517
Interunit transfers 397 260 266
Diving:
Unaffiliated customers 82,246 80,200 90,116
Interunit transfers 5 9 10
Motors:
Unaffiliated customers 76,424 64,260 53,249
Interunit transfers 1,363 1,783 1,678
Other 1,139 1,806 1,569
Eliminations (1,832) (2,066) (1,982)
- -------------------------------------------------------------------------------
$ 347,288 $ 305,094 $ 270,017
- -------------------------------------------------------------------------------
Operating profit (loss):
Outdoor equipment $ 8,182 $ 3,546 $ 1,987
Watercraft 10,327 12,598 8,658
Diving 10,832 4,749 10,193
Motors 3,936 3,497 1,156
Other (8,558) (4,877) (3,638)
- -------------------------------------------------------------------------------
$ 24,719 $ 19,513 $ 18,356
- -------------------------------------------------------------------------------
Identifiable assets:
Outdoor equipment $ 49,512 $ 47,760
Watercraft 63,394 54,458
Diving 87,818 89,706
Motors 30,208 25,483
Discontinued operations, net -- 56,114
Other 27,039 25,504
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$ 257,971 $ 299,025
- -------------------------------------------------------------------------------
A summary of the Company's continuing operations by geographic area is presented
below:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Net sales:
United States:
Unaffiliated customers $ 232,014 $ 190,743 $ 156,252
Interarea transfers 6,540 6,622 8,427
Europe:
Unaffiliated customers 88,213 90,445 91,973
Interarea transfers 7,800 6,510 6,642
Other 27,061 23,906 21,792
Interarea transfers 7,863 5,495 1,737
Eliminations (22,203) (18,627) (16,806)
- -------------------------------------------------------------------------------
$ 347,288 $ 305,094 $ 270,017
- -------------------------------------------------------------------------------
Identifiable assets:
United States $ 148,186 $ 129,874
Europe 91,684 92,933
Other 18,101 20,104
Discontinued operations, net -- 56,114
- -------------------------------------------------------------------------------
$ 257,971 $ 299,025
- -------------------------------------------------------------------------------
F-16
14 VALUATION AND QUALIFYING ACCOUNTS
The following summarizes changes to valuation and qualifying accounts:
- ------------------------------------------------------------------------------------------------------------
Additions Reserves of
Balance at Charged to Businesses Balance
Beginning Costs and Acquired Less at End
of Year Expenses or Sold Deductions of Year
- ------------------------------------------------------------------------------------------------------------
Year ended
September 29, 2000:
Allowance for
doubtful accounts $3,236 $1,812 $ -- $1,153 $3,895
Reserves for
inventory valuation 4,911 853 -- 2,815 2,949
Year ended
October 1, 1999:
Allowance for
doubtful accounts 2,153 2,161 14 1,092 3,236
Reserves for
inventory valuation 5,196 801 -- 1,086 4,911
Year ended
October 2, 1998:
Allowance for
doubtful accounts 2,388 734 35 1,004 2,153
Reserves for
inventory valuation 6,009 270 120 1,203 5,196
- ------------------------------------------------------------------------------------------------------------
Deductions include the net impact of foreign currency fluctuations on the
respective accounts.
15 EARNINGS PER SHARE
Basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is similar to the previously
reported fully diluted earnings per share.
The following sets forth the computation of basic and diluted earnings per
common share:
- -------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------
Income from continuing
operations for basic and
diluted earnings per share $8,375 $5,861 $5,379
- -------------------------------------------------------------------------------
Weighted average shares outstanding 8,139,340 8,108,781 8,100,415
Less nonvested restricted stock 17,265 12,206 5,509
- -------------------------------------------------------------------------------
Basic average common shares 8,122,075 8,096,575 8,094,906
Dilutive stock options and restricted stock 8,208 11,653 18,924
- -------------------------------------------------------------------------------
Diluted average common shares 8,130,283 8,108,228 8,113,830
- -------------------------------------------------------------------------------
Basic earnings per common share
from continuing operations $1.03 $0.72 $0.66
- -------------------------------------------------------------------------------
Diluted earnings per common share
from continuing operations $1.03 $0.72 $0.66
- -------------------------------------------------------------------------------
16 LITIGATION
The Company is subject to various legal actions and proceedings in the normal
course of business, including those related to environmental matters. The
Company is insured against loss for certain of these 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 material adverse effect on the financial condition,
results of operations, liquidity or cash flows of the Company.
F-17
17 QUARTERLY FINANCIAL SUMMARY (unaudited)
The following summarizes quarterly operating results:
- ------------------------------------------------------------------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Net Sales $56,201 $ 48,144 $ 96,703 $ 84,644 $ 114,003 $101,134 $ 80,381 $71,172
Gross profit 21,912 17,811 39,070 34,629 45,337 42,107 28,893 26,123
Operating profit loss 139 (3,121) 9,584 8,288 13,912 13,690 1,084 656
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
operations (1,035) (3,038) 3,896 3,220 5,958 6,359 (444) (680)
Income (loss) from discontinued
operations (940) 19 -- 1,157 -- 725 -- (740)
Loss on disposal of discontinued
operations (23,109) -- (1,309) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(25,084) $ (3,019) $ 2,587 $ 4,377 $ 5,958 $ 7,084 $ (444) $(1,420)
- ------------------------------------------------------------------------------------------------------------------------------------
Basic earnings (loss) per
common share:
Continuing operations $(0.13) $ (0.37) $ 0.48 $ 0.40 $ 0.73 $ 0.79 $ (0.05) $ (0.09)
Discontinued operations (2.96) -- (0.16) 0.14 -- 0.09 -- (0.09)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(3.09) $ (0.37) $ 0.32 $ 0.54 $ 0.73 $ 0.88 $ (0.05) $ (0.18)
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings (loss) per
common share:
Continuing operations $(0.13) $ (0.37) $ 0.48 $ 0.40 $ 0.73 $ 0.78 $ (0.05) $ (0.09)
Discontinued operations (2.96) -- (0.16) 0.14 -- 0.09 -- (0.09)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(3.09) $ (0.37) $ 0.32 $ 0.54 $ 0.73 $ 0.87 $ (0.05) $ (0.18)
- ------------------------------------------------------------------------------------------------------------------------------------