UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 1, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-16255 JOHNSON WORLDWIDE ASSOCIATES, INC. (Exact name of Registrant as specified in its charter) Wisconsin 39-1536083 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1326 Willow Road, Sturtevant, Wisconsin 53177 (Address of principal executive offices) (414) 884-1500 (Registrant's telephone number, including area code) 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 [ ] As of January 31, 1999, 6,871,045 shares of Class A and 1,222,861 shares of Class B common stock of the Registrant were outstanding. ================================================================================
JOHNSON WORLDWIDE ASSOCIATES, INC. Index Page No. - - -------------------------------------------------------------------------------- PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Statements of Operations - Three Months Ended January 1, 1999 and January 2, 1998 1 Consolidated Balance Sheets - January 1, 1999, October 2, 1998 and January 2, 1998 2 Consolidated Statements of Cash Flows - Three Months Ended January 1, 1999 and January 2, 1998 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 15 Signatures
JOHNSON WORLDWIDE ASSOCIATES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - - -------------------------------------------------------------------------------- Three Months Ended - - -------------------------------------------------------------------------------- January 1 January 2 (thousands, except per share data) 1999 1998 - - -------------------------------------------------------------------------------- Net sales $ 60,000 $ 51,841 Cost of sales 38,266 32,647 - - -------------------------------------------------------------------------------- Gross profit 21,734 19,194 - - -------------------------------------------------------------------------------- Operating expenses: Marketing and selling 14,979 13,493 Finance, information systems and administrative management 6,342 5,837 Research and development 1,944 1,543 Amortization of acquisition costs 1,025 912 Profit sharing 71 15 Nonrecurring charges 416 66 - - -------------------------------------------------------------------------------- Total operating expenses 24,777 21,866 - - -------------------------------------------------------------------------------- Operating loss (3,043) (2,672) Interest income (104) (77) Interest expense 2,283 2,194 Other income, net (5) (71) - - -------------------------------------------------------------------------------- Loss before income taxes (5,217) (4,718) Income tax benefit (2,198) (1,934) - - -------------------------------------------------------------------------------- Net loss $ (3,019) $ (2,784) - - -------------------------------------------------------------------------------- Basic loss per common share $ (0.37) $ (0.34) - - -------------------------------------------------------------------------------- Diluted loss per common share $ (0.37) $ (0.34) - - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the consolidated financial statements. -1-
<TABLE> <CAPTION> JOHNSON WORLDWIDE ASSOCIATES, INC. CONSOLIDATED BALANCE SHEETS (unaudited) - - ----------------------------------------------------------------------------------------------- January 1 October 2 January 2 (thousands, except share data) 1999 1998 1998 - - ----------------------------------------------------------------------------------------------- ASSETS Current assets: <S> <C> <C> <C> Cash and temporary cash investments $ 10,989 $ 11,496 $ 4,089 Accounts receivable, less allowance for doubtful accounts of $2,709, $2,570, and $2,733, respectively 62,093 53,421 49,587 Inventories 80,780 76,603 90,191 Deferred income taxes 6,836 6,067 5,140 Other current assets 8,834 6,933 7,407 - - ----------------------------------------------------------------------------------------------- Total current assets 169,532 154,520 156,414 Property, plant and equipment 35,772 35,469 32,144 Deferred income taxes 15,529 15,435 10,856 Intangible assets 91,007 90,101 81,463 Other assets 853 492 544 - - ----------------------------------------------------------------------------------------------- Total assets $ 312,693 $ 296,017 $ 281,421 - - ----------------------------------------------------------------------------------------------- continued -3-
JOHNSON WORLDWIDE ASSOCIATES, INC. - - ------------------------------------------------------------------------------------------------------------ January 1 October 2 January 2 1999 1998 1998 - - ------------------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: <S> <C> <C> <C> Short-term debt and current maturities of long- term debt $ 76,462 $ 42,614 $ 45,224 Accounts payable 13,580 11,681 13,844 Accrued liabilities 21,286 30,724 17,614 - - ------------------------------------------------------------------------------------------------------------ Total current liabilities 111,328 85,019 76,682 Long-term debt, less current maturities 75,379 82,066 88,181 Other liabilities 4,575 4,546 4,290 - - ------------------------------------------------------------------------------------------------------------ Total liabilities 191,282 171,631 169,153 - - ------------------------------------------------------------------------------------------------------------ Shareholders' equity: Preferred stock: none issued -- -- -- Common stock: Class A shares issued: January 1, 1999, 6,910,577; October 2, 1998, 6,909,577; January 2, 1998, 6,905,523 345 345 345 Class B shares issued (convertible into Class A): January 1, 1999, 1,222,861: October 2, 1998, 1,223,861; January 2, 1998, 1,227,915 61 61 61 Capital in excess of par value 44,205 44,205 44,186 Retained earnings 82,048 85,068 77,096 Contingent compensation (15) (27) (58) Other comprehensive income - cumulative translation adjustment (4,618) (4,651) (9,060) Treasury stock: January 1, 1999, 39,532 Class A shares; October 2, 1998, 39,532 Class A shares; January 2, 1998, 22,919 Class A shares (615) (615) (302) - - ------------------------------------------------------------------------------------------------------------ Total shareholders' equity 121,411 124,386 112,268 - - ------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 312,693 $ 296,017 $ 281,421 - - ------------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of the consolidated financial statements. </TABLE> -3-
<TABLE> <CAPTION> JOHNSON WORLDWIDE ASSOCIATES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - - ------------------------------------------------------------------------------------ Three Months Ended - - ------------------------------------------------------------------------------------ January 1 January 2 (thousands) 1999 1998 - - ------------------------------------------------------------------------------------ CASH USED FOR OPERATIONS <S> <C> <C> Net loss $ (3,019) $ (2,784) Noncash items: Depreciation and amortization 3,527 3,216 Deferred income taxes (763) 2,148 Change in assets and liabilities, net of effect of businesses acquired: Accounts receivable, net (6,842) 786 Inventories (4,039) (11,263) Accounts payable and accrued liabilities (8,788) (8,279) Other, net (801) (483) - - ------------------------------------------------------------------------------------ (20,725) (16,659) - - ------------------------------------------------------------------------------------ CASH USED FOR INVESTING ACTIVITIES Net assets of businesses acquired, net of cash (4,233) (3,034) Net additions to property, plant and equipment (2,890) (2,072) - - ------------------------------------------------------------------------------------ (7,123) (5,106) - - ------------------------------------------------------------------------------------ CASH PROVIDED BY FINANCING ACTIVITIES Issuance of senior notes -- 25,000 Net change in short-term debt 27,317 (6,081) Common stock transactions -- 8 - - ------------------------------------------------------------------------------------ 27,317 18,927 Effect of foreign currency fluctuations on cash 24 (203) - - ------------------------------------------------------------------------------------ Decrease in cash and temporary cash investments (507) (3,041) CASH AND TEMPORARY CASH INVESTMENTS Beginning of period 11,496 7,130 - - ------------------------------------------------------------------------------------ End of period $ 10,989 $ 4,089 - - ------------------------------------------------------------------------------------ The accompanying notes are an integral part of the consolidated financial statements. </TABLE> -4-
JOHNSON WORLDWIDE ASSOCIATES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1 Basis of Presentation The consolidated financial statements included herein are unaudited. In the opinion of management, these statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position of Johnson Worldwide Associates, Inc. and subsidiaries (the Company) as of January 1, 1999 and the results of operations and cash flows for the three months ended January 1, 1999. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1998 Annual Report. Because of seasonal and other factors, the results of operations for the three months ended January 1, 1999 are not necessarily indicative of the results to be expected for the full year. All amounts, other than share and per share amounts, are stated in thousands. Certain amounts as previously reported have been reclassified to conform with the current period presentation. 2 Income Taxes The provision for income taxes includes deferred taxes and is based upon estimated annual effective tax rates in the tax jurisdictions in which the Company operates. 3 Inventories Inventories at the end of the respective periods consist of the following: --------------------------------------------------------------------- January 1 October 2 January 2 1999 1998 1998 --------------------------------------------------------------------- Raw materials $ 27,536 $ 27,834 $ 34,643 Work in process 3,502 4,753 7,012 Finished goods 55,192 49,875 58,073 --------------------------------------------------------------------- 86,230 82,462 99,728 Less reserves 5,450 5,859 9,537 --------------------------------------------------------------------- $ 80,780 $ 76,603 $ 90,191 --------------------------------------------------------------------- -5-
JOHNSON WORLDWIDE ASSOCIATES, INC. 4 Earnings Per Share The following table sets forth the computation of basic and diluted earnings (loss) per common share: <TABLE> <CAPTION> ------------------------------------------------------------------------------------------- Three Months Ended ------------------------------------------------------------------------------------------- January 1 January 2 1999 1998 ------------------------------------------------------------------------------------------- <S> <C> <C> Net loss for basic and diluted earnings per share $ (3,019) $ (2,784) ------------------------------------------------------------------------------------------- Weighted average common shares outstanding 8,093,906 8,109,965 Less nonvested restricted stock 4,158 5,149 ------------------------------------------------------------------------------------------- Basic and diluted average common shares 8,089,748 8,104,816 ------------------------------------------------------------------------------------------- Basic loss per common share $ (0.37) $ (0.34) ------------------------------------------------------------------------------------------- Diluted loss per common share $ (0.37) $ (0.34) ------------------------------------------------------------------------------------------- </TABLE> Options to purchase 733,005 shares of common stock with a weighted average exercise price of $15.72 per share were outstanding at January 1, 1999. Options to purchase 627,457 shares of common stock with a weighted average exercise price of $17.46 per share were outstanding at January 2, 1998. None of the options were included in the computation of diluted loss per common share because the effect would be antidilutive. 5 Stock Ownership Plans A summary of stock option activity related to the Company's plans is as follows: --------------------------------------------------------------------- Weighted Average Shares Exercise Price --------------------------------------------------------------------- Outstanding at October 2, 1998 602,061 $17.43 Granted 153,000 9.69 Cancelled (22,056) 20.49 --------------------------------------------------------------------- Outstanding at January 1, 1999 733,005 $15.72 --------------------------------------------------------------------- 6 Acquisitions 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 purchase price, including direct expenses, for the acquisition was approximately $5,700, of which approximately $3,100 was recorded as intangible -6-
JOHNSON WORLDWIDE ASSOCIATES, INC. assets and is being amortized over 25 years. Additional payments in the years 1999 through 2003 are dependent upon the achievement of specified levels of sales and profitability of the acquired products. The acquisition was accounted for using the purchase method and, accordingly, the Consolidated Financial Statements include the results of operations since the date of acquisition. Additional payments, if required, will increase intangible assets in future years. 7 Litigation In 1998, certain businesses acquired by the Company became subject to judgments in civil liability cases. In February 1999, these cases were settled. All payments made as a result of these judgments reduced payments otherwise due to selling shareholders of the businesses acquired. Accordingly, these judgments did not impact the operating results of the Company. 8 Comprehensive Income The Company adopted Financial Accounting Standards Board Statement 130, Reporting Comprehensive Income, in 1999. Comprehensive income includes net income and changes in shareholders' equity from non-owner sources. For the Company, the elements of comprehensive income excluded from net income are represented primarily by the cumulative translation adjustment. Comprehensive income (loss) for the respective periods consists of the following: ------------------------------------------------------------------------ Three Months Ended ------------------------------------------------------------------------ January 1 January 2 1999 1998 ------------------------------------------------------------------------ Net loss $ (3,019) $ (2,784) Translation adjustment 33 (2,704) ------------------------------------------------------------------------ Comprehensive income (loss) $ (2,986) $ (5,488) ------------------------------------------------------------------------ 9 Segments of Business The Company conducts its worldwide operations through five separate global business units which represent major product lines. Operations are conducted in the United States and various foreign countries, primarily in Europe, Canada and the Pacific Basin. -7-
JOHNSON WORLDWIDE ASSOCIATES, INC. 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 periods presented. A summary of the Company's operations by business unit is presented below: ------------------------------------------------------------------------ Three Months Ended ------------------------------------------------------------------------ January 1 January 2 1999 1998 ------------------------------------------------------------------------ Net sales: Diving: Unaffiliated customers $ 17,645 $ 19,430 Interunit transfers 3 108 Outdoor equipment: Unaffiliated customers 15,000 12,392 Interunit transfers 11 1 Fishing: Unaffiliated customers 11,856 9,269 Interunit transfers 123 187 Motors: Unaffiliated customers 9,025 5,890 Interunit transfers 339 405 Watercraft: Unaffiliated customers 5,782 4,227 Interunit transfers 12 -- Other 692 633 Eliminations (488) (701) ------------------------------------------------------------------------ $ 60,000 $ 51,841 ------------------------------------------------------------------------ Operating profit (loss): Diving $ (564) $ 1,606 Outdoor equipment (946) (687) Fishing 79 (1,661) Motors (942) (1,544) Watercraft 150 137 Other (815) (523) ------------------------------------------------------------------------ $ (3,043) $ (2,672) ------------------------------------------------------------------------ -8-
JOHNSON WORLDWIDE ASSOCIATES, INC. -------------------------------------------------------------------------- January 1 October 2 January 2 1999 1998 1998 -------------------------------------------------------------------------- Identifiable assets: Diving $ 105,330 $ 104,344 $ 94,137 Outdoor equipment 44,555 49,090 47,900 Fishing 65,833 62,099 73,552 Motors 27,356 22,905 27,414 Watercraft 40,114 29,340 19,649 Other 29,505 28,239 18,769 -------------------------------------------------------------------------- $ 312,693 $ 296,017 $ 281,421 -------------------------------------------------------------------------- -9-
JOHNSON WORLDWIDE ASSOCIATES, INC. 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 months ended January 1, 1999 and January 2, 1998. This discussion should be read in conjunction with the consolidated financial statements and related notes that immediately precede this section, as well as the Company's 1998 Annual Report. Forward Looking Statements Certain matters discussed in this 1998 Form 10-Q 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, the success of the Company's EVA program, actions of companies that compete with JWA, the Company's success in managing inventory, movements in foreign currencies or interest rates, the success of suppliers, customers and others regarding compliance with year 2000 issues, 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 Form 10-Q and the Company undertakes no obligations to publicly update such forward-looking statements to reflect subsequent events or circumstances. Results of Operations Net sales for the three months ended January 1, 1999 totaled $60.0 million, an increase of 16%, or $8.2 million, over the three months ended January 2, 1998. Sales of all businesses except the Diving business exhibited strong sales growth. The Diving business was adversely impacted by weakness in Asia, which negatively impacted export sales. Relative to the U.S. dollar, the average values of most currencies of the countries in which the Company has operations were higher for the three months ended January 1, -10-
JOHNSON WORLDWIDE ASSOCIATES, INC. 1999 as compared to the corresponding period of the prior year. Excluding the impact of foreign currencies, net sales increased 14% for the three months ended January 1, 1999. Gross profit as a percentage of sales decreased to 36.2% for the three months ended January 1, 1999 compared to 37.0% in the corresponding period in the prior year. The decrease in higher margin Diving sales relative to total sales contributed to the decrease. The Company incurred an operating loss of $3.0 million for the three months ended January 1, 1999, compared to an operating loss of $2.7 million for the corresponding period of the prior year. Seasonal losses of the Leisure Life watercraft business, which the Company acquired in February 1998 and, accordingly, did not impact prior year results, contributed to the decrease from the prior year. Increased nonrecurring charges from integration of acquired businesses also contributed to the decrease. The combination of these two factors more than offset the positive impact of increased sales on operating margins. Interest expense totaled $2.3 million for the three months ended January 1, 1999 compared to $2.2 million for the corresponding period of the prior year. Increased debt levels due to acquisitions consummated in 1998 were substantially offset by improved management of working capital and a favorable interest rate environment. The Company incurred a net loss of $3.0 million in the three months ended January 1, 1999 compared to a loss of $2.8 million in the corresponding period of the prior year. On a per share basis, the loss totaled $0.37 compared to $0.34 in the prior year. Financial Condition The following discusses changes in the Company's liquidity and capital resources. Operations Cash flows used for operations totaled $20.7 million for the three months ended January 1, 1999 and $16.7 million for the corresponding period of the prior year. Growth in inventories of $4.0 million for the three months ended January 1, 1999 and $11.3 million for the corresponding period of the prior year account for a significant amount of the net usage of funds. The build up of inventory in anticipation of the selling season contributed to the increase in both years. Inventory turns increased for the period ended January 1, 1999 compared to the corresponding period of the prior year. Accounts receivable increased $6.8 million for the three months ended January 1, 1999 and decreased $0.8 million for the corresponding period of the prior year. The increase in the current year is related to the sales growth during the last three months and seasonal dating programs. -11-
JOHNSON WORLDWIDE ASSOCIATES, INC. Accounts payable and accrued liabilities decreased $8.8 million for the three months ended January 1, 1999 and $8.3 million for the corresponding period of the prior year, increasing the net outflow of cash from operations. These outflows include seasonal payments for interest expense, incentive compensation and retirement programs. Depreciation and amortization charges were $3.5 million for the three months ended January 1, 1999 and $3.2 million for the corresponding period of the prior year, mitigating the net outflow of operating funds. The increase was due primarily to increased amortization of intangible assets from businesses acquired in 1998. Investing Activities Expenditures for property, plant and equipment were $2.9 million for the three months ended January 1, 1999 and $2.1 million for the corresponding period of the prior year. The Company's recurring investments are made primarily for tooling for new products and enhancements. In 1999, capitalized expenditures are anticipated to total approximately $12 million. These expenditures are expected to be funded by working capital or existing credit facilities. The Company completed the acquisition of one business in the current year and two businesses in the prior year, which increased tangible and intangible assets by $4.2 million and $3.0 million, respectively, net of cash and liabilities assumed. Financing Activities Cash flows from financing activities totaled $27.3 million for the three months ended January 1, 1999 and $18.9 million for the corresponding period of the prior year. In October 1997, the Company consummated a private placement of long-term debt totaling $25 million. Payments on long-term debt required to be made in 1999 total $7.8 million. 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. -12-
JOHNSON WORLDWIDE ASSOCIATES, INC. 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. 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 January 1, 1999: -13-
JOHNSON WORLDWIDE ASSOCIATES, INC. - - -------------------------------------------------------------------------------- Estimated Impact on - - -------------------------------------------------------------------------------- Earnings Before (millions) Fair Value Income Taxes - - -------------------------------------------------------------------------------- Foreign exchange rate instruments $3.2 $0.6 Interest rate instruments 3.9 0.8 - - -------------------------------------------------------------------------------- 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. Year 2000 The year 2000 issue is the result of computer programs using two digits (rather than four) to define years. Computers or other equipment with date sensitive software may recognize "00" as the year 1900 rather than 2000. This could result in system failures or miscalculations. If the Company or its significant customers or suppliers fail to correct year 2000 issues, the Company's ability to operate could be materially affected. The Company has assessed the impact of year 2000 issues on the processing of date-related information for all of its information systems infrastructure and non-technical assets, such as production equipment. All systems and non-technical assets are in the process of being inventoried and classified as to their compliance with year 2000 data processing. Any systems found year 2000 deficient will be modified, upgraded or replaced. Project plans anticipate all existing, critical information systems infrastructure and non-technical assets to be year 2000 compliant before failure to comply would significantly disrupt the Company's operations. Contingency plans will be developed to address any failures resulting from relationships with customers, suppliers or other third parties. The Company has made inquiries of its suppliers, customers and other organizations which impact the Company's business, but cannot guarantee that circumstances beyond its control will not have an adverse impact on its operations. Since 1993, the Company has invested approximately $10 million in information systems improvements and has been migrating its businesses to systems that are year 2000 compliant. Based on assessments and testing to date, the financial impact of addressing any potential remaining internal system issues should not be material to the Company's financial position, results of operations or cash flows. -14-
JOHNSON WORLDWIDE ASSOCIATES, INC. Item 3. 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." PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The following documents are filed as part of this Form 10-Q Exhibit 4.17 Amendment No. 1 dated September 11, 1998 to the Amended and Restated Credit Agreement dated as of April 3, 1998. Exhibit 27: Financial Data Schedule (b) There were no reports on Form 8-K filed for the three months ended January 1, 1999. -15-
SIGNATURES Pursuant to the requirements 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. JOHNSON WORLDWIDE ASSOCIATES, INC. Date: February 15, 1999 /s/ Carl G. Schmidt ---------------------------------- Carl G. Schmidt Senior Vice President and Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer)
JOHNSON WORLDWIDE ASSOCIATES, INC. EXHIBIT INDEX Page Exhibit Description Number 4.17 Amendment No. 1 dated September 11, 1998 to the - Amended and Restated Credit Agreement dated as of April 3, 1998. 27. Financial Data Schedule -